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DELAWARE GROUP
Enterprise Fund
U.S. Growth Fund
World Growth Fund
New Pacific Fund
Corporate Income Fund
Federal Bond Fund
1997 Semi-Annual Report
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More Than 68 Years Of Investment Experience has taught us that disciplined
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MAY 7, 1997
Dear Shareholder:
When the Federal Reserve Board raised its target for short-term U.S. interest
rates on March 13, it was a shot heard "round the world." The U.S. stock market
suffered its first substantial correction in seven years. Bonds fared no better.
Most overseas financial markets likewise declined in value.
Yet, in just a few weeks, the markets reversed course. In hindsight, the
Fed's decision to increase the overnight lending rate between banks by 25 basis
points (0.25%) to 5.5% was a firecracker rather than a mortar blast for
investors.
To a large extent, such short-term volatility reflects investor
ambivalence regarding future inflation. Consumer prices have been quite tame in
the 1990s in the U.S. and abroad. Some professionals wonder how long the trend
can endure.
For the six months ended April 30, 1997, the unmanaged Standard & Poor's
500 Index provided a strong total return of +14.72% while the unmanaged Morgan
Stanley Europe Australia Far East (EAFE) Index rose +3.10%. The culprit for weak
EAFE returns was Japan, whose Nikkei Index fell 10% during the period. The
Lehman Brothers Aggregate Bond Index provided a total return of +1.70% during
the six months ended April 30, illustrating that bond income has only partially
offset a short-term decline in principal value.
As an investor, one of the best ways you can approach turbulent times is
with a diversified investment plan that takes advantage of the fact that global
markets and domestic asset classes seldom move in sync over the long term.
I encourage you to read the portfolio managers' discussion that follows,
review the performance of your investments and meet with your financial adviser
to discuss your goals. I look forward to reporting to you again this autumn.
Sincerely,
/s/ Wayne A. Stork
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Wayne A. Stork
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
1997 semi-annual report 1
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Domestic Equity Funds
Enterprise Fund
Managed by a Lynch & Mayer portfolio team
Headed by Kevin Ferguson and Edward Petner
It's been rough sledding this past winter for stocks of many mid-size companies.
Although the unmanaged S&P 400 MidCap Index, our benchmark, rose by +6.88%, the
average mutual fund specializing in mid-cap stocks declined in value.
Enterprise Fund was negatively affected by the relatively weak
short-term performance of the technology sector, your Fund's largest area of
concentration, as well as several consumer-related stocks that did not meet our
expectations. The Fund's total return was -3.84% for the six months ended April
30, 1997, (capital change plus income based on A Class shares at net asset
value).
Viewed from a long-term perspective, this setback was modest and
reflective of the inherent volatility of medium-size companies' share prices. On
the positive side, the technology sector's weakness provided us with an apparent
opportunity to acquire shares of fundamentally strong companies at attractive
prices.
The Fund's strategy includes a constant search for companies that
exhibit what we believe are early indications of positive fundamental change
such as:
* an acceleration of earnings growth;
* an improving industry environment;
* a corporate restructuring; or
* a turnaround.
We had successes during the first half of your Fund's fiscal year, among
them CONSECO INC., a financial services company, and XLINX INC., which makes
programmable chips for personal computers. But we also had significant
disappointments, including MERCURY FINANCE CO., an auto financing company, and
TRUMP HOTELS & CASINOS.
We believe Enterprise Fund is well-positioned for the future because our
research shows that about two-thirds of your Fund's holdings could see profits
rise at least 20% in calendar 1998.
PORTFOLIO HIGHLIGHTS
- ---------------------------------------------------------
April 30, 1997
- ---------------------------------------------------------
Median Market Capitalization $2.2 billion
Number of Stocks 68
Average Stock Price-to-Earnings Ratio 13.3x*
Largest Holding - BJ Services Co. 3.1%
Top Sector - Technology 21.5%
Beta** 1.06
* BASED ON ANALYSTS' EARNINGS ESTIMATES FOR 1998 AS
REPORTED BY FIRST CALL.
**A MEASURE OF RISK RELATIVE TO THE S&P 500 INDEX. A NUMBER LESS THAN 1.0 MEANS
LESS HISTORICAL PRICE VOLATILITY THAN THE INDEX. A NUMBER HIGHER THAN 1.0
MEANS MORE HISTORICAL VOLATILITY.
2 1997 semi-annual report
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COMPARATIVE RETURNS FOR THE SIX MONTHS ENDED APRIL 30, 1997
In our opinion, U.S. economic growth will eventually slow in 1997, making the
stocks of companies that can sustain above average earnings growth more
attractive.
Enterprise Fund A* -3.84%
Standard & Poor's Mid-Cap 400 Index +6.88%
Lipper Mid-Cap Fund Average (200 funds) -0.87%
*AT NET ASSET VALUE WITH DISTRIBUTIONS REINVESTED. PAST PERFORMANCE DOES NOT
GUARANTEE FUTURE RESULTS. PERFORMANCE OF OTHER FUND CLASSES VARIES DUE TO
DIFFERENT CHARGES AND EXPENSES.
ENTERPRISE FUND PERFORMANCE
Average Annual Return Through April 30, 1997
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LIFETIME ONE YEAR
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Class A (Est. 12/3/94)
Excluding Sales Charge +8.18% -3.06%
Including Sales Charge +6.65% -7.65%
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Class B (Est. 4/14/94)
Excluding Sales Charge +10.98% -3.74%
Including Sales Charge +10.18% -7.35%
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Class C (Est. 5/10/94)
Excluding Sales Charge +11.96% -3.74%
Including Sales Charge +11.96% -4.65%
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ALL PERFORMANCE INCLUDES REINVESTMENT OF DISTRIBUTIONS AND APPLICABLE SALES
CHARGES AS DESCRIBED BELOW. RETURN AND SHARE VALUE WILL FLUCTUATE SO THAT
SHARES WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST. PAST
PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. PERFORMANCE FOR CLASS B AND
C SHARES "EXCLUDING SALES CHARGE" ASSUMES THE INVESTMENT WAS NOT REDEEMED.
CLASS A SHARES HAVE A 4.75% MAXIMUM FRONT-END SALES CHARGE AND A 12B-1 FEE.
CLASS B SHARES DO NOT CARRY A FRONT-END SALES CHARGE, BUT ARE SUBJECT TO A 1%
ANNUAL DISTRIBUTION AND SERVICE FEE. THEY ARE ALSO SUBJECT TO A DEFERRED SALES
CHARGE IF REDEEMED BEFORE THE END OF THE SIXTH YEAR.
CLASS C SHARES HAVE A 1% ANNUAL DISTRIBUTION AND SERVICE FEE. IF SHARES ARE
REDEEMED WITHIN 12 MONTHS, A 1% CONTINGENT DEFERRED SALES CHARGE APPLIES.
THE AVERAGE ANNUAL TOTAL RETURNS FOR THE LIFETIME AND ONE-YEAR PERIODS AND
AGGREGATE SIX-MONTH RETURN FOR THE PERIOD ENDED APRIL 30, 1997, FOR ENTERPRISE
FUND'S INSTITUTIONAL CLASS WERE +7.38%, -2.82% AND -3.67%. THIS CLASS WAS
INITIALLY OFFERED FEBRUARY 3, 1994, AND IS AVAILABLE WITHOUT SALES OR
ASSET-BASED DISTRIBUTION CHARGES ONLY TO INSTITUTIONAL ACCOUNTS.
1997 semi-annual report 3
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U.S. GROWTH FUND
Managed by a Lynch & Mayer portfolio team
Headed by Anthony Segalas
U.S. Growth Fund generated a total return of +8.86% (capital change plus income
for A Class shares at net asset value) for the six months ended April 30, 1997,
greater than the average of its peers.
We attribute these results to the Fund's positioning in large cap stocks
that have done well since October, particularly pharmaceutical and energy
stocks. Your Fund's results were lower than the return provided by the unmanaged
S&P 500 Index in part because of price and earnings weakness in some technology
and retailing stocks we held.
When we assumed management of the portfolio last May, we decided to
focus on companies exhibiting signs of positive fundamental change and strong
long-term growth prospects. Since then, we've had success with large cap stocks
such as MERCK & CO.
For much of the period, the capital appreciation from many traditional
"growth" stocks lagged that from stocks of cyclical companies that is, those
businesses whose fortunes are tied to the performance of the overall U.S.
economy.
In the opinion of your Fund's management team, corporate earnings growth
will slow in 1997, possibly bringing growth style investing back into favor. As
of the end of 1996, the U.S. economy had expanded in 22 of the last 24 calendar
quarters, yet with a relatively modest average growth rate of 2.5%. This
combination of steady expansion and low inflation has provided a highly
favorable backdrop for financial assets in the 1990s, and we see few clouds on
the horizon to alter this long-term trend.
Analysts anticipate that companies in your Fund's portfolio can report
earnings growth averaging 27% through 1998, triple the estimated growth rate of
companies in the S&P 500 Index.
PORTFOLIO HIGHLIGHTS
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As of April 30, 1997
- ----------------------------------------------------------
Median Market Capitalization $5.4 billion
Number of Stocks 47
Average Stock Price-to-Earnings Ratio 19.8x*
Largest Holding - Eli Lilly & Co. 4.4%
Top Sectors - Healthcare and Drugs 27.6%
Beta** 1.10
*BASED ON ANALYSTS' EARNINGS ESTIMATES FOR 1998.
**A MEASURE OF RISK RELATIVE TO THE S&P 500 INDEX. A NUMBER LESS THAN 1.0 MEANS
LESS HISTORICAL PRICE VOLATILITY THAN THE INDEX. A NUMBER HIGHER THAN 1.0
MEANS MORE HISTORICAL VOLATILITY.
4 1997 semi-annual report
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COMPARATIVE RETURNS FOR THE
SIX MONTHS ENDED APRIL 30, 1997
U.S. Growth A* 8.86%
Standard & Poor's 500 Index 14.72%
Lipper Growth Fund Average (799 funds) 7.15%
By focusing on companies with better-than average earnings prospects, we believe
we have positioned U.S. Growth Fund well for the balance of fiscal 1997.
*AT NET ASSET VALUE WITH DISTRIBUTIONS REINVESTED. PAST PERFORMANCE DOES NOT
GUARANTEE FUTURE RESULTS. PERFORMANCE OF OTHER FUND CLASSES VARIES DUE TO
DIFFERENT CHARGES AND EXPENSES.
U.S. GROWTH PERFORMANCE
Average Annual Return Through April 30, 1997
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LIFETIME ONE YEAR
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Class A (Est. 12/3/93)
Excluding Sales Charge +12.77% +15.82%
Including Sales Charge +11.16% +10.30%
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Class B (Est. 3/29/94)
Excluding Sales Charge +13.43% +14.96%
Including Sales Charge +12.68% +10.96%
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Class C (Est. 5/23/94)
Excluding Sales Charge +15.77% +14.95%
Including Sales Charge +15.77% +13.95%
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ALL PERFORMANCE INCLUDES REINVESTMENT OF DISTRIBUTIONS AND APPLICABLE SALES
CHARGES AS DESCRIBED BELOW. RETURN AND SHARE VALUE WILL FLUCTUATE SO THAT
SHARES WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST. PAST
PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. PERFORMANCE FOR CLASS B AND
C SHARES "EXCLUDING SALES CHARGE" ASSUMES THE INVESTMENT WAS NOT REDEEMED.
CLASS A SHARES HAVE A 4.75% MAXIMUM FRONT-END SALES CHARGE AND A 12B-1 FEE.
CLASS B SHARES DO NOT CARRY A FRONT-END SALES CHARGE, BUT ARE SUBJECT TO A 1%
ANNUAL DISTRIBUTION AND SERVICE FEE. THEY ARE ALSO SUBJECT TO A DEFERRED SALES
CHARGE IF REDEEMED BEFORE THE END OF THE SIXTH YEAR.
CLASS C SHARES HAVE A 1% ANNUAL DISTRIBUTION AND SERVICE FEE. IF SHARES ARE
REDEEMED WITHIN 12 MONTHS, A 1% CONTINGENT DEFERRED SALES CHARGE APPLIES.
THE AVERAGE ANNUAL TOTAL RETURNS FOR THE LIFETIME AND ONE-YEAR PERIODS AND
AGGREGATE SIX-MONTH RETURN FOR THE PERIOD ENDED APRIL 30, 1997, FOR U.S.
GROWTH INSTITUTIONAL CLASS WERE +12.03%, +16.18% AND +9.01%. THIS CLASS WAS
INITIALLY OFFERED FEBRUARY 3, 1994, AND IS AVAILABLE WITHOUT SALES OR
ASSET-BASED DISTRIBUTION CHARGES ONLY TO INSTITUTIONAL ACCOUNTS.
1997 semi-annual report 5
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International Equity Funds
WORLD GROWTH FUND
Managed by a portfolio team at Walter Scott & Partners
World Growth Fund provided a total return of +3.35% (capital change plus income
based on A Class shares at net asset value) for the six months ended April 30,
1997. This outpaced the return of the unmanaged Morgan Stanley Europe Australia
Far East (EAFE) Index for the period, but was below the average of your Fund's
peers.
As of April 30, your Fund invested the largest percentage of its
portfolio in Japanese stocks. This reflected a belief that recent economic
weakness in Japan is temporary. We have positioned the portfolio to benefit from
a recovery in Japan's domestic economy, an expected corporate profits and from
depreciation of the yen. We've added companies such as JOYFULL, a
steakhouse-style restaurant chain that caters to price-conscious Japanese
consumers.
We are pleased to report that our Japanese stocks substantially
outperformed the Nikkei Index for the six months ended April 30, 1997. Our
holdings in Japan rose +1.4% in value while the Nikkei declined 10% for the
period. Nevertheless, this was lower than the returns available from markets
elsewhere in the world.
Your Fund's performance was augmented by investments in Europe,
particularly Germany. As of April 30, we were also overweighted in the
Netherlands, Norway and Sweden.
As part of your Fund's overall investment strategy, we attempt to
mitigate the special risks of international investing in several ways. As of
April 30, we held yen and deutschemark currency options to protect the dollar
value of our investments in Japan and Germany. We analyze political and economic
events that might affect our investments. And we rigorously scrutinize company
balance sheets.
COUNTRY ALLOCATION
April 30, 1997
Japan 33.0%
Germany 15.2%
Denmark/Netherlands 10.5%
France 3.4%
Norway 6.0%
United Kingdom 5.3%
Singapore/Malaysia 6.6%
Sweden 3.4%
Other 5.3%
Cash Equivalents 11.3%
JAPANESE AND GERMAN STOCKS REPRESENTED NEARLY HALF OF YOUR FUND'S NET ASSETS AS
OF APRIL 30.
6 1997 semi-annual report
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COMPARATIVE RETURNS FOR THE
SIX MONTHS ENDED APRIL 30, 1997
World Growth A* +3.35%
Morgan Stanley Europe Australian Far East Index +1.72%
Lipper International Fund Average (396 funds) +6.17%
World Growth Fund focuses on companies that we believe can expand by more than
20% a year. We seek businesses that can generate high levels of cash flow over
long periods of time.
*AT NET ASSET VALUE WITH DISTRIBUTIONS REINVESTED. PAST PERFORMANCE DOES NOT
GUARANTEE FUTURE RESULTS. PERFORMANCE OF OTHER FUND CLASSES VARIES DUE TO
DIFFERENT CHARGES AND EXPENSES.
WORLD GROWTH FUND PERFORMANCE
Average Annual Return Through April 30, 1997
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LIFETIME ONE YEAR
Class A (Est. 12/3/93)
Excluding Sales Charge +7.70% +3.10%
Including Sales Charge +6.17% -1.80%
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Class B (Est. 3/29/94)
Excluding Sales Charge +6.02% +2.35%
Including Sales Charge +5.16% -1.48%
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Class C (Est. 5/23/94)
Excluding Sales Charge +6.28% +2.25%
Including Sales Charge +6.28% +1.30%
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ALL PERFORMANCE INCLUDES REINVESTMENT OF DISTRIBUTIONS AND APPLICABLE SALES
CHARGES AS DESCRIBED BELOW. RETURN AND SHARE VALUE WILL FLUCTUATE SO THAT
SHARES WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST. PAST
PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. PERFORMANCE FOR CLASS B AND
C SHARES "EXCLUDING SALES CHARGE" ASSUMES THE INVESTMENT WAS NOT REDEEMED.
CLASS A SHARES HAVE A 4.75% MAXIMUM FRONT-END SALES CHARGE AND A 12B-1 FEE.
CLASS B SHARES DO NOT CARRY A FRONT-END SALES CHARGE, BUT ARE SUBJECT TO A 1%
ANNUAL DISTRIBUTION AND SERVICE FEE. THEY ARE ALSO SUBJECT TO A DEFERRED SALES
CHARGE IF REDEEMED BEFORE THE END OF THE SIXTH YEAR.
CLASS C SHARES HAVE A 1% ANNUAL DISTRIBUTION AND SERVICE FEE. IF SHARES ARE
REDEEMED WITHIN 12 MONTHS, A 1% CONTINGENT DEFERRED SALES CHARGE APPLIES.
THE AVERAGE ANNUAL TOTAL RETURNS FOR THE LIFETIME AND ONE-YEAR PERIODS AND
AGGREGATE SIX-MONTH RETURN FOR THE PERIOD ENDED APRIL 30, 1997, FOR WORLD
GROWTH FUND'S INSTITUTIONAL CLASS WERE +6.44%, +3.37% AND +3.46%. THIS CLASS
WAS INITIALLY OFFERED FEBRUARY 3, 1994, AND IS AVAILABLE WITHOUT SALES OR
ASSET-BASED DISTRIBUTION CHARGES ONLY TO INSTITUTIONAL ACCOUNTS.
1997 semi-annual report 7
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NEW PACIFIC FUND
Managed by Peter Robson at John Govett & Co.
Since October, Asian stock markets have been everything but calm. Japan and
Thailand suffered sharp setbacks amid concerns over the health of each
respective country's financial system. The South Korean economy was in
recession. India is in the midst of political turmoil.
That said, however, there were islands of opportunity that helped New
Pacific Fund outpace both its peers and its benchmark by a wide margin for the
period. Your Fund achieved a total return of +4.09% for the six months ended
April 30, 1997, (capital change plus income based on A Class shares at net asset
value).
Our results reflected prudent country and stock selection, lower
regional interest rates and our ability to capitalize on political uncertainty
in some countries. Our Taiwanese holdings performed particularly well, as did
our stock selections in Indonesia and the Philippines.
In Japan, we've focused on well-capitalized, export-oriented companies
that we believe are likely to benefit from the falling value of the yen, which
may make Japanese goods cheaper for foreigners to buy. Beginning in February,
Japan's stock market began to recover.
In China and Hong Kong, our holdings include several so-called "Red
chip" stocks that stand to benefit as the capitalist and socialist economies
converge.
The Fund's strategy is to focus on major growth areas of the Pacific Rim
by emphasizing emerging Asian economies. The Fund seeks to find value by
analyzing the earnings potential of a company relative to its current stock
price and historical prices.
Investing in emerging markets is a long-term commitment that involves
special risks. Recent turmoil in India and Thailand, for example, illustrates
what can happen to equity markets when a country's government is less stable
than that of the U.S. or when accounting standards differ. Nevertheless, we
believe investors who are willing to accept such short-term growing pains can
potentially reap substantial rewards.
COUNTRY/ASSET ALLOCATION
April 30, 1997
Japan 19.9%
Singapore/Malaysia 15.2%
Taiwan 4.0%
Philippines 2.8%
India/Pakistan 5.7%
Indonesia 4.5%
Cash 12.1%
Hong Kong 12.5%
Thailand 7.3%
China 7.5%
South Korea 4.0%
Australia 4.5%
YOUR FUND WAS WELL-DIVERSIFIED WITHIN THE PACIFIC RIM. AS OF APRIL 30, NO ONE
COUNTRY REPRESENTED MORE THAN ONE-FIFTH OF YOUR FUND'S NET ASSETS.
