<PAGE>
For International Diversification
Overseas Equity Fund
(photo of illustration from International Diversification Brochure)
service and guidance
professional management
goals
1999
Semi-Annual Report
DELAWARE(SM)
INVESTMENTS
=====================
Philadelphia o London
<PAGE>
professional
management
professional management
(various photos demonstrating service and guidance,
professional management and goals)
MORE THAN 70 YEARS
of investment experience has taught us
that disciplined strategies and prudent
risk management are a sound approach to
any market environment.
goals
goals
WHATEVER YOUR GOALS,
the years ahead will be shaped by
choices you make today. Delaware
offers many options that can be an
appropriate part of a sound
investment plan.
service and
guidance
service and guidance
DELAWARE BELIEVES THAT THE GUIDANCE
of a professional financial adviser
is vital to your long-term success.
We are committed to providing you
and your adviser with the highest
quality information and service.
<PAGE>
June 18, 1999
for
international
diversification
1
Dear Shareholder:
OVERSEAS MARKETS PROSPERED THIS PAST winter, as many international economies
bounced back from a turbulent summer. The U.S. Federal Reserve Board lowered
domestic interest rates three times last autumn in order to increase liquidity
in the U.S. Many nations around the globe, including the United Kingdom, New
Zealand and the Far East, followed with rate cuts of their own. This spurred the
economic recovery of established and emerging international markets.
Overseas Equity Fund, which invests in both developed and emerging markets,
provided competitive performance for the first half of fiscal 1999. Positive
returns provided by emerging markets contributed to the Fund's results. Overseas
Equity Fund's unmanaged benchmark, the MSCI EAFE Index, which focuses on
established markets, returned 15.44% during the six month period ended April 30,
1999. Although it is not your Fund's benchmark index, it is worth pointing out
that the MSCI Emerging Markets Free Index, an unmanaged index of stocks in
emerging market countries, returned 34.87%. Overseas Equity Fund held
approximately 27% of net assets in emerging markets stocks as of fiscal
year-end. We see strong potential for emerging countries in the coming year.
Emerging markets have started to see recovery from the turbulence of the past
few years. Asian economies have been improving as many governments implemented
pro-business policy changes and companies have encouraged internal corporate
restructurings. We anticipate these moves will benefit shareholders over the
long term. Asian economies are both importing more goods and exporting more
products to other nations. At the same time, interest rates have fallen. These
changes indicate recovery in this area of the world. In other areas, Brazil
successfully navigated rough waters that followed the devaluation of its
national currency in January. Since the devaluation, Brazil's stock market has
rebounded. However, we still see tremendous value and attractive potential in
Brazil and other Latin American markets because we believe shares of promising
corporations continue to trade at a great discount.
CUMULATIVE TOTAL RETURN
- -----------------------------------------------------------------------
FOR THE PERIODS ENDED APRIL 30, 1999
Six Months
- -----------------------------------------------------------------------
Overseas Equity Fund A Class +15.02%
MSCI EAFE Index +15.44%
Lipper International Fund Average (594 Funds) +15.08%
- -----------------------------------------------------------------------
All performance shown above is based on net asset value without effect of sales
charges and assumes reinvestment of all distributions. See page 7 for complete
performance information for all classes. Performance for other Fund classes
varies due to different expenses. The MSCI EAFE Index is an unmanaged measure of
international stocks in established markets. All returns are stated in U.S.
dollars. Past performance does not guarantee future results.
<PAGE>
for
international
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2
Developed markets have shown signs of improvement as well, and your Fund
continues to focus on areas such as the United Kingdom, Australia and New
Zealand.
For investors with international holdings, it has been difficult to maintain
a long-term perspective over the past few years. Although there are inherent
risks associated with international investing, such as currency and political
risks, there can also be great financial opportunities. We believe Overseas
Equity Fund is poised to offer investors attractive return potential as
international markets continue to strengthen and move back into favor.
On the pages that follow, your Fund's portfolio management team discusses in
further detail Overseas Equity Fund's performance since November. I encourage
you to read their commentary.
Investing in international markets allows you to maintain a strong
diversification component within your portfolio. As global markets rebound from
last year, we see great potential for capital appreciation in this area. 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
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for
international
diversification
3
Portfolio Manager's Review
CLIVE A. GILLMORE
Senior Portfolio Manager and
Director of Delaware International
Advisers, Ltd.
ROBERT AKESTER
Senior Portfolio Manager
Delaware International Advisers, Ltd.
JOSH A. BROOKS
Senior Portfolio Manager
Delaware International Advisers, Ltd.
May 15, 1999
INTERNATIONAL MARKETS PERFORMED well during the first half of Overseas Equity
Fund's fiscal 1999. We have seen strength in economies along the Pacific Rim, in
Latin America and, to a lesser extent, in Europe. Your Fund benefited from this
strength, providing a 15.02% return for the six-month period ended April 30,
1999 (for Class A shares at net asset value with all distributions reinvested).
Overseas Equity Fund kept pace with both its unmanaged benchmark, MSCI EAFE
Index which returned 15.44% and its peers in the Lipper international funds
category, which had an average return of 15.08%.
The Fund performed well 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. On
the heels of last year's global economic turbulence, we see extreme intrinsic
value in many international companies. We see the rest of 1999 as a time to be
cautiously optimistic. Although the storm is subsiding, there is still some
uncertainty in emerging markets around the world.
Overseas Equity Fund focuses on both emerging nations as well as developed
nations. The rules governing the Fund allow up to 40% of its assets to be
invested 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 increased our holdings in emerging markets to 27% as of April 30, 1999.
