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Delaware New Pacific Fund
Delaware Overseas Equity Fund
(Various photos demonstrating service and guidance,
professional management and goals)
For International Diversification
service and guidance
professional management
goals
1999
Annual Report
DELAWARE(SM)
INVESTMENTS
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Philadelphia o London
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A TRADITION OF SOUND INVESTING
commitment
A Commitment
To Our Investors
(Photo of computer keyboard)
(Photo of illustration from International Diversification Brochure)
Delaware Investments has a tradition of money management that dates back to
1929. We have a long and distinguished history of helping individuals and
institutions - including some of America's largest pension funds reach their
financial goals.
Headquartered in Philadelphia, a block from the nation's oldest stock
exchange, the Delaware organization established its first mutual fund in 1938.
Delaware International Advisers Ltd., our international affiliate, was
established in 1990 and is headquartered in London.
Delaware Investments offers a full range of mutual funds. We also manage
investments for variable annuities and closed-end funds as well as offer a wide
range of retirement plan services for individuals and businesses.
Delaware Investments manages approximately $45 billion in mutual fund assets
and institutional advisory accounts for more than half-a-million investors.
Complete information on any fund offered by Delaware Investments can be found in
each fund's current prospectus. Prospectuses for all funds offered by Delaware
Investments are available from your financial adviser. Please read the
prospectus carefully before you invest or send money.
Fund Objectives
Delaware New Pacific Fund
To seek long-term capital appreciation by investing primarily in companies which
are domiciled in or have their principal business activities in the Pacific
Basin.
Delaware Overseas Equity Fund
To maximize total return, principally through investments in an internationally
diversified portfolio of equity securities.
Table of Contents
Letter to Shareholders Page 1
Portfolio Managers' Review
Delaware New Pacific Fund Page 3
Delaware Overseas Equity Fund Page 5
Performance Summary Page 8
Statements of Net Assets Page 10
Financial Highlights Page 16
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November 17, 1999
Dear Shareholder:
Overseas markets prospered this past year, as many international and emerging
market economies bounced back from turbulence in the summer and fall of 1998.
The U.S. Federal Reserve Board lowered domestic interest rates three times last
autumn to increase liquidity in the U.S. Many nations worldwide, including the
United Kingdom, New Zealand, Taiwan, Japan and Singapore followed with rate cuts
of their own. This spurred the economic recovery of established and emerging
international markets.
Lower interest rates proved favorable for international and emerging market
investors. Delaware New Pacific Fund, which invests primarily in companies
located in Asia, provided a +58.52% return for the one-year period ending
October 31, 1999 (for Class A shares at net asset value with all distributions
reinvested). We believe your portfolio is poised to reap the benefits of
continuing economic recovery in this area of the world.
Delaware Overseas Equity Fund, which invests in both developed and emerging
markets, provided positive, but less competitive performance for the year. Your
Fund provided a +13.86% return for the one-year period, ending October 31, 1999
(for Class A shares at net asset value with all distributions reinvested).
Emerging markets continue to recover from the volatility of last year. Asian
economies, in general, have been improving as many governments implemented
pro-business policy changes. Across the globe, Brazil successfully navigated
rough waters after devaluing its national currency in January 1999. Developed
markets have shown signs of significant improvement as well.
Annual Total Returns
One Year Ended October 31, 1999
- --------------------------------------------------------------------------------
Delaware New Pacific Fund A Class +58.52%
Morgan Stanley Pacific Index +51.88%
Lipper Pacific Region Fund Average (55 funds) +64.79%
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Delaware Overseas Equity Fund +13.86%
MSCI EAFE Index +23.37%
Lipper International Fund Average (591 funds) +24.34%
- --------------------------------------------------------------------------------
All performance shown above is based on net asset value without the effect of
sales charges and assumes reinvestment of all distributions. See pages 8 and 9
for complete performance information for all classes. Performance for other Fund
classes varies due to different expenses. The Morgan Stanley Pacific Index is an
unmanaged measure of international stocks in established Pacific markets. The
Lipper Pacific Region Fund Average represents a peer group of Pacific region
mutual funds tracked by Lipper Analytical. The MSCI EAFE Index is an unmanaged
measure of international stocks in established markets. The Lipper International
Fund Average represents a peer group of international mutual funds tracked by
Lipper Analytical. You cannot invest directly in an index. All returns are
stated in U.S. dollars. Past performance does not guarantee future results.
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For some investors with holdings in international and emerging markets, it
has probably been difficult to maintain a long-term perspective over the past
few years. Although there are inherent short-term risks associated with
international investing, such as currency and political risks, there can also be
great financial opportunities over longer time periods.
On the pages that follow, your Fund's portfolio management teams discuss in
further detail Delaware New Pacific Fund's and Delaware Overseas Equity Fund's
recent performance and outlook for the future.
Investing in international and emerging markets adds a strong diversification
component to your portfolio. Global markets have rebounded strongly from a
difficult 1998 and we continue to see great potential for capital appreciation
in this area. We hope that investors who have remained committed to this market
will be rewarded in the future as they have been this past year. Thank you for
your continued confidence in Delaware Investments.
Sincerely,
/s/ Wayne A. Stork
- ---------------------------------
Wayne A. Stork
Chairman,
Delaware Investments Family of Funds
/s/ David K. Downes
- ---------------------------------
David K. Downes
President and Chief Executive Officer,
Delaware Investments Family of Funds
INVESTING IN
INTERNATIONAL AND
EMERGING MARKETS
ADDS A STRONG
DIVERSIFICATION
COMPONENT TO YOUR
PORTFOLIO.
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investing
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(Photo of computer keyboard)
Portfolio Managers' Review
Delaware New Pacific Fund
Jane Pickard
AIB Govett, Inc.
November 17, 1999
Overview
Markets in the Pacific Region have continued to rally throughout 1999. Stock
markets made strong gains while currencies have generally been stable to strong.
We attribute this sharp turnaround in the region's fortunes to a confluence of
positive factors.
In Japan, the signs of the economy having bottomed cannot be ignored.
Although we think the country's first quarter gross domestic product of 1.9% is
unlikely to be sustained, we believe their economic recession is over and that
prospects for growth are improving (Source: Bloomberg). Consumer consumption
indicators in Japan are beginning to rise despite a concurrent increase in
unemployment. This suggests to us that low interest rates are finally having a
positive impact. Strong performance in the small cap sector of the Japanese
stock market, primarily driven by local individual investors is expected to
benefit retail and property demand going forward (Source: Bloomberg).
Other Asian macro economic news has also been extremely positive. Many
experts had expected that Asia would follow a slow recovery, a "U" shaped move
back to growth over a number of years. In reality many economies, especially
Korea's, registered positive growth in the first quarter of 1999. Consumer
consumption has been a key driver for recovery.
The flow of positive news has been sufficient to counter the impact of higher
U.S. interest rates, which has historically caused corrections in equity
markets.
Politics in this region have been in the news. The flare-up of tensions
between India and Pakistan in the second quarter was a disappointing
development. Pakistan's Supreme Court is just now agreeing to hear a
constitutional petition next month against the army coup that toppled the
government of Prime Minister Nawaz Sharif in October 1999. In Indonesia the
elections passed relatively peacefully, although a month later there was still
no final counting of the vote. Still, the elections are largely viewed as a
positive sign that one of the most populous nations in the world is quickly
moving towards a democratic system.
Investment Strategy
As of October 31, 1999, we have approximately 43% of the portfolio allocated to
Japan, a sizeable weighting but a smaller percentage than our benchmark, the
Morgan Stanley Pacific Index. Our underweight position is primarily a function
of our belief that there are more attractive growth rates elsewhere in the
region.
The Fund has had about the same allocation to Australia as the index.
Australia, in our opinion, has good quality industrial companies priced at fair
value, but has better opportunities for capital appreciation in the resource and
cyclical sector. As we expect global growth rates to trend upward, demand for
overview
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commodity products will outstrip supply and this sector of the market is
expected to perform well.
Until recently, your Fund has held no investments in Malaysia because we
considered the political risk to be too high, especially since other markets
offered equally attractive fundamentals. In addition, the Fund has no protective
currency hedges in place as we believe that a reduction in debt will be
sufficient to stabilize if not strengthen the individual currencies in the
Pacific region.
Outlook
Macro economic indicators in the New Pacific region are improving. We actually
believe that earnings forecasts are currently underestimating the potential
impact of both volume growth and positive, widespread changes in corporate
management.
The environment under which companies operate in Asia today is radically
different than that of the early 1990s. Competition has increased, foreign
companies are present on an equal basis and political connections are far less
important to managing businesses than in the past. In this environment
management has little alternative but to run a focused business. Corporate
restructuring is a decade long process, but the process has begun and we have
already seen tremendous improvements.
China is moving from being a perceived risk to financial markets to becoming
a positive contributor. If China moves into a growth cycle, the benefits for the
rest of the region are significant. China is a sizeable trade partner. The
interest rate cut by the authorities on the mainland, coupled with strong first
quarter domestic growth indicates that China has clearly shifted to an
expansionary policy (Source: Bloomberg). Forecasts for Chinese GDP have been
raised. Instead of a further decline in the growth rate, we now expect a stable
outlook. Given that consumption makes up about 80% of the Chinese economy, low
interest rates may well place it on a path to improving growth (Source:
Bloomberg).
If both Japan and China resume a steady growth pattern into 2000, we believe
the ground will be laid for a sustained period of out-performance from this
region's stock markets. Whether this will happen remains an unknown at present,
but the remainder of 1999 ought to provide an effective indication.
outlook
(Photo of couple talking to financial advisor)
Delaware New Pacific Fund Country Allocation
October 31, 1999
India 4.35%
Japan 42.92%
Hong Kong 8.73%
Malaysia 2.37%
Singapore 7.77%
South Korea 7.43%
Thailand 3.26%
Other Investments 6.85%
Cash, Other Assets & Liabilities 10.68%
Australia 5.64%
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Delaware Overseas
Equity Fund
Clive A. Gillmore
Senior Portfolio Manager and
Director of Delaware
International Advisers Ltd.
Robert Akester
Senior Portfolio Manager
Delaware International Advisers Ltd.
November 17, 1999
Joshua A. Brooks
Senior Portfolio Manager
Delaware International Advisers Ltd.
(Photo of family on beach)
Overview
International markets performed relatively well during your Fund's fiscal 1999.
We have seen strength in economies along the Pacific Rim and in Latin America,
along with moderate growth in Europe and the United Kingdom. Your Fund benefited
from this relative strength and provided a +13.86% return for the one-year
period ended October 31, 1999 (for Class A shares at net asset value with all
distributions reinvested).