8 1997 semi-annual report
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COMPARATIVE RETURNS FOR THE
SIX MONTHS ENDED APRIL 30, 1997
New Pacific Fund A* -4.09%
Morgan Stanley Pacific Index -10.38%
Lipper Pacific Region Fund Average (45 funds) -0.29%
In the coming months, we expect to modestly increase our weighting in Singapore,
Thailand and Malaysia and modestly reduce our position in Taiwan, where many
stocks appear fully valued. Your Fund's management has also set a target of
reducing the cash position to about 5% of net assets.
*AT NET ASSET VALUE WITH DISTRIBUTIONS REINVESTED. PAST PERFORMANCE DOES NOT
GUARANTEE FUTURE RESULTS. PERFORMANCE OF OTHER FUND CLASSES VARIES DUE TO
DIFFERENT CHARGES AND EXPENSES.
NEW PACIFIC FUND PERFORMANCE
Average Annual Return Through April 30, 1997
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LIFETIME ONE YEAR
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Class A (Est. 12/3/93)
Excluding Sales Charge +0.37% -2.72%
Including Sales Charge -1.05% -7.32%
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Class B (Est. 3/29/94)
Excluding Sales Charge +1.10% -3.42%
Including Sales Charge +0.15% -7.22%
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Class C (Est. 7/7/94)
Excluding Sales Charge +0.54% -3.29%
Including Sales Charge +0.54% -4.24%
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ALL PERFORMANCE INCLUDES REINVESTMENT OF DISTRIBUTIONS AND APPLICABLE SALES
CHARGES AS DESCRIBED BELOW. RETURN AND SHARE VALUE WILL FLUCTUATE SO THAT SHARES
WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST. PAST PERFORMANCE
IS NOT A GUARANTEE OF FUTURE RESULTS. PERFORMANCE FOR CLASS B AND C SHARES
"EXCLUDING SALES CHARGE" ASSUMES THE INVESTMENT WAS NOT REDEEMED.
CLASS A SHARES HAVE A 4.75% MAXIMUM FRONT-END SALES CHARGE AND A 12B-1 FEE.
CLASS B SHARES DO NOT CARRY A FRONT-END SALES CHARGE, BUT ARE SUBJECT TO A 1%
ANNUAL DISTRIBUTION AND SERVICE FEE.
THEY ARE ALSO SUBJECT TO A DEFERRED SALES CHARGE IF REDEEMED BEFORE THE END OF
THE SIXTH YEAR. CLASS C SHARES HAVE A 1% ANNUAL DISTRIBUTION AND SERVICE FEE. IF
SHARES ARE REDEEMED WITHIN 12 MONTHS, A 1% CONTINGENT DEFERRED SALES CHARGE
APPLIES.
THE AVERAGE ANNUAL TOTAL RETURNS FOR THE LIFETIME AND ONE-YEAR PERIODS AND
AGGREGATE SIX-MONTH RETURN FOR THE PERIOD ENDED APRIL 30, 1997, FOR NEW PACIFIC
FUND'S INSTITUTIONAL CLASS WERE -2.50%, -2.20% AND +4.37%. THIS CLASS WAS
INITIALLY OFFERED FEBRUARY 3, 1994, AND IS AVAILABLE WITHOUT SALES OR
ASSET-BASED DISTRIBUTION CHARGES ONLY TO INSTITUTIONAL ACCOUNTS.
1997 semi-annual report 9
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Bond Funds
CORPORATE INCOME FUND
Managed by Timothy Policinski, Lincoln Investment Management Inc.
Amid a turbulent bond market, Corporate Income Fund's total return for the six
months ended April 30, 1997, was +0.88% (capital change plus income for A Class
shares at net asset value). Recurrent inflation fears were the driving force
behind the volatility.
The bond market's perception of the economy and the direction of
interest rates changed significantly during the first half of the 1997 fiscal
year. Last autumn, we increased average effective duration, which allowed your
Fund to benefit from falling interest rates during the last calendar quarter of
1996. Strong corporate profits and moderate economic growth led to higher
corporate bond prices, enhancing your Fund's performance.
However, by the beginning of 1997, a different story emerged. America's
output of goods and services grew by 5.8% in the first quarter, the fastest
annual rate since 1973. Investors speculated that the benign inflation
environment of the 1990s could not be sustained amid such boom times.
By March, bond prices had slumped. Although some economic statistics
would appear to support a continuation of steady to lower long-term interest
rates, Federal Reserve Board chairman Alan Greenspan has expressed his resolve
to quell inflation. The Fed boosted interest rates on March 13, causing yields
on long-term Treasury bonds to rise above 7%.
We see several reasons for caution regarding interest rates in the
months ahead. History suggests we should expect further increases by the Fed
before year's end.
Since late February, we've maintained a duration that's been slightly
shorter than our benchmark, the Lehman Brothers Corporate Bond Index. To augment
your Fund's yield without taking on additional interest rate risk, we've
purchased trust preferred bonds, a type of subordinated corporate debt.
PORTFOLIO HIGHLIGHTS
- ----------------------------------------------------
April 30, 1997
- ----------------------------------------------------
Average Effective Maturity 15.2 years
Average Effective Duration 5.3 years
Average Quality A+
30-Day Annualized Yield* 6.04%
*FOR CLASS A SHARES BASED ON SECURITIES AND EXCHANGE COMMISSION GUIDELINES.
SEC YIELDS FOR B AND C CLASSES WERE 5.17% AND 5.16% RESPECTIVELY.
10 1997 semi-annual report
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COMPARATIVE RETURNS FOR THE
SIX MONTHS ENDED APRIL 30, 1997
Corporate Income Fund A +0.88%
Lehman Brothers Corporate Bond Index +1.23%
Lipper Corporate BBB Bond Fund Average (122 funds) +1.70%
We expect long-term yields for high quality corporate bonds to generally
remain in a range of 7% to 7.75% for the balance of 1997, although we believe it
is possible yields could dip to as low as 6.75% if the economy grows weak, or
rise to as much as 8.25% should inflation accelerate.
*AT NET ASSET VALUE WITH DISTRIBUTIONS REINVESTED. PAST PERFORMANCE DOES NOT
GUARANTEE FUTURE RESULTS. PERFORMANCE OF OTHER FUND CLASSES VARIES DUE TO
DIFFERENT CHARGES AND EXPENSES.
CORPORATE INCOME FUND PERFORMANCE
Average Annual Return Through April 30, 1997
- --------------------------------------------------------------------------
LIFETIME ONE YEAR
- --------------------------------------------------------------------------
Class A (Est. 12/3/93)
Excluding Sales Charge +4.37% +6.57%
Including Sales Charge +2.89% +1.49%
- --------------------------------------------------------------------------
Class B (Est. 7/27/94)
Excluding Sales Charge +7.09% +5.75%
Including Sales Charge +6.20% +1.75%
- --------------------------------------------------------------------------
Class C (Est. 7/7/94)
Excluding Sales Charge +7.33% +5.77%
Including Sales Charge +7.33% +4.77%
- --------------------------------------------------------------------------
ALL PERFORMANCE INCLUDES REINVESTMENT OF DISTRIBUTIONS AND APPLICABLE SALES
CHARGES AS DESCRIBED BELOW. RETURN AND SHARE VALUE WILL FLUCTUATE SO THAT
SHARES WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST. PAST
PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. PERFORMANCE FOR CLASS B AND
C SHARES "EXCLUDING SALES CHARGE" ASSUMES THE INVESTMENT WAS NOT REDEEMED.
CLASS A SHARES HAVE A 4.75% MAXIMUM FRONT-END SALES CHARGE AND A 12B-1 FEE.
CLASS B SHARES DO NOT CARRY A FRONT-END SALES CHARGE, BUT ARE SUBJECT TO A 1%
ANNUAL DISTRIBUTION AND SERVICE FEE. THEY ARE ALSO SUBJECT TO A DEFERRED SALES
CHARGE IF REDEEMED BEFORE THE END OF THE SIXTH YEAR.
CLASS C SHARES HAVE A 1% ANNUAL DISTRIBUTION AND SERVICE FEE. IF SHARES ARE
REDEEMED WITHIN 12 MONTHS, A 1% CONTINGENT DEFERRED SALES CHARGE APPLIES.
THE AVERAGE ANNUAL TOTAL RETURNS FOR THE LIFETIME AND ONE-YEAR PERIODS AND
AGGREGATE SIX-MONTH RETURN FOR THE PERIOD ENDED APRIL 30, 1997, FOR CORPORATE
INCOME FUND'S INSTITUTIONAL CLASS WERE +4.85%, +6.85% AND +1.05%. THIS CLASS
WAS INITIALLY OFFERED FEBRUARY 3, 1994, AND IS AVAILABLE WITHOUT SALES OR
ASSET-BASED DISTRIBUTION CHARGES ONLY TO INSTITUTIONAL ACCOUNTS.
1997 semi-annual report 11
<PAGE>
FEDERAL BOND FUND
Managed by Timothy Policinski, Lincoln Investment Management Inc.
During the first half of fiscal 1997, good economic news has negatively affected
government bonds. Federal Bond Fund's total return for the six months ended
April 30, 1997, was +0.91% (capital change plus income for A Class shares at net
asset value).
Signs of a booming U.S. economy and the Federal Reserve Board's March 13
increase in short-term interest rates have led to lower long-term bond prices,
reducing the total return of government securities. The yield on 10-year U.S.
Treasury Notes as of April 30, 1997, stood at 6.71%, some 40 basis points
(0.40%) higher than six months earlier.
The big question facing bond investors is how long can inflation remain
benign. The nation's output of goods and services has been growing at an
above-average pace since autumn, and America's unemployment rate has been low.
Ordinarily these are signals that inflation could accelerate.
A positive piece of news that could help keep inflation in check is that
Washington is finally making progress on reducing deficit spending. The strong
economy has led to higher than expected federal tax revenues. Accordingly, many
estimates of the deficit for the government's 1997 fiscal year have dropped to
less than $100 billion.
At the start of its fiscal year, your Fund's effective duration was
slightly longer than that of our benchmark, the Lehman Brothers Government Bond
Index. This helped us during the autumn bond market rally. Duration measures a
bond's sensitivity to interest rates and indicates the likely change in a bond's
price given a 1% change in interest rates. In March, in an effort to preserve
principal, the Fund strategically increased its cash holdings and reduced
duration to a level modestly shorter than our benchmark.
We expect long-term yields for government bonds to generally remain in a
range of 6.25% to 6.88% for the balance of 1997, although we believe it is
possible yields could dip to as low as 5.75% if the economy grows weak, or rise
to as much as 7.38% should inflation accelerate and the Fed tightens credit more
than two or three times.
PORTFOLIO HIGHLIGHTS
- ----------------------------------------------------
April 30, 1997
- ----------------------------------------------------
Average Effective Maturity 10.4 years
Average Effective Duration 4.6 years
Average Quality AAA
30-Day Annualized Yield* 5.44%
*FOR CLASS A SHARES BASED ON SECURITIES AND EXCHANGE COMMISSION GUIDELINES.
SEC YIELDS FOR B AND C CLASSES WERE 4.73% AND 4.65%, RESPECTIVELY.
12 1997 semi-annual report
<PAGE>
COMPARATIVE RETURNS FOR THE
SIX MONTHS ENDED APRIL 30, 1997
Federal Bond Fund A* +0 91%
Lehman Brothers Government Bond Index +1.32%
Lipper General U.S. Government Bond Fund Average (186 funds) +1.11%
As always, Federal Bond Fund seeks to provide income from specific sectors of
the government bond market - such as mortgage securities - which we believe can
provide additional yield and value without a substantial increase in risk to
principal.
*AT NET ASSET VALUE WITH DISTRIBUTIONS REINVESTED. PAST PERFORMANCE DOES NOT
GUARANTEE FUTURE RESULTS. PERFORMANCE OF OTHER FUND CLASSES VARIES DUE TO
DIFFERENT CHARGES AND EXPENSES.
FEDERAL BOND FUND PERFORMANCE
Average Annual Return Through April 30, 1997
- -----------------------------------------------------------------------
LIFETIME ONE YEAR
- -----------------------------------------------------------------------
Class A (Est. 12/3/93)
Excluding Sales Charge +3.62% +5.26%
Including Sales Charge +2.15% +0.28%
- -----------------------------------------------------------------------
Class B (Est. 5/11/94)
Excluding Sales Charge +5.36% +4.58%
Including Sales Charge +4.37% +0.58%
- -----------------------------------------------------------------------
Class C (Est. 9/14/94)
Excluding Sales Charge +4.90% +4.52%
Including Sales Charge +4.90% +3.52%
- -----------------------------------------------------------------------
ALL PERFORMANCE INCLUDES REINVESTMENT OF DISTRIBUTIONS AND APPLICABLE SALES
CHARGES AS DESCRIBED BELOW. RETURN AND SHARE VALUE WILL FLUCTUATE SO THAT SHARES
WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST. PAST PERFORMANCE
IS NOT A GUARANTEE OF FUTURE RESULTS. PERFORMANCE FOR CLASS B AND C SHARES
"EXCLUDING SALES CHARGE" ASSUMES THE INVESTMENT WAS NOT REDEEMED.
CLASS A SHARES HAVE A 4.75% MAXIMUM FRONT-END SALES CHARGE AND A 12B-1 FEE.
CLASS B SHARES DO NOT CARRY A FRONT-END SALES CHARGE, BUT ARE SUBJECT TO A 1%
ANNUAL DISTRIBUTION AND SERVICE FEE. THEY ARE ALSO SUBJECT TO A DEFERRED SALES
CHARGE IF REDEEMED BEFORE THE END OF THE SIXTH YEAR.
CLASS C SHARES HAVE A 1% ANNUAL DISTRIBUTION AND SERVICE FEE. IF SHARES ARE
REDEEMED WITHIN 12 MONTHS, A 1% CONTINGENT DEFERRED SALES CHARGE APPLIES.
THE AVERAGE ANNUAL TOTAL RETURNS FOR THE LIFETIME AND ONE-YEAR PERIODS AND
AGGREGATE SIX-MONTH RETURN FOR THE PERIOD ENDED APRIL 30, 1997, FOR FEDERAL BOND
FUND'S INSTITUTIONAL CLASS WERE +2.98%, +5.54% AND +1.02%. THIS CLASS WAS
INITIALLY OFFERED FEBRUARY 3, 1994, AND IS AVAILABLE WITHOUT SALES OR
ASSET-BASED DISTRIBUTION CHARGES ONLY TO INSTITUTIONAL ACCOUNTS.
1997 semi-annual report 13
<PAGE>
Financial Statements
DELAWARE GROUP ADVISER FUNDS, INC.
ENTERPRISE FUND
STATEMENT OF NET ASSETS
APRIL 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
NUMBER MARKET
OF SHARES VALUE
------------------------
COMMON STOCK - 92.54%
AUTOMOBILES & AUTO PARTS - 1.98%
*Tower Automotive ............................ 15,500 $ 573,500
----------
573,500
----------
BANKING, FINANCE & INSURANCE - 8.18%
Charter One Financial ....................... 3,225 143,714
Conseco ..................................... 20,600 852,325
ReliaStar Financial ......................... 4,900 296,450
UNUM ........................................ 5,900 454,300
Washington Mutual ........................... 12,600 620,550
----------
2,367,339
----------
CABLE, MEDIA, & PUBLISHING - 3.54%
*American Radio Systems ...................... 3,600 105,300
*Evergreen Media Class A ..................... 17,100 552,544
*SFX Broadcasting Class A .................... 11,700 367,081
----------
1,024,925
----------
CHEMICALS - 3.12%
Crompton & Knowles .......................... 26,300 572,025
IMC Fertilizer Group ........................ 9,000 331,875
----------
903,900
----------
COMPUTERS & TECHNOLOGY - 10.23%
*Adaptec ..................................... 17,400 644,888
*BMC Software ................................ 12,500 539,844
*Cadence Design Systems ...................... 8,725 279,200
*Hyperion Software ........................... 11,600 187,050
*Parametric Technology ....................... 9,800 442,838
*Sterling Commerce ........................... 9,800 253,575
*Storage Technology .......................... 14,800 519,850
*Xircom ...................................... 10,100 94,056
----------
2,961,301
----------
ELECTRONICS & ELECTRICAL - 8.24%
*Altera ...................................... 9,900 490,669
*Etec Systems ................................ 17,800 515,088
*LSI Logic ................................... 17,400 665,550
*Xilinx ...................................... 14,600 714,488
----------
2,385,795
----------
ENERGY - 15.59%
*BJ Services ................................. 19,500 918,938
*Benton Oil & Gas ............................ 21,200 310,050
*Diamond Offshore Drilling ................... 10,880 700,400
*ENSCO International ......................... 12,800 608,000
*Nabors Industries ........................... 11,700 219,375
Sun ......................................... 16,800 459,900
Transocean Offshore ......................... 10,800 654,750
*Triton Energy ............................... 10,200 374,850
*United Meridian ............................. 9,500 269,563
----------
4,515,826
----------
- ---------------------
Top 10 holdings, representing 24.09% of net assets, are in bold face.
<PAGE>
- --------------------------------------------------------------------------------
NUMBER MARKET
OF SHARES VALUE
------------------------
COMMON STOCK (CONTINUED)
FARMING & AGRICULTURE - 3.33%
Delta and Pine Land ............................. 9,067 $ 226,667
Dole Food ....................................... 11,200 456,400
Pioneer Hi-Bred International ................... 4,000 282,500
----------
965,567
----------
FOOD, BEVERAGE & TOBACCO - 5.23%
CKE Restaurants ................................. 25,800 506,325
Coca-Cola Enterprises ........................... 8,500 513,188
Flowers Industries .............................. 20,300 494,813
----------
1,514,326
----------
HEALTHCARE & PHARMACEUTICALS - 12.12%
*Biochem Pharma ................................. 33,100 595,800
*Biogen ......................................... 9,400 301,975
*Centocor ....................................... 17,300 487,644
*HEALTHSOUTH .................................... 23,200 458,200
*Liposome ....................................... 17,500 388,281
*MedPartners .................................... 25,894 472,566
*Sangstat Medical ............................... 2,500 43,125
*VISX ........................................... 10,600 240,488
*Vencor ......................................... 12,500 520,313
----------
3,508,392
----------
INDUSTRIAL MACHINERY - 1.64%
Harnischfeger Industries ........................ 11,400 474,525
----------
474,525
----------
LEISURE, LODGING, & ENTERTAINMENT - 1.58%
HASBRO .......................................... 18,350 458,750
----------
458,750
----------
METALS AND MINING - 1.88%
Potash Corporation of Saskatchewan .............. 7,100 545,813
----------
545,813
----------
RETAIL - 7.84%
Claire's Stores ................................. 19,200 367,200
*Corporate Express ............................... 15,800 156,025
Dollar General .................................. 13,050 412,706
*Samsonite ....................................... 9,200 379,500
*Stage Stores .................................... 17,600 371,800
*Zale ............................................ 31,500 582,750
----------
2,269,981
----------
TELECOMMUNICATIONS - 2.99%
*Brooks Fiber Properties ......................... 8,300 181,563
*Colt Telecommunications Group-ADR ............... 5,300 95,731
*McLeod Class A .................................. 11,100 205,350
*QUALCOMM ........................................ 8,200 382,325
----------
864,969
----------
TEXTILES, APPAREL, & FURNITURE - 2.26%
*Lear ............................................ 10,600 378,950
*Tommy Hilfiger .................................. 6,900 274,275
----------
653,225
----------
14 1997 semi-annual report
<PAGE>
ENTERPRISE FUND (Continued)
STATEMENT OF NET ASSETS (Continued)
- --------------------------------------------------------------------------------
NUMBER MARKET
OF SHARES VALUE
------------------------
COMMON STOCK (CONTINUED)
TRANSPORTATION & SHIPPING - 2.79%
Tidewater ..................................... 11,200 $ 449,400
*Wisconsin Central Transportation .............. 11,000 358,875
----------
808,275
----------
Total Common Stock (cost $23,780,303) .......... 26,796,409
----------
PRINCIPAL
AMOUNT
REPURCHASE AGREEMENTS - 7.31%
With J.P. Morgan Securities 5.40%
05/01/97 (dated 04/30/97,
to be repurchased at $460,090,
collateralized by $460,000 U.S.