OVERSEAS EQUITY FUND COUNTRY ALLOCATION
- ------------------------------------------------------------------------------
APRIL 30, 1999
Argentina 1.4% Spain 3.5%
Australia 9.0% Malaysia 2.4%
Brazil+ 5.9% Netherlands 4.9%
Chile 1.3% New Zealand 3.3%
China 2.0% Mexico 2.1%
France 5.5% South Africa 4.0%
Germany 6.5% Turkey 1.1%
Hong Kong 2.0% United Kingdom 21.2%
India+ 1.9% Other* 6.0%
Japan 9.9% Cash and Other Assets 6.1%
*Other includes the following country allocations: Belgium 0.7%; Croatia 0.4%;
Egypt 0.4%; Estonia 0.7%; Hungary 0.5%; Peru 0.9%; Romania 0.2%; Russia 0.7%;
South Korea 0.7%; Taiwan 0.4%; Thailand 0.4%
+India includes the India Fund listed under Investment companies in the
statement of net assets; Brazil includes Telebras, ADR Pfd. Block, listed under
preferred stock in the statement of net assets.
<PAGE>
for
international
diversification
4
DEVELOPED NATIONS PROVIDE
ATTRACTIVE RETURNS
Adhering to our stock selection strategy, we didn't make many major changes in
your Fund's portfolio allocation over the past six months. Turnover was a scant
4% for this period. Among developed nations, we focused on countries that, in
our opinion, had strong, but undervalued national currencies. As we have yet to
determine the long-term sustainability of the newly issued Euro, we paid
particular attention to economies that did not adopt the new currency. The
United Kingdom remains our largest country weighting. Also, we maintain healthy
allocations in Australia and New Zealand. Both nations have produced extremely
attractive returns for your Fund this past winter.
Despite the recent strength of Japan's stock market, we continue to maintain
a relatively small allocation in Japan, compared to our unmanaged benchmark, the
MSCI EAFE Index. The Japanese government has announced a revised budget, which
includes tax cuts and increased public spending. Despite these measures, we
think the economic recovery will be slow and difficult. Investment opportunities
in Japan are still relatively unattractive to us as Japanese stocks are highly
priced and we believe value opportunities are difficult to find. We have limited
our exposure in Japan to select value opportunities.
VALUE IN EMERGING MARKETS
We have increased our holdings in the emerging markets arena over the past six
months. The sharp recovery now taking place could refocus attention on the
long-term growth potential of these economies. The turmoil of last year created
value opportunities. For this reason we have increased our holdings in emerging
markets to 27% of net assets. We think the opportunities for capital
appreciation in emerging markets are relatively more attractive than the
opportunities presented by many developed nations. Central banks around the
globe lowered domestic interest rates this past autumn and winter, producing a
favorable amount of liquidity in international markets. This enabled many
nations to begin their economic recoveries. In several Asian economies,
political reform, policy changes and restructurings resulted in growing GDP,
falling interest rates and a slight increase in consumer spending. These changes
point to rehabilitation after the recent crisis.
In addition, many businesses recently announced corporate restructuring, a
move we expect will benefit shareholders over the long term. We have uncovered
extraordinary opportunities to purchase securities at prices well below what we
believe to be their intrinsic value.
Our search for companies whose stock sells at below the company's true value
has led us to a number of commodity and mining companies in South Africa. We
have increased the Fund's holdings of Anglo-American Corporation of South Africa
Limited, a mining conglomerate specializing in diamonds, gold and platinum. In
addition, we continue to hold Sappi Limited, a paper producer, and Iscor, a
steel and oil ore producer. These stocks have already recovered somewhat,
AMONG DEVELOPED NATIONS, WE FOCUSED ON COUNTRIES THAT, IN OUR OPINION, HAD
STRONG, BUT UNDERVALUED NATIONAL CURRENCIES.
<PAGE>
for
international
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5
helped by a more positive attitude by investors to commodities, as the global
economy's prospects improve.
Until recently, oil prices the world over had suffered due to low supply
caused by factors including last year's warm winter and recessionary conditions
around the world. Since December, however, the price of oil has risen from
$10.73 a barrel to nearly $19 a barrel in May (Source: Datastream). Improving
world economies, along with intervention from OPEC, an intergovernmental
organization dedicated to the stability and prosperity of the petroleum market,
have brought oil prices back up to a level more acceptable to the producing
companies. As a result, oil-producing companies have appreciated in value over
the past six months.We expect that if OPEC's self-imposed output limits can be
maintained, oil prices will remain strong.
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. In our last report we stated our position that
many strong Brazilian corporations are poised for financial success. Most
corporations in this country maintain healthy balance sheets and many offer
growth potential for the coming year even though the economy is facing
recession. Despite the rebound in the market since the devaluation, we believe
there are still many attractive investment opportunities at deep discounts to
comparable companies elsewhere in the world.
There are some emerging economies that we have shied away from or approached
only with caution. Although Korea has been a strong performer this past winter,
we have chosen to underweight it. As of April 30, our position in Korea was 0.7%
compared to the MSCI Emerging Markets Free Index's 12.50%. Although the
government is promoting economic reform, we believe that due to the excessive
debts of most companies in the market, progress at the stock level will be slow
and investing in securities in this area may involve undue risk. In the Pacific
region, we have chosen, instead, to focus on emerging Asian economies like China
and Thailand. In Thailand's case, reforms appear to be proceeding faster than
Korea's, although the market has recovered far less, so far. 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.
WE HAVE INCREASED OUR HOLDINGS IN THE EMERGING MARKETS ARENA OVER THE PAST SIX
MONTHS. THE SHARP RECOVERY NOW TAKING PLACE COULD REFOCUS ATTENTION ON THE
LONG-TERM GROWTH POTENTIAL OF THESE ECONOMIES.
<PAGE>
for
international
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6
OUTLOOK
Looking forward to the remainder of fiscal 1999, we plan to maintain our focus
in the following areas:
o Continue to focus on the emerging markets arena. We believe that we will be
able to benefit further as these economies continue to recover from losses
suffered last year;
o Remain underweighted in Japan compared to the MSCI EAFE Index. We see select
opportunities to purchase Japanese stocks at attractive prices; and,
o Focus 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 an attractive position to
maximize total return consistent with our prudent investment style during the
remainder of fiscal 1999.