Unfortunately, Delaware Overseas Equity Fund did not keep pace with either
its unmanaged benchmark, the MSCI EAFE Index, which returned +23.37% or its
peers in the Lipper International Funds category, which had an average return of
+24.34%.
The Fund underperformed largely because of our strict adherence to a
value-style approach to investing. We strive to select what we believe are
healthy, undervalued companies with the potential to reach their full intrinsic
value in the not too distant future. Over longer time periods, we believe this
strategy will enable your Fund to deliver returns in line with its benchmarks,
although it did not do so for this time period.
Investment Strategy
Delaware Overseas Equity Fund focuses on both developed nations as well as
emerging nations. We are permitted to invest up to 40% of the Fund's assets in
emerging market economies. Due to the compelling valuations and what we believe
to be above-average growth potential available from these areas, we have
slightly increased our holdings in emerging markets over the past fiscal year.
Developed nations were the secondary story in terms of overall performance
this past year. The European Union countries, including the United Kingdom, saw
slow-to-moderate growth over the course of fiscal 1999. During the third and
fourth quarter of your Fund's fiscal year, there was some reversal in the themes
we saw in the first half of the year with the European currency. On January 1,
1999, Europe's Economic and Monetary Union (EMU) introduced a new unified
currency, the "Euro." The EMU includes 11 of the 15 European Union
Members--Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg,
the Netherlands, Portugal and Spain. After stumbling considerably in the first
three months of 1999, the new currency recovered, but as of October 31, 1999 the
Euro is still 10% below its initial level in January 1999 (Source: Bloomberg).
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The European markets performed somewhat better from April 30, 1999 to October
31, 1999 after a slow start to your Fund's fiscal year, although performance
varied significantly by country. Of the main markets, France was a standout
performer for your Fund, buoyed by the corporate activity in the financial
sector and also the proposed takeover of Elf Aquitaine by Total Fina in the oil
sector. We have seen generally better economic figures coming out of Europe with
industrial production, GDP and consumer confidence all improving as of October
31, 1999. Stock valuations within Europe are selectively reasonable; we believe
Spain, the Netherlands and the United Kingdom offer good value. We did not
invest significantly in Eastern European nations during your Fund's fiscal year.
They were dragged down by economic depression in Germany and also Russia.
The developed Pacific markets provided mixed returns over the fiscal year as
compared to the favorable returns provided by the emerging markets nations in
the Pacific region. The best performing developed market was Japan, which posted
flat gains for the year after two years of negative returns. The latest economic
figures released in Japan indicate that a nascent recovery is underway, fueled
by the huge fiscal stimulus that the government has provided. The other Asian
markets fell as there were fears that the dramatic appreciation of the yen would
lead Japan's economy downward again. We continue to believe that stock
valuations in Japan remain expensive and that the profitability of Japanese
corporations will only improve with full-scale corporate restructuring.
In emerging market nations, the turmoil of 1998 created numerous value
investment opportunities. Central banks around the globe lowered domestic
interest rates in 1998, producing needed liquidity in international markets.
This enabled many nations to begin their economic recoveries. In several Asian
economies, political reform, policy changes and corporate restructuring resulted
in growing GDP, falling interest rates and a slight increase in consumer
spending.
Our search for stocks that sell below a company's true value has led us to
commodity companies in South Africa. We continue to hold Sappi Limited, a paper
producer, and Iscor, a steel and oil producer. These stocks have recovered
nicely over the course of fiscal 1999. They have been aided by a more positive
attitude toward commodities on the part of international investors due to
improvement in global economic prospects.
Another attractive area for us is Brazil. This nation's government faced
severe financial difficulties in the past and, as a result, devalued its
national currency in January 1999. Most corporations in this country maintain
healthy balance sheets and many offer growth potential for the coming year even
though the economy appears to be facing recession. Another bright spot for
Delaware Overseas Equity Fund was Mexico. Because it is tied closely to the
strategy
(Photo of glasses, pen & keyboard)
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U.S. economy, this nation's economy has fared better than many of its Latin
American and South American neighbors.
There are, however, some emerging economies that we have shied away from or
approached with caution. South Korea has been a strong performer this past
winter, but we have chosen to underweight it. Although the government is
promoting economic reform, we believe that due to the excessive debts of most
companies in the market, investing in securities in this area may involve undue
risk in the months ahead.
In the Pacific region, we have chosen, instead, to focus on emerging Asian
economies like China. The Chinese stocks which attract us are those with strong
balance sheets (high net cash levels in several cases) and genuine businesses,
such as toll roads and railways.
Outlook
Looking forward to the first half of fiscal 2000, we plan to maintain our focus
in the following areas:
o Continue to concentrate on the emerging markets arena. We have already seen
significant capital appreciation in this area and we believe that we will be
able to benefit further as these economies continue to recover.
o Remain underweighted in Japan compared to the MSCI EAFE Index. We have,
however, not counted out Japan altogether. Their companies are slowly
restructuring and refocusing on profits and shareholders. We might see better
opportunities unfold in Japan over the next six months to a year.
o Center our attention on the long-term fundamental value of the positions we
currently hold. It is our opinion that your Fund is currently well positioned
to reap the benefits of improving international economies.
By focusing on these objectives, we believe we are in a solid position to
provide attractive total return consistent with our prudent investment style.
outlook
Delaware Overseas Equity Fund Country Allocation
October 31, 1999
Spain 3.96%
Japan 8.76%
China & Hong Kong 3.89%
Germany 7.23%
France 6.80%
Australia & New Zealand 10.81%
Netherlands & Belgium 5.63%
Other Investments 5.81%
South Africa, Egypt & Turkey 6.08%
United Kingdom 16.85%
Other Pacific Rim 5.41%
Latin America 9.99%
Cash, Other Assets & Liabilities 8.78%
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Performance Summary
Delaware New Pacific Fund's
Lifetime Performance
Performance of a $10,000 Investment
December 3, 1993 through October 31, 1999
Morgan Stanley Delaware New Pacific
Pacific Index Fund Class A
------------- ------------
Dec. 93 $10,000 $9,425
Oct. 94 $11,887 $9,849
Oct. 95 $10,576 $8,471
Oct. 96 $10,947 $9,170
Oct. 97 $ 8,809 $7,231
Oct. 98 $ 7,602 $4,567
Oct. 99 $11,546 $7,239
Chart assumes $10,000 invested on December 3, 1993, and includes the effect of a
5.75% maximum front-end sales charge and reinvestment of all distributions.
Returns for other classes will differ due to different charges and expenses.
Past performance does not guarantee future results. The Morgan Stanley Pacific
Index is an unmanaged measure of international stocks in established Pacific
markets. You cannot invest directly in an index.
Delaware New Pacific Fund Performance
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Average Annual Returns through October 31, 1999
Lifetime Five Years One Year
Class A (Est. 12/3/93)
Excluding Sales Charge -4.37% -5.97% +58.52%
Including Sales Charge -5.32% -7.08% +49.38%
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Class B (Est. 3/29/94)
Excluding Sales Charge -4.51% -6.59% +57.08%
Including Sales Charge -4.68% -6.95% +52.08%
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Class C (Est. 5/10/94)
Excluding Sales Charge -5.14% -6.64% +57.14%
Including Sales Charge -5.14% -6.64% +56.14%
Returns reflect investment of distributions and any applicable sales charges as
noted below. Return and share value will fluctuate so that shares, when
redeemed, may be worth more or less than the original cost. Past performance
does not guarantee future results. Class B and C results excluding sales charge
assume either contingent sales charges did not apply or the investment was not
redeemed.
Class A shares have a 5.75% front-end sales charge and a 12b-1 fee.
Class B shares do not have 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 of up to 5% if redeemed before the end of the sixth year.
Class C shares have a 1% annual distribution and service fee. If redeemed within
12 months, a 1% contingent deferred sales charge applies.
Average annual total returns for the lifetime, five-year and one-year periods
ended 10/31/99, for Delaware New Pacific Fund's Institutional Class were -5.85%,
- -5.52% and +59.06%, respectively. The Institutional Class was made available
without sales charges only to certain eligible institutional accounts on 2/3/94.
Expense limitations were in effect during these periods. Performance would have
been lower had the expense limitations not been in effect.
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Delaware Overseas Equity Fund's
Lifetime Performance
Performance of a $10,000 Investment
December 3, 1993 through October 31, 1999
Delaware Overseas
MSCI EAFE Index Equity Fund Class A
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Dec. 93 $10,000 $ 9,425
Oct. 94 $11,276 $10,387
Oct. 95 $11,268 $10,783
Oct. 96 $12,485 $11,743
Oct. 97 $13,099 $12,652
Oct. 98 $14,403 $11,013
Oct. 99 $17,769 $12,540
Chart assumes $10,000 invested on December 3, 1993, and includes the effect of a
5.75% maximum front-end sales charge and reinvestment of distributions. Returns
for other classes will differ due to different charges and expenses. Past
performance does not guarantee future results. The MSCI EAFE Index is an
unmanaged measure of international stocks in established markets. You cannot
invest directly in an index.
Delaware Overseas Equity Fund Performance
Average Annual Returns through October 31, 1999
Lifetime Five Years One Year
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Class A (Est. 12/3/93)
Excluding Sales Charge +4.95% +3.84% +13.86%
Including Sales Charge +3.90% +2.62% +7.27%
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Class B (Est. 3/29/94)
Excluding Sales Charge +3.53% +3.09% +12.98%
Including Sales Charge +3.42% +2.86% +8.75%
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Class C (Est. 5/10/94)
Excluding Sales Charge +3.63% +3.08% +13.08%
Including Sales Charge +3.63% +3.08% +12.23%
Returns reflect reinvestment of distributions and any applicable sales charges
as noted below. Return and share value will fluctuate so that shares, when
redeemed, may be worth more or less than the original cost. Past performance
does not guarantee future results. B and C class results excluding sales charge
assume either contingent sales charges did not apply or the investment was not
redeemed.
Class A shares have a maximum 5.75% front-end sales charge and a 12b-1 fee.
Class B shares do not have 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 of up to 5% if redeemed before the end of the sixth year.
Class C shares have a 1% annual distribution and service fee. If redeemed within
12 months, a 1% contingent deferred sales charge applies.
Average annual total returns for the lifetime, five-year and one-year periods
ended 10/31/99, for Delaware Overseas Equity Fund's Institutional Class were
+4.31%, +3.90% and +14.30%, respectively. The Institutional Class was made
available without sales charges only to certain eligible institutional accounts
on 2/3/94.
Expense limitations were in effect during these periods. Performance would have
been lower had the expense limitations not been in effect.
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Financial Statements
DELAWARE GROUP ADVISER FUNDS, INC.