Treasury Notes 8.625% due 08/15/97,
market value $471,746) ........................ $ 460,000 460,000
With Prudential Securities 5.40%
05/01/97 (dated 04/30/97,
to be repurchased at $312,342,
collateralized by $311,000 U.S. Treasury
Notes 6.125% due 05/31/97,
market value $319,119) ........................ 312,220 312,000
With Prudential Securities 5.40%
05/01/97 (dated 04/30/97,
to be repurchased at $461,479,
collateralized by $460,000 U.S. Treasury
Notes 6.125% due 05/31/97,
market value $471,442) ........................ 462,000 462,000
With PaineWebber Securities 5.40%
05/01/97 (dated 04/30/97,
to be repurchased at $210,864,
collateralized by $210,000 U.S. Treasury
Notes 6.000% due 11/30/97,
market value $215,254) ........................ 211,000 211,000
With J.P. Morgan Securities 5.40%
05/01/97 (dated 04/30/97,
to be repurchased at $211,158,
collateralized by $218,000 U.S. Treasury
Notes 5.125% due 04/30/98,
market value $216,602) ........................ 211,000 211,000
With PaineWebber Securities 5.40%
05/01/97 (dated 04/30/97,
to be repurchased at $230,192,
collateralized by $231,000 U.S. Treasury
Notes 6.875% due 03/31/00,
market value $234,799) ........................ 230,000 230,000
With PaineWebber Securities 5.40%
05/01/97 (dated 04/30/97,
to be repurchased at $230,192,
collateralized by $231,000 U.S. Treasury
Notes 6.875% due 03/31/00,
market value $234,799) ........................ 230,000 230,000
----------
Total Repurchase Agreements
(cost $2,116,000) ............................. 2,116,000
----------
<PAGE>
- --------------------------------------------------------------------------------
MARKET
VALUE
--------------
TOTAL MARKET VALUE OF SECURITIES - 99.85%
(cost $25,896,303) ......................................... $ 28,912,409
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 0.15% ................................. 44,520
------------
NET ASSETS APPLICABLE TO 2,358,292
SHARES ($.01 PAR VALUE)
OUTSTANDING - 100.00% ...................................... $ 28,956,929
============
NET ASSET VALUE - ENTERPRISE FUND A CLASS
($19,455,188 / 1,594,387 shares) ........................... $ 12.20
============
(MAXIMUM OFFERING PRICE $12.20/.9525 = $12.81)
NET ASSET VALUE - ENTERPRISE FUND B CLASS
($2,345,967 / 182,211 shares) .............................. $ 12.87
============
(subject to a contingent deferred sales charge which
varies from 1%-4% depending upon the holding period)
NET ASSET VALUE - ENTERPRISE FUND C CLASS
($162,137 / 12,345 shares) ................................. $ 13.13
============
(subject to a contingent deferred sales charge
of 1% depending upon the holding period)
NET ASSET VALUE - ENTERPRISE FUND INSTITUTIONAL CLASS
($6,993,637 / 569,349 shares) .............................. $ 12.28
============
COMPONENTS OF NET ASSETS AT APRIL 30, 1997:
Common stock $.01 par value,
70,000,000 shares authorized to the
Enterprise Fund with 20,000,000 shares
allocated to the Enterprise Fund A Class,
20,000,000 shares allocated to the
Enterprise Fund B Class, 15,000,000
shares allocated to the Enterprise Fund C
Class and 15,000,000 shares allocated to the
Enterprise Fund Institutional Class ......................... $ 24,666,668
Accumulated undistributed:
Net realized gain on investments ............................ 1,431,576
Net investment loss ......................................... (157,421)
Net unrealized appreciation of investments .................. 3,016,106
------------
Total Net Assets ............................................ $ 28,956,929
============
- ------------
*Non-income producing security
ADR - American Depository Receipt
See accompanying notes
1997 semi-annual report 15
<PAGE>
DELAWARE GROUP ADVISER FUNDS, INC.
U.S. GROWTH FUND
STATEMENT OF NET ASSETS
APRIL 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
NUMBER MARKET
OF SHARES VALUE
------------------------
COMMON STOCK - 97.04%
AEROSPACE & DEFENSE - 0.91%
Boeing ........................................ 3,200 $ 315,600
----------
315,600
----------
BANKING, FINANCE & INSURANCE - 10.78%
Chase Manhattan ............................... 15,000 1,389,375
Chubb ......................................... 8,900 513,975
Citicorp ...................................... 9,100 1,024,888
DEAN WITTER DISCOVER & CO ..................... 20,700 791,775
----------
3,720,013
----------
CHEMICALS - 1.55%
Monsanto ...................................... 12,500 534,375
----------
534,375
----------
COMPUTERS & TECHNOLOGY - 14.99%
*Cisco Systems ................................. 6,700 347,144
*Compaq Computer ............................... 18,100 1,545,283
First Data .................................... 35,087 1,210,508
*Microsoft ..................................... 11,600 1,410,125
*SunGuard Data Systems ......................... 14,900 662,119
----------
5,175,179
----------
CONSUMER PRODUCTS - 3.00%
Gillete ....................................... 12,200 1,037,000
----------
1,037,000
----------
ELECTRONICS & ELECTRICAL - 9.82%
Intel ......................................... 8,300 1,270,938
Nokia, Sponsored ADR .......................... 11,500 743,188
Texas Instruments ............................. 11,700 1,044,225
*Xilinx ........................................ 6,800 332,775
----------
3,391,126
----------
ENERGY - 4.46%
*Diamond Offshore Drilling ..................... 10,000 643,750
Schlumberger Limited .......................... 8,100 897,075
----------
1,540,825
----------
FOOD, BEVERAGE & TOBACCO - 5.41%
Coca-Cola Company ............................. 14,000 890,750
PepsiCo ....................................... 18,600 648,675
Philip Morris ................................. 8,300 326,813
----------
1,866,238
----------
HEALTHCARE - 6.10%
*Boston Scientific ............................. 11,700 564,525
*HEALTHSOUTH ................................... 18,400 363,400
Medtronic ..................................... 17,000 1,177,250
----------
2,105,175
----------
LEISURE, LODGING & ENTERTAINMENT - 4.28%
Walt Disney ................................... 18,000 1,476,000
----------
1,476,000
----------
MISCELLANEOUS - 1.86%
*CUC International ............................. 30,400 642,200
----------
642,200
----------
- ----------
Top 10 holdings, representing 41.62% of net assets, are in bold face.
<PAGE>
- --------------------------------------------------------------------------------
NUMBER MARKET
OF SHARES VALUE
------------------------
COMMON STOCK (CONTINUED)
PAPER & FOREST PRODUCTS - 1.50%
Kimberly-Clark ................................ 10,100 $ 517,625
----------
517,625
----------
PHARMACEUTICALS - 21.45%
Amgen ......................................... 12,300 723,394
*Biochem Pharma ................................ 26,600 478,800
Eli Lilly & Company ........................... 19,200 1,687,200
*Forest Laboratories ........................... 21,300 726,863
Merck & Company ............................... 16,600 1,502,300
Pfizer ........................................ 9,100 873,600
Warner-Lambert ................................ 14,400 1,411,200
----------
7,403,357
----------
RETAIL - 2.71%
Dollar General ................................ 14,750 466,469
Gap ........................................... 14,700 468,563
----------
935,032
----------
TELECOMMUNICATIONS - 1.83%
*QUALCOMM ...................................... 5,800 270,426
WorldCom ...................................... 15,100 361,456
----------
631,882
----------
TEXTILES, APPAREL & FURNITURE - 2.15%
Gucci Group N.V ............................... 10,700 742,313
----------
742,313
----------
TRAVEL & FINANCIAL SERVICES - 4.24%
American Express .............................. 22,200 1,462,425
----------
1,462,425
----------
Total Common Stock (cost $29,020,320) .......... 33,496,365
----------
PRINCIPAL
AMOUNT
REPURCHASE AGREEMENTS - 2.94%
With J.P. Morgan Securities 5.40%
05/01/97 (dated 04/30/97,
to be repurchased at $220,478,
collateralized by $220,000 U.S.
Treasury Notes 8.625% due 08/15/97,
market value $226,063) .......................... $221,000 221,000
With Prudential Securities 5.40%
05/01/97 (dated 04/30/97,
to be repurchased at $149,676,
collateralized by $149,000 U.S. Treasury
Notes 6.125% due 05/31/97,
market value $152,924) .......................... 150,000 150,000
With Prudential Securities 5.40%
05/01/97 (dated 04/30/97,
to be repurchased at $221,143,
collateralized by $220,000 U.S. Treasury
Notes 6.125% due 05/31/97,
market value $225,918) .......................... 221,000 221,000
16 1997 semi-annual report
<PAGE>
U.S. GROWTH FUND (Continued)
STATEMENT OF NET ASSETS (Continued)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
------------------------
REPURCHASE AGREEMENTS (CONTINUED)
With PaineWebber Securities 5.40%
05/01/97 (dated 04/30/97, to be
repurchased at $101,048,
collateralized by $101,000 U.S. .............
Treasury Notes 6.000% due 11/30/97,
market value $103,151) ...................... $ 101,000 $ 101,000
With J.P. Morgan Securities 5.40%
05/01/97 (dated 04/30/97,
to be repurchased at $101,188,
collateralized by $105,000 U.S. Treasury
Notes 5.125% due 04/30/98,
market value $103,796) ...................... 101,000 101,000
With PaineWebber Securities 5.40%
05/01/97 (dated 04/30/97,
to be repurchased at $110,310,
collateralized by $111,000 U.S. Treasury
Notes 6.875% due 03/31/00,
market value $112,517) ...................... 110,000 110,000
With PaineWebber Securities 5.40%
05/01/97 (dated 04/30/97,
to be repurchased at $110,310,
collateralized by $111,000 U.S. Treasury
Notes 6.875% due 03/31/00,
market value $112,517) ...................... 110,000 110,000
-----------
Total Repurchase Agreements
(cost $1,014,000) ........................... 1,014,000
-----------
TOTAL MARKET VALUE OF SECURITIES - 99.98%
(cost $30,034,320) .......................... 34,510,365
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 0.02% ................... 5,697
-----------
NET ASSETS APPLICABLE TO 2,527,786 SHARES
($.01 PAR VALUE) OUTSTANDING - 100.00% ...... $34,516,062
===========
<PAGE>
NET ASSET VALUE - U.S. GROWTH FUND A CLASS
($20,183,088 / 1,483,488 shares) ........................... $ 13.61
============
(MAXIMUM OFFERING PRICE $13.61 / .9525 = $14.29)
NET ASSET VALUE - U.S. GROWTH FUND B CLASS
($1,080,326 / 81,033 shares) ............................... $ 13.33
============
(subject to a contingent deferred sales charge which
varies from 1%-4% depending upon the holding period)
NET ASSET VALUE - U.S. GROWTH FUND C CLASS
($98,594 / 7,066 shares) ................................... $ 13.95
============
(subject to a contingent deferred sales charge
of 1% depending upon the holding period)
NET ASSET VALUE - U.S. GROWTH FUND INSTITUTIONAL CLASS
($13,154,054 / 956,199 shares) ............................. $ 13.76
============
COMPONENTS OF NET ASSETS AT APRIL 30, 1997:
Common stock $.01 par value, 70,000,000 shares
authorized to the U.S. Growth Fund with 20,000,000
shares allocated to the U.S. Growth Fund A Class,
20,000,000 shares allocated to the U.S. Growth Fund B
Class, 15,000,000 shares allocated to the U.S. Growth
Fund C Class and 15,000,000 shares allocated to the
U.S. Growth Fund Institutional Class ....................... $ 28,310,914
Accumulated undistributed:
Net Investment loss ......................................... (77,857)
Net realized gain on investments ............................ 1,806,960
Net unrealized appreciation of investments .................. 4,476,045
------------
Total Net Assets ............................................ $ 34,516,062
============
- ----------------
*Non-income producing security
ADR - American Depository Receipt
See accompanying notes
1997 semi-annual report 17
<PAGE>
DELAWARE GROUP ADVISER FUNDS, INC.
WORLD GROWTH FUND
STATEMENT OF NET ASSETS
APRIL 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
NUMBER MARKET
OF SHARES VALUE
------------------------
COMMON STOCK - 88.70%
AUSTRALIA - 2.87%
Woodside Petroleum, Ltd .................... 60,000 $ 477,819
----------
477,819
----------
CHILE - 2.46%
Embotelladora Andina SA, ADR ............... 10,300 206,000
Embotelladora Andina SA, ADR-B ............. 10,300 202,138
----------
408,138
----------
DENMARK - 2.10%
Sophus Berendsen, Class B .................. 2,860 347,520
----------
347,520
----------
FRANCE - 3.43%
Brioche Pasquier SA ........................ 2,000 232,953
Castorama Dubois Investissem ............... 2,268 335,755
----------
568,708
----------
GERMANY - 15.20%
Adidas ..................................... 6,000 622,579
Bien-Haus .................................. 600 176,889
Dyckerhoff Preferred Shares ................ 877 309,249
Gea ........................................ 790 278,571
Heidelberger Zement German ................. 3,300 268,975
Kampa ...................................... 5,256 197,491
Moebel Walther ............................. 6,250 289,034
Spar Handels ............................... 18,000 234,118
Westag and Getalit ......................... 750 143,505
----------
2,520,411
----------
JAPAN - 33.02%
Chain Store Okuwa .......................... 17,000 168,582
Daifuko .................................... 24,000 275,775
Familymart ................................. 8,360 305,950
Fanuc Company .............................. 7,000 238,549
Fuji Machine Manufacturing ................. 11,000 309,932
Fujimi ..................................... 7,150 377,027
Futaba Industrial .......................... 18,000 273,414
Ito-Yokado,Ltd ............................. 6,000 287,581
Joyfull Company ............................ 24,000 264,442
Kubota ..................................... 30,000 138,360
Kyocera .................................... 4,000 239,257
Misumi ..................................... 9,000 154,415
Nippon Kanzai .............................. 10,368 183,598
Nippon Telegraph & Telephone ............... 35 246,537
Promise .................................... 7,000 289,234
Rohm ....................................... 6,000 464,663
Shimano .................................... 8,000 134,740
Sankyo ..................................... 13,900 371,950
Secom ...................................... 5,000 297,104
Shimachu ................................... 8,000 192,035
Tokio Marine & Fire Insurance .............. 27,000 263,498
----------
5,476,643
----------
- -------------------
Top 10 holdings, representing 30.86% of net assets, are in bold
<PAGE>
- --------------------------------------------------------------------------------
NUMBER MARKET
OF SHARES VALUE
------------------------
COMMON STOCK - (CONTINUED)
NETHERLANDS - 8.38%
IHC Caland ..................................... 10,000 $ 494,271
Koninklijke Ahold .............................. 9,338 638,110
PolyGram ....................................... 5,250 257,604
----------
1,389,985
----------
NORWAY - 5.99%
*Petroleum Geo-Services ASA .................... 12,000 468,882
Saga Petroleum ASA ............................ 30,000 524,962
----------
993,844
----------
SINGAPORE/MALAYSIA - 6.59%
Carlsberg Brewery Malaysia ..................... 48,000 418,838
Clipsal Industries ............................. 115,000 450,800
R.J. Reynolds Berhad ........................... 110,000 223,524
----------
1,093,162
----------
SWEDEN - 3.36%
Ericsson (LM) Telephone (ordinary shares) ...... 17,600 556,763
----------
556,763
----------
UNITED KINGDOM - 5.30%
Cable & Wireless plc ........................... 48,000 370,685
RMC Group ...................................... 20,000 306,305
Redland ........................................ 35,519 201,902
----------
878,892
----------
Total Common Stock
(cost $12,915,632) ............................. 14,711,885
----------
PRINCIPAL
AMOUNT
CURRRENCY PUT OPTIONS - 3.39%
German Deutsche Marks 01/23/98
(Strike Price 1.64 ) ...................... 300,000 15,960
German Deutsche Marks 04/09/98
(Strike Price 1.72) ....................... 2,300,000 58,190
Japanese Yen 12/08/98
(Strike Price 113.00) ..................... 3,500,000 362,600
Japanese Yen 04/09/98
(Strike Price 127.00) ..................... 1,200,000 26,040
Japanese Yen 06/23/97
(Strike Price 109.00) ..................... 700,000 98,700
---------
Total Currency Put Options
(cost $205,125) ........................... 561,490
---------
18 1997 semi-annual report
<PAGE>
WORLD GROWTH FUND
STATEMENT OF NET ASSETS
APRIL 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
------------------------
REPURCHASE AGREEMENTS - 8.00%
With Paine Webber Securities 5.40%
5/1/97 (dated 4/30/97, to be repurchased
at $131,019, collateralized
by $131,000 U.S. Treasury
Notes 6.00% due 11/30/97,
market value of $134,858) ..................... $ 131,000 $ 131,000
With JP Morgan Securities 5.40%
5/1/97 (dated 4/30/97, to be repurchased
at $132,020, collateralized by $132,000
U.S. Treasury Notes 5.125% due 04/30/98,
market value of $135,702) ..................... 132,000 132,000
With Paine Webber 5.40%
5/1/97 (dated 4/30/97, to be repurchased
at $146,021, collateralized by $146,000,
U.S. Treasury Notes 6.875% due 03/31/00,
market value of $147,103) ..................... 145,000 145,000
With Paine Webber 5.40%
5/1/97 (dated 4/30/97, to be repurchased
at $146,021, collateralized by $146,000,
U.S. Treasury Notes 6.875% due 03/31/00,
market value of $147,103) ..................... 145,000 145,000
With Prudential Securities 5.40%
5/1/97 (dated 4/30/97, to be repurchased
at $195,030, collateralized by $195,000
U.S. Treasury Notes 6.125% due 05/31/97,
market value of $199,930) ..................... 195,000 195,000
With Prudential Securities 5.40%
5/1/97 (dated 4/30/97, to be repurchased
at $288,043, collateralized by $288,000
U.S. Treasury Notes 6.125% due 05/31/97,
market value of $295,361) ..................... 288,000 288,000
With JP Morgan Securities 5.40%
5/1/97 (dated 4/30/97, to be repurchased
at $290,042, collateralized by $290,000
U.S. Treasury Notes 8.625% due 08/15/97,
market value of $295,621) ..................... 290,000 290,000
----------
Total Repurchase Agreements
(cost $1,326,000) ............................. 1,326,000
----------
<PAGE>
- --------------------------------------------------------------------------------
MARKET
VALUE
--------------
TOTAL MARKET VALUE OF SECURITIES - 100.09%
(cost $14,446,757) ........................................... $ 16,599,375
LIABILITIES NET OF RECEIVABLES
AND OTHER ASSETS - (0.09%) ................................... (14,136)
-------------
NET ASSETS APPLICABLE TO 1,390,836 SHARES
($.01 PAR VALUE) OUTSTANDING - 100.00% ....................... $16,585,239
============
NET ASSET VALUE - WORLD GROWTH FUND A CLASS
($15,103,052 / 1,257,748) .................................... $ 12.01
============
(MAXIMUM OFFERING PRICE $12.01 / .9525=$12.61)
NET ASSET VALUE - WORLD GROWTH FUND B CLASS
($1,313,649 / 118,245) ....................................... $ 11.11
============
(subject to a contingent deferred sales charge which varies
from 1%-4% depending upon the holding period)
NET ASSET VALUE - WORLD GROWTH FUND C CLASS
($119,372 / 10,730) .......................................... $ 11.13
============
(subject to a contingent deferred sales charge of 1%
depending upon the holding period)
NET ASSET VALUE - WORLD GROWTH FUND
INSTITUTIONAL CLASS
($49,166 / 4,113) ............................................ $ 11.95
============
COMPONENTS OF NET ASSETS AT APRIL 30, 1997:
Common stock $.01 par value, 70,000,000 shares
authorized to the World Growth Fund with 20,000,000
shares allocated to the World Growth Fund A Class,
20,000,000 shares allocated to the World Growth Fund
B Class, 15,000,000 shares allocated to the World Growth
Fund C Class and 15,000,000 shares allocated to the
World Growth Fund Institutional Class ........................ $ 14,162,839
Accumulated undistributed:
Net investment loss .......................................... (85,926)
Net realized gain on investments and foreign currencies ...... 355,708
Net unrealized appreciation of investments and
foreign currencies .......................................... 2,152,618
------------
Total Net Assets ............................................. $ 16,585,239
============
- ------------------
*Non-income producing security
ADR - American Depository Receipt
See accompanying notes
1997 semi-annual report 19
<PAGE>
DELAWARE GROUP ADVISER FUNDS, INC.