Performance Summary
OVERSEAS EQUITY FUND PERFORMANCE
- ------------------------------------------------------------------------
AVERAGE ANNUAL RETURN THROUGH APRIL 30, 1999
Lifetime Five Years One Year
- ------------------------------------------------------------------------
Class A (Est. 12/3/93)
Excluding Sales Charge +5.62% +4.87% -3.34%
Including Sales Charge +4.47% +3.63% -8.90%
- ------------------------------------------------------------------------
Class B (Est. 3/29/94)
Excluding Sales Charge +4.18% +4.11% -4.11%
Including Sales Charge +4.07% +3.88% -7.69%
- ------------------------------------------------------------------------
Class C (Est. 5/10/94)
Excluding Sales Charge +4.31% -4.11%
Including Sales Charge +4.31% -4.83%
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 carry a front-end sales charge, but are subject to a 1%
annual distribution and service fee. They are also subject to a deferred sales
charge 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, one-year periods and
six-month cumulative return for the periods ended 4/30/99, for Overseas Equity
Fund's Institutional Class were +4.91%, +4.95%, -3.12%, and +15.32%,
respectively. The institutional class was made available without sales charges
only to certain eligible institutional accounts on 2/3/94.
An expense limitation of 1.55%, exclusive of 12b-1 fees, was in effect during
this period. Performance would have been lower had the expense limitation not
been in effect.
<PAGE>
for international diversification 7
Financial Statements
DELAWARE GROUP ADVISER FUNDS, INC.
OVERSEAS EQUITY FUND
STATEMENT OF NET ASSETS
APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
NUMBER MARKET
OF SHARES VALUE
----------------------
COMMON STOCK - 91.56%
ARGENTINA - 1.42%
Central Puerto SA, Class B ................... 8,000 $ 20,008
Transportadora De Gas Sur B .................. 6,700 12,802
YPF Sociedad Anonima, ADR .................... 500 21,000
--------
53,810
--------
AUSTRALIA - 8.98%
Amcor ........................................ 14,000 75,381
CSR .......................................... 27,000 72,162
Foster's Brewing Group........................ 24,000 69,987
National Australia Bank ...................... 4,400 85,636
Orica ........................................ 6,500 37,823
--------
340,989
--------
BELGIUM - 0.68%
Electrabel SA ................................ 78 25,773
--------
25,773
--------
BRAZIL - 4.65%
Aracruz Celulose SA, ADR ..................... 1,500 30,000
Centrais Electric Series B, GDR .............. 400 18,566
Companhia Energetica de Minas Gerais, ADR..... 1,167 27,997
Companhia Paranaense de Energia-Copel, ADR ... 3,600 29,475
Rossi Residential, GDR ....................... 16,600 22,013
Telebras, ADR ................................ 500 39
Unibanco, GDR ................................ 1,320 32,752
Usinas Siderurg Minas, ADR ................... 5,600 15,832
--------
176,674
--------
CHILE - 1.26%
Administradora de fondos de Pensiones Provida
SA, ADR ................................... 1,400 28,175
Empresa Nacional Electricidad SA, ADR ........ 1,400 19,600
--------
47,775
--------
CHINA - 1.99%
First Tractor ................................ 42,000 8,399
Guangdong Kelon Electrical Holding ........... 30,000 27,095
Guangshen Railway ............................ 140,000 18,424
Shenzhen Expressway .......................... 106,000 21,745
--------
75,663
--------
CROATIA - 0.41%
*Zagrebacka Banka, GDR ........................ 1,775 15,576
--------
15,576
--------
<PAGE>
- --------------------------------------------------------------------------------
NUMBER MARKET
OF SHARES VALUE
----------------------
COMMON STOCK (CONTINUED)
EGYPT - 0.42%
Paints & Chemical, GDR ....................... 2,300 $ 15,928
--------
15,928
--------
ESTONIA - 0.67%
*EESTI Telekom, GDR ........................... 461 9,750
*EESTI Uhispank, GDR .......................... 2,890 15,534
--------
25,284
--------
FRANCE - 5.51%
Compagnie De Saint Gobain .................... 432 74,321
Elf Aquitaine ................................ 520 80,927
Societe Generale.............................. 300 53,803
--------
209,051
--------
GERMANY - 6.53%
Bayer ........................................ 1,600 67,757
Bayerische Hypo-Und Vereinsbank .............. 840 55,582
Rheinisch Westfaelisches Elektric ............ 860 39,606
Siemens ...................................... 1,150 84,860
--------
247,805
--------
HONG KONG - 2.02%
Hong Kong Electric ........................... 24,000 76,484
--------
76,484
--------
HUNGARY - 0.50%
Gedeon Richter, GDR .......................... 500 18,700
--------
18,700
--------
INDIA - 0.99%
Larsen & Toubro, GDR ......................... 2,500 23,125
Mahanagar Telephone Nigam, GDR ............... 1,400 14,560
--------
37,685
--------
JAPAN - 9.85%
Eisai ........................................ 5,000 93,632
Hitachi ...................................... 12,000 87,675
Koito Manufacturing .......................... 9,000 41,927
Matsushita Electric Industrial ............... 4,000 76,079
West Japan Railway ........................... 18 74,654
--------
373,967
--------
MALAYSIA - 2.41%
Petronas Dagangan Berhad ..................... 30,000 30,000
Resorts World Berhad ......................... 18,000 29,605
Sime Darby Berhad ............................ 28,000 31,979
--------
91,584
--------
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8 for international diversification
STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
NUMBER MARKET
OF SHARES VALUE
----------------------
COMMON STOCK (Continued)
MEXICO - 2.05%
Alfa SA de CV, Class A ....................... 5,400 $ 21,165
Cemex SA, Class B............................. 7,500 34,677
Vitro SA, ADR ................................ 3,500 21,875
--------
77,717
--------
NETHERLANDS - 4.93%
Elsevier-CVA.................................. 4,500 67,413
Koninklijke Van Ommern ....................... 1,300 38,124
Royal Dutch Petroleum ........................ 1,400 81,668
--------
187,205
--------
NEW ZEALAND - 3.27%
Carter Holt Harvey............................ 28,000 41,027
Telecom Corporation Of New Zealand ........... 16,000 83,216
--------
124,243