DELAWARE NEW PACIFIC FUND
STATEMENT OF NET ASSETS
OCTOBER 31, 1999
________________________________________________________________________________
NUMBER MARKET
OF SHARES VALUE
-------------------------------
COMMON STOCK - 86.14%
AUSTRALIA - 5.64%
Australia & New Zealand Banking Group ........... 27,000 $ 177,895
Broken Hill Proprietary ......................... 15,000 154,773
CSR ............................................. 70,000 156,871
Orica ........................................... 39,000 205,835
*Pasminco ........................................ 117,300 112,019
Telstra ......................................... 28,500 144,739
WMC ............................................. 42,000 179,955
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1,132,087
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HONG KONG - 8.73%
Cable & Wireless Telecom ........................ 90,000 205,651
*China Telecom ................................... 86,000 294,490
Dah Sing Financial .............................. 53,600 213,903
Henderson Land Development ...................... 64,000 291,658
HSBC Holdings ................................... 14,800 177,665
Hutchison Whampoa ............................... 13,000 130,536
Jardine Matheson ................................ 36,000 154,800
South China Morning Post ........................ 234,000 170,198
Sun Hung Kai Properties ......................... 14,000 113,092
----------
1,751,993
----------
INDIA - 4.35%
Hindalco Industries, GDR ........................ 11,040 234,048
ICICI, GDR ...................................... 6,170 69,258
I.T.C., GDR ..................................... 7,000 132,650
Mahanagar Telephone Nigam, GDR .................. 12,500 104,063
PT Hanjaya Mandala Sampoerna .................... 60,000 139,780
Videsh Sanchar Nigam, GDR ....................... 12,110 193,457
----------
873,256
----------
JAPAN - 42.92%
DDI ............................................. 36 393,915
Densei-Lambda K.K. .............................. 4,500 215,962
Denso ........................................... 20,000 428,085
Fujitsu ......................................... 16,000 482,219
Hikari Tsushin .................................. 500 402,649
Ito-Yokado ...................................... 5,000 400,250
Kao ............................................. 11,000 335,749
Mitsubishi ...................................... 44,000 316,744
Mitsui Fudosan .................................. 57,000 426,194
Nichido Fire & Marine ........................... 31,000 190,728
Nifco ........................................... 800 10,297
Nippon Express .................................. 47,000 332,927
Nippon Telegraph & Telephone .................... 13 199,645
NTT Mobile Communications ....................... 20 531,746
Omron ........................................... 21,000 439,411
Orix ............................................ 3,400 456,880
Ricoh ........................................... 28,000 457,148
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________________________________________________________________________________
NUMBER MARKET
OF SHARES VALUE
-------------------------------
COMMON STOCK (CONTINUED)
JAPAN (CONTINUED)
Sakura Bank, (The) .............................. 46,000 $ 395,604
Shohkoh Fund .................................... 600 367,423
Softbank ........................................ 1,000 415,607
Takeda Chemical Industries ...................... 9,000 517,445
Trend Micro ..................................... 4,500 894,082
----------
8,610,710
----------
MALAYSIA - 2.37%
Commerce Asset-Holding Berhad ................... 78,000 172,421
Perusahaan Otomobil Nasional .................... 38,000 70,000
Resorts World Berhad ............................ 81,000 232,342
----------
474,763
----------
PHILIPPINES - 1.78%
Far East Bank & Trust ........................... 3,827 6,537
Manila Electric ................................. 32,000 87,781
Metropolitan Bank & Trust ....................... 10,670 79,825
Philippine Long Distance, ADR ................... 4,600 94,588
San Miguel ...................................... 61,600 89,097
----------
357,828
----------
SINGAPORE - 7.77%
DBS Group ....................................... 50,935 576,160
Fraser & Neave .................................. 70,000 299,037
Keppel .......................................... 115,000 312,756
Sembcorp Industries ............................. 26 33
Singapore Airlines .............................. 18,810 199,191
Singapore Press Holdings ........................ 10,000 171,480
----------
1,558,657
----------
SOUTH KOREA - 7.43%
*Housing & Commercial Bank ....................... 8,287 219,006
*Hyundai Motor ................................... 6,000 105,544
*Korea Telecom, ADR .............................. 8,000 282,000
L.G. Chemical ................................... 9,978 301,960
Pohang Iron & Steel ............................. 2,160 267,087
Samsung Electronics ............................. 1,895 315,965
----------
1,491,562
----------
TAIWAN - 1.89%
Asustek Computer ................................ 17,226 180,840
China Steel ..................................... 257,250 197,885
----------
378,725
----------
THAILAND - 3.26%
*Advanced Information Service ................... 13,000 151,456
*Bangkok Expressway Public ...................... 196,200 96,513
*National Finance & Securities .................. 94,500 36,087
*PTT Exploration & Production ................... 14,500 105,864
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DELAWARE NEW PACIFIC FUND
STATEMENT OF NET ASSETS (CONTINUED)
________________________________________________________________________________
NUMBER MARKET
OF SHARES VALUE
-------------------------------
COMMON STOCK (Continued)
THAILAND (Continued)
*Thai Farmers Bank .............................. 101,500 $ 143,217
Total Access Communication ..................... 49,800 120,516
----------
653,653
----------
Total Common Stock (cost $13,115,671) .......... 17,283,234
----------
INVESTMENT COMPANIES - 3.18%
*Taipei Fund .................................... 70 637,000
----------
Total Investment Companies (cost $637,053) ..... 637,000
----------
Principal
Amount
---------
REPURCHASE AGREEMENTS - 7.34%
With Chase Manhattan 5.20% 11/1/99 (dated
10/29/99, collateralized by $478,000 U.S.
Treasury Notes 6.125% due 12/31/01,
market value $489,083) ....................... $477,000 477,000
With J.P. Morgan Securities 5.20% 11/1/99
(dated 10/29/99, collateralized by $344,000
U.S. Treasury Notes 5.625% due 5/15/01,
market value $351,082 and $153,000 U.S.
Treasury Notes 6.50% due 8/31/01,
market value $156,747) ....................... 498,000 498,000
With PaineWebber 5.20% 11/1/99 (dated 10/29/99,
collateralized by $172,000 U.S. Treasury
Notes 6.25% due 10/31/01, market value
$178,234 and $323,000 U.S. Treasury Notes
6.25% due 2/15/03, market value $329,701) .... 498,000 498,000
----------
Total Repurchase Agreements
(cost $1,473,000)......................................... 1,473,000
----------
TOTAL MARKET VALUE OF SECURITIES - 96.66%
(COST $15,225,724)........................................ $19,393,234
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 3.34%..... 671,063
-----------
NET ASSETS APPLICABLE TO 2,754,763 SHARES
($0.01 PAR VALUE) OUTSTANDING - 100.00%................... $20,064,297
===========
<PAGE>
for international diversification 11
NET ASSET VALUE - DELAWARE NEW PACIFIC FUND A CLASS
($12,113,304 / 1,668,385 SHARES) ............................ $7.26
=====
NET ASSET VALUE - DELAWARE NEW PACIFIC FUND B CLASS
($5,653,643 / 772,134 SHARES) ............................... $7.32
=====
NET ASSET VALUE - DELAWARE NEW PACIFIC FUND C CLASS
($1,093,385 / 152,865 SHARES) ............................... $7.15
=====
NET ASSET VALUE - DELAWARE NEW PACIFIC FUND INSTITUTIONAL CLASS
($1,203,965 / 161,379 SHARES) ............................... $7.46
=====
COMPONENTS OF NET ASSETS AT OCTOBER 31, 1999:
Common stock, $0.01 par value, 70,000,000 shares authorized to
the Fund with 20,000,000 shares allocated to the Delaware
New Pacific Fund A Class, 20,000,000 shares allocated to the
Delaware New Pacific Fund B Class, 15,000,000 shares
allocated to the Delaware New Pacific Fund C Class and
15,000,000 shares allocated to the Delaware New Pacific
Fund Institutional Class .................................... $21,149,648
Accumulated net realized loss on investments ................... (5,244,500)
Net unrealized appreciation of investments and foreign currencies 4,159,149
-----------
Total net assets ............................................... $20,064,297
===========
- ----------------------
*Non-income producing security
ADR - American Depository Receipt
GDR - Global Depository Receipt
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
DELAWARE NEW PACIFIC FUND
Net asset value A Class (A) .................................... $7.26
Sales charge (5.75% of offering price or 6.06% of the amount
invested per share) (B) ..................................... 0.44
-----
Offering price ................................................. $7.70
=====
- ----------------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon redemption or repurchase of shares.
(B) See the current Prospectus for purchases of $50,000 or more.
See accompanying notes
<PAGE>
12 for international diversification
DELAWARE GROUP ADVISER FUNDS, INC.