NEW PACIFIC FUND
STATEMENT OF NET ASSETS
APRIL 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
NUMBER MARKET
OF SHARES VALUE
------------------------
COMMON STOCK - 84.25%
AUSTRALIA - 4.49%
Amcor Limited ................................. 20,000 $ 131,728
National Foods ................................ 106,300 135,280
WMC Limited ................................... 80,336 476,690
----------
743,698
----------
CHINA - 6.97%
Guangdong Electric Power ...................... 219,000 246,239
*Guangshen Railway ............................. 399,000 190,576
*Huaneng Power International, ADR .............. 8,000 194,000
Shandong Huaneng Power Company ................ 22,000 255,750
*Want Want Holdings ............................ 80,000 267,200
----------
1,153,765
----------
HONG KONG - 12.56%
Aeon Credit Service ........................... 538,000 173,627
Asia Securities International ................. 765,000 328,358
Cheung Kong Holdings .......................... 20,000 175,563
China Overseas Land & Investment .............. 570,000 321,920
China Travel International Investment ......... 222,000 116,782
Founder Hong Kong Limited ..................... 396,000 253,043
*Hutchison Whampoa ............................. 29,000 215,258
Lai Sun Development ........................... 200,000 243,981
Peregrine Investment Holding .................. 161,000 247,325
----------
2,075,857
----------
INDIA - 5.26%
Arvind Mills Limited, GDR ..................... 23,000 105,800
CESC Limited, GDR ............................. 28,000 38,500
*Industrial Credit & Investment, GDR ........... 12,000 122,280
Larsen & Toubro, GDR .......................... 15,250 216,906
Reliance Industries, ADR ...................... 9,090 168,165
Steel Authority India, GDR .................... 17,000 149,175
*Videsh Sanchar Nigam Limited, GDR ............. 3,750 69,750
----------
870,576
----------
INDONESIA - 4.49%
PT Bimantara Citra ............................ 143,000 194,196
PT Bank Unum Nasional ......................... 150,000 106,481
PT Panin Bank ................................. 118,750 173,481
*PT Sierad Produca-Foreign ..................... 320,000 102,057
PT Tigaraksa Satria ........................... 125,000 167,180
----------
743,395
----------
JAPAN - 19.87%
ADO Electronic Industry ....................... 300 5,667
Aiwa Ltd. ..................................... 9,000 155,124
Autobacs Seven ................................ 1,000 66,504
Bank of Tokyo-Mitsubishi ...................... 12,000 189,832
Daiichi Pharmaceutical ........................ 10,000 160,554
Nippondenso ................................... 10,000 227,452
Hitachi Limited ............................... 16,000 144,814
Inaba Denkisangyo ............................. 5,000 77,522
Jusco ......................................... 6,000 184,165
Kawasaki ...................................... 36,000 141,949
Koito Manufacturing ........................... 27,000 163,624
Mitsui Fudosan ................................ 17,000 194,003
- ----------------------
Top 10 holdings, representing 19.06% of net assets, are in bold face.
<PAGE>
- --------------------------------------------------------------------------------
NUMBER MARKET
OF SHARES VALUE
------------------------
COMMON STOCK (CONTINUED)
JAPAN (CONTINUED)
NIFCO ......................................... 8,800 $ 84,496
Nippon Telegraph & Telephone .................. 21 147,922
ONO Pharmaceutical ............................ 6,000 169,998
Ricoh ......................................... 17,000 202,031
Seven Eleven Japan ............................ 3,000 190,068
Softbank ...................................... 3,250 190,560
Sony .......................................... 2,500 181,804
Suzuki Motor .................................. 16,000 169,998
Yamaha ........................................ 12,000 241,776
----------
3,289,863
----------
PAKISTAN - 0.43%
*Pakistan Telecommunications, GDR .............. 1,068 71,022
----------
71,022
----------
PHILIPPINES - 2.77%
*DMCI Holdings ................................. 180,000 92,150
Picop Resources ............................... 137,500 20,075
Sime Darby Pilipinas .......................... 170,000 244,975
Universal Rightfield Property Holdings ........ 1,007,000 101,196
----------
458,396
----------
SINGAPORE/MALAYSIA - 15.16%
ACMA .......................................... 48,800 81,266
Advance Synergy Berhad ........................ 160,000 209,100
Hong Leong Properties ......................... 153,000 208,487
Kumpulan Guthrie .............................. 140,000 216,432
Land & General Holdings ....................... 92,000 125,365
Malaysian Resources ........................... 62,000 177,863
MBF Capital-Berhad, GDR ....................... 136,000 201,578
Multi-Purpose Holdings ........................ 240,000 250,824
*Overseas Chinese Banking ...................... 18,000 210,199
Rashid Hussain ................................ 27,000 179,656
Roly International Holdings ................... 226,000 98,310
Sembawang ..................................... 50,000 215,934
Van Der Hors .................................. 54,000 155,224
YTL Power ..................................... 113,000 180,094
----------
2,510,332
----------
SOUTH KOREA - 4.01%
Dong-Ah Construction, EDR ..................... 8,000 67,800
*Electronic Compo-Semicon ...................... 3,910 121,422
Korea Electric Power .......................... 3,850 114,810
Mirae ......................................... 660 167,960
S1 ............................................ 330 86,200
Samchully ..................................... 1,389 105,888
----------
664,080
----------
TAIWAN - 0.91%
*Acer, GDR ..................................... 12,384 150,775
----------
150,775
----------
THAILAND - 7.33%
Banpu Public .................................. 9,400 152,588
First Bangkok City Bank ....................... 82,340 68,564
First Bangkok City Bank, plc .................. 56,660 47,181
IFTCT Finance & Securities, plc ............... 60,000 22,741
Italian-Thai Development ...................... 46,000 154,977
20 1997 semi-annual report
<PAGE>
NEW PACIFIC FUND (Continued)
STATEMENT OF NET ASSETS (Continued)
- --------------------------------------------------------------------------------
NUMBER MARKET
OF SHARES VALUE
------------------------
COMMON STOCK (CONTINUED)
THAILAND (CONTINUED)
Property Perfect Public ......................... 41,000 $ 37,672
Shinawatra Computer ............................. 23,000 156,737
Siam Cement ..................................... 5,500 147,397
Siam City Public Bank ........................... 200,700 163,280
Singer Thailand ................................. 31,200 142,144
United Communication ............................ 21,000 120,597
----------
1,213,878
----------
Total Common Stock (cost $14,425,967) ........... 13,945,637
----------
INVESTMENT COMPANIES - 3.08%
*Taipei Fund ..................................... 44 510,400
----------
Total Investment Companies
(cost $371,759) ................................ 510,400
----------
WARRANTS/
RIGHTS
WARRANTS & RIGHTS - 0.19%
*ACMA Warrants 7/24/01 .......................... 7,200 3,881
*China Travel International Warrants 6/30/98 ..... 6,400 1,859
*Far East Bank & Trust Rights 12/26/97 ........... 746 16,069
*Lai Sun Hotels International Warrants 4/30/99 ... 30,120 2,877
*Nankai Warrants 12/2/97 ........................ 25 1,250
*Optec Warrants 2/8/00 .......................... 20 4,125
*Oriental Press Group Warrants 10/2/98 ........... 44,200 1,709
----------
Total Warrants & Rights (cost $44,199) .......... 31,770
----------
PRINCIPAL
AMOUNT
CONVERTIBLE BONDS - 0.34%
Yangming Marine Transport 2.00% 10/06/01 ........... $ 49,000 55,738
----------
Total Convertible Bonds (cost $51,446) ............. 55,738
----------
REPURCHASE AGREEMENTS - 9.53%
With Paine Webber Securities 5.40%
05/01/97 (dated 4/30/97, to be
repurchased at $156,023,
collateralized by $156,000 U.S Treasury
Notes 6.00% due 11/30/97,
market value $160,612) ........................... 156,000 156,000
With JP Morgan Securities 5.40%
05/01/97 (dated 4/30/97, to be repurchased
at $156,023, collateralized by $156,000
U.S Treasury Notes 5.125% due 4/30/98,
market value $161,618 ............................ 156,000 156,000
With Paine Webber Securities 5.40%
05/01/97(dated 4/30/97, to be repurchased
at $174,026, collateralized by $174,000
U.S Treasury Notes 6.875% due 3/31/00,
market value $175,196 ) ........................... 174,000 174,000
With Paine Webber Securities 5.40%
05/01/97(dated 4/30/97, to be repurchased
at $174,026, collateralized by $174,000
U.S Treasury Notes 6.875% due 3/31/00,
market value $175,196) ........................... 174,000 174,000
<PAGE>
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
------------------------
REPURCHASE AGREEMENTS (CONTINUED)
With Prudential Securities 5.40%
05/01/97(dated 4/30/97, to be
repurchased at $229,034, collateralized by
$229,000 U.S Treasury Notes 6.125% due 5/31/97,
market value $238,112 ............................. $ 229,000 $ 229,000
With Prudential Securities 5.40%
05/01/97(dated 4/30/97, to be repurchased
at $343,051, collateralized by $343,000
U.S Treasury Notes 6.125% due 5/31/97,
market value $351,768) ........................... 343,000 343,000
With JP Morgan Securities 5.40%
05/01/97(dated 4/30/97, to be repurchased
at $346,051, collateralized by $346,000
U.S Treasury Notes 8.625% due 8/15/97,
market value $351,803) ........................... 346,000 346,000
----------
Total Repurchase Agreements
(cost $1,578,000) ................................ 1,578,000
----------
TOTAL MARKET VALUE OF SECURITIES
(cost $16,471,371) - 97.39% ................................. 16,121,545
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 2.61% ................................... 432,232
------------
NET ASSETS APPLICABLE TO 1,711,347 SHARES
($.01 PAR VALUE) OUTSTANDING - 100.00% ....................... $ 16,553,777
============
NET ASSET VALUE - NEW PACIFIC FUND A CLASS
($15,042,839 / 1,558,196 shares) ............................ $ 9.65
============
(MAXIMUM OFFERING PRICE $9.65 / .9525= $10.13)
NET ASSET VALUE - NEW PACIFIC FUND B CLASS
($1,347,081 / 136,335 shares) ............................... $ 9.88
============
(subject to a contingent deferred sales charge which varies
from 1%-4% depending upon the holding period)
NET ASSET VALUE - NEW PACIFIC FUND C CLASS
($70,856 / 7,316 shares) .................................... $ 9.69
============
(subject to a contingent deferred sales
charge of 1% depending upon the holding period)
NET ASSET VALUE - NEW PACIFIC FUND INSTITUTIONAL CLASS
($93,001 / 9,500 shares) .................................... $ 9.79
============
COMPONENTS OF NET ASSETS AT APRIL 30, 1997
Common Stock $.01 par value, 70,000,000
shares authorized to the New Pacific Fund
with 20,000,000 shares allocated to the
New Pacific Fund A Class, 20,000,000 shares
allocated to the New Pacific Fund B Class,
15,000,000 shares allocated to the New Pacific Fund
C Class and 15,000,000 shares allocated to the
New Pacific Fund Institutional Class ......................... $ 16,799,564
Accumulated undistributed:
Net investment income ........................................ 2,413
Net realized gain on investments and foreign currencies ...... 101,120
Net unrealized depreciation of investments and foreign
currencies ................................................... (349,320)
------------
Total Net Assets .............................................. $ 16,553,777
============
- ------------
*Non-income producing security
ADR-American Depository Receipt
GDR-Global Depository Receipt
See accompanying notes
1997 semi-annual report 21
<PAGE>
DELAWARE GROUP ADVISER FUNDS, INC.
CORPORATE INCOME FUND
STATEMENT OF NET ASSETS
APRIL 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
------------------------
CORPORATE BONDS - 76.97%
AUTOMOBILE & AUTO EQUIPMENT - 3.16%
Chrysler 7.45% 02/01/97 ....................... $ 400,000 $ 382,500
Goodyear Tire & Rubber 6.63% 12/01/06 .......... 250,000 237,813
----------
620,313
----------
BANKING, FINANCE & INSURANCE - 29.82%
American Express 8.50% 08/15/01 ................ 200,000 211,500
AT&T Capital 7.47% 05/11/05 .................... 250,000 250,000
Barnett Capital Trust. 8.06% 12/01/26 .......... 200,000 195,250
Bear Stearns Capital Trust 7.00% 01/15/27 ...... 200,000 193,240
CIT Group Holdings 5.88% 10/15/08 .............. 250,000 223,438
Citicorp Notes 6.33% 01/05/06 .................. 200,000 188,250
Den Norske Bank 5.75% 11/29/49 ................. 200,000 177,170
Dow Capital 9.00% 05/15/10 ..................... 155,000 171,663
First Bank System 6.88% 09/15/07 ............... 250,000 241,563
First Nationwide Escrow 10.63% 10/01/03 ........ 150,000 160,125
First Security 7.00% 07/15/05 .................. 250,000 245,625
Ford Motor Credit 7.25% 05/15/99 ............... 340,000 345,100
Heller Financial 5.63% 03/15/00 ................ 100,000 97,125
International Lease Finance 8.25% 01/15/00 ..... 250,000 259,063
John Deere Capital 8.63% 08/01/19 .............. 100,000 105,125
Lloyd's Bank PLC 5.83% 08/29/49 ................ 200,000 179,070
Lehman Brothers Holdings 8.88% 03/01/02 ........ 300,000 320,250
Mellon Capital Notes 7.72% 12/01/26 ............ 200,000 189,000
Morgan Stanley Group 6.88% 03/01/07 ............ 400,000 390,000
NationsBank 6.62% 01/15/98 ..................... 220,000 220,999
Smith Barney Holdings 7.88% 10/01/99 ........... 100,000 102,750
Societe Generale-NY Notes 7.40% 06/01/06 ....... 100,000 99,750
SouthTrust Bank of Birmingham
7.69% 05/15/25 ............................... 250,000 258,750
State Street Capital 8.04% 03/15/27 ............ 250,000 195,750
Transamerica Financial 6.80% 03/15/99 .......... 150,000 150,750
Union Bank Switzerland 7.25% 07/15/06 .......... 500,000 500,000
Wachovia Capital 7.64% 01/15/27 ................ 200,000 189,250
----------
5,860,556
----------
CABLE, MEDIA & PUBLISHING - 2.83%
Comcast Cable 8.88% 05/01/17 ................... 150,000 151,125
K-III Communications 8.50% 02/01/06 ............ 150,000 148,313
Rogers Cablesystems 10.00% 03/15/05 ............ 150,000 157,313
Viacom International 8.75% 05/15/01 ............ 100,000 100,125
----------
556,876
----------
CHEMICALS - 1.54%
ISP Holding Notes 9.00% 10/15/03 ............... 150,000 151,875
Sifto Canada 8.50% 07/15/00 .................... 150,000 150,375
----------
302,250
----------
ENERGY - 4.62%
Occidental Petroleum 10.13% 09/15/09 ........... 250,000 295,625
Pennzoil 10.13% 11/15/09 ...................... 290,000 340,388
Phillips Petroleum 9.18% 09/15/21 .............. 250,000 271,563
----------
907,576
----------
<PAGE>
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
------------------------
CORPORATE BONDS (CONTINUED)
FOOD, BEVERAGE & TOBACCO - 1.23%
Nabisco 7.55% 06/15/15 ........................ $ 250,000 $ 241,250
-----------
241,250
-----------
HEALTHCARE & PHARMACEUTICALS - 2.01%
Allegiance 7.30% 10/15/06 ..................... 250,000 246,563
Tenet Healthcare 8.00% 01/15/05 ................ 150,000 147,750
-----------
394,313
-----------
LEISURE, LODGING & ENTERTAINMENT - 1.17%
Darden Restaurants - 6.38% 02/01/06 ............ 250,000 229,688
-----------
229,688
-----------
METALS & MINING - 3.49%
Cyprus Amax Minerals 7.37% 05/15/07 ............ 250,000 247,188
Inco 9.60% 06/15/22 ........................... 100,000 108,000
Newmont Gold 8.91% 01/05/09 .................... 96,551 102,103
Placer Dome 7.31% 01/26/21 ..................... 250,000 229,063
-----------
686,354
-----------
PAPER & FOREST PRODUCTS - 2.12%
Georgia-Pacific 9.13% 07/01/22 ................. 400,000 417,500
-----------
417,500
-----------
RETAIL - 2.85%
Sears Roebuck 9.05% 02/06/12 ................... 500,000 560,000
-----------
560,000
-----------
TELECOMMUNICATIONS - 1.85%
Comsat 7.92% 03/20/07 ......................... 250,000 255,313
GTE 9.38% 12/01/00 ............................ 100,000 107,500
-----------
362,813
-----------
TEXTILES - 0.78%
Westpoint Stevens 8.75% 12/15/01 ............... 150,000 152,625
-----------
152,625
-----------
TRANSPORTATION & SHIPPING - 8.77%
Burlington Northern Railroad 6.94% 01/02/14 .... 245,925 239,325
Federal Express 7.96% 03/28/17 ................. 250,000 245,313
NWA Trust 10.23% 06/21/14 ..................... 237,692 263,244
Norfolk Southern 7.40% 09/15/06 ................ 500,000 498,125
United Air Lines 9.21% 01/21/17 ................ 450,000 477,590
-----------
1,723,597
-----------
UTILITIES - 10.73%
Great Lakes Power 9.00% 08/01/04 ............... 100,000 106,875
Houston Light & Power 8.26% 02/01/37 .......... 200,000 198,250
MidAmerican Energy 6.50% 12/15/01 .............. 250,000 245,000
Old Dominion Electric 8.76% 12/01/22 ........... 400,000 439,000
Pennsylvania Power & Light
7.70% 10/01/09 ............................... 200,000 204,250
Public Service Company of Colorado
7.13% 06/01/06 ............................... 250,000 248,125
Texas Gas Transmissions 8.63% 04/01/04 ......... 100,000 107,625
Texas Utilities 7.37% 11/01/99 ................. 450,000 456,750
Utilicorp United 8.45% 11/15/99 ................ 100,000 103,625
-----------
2,109,500
-----------
Total Corporate Bonds
(cost $15,179,762) ............................ 15,125,211
-----------
22 1997 semi-annual report
<PAGE>
CORPORATE INCOME FUND (Continued)
STATEMENT OF NET ASSETS (Continued)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
------------------------
FOREIGN BONDS - 2.07%
CANADA - 0.78%
Rogers Cantel 9.38% 06/01/08 ....................... $ 150,000 $ 153,750
----------
153,750
----------
MEXICO - 1.29%
United Mexican States 7.63% 08/06/01 ............... 250,000 253,438
----------
253,438
----------
Total Foreign Bonds (cost $407,188) ................ 407,188
----------
CORPORATE COLLATERALIZED
MORTGAGE OBLIGATIONS 1.27%
Green Tree Home Improvement
7.35% 7/15/21 .................................... 250,000 250,256
----------
Total Corporate Collateralized Mortgage Obligations
(cost $251,094) .................................. 250,256
----------
AGENCY OBLIGATIONS - 6.51%
Federal National Mortgage Association
6.66% 12/01/05 ................................... 296,273 292,570
Federal National Mortgage Association
7.04% 7/01/06 .................................... 297,835 296,861
Federal National Mortgage Association
7.15% 10/01/15 ................................... 241,540 236,400
Federal National Mortgage Association
7.00% 10/01/25 ................................... 466,806 453,532
----------
Total Agency Obligations (cost $1,298,599) ......... 1,279,363
----------
REPURCHASE AGREEMENTS - 10.82%
With Paine Webber Securities 5.40% 5/01/97
(dated 4/30/97, to be repurchased at
$210,031 collateralized by $210,000
US Treasury Notes 6.00% due 11/30/97,
market value $215,399) ........................... 210,000 210,000
With JP Morgan Securities 5.40%
5/01/97 (dated 4/30/97, to be repurchased
at $213,032, collateralized by $213,000
US Treausury Notes 5.125% due
4/30/98, market value $216,748) ................... 213,000 213,000
With Paine Webber Securitites 5.40%
05/01/97 (dated 4/30/97), to be repurchased
at $234,035, collateralized by $234,000
US Treasury Notes 6.875% due
3/31/00, market value $234,957) ................... 234,000 234,000
With Paine Webber Securitites 5.40%
05/01/97 (dated 4/30/97), to be repurchased
at $234,035, collateralized by $234,000
US Treasury Notes 6.875% due 3/31/00,
market value $234,957) ........................... 234,000 234,000
With Prudential Securities 5.40%
5/01/97 (dated 4/30/97, to be repurchased
at $311,047, collateralized by $311,000
US Treasury Notes 6.125% due
5/31/97, market value $319,334 ) .................. 311,000 311,000
<PAGE>
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
------------------------
REPURCHASE AGREEMENTS (CONTINUED)
With Prudential Securities 5.40% 05/01/97
(dated 4/30/97, to be repurchased at
460,068, collateralized by $460,000 US
Treasury Notes 6.125% due
5/31/97, market value $471,760) ................... $460,000 $460,000
With JP Morgan Securities 5.40%
05/01/97 (dated 4/30/97), to be repurchased
at $464,071, collateralized by $464,000
US Treasury Notes 8.625% due
8/15/97, market value $472,063) ................... 464,000 464,000
------------
Total Repurchase Agreements
(cost $2,126,000) ......................................... 2,126,000
------------
TOTAL MARKET VALUE OF SECURITIES -
(cost $19,262,643) - 97.64% ................................ 19,188,018
------------
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 2.36% .................................. 462,861
------------
NET ASSETS APPLICABLE TO 2,107,628 SHARES
($.01 PAR VALUE) OUTSTANDING - 100.00% ..................... $ 19,650,879
============
NET ASSET VALUE - CORPORATE INCOME FUND A CLASS
($12,968,686 / 1,378,087 shares) .......................... $ 9.41
============
(MAXIMUM OFFERING PRICE $9.41 / .9525=$9.88)
NET ASSET VALUE - CORPORATE INCOME FUND B CLASS
($177,851 / 17,536 shares) ................................ $ 10.14
============
(subject to a contingent deferred sales charge which
varies from 1%-4% depending on the holding period)
NET ASSET VALUE - CORPORATE INCOME FUND C CLASS
($71,645 / 7,075 shares) .................................. $ 10.13
============
(subject to a contingent deferred sales charge
of 1% depending upon the holding period)
NET ASSET VALUE - CORPORATE INCOME FUND
INSTITUTIONAL CLASS
($6,432,697 / 704,930 shares) ............................. $ 9.13
============
COMPONENTS OF NET ASSETS AT APRIL 30, 1997:
Common stock $.01 par value, 70,000,000 shares
authorized to the Corporate Income Fund with
20,000,000 shares allocated to the Corporate
Income Fund A Class, 20,000,000 shares allocated
to the Corporate Income Fund B Class,
15,000,000 shares allocated to the Corporate
Income Fund C Class and 15,000,000 shares allocated
to the Corporate Income Fund Institutional Class ........... $ 20,231,192
Accumulated undistributed:
Net investment income ....................................... 639
Net realized loss on investments ............................ (506,327)
Net unrealized depreciation of investments .................. (74,625)
------------
Total Net Assets ............................................ $ 19,650,879
============
See accompanying notes
1997 semi-annual report 23
<PAGE>
DELAWARE GROUP ADVISER FUNDS, INC.