--------
PERU - 0.88%
Creditcorp Ltd., ADR ......................... 2,420 24,502
Telefonica del Peru SA, ADR................... 600 9,038
--------
33,540
--------
ROMANIA - 0.22%
*Banco Turco Romana SA, GDR ................... 1,550 8,409
--------
8,409
--------
RUSSIA - 0.69%
Gazprom, ADR ................................. 1,000 10,625
Lukoil Holding, ADR .......................... 300 11,124
Mosenergo, ADR ............................... 1,950 4,583
--------
26,332
--------
SOUTH AFRICA - 3.97%
AngloAmerican Corporation of
South Africa Limited ...................... 860 44,544
Edgars Stores Limited ........................ 816 4,169
Iscor Limited ................................ 85,500 26,763
Sappi Limited ................................ 5,000 36,244
Sasol Limited ................................ 5,500 38,962
--------
150,682
--------
SOUTH KOREA - 0.68%
Pohang Iron & Steel, ADR ..................... 1,000 25,750
--------
25,750
--------
SPAIN - 3.53%
Iberdrola SA.................................. 4,300 60,319
Telefonica de Espana SA....................... 1,570 73,717
--------
134,036
--------
<PAGE>
- --------------------------------------------------------------------------------
NUMBER MARKET
OF SHARES VALUE
----------------------
COMMON STOCK (CONTINUED)
TAIWAN - 0.36%................................
*Yageo, GDR.................................... 2,800 $13,650
--------
13,650
--------
THAILAND - 0.43%
*Hana Microelectronics ........................ 8,000 15,117
*K.R. Precision ............................... 4,400 1,395
--------
16,512
--------
TURKEY - 1.10%
*Efes Sinai Yatirim, ADR ...................... 9,999 12,749
*Efes Sinai Yatirim Holding ................... 359,800 4,450
Koc Holdings AS............................... 134,600 24,369
--------
41,568
--------
UNITED KINGDOM - 21.16%
Bass ......................................... 5,357 84,772
Blue Circle Industry.......................... 15,000 101,850
Boots ........................................ 5,800 76,711
British Airways .............................. 9,600 75,572
GKN .......................................... 7,300 124,680
Glaxo Wellcome ............................... 3,000 88,527
Powergen ..................................... 6,900 75,272
Rio Tinto..................................... 7,200 126,158
Taylor Woodrow ............................... 16,000 49,943
---------
803,485
---------
Total Common Stock (cost $3,445,038).......... 3,475,877
---------
INVESTMENT COMPANIES - 0.88%
*The India Fund ............................... 4,000 33,500
--------
Total Investment Companies (cost $25,240)..... 33,500
--------
PREFERRED STOCK - 1.20%
Telebras, ADR Pfd Block ...................... 500 45,594
--------
Total Preferred Stock (cost $33,559) ......... 45,594
--------
RIGHTS - 0.04%
*Telefonica de Espana SA ...................... 1,570 1,463
--------
Total Rights (cost $0) ....................... 1,463
--------
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for international diversification 9
STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
----------------------
REPURCHASE AGREEMENTS - 4.08%
With Chase Manhattan 4.85% 5/3/99
(dated 4/30/99, collateralized by $23,000
U.S. Treasury Notes 5.50% due 12/31/00,
market value $24,007 and $19,000
U.S. Treasury Notes 5.50% due 12/31/00,
market value $19,206 and $10,000
U.S. Treasury Notes 5.75% due 8/15/03,
market value $9,838).......................... $53,000 $ 53,000
With J.P. Morgan Securities 4.85% 5/3/99
(dated 4/30/99, collateralized by $15,000
U.S. Treasury Notes 5.50% due 5/31/03,
market value $14,996 and $23,000
U.S. Treasury Notes 5.75% due 10/31/02,
market value $23,833 and $11,000
U.S. Treasury Notes 11.125% due
8/15/03, market value $13,734)................ 51,000 51,000
With PaineWebber 4.85% 5/3/99
(dated (4/30/00, collateralized by $20,000
U.S. Treasury Notes 4.00% due 10/31/00,
market value $19,380 and $13,000
U.S. Treasury Notes 6.375% due 7/15/99,
market value $13,494 and $19,000
U.S. Treasury Notes 6.25% due 10/31/01,
market value $19,708) ........................ 51,000 51,000
Total Repurchase Agreement ----------
(cost $155,000) .............................. 155,000
----------
TOTAL MARKET VALUE OF SECURITIES - 97.76%
(COST $3,658,837)....................................... $3,711,434
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 2.24%.... 84,990
----------
NET ASSETS APPLICABLE TO 505,204 SHARES
($.01 PAR VALUE OUTSTANDING - 100.00%................... $3,796,424
==========
NET ASSET VALUE - OVERSEAS EQUITY FUND A CLASS
($2,360,514 / 298,431 SHARES) .......................... $7.91
=====
NET ASSET VALUE - OVERSEAS EQUITY FUND B CLASS
($1,077,316 / 156,358 SHARES)........................... $6.89
=====
NET ASSET VALUE - OVERSEAS EQUITY FUND C CLASS
($274,789 / 39,775 SHARES) ............................. $6.91
=====
NET ASSET VALUE - OVERSEAS EQUITY FUND INSTITUTIONAL CLASS
($83,805 / 10,640 SHARES) ............................. $7.88
=====
COMPONENTS OF NET ASSETS AT APRIL 30, 1999:
Common stock, $.01 par value
70,000,000 shares authorized with
20,000,000 shares allocated to the
Overseas Equity Fund A Class,
20,000,000 shares allocated to the
Overseas Equity Fund B Class,
15,000,000 shares allocated to the
Overseas Equity Fund C Class, and
15,000,000 shares allocated to the
Overseas Equity Fund Institutional
Class ................................................. $3,774,703
**Distributions in excess of net investment income ........ (882)
Accumulated net realized loss on investments ........... (30,567)
Net unrealized appreciation of investments and
foreign currencies ..................................... 53,170
----------
.......................................................... $3,796,424
==========
<PAGE>
- -----------------
*Non-income producing security
**Distributions in excess of 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 -
OVERSEAS EQUITY FUND A CLASS
Net asset value A Class (A) $7.91
Sales charge (5.75% of offering price or 6.07% of the amount
invested per share) (B) 0.48
-----
Offering Price $8.39
=====
- --------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon redemption or repurchase of shares.