DELAWARE OVERSEAS EQUITY FUND
STATEMENT OF NET ASSETS
OCTOBER 31, 1999
________________________________________________________________________________
NUMBER MARKET
OF SHARES VALUE
-------------------------------
COMMON STOCK - 88.75%
ARGENTINA - 0.68%
Central Puerto SA, Class B ......................... 8,000 $ 13,366
Transportadora De Gas Series B ..................... 6,700 11,060
-----------
24,426
-----------
AUSTRALIA - 8.02%
Amcor .............................................. 14,000 61,081
CSR ................................................ 27,000 60,507
Foster's Brewing Group ............................. 24,000 63,685
National Australia Bank ............................ 4,400 67,790
Orica .............................................. 6,500 34,306
-----------
287,369
-----------
BELGIUM - 0.72%
Electrabel SA ...................................... 78 25,780
-----------
25,780
-----------
BRAZIL - 4.20%
Aracruz Celulose SA, ADR ........................... 1,500 30,750
Centrais Electric Series B, GDR .................... 400 12,705
Companhia Energetica de Minas Gerais, ADR .......... 1,167 16,680
Companhia Paranaense de Energia-Copel, ADR ......... 3,600 23,850
Rossi Residential, GDR ............................. 16,600 15,732
Telebras, ADR ...................................... 500 23
Unibanco, GDR ...................................... 1,320 30,525
Usiminas Siderurg Minas, ADR ....................... 5,600 20,397
-----------
150,662
-----------
CHILE - 1.01%
Administradora de Fondos de Pensiones
Provida SA, ADR .................................. 1,400 24,150
Empresa Nacional Electricidad SA, ADR .............. 931 11,870
-----------
36,020
-----------
CHINA - 1.84%
First Tractor ...................................... 42,000 7,678
Guangdong Kelon Electric Holding ................... 30,000 26,648
Guangshen Railway .................................. 140,000 16,040
Shenzhen Expressway ................................ 106,000 15,829
-----------
66,195
-----------
CROATIA - 0.44%
Zagrebacka Banka, GDR .............................. 1,775 15,753
-----------
15,753
-----------
EGYPT - 0.41%
*Paints & Chemical, GDR ............................. 2,300 14,548
-----------
14,548
-----------
ESTONIA - 0.54%
EESTI Telekom, GDR ................................. 461 7,307
*EESTI Uhispank, GDR ................................ 2,890 12,066
-----------
19,373
-----------
<PAGE>
________________________________________________________________________________
NUMBER MARKET
OF SHARES VALUE
-------------------------------
COMMON STOCK (CONTINUED)
FRANCE - 6.80%
Compagnie de Saint Gobain ........................... 432 $ 75,126
Societe Generale .................................... 300 65,450
Total Fina .......................................... 760 102,929
-----------
243,505
-----------
GERMANY - 7.23%
Bayer ............................................... 1,600 65,598
Bayerische Hypo-und Vereinsbank ..................... 840 54,890
Rheinisch Westfaelisches Elektric ................... 860 35,395
Siemens ............................................. 1,150 103,024
-----------
258,907
-----------
HONG KONG - 2.05%
Hong Kong Electric .................................. 24,000 73,378
-----------
73,378
-----------
HUNGARY - 0.63%
*Gedeon Richter, GDR ................................. 500 22,450
-----------
22,450
-----------
INDIA - 1.74%
*ICICI, ADR .......................................... 292 3,285
Larsen & Toubro, GDR ................................ 700 15,190
Mahanagar Telephone Nigam, GDR ...................... 1,400 11,655
Videsh Sanchar Nigam 144A, GDR ...................... 660 10,544
Videsh Sanchar Nigam, GDR ........................... 1,370 21,886
-----------
62,560
-----------
ISRAEL - 0.42%
ECI Telecommunications .............................. 520 15,080
-----------
15,080
-----------
JAPAN - 8.76%
Eisai ............................................... 2,000 54,998
Hitachi ............................................. 6,000 64,904
Koito Manufacturing ................................. 6,000 34,496
Matsushita Elecric Industrial ....................... 4,000 84,273
West Japan Railway .................................. 18 75,155
-----------
313,826
-----------
MALAYSIA - 3.22%
Petronas Dagangan Berhad ............................ 30,000 30,158
Resorts World Berhad ................................ 18,000 51,632
Sime Darby Berhad ................................... 28,000 33,453
-----------
115,243
-----------
MEXICO - 1.90%
Alfa SA de CV, Class A .............................. 5,400 20,585
Cemex SA, Class B ................................... 7,500 33,498
Vitro SA, ADR ....................................... 3,500 13,781
-----------
67,864
-----------
NETHERLANDS - 4.91%
Elsevier - CVA ...................................... 4,500 42,827
Koninklijke Van Ommeren ............................. 1,300 49,051
Royal Dutch Petroleum ............................... 1,400 83,854
-----------
175,732
-----------
<PAGE>
DELAWARE OVERSEAS EQUITY FUND
STATEMENT OF NET ASSETS (CONTINUED)
________________________________________________________________________________
NUMBER MARKET
OF SHARES VALUE
-------------------------------
COMMON STOCK (CONTINUED)
NEW ZEALAND - 2.79%
Carter Holt Harvey .................................. 28,000 $35,459
Telecom Corporation of New Zealand .................. 16,000 64,352
-----------
99,811
-----------
PERU - 1.11%
Creditcorp, ADR ..................................... 2,420 25,713
Telefonica del Peru SA, ADR ......................... 1,200 13,875
-----------
39,588
-----------
ROMANIA - 0.03%
Banco Turco Romana SA, GDR .......................... 128 899
-----------
899
-----------
RUSSIA - 0.63%
*Gazprom, ADR ........................................ 1,000 7,525
Lukoil Holding, ADR ................................. 300 9,504
Mosenergo, ADR ...................................... 1,950 5,363
-----------
22,392
-----------
SOUTH AFRICA - 4.50%
Amalgamated Banks of South Africa ................... 4,373 17,838
Edgars Stores ....................................... 816 7,975
Iscor ............................................... 85,500 33,134
Sanlam .............................................. 20,000 22,959
Sappi ............................................... 5,000 41,439
Sasol ............................................... 5,500 37,882
-----------
161,227
-----------
SOUTH KOREA - 0.93%
Pohang Iron & Steel, ADR ............................ 1,000 33,375
-----------
33,375
-----------
SPAIN - 3.96%
Iberdrola SA ........................................ 4,300 62,813
*Telefonica de Espana SA ............................. 4,803 79,172
-----------
141,985
-----------
TAIWAN 0.47%
Yageo, GDR .......................................... 3,108 16,706
-----------
16,706
-----------
THAILAND - 0.79%
*Hana Microelectronics ............................... 8,000 28,168
-----------
28,168
-----------
TURKEY - 1.17%
*Efes Sinai Yatirim, ADR ............................ 12,999 10,724
*Efes Sinai Yatirim Holding .......................... 467,740 4,038
Koc Holdings AS ..................................... 269,200 27,157
-----------
41,919
-----------
UNITED KINGDOM - 16.85%
Bass ................................................ 5,357 58,594
Blue Circle Industry ................................ 15,000 69,945
Boots ............................................... 5,800 59,719
British Airways ..................................... 9,600 49,659
GKN ................................................. 7,300 117,128
Glaxo Wellcome ...................................... 3,000 88,621
Powergen ............................................ 6,900 60,660
Rio Tinto ........................................... 3,600 61,641
<PAGE>
for international diversification 13
________________________________________________________________________________
NUMBER MARKET
OF SHARES VALUE
-------------------------------
COMMON STOCK (CONTINUED)
UNITED KINGDOM (CONTINUED)
Taylor Woodrow ....................................... 16,000 $ 37,632
-----------
603,599
-----------
Total Common Stock (cost $3,300,634) ................. 3,178,340
-----------
INVESTMENT COMPANIES - 1.38%
*India Fund, (The) .................................... 4,000 49,500
-----------
Total Investment Companies (cost $25,240) ............ 49,500
-----------
PREFERRED STOCK - 1.09%
Telebras, ADR Preferred Block ........................ 500 38,938
-----------
Total Preferred Stock (cost $33,559) ................. 38,938
-----------
Principal
Amount
---------
REPURCHASE AGREEMENTS - 6.65%
With Chase Manhattan 5.20% 11/1/99 (dated
10/29/99, collateralized by $79,000 U.S.
Treasury Notes 6.125% due 12/31/01,
market value $80,215) ............................. $78,000 78,000
With J.P. Morgan Securities 5.20% 11/1/99
(dated 10/29/99, collateralized by $56,000
U.S. Treasury Notes 5.625% due 5/15/01,
market value $56,736 and $25,000 U.S.
Treasury Notes 6.50% due 8/31/01, market
value $25,326) .................................... 80,000 80,000
With PaineWebber 5.20% 11/1/99 (dated
10/29/99, collateralized by $28,000 U.S. Treasury
Notes 6.25% due 10/31/01, market value $28,798 and
$52,000 U.S. Treasury Notes 6.25% due 2/15/03,
market value $53,272) ............................. 80,000 80,000
-----------
Total Repurchase Agreements
(cost $238,000) ................................... 238,000
-----------
TOTAL MARKET VALUE OF SECURITIES - 97.87%
(COST $3,597,433) .......................................... $3,504,778
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 2.13%....... 76,411
-----------
NET ASSETS APPLICABLE TO 481,339 SHARES
($0.01 PAR VALUE) OUTSTANDING - 100.00% .................... $3,581,189
===========
NET ASSET VALUE - DELAWARE OVERSEAS EQUITY FUND A CLASS
($2,285,367 / 291,979 SHARES)............................... $7.83
=====
NET ASSET VALUE - DELAWARE OVERSEAS EQUITY FUND B CLASS
($1,017,700 / 149,835 SHARES)............................... $6.79
=====
NET ASSET VALUE - DELAWARE OVERSEAS EQUITY FUND C CLASS
($209,174 / 30,697 SHARES).................................. $6.81
=====
NET ASSET VALUE - DELAWARE OVERSEAS EQUITY FUND
INSTITUTIONAL CLASS ($68,948 / 8,828 SHARES)................ $7.81
=====
<PAGE>
14 for international diversification
DELAWARE OVERSEAS EQUITY FUND
STATEMENT OF NET ASSETS (CONTINUED)
________________________________________________________________________________
COMPONENTS OF NET ASSETS AT OCTOBER 31, 1999:
Common stock, $0.01 par value 70,000,000 shares
authorized to the Fund with 20,000,000 shares
allocated to the Delaware Overseas Equity Fund A
Class, 20,000,000 shares allocated to the
Delaware Overseas Equity Fund B Class, 15,000,000
shares allocated to the Delaware Overseas Equity Fund C
Class, and 15,000,000 shares allocated to the Delaware
Overseas Equity Fund Institutional Class ................... $3,595,677
**Undistributed net investment income .......................... 19,166
Accumulated net realized gain on investments ................. 58,378
Net unrealized depreciation of investments and foreign currencies (92,032)
-----------
Total net assets $3,581,189
===========
- ----------------------
*Non-income producing security
**Undistributed net investment income includes net realized gains (losses) on
foreign currencies. Net realized gains (losses) on foreign currencies are
treated as net investment income in accordance with provisions of the Internal
Revenue Code.
ADR - American Depository Receipt
GDR - Global Depository Receipt
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
DELAWARE OVERSEAS EQUITY FUND
Net asset value A Class (A) .................................... $7.83
Sales charge (5.75% of offering price or 6.13% of the amount
invested per share) (B) ..................................... 0.48
-----
Offering price $8.31
=====
- ----------------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon redemption or repurchase of shares.
(B) See the current Prospectus for purchases of $50,000 or more.
See accompanying notes
<PAGE>
DELAWARE GROUP ADVISER FUNDS, INC.