FEDERAL BOND FUND
STATEMENT OF NET ASSETS
APRIL 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
------------------------
U.S. TREASURY OBLIGATIONS - 39.13%
U.S. Treasury Note 6.13% 12/31/01 .............. $1,500,000 $1,475,130
U.S. Treasury Note 5.13% 11/30/98 .............. 650,000 640,166
U.S. Treasury Note 6.50% 04/30/99 .............. 500,000 502,215
U.S. Treasury Bond 12.75% 11/15/10 ............. 875,000 1,205,925
U.S. Treasury Bond 6.63% 02/15/27 .............. 1,080,000 1,034,640
----------
Total U.S. Treasury Obligations
(cost $4,876,277) ............................. 4,858,076
----------
AGENCY OBLIGATIONS - 39.94%
Federal Home Loan Mortgage Corporation
6.30% 04/08/99 ............................... 1,000,000 998,150
Federal Home Loan Mortgage Corporation
7.30% 12/01/12 ............................... 295,125 295,863
Federal Home Loan Mortgage Corporation
7.50% 11/15/23 ............................... 500,000 504,523
Federal National Mortgage Association
7.04% 07/01/06 ............................... 198,557 197,907
Federal National Mortgage Association Strip
0.00% 07/24/06 ............................... 1,000,000 533,770
Federal National Mortgage Association
7.50% 01/25/07 ............................... 500,000 501,531
Federal National Mortgage Association
6.00% 03/01/09 ............................... 771,785 738,984
Federal National Mortgage Association
7.15% 10/01/15 ............................... 241,540 236,408
Federal National Mortgage Association
7.00% 10/01/25 ............................... 466,807 453,532
Student Loan Marketing Association
6.16% 12/02/99 ............................... 500,000 497,385
----------
Total Agency Obligations
(cost $4,994,495) ............................. 4,958,053
----------
CORPORATE BONDS - 11.29%
Associates N.A .9.13% 04/01/00 ................. 400,000 425,000
CIT Group Holdings 5.88% 10/15/08 .............. 250,000 223,438
National Power Plc 7.13% 07/11/01 .............. 250,000 255,625
Norfolk Southern 7.40% 09/15/06 ................ 500,000 498,125
----------
Total Corporate Bonds
(cost $1,427,140) ............................ 1,402,188
----------
CORPORATE COLLATERALIZED MORTGAGE
OBLIGATIONS - 2.02%
Green Tree Home Improvement
7.35% 07/15/21 ............................... 250,000 250,256
----------
Total Corporate Collateralized Mortgage
Obligations (cost $251,093) ................... 250,256
----------
<PAGE>
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
------------------------
REPURCHASE AGREEMENT - 6.44%
With J.P. Morgan Securities 5.40% 05/01/97
(dated 04/30/97, to be repurchased at
$173,947, collateralized by $174,000 U.S.
Treasury Notes 8.625% due 08/15/97,
market value $178,354) ........................... $174,000 $174,000
With Prudential Securities 5.40%
05/01/97 (dated 04/30/97,
to be repurchased at $118,088,
collateralized by $118,000 U.S. Treasury
Notes 6.125% due 05/31/97,
market value $120,650) ........................... 118,000 118,000
With Prudential Securities 5.40%
05/01/97 (dated 04/30/97,
to be repurchased at $174,472,
collateralized by $174,000 U.S. Treasury
Notes 6.125% due 05/31/97,
market value $178,239) ........................... 174,000 174,000
With PaineWebber Securities 5.40%
05/01/97 (dated 04/30/97,
to be repurchased at $79,722,
collateralized by $79,000 U.S. Treasury
Notes 6.000% due 11/30/97,
market value $81,382) ............................ 80,000 80,000
With J.P. Morgan Securities 5.40%
05/01/97 (dated 04/30/97,
to be repurchased at $79,833,
collateralized by $83,000 U.S. Treasury
Notes 5.125% due 04/30/98,
market value $81,891) ............................ 80,000 80,000
With PaineWebber Securities 5.40%
05/01/97 (dated 04/30/97,
to be repurchased at $87,029,
collateralized by $87,000 U.S. Treasury
Notes 6.875% due 03/31/00,
market value $88,771) ............................ 87,000 87,000
With PaineWebber Securities 5.40%
05/01/97 (dated 04/30/97,
to be repurchased at $87,029,
collateralized by $87,000 U.S. Treasury
Notes 6.875% due 03/31/00,
market value $88,771) ............................ 87,000 87,000
--------
Total Repurchase Agreement
(cost $800,000) .................................. 800,000
--------
24 1997 semi-annual report
<PAGE>
FEDERAL BOND FUND (Continued)
STATEMENT OF NET ASSETS (Continued)
- --------------------------------------------------------------------------------
MARKET
VALUE
-------------
TOTAL MARKET VALUE OF SECURITIES - 98.82%
(cost $12,349,005) ......................................... $ 12,268,573
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 1.18% .................................. 146,509
------------
NET ASSETS APPLICABLE TO 1,315,000 SHARES
($.01 PAR VALUE) OUTSTANDING - 100.00% ...................... $ 12,415,082
============
NET ASSET VALUE - FEDERAL BOND FUND A CLASS
($11,614,900 / 1,231,849 shares) ............................ $ 9.43
============
(MAXIMUM OFFERING PRICE $9.43/.9525 = $9.90)
NET ASSET VALUE - FEDERAL BOND FUND B CLASS
($578,678 / 58,461 shares) .................................. $ 9.90
============
(subject to a contingent deferred sales charge which
varies from 1%-4% depending upon the holding period)
NET ASSET VALUE - FEDERAL BOND FUND C CLASS
($12,806 / 1,276 shares) ................................... $ 10.03
============
(subject to a contingent deferred sales charge
of 1% depending upon the holding period)
NET ASSET VALUE - FEDERAL BOND FUND INSTITUTIONAL CLASS
($208,698 / 23,414 shares) .................................. $ 8.91
============
COMPONENTS OF NET ASSETS AT APRIL 30, 1997:
Common stock $.01 par value, 70,000,000 shares
authorized to the Federal Bond Fund with 20,000,000 shares
allocated to the Federal Bond Fund A Class, 20,000,000
shares allocated to the Federal Bond Fund B Class,
15,000,000 shares allocated to the Federal Bond
Fund C Class and 15,000,000 shares allocated to the
Federal Bond Fund Institutional Class ....................... $ 12,981,594
Accumulated undistributed:
Net investment income ........................................ 206
Net realized loss on investments ............................. (486,286)
Net unrealized depreciation of investments ................... (80,432)
------------
Total Net Assets ............................................. $ 12,415,082
============
See accompanying notes
1997 semi-annual report 25
<PAGE>
DELAWARE GROUP ADVISER FUNDS, INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
World New Corporate Federal
Enterprise U.S. Growth Growth Pacific Income Bond
Fund Fund Fund Fund Fund Fund
---- ---- ---- ---- ---- ----
INVESTMENT INCOME:
<S> <C> <C> <C> <C> <C> <C>
Interest ................................... $ 80,118 $ 33,262 $ 15,168 $ 22,850 $ 709,997 $ 407,558
Dividends (net of withholding taxes) ....... 42,518 126,396 55,096 103,711 -- --
----------- ----------- --------- --------- --------- ----------
122,636 159,658 70,264 126,561 709,997 407,558
----------- ----------- --------- --------- --------- ----------
EXPENSES:
Management fees ............................ 120,933 109,201 89,563 52,634 28,400 18,224
Custodian fees ............................. 3,560 1,500 3,900 17,100 1,100 870
Dividend disbursing and transfer agent
fees and expenses ......................... 29,406 18,421 6,871 8,896 18,227 7,026
Distribution expense ....................... 43,307 33,153 28,995 22,164 20,075 20,041
Federal and state registration fees ........ 16,000 14,900 10,800 7,200 10,500 10,200
Reports and statements to shareholders ..... 8,000 6,965 -- 2,825 9,050 6,400
Professional fees .......................... 9,000 9,000 9,000 9,000 9,000 9,000
Directors' fees ............................ 900 800 900 150 1,000 750
Taxes (other than taxes on income) ......... 500 400 -- -- 400 --
Amortization of organization expenses ...... 1,021 240 988 941 1,006 1,049
Other ...................................... 47,430 42,935 -- -- 6,442 1,152
----------- ----------- --------- --------- --------- ----------
280,057 237,515 151,017 120,910 105,200 74,712
----------- ----------- --------- --------- --------- ----------
NET INVESTMENT INCOME (LOSS) ............... (157,421) (77,857) (80,753) 5,651 604,797 332,846
----------- ----------- --------- --------- --------- ----------
NET REALIZED AND UNREALIZED GAIN(LOSS)
ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on:
Investment transactions .................. 1,531,787 1,812,982 297,547 102,529 12,563 (29,927)
Futures ................................... (166,065) -- -- -- -- --
Foreign currencies ........................ -- -- (17,517) (4,812) -- --
----------- ----------- --------- --------- --------- ----------
Net realized gain (loss) ................. 1,365,722 1,812,982 280,030 97,717 12,563 (29,927)
Net unrealized appreciation (depreciation)
of investments and foreign currencies during
the year .................................. (2,456,062) 761,558 333,499 405,589 (446,500) (197,935)
----------- ----------- --------- --------- --------- ----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS AND FOREIGN
CURRENCIES ................................ (1,090,340) 2,574,540 613,529 503,306 (433,937) (227,862)
----------- ----------- --------- --------- --------- ----------
NET INCREASE (decrease) RESULTING
FROM OPERATIONS ........................... $(1,247,761) $ 2,496,683 $ 532,776 $ 508,957 $ 170,860 $ 104,984
=========== =========== ========= ========= ========= ==========
</TABLE>
See accompanying notes
26 1997 semi-annual report
<PAGE>
DELAWARE GROUP ADVISER FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Enterprise Fund U. S. Growth Fund World Growth Fund
---------------------------------------------------------------------------------------------
Six Months Year Ended Six Months Year Ended Six Months Year Ended
Ended 10/31/96 Ended 10/31/96 Ended 10/31/96
4/30/97 4/30/97 4/30/97
(Unaudited) (Unaudited) (Unaudited)
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ........ $ (157,421) $ (325,621) $ (77,857) $ (153,617) $ (80,753) $ (73,483)
Net realized gain (loss)
on investments
and foreign currencies ............. 1,365,722 2,677,337 1,812,982 3,956,760 280,030 1,306,556
Net change in unrealized
appreciation (depreciation)
on investments, forward foreign
currency contracts,
futures and other assets ........... (2,456,062) 2,338,469 761,558 (1,322,583) 333,499 34,912
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease)
in net assets
resulting from operations .......... (1,247,761) 4,690,185 2,496,683 2,480,560 532,776 1,267,985
---------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income:
A Class ............................ -- -- -- -- -- (26,689)
B Class ............................ -- -- -- -- -- (2,249)
C Class ............................ -- -- -- -- -- (93)
Institutional Class ................ -- -- -- -- -- (10)
Net realized gain from security
transactions:
A Class ............................ (1,300,035) -- (1,626,328) -- (919,212) --
B Class ............................ (153,219) -- (85,057) -- (81,344) --
C Class ............................ (4,756) -- (5,841) -- (7,538) --
Institutional Class ................ (489,527) -- (1,003,161) -- (1,413) --
---------- ---------- ---------- ---------- ---------- ----------
(1,947,537) -- (2,720,387) -- (1,009,507) (29,041)
---------- ---------- ---------- ---------- ---------- ----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class ............................ 2,911,732 2,275,881 3,857,987 1,369,974 719,437 1,232,465
B Class ............................ 263,540 795,312 308,526 366,669 179,831 255,022
C Class ............................ 116,643 38,507 55,788 41,965 32,902 75,221
Institutional Class ................ 123,080 3,105,531 3,662,391 5,978,904 43,362 422,003
Net asset value of shares issued upon
reinvestment of dividends from net
realized gain on security
transactions:
A Class ............................ 1,288,996 -- 1,622,652 -- 913,590 26,515
B Class ............................ 149,840 -- 84,600 -- 78,070 2,156
C Class ............................ 4,756 -- 5,683 -- 7,537 93
Institutional Class ................ 489,527 -- 1,003,161 -- 1,413 10
---------- ---------- ---------- ---------- ---------- ----------
5,348,114 6,215,231 10,600,788 7,757,512 1,976,142 2,013,485
---------- ---------- ---------- ---------- ---------- ----------
Cost of shares repurchased:
A Class ............................ (1,420,196) (1,082,040) (1,268,444) (405,142) (989,640) (544,997)
B Class ............................ (168,506) (626,025) (103,325) (199,197) (105,911) (313,741)
C Class ............................ (12,785) (38,554) (17,695) (19,270) (29,025) (9,744)
Institutional Class ................ (80,665) (715,737) (1,456,802) (1,616,507) (279,469) (298,223)
---------- ---------- ---------- ---------- ---------- ----------
(1,682,152) (2,462,356) (2,846,266) (2,240,116) (1,404,045) (1,166,705)
---------- ---------- ---------- ---------- ---------- ----------
Increase in assets derived from
capital share transactions ......... 3,665,962 3,752,875 7,754,522 5,517,396 572,097 846,780
---------- ---------- ---------- ---------- ---------- ----------
NET INCREASE IN NET ASSETS .......... 470,664 8,443,060 7,530,818 7,997,956 95,366 2,085,724
NET ASSETS:
Beginning of period ................. 28,486,265 20,043,205 26,985,244 18,987,288 16,489,873 14,404,149
---------- ---------- ---------- ---------- ---------- ----------
End of period ....................... $ 28,956,929 $ 28,486,265 $ 34,516,062 $ 26,985,244 $ 16,585,239 $ 16,489,873
============ ============ ============ ============ ============ ============
Undistributed net investment
income (loss) ...................... $ (157,421) $ -- $ (77,857) $ -- $ (85,926) $ --
============ ============ ============ ============ ============ ============
</TABLE>
See accompanying notes
1997 semi-annual report 27
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
New Pacific Fund Corporate Income Fund Federal Bond Fund
---------------------------------------------------------------------------------------------
Six Months Year Ended Six Months Year Ended Six Months Year Ended
Ended 10/31/96 Ended 10/31/96 Ended 10/31/96
4/30/97 4/30/97 4/30/97
(Unaudited) (Unaudited) (Unaudited)
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS
Net investment income (loss) .......... $ 5,651 $ (54,248) $ 604,797 $ 1,023,577 $ 332,846 $ 617,314
Net realized gain (loss) on
investments and foreign
currencies ........................... 97,717 689,810 12,563 20,020 (29,927) (169,368)
Net change in unrealized
appreciation (depreciation)
on investments, forward
foreign currency contracts,
futures and other assets ............. 405,589 269,109 (446,500) (185,462) (197,935) (32,850)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in
net assets resulting from
operations ........................... 508,957 904,671 170,860 858,135 104,984 415,096
------------ ------------ ------------ ------------ ------------ ------------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income:
A Class .............................. -- (11,516) (393,161) (718,871) (311,288) (603,847)
B Class .............................. -- (518) (4,194) (17,832) (12,798) (16,564)
C Class .............................. -- (16) (1,787) (1,624) (277) (738)
Institutional Class .................. -- (5) (205,016) (287,769) (4,461) (5,449)
Net realized gain from security
transactions:
A Class .............................. (190,598) -- -- -- -- --
B Class .............................. (8,912) -- -- -- -- --
C Class .............................. (761) -- -- -- -- --
Institutional Class .................. (370) -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
(200,641) (12,055) (604,158) (1,026,096) (328,824) (626,598)
------------ ------------ ------------ ------------ ------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class .............................. 3,480,289 1,193,031 784,061 305,376 112,568 48,548
B Class .............................. 844,442 159,517 60,368 81,050 27,038 262,721
C Class .............................. 32,348 31,250 367 63,666 138 3,700
Institutional Class .................. 248,403 226,105 1,494,611 3,648,730 955,108 155,011
Net asset value of shares issued upon
reinvestment of dividends from net
investment income and realized gain
on security transactions:
A Class .............................. 190,204 11,472 384,076 708,496 309,938 600,991
B Class .............................. 8,437 495 3,525 16,283 8,477 14,743
C Class .............................. 761 16 1,786 1,623 277 724
Institutional Class .................. 370 5 205,016 292,853 4,461 5,449
------------ ------------ ------------ ------------ ------------ ------------
4,805,254 1,621,891 2,933,810 5,118,077 1,418,005 1,091,887
------------ ------------ ------------ ------------ ------------ ------------
Cost of shares repurchased:
A Class .............................. (672,513) (668,487) (183,806) (105,817) (17,320) (70,780)
B Class .............................. (81,634) (203,256) (80,252) (256,466) (15,030) (5,294)
C Class .............................. (7,152) (4,910) -- (747) (14) (6,151)
Institutional Class .................. (276,372) (166,392) (974,863) (1,785,656) (851,990) (1,047,866)
------------ ------------ ------------ ------------ ------------ ------------
(1,037,671) (1,043,045) (1,238,921) (2,148,686) (884,354) (1,130,091)
------------ ------------ ------------ ------------ ------------ ------------
Increase (decrease) in assets
derived from capital
share transactions ................... 3,767,583 578,846 1,694,889 2,969,391 533,651 (38,204)
------------ ------------ ------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS . 4,075,899 1,471,462 1,261,591 2,801,430 309,811 (249,706)
NET ASSETS:
Beginning of period ................... 12,477,878 11,006,416 18,389,288 15,587,858 12,105,271 12,354,977
------------ ------------ ------------ ------------ ------------ ------------
End of period ......................... $ 16,553,777 $ 12,477,878 $ 19,650,879 $ 18,389,288 $ 12,415,082 $ 12,105,271
============ ============ ============ ============ ============ ============
Undistributed net investment income
(loss) ............................... $ 2,413 $ -- $ 639 $ -- $ 206 $ --
============ ============ ============ ============ ============ ============
</TABLE>
See accompanying notes
1997 semi-annual report
28
<PAGE>
Delaware Group Adviser Funds, Inc.