(B) See How to Buy shares in the current Prospectus for purchases of $100,000 or
more for Overseas Equity Fund A Class.
See accompanying notes
<PAGE>
10 for international diversification
DELAWARE GROUP ADVISER FUNDS, INC.
OVERSEAS EQUITY FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends ....................................... $ 52,339
Interest ........................................ 1,291
Foreign tax withheld ............................ (3,574)
--------
50,056
--------
EXPENSES:
Management fees ................................. 16,661
Registration fees ............................... 32,919
Dividend disbursing and transfer agent
fees and expenses ............................ 22,832
Custodian fees and expenses ..................... 10,344
Distribution expense ............................ 9,571
Reports and statements to shareholders .......... 3,522
Professional fees ............................... 3,185
Taxes (other than taxes on income)............... 2,450
Directors' fees ................................. 2,015
Accounting and administration ................... 1,388
Amortization of organization expenses............ 186
Other............................................ 5,042
--------
110,115
--------
Less expenses absorbed or waived by the
Delaware Management Company .................. (73,964)
Less expenses paid indirectly ................... (83)
--------
Total expenses .................................. 36,068
--------
NET INVESTMENT INCOME ........................... 13,988
--------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized loss on:
Investments .................................. (30,906)
Foreign currencies............................ (10,618)
--------
Net realized loss (41,524)
Net change in unrealized appreciation/depreciation
of investments and foreign currencies ......... 521,634
--------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS AND
FOREIGN CURRENCIES ........................... 480,110
--------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ..................... $494,098
========
See accompanying notes
<PAGE>
DELAWARE GROUP ADVISER FUNDS, INC.
OVERSEAS EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR
4/30/99 ENDED
(UNAUDITED) 10/31/98
------------------------
OPERATIONS:
Net investment income................................. $ 13,988 $ 33,133
Net realized gain (loss) on investments
and foreign currencies............................. (41,524) 803,026
Net change in unrealized appreciation/(depreciation)
of investments and foreign currencies ............. 521,634 (1,701,170)
-------- ----------
Net increase (decrease) in net assets resulting
from operations .................................. 494,098 (865,011)
-------- ----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
A Class............................................ (158,267) (454,027)
B Class ........................................... (93,220) (65,715)
C Class ........................................... (21,225) (7,303)
Institutional Class ............................... (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)
-------- ----------
(843,484) (2,200,434)
-------- ----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class ........................................... 236,194 498,572
B Class ........................................... 109,144 140,999
C Class ........................................... 112,531 117,386
Institutional Class................................ 19,727 23,006
Net asset value of shares issued upon
reinvestment of distributions from
net investment income and net
realized gain on investments:
A Class ........................................... 464,677 1,867,982
B Class ........................................... 284,170 264,050
C Class ........................................... 46,619 29,819
Institutional Class ............................... 13,809 11,146
--------- ----------
1,286,871 2,952,960
--------- ----------
Cost of shares repurchased:
A Class ........................................... (211,773) (8,677,065)
B Class ........................................... (337,385) (219,839)
C Class ........................................... (25,820) (76,715)
Institutional Class................................ (3,604) (14,376)
--------- ----------
(578,582) (8,987,995)
--------- ----------
Increase (decrease) in net assets derived
from capital share transactions ................... 708,289 (6,035,035)
--------- ----------
NET INCREASE (DECREASE) IN NET ASSETS ................ 358,903 (9,100,480)
NET ASSETS:
Beginning of period .................................. 3,437,521 12,538,001
---------- ----------
End of period ........................................ $3,796,424 $3,437,521
========== ==========
See accompanying notes
<PAGE>
for international diversification 11
DELAWARE GROUP ADVISER FUNDS, INC.
OVERSEAS EQUITY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
OVERSEAS EQUITY FUND CLASS A
-----------------------------------------------------------------------------------
SIX MONTHS YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED 12/3/93(1) TO
4/30/99(4) 10/31/98(4) 10/31/97(4) 10/31/96(5) 10/31/95 10/31/94
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............... $8.950 $12.520 $12.390 $11.400 $11.000 $10.000
Income from investment operations:
Net investment income (loss) .................... 0.038 0.084 (0.060) (0.060) 0.010 0.020
Net realized and unrealized gain (loss)
on investments and foreign currencies ......... 0.987 (1.494) 0.960 1.073 0.400 1.010
------ ------- ------- ------- ------- -------
Total from investment operations ................ 1.025 (1.410) 0.900 1.013 0.410 1.030
------ ------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ............ (0.695) (0.520) (0.440) (0.023) (0.010) (0.030)
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) (0.030)
------ ------- ------- ------- ------- -------
Net asset value, end of period .................. $7.910 $ 8.950 $12.520 $12.390 $11.400 $11.000
====== ======= ======= ======= ======= =======
Total return(2) .................................... 15.02% (12.95%) 7.74% 8.90% 3.81% 10.25%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ......... $2,361 $2,034 $10,868 $14,886 $13,018 $11,721
Ratio of expenses to average net assets ......... 1.85%(3) 1.83% 1.80% 1.82% 1.85% 1.85%(3)
Ratio of expenses to average net assets
prior to expense limitation ................... 6.18%(3) 3.75% 1.80% 2.60% 2.96% 3.56%(3)
Ratio of net investment income (loss)
to average net assets ......................... 1.08%(3) 0.86% (0.45%) (0.51%) 0.00% 0.25%(3)
Ratio of net investment loss to average net
assets prior to expense limitation ............ (3.25%)(3) (1.06%) (0.45%) (1.29%) (1.11%) (1.96%)(3)
Portfolio turnover rate ......................... 4% 87% 18% 21% 9% 6%
</TABLE>
- ------------------------
(1) Commencement of operations.