STATEMENTS OF OPERATIONS
YEAR ENDED OCTOBER 31, 1999
________________________________________________________________________________
Delaware Delaware
New Overseas
Pacific Equity
Fund Fund
-------------------------------
INVESTMENT INCOME:
Dividends ......................................... $ 141,342 $102,682
Interest .......................................... 50,120 5,937
Foreign tax withheld .............................. (15,249) (7,797)
---------- ---------
176,213 100,822
---------- ---------
EXPENSES:
Management fees ................................... 110,931 31,890
Distribution expense .............................. 69,820 19,651
Dividend disbursing and transfer agent fees
and expenses ................................... 64,880 40,517
Registration fees ................................. 53,961 46,914
Reports and statements to shareholders ............ 37,851 36,794
Custodian fees .................................... 22,514 17,253
Accounting and administration ..................... 4,760 1,108
Directors' fees ................................... 2,820 2,665
Taxes (other than taxes on income) ................ 1,680 3,700
Other ............................................. 4,636 22
---------- ---------
373,853 200,514
Less expenses absorbed or waived by
Delaware Management Company .................... (82,264) (124,622)
Less expenses paid indirectly ..................... (617) (236)
---------- ---------
Total expenses .................................... 290,972 75,656
---------- ---------
Net investment income (loss) ...................... (114,759) 25,166
---------- ---------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on:
Investments ....................................... 1,845,801 58,039
Foreign currencies ................................ 2,735 (1,748)
---------- ---------
Net realized gain ................................. 1,848,536 56,291
Net change in unrealized appreciation/depreciation
of investments and foreign currencies .......... 4,330,161 376,432
---------- ---------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND
FOREIGN CURRENCIES ............................. 6,178,697 432,723
---------- ---------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ...................... $6,063,938 $457,889
========== =========
See accompanying notes
<PAGE>
15 for international diversification
DELAWARE GROUP ADVISER FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DELAWARE DELAWARE
NEW PACIFIC FUND OVERSEAS EQUITY FUND
---------------------------- ----------------------------
YEAR ENDED YEAR ENDED
10/31/99 10/31/98 10/31/99 10/31/98
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) .................................. $ (114,759) $ (3,358) $ 25,166 $ 36,615
Net realized gain (loss) on investments and foreign currencies 1,848,536 (6,395,951) 56,291 799,544
Net change in unrealized appreciation/depreciation of
investments and foreign currencies .......................... 4,330,161 2,186,476 376,432 (1,701,170)
----------- ----------- ---------- -----------
Net increase (decrease) in net assets resulting
from operations ............................................. 6,063,938 (4,212,833) 457,889 (865,011)
----------- ----------- ---------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
A Class .................................................... -- (55,976) (158,267) (454,027)
B Class .................................................... -- (19,082) (93,220) (65,715)
C Class .................................................... -- (1,015) (21,225) (7,303)
Institutional Class ........................................ -- (2,018) (4,757) (2,683)
Net realized gain on investments:
A Class .................................................... -- -- (311,979) (1,431,918)
B Class .................................................... -- -- (199,549) (207,294)
C Class .................................................... -- -- (45,435) (23,031)
Institutional Class ........................................ -- -- (9,052) (8,463)
----------- ----------- ---------- -----------
-- (78,091) (843,484) (2,200,434)
----------- ----------- ---------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class .................................................... 7,036,523 4,005,717 583,522 498,572
B Class .................................................... 2,617,747 1,715,579 155,355 140,999
C Class .................................................... 1,070,210 107,657 157,634 117,386
Institutional Class ........................................ 5,731,523 738,249 481,026 23,006
Net asset value of shares issued upon reinvestment of
distributions from net investment income and net realized
gain on investments:
A Class .................................................... -- 55,567 464,682 1,867,982
B Class .................................................... -- 18,639 284,170 264,050
C Class .................................................... -- 1,013 46,619 29,819
Institutional Class ........................................ -- 2,018 13,809 11,146
----------- ----------- ---------- -----------
16,456,003 6,644,439 2,186,817 2,952,960
----------- ----------- ---------- -----------
Cost of shares repurchased:
A Class .................................................... (4,807,802) (2,239,821) (610,554) (8,677,065)
B Class .................................................... (815,140) (938,555) (429,624) (219,839)
C Class .................................................... (303,950) (49,819) (136,429) (76,715)
Institutional Class ........................................ (5,000,686) (710,048) (480,947) (14,376)
----------- ----------- ---------- -----------
(10,927,578) (3,938,243) (1,657,554) (8,987,995)
----------- ----------- ---------- -----------
Increase (decrease) in net assets derived from capital
share transactions .......................................... 5,528,425 2,706,196 529,263 (6,035,035)
----------- ----------- ---------- -----------
Net increase (decrease) In net assets ......................... 11,592,363 (1,584,728) 143,668 (9,100,480)
NET ASSETS:
Beginning of year ............................................. 8,471,934 10,056,662 3,437,521 12,538,001
----------- ----------- ---------- -----------
End of year ................................................... $20,064,297 $ 8,471,934 $3,581,189 $ 3,437,521
=========== =========== ========== ===========
</TABLE>
See accompanying notes
<PAGE>
16 for international diversification
DELAWARE GROUP ADVISER FUNDS, INC.
FINANCIAL HIGHLIGHTS
Selected data for each share of the Fund outstanding through each year were as
follows:
<TABLE>
<CAPTION>
DELAWARE NEW PACIFIC FUND A CLASS
----------------------------------------------------------
YEAR ENDED
10/31/99(2) 10/31/98(2) 10/31/97(2) 10/31/96(3) 10/31/95
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ........................ $4.590 $7.320 $9.420 $8.710 $10.440
Income (loss) from investment operations:
Net investment income (loss) ........................... (0.039) 0.008 (0.010) (0.050) (0.050)
Net realized and unrealized gain
(loss) on investments and
foreign currencies ................................... 2.709 (2.683) (1.940) 0.769 (1.390)
------ ------ ------ ------ ------
Total from investment operations ....................... 2.670 (2.675) (1.950) 0.719 (1.440)
------ ------ ------ ------ ------
Less dividends and distributions:
Dividends from net
investment income .................................... -- (0.055) (0.150) (0.009) --
Distributions from net realized gain
on investments ....................................... -- -- -- -- (0.290)
------ ------ ------ ------ ------
Total dividends and distributions ...................... -- (0.055) (0.150) (0.009) (0.290)
------ ------ ------ ------ ------
Net asset value, end of year $7.260 $4.590 $7.320 $9.420 $8.710
====== ====== ====== ====== ======
Total return(1) ........................................... 58.52% (36.85%) (21.15%) 8.26% (13.99%)
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ........................................ $12,113 $5,887 $7,144 $11,752 $10,353
Ratio of expenses to average
net assets ........................................... 1.96% 1.90% 1.80% 1.82% 1.85%
Ratio of expenses to average net
assets prior to expense limitation
and expenses paid indirectly ......................... 2.57% 3.23% 1.86% 2.77% 3.73%
Ratio of net investment income (loss)
to average net assets ................................ (0.65%) 0.15% (0.08%) (0.41%) (0.60%)
Ratio of net investment loss to average
net assets prior to expense limitation
and expenses paid indirectly ......................... (1.26%) (1.18%) (0.14%) (1.36%) (2.48%)
Portfolio turnover rate ................................ 90% 188% 178% 163% 163%
</TABLE>
<PAGE>
[RESTUBBED TABLE]
<TABLE>
<CAPTION>
DELAWARE NEW PACIFIC FUND B CLASS
-----------------------------------------------------------------
YEAR ENDED
10/31/99(2) 10/31/98(2) 10/31/97(2) 10/31/96(3) 10/31/95
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year .................... $4.660 $7.470 $9.680 $9.010 $10.860
Income (loss) from investment operations:
Net investment income (loss) ....................... (0.081) (0.031) (0.080) (0.050) (0.100)
Net realized and unrealized gain
(loss) on investments and
foreign currencies ............................... 2.741 (2.724) (1.980) 0.730 (1.460)
------ ------ ------ ------ -------
Total from investment operations ................... 2.660 (2.755) (2.060) 0.680 (1.560)
------ ------ ------ ------ -------
Less dividends and distributions:
Dividends from net
investment income ................................ -- (0.055) (0.150) (0.010) --
Distributions from net realized gain
on investments ................................... -- -- -- -- (0.290)
------ ------ ------ ------ -------
Total dividends and distributions .................. -- (0.055) (0.150) (0.010) (0.290)
------ ------ ------ ------ -------
Net asset value, end of year .......................... $7.320 $4.660 $7.470 $9.680 $ 9.010
====== ====== ====== ====== =======
Total return(1) ....................................... 57.08% (37.05%) (21.72%) 7.54% (14.56%)
Ratios and supplemental data:
Net assets, end of period
(000 omitted) .................................... $5,654 $2,236 $2,534 $562 $573
Ratio of expenses to average
net assets ....................................... 2.66% 2.60% 2.50% 2.50% 2.50%
Ratio of expenses to average net
assets prior to expense limitation
and expenses paid indirectly ..................... 3.27% 3.93% 2.56% 3.45% 4.38%
Ratio of net investment income (loss)
to average net assets ............................ (1.35%) (0.55%) (0.77%) (1.09%) (1.20%)
Ratio of net investment loss to average
net assets prior to expense limitation
and expenses paid indirectly ..................... (1.96%) (1.88%) (0.83%) (2.04%) (3.08%)
Portfolio turnover rate ............................ 90% 188% 178% 163% 163%
</TABLE>
- ----------------------
(1) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge.
(2) The average shares outstanding method has been applied for per share
information.
(3) Commencing May 3, 1996, Delaware Management Company replaced Lincoln
National Corporation as the Fund's investment manager.