Notes to Financial Statements
April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
The Delaware Group Adviser Funds, Inc. ("The Company"), is registered as a
diversified open-end Investment Company under the Investment Company Act of
1940, as amended. The Company is organized as a Maryland corporation. The
Delaware Group Adviser Funds, Inc. currently issues six separate series of
shares (each referred to as a "Fund" or collectively as the "Funds")
Enterprise Fund, U.S. Growth Fund, World Growth Fund, New Pacific Fund,
Corporate Income Fund and Federal Bond Fund. Each Fund offers four classes
of shares.
1. Significant Accounting Policies
The following accounting policies are in accordance with generally accepted
accounting principles and are consistently followed by each of the Funds:
Securities Valuation - Securities listed on a national exchange are valued at
the last quoted sales price as of 4:00 pm EST on the valuation date. Securities
not traded are valued at the mean of the last quoted bid and asked prices.
Securities not listed on a national exchange are valued at the mean of the last
quoted bid and asked prices. Securities listed on a foreign exchange are valued
at the last quoted sale price before the time when the fund is valued. Debt
obligations that are issued or guaranteed by the U.S. Government, its agencies,
authorities and instrumentalities are valued on the basis of prices provided by
independent pricing services. Money Market instruments having less than 60 days
to maturity are valued at amortized cost, which approximates market value.
Federal Income Taxes - Each Fund intends to qualify as a regulated investment
company and make the requisite distribution to shareholders. Accordingly, no
federal income tax provision is required in the financial statements.
Repurchase Agreements - Each Fund may invest in a pooled cash account along with
other members of the Delaware Group of Funds. The aggregated daily balance of
the pooled cash account is invested in repurchase agreements secured by
obligation of the U.S. government. The respective collateral is held by the
Funds' custodian bank until the maturity of the respective repurchase
agreements. Each repurchase agreement is at least 100% collateralized. However,
in the event of default or bankruptcy by the counterparty to the agreement,
realization of the collateral may be subject to legal proceedings.
Class Accounting - Investment income, common expenses and realized and
unrealized gains (losses) on investments are allocated to the various classes of
each Fund on the basis of daily net assets of each class. Distribution expenses
relating to a specific class are charged directly to that class.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Foreign Currencies - The value of all assets and liabilities denominated in
foreign currencies are translated into U.S. dollars at the exchange rate of such
currencies against the U.S. dollar as of 3:00 pm EST. Forward foreign currency
contracts are valued at the mean between the bid and asked prices of the
contracts. Interpolated values are derived when the settlement date of the
contract is an interim date for which quotations are not available. Risks may
arise upon entering into these contracts from the potential inabilit y of
counterparties to meet the terms of their contracts and from unanticipated
movements in the value of a foreign currency relative to the U.S. dollar.
<PAGE>
Futures Transactions - Certain portfolios may enter into futures contracts
subject to certain limitations. Risks of entering into futures contracts include
the possibility that there will not be a perfect price correlation between the
futures contracts and the underlying securities, and that a portfolio could lose
more than the original margin deposit required to initiate a futures
transaction.
Other - Expenses common to all Funds within the Delaware Group of Funds are
allocated amongst the funds on the basis of average net assets. Security
transactions are recorded on the date the securities are purchased or sold
(trade date). Costs used in calculating realized gains and losses on the sale of
investment securities are those of the specific securities sold. Dividend income
is recorded on the ex-dividend date and interest income is recorded on the
accrual basis. Original issue discounts are accreted to interest income over the
lives of the respective securities.
Organization costs are amortized over a five year period beginning on the date
of commencement of operations. The balance of organization costs at April 30,
1997 were $3,286, $2,544, $3,172, $3,000, $3,237 and $3,378 for the Enterprise
Fund, U.S. Growth Fund, World Growth Fund, New Pacific Fund, Corporate Income
Fund and Federal Bond Fund, respectively.
Certain Fund expenses are paid directly by brokers. The amount of these expenses
is less than 0.01% of each Fund's average net assets.
2. Investment Management and Distribution Agreements In accordance with the
terms of the Investment Management Agreement, the Fund's pay Delaware Management
Company, Inc. (DMC), the investment manager of each fund a monthly fee based
upon each Fund's average daily net assets at the following annual rates:
Enterprise Fund. . . . . . . . . . .80%
U.S. Growth Fund. . . . . . . . . .70%
World Growth Fund. . . . . . . . 1.10%
New Pacific Fund. . . . . . . . . .80%
Corporate Income Fund. . . . .30%
Federal Bond Fund. . . . . . . . .30%
DMC has entered into sub-advisory agreements with Lynch & Mayer, Inc. with
respect to the management of the Enterprise Fund and U.S. Growth Fund, with
Walter Scott & partners Limited with respect to the management of the World
Growth Fund, with John Govett & Company Limited with respect to the management
of the New Pacific Fund, and with Lincoln Investment Management, Inc. with
respect to the management of the Corporate Income Fund and Federal Bond Fund.
The sub-advisers receive sub-advisory fees from the Manager for their services
calculated in accordance with the schedule set forth below. The Funds do not pay
any fees to the sub-advisers:
Enterprise Fund. . . . . . . . . 50% on the
first $150 million
and .35% on assets
over $150 million
U.S. Growth Fund. . . . . . . . . .40%
World Growth Fund. . . . . . . . .80%
New Pacific Fund. . . . . . . . . .50%
Corporate Income Fund. . . . .30%
Federal Bond Fund. . . . . . . . .30%
1997 semi-annual report
29
<PAGE>
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
DMC has elected voluntarily to waive that portion, if any, of the annual
management fees payable by the Fund to the extent necessary to ensure that the
annual operating expenses exclusive of taxes, interest, brokerage commission,
extraordinary expenses and 12b-1 expenses exceed 1.50% of average net assets for
the Enterprise Fund, the U.S. Growth Fund, the World Growth Fund, and the New
Pacific Fund, and .90% of average net assets for the Corporate Income Fund and
the Federal Bond Fund for each class through April 30, 1997. At April 30, 1997,
the Enterprise Fund, the U.S. Growth Fund, the World Growth Fund and the New
Pacific Fund had liabilities for investment management fees and other expenses
payable to DMC for $122,982, $111,576, $90,831 and $53,656 respectively.
Pursuant to the Distribution Agreement, each Fund pays Delaware Distributors
L.P. (DDLP), the Distributor and an affiliate of DMC, an annual fee of .30% of
the average daily net assets of the A Class and 1.00% of the average daily net
assets of the B Class and the C Class. No distribution expenses are paid by the
Institutional Class. At April 30, 1997 the Enterprise Fund, the U.S. Growth
Fund, the World Growth Fund, the New Pacific Fund, the Corporate Income Fund and
the Federal Bond Fund had liabilities for distribution fees and other expenses
payable to DDLP for $1,346, $1,135, $979, $974, $674 and $662, respectively.
Each of the Funds have engaged Delaware Service Co., Inc. (DSC), an affiliate of
DMC to serve as dividend disbursing and transfer agent, and to provide
accounting services for the Fund. For the six months ended April 30, 1997, the
amount expensed for dividend disbursing and Transfer agent for these services
were $29,406, $18,421, $6,871, $8,896, $18,227 and $7,026 for the Enterprise
Fund, the U.S. Growth Fund, the World Growth Fund, the New Pacific Fund, the
Corporate Income Fund and the Federal Bond Fund, respectively. At April 30,
1997, the Enterprise Fund, the U.S. Growth Fund, the World Growth Fund, the New
Pacific Fund, the Corporate Income Fund and the Federal Bond Fund had
liabilities for fees and other expenses payable to DSC for accounting services
of $11,408, $8,003, $7,203, $13,469, $3,830 and $1,883, respectively.
Certain officers of DMC are officers, directors and/or employees of each Fund.
These officers, directors and employees are paid no compensation by each Fund.
3. Investments
For the six months ended April 30, 1997, each Fund made purchases and sales of
investment securities other than U.S. government securities and temporary cash
investments as follows:
Purchases Sales
--------- -----
Enterprise Fund .................... $12,512,831 $11,682,441
U.S. Growth Fund ................... 23,167,156 17,988,153
World Growth Fund .................. 904,766 1,864,883
New Pacific Fund ................... 12,539,135 9,576,735
Corporate Income Fund .............. 5,240,952 4,062,874
Federal Bond Fund .................. 8,314,673 8,551,446
Investment securities based on cost for federal income tax purposes at April 30,
1997, are as follows:
Enterprise U.S. Growth World Growth
Fund Fund Fund
----------- ----------- ------------
Cost of Investments .... $25,896,303 $30,034,320 $14,446,757
Aggregated unrealized
appreciation........... 4,437,984 4,896,249 3,464,133
Aggregated unrealized
depreciation........... (1,421,878) (420,204) (1,311,515)
Corporate
New Pacific Income Federal Bond
Fund Fund Fund
----------- ------ ------------
Cost of Investments ... $16,471,371 $19,262,643 $12,349,005
Aggregated unrealized
appreciation.......... 856,765 180,844 14,049
Aggregated unrealized
depreciation.......... (1,206,591) (255,469) (94,481)
For federal income tax purposes, the Fund had accumulated capital losses at
October 31, 1996, of $518,890 for the Corporate Income Fund and $456,359 for the
Federal Bond Fund which may be carried forward and applied against future
capital gains. The capital loss carryover for the Corporate Income Fund expires
in 2002. The capital loss carryover for the Federal Bond Fund expires as
follows: $286,991 - 2002 and $169,368 - 2003.
1997 semi-annual report
30
<PAGE>
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
4. Capital Stock
Transactions in capital stock shares were as follows:
<TABLE>
<CAPTION>
Enterprise Fund U. S. Growth Fund World Growth Fund
Six Months Year Ended Six Months Year Ended Six Months Year Ended
Ended 10/31/96 Ended 10/31/96 Ended 10/31/96
4/30/97 4/30/97 4/30/97
(unaudited) (unaudited) (unaudited)
-------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Shares sold:
A Class ......................................... 217,843 182,506 285,376 105,330 61,278 102,249
B Class ......................................... 18,850 58,416 22,970 29,115 16,162 22,652
C Class ......................................... 8,072 2,813 4,003 3,225 2,992 6,554
Institutional Class ............................. 9,238 265,237 267,296 458,645 3,615 34,323
Shares issued upon reinvestment of dividends from
net investment income and net realized gains
from security transactions:
A Class ......................................... 99,152 -- 125,787 -- 79,030 2,274
B Class ......................................... 10,897 -- 6,677 -- 7,283 197
C Class ......................................... 339 -- 429 -- 702 9
Institutional Class ............................. 37,454 -- 76,988 -- 123 1
-------- ------- ------- ------- ------- -------
401,845 508,972 789,526 596,315 171,185 168,439
Shares repurchased:
A Class ......................................... (107,472) (83,533) (94,211) (30,815) (83,603) (45,169)
B Class ......................................... (12,409) (45,008) (8,059) (15,662) (9,684) (28,774)
C Class ......................................... (891) (2,754) (1,256) (1,448) (2,645) (881)
Institutional Class ............................. (6,317) (60,648) (105,820) (126,549) (22,618) (25,402)
-------- ------- ------- ------- ------- -------
(127,089) (191,943) (209,346) (174,474) (118,550) (100,226)
-------- ------- ------- ------- ------- -------
Net Increase ..................................... 274,756 317,029 580,180 421,841 52,635 68,213
======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
New Pacific Fund Corporate Income Fund Federal Bond Fund
Six Months Year Ended Six Months Year Ended Six Months Year Ended
Ended 10/31/96 Ended 10/31/96 Ended 10/31/96
4/30/97 4/30/97 4/30/97
(unaudited) (unaudited) (unaudited)
-------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Shares sold:
A Class .......................................... 359,777 126,895 81,846 32,118 11,698 5,073
B Class .......................................... 85,547 16,203 5,961 7,873 2,706 26,258
C Class .......................................... 3,333 3,204 36 6,328 14 356
Institutional Class .............................. 25,129 23,242 161,091 393,897 105,765 16,707
Shares issued upon reinvestment of dividends
from net investment income and net
realized gains from security transactions
A Class .......................................... 20,129 1,188 40,350 73,998 32,593 62,600
B Class .......................................... 872 50 344 1,585 848 1,469
C Class .......................................... 80 2 175 160 27 71
Institutional Class .............................. 39 1 22,213 31,592 498 568
------- ------ ------- ------- ------ ------
494,906 170,785 312,016 547,551 154,149 113,102
Shares repurchased:
A Class .......................................... (69,125) (69,123) (19,269) (11,043) (1,813) (7,195)
B Class .......................................... (8,188) (21,797) (7,730) (25,116) (1,511) (518)
C Class .......................................... (734) (549) -- (72) (1) (606)
Institutional Class .............................. (28,201) (17,836) (105,054) (189,008) (94,485) (107,611)
------- ------ ------- ------- ------ ------
(106,248) (109,305) (132,053) (225,239) (97,810) (115,930)
------- ------ ------- ------- ------ ------
Net Increase (Decrease) ........................... 388,658 61,480 179,963 322,312 56,339 (2,828)
======= ====== ======= ======= ====== ======
</TABLE>
1997 semi-annual report
31
<PAGE>
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
5. Forward Foreign Currency Contracts
The following forward currency contracts were outstanding at April 30, 1997:
<TABLE>
<CAPTION>
Contract In Exchange Settlement Unrealized
to Deliver For Date Gain
---------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
New Pacific Fund 415,000 Malaysian Riggit $165,358 5/2/97 $6
</TABLE>
6. Concentration of Risk
Like any investment in securities, the value of the portfolio securities may be
subject to risk of loss from market, currency, economic and political factors
which occur in the countries where the funds are invested.
The Corporate Income Fund and the Federal Bond Fund invest in securities whose
value is derived from an underlying pool of mortgages or consumer loans.
Prepayment of these loans may shorten the stated maturity of the respective
obligation and may result in a loss of premium, if it has been paid.
1997 semi-annual report
32
<PAGE>
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
7. Financial Highlights
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
Enterprise Fund A Class Enterprise Fund B Class
----------------------------------------------------------------------------------------------
For For the For the For the For the For the For the For the
The Year Year Period Six Year Year Period
Six Months Ended Ended 12/3/93(1) Months Ended Ended 4/14/94(1)
Ended 10/31/96 10/31/95 to 10/31/94 Ended 10/31/96 10/31/95 to 10/31/94
4/30/97 4/30/97
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 13.59 $ 11.28 $ 9.20 $ 10.00 $ 14.34 $ 11.96 $ 9.81 $10.00
Income from investment operations:
Net investment income (loss) ........ (0.04) (0.16) (0.08) (0.08) (0.01) (0.26) (0.12) (0.04)
Net realized and unrealized gain
(loss) from security transactions .. (0.42) 2.47 2.16 (0.71) (0.53) 2.64 2.27 (0.15)
-------- ------- -------- ------- ------- -------- ------ ------
Net increase (decrease) in net assets
from investment operations ......... (0.46) 2.31 2.08 (0.79) (0.54) 2.38 2.15 (0.19)
-------- ------- -------- ------- ------- -------- ------ ------
Less dividends and distributions:
Dividends from net investment income -- -- -- (0.01) -- -- -- --
Distributions from net realized gain
on security transactions ........... (0.93) -- -- -- (0.93) -- -- --
-------- ------- -------- ------- ------- -------- ------ ------
Total dividends and distributions ... (0.93) -- -- (0.01) (0.93) -- -- --
-------- ------- -------- ------- ------- -------- ------ ------
Net asset value, end of period ...... $ 12.20 $ 13.59 $ 11.28 $ 9.20 $ 12.87 $ 14.34 $11.96 $ 9.81
======== ========= ======== ======= ========= ======= ====== ======
Total Return2 ...................... (3.84%)** 20.37% 22.72% (7.91%)** (4.21%)** 19.90 21.92% (1.91%)
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ......................$ 19,455 $18,826 $ 14,508 $10,579 $2,346 $ 2,365 $1,811 $ 761
Ratio of expenses to
average net assets .................. 1.80%* 1.82% 1.85% 1.85%* 2.50%* 2.50% 2.50% 2.50%*
Ratio of expenses to
average net assets prior
to expense limitation ............... 1.80%* 1.90% 2.42% 3.10%* 2.50%* 2.58% 3.07% 3.76%*
Ratio of net investment income
to average net assets ............... (1.34%)* (1.26%) (0.83%) (1.01%)* (2.04%)* (1.94%) (1.50%) (1.53%)*
Ratio of net investment income
to average net assets prior
to expense limitation ............... (1.34%)* (1.34%) (1.40%) (2.26%)* (2.04%)* (2.02%) (2.07%) (2.79%)*
Portfolio turnover .................. 43% 92% 106% 120% 43% 92% 106% 120%
Average commission rate paid ........ $ 0.0536 $ 0.0505 N/A N/A $0.0536 $0.0505 N/A N/A
</TABLE>
- --------------------
*Annualized
**Total return has not been annualized.
1 Date of initial public offering.
2 Does not include maximum sales charge of 4.75% nor the 1% limited contingent
deferred sales charge that would apply in the event of certain redemptions
within 12 months of purchase of A Class shares. Does not include contingent
deferred sales charge which varies from 1-4% depending upon the holding period
for Class B and Class C shares.