(2) 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.
(3) Annualized.
(4) The average shares outstanding method has been applied for per share
information.
(5) Commencing May 3, 1996, Delaware Management Company replaced Lincoln
National Corporation as the Fund's investment manager.
See accompanying notes
<PAGE>
12 for international diversification
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
OVERSEAS EQUITY FUND CLASS B
-----------------------------------------------------------------------------------
SIX MONTHS YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED 3/29/94(1) TO
4/30/99(4) 10/31/98(4) 10/31/97(4) 10/31/96(5) 10/31/95 10/31/94
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............... $8.030 $11.540 $11.560 $10.710 $10.400 $10.000
Income from investment operations:
Net investment income (loss) .................... 0.014 0.026 (0.140) (0.060) (0.020) -
Net realized and unrealized gain (loss)
on investments and foreign currencies ......... 0.856 (1.376) 0.890 0.930 0.350 0.430
------ ------- ------- ------- ------- -------
Total from investment operations ................ 0.870 (1.350) 0.750 0.870 0.330 0.430
------ ------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ............ (0.640) (0.520) (0.440) (0.020) (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) (0.020) (0.030)
------ ------- ------- ------- ------- -------
Net asset value, end of period .................. $6.890 $ 8.030 $11.540 $11.560 $10.710 $10.400
====== ====== ======= ======= ======= =======
Total return(2) .................................... 14.64% (13.66%) 6.95% 8.16% 3.19% 4.28%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ......... $1,077 $1,166 $1,450 $1,208 $1,183 $523
Ratio of expenses to average net assets ......... 2.55%(3) 2.53% 2.50% 2.50% 2.50% 2.50%(3)
Ratio of expenses to average net assets
prior to expense limitation ................... 6.88%(3) 4.45% 2.50% 3.28% 3.61% 4.22%(3)
Ratio of net investment income (loss)
to average net assets ......................... 0.38%(3) 0.16% (1.16%) (1.19%) (0.57%) (0.37%)(3)
Ratio of net investment loss to average net
assets prior to expense limitation ............ (3.95%)(3) (1.76%) (1.16%) (1.97%) (1.68%) (2.09%)(3)
Portfolio turnover rate ......................... 4% 87% 18% 21% 9% 6%
</TABLE>
- ---------------------
(1) Commencement of operations.
(2) 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.
(3) Annualized.
(4) The average shares outstanding method has been applied for per share
information.
(5) Commencing May 3, 1996, Delaware Management Company replaced Lincoln
National Corporation as the Fund's investment manager.
See accompanying notes
<PAGE>
for international diversification 13
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
OVERSEAS EQUITY FUND CLASS C
-----------------------------------------------------------------------------------
SIX MONTHS YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED 5/10/94(1) TO
4/30/99(4) 1998(4) 1997(4) 1996(5) 1995 10/31/94
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................ $8.040 $11.550 $11.580 $10.730 $10.430 $10.000
Income from investment operations:
Net investment income (loss) ..................... 0.019 0.027 (0.140) (0.060) (0.060) 0.010
Net realized and unrealized gain (loss) on
investments and foreign currencies ............. 0.861 (1.377) 0.880 0.930 0.390 0.440
------ ------- ------- ------- ------- -------
Total from investment operations ................. 0.880 (1.350) 0.740 0.870 0.330 0.450
------ ------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ............. (0.640) (0.520) (0.440) (0.020) (0.030) (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) (0.030) (0.020)
------ ------- ------- ------- ------- -------
Net asset value, end of period ................... $6.910 $ 8.040 $11.550 $11.580 $10.730 $10.430
====== ======= ======= ======= ======= =======
Total return(2) ..................................... 14.74% (13.67%) 6.85% 8.15% 3.16% 4.45%
Ratios and supplemental data:
Net assets, end of period (000 omitted) .......... $275 $179 $159 $112 $43 $38
Ratio of expenses to average net assets .......... 2.55%(3) 2.53% 2.50% 2.50% 2.50% 2.50%(3)
Ratio of expenses to average net assets
prior to expense limitation .................... 6.88%(3) 4.45% 2.50% 3.28% 3.61% 4.23%(3)
Ratio of net investment income (loss) to
average net assets ............................. 0.38%(3) 0.16% (1.16%) (1.19%) (0.62%) 0.16%(3)
Ratio of net investment loss to average net
assets prior to expense limitation ............. (3.95%)(3) (1.76%) (1.16%) (1.97%) (1.73%) (1.57%)(3)
Portfolio turnover rate .......................... 4% 87% 18% 21% 9% 6%
</TABLE>
- --------------------
(1) Commencement of operations.
(2) 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.
(3) Annualized.
(4) The average shares outstanding method has been applied for per share
information.
(5) Commencing May 3, 1996, Delaware Management Company replaced Lincoln
National Corporation as the Fund's investment manager.