See accompanying notes
<PAGE>
for international diversification 17
Financial Highlights (Continued)
Selected data for each share of the Fund outstanding through each year were as
follows:
<TABLE>
<CAPTION>
DELAWARE NEW PACIFIC FUND C CLASS
------------------------------------------------------------------
YEAR ENDED
10/31/99(2) 10/31/98(2) 10/31/97(2) 10/31/96(3) 10/31/95
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ............. $4.550 $7.320 $9.490 $8.830 $10.660
Income (loss) from investment operations:
Net investment income (loss) ................ (0.082) (0.029) (0.080) (0.050) (0.080)
Net realized and unrealized gain
(loss) on investments and
foreign currencies ........................ 2.682 (2.686) (1.940) 0.718 (1.460)
------ ------ ------ ------ ------
Total from investment operations ............ 2.600 (2.715) (2.020) 0.668 (1.540)
------ ------ ------ ------ ------
Less dividends and distributions:
Dividends from net
investment income ......................... -- (0.055) (0.150) (0.008) --
Distributions from net realized gain
on investments ............................ -- -- -- -- (0.290)
------ ------ ------ ------ ------
Total dividends and distributions ........... -- (0.055) (0.150) (0.008) (0.290)
------ ------ ------ ------ ------
Net asset value, end of year ................... $7.150 $4.550 $7.320 $9.490 $8.830
====== ====== ====== ====== ======
Total return(1) ................................ 57.14% (37.18%) (21.85%) 7.58% (14.57%)
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ............................. $1,093 $130 $129 $44 $17
Ratio of expenses to average
net assets ................................ 2.66% 2.60% 2.50% 2.50% 2.50%
Ratio of expenses to average net
assets prior to expense limitation
and expenses paid indirectly .............. 3.27% 3.93% 2.56% 3.45% 4.38%
Ratio of net investment loss to
average net assets ........................ (1.35%) (0.55%) (0.77%) (1.09%) (1.02%)
Ratio of net investment loss to
average net assets prior to
expense limitation
and expenses paid indirectly .............. (1.96%) (1.88%) (0.83%) (2.04%) (2.90%)
Portfolio turnover rate ..................... 90% 188% 178% 163% 163%
</TABLE>
<PAGE>
[RESTUBBED TABLE]
<TABLE>
<CAPTION>
DELAWARE NEW PACIFIC FUND INSTITUTIONAL CLASS
------------------------------------------------------------------
YEAR ENDED
10/31/99(2) 10/31/98(2) 10/31/97(2) 10/31/96(3) 10/31/95
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ............ $4.690 $7.440 $9.530 $8.770 $10.480
Income (loss) from investment operations:
Net investment income (loss) ............... (0.020) 0.024 0.020 (0.050) (0.010)
Net realized and unrealized gain
(loss) on investments and
foreign currencies ....................... 2.790 (2.719) (1.960) 0.820 (1.410)
------ ------ ------ ------ -------
Total from investment operations ........... 2.770 (2.695) (1.940) 0.770 (1.420)
------ ------ ------ ------ -------
Less dividends and distributions:
Dividends from net
investment income ........................ -- (0.055) (0.150) (0.010) --
Distributions from net realized gain
on investments ........................... -- -- -- -- (0.290)
------ ------ ------ ------ -------
Total dividends and distributions .......... -- (0.055) (0.150) (0.010) (0.290)
------ ------ ------ ------ -------
Net asset value, end of year .................. $7.460 $4.690 $7.440 $9.530 $ 8.770
====== ====== ====== ====== =======
Total return(1) ............................... 59.06% (36.39%) (20.79%) 8.77% (13.65%)
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ............................ $1,204 $219 $250 $119 $62
Ratio of expenses to average
net assets ............................... 1.66% 1.60% 1.50% 1.50% 1.50%
Ratio of expenses to average net
assets prior to expense limitation
and expenses paid indirectly ............. 2.27% 2.93% 1.56% 2.45% 3.38%
Ratio of net investment loss to
average net assets ....................... (0.35%) 0.45% 0.22% (0.09%) (0.16%)
Ratio of net investment loss to
average net assets prior to
expense limitation
and expenses paid indirectly ............. (0.96%) (0.88%) 0.16% (1.04%) (2.04%)
Portfolio turnover rate .................... 90% 188% 178% 163% 163%
</TABLE>
- ----------------------
(1) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge.
(2) The average shares outstanding method has been applied for per share
information.
(3) Commencing May 3, 1996, Delaware Management Company replaced Lincoln
National Corporation as the Fund's investment manager.
See accompanying notes
<PAGE>
18 for international diversification
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding through each year were as
follows:
<TABLE>
<CAPTION>
DELAWARE OVERSEAS EQUITY FUND A CLASS
------------------------------------------------------------------
YEAR ENDED
10/31/99(2) 10/31/98(2) 10/31/97(2) 10/31/96(3) 10/31/95
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ............. $8.950 $12.520 $12.390 $11.400 $11.000
Income (loss) from investment operations:
Net investment income (loss) ................ 0.075 0.091 (0.060) (0.060) 0.010
Net realized and unrealized gain
(loss) on investments and
foreign currencies ........................ 0.870 (1.501) 0.960 1.073 0.400
------- ------- ------- ------- -------
Total from investment operations ............ 0.945 (1.410) 0.900 1.013 0.410
------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net
investment income.......................... (0.695) (0.520) (0.440) (0.023) (0.010)
Distributions from net realized gain
on investments............................. (1.370) (1.640) (0.330) -- --
------- ------- ------- ------- -------
Total dividends and distributions ........... (2.065) (2.160) (0.770) (0.023) (0.010)
------- ------- ------- ------- -------
Net asset value, end of year ................... $7.830 $8.950 $12.520 $12.390 $11.400
======= ======= ======= ======= =======
Total return(1)................................. 13.86% (12.95%) 7.74% 8.90% 3.81%
Ratios and supplemental data:
Net assets, end of period
(000 omitted).............................. $2,285 $2,034 $10,868 $14,886 $13,018
Ratio of expenses to average
net assets................................. 1.85% 1.83% 1.80% 1.82% 1.85%
Ratio of expenses to average net
assets prior to expense limitation
and expenses paid indirectly............... 5.31% 3.75% N/A 2.60% 2.96%
Ratio of net investment income (loss)
to average net assets...................... 0.95% 0.93% (0.45%) (0.51%) 0.00%
Ratio of net investment loss to
average net assets prior to
expense limitation
and expenses paid indirectly............... (2.51%) (0.99%) N/A (1.29%) (1.11%)
Portfolio turnover rate ..................... 7% 87% 18% 21% 9%
</TABLE>
- ----------------------
(1) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge.
(2) The average shares outstanding method has been applied for per share
information.
(3) Commencing May 3, 1996, Delaware Management Company replaced Lincoln
National Corporation as the Fund's investment manager.
See accompanying notes
<PAGE>
[RESTUBBED TABLE]
<TABLE>
<CAPTION>
DELAWARE OVERSEAS EQUITY FUND B CLASS
------------------------------------------------------------------
YEAR ENDED
10/31/99(2) 10/31/98(2) 10/31/97(2) 10/31/96(3) 10/31/95
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ............. $8.030 $11.540 $11.560 $10.710 $10.400
Income (loss) from investment operations:
Net investment income (loss) ................ 0.017 0.033 (0.140) (0.060) (0.020)
Net realized and unrealized gain
(loss) on investments and
foreign currencies ........................ 0.753 (1.383) 0.890 0.930 0.350
------- ------- ------- ------- -------
Total from investment operations ............ 0.770 (1.350) 0.750 0.870 0.330
------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net
investment income ......................... (0.640) (0.520) (0.440) (0.020) (0.020)
Distributions from net realized gain
on investments ............................ (1.370) (1.640) (0.330) -- --
------- ------- ------- ------- -------
Total dividends and distributions ........... (2.010) (2.160) (0.770) (0.020) (0.020)
------- ------- ------- ------- -------
Net asset value, end of year ................... $6.790 $8.030 $11.540 $11.560 $10.710
======= ======= ======= ======= =======
Total return(1) ................................ 12.98% (13.66%) 6.95% 8.16% 3.19%
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ............................. $1,018 $1,166 $1,450 $1,208 $1,183
Ratio of expenses to average
net assets ................................ 2.55% 2.53% 2.50% 2.50% 2.50%
Ratio of expenses to average net
assets prior to expense limitation
and expenses paid indirectly .............. 6.01% 4.45% N/A 3.28% 3.61%
Ratio of net investment income (loss)
to average net assets ..................... 0.25% 0.23% (1.16%) (1.19%) (0.57%)
Ratio of net investment loss to
average net assets prior to
expense limitation
and expenses paid indirectly .............. (3.21%) (1.69%) N/A (1.97%) (1.68%)
Portfolio turnover rate ..................... 7% 87% 18% 21% 9%
</TABLE>
<PAGE>
for international diversification 19
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding through each year were as
follows:
<TABLE>
<CAPTION>
DELAWARE OVERSEAS EQUITY FUND C CLASS
------------------------------------------------------------------
YEAR ENDED
10/31/99(2) 10/31/98(2) 10/31/97(2) 10/31/96(3) 10/31/95
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ............. $8.040 $11.550 $11.580 $10.730 $10.430
Income (loss) from investment operations:
Net investment income (loss) ................ 0.017 0.033 (0.140) (0.060) (0.060)
Net realized and unrealized gain
(loss) on investments and
foreign currencies ........................ 0.763 (1.383) 0.880 0.930 0.390
------ ------- ------- ------- -------
Total from investment operations ............ 0.780 (1.350) 0.740 0.870 0.330
------ ------- ------- ------- -------
Less dividends and distributions:
Dividends from net
investment income ......................... (0.640) (0.520) (0.440) (0.020) (0.030)
Distributions from net realized gain
on investments ............................ (1.370) (1.640) (0.330) -- --
------ ------- ------- ------- -------
Total dividends and distributions ........... (2.010) (2.160) (0.770) (0.020) (0.030)
------ ------- ------- ------- -------
Net asset value, end of year ................... $6.810 $8.040 $11.550 $11.580 $10.730
====== ======= ======= ======= =======
Total return(1) ................................ 13.08% (13.67%) 6.85% 8.15% 3.16%
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ............................. $209 $179 $159 $112 $43
Ratio of expenses to average
net assets ................................ 2.55% 2.53% 2.50% 2.50% 2.50%
Ratio of expenses to average net
assets prior to expense limitation
and expenses paid indirectly .............. 6.01% 4.45% N/A 3.28% 3.61%
Ratio of net investment income
(loss) to average net assets .............. 0.25% 0.23% (1.16%) (1.19%) (0.62%)
Ratio of net investment loss to
average net assets prior to
expense limitation
and expenses paid indirectly .............. (3.21%) (1.69%) N/A (1.97%) (1.73%)
Portfolio turnover rate ..................... 7% 87% 18% 21% 9%
</TABLE>
- ----------------------
(1) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge.
(2) The average shares outstanding method has been applied for per share
information.
(3) Commencing May 3, 1996, Delaware Management Company replaced Lincoln
National Corporation as the Fund's investment manager.
See accompanying notes
<PAGE>
[RESTUBBED TABLE]
<TABLE>
<CAPTION>
DELAWARE OVERSEAS EQUITY FUND INSTITUTIONAL CLASS
------------------------------------------------------------------
YEAR ENDED
10/31/99(2) 10/31/98(2) 10/31/97(2) 10/31/96(3) 10/31/95
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $8.930 $12.480 $12.320 $11.440 $11.020
Income (loss) from investment operations:
Net investment income (loss) 0.098 0.123 (0.020) (0.060) 0.040
Net realized and unrealized gain
(loss) on investments and
foreign currencies 0.872 (1.513) 0.950 0.963 0.410
------ ------- ------- ------- -------
Total from investment operations 0.970 (1.390) 0.930 0.903 0.450
------ ------- ------- ------- -------
Less dividends and distributions:
Dividends from net
investment income (0.720) (0.520) (0.440) (0.023) (0.030)
Distributions from net realized gain
on investments (1.370) (1.640) (0.330) -- --
------ ------- ------- ------- -------
Total dividends and distributions (2.090) (2.160) (0.770) (0.023) (0.030)
------ ------- ------- ------- -------
Net asset value, end of year $7.810 $8.930 $12.480 $12.320 $11.440
====== ======= ======= ======= =======
Total return(1) 14.30% (12.82%) 8.04% 7.91% 4.22%
Ratios and supplemental data:
Net assets, end of period
(000 omitted) $69 $59 $60 $284 $161
Ratio of expenses to average
net assets 1.55% 1.53% 1.50% 1.50% 1.50%
Ratio of expenses to average net
assets prior to expense limitation
and expenses paid indirectly 5.01% 3.45% N/A 2.28% 2.61%
Ratio of net investment income
(loss) to average net assets 1.25% 1.23% (0.15%) (0.19%) 0.40%
Ratio of net investment loss to
average net assets prior to
expense limitation
and expenses paid indirectly (2.21%) (0.69%) N/A (0.97%) (0.71%)
Portfolio turnover rate 7% 87% 18% 21% 9%
</TABLE>
<PAGE>
20 for international diversification
DELAWARE GROUP ADVISER FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
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 Delaware Business Trust. The
Company currently issues three separate series of shares: the Delaware U.S.