1997 semi-annual report
33
<PAGE>
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
7. Financial Highlights (Continued)
<TABLE>
<CAPTION>
Enterprise Fund C Class Enterprise Fund Institutional Class
----------------------------------------------------------------------------------------------
For For the For the For the For the For the For the For the
The Year Year Period Six Year Year Period
Six Months Ended Ended 5/10/94(1) Months Ended Ended 2/3/94(1)
Ended 10/31/96 10/31/95 to 10/31/94 Ended 10/31/96 10/31/95 to 10/31/94
4/30/97 4/30/97
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $14.61 $12.21 $10.02 $10.00 $13.66 $11.30 $9.23 $10.44
Income from investment operations:
Net investment income (loss) ....... -- (0.25) (0.15) (0.05) (0.06) (0.12) (0.02) (0.02)
Net realized and unrealized gain
(loss) from security transactions .. (0.55) 2.65 2.34 0.07 (0.39) 2.48 2.09 (1.19)
------ ------ ------ ------ ------ ------ ------ -----
Net increase (decrease) in net assets
from investment operations ......... (0.55) 2.40 2.19 0.02 (0.45) 2.36 2.07 (1.21)
------ ------ ------ ------ ------ ------ ------ -----
Less dividends and distributions:
Dividends from net investment income -- -- -- -- -- -- -- --
Distributions from net realized gain
on security transactions ........... (0.93) -- -- -- (0.93) -- -- --
------ ------ ------ ------ ------ ------ ------ -----
Total dividends and distributions .. (0.93) -- -- -- (0.93) -- -- --
------ ------ ------ ------ ------ ------ ------ -----
Net asset value, end of period ..... $13.13 $14.61 $12.21 $10.02 $12.28 $13.66 $11.30 $9.23
====== ====== ====== ====== ====== ====== ====== =====
Total Return2........................ (4.14%)** 19.57% 21.86% 0.23%** (3.67%)** 20.80% 22.43% (11.61%)**
Ratios and supplemental data:
Net assets, end of period
(000 omitted). . . . . . ........... $162 $ 70 $58 $37 $6,994 $7,225 $3,666 $234
Ratio of expenses to
average net assets. ................ 2.50%* 2.50% 2.50% 2.50%* 1.50%* 1.50% 1.53% 1.50%*
Ratio of expenses to
average net assets prior
to expense limitation .............. 2.50%* 2.58% 3.07% 3.75%* 1.50%* 1.58% 2.07% 2.75%*
Ratio of net investment income
to average net assets .............. (2.04%)* (1.94%) (1.49%) (1.53%)* (1.04%)* (0.94%) (0.60%) (0.63%)*
Ratio of net investment income
to average net assets prior
to expense limitation .............. (2.04%)* (2.02%) (2.06%) (2.78%)* (1.04%)* (1.02%) (1.14%) (1.88%)*
Portfolio turnover. ................ 43% 92% 106% 120% 43% 92% 106% 120%
Average commission rate paid ....... $0.0536 $0.0505 N/A N/A $0.0536 $0.0505 N/A N/A
</TABLE>
- --------------------
*Annualized
**Total return has not been annualized.
1 Date of initial public offering.
2 Does not include maximum sales charge of 4.75% nor the 1% limited contingent
deferred sales charge that would apply in the event of certain redemptions
within 12 months of purchase of A Class shares. Does not include contingent
deferred sales charge which varies from 1-4% depending upon the holding period
for Class B and Class C shares.
1997 semi-annual report
34
<PAGE>
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
7. Financial Highlights (Continued)
<TABLE>
<CAPTION>
U.S. Growth Fund A Class U.S. Growth Fund B Class
--------------------------------------------------------------------------------------------
For For the For the For the For the For the For the For the
The Year Year Period Six Year Year Period
Six Months Ended Ended 12/3/93(1) Months Ended Ended 3/29/94(1)
Ended 10/31/96 10/31/95 to 10/31/94 Ended 10/31/96 10/31/95 to 10/31/94
4/30/97 4/30/97
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period ......................... $13.82 $12.43 $10.21 $10.00 $13.61 $12.33 $10.19 $10.00
Income from investment operations:
Net investment income (loss) ....... (0.04) (0.09) (0.09) (0.04) (0.08) (0.17) (0.14) (0.03)
Net realized and unrealized gain
(loss) from security transactions .. 1.19 1.48 2.31 0.26 1.16 1.45 2.28 0.22
------ ------ ------ ------ ------ ------ ------- ------
Net increase (decrease)
from in net assets from
investment operations .............. 1.15 1.39 2.22 0.22 1.08 1.28 2.14 0.19
------ ------ ------ ------ ------ ------ ------- ------
Less dividends and distributions:
Dividends from net
investment income. . ............... - - - (0.01) - - - -
Distributions from net realized gain
on security transactions ........... (1.36) - - - (1.36) - - -
------ ------ ------ ------ ------ ------ ------- ------
Total dividends and distributions .. (1.36) - - - (0.01) (1.36) - -
------ ------ ------ ------ ------ ------ ------- ------
Net asset value, end of period ..... $13.61 $13.82 $12.43 $10.21 $13.33 $13.61 $ 12.33 $10.19
====== ====== ====== ====== ====== ====== ======= ======
Total Return2. . . . . . ........... 8.86%** 11.18% 21.74% 2.18%** 8.46%** 10.38% 21.00% 1.90%**
Ratios and supplemental data:
Net assets, end of period
(000 omitted). . . . . . ........... $20,183 $16,118 $13,574 $ 10,669 $1,080 $809 $567 $204
Ratio of expenses to
average net assets. ................ 1.61%* 1.80% 1.85% 1.85%* 2.31%* 2.48% 2.50% 2.50%*
Ratio of expenses
to average net assets prior
to expense limitation .............. 1.61%* 1.88% 2.18% 2.94%* 2.31%* 2.56% 2.83% 3.60%*
Ratio of net investment income
to average net assets .............. (0.80%)* (0.77%) (0.88%) (0.51%)* (1.50%)* (1.45%) (1.57%) (1.26%)*
Ratio of net investment income
to average net assets prior
to expense limitation .............. (0.80%)* (0.85%) (1.21%) (1.60%)* (1.50%)* (1.53%) (1.90%) (2.36%)*
Portfolio turnover rate ............ 59% 131% 58% 66% 59% 131% 58% 66%
Average commission rate paid ....... $0.0575 $0.0519 N/A N/A 0.0575 $0.0519 N/A N/A
</TABLE>
- -------------------
*Annualized
**Total return has not been annualized.
1 Date of initial public offering.
2 Does not include maximum sales charge of 4.75% nor the 1% limited contingent
deferred sales charge that would apply in the event of certain redemptions
within 12 months of purchase of A Class shares. Does not include contingent
deferred sales charge which varies from 1-4% depending upon the holding period
for Class B and Class C shares.
1997 semi-annual report
35
<PAGE>
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
7. Financial Highlights (Continued)
<TABLE>
<CAPTION>
U.S. Growth Fund C Class U.S. Growth Fund Institutional Class
---------------------------------------------------------------------------------------------
For For the For the For the For the For the For the For the
The Year Year Period Six Year Year Period
Six Months Ended Ended 5/23/94(1) Months Ended Ended 2/3/94(1)
Ended 10/31/96 10/31/95 to 10/31/94 Ended 10/31/96 10/31/95 to 10/31/94
4/30/97 4/30/97
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period ......................... $14.18 $12.85 $10.62 $10.00 $13.94 $12.50 $10.23 $10.52
Income from investment operations:
Net investment income (loss) ........ (0.07) (0.16) (0.10) (0.03) (0.02) (0.05) (0.05) (0.01)
Net realized and unrealized gain
(loss) from security transactions ... 1.20 1.49 2.33 0.65 1.20 1.49 2.32 (0.28)
------ ------ ------ ------ ------ ------ ------ ------
Net increase (decrease)
from in net assets from
investment operations ............... 1.13 1.33 2.23 0.62 1.18 1.44 2.27 (0.29)
------ ------ ------ ------ ------ ------ ------ ------
Less dividends and distributions:
Dividends from net
investment income. . .............. - - - - - - - -
Distributions from net realized gain
on security transactions ............ (1.36) - - - (1.36) - - -
------ ------ ------ ------ ------ ------ ------ ------
Total dividends and distributions ... (1.36) - - - (1.36) - - -
------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period ...... $13.95 $14.18 $12.85 $10.62 $13.76 $13.94 $12.50 $10.23
====== ====== ====== ====== ====== ====== ====== ======
Total Return(2)...................... 8.47%** 10.35% 21.00% 6.17%** 9.01%** 11.52% 22.19% (2.78%)**
Ratios and supplemental data:
Net assets, end of period
(000 omitted). . . . . . ........... $99 $55 $27 $5 $13,154 $10,003 $4,819 $1,630
Ratio of expenses to
average net assets. ................. 2.31%* 2.48% 2.50% 2.50%* 1.31%* 1.48% 1.50% 1.50%*
Ratio of expenses
to average net assets prior
to expense limitation ............... 2.31%* 2.56% 2.82% 3.54%* 1.31%* 1.56% 1.83% 2.60%*
Ratio of net investment income
to average net assets ............... (1.50%)* (1.45%) (1.61%) (1.09%)* (0.50%)* (0.45%) (0.59%) (0.27%)*
Ratio of net investment income
to average net assets prior
to expense limitation ............... (1.50%)* (1.53%) (1.93%) (2.13%)* (0.50%)* (0.53%) (0.92%) (1.37%)*
Portfolio turnover rate ............... 59% 131% 58% 66% 59% 131% 58% 66%
Average commission rate paid ..........$0.0575 $0.0519 N/A N/A $0.0575 $0.0519 N/A N/A
</TABLE>
- --------------------
*Annualized
**Total return has not been annualized.
1 Date of initial public offering.
2 Does not include maximum sales charge of 4.75% nor the 1% limited contingent
deferred sales charge that would apply in the event of certain redemptions
within 12 months of purchase of A Class shares. Does not include contingent
deferred sales charge which varies from 1-4% depending upon the holding period
for Class B and Class C shares.
1997 semi-annual report
36
<PAGE>
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
7. Financial Highlights (Continued)
<TABLE>
<CAPTION>
WORLD GROWTH FUND A CLASS WORLD GROWTH FUND B CLASS
--------------------------------------------------------------------------------------------
For For the For the For the For the For the For the For the
The Year Year Period Six Year Year Period
Six Months Ended Ended 5/23/94(1) Months Ended Ended 2/3/94(1)
Ended 10/31/96 10/31/95 to 10/31/94 Ended 10/31/96 10/31/95 to 10/31/94
4/30/97 4/30/97
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period ......................... $12.39 $11.40 $11.00 $10.00 $11.56 $10.71 $10.40 $10.00
Income from investment operations:
Net investment income (loss) ....... (0.06) (0.06) 0.01 0.02 (0.05) (0.06) (0.02) -
Net realized and unrealized (gain)
loss from security transactions .... 0.45 1.07 0.40 1.01 0.37 .93 0.35 0.43
------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations ... 0.39 1.01 0.41 1.03 0.32 0.87 0.33 0.43
------ ------ ------ ------ ------ ------ ------ ------
Less dividends and distributions:
Dividends from net
investment income. . ............... 0.00 (0.02) (0.01) (0.03) 0.00 (0.02) (0.02) (0.03)
Distributions from net realized gain
on security transactions ........... (0.77) - - - (0.77) - - -
------ ------ ------ ------ ------ ------ ------ ------
Total dividends and distributions .. (0.77) (0.02) (0.01) (0.03) (0.77) (0.02) (0.02) (0.03)
------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period ..... $12.01 $12.39 $11.40 $11.00 $11.11 $11.56 $10.71 $10.40
====== ====== ====== ====== ====== ====== ====== ======
Total Return(2)..................... 3.35%** 8.90% 3.81% 10.25%** 2.97%** 8.16% 3.19% 4.28%**
Ratios and supplemental data:
Net assets, end of period
(000 omitted). . . . . . ...........$15,103 $14,886 $13,018 $11,721 $1,314 $1,208 $1,183 $523
Ratio of expenses to
average net assets. ................ 1.80%* 1.82% 1.85% 1.85%* 2.50%* 2.50% 2.50% 2.50%*
Ratio of expenses to
average net assets prior
to expense limitation .............. 1.80%* 2.60% 2.96% 3.56%* 2.50%* 3.28% 3.61% 4.22%*
Ratio of net investment income
to average net assets .............. (0.92%)* (0.51%) 0.00% 0.25%* (1.62%)* (1.19%) (0.57%) (0.37%)*
Ratio of net investment income
to average net assets prior
to expense limitation ............. (0.92%)* (1.29%) 1.11% 1.96%* (1.62%)* (1.97%) (1.68%) 2.09%*
Portfolio turnover rate ............ 5% 21% 9% 6% 5% 21% 9% 6%
Average Commission rate paid ....... $.0506 $0.0448 N/A N/A $.0506 $0.0448 N/A N/A
</TABLE>
- --------------------
*Annualized
**Total return has not been annualized.
1 Date of initial public offering.
2 Does not include maximum sales charge of 4.75% nor the 1% limited contingent
deferred sales charge that would apply in the event of certain redemptions
within 12 months of purchase of A Class shares. Does not include contingent
deferred sales charge which varies from 1-4% depending upon the holding period
for Class B and Class C shares.
1997 semi-annual report
37
<PAGE>
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
7. Financial Highlights (Continued)
<TABLE>
<CAPTION>
World Growth Fund C Class World Growth Fund Institutional Class
---------------------------------------------------------------------------------------------
For For the For the For the For the For the For the For the
The Year Year Period Six Year Year Period
Six Months Ended Ended 5/10/94(1) Months Ended Ended 2/3/94(1)
Ended 10/31/96 10/31/95 to 10/31/94 Ended 10/31/96 10/31/95 to 10/31/94
4/30/97 4/30/97
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period .......................... $11.58 $10.73 $10.43 $10.00 $12.32 $11.44 $11.02 $10.50
Income from investment operations:
Net investment income (loss) ........ (0.05) (0.06) (0.06) 0.01 (0.07) (0.06) 0.04 0.04
Net realized and unrealized (gain)
loss from security transactions ..... 0.37 0.93 0.39 0.44 0.47 0.96 0.41 0.52
------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations .... 0.32 0.87 0.33 0.45 0.40 0.90 0.45 0.56
------ ------ ------ ------ ------ ------ ------ ------
Less dividends and distributions:
Dividends from net
investment income. . ................ 0.00 (0.02) (0.03) (0.02) - (0.02) (0.03) (0.04)
Distributions from net realized gain
on security transactions ............ (0.77) - - - (0.77) - - -
------ ------ ------ ------ ------ ------ ------ ------
Total dividends and distributions ... (0.77) (0.02) (0.03) (0.02) (0.77) (0.02) (0.03) (0.04)
------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period ...... $11.13 $11.58 $10.73 $10.43 $11.95 $12.32 $11.44 $11.02
====== ====== ====== ====== ====== ====== ====== ======
Total Return(2)...................... 2.87%** 8.15% 3.16% 4.45%** 3.46%** 7.91% 4.22% 5.26%**
Ratios and supplemental data:
Net assets, end of period
(000 omitted). . . . . . ........... $119 $112 $43 $38 $49 $284 $161 $63
Ratio of expenses to
average net assets. ................ 2.50%* 2.50% 2.50% 2.50%* 1.50%* 1.50% 1.50% 1.50%*
Ratio of expenses to
average net assets prior
to expense limitation .............. 2.50%* 3.28% 3.61% 4.23%* 1.50%* 2.28% 2.61% 3.21%*
Ratio of net investment income
to average net assets .............. (1.62%)* (1.19%) (0.62%) 0.16%* (0.62%)* (0.19%) 0.40% 0.76%*
Ratio of net investment income
to average net assets prior
to expense limitation .............. (1.62%)* (1.97%) (1.73%) (1.57%)* (0.62%)* (0.97%) (0.71%) (0.95%)*
Portfolio turnover rate .............. 5% 21% 9% 6% 5% 21% 9% 6%
Average Commission rate paid ......... $0.0506 $0.0448 N/A N/A $0.0506 $0.0448 N/A N/A
</TABLE>
- -------------------
*Annualized
**Total return has not been annualized.
1 Date of initial public offering.
2 Does not include maximum sales charge of 4.75% nor the 1% limited contingent
deferred sales charge that would apply in the event of certain redemptions
within 12 months of purchase of A Class shares. Does not include contingent
deferred sales charge which varies from 1-4% depending upon the holding period
for Class B and Class C shares.
1997 semi-annual report
38
<PAGE>
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
7. Financial Highlights (Continued)
<TABLE>
<CAPTION>
New Pacific Fund A Class New Pacific Fund B Class
---------------------------------------------------------------------------------------------
For For the For the For the For the For the For the For the
The Year Year Period Six Year Year Period
Six Months Ended Ended 5/10/94(1) Months Ended Ended 2/3/94(1)
Ended 10/31/96 10/31/95 to 10/31/94 Ended 10/31/96 10/31/95 to 10/31/94
4/30/97 4/30/97
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period ......................... $9.42 $8.71 $10.44 $10.00 $9.68 $9.01 $10.86 $10.00
Income from investment operations:
Net investment income (loss) ....... 0.02 (0.05) (0.05) (0.02) 0.08 (0.05) (0.10) (0.03)
Net realized and unrealized gain
(loss) on security transactions ... 0.36 0.77 (1.39) 0.47 0.27 0.73 (1.46) 0.89
----- ----- ----- ------ ----- ----- ----- ------
Total from investment operations ... 0.38 0.72 (1.44) 0.45 0.35 0.68 (1.56) 0.86
----- ----- ----- ------ ----- ----- ----- ------
Less dividends and distributions:
Dividends from net
investment income. . .............. - (0.01) - (0.01) - (0.01) - -
Distributions from net realized gain
on security transactions .......... (0.15) - (0.29) - (0.15) - (0.29) -
----- ----- ----- ------ ----- ----- ----- ------
Total dividends and distributions .. (0.15) (0.01) (0.29) (0.01) (0.15) (0.01) (0.29) -
----- ----- ----- ------ ----- ----- ----- ------
Net asset value, end of period ..... $9.65 $9.42 $8.71 $10.44 $9.88 $9.68 $9.01 $10.86
===== ===== ===== ====== ===== ===== ===== ======
Total Return(2)..................... 4.09%** 8.26% (13.99%) 4.53%** 3.67%** 7.54% (14.56%) 8.58%**
Ratios and supplemental data:
Net assets, end of period
(000 omitted)...................... $15,043 $11,752 $10,353 $11,333 $1,347 $562 $573 $431
Ratio of expenses to
average net assets. ............... 1.80%* 1.82% 1.85% 1.85%* 2.50%* 2.50% 2.50% 2.50%*
Ratio of expenses to
average net assets prior
to expense limitation ............. 1.80%* 2.77% 3.73% 3.66%* 2.50%* 3.45% 4.38% 4.32%*
Ratio of net investment income
to average net assets ............. 0.12%* 1.17% (0.60%) (0.21%)* (0.58%)* (0.49%) (1.20%) (0.88%)*
Ratio of net investment income
to average net assets prior
to expense limitation ............. 0.12%* 0.22% (2.48%) (2.02%)* (0.58%) * (0.46%) (3.08%) (2.70%)*
Portfolio turnover rate ............ 77% 163% 163% 104% 77% 163% 163% 104%
Average Commission rate paid ....... $0.0088 $0.0118 N/A N/A $0.0088 $0.0118 N/A N/A
</TABLE>
- -------------------
*Annualized
**Total return has not been annualized.
1 Date of initial public offering.
2 Does not include maximum sales charge of 4.75% nor the 1% limited contingent
deferred sales charge that would apply in the event of certain redemptions
within 12 months of purchase of A Class shares. Does not include contingent
deferred sales charge which varies from 1-4% depending upon the holding period
for Class B and Class C shares.