See accompanying notes
<PAGE>
14 for international diversification
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
OVERSEAS EQUITY FUND INSTITUTIONAL CLASS
-----------------------------------------------------------------------------------
SIX MONTHS YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED 2/3/94(1) TO
4/30/99(4) 10/31/98(4) 10/31/97(4) 10/31/96(5) 10/31/95 10/31/94
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................ $8.930 $12.480 $12.320 $11.440 $11.020 $10.500
Income from investment operations:
Net investment income (loss) ..................... 0.048 0.116 (0.020) (0.060) 0.040 0.040
Net realized and unrealized gain (loss) on
investments and foreign currencies ............. 0.992 (1.506) 0.950 0.963 0.410 0.520
------ ------- ------- ------- ------- -------
Total from investment operations ................. 1.040 (1.390) 0.930 0.903 0.450 0.560
------ ------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ............. (0.720) (0.520) (0.440) (0.023) (0.030) (0.040)
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) (0.040)
------ ------- ------- ------- ------- -------
Net asset value, end of period ................... $7.880 $ 8.930 $12.480 $12.320 $11.440 $11.020
====== ======= ======= ======= ======= =======
Total return(2) ..................................... 15.32% (12.82%) 8.04% 7.91% 4.22% 5.26%
Ratios and supplemental data:
Net assets, end of period (000 omitted) .......... $84 $59 $60 $284 $161 $63
Ratio of expenses to average net assets .......... 1.55%(3) 1.53% 1.50% 1.50% 1.50% 1.50%(3)
Ratio of expenses to average net assets
prior to expense limitation .................... 5.88%(3) 3.45% 1.50% 2.28% 2.61% 3.21%(3)
Ratio of net investment income (loss) to
average net assets ............................. 1.38%(3) 1.16% (0.15%) (0.19%) 0.40% 0.76%(3)
Ratio of net investment loss to average net
assets prior to expense limitation ............. (2.95%)(3) (0.76%) (0.15%) (0.97%) (0.71%) (0.95%)(3)
Portfolio turnover rate .......................... 4% 87% 18% 21% 9% 6%
</TABLE>
- --------------------
(1) Commencement of operations.
(2) 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.
(3) Annualized.
(4) The average shares outstanding method has been applied for per share
information.
(5) Commencing May 3, 1996, Delaware Management Company replaced Lincoln
National Corporation as the Fund's investment manager.
See accompanying notes
<PAGE>
for international diversification 15
Delaware Group Adviser Funds, Inc.
Notes to Financial Statements
April 30, 1999
(Unaudited)
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
Delaware Group Adviser Funds, Inc. currently issues three separate series of
shares (each referred to as a "Fund" or collectively as the "Funds") U.S. Growth
Fund, Overseas Equity Fund (formerly known as the World Growth Fund) and the New
Pacific Fund. These financial statements and related notes pertain to the
Overseas Equity Fund (The "Fund"). The Fund offers four classes of shares. The
Overseas Equity Fund A Class carries a front-end sales charge of 5.75%. The
Overseas Equity Fund B Class carries a back-end deferred sales charge. The
Overseas Equity Fund C Class carries a level load deferred sales charge, and the
Overseas Equity Fund Institutional Class has no sales charge.
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 Fund.
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 Fund's Board of Directors.
Federal Income Taxes - The 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
the 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 - The 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 in the Fund's records at the current prevailing exchange rates. 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. 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 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
Fund reports 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.
<PAGE>
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.
Certain expenses of the Fund are paid through "soft dolllar" arrangements with
brokers. These transactions are done subject to best price and execution. The
amount of these expenses was approximately $39 for the period ended April 30,
1999. The Fund may receive earnings credit used to offset custody fees when
positive balances are maintained at the custodian. These credits were $44 for
the period ended April 30, 1999. The "soft dollar" reimbursement and the
earnings credit are combined as expenses paid indirectly in the Statement of
Operations. 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 Fund is aware of
such dividends, net of all non-rebatable tax withholdings. Original issue
discounts are accreted to interest income over the lives of the respective
securities. 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 Fund declares and pays dividends from net investment income and
capital gains annually.
2. Investment Management and Other Transactions with Affiliates
Effective April 1, 1999, in accordance with the terms of the Investment
Management Agreement, the Fund currently pays Delaware Management Company
("DMC"), the Investment Manager of the Fund, an annual fee which is calculated
daily at a rate of 0.85% of the first $500,000,000 of the average daily net
assets of the Fund, 0.80% of the next $500,000,000, 0.75% of the next
$1,500,000,000, and 0.70% of the average daily net assets of the Fund in excess
of $2,500,000,000, less the fees paid to the unaffiliated directors. Prior to
April 1, 1999, DMC was paid at a rate of 1.00% of the average daily net assets
of the Fund, less the fees paid to the unaffiliated directors.
DMC has entered into sub-advisory agreement with Delaware Investment Advisors
Limited, as of September 15, 1997, with respect to the management of the Fund.
The sub-adviser receives sub-advisory fees from the Manager for their services.
The fund does not pay any fees to the sub-advisers.
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
taxes, interest, brokerage commissions and extraordinary expenses, exceed 1.55%
of average daily net assets of the Fund through October 31, 1999.
The Fund has engaged Delaware Service Company, Inc. ("DSC"), an affiliate of
DMC, to provide dividend disbursing, transfer agent, and accounting and
administrative services. The
<PAGE>
16 for international diversification
Notes to Financial Statements (Continued)
Fund pays DSC a monthly fee based on the number of Shareholder accounts,
Shareholder transactions, and actual net assets subject to certain minimizing.
At April 30, 1999, the Fund had liabilities for such fees and other expenses
payable to DSC of $852.
Pursuant to the Distribution Agreement, the 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 Class. At April 30, 1999, the Fund had
liabilities for such fees and other expenses payable to DDLP of $6,462.
For the six months ended April 30, 1999 DDLP earned $833 for commissions on
sales of the Fund A Class shares.