Growth Fund, the Delaware New Pacific Fund and the Delaware Overseas Equity
Fund. These financial statements and related notes pertain to the Delaware New
Pacific Fund ("New Pacific Fund") and the Delaware Overseas Equity Fund
("Overseas Equity Fund") (individually a "Fund" and collectively the "Funds").
Each Fund offers four classes of shares. The A Class carries a front-end sales
charge of 5.75%. The B Class carries a back-end deferred sales charge. The C
Class carries a level load deferred sales charge and the Institutional Class has
no sales charge.
The New Pacific Fund seeks long-term capital appreciation by investing in
Pacific Basin countries.
The Overseas Equity Fund seeks to maximize total return by investing in an
internationally diversified mix of stocks.
1. Significant Accounting Policies
The following accounting policies are in accordance with generally accepted
accounting principles and are consistently followed by the Funds.
Security Valuation - Securities listed on an exchange are valued at the last
quoted sales price as of the close of the NYSE on the valuation date. Securities
not traded or securities not listed on an exchange are valued at the mean of the
last quoted bid and asked prices. Securities listed on a foreign exchange are
valued at the last quoted sales price before the Fund is valued. Money market
instruments having less than 60 days to maturity are valued at amortized cost,
which approximates market value. Other securities and assets for which market
quotations are not readily available are valued at fair value as determined in
good faith by or under the direction of the Company's Board of Directors.
Federal Income Taxes - Each Fund intends to continue to qualify as a regulated
investment company and make the requisite distributions to shareholders.
Accordingly, no provision for federal income taxes has been made in the
financial statements. Income and capital gain distributions are determined in
accordance with federal income tax regulations, which may differ from generally
accepted accounting principles.
Class Accounting - Investment income, common expenses and realized and
unrealized gain (loss) 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.
Repurchase Agreements - Each Fund may invest in a pooled cash account along with
other members of the Delaware Investments Family of Funds. The aggregate daily
balance of the pooled cash account is invested in repurchase agreements secured
by obligations of the U.S. Government. The respective collateral is held by the
Fund's 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.
Foreign Currency Transactions - Transactions denominated in foreign currencies
are recorded at the current prevailing exchange rates on the valuation date. The
value of all assets and liabilities denominated in foreign currencies are
translated into U.S. dollars at the exchange rate of such currencies against the
U.S. dollar as of 3:00 PM EST daily. Transaction gains or losses resulting from
changes in exchange rates during the reporting period or upon settlement of the
foreign currency transaction are reported in operations for the current period.
It is not
<PAGE>
- --------------------------------------------------------------------------------
practical to isolate that portion of both realized and unrealized gains and
losses on investments in equity securities in the statement of operations that
result from fluctuations in foreign currency exchange rates. The Funds report
certain foreign currency related transactions as components of realized gains
for financial reporting purposes, whereas such components are treated as
ordinary income (loss) for federal income tax purposes.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Other - Expenses common to all funds within the Delaware Investments Family of
Funds are allocated amongst the funds on the basis of average net assets.
Security transactions are recorded on the date the securities are purchased or
sold (trade date). Costs used in calculating realized gains and losses on the
sale of investment securities are those of the specific securities sold.
Dividend income is recorded on the ex-dividend date and interest income is
recorded on the accrual basis. Foreign dividends are also recorded on the
ex-dividend date or as soon after the ex-dividend date that the Funds are aware
of such dividends, net of all non-rebatable tax withholdings. Withholding taxes
on foreign dividends have been provided for in accordance with the Fund's
understanding of the applicable country's tax rules and rates. The Funds declare
and pay dividends from net investment income and capital gains, if any,
annually.
Certain expenses of the Funds are paid through "soft dollar" arrangements with
brokers. These transactions are done subject to best price and execution. The
amount of these expenses was approximately $309 for the New Pacific Fund and $83
for the Overseas Equity Fund for the year ended October 31, 1999. In addition,
the Funds receive earnings credits from their custodian when positive balances
are maintained, which are used to offset custody fees. These credits were $308
for the New Pacific Fund and $153 for the Overseas Equity Fund for the year
ended October 31, 1999. The expenses paid under the above arrangements are
included in their respective expense captions on the Statements of Operations
with the corresponding expense offset shown as "Expenses paid indirectly".
2. Investment Management and Other Transactions with Affiliates
Effective April 1, 1999, in accordance with the terms of the Investment
Management Agreement, the Funds pay Delaware Management Company, Inc. ("DMC"),
the Investment Manager of each Fund, an annual fee based upon each Fund's
average daily net assets at the following annual rates:
NEW PACIFIC OVERSEAS EQUITY
FUND FUND
-------------- --------------
On the first $500 million .................. 0.85% 0.85%
On the next $500 million ................... 0.80% 0.80%
On the next $1.5 billion ................... 0.75% 0.75%
In excess of $2.5 billion .................. 0.70% 0.70%
Prior to April 1, 1999, DMC was paid a monthly fee based upon each Fund's
average daily net assets at the following rates:
NEW PACIFIC OVERSEAS EQUITY
FUND FUND
-------------- --------------
Management fee as a percentage of
average daily net assets (per annum) .... 0.80% 1.00%
<PAGE>
for international diversification 21
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
2. Investment Management and Other Transactions with Affiliates (Continued)
DMC has entered into sub-advisory agreements with AIB Govett, Inc., with respect
to the management of the New Pacific Fund, and with Delaware International
Advisers Limited, an affiliate of DMC, with respect to the management of the
Overseas Equity Fund. The sub-advisers receive sub-advisory fees from the
Investment Manager for their services calculated in accordance with the schedule
set forth below. The Funds do not pay any fees to the sub-advisers.
NEW PACIFIC OVERSEAS EQUITY
FUND FUND
-------------- --------------
Sub-advisory fee as a percentage of
average daily net assets paid to
DMC by the Fund (per annum) 0.50% 0.80%
DMC has elected to waive that portion, if any, of the management fee and
reimburse the Fund to the extent that annual operating expenses, exclusive of
distribution fees, taxes, interest, brokerage commissions and extraordinary
expenses, exceed 1.70% for each class of the New Pacific Fund and 1.55% for each
class of the Overseas Equity Fund, of the average daily net assets of each Fund
through October 31, 1999.
Effective November 1, 1999, the expense limitations will change to 2.00% and
1.70% for the New Pacific Fund and the Overseas Equity Fund, respectively, and
will expire April 30, 2000.
The Funds have engaged Delaware Service Company, Inc. ("DSC"), an affiliate of
DMC, to provide dividend disbursing, transfer agent and accounting services.
Each Fund pays DSC a monthly fee based on the number of shareholder accounts,
shareholder transactions and average net assets, subject to certain minimums.
On October 31, 1999, the Funds had payables to DSC as follows:
NEW PACIFIC OVERSEAS EQUITY
FUND FUND
-------------- -----------------
$5,440 $3,332
Pursuant to the Distribution Agreement, each Fund pays Delaware Distributors,
L.P. ("DDLP"), the Distributor and an affiliate of DMC, an annual fee not to
exceed 0.30% of the average daily net assets of the A Class and 1.00% of the
average daily net assets of the B and C Classes. At October 31, 1999, the Funds
had liabilities for such fees and other expenses payable to DDLP as follows:
NEW PACIFIC OVERSEAS EQUITY
FUND FUND
-------------- -----------------
$20,904 $14,661
For the year ended October 31, 1999, DDLP earned commissions on sales of the
Fund A Class shares as follows:
NEW PACIFIC OVERSEAS EQUITY
FUND FUND
-------------- -----------------
$49,254 $7,203
Certain officers of DMC, DSC and DDLP are officers, directors and/or employees
of the Funds. These officers, directors and employees are paid no compensation
by the Funds.
<PAGE>
3. Investments
During the year ended October 31, 1999, each Fund made purchases and sales of
investment securities other than U.S. government securities and temporary cash
investments as follows:
PURCHASES SALES
----------- -----------
New Pacific Fund .............................. $16,099,536 $11,320,081
Overseas Equity Fund .......................... $233,780 $452,954
At October 31, 1999, the aggregate cost of securities and unrealized
appreciation (depreciation) for federal income tax purposes are as follows:
NEW PACIFIC OVERSEAS EQUITY
FUND FUND
-------------- --------------
Cost of investments ........................... $15,264,200 $3,597,433
=========== ==========
Aggregated unrealized appreciation ............ $ 4,899,630 $ 538,094
Aggregated unrealized depreciation ............ (770,596) (630,749)
----------- ----------
Net unrealized appreciation (depreciation) .... $ 4,129,034 $ (92,655)
=========== ==========
For federal income tax purposes, the New Pacific Fund had a capital loss
carryforward at October 31, 1999 of $5,247,362 which may be carried forward and
applied against future capital gains. The capital loss carryforward expires in
2006.
4. Capital Stock
Transactions in capital stock shares were as follows:
NEW PACIFIC FUND
--------------------------
YEAR ENDED
10/31/99 10/31/98
Shares sold:
A Class ........................................ 1,124,218 703,209
B Class ........................................ 424,919 303,076
C Class ........................................ 175,563 19,220
Institutional Class ............................ 876,299 130,843
Shares issued upon reinvestment of distributions
from net investment income:
A Class ........................................ -- 8,030
B Class ........................................ -- 2,640
C Class ........................................ -- 146
Institutional Class ............................ -- 286
----------- ---------
2,600,999 1,167,450
----------- ---------
Shares repurchased:
A Class ........................................ (739,315) (403,742)
B Class ........................................ (132,812) (165,007)
C Class ........................................ (51,268) (8,431)
Institutional Class ............................ (761,571) (118,089)
----------- ---------
(1,684,966) (695,269)
Net Increase ...................................... 916,033 472,181
=========== =========
<PAGE>
22 for international diversification
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. Capital Stock (Continued)
Transactions in capital stock shares were as follows:
OVERSEAS EQUITY FUND
--------------------------
YEAR ENDED
10/31/99 10/31/98
Shares sold:
A Class 75,438 49,042
B Class 22,753 15,653
C Class 20,523 13,815
Institutional Class 60,595 2,121
-------- --------
Shares issued upon reinvestment of distributions from net investment income and
net realized gains on investments:
A Class 67,837 188,305
B Class 47,520 29,437
C Class 7,770 3,317
Institutional Class 2,028 1,127
-------- --------
304,464 302,817
-------- --------
Shares repurchased:
A Class (78,698) (878,340)
B Class (65,654) (25,581)
C Class (19,816) (8,711)
Institutional Class (60,389) (1,464)
-------- --------
(224,557) (914,096)
-------- --------
Net Increase (Decrease) 79,907 (611,279)
======== ========
5. Foreign Exchange Contracts
The New Pacific and Overseas Equity Funds will generally enter into forward
foreign currency contracts as a way of managing foreign exchange rate risk. A
fund may enter into these contracts to fix the U.S. dollar value of a security
that it has agreed to buy or sell for the period between the date the trade was
entered into and the date the security is delivered and paid for. A fund may
also use these contracts to hedge the U.S. dollar value of securities it already
owns denominated in foreign currencies.