1997 semi-annual report
39
<PAGE>
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
7. Financial Highlights (Continued)
<TABLE>
<CAPTION>
New Pacific Fund C Class New Pacific Fund Institutional Class
---------------------------------------------------------------------------------------------
For For the For the For the For the For the For the For the
The Year Year Period Six Year Year Period
Six Months Ended Ended 7/7/94(1) Months Ended Ended 2/3/94(1)
Ended 10/31/96 10/31/95 to 10/31/94 Ended 10/31/96 10/31/95 to 10/31/94
4/30/97 4/30/97
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period ......................... $9.49 $8.83 $10.66 $10.00 $9.53 $8.77 $10.48 $11.14
Income from investment operations:
Net investment income (loss) ....... 0.08 (0.05) (0.08) (0.02) (0.01) (0.05) (0.01) 0.01
Net realized and unrealized gain
(loss) on security transactions .... 0.27 0.72 (1.46) 0.68 0.42 0.82 (1.41) (0.67)
----- ----- ----- ------ ----- ----- ----- ------
Total from investment operations ... 0.35 0.67 (1.54) 0.66 0.41 0.77 (1.42) (0.66)
----- ----- ----- ------ ----- ----- ----- ------
Less dividends and distributions:
Dividends from net
investment income. . ............... - (0.01) - - - (0.01) - -
----- ----- ----- ------ ----- ----- ----- ------
Distributions from net realized gain
on security transactions ........... (0.15) - (0.29) - (0.15) - (0.29) -
----- ----- ----- ------ ----- ----- ----- ------
Total dividends and distributions (0.15) (0.01) (0.29) - (0.15) (0.01) (0.29) -
----- ----- ----- ------ ----- ----- ----- ------
Net asset value, end of period ..... $9.69 $9.49 $8.83 $10.66 $9.79 $9.53 $8.77 $10.48
===== ===== ===== ====== ===== ===== ===== ======
Total Return(2)..................... 3.74%** 7.58% (14.57%) 6.55%** 4.37%** 8.77% (13.65%) (5.98%)**
Ratios and supplemental data:
Net assets, end of period
(000 omitted)....................... $71 $44 $17 $12 $93 $120 $62 $47
Ratio of expenses to
average net assets. ................ 2.50%* 2.50% 2.50% 2.50%* 1.50%* 1.50% 1.50% 1.50%*
Ratio of expenses to
average net assets prior
to expense limitation ............. 2.50%* 3.45% 4.38% 4.31%* 1.50%* 2.45% 3.38% 3.31%*
Ratio of net investment income
to average net assets ............. (0.58%)* 0.49% (1.02%) (0.83%)* 0.42%* 1.49% (0.16%) 0.23%*
Ratio of net investment income
to average net assets prior
to expense limitation ............. (0.58%)* (0.46%) (2.90%) (2.64%)* 0.42%* 0.54% (2.04%) (1.58%)*
Portfolio turnover rate ............ 77% 163% 163% 104% 77% 163% 163% 104%
Average Commission rate paid ....... $0.0088 $0.0118 N/A N/A $0.0088 $0.0118 N/A N/A
</TABLE>
- ------------------
*Annualized
**Total return has not been annualized.
1 Date of initial public offering.
2 Does not include maximum sales charge of 4.75% nor the 1% limited contingent
deferred sales charge that would apply in the event of certain redemptions
within 12 months of purchase of A Class shares. Does not include contingent
deferred sales charge which varies from 1-4% depending upon the holding period
for Class B and Class C shares.
1997 semi-annual report
40
<PAGE>
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
7. Financial Highlights (Continued)
<TABLE>
<CAPTION>
Federal Bond Fund A Class Federal Bond Fund B Class
---------------------------------------------------------------------------------------------
For For the For the For the For the For the For the For the
The Year Year Period Six Year Year Period
Six Months Ended Ended 12/3/94(1) Months Ended Ended 7/27/94(1)
Ended 10/31/96 10/31/95 to 10/31/94 Ended 10/31/96 10/31/95 to 10/31/94
4/30/97 4/30/97
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ................ $9.60 $9.80 $9.15 $10.00 $10.07 $10.25 $9.78 $10.00
Income from investment operations:
Net investment income (loss) ........ 0.26 0.52 0.57 0.38 0.22 0.45 0.57 0.12
Net realized and unrealized gain
(loss) on security transactions ..... (0.17) (0.20) 0.65 (0.86) (0.17) (0.18) 0.65 (0.23)
----- ----- ----- ----- ----- ------ ------ -----
Total from investment operations .... 0.09 0.32 1.22 (0.48) 0.05 0.27 1.22 (0.11)
----- ----- ----- ----- ----- ------ ------ -----
Less dividends and distributions:
Dividends from net
investment income. . ................ (0.26) (0.52) (0.57) (0.37) (0.22) (0.45) (0.75) (0.11)
----- ----- ----- ----- ----- ------ ------ -----
Distributions from net realized gain
on security transactions ............ - - - - - - - -
----- ----- ----- ----- ----- ------ ------ -----
Total dividends and distributions ... (0.26) (0.52) (0.57) (0.37) (0.22) (0.45) (0.75) (0.11)
----- ----- ----- ----- ----- ------ ------ -----
Net asset value, end of period ...... $9.43 $9.60 $9.80 $9.15 $9.90 $10.07 $10.25 $9.78
===== ===== ===== ===== ===== ====== ====== =====
Total Return(3)...................... 0.91%** 3.43% 13.72% (4.93%)** 0.52%** 2.76% 13.09% (1.11%)**
Ratios and supplemental data:
Net assets, end of period
(000 omitted)........................ $11,615 $11,419 $11,062 $9,658 $578 $568 $299 $239
Ratio of expenses to
average net assets. ................. 1.20%* 1.23% 1.25% 1.25%* 1.90%* 1.90% 1.90% 1.90%*
Ratio of expenses to
average net assets prior
to expense limitation ............... 1.20%* 1.91% 2.06% 2.58%* 1.90%* 2.58% 2.71% 3.22%*
Ratio of net investment income
to average net assets ............... 5.16% 5.33% 6.07% 4.38%* 4.46%* 4.66% 5.43% 4.87%*
Ratio of net investment income
to average net assets prior
to expense limitation ............... 5.16%* 4.65% 5.26% 3.05%* 4.46%* 3.98% 4.62% 3.55%*
Portfolio turnover rate ............. 72% 196% 227% 366% 72% 196% 227% 366%
</TABLE>
- --------------------------
*Annualized
**Total return has not been annualized.
1 Date of initial public offering.
2 Does not include maximum sales charge of 4.75% nor the 1% limited contingent
deferred sales charge that would apply in the event of certain redemptions
within 12 months of purchase of A Class shares. Does not include contingent
deferred sales charge which varies from 1-4% depending upon the holding period
for Class B and Class C shares.
1997 semi-annual report
41
<PAGE>
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
7. Financial Highlights (Continued)
<TABLE>
<CAPTION>
Federal Bond Fund C Class Federal Bond Fund Institutional Class
---------------------------------------------------------------------------------------------
For For the For the For the For the For the For the For the
The Year Year Period Six Year Year Period
Six Months Ended Ended 7/7/94(1) Months Ended Ended 2/3/94(1)
Ended 10/31/96 10/31/95 to 10/31/94 Ended 10/31/96 10/31/95 to 10/31/94
4/30/97 4/30/97
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $10.20 $10.38 $9.79 $10.00 $9.09 $9.60 $9.15 $10.00
Income from investment operations:
Net investment income (loss) ..... 0.22 0.45 0.63 0.15 0.27 0.55 0.69 0.33
Net realized and unrealized gain .
(loss) on security transactions . (0.17) (0.18) 0.47 (0.22) (0.18) (0.51) 0.54 (0.85)
------ ------ ------ ----- ----- ----- ----- -----
Total from investment operations . 0.05 0.27 1.10 (0.07) 0.09 0.04 1.23 (0.52)
------ ------ ------ ----- ----- ----- ----- -----
Less dividends and distributions:
Dividends from net ...............
investment income. . ............ (0.22) (0.45) (0.51) (0.14) (0.27) (0.55) (0.78) (0.33)
------ ------ ------ ----- ----- ----- ----- -----
Distributions from net realized
gain on security transactions ... - - - - - - - -
------ ------ ------ ----- ----- ----- ----- -----
Total dividends and distributions (0.22) (0.45) (0.51) (0.14) (0.27) (0.55) (0.78) (0.33)
------ ------ ------ ----- ----- ----- ----- -----
Net asset value, end of period .... $10.03 $10.20 $10.38 $9.79 $8.91 $9.09 $9.60 $9.15
====== ====== ====== ===== ===== ===== ===== =====
Total Return3 ..................... 0.51%** 2.74% 11.59% (0.72%)** 1.02%** 0.60% 14.15% (5.17%)**
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ................... $13 $12 $15 $49 $209 $106 $979 $353
Ratio of expenses to
average net assets .............. 1.90%* 1.90% 1.85% 1.90%* 0.90%* 0.90% 0.90% 0.90%*
Ratio of expenses to
average net assets prior
to expense limitation ........... 1.90%* 2.58% 2.70% 3.22%* 0.90%* 1.58% 1.71% 2.23%*
Ratio of net investment income
to average net assets ........... 4.46%* 4.66% 4.73% 4.71%* 5.46%* 5.66% 6.39% 5.57%*
Ratio of net investment income
to average net assets prior
to expense limitation ........... 4.46%* 3.98% 3.88% 3.39%* 5.46%* 4.98% 5.58% 4.24%*
Portfolio turnover rate ........... 72% 196% 227% 366% 72% 196% 227% 366%
</TABLE>
- ---------------
*Annualized
**Total return has not been annualized.
1 Date of initial public offering.
2 Does not include maximum sales charge of 4.75% nor the 1% limited contingent
deferred sales charge that would apply in the event of certain redemptions
within 12 months of purchase of A Class shares. Does not include contingent
deferred sales charge which varies from 1-4% depending upon the holding period
for Class B and Class C shares.
1997 semi-annual report
42
<PAGE>
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
7. Financial Highlights (Continued)
<TABLE>
<CAPTION>
Corporate Income Fund A Class Corporate Income Fund B Class
---------------------------------------------------------------------------------------------
For For the For the For the For the For the For the For the
The Year Year Period Six Year Year Period
Six Months Ended Ended 12/3/93(1) Months Ended Ended 5/11/94(1)
Ended 10/31/96 10/31/95 to 10/31/94 Ended 10/31/96 10/31/95 to 10/31/94
4/30/97 4/30/97
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.62 $9.76 $8.80 $10.00 $10.35 $10.45 $9.73 $10.00
Income from investment operations:
Net investment income ............... 0.29 0.59 0.61 0.51 0.26 0.52 0.66 0.29
Net realized and unrealized gain
(loss) on security transactions ..... (0.21) (0.14) 0.91 (1.20) (0.21) (0.10) 0.91 (0.28)
----- ----- ----- ----- ------ ------ ------ -----
Total from investment operations .... 0.08 0.45 1.52 (0.69) 0.05 0.42 1.57 0.01
----- ----- ----- ----- ------ ------ ------ -----
Less dividends and distributions:
Dividends from net
investment income. . ................ (0.29) (0.59) (0.56) (0.51) (0.26) (0.52) (0.85) (0.28)
Distributions from net realized gain
on security transactions ............ - - - - - - - -
----- ----- ----- ----- ------ ------ ------ -----
Total dividends and distributions ... (0.29) (0.59) (0.56) (0.51) (0.26) (0.52) (0.85) (0.28)
----- ----- ----- ----- ------ ------ ------ -----
Net asset value, end of period ...... $9.41 $9.62 $9.76 $8.80 $10.14 $10.35 $10.45 $9.73
===== ===== ===== ===== ====== ====== ====== =====
Total Return(2)...................... 0.88%** 4.81% 17.71% (7.06%)** 0.45%** 4.16% 17.05% 0.11%**
Ratios and supplemental data:
Net assets, end of period
(000 omitted). . . . . . ............ $12,968 $12,270 $11,518 $9,620 $178 $196 $362 $222
Ratio of expenses to
average net assets. ................. 1.20%* 1.23% 1.25% 1.25%* 1.90%* 1.90% 1.90% 1.90%*
Ratio of expenses to
average net assets prior
to expense limitation ............... 1.20%* 1.65% 1.87% 2.55%* 1.90%* 2.32% 2.52% 3.21%*
Ratio of net investment income
to average net assets ............... 6.20%* 6.20% 6.64% 6.04%* 5.50%* 5.53% 5.97% 5.94%*
Ratio of net investment income
to average net assets prior
to expense limitation ............... 6.20%* 5.78% 6.02% 4.74%* 5.50%* 5.11% 5.35% 4.63%*
Portfolio turnover rate ............. 34% 68% 119% 185% 34% 68% 119% 185%
</TABLE>
- ----------
*Annualized
**Total return has not been annualized.
1 Date of initial public offering.
2 Does not include maximum sales charge of 4.75% nor the 1% limited contingent
deferred sales charge that would apply in the event of certain redemptions
within 12 months of purchase of A Class shares. Does not include contingent
deferred sales charge which varies from 1-4% depending upon the holding period
for Class B and Class C shares.
1997 semi-annual report
43
<PAGE>
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
7. Financial Highlights (Continued)
<TABLE>
<CAPTION>
Corporate Income Fund C Class Corporate Income Fund Institutional Class
---------------------------------------------------------------------------------------------
For For the For the For the For the For the For the For the
The Year Year Period Six Year Year Period
Six Months Ended Ended 9/14/94(1) Months Ended Ended 2/3/94(1)
Ended 10/31/96 10/31/95 to 10/31/94 Ended 10/31/96 10/31/95 to 10/31/94
4/30/97 4/30/97
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.33 $10.44 $9.80 $10.00 $9.34 $9.49 $8.84 $9.98
Income from investment operations:
Net investment income ............... 0.26 0.52 0.18 0.08 0.31 0.62 0.73 0.41
Net realized and unrealized gain
(loss) on security transactions .... (0.20) (0.11) 1.33 (0.19) (0.21) (0.15) 0.78 (1.12)
------ ------ ------ ----- ----- ----- ----- -----
Total from investment operations .... 0.06 0.41 1.51 (0.11) 0.10 0.47 1.51 (0.71)
------ ------ ------ ----- ----- ----- ----- -----
Less dividends and distributions:
Dividends from net
investment income ................. (0.26) (0.52) (0.87) (0.09) (0.31) (0.62) (0.86) (0.43)
------ ------ ------ ----- ----- ----- ----- -----
Distributions from net realized gain
on security transactions .......... - - - - - - - -
------ ------ ------ ----- ----- ----- ----- -----
Total dividends and distributions .. (0.26) (0.52) (0.87) (0.09) (0.31) (0.62) (0.86) (0.43)
------ ------ ------ ----- ----- ----- ----- -----
Net asset value, end of period ...... $10.13 $10.33 $10.44 $9.80 $9.13 $9.34 $9.49 $8.84
====== ====== ====== ===== ===== ===== ===== =====
Total Return2 ....................... 0.55%** 4.06% 16.23% (1.00%)** 1.05%** 5.19% 18.27% (7.21%)**
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ..................... $72 $71 $5 $9 $6,433 $5,852 $3,704 $1,302
Ratio of expenses to
average net assets ................ 1.90%* 1.90% 1.90% 1.85%* 0.90%* 0.90% 0.90% 0.90%*
Ratio of expenses to
average net assets prior
to expense limitation ............. 1.90%* 2.32% 2.52% 3.17%* 0.90%* 1.32% 1.52% 2.20%*
Ratio of net investment income
to average net assets ............. 5.50%* 5.53% 5.75% 5.91%* 6.50%* 6.53% 6.95% 6.88%*
Ratio of net investment income
to average net assets prior
to expense limitation ............. 5.50%* 5.11% 5.13% 4.59%* 6.50%* 6.11% 6.33% 5.58%*
Portfolio turnover rate ............. 34% 68% 119% 185% 34% 68% 119% 185%*
</TABLE>
- ------------------------
*Annualized
**Total return has not been annualized.
1 Date of initial public offering.
2 Does not include maximum sales charge of 4.75% nor the 1% limited contingent
deferred sales charge that would apply in the event of certain redemptions
within 12 months of purchase of A Class shares. Does not include contingent
deferred sales charge which varies from 1-4% depending upon the holding period
for Class B and Class C shares.
1997 semi-annual report
44
<PAGE>
DELAWARE GROUP OF FUNDS
For Growth of Capital
Aggressive Growth Fund
Trend Fund
Enterprise Fund
DelCap Fund
Value Fund
U.S. Growth Fund
Growth Stock Fund
For Total Return
Quantum Fund
Blue Chip Fund
Devon Fund
Decatur Total Return Fund
Decatur Income Fund
Delaware Fund
For International Diversification
Emerging Markets Fund
New Pacific Fund
World Growth Fund
International Equity Fund
Global Assets Fund
Global Bond Fund
<PAGE>
For Current Income
Delchester Fund
Strategic Income Fund
Corporate Income Fund
Federal Bond Fund
U.S. Government Fund
U.S. Government Securities Fund
Limited-Term Government Fund
For Tax-Free Current Income
National High Yield Municipal Bond Fund
Tax-Free USA Fund
Tax-Free Insured Fund
Tax-Free USA Intermediate Fund
State Tax-Free Funds*
Money Market Funds
Delaware Cash Reserve
U.S. Government Money Fund
Tax-Free Money Fund
* Available for the following states: AZ, CA, CO, FL, ID,
IA, KS, MN, MO, NM, NY, ND, OR, PA, UT, WA, WI.
<PAGE>
INVESTMENT MANAGER
Delaware Management Company, Inc.
Philadelphia
INTERNATIONAL AFFILIATE
Delaware International Advisers Ltd.
London, England
SUBADVISERS
Lynch & Mayer
New York, New York
Walter Scott & Partners, Ltd.
Edinburgh, Scotland
John Govett & Co.
London, England
Lincoln Investment Management Inc.
Fort Wayne, Indiana
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
Philadelphia
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING AND
TRANSFER AGENT
Delaware Service Company, Inc.
Philadelphia
1818 Market Street
Philadelphia, PA 19103-3682
FOR SHAREHOLDERS
1.800.523.1918
FOR SECURITIES DEALERS
1.800.362.7500
FOR FINANCIAL INSTITUTIONS
REPRESENTATIVES
1.800.659.2265
<PAGE>
THIS SEMI-ANNUAL REPORT IS FOR THE INFORMATION OF DELAWARE GROUP ADVISER
FUNDS' SHAREHOLDERS, BUT IT MAY BE USED WITH PROSPECTIVE INVESTORS WHEN PRECEDED
OR ACCOMPANIED BY A CURRENT PROSPECTUS FOR DELAWARE GROUP ADVISER FUNDS, WHICH
SETS FORTH DETAILS ABOUT CHARGES, EXPENSES, INVESTMENT OBJECTIVES, AND OPERATING
POLICIES OF THE FUND. INTERNATIONAL INVESTING HAS SPECIAL RISKS THAT INCLUDE
LESS STABLE ECONOMIES AND GOVERNMENTS CURRENCY FLUCTUATIONS AND DIFFERENT
ACCOUNTING STANDARDS. YOU SHOULD READ THE PROSPECTUS CAREFULLY BEFORE YOU
INVEST. SUMMARY INVESTMENT RESULTS ARE DOCUMENTED IN THE FUND'S CURRENT
STATEMENT OF ADDITIONAL INFORMATION. THE FIGURES IN THIS REPORT REPRESENT PAST
RESULTS WHICH ARE NOT A GUARANTEE OF FUTURE 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.
Be sure to consult your financial adviser when making investments. Mutual funds
can be a valuable part of your financial plan: however, shares of the Fund are
not FDIC or NCUSIF insured, are not guaranteed by any bank or any credit union,
and involve investment risk, including the possible loss of the principal amount
invested. Shares of the Fund are not bank or credit union deposits.
Copy Rights Delaware Distributors, L.P.
DELAWARE
GROUP
=========
Philadelphia o London
Printed in the USA on
recycled paper
DAF-AR [4/97] PP6/97
LAF-31