Certain officers of DMC, DSC and DDLP are officers, directors and/or employees
of the Fund. These officers, directors and employees are paid no compensation by
the Fund.
3. Investments
During the six months ended April 30, 1999, the Fund made purchases of $130,538
and sales of $116,363 of investment securities other than U.S. government
securities and temporary cash investments.
The cost of investments for federal income tax purposes approximates cost for
book purposes. At April 30, 1999, the aggregate cost of securities was
$3,658,837.
At April 30, 1999, net unrealized appreciation for federal income tax purposes
aggregated $52,597 of which $469,424 related to unrealized appreciation of
securities and $416,827 related to unrealized depreciation of securities.
4. Capital Stock
Transactions in capital stock were as follows:
Six Months Year
Ended Ended
4/30/99 10/31/98
(Unaudited)
---------- --------
Shares sold:
A Class 31,640 49,042
B Class 16,040 15,653
C Class 14,070 13,815
Institutional Class 2,516 2,121
Shares issued upon reinvestment of
distributions from net investment income and
net realized gains from investments:
A Class 67,836 188,305
B Class 47,520 29,437
C Class 7,770 3,317
Institutional Class 2,028 1,127
-------- --------
189,420 302,817
-------- --------
Shares repurchased:
A Class (28,447) (878,340)
B Class (52,418) (25,581)
C Class (4,285) (8,711)
Institutional Class (498) (1,464)
-------- --------
(85,648) (914,096)
-------- --------
Net Increase (decrease) 103,772 (611,279)
======== ========
<PAGE>
5. Foreign Exchange Contracts
The Fund 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 Fund as an unrealized gain or loss. When the contract is closed, the Fund
records a realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
The use of forward foreign currency contracts does not eliminate fluctuations in
the underlying prices of the Fund's 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 Fund could be exposed to risks if the
counterparties to the contracts are unable to meet the terms of their contracts.
There were no forward foreign currency contracts outstanding in the Fund at
April 30, 1999.
6. Market and Credit Risk
Some countries in which the Fund invests 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 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 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 Fund.
7. Lines of Credit
The committed line of credit is $500,000 for the Fund. No amounts were
outstanding at April 30, 1999, or at any time during the fiscal year.
<PAGE>
for international diversification 17
Proxy Results
(Unaudited)
For the period ended April 30, 1999, the Delaware Group Adviser Funds, Inc.
shareholders voted on the following proposals at the annual meeting of
shareholders on December 21,1998. The description of each proposal and number of
shares voted are as follows:
1. To elect the Fund's Board of Directors:
Shares Shares Voted
Voted Withheld
For Authority
------ ------------
Jeffrey J. Nick 5,136,543 384,167
Walter P. Babich 5,136,870 383,840
John H. Durham 5,138,701 382,009
Anthony D. Knerr 5,138,664 382,046
Ann R. Leven 5,138,744 381,966
W. Thacher Longstreth 5,138,744 381,966
Thomas F. Madison 5,138,744 381,966
Charles E. Peck 5,138,744 381,966
Wayne A. Stork 5,138,744 381,966
Jan R. Yeomans 5,138,744 381,966
2. To approve the reclassification of the Fund's investment objective from
fundamental to non-fundamental.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
3,407,916 77,601 123,645
3. To approve standardized fundamental investment restrictions for the Fund
(proposal involves separate votes on seven sub-proposals 3A-3G).
3A. To adopt a new fundamental investment restriction concerning concentration
of the Fund's investments in the same industry.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
3,423,310 69,810 116,042
3B. To adopt a new fundamental investment restriction concerning borrowing money
and issuing senior securities.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
3,413,742 77,780 117,641
3C. To adopt a new fundamental investment restriction concerning underwriting.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
3,413,911 70,464 124,788
3D. To adopt a new fundamental investment restriction concerning investments in
real estate.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
3,421,359 72,878 114,926
3E. To adopt a new fundamental investment restriction concerning investments in
commodities.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
3,408,179 77,970 123,014
<PAGE>
3F. To adopt a new fundamental investment restriction concerning lending by the
Fund.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
3,421,997 75,824 111,342
3G. To reclassify all current fundamental investment restrictions as
non-fundamental.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
3,402,459 82,721 123,983
4. To approve a new investment management agreement with Delaware Management
Company for the Fund.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
3,731,184 81,436 115,523
5. To approve a new sub-advisor agreement with Delaware International Advisors
Ltd. for the Fund.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
3,724,825 76,802 126,516
6. To ratify the selection of Ernst & Young LLP, as the independent auditors
for Delaware Group Adviser Funds, Inc.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
5,176,543 64,551 279,612
7. To approve the restructuring of the Delaware Group Adviser Funds, Inc. from
a Maryland Corporation into a Delaware Business Trust.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
4,677,993 87,609 313,676
<PAGE>
This semi-annual report is for the information of Overseas Equity Fund
shareholders, but it may be used with prospective investors when preceded or
accompanied by a current Prospectus for this 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 this 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 this Fund will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Investment Manager
Delaware Management Company
Philadelphia, Pennsylvania
International Subadviser
Delaware International Advisers Ltd.
London, England
National Distributor
Delaware Distributors, L.P.
Philadelphia, Pennsylvania
Shareholder Servicing,
Dividend Disbursing
and Transfer Agent
Delaware Service Company, Inc.
Philadelphia, Pennsylvania
(PHOTO OF GLOBES)
1818 Market Street
Philadelphia, PA 19103-3682
For Shareholders
1.800.523.1918
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 Fund are
not FDIC or NCUSIF insured, are not guaranteed by any bank or any credit union,
and involve investment risk, including the possible loss of the principal amount
invested. Shares of the Fund are not bank or credit union deposits.
(C) Delaware Distributors, L.P.
Printed in the USA
on recycled paper
(J4743)
SA-109 [4/99] PP6/99
(1782)
DELAWARE
INVESTMENTS
- ---------------------
PHILADELPHIA o LONDON