Forward foreign currency contracts are valued at the mean between the bid and
asked prices of the contracts and are marked-to-market daily. Interpolated
values are derived when the settlement date of the contract is an interim date
for which quotations are not available. The change in market value is recorded
by the Funds as an unrealized gain or loss. When the contract is closed, the
Funds record a realized gain or loss equal to the difference between the value
of the contract at the time it was opened and the value at the time it was
closed.
The use of forward foreign currency contracts does not eliminate fluctuations in
the underlying prices of the Funds' securities, but it does establish a rate of
exchange that can be achieved in the future. Although forward foreign currency
contracts limit the risk of loss due to a decline in the value of the hedged
currency, they also limit any potential gain that might result should the value
of the currency increase. In addition, the Funds could be exposed to risks if
the counterparties to the contracts are unable to meet the terms of their
contracts.
The Funds had no forward foreign currency contract outstanding at October 31,
1999.
<PAGE>
6. Credit and Market Risk
Some countries in which the New Pacific and Overseas Equity Funds may invest
require governmental approval for the repatriation of investment income, capital
or the proceeds of sales of securities by foreign investors. In addition, if
there is a deterioration in a country's balance of payments or for other
reasons, a country may impose temporary restrictions on foreign capital
remittances abroad.
The securities exchanges of certain foreign markets are substantially smaller,
less liquid and more volatile than the major securities markets in the United
States. Consequently, acquisition and disposition of securities by the New
Pacific Fund and the Overseas Equity Fund may be inhibited. In addition, a
significant proportion of the aggregate market value of equity securities listed
on the major securities exchanges in emerging markets are held by a smaller
number of investors. This may limit the number of shares available for
acquisition or disposition by the Funds.
7. Lines of Credit
The committed lines of credit are $600,000 and $100,000 for the New Pacific Fund
and Overseas Equity Fund, respectively. No amounts were outstanding at October
31, 1999, or at any time during the fiscal year.
8. Tax Information (unaudited)
The information set forth is for each Fund's fiscal year as required by federal
laws. Shareholders, however, must report distributions on a calendar year basis
for income tax purposes, which may include distributions for portions of two
fiscal years of a fund. Accordingly, the information needed by shareholders for
income tax purposes will be sent to them in early 2000. Please consult your tax
advisor for proper treatment of the information.
For the fiscal year ended October 31, 1999, the Overseas Equity Fund designated
as long-term capital gains and ordinary income distributions paid during the
year as follows:
(A) (B) (C)
LONG-TERM
CAPITAL GAINS ORDINARY TOTAL
DISTRIBUTIONS INCOME DISTRIBUTIONS
FUND (TAX BASIS) DISTRIBUTIONS (TAX BASIS)
- ----------- ------------- ------------- -------------
Overseas
Equity Fund 67% 33% 100%
Items (A) and (B) are based on a percentage of the Fund's total distributions.
<PAGE>
for international diversification 23
DELAWARE GROUP ADVISER FUNDS, INC.
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
DELAWARE GROUP ADVISER FUNDS, INC. - DELAWARE NEW PACIFIC FUND
DELAWARE GROUP ADVISER FUNDS, INC. - DELAWARE OVERSEAS EQUITY FUND
We have audited the accompanying statements of net assets of Delaware New
Pacific Fund and Delaware Overseas Equity Fund (the "Funds") as of October 31,
1999, and the related statements of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the three years in the period
then ended. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights for the periods ended October 31, 1995 and 1996
were audited by other auditors whose report dated December 20, 1996 expressed an
unqualified opinion on those financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of October 31, 1999, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective Funds at October 31, 1999, the results of their operations for
the year then ended, the changes in their net assets for each of the two years
in the period then ended, and their financial highlights for each of the three
years in the period then ended, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
--------------------------
Ernst & Young LLP
Philadelphia, Pennsylvania
December 3, 1999
<PAGE>
DELAWARE INVESTMENTS FAMILY OF FUNDS
<TABLE>
<CAPTION>
<S> <C>
FOR GROWTH OF CAPITAL FOR CURRENT INCOME
Delaware Select Growth Fund Delaware Delchester Fund
Delaware Trend Fund Delaware High-Yield Opportunities Fund
Delaware DelCap Fund Delaware Strategic Income Fund
Delaware Small Cap Value Fund Delaware Corporate Bond Fund
Delaware U.S. Growth Fund Delaware Extended Duration Bond Fund
Delaware Growth Stock Fund Delaware American Government Bond Fund
Delaware Tax-Efficient Equity Fund Delaware U.S. Government Securities Fund
Delaware Social Awareness Fund Delaware Limited-Term Government Fund
FOR TOTAL RETURN FOR TAX-EXEMPT INCOME
Delaware Blue Chip Fund Delaware National High-Yield Municipal Bond Fund
Delaware Devon Fund Delaware Tax-Free USA Fund
Delaware Growth and Income Fund Delaware Tax-Free Insured Fund
Delaware Decatur Equity Income Fund Delaware Tax-Free USA Intermediate Fund
Delaware REIT Fund Delaware State Tax-Free Funds*
Delaware Balanced Fund
MONEY MARKET FUNDS
FOR INTERNATIONAL DIVERSIFICATION Delaware Cash Reserve
Delaware Emerging Markets Fund Delaware Tax-Free Money Fund
Delaware New Pacific Fund
Delaware Overseas Equity Fund ASSET ALLOCATION FUNDS
Delaware International Equity Fund Delaware Foundation Funds
Delaware Global Equity Fund Growth Portfolio
Delaware Global Bond Fund Balanced Portfolio
Income Portfolio
</TABLE>
*Available for the following states: Arizona, California, Colorado, Florida,
Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, North Dakota, New Jersey,
New Mexico, New York, Ohio, Oregon, Pennsylvania and Wisconsin. Insured and
intermediate bond funds are available in selected states.
funds
Complete information on any fund offered by Delaware Investments can be found in
each fund's current prospectus. Prospectuses for all funds offered by Delaware
Investments are available from your financial adviser. Please read the
prospectus carefully before you invest or send money.
[Photo of Computer Keyboard]
<PAGE>
THIS ANNUAL REPORT IS FOR THE INFORMATION OF SHAREHOLDERS OF DELAWARE NEW
PACIFIC FUND and Delaware Overseas Equity Fund, but it may be used with
prospective investors when preceded or accompanied by a current Prospectus for
Delaware New Pacific Fund and Delaware Overseas Equity Fund and the Delaware
Investments Performance Update for the most recently completed calendar quarter.
The Prospectus sets forth details about charges, expenses, investment objectives
and operating policies of the Fund. You should read the prospectus carefully
before you invest or send money. 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.
<TABLE>
<CAPTION>
Board of Directors Affiliated Officers
<S> <C>
WAYNE A. STORK RICHARD J. FLANNERY
Chairman Executive Vice President and General Counsel
Delaware Investments Family of Funds Delaware Investments Family of Funds
Philadelphia, PA Philadelphia, PA
WALTER P. BABICH BRUCE D. BARTON
Board Chairman, Citadel Constructors, Inc. President and Chief Executive Officer
King of Prussia, PA Delaware Distributors, L.P.
Philadelphia, PA
DAVID K. DOWNES
President and Chief Executive Officer ERIC E. MILLER
Delaware Investments Family of Funds Senior Vice President, Secretary
Philadelphia, PA and Deputy General Counsel
Delaware Investments Family of Funds
JOHN H. DURHAM Philadelphia, PA
Private Investor
Horsham, PA [Graphic Omitted]
ANTHONY D. KNERR [Photo of Globes]
Consultant, Anthony Knerr & Associates
New York, NY
ANN R. LEVEN
Former Treasurer, National Gallery of Art
Washington, DC
THOMAS F. MADISON
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN
CHARLES E. PECK
Retired
Fredericksburg, VA
JAN L. YEOMANS
Vice President and Treasurer directors
3M Corporation & officers
St. Paul, Minnesota
- --------------------------------------------------------------------------------
INVESTMENT MANAGER SHAREHOLDER SERVICING,
Delaware Management Company DIVIDEND DISBURSING
Philadelphia, Pennsylvania AND TRANSFER AGENT
Delaware Service Company, Inc.
NATIONAL DISTRIBUTOR Philadelphia, Pennsylvania
Delaware Distributors, L.P.
Philadelphia, Pennsylvania 1818 Market Street
Philadelphia, PA 19103-3682
SUBADVISERS
Delaware International Advisers Ltd.
London, England
AIB Govett, Inc.
San Francisco, CA and London, England
</TABLE>
<PAGE>
When used with prospective investors, this report must be preceded or
accompanied by a current Delaware Overseas Equity Fund and Delaware New Pacific
Fund Prospectus and the Delaware Investments Performance Update for the most
recently completed calendar quarter. For a prospectus of any other mutual fund
from Delaware Investments, contact your financial adviser or Delaware
Investments.
For Shareholders [Graphic Omitted]
1.800.523.1918
[Photo of Globes]
For Securities Dealers
1.800.362.7500
For Financial Institutions
Representatives Only
1.800.659.2265
www.delawareinvestments.com
Be sure to consult your financial adviser when making investments. Mutual funds
can be a valuable part of your financial plan; however, shares of the Funds are
not FDIC or NCUSIF insured, are not guaranteed by any bank or any credit union,
and involve investment risk, including the possible loss of the principal amount
invested. Shares of the Funds are not bank or credit union deposits.
(C) Delaware Distributors, L.P.
DELAWARE(SM)
INVESTMENTS
- ---------------------
Philadelphia o London
Printed in the USA
on recycled paper
(2347)
AR-109[10/99] PPL12/99
