<PAGE>
DELAWARE
INVESTMENTS
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Philadelphia * London
Delaware S&P 500 Index Fund
Consultant Class * Institutional Class
Prospectus
December 30, 1999
Total Return Fund
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the accuracy of this prospectus, and any
representation to the contrary is a criminal offense.
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Table of Contents
Fund profile page 3
Delaware S&P 500 Index Fund 3
How we manage the Fund page 5
Our investment strategies 5
The securities we typically invest in 6
The risks of investing in the Fund 8
Who manages the Fund page 9
Investment manager and sub-adviser 9
Portfolio manager 9
Fund administration (Who's who) 10
About your account page 12
Investing in the Fund
How to buy shares 13
How to redeem shares 15
Account minimums 16
Special services 17
Dividends, distributions and taxes 18
Certain management considerations page 19
Financial highlights page 20
2
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Profile: Delaware S&P 500 Index Fund
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What are the Fund's goals?
S&P 500 Index Fund seeks to replicate the total return of the Standard & Poor's
500 Composite Stock Price Index. Although the Fund will strive to meet its
goals, there is no assurance that it will.
What are the Fund's main investment strategies?
S&P Index Fund will invest primarily in common stock. The Fund intends to invest
in all 500 stocks in the S&P 500 Index in proportion to their weighting in the
Index. To the extent that all 500 stocks cannot be purchased, the Fund will
purchase a representative sample of the stocks listed in the Index in proportion
to their weightings.
The Fund is not managed according to traditional methods of "active" investment
management, which involve the buying and selling of securities based upon
economic, financial and market analysis and investment judgment. Instead, the
Fund utilizes a "passive" investment approach, attempting to duplicate the
investment performance of its benchmark index through automated statistical
analytic procedures.
What are the main risks of investing in the Fund?
Investing in any mutual fund involves risk, including the risk that you may lose
part or all of the money you invest. The value of your investment in the Fund
will increase and decrease according to changes in the value of the securities
in the Fund's portfolio. The Fund will be affected by declines in stock prices.
For a more complete discussion of risk, please turn to "The risks of investing
in the Fund."
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
Who should invest in the Fund
o Investors with long-term financial goals.
o Investors seeking an investment primarily in common stocks.
o Investors seeking total return.
Who should not invest in the Fund
o Investors with short-term financial goals.
o Investors whose primary goal is current income.
o Investors who are unwilling to accept share prices that may fluctuate.
You should keep in mind that an investment in the Fund is not a complete
investment program; it should be considered just one part of your total
financial plan. Be sure to discuss this Fund with your financial adviser to
determine whether it is an appropriate choice for you.
3
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What are the Fund's fees and expenses?
Sales charges are fees paid directly from your investments when you buy or sell
shares of the Fund.
<TABLE>
<CAPTION>
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CLASS Consultant Institutional
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<S> <C> <C>
Maximum sales charge (load) imposed on purchases as none none
a percentage of offering price
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Maximum contingent deferred sales charge (load) as a none none
percentage of original purchase price or redemption
price, whichever is lower
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Maximum sales charge (load) imposed on reinvested none none
dividends
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Redemption fees none none
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Exchange fees none(1) none(1)
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Annual fund operating expenses are deducted from the Fund's assets.
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Management fees 0.07% 0.07%
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Distribution and service (12b-1) fees 0.12%(2) none
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Other expenses 0.99% 0.99%
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Total annual fund operating expenses 1.18% 1.06%
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Fee waivers and payments(3) (0.66%) (0.66%)
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Net expenses 0.52% 0.40%
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</TABLE>
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds with similar investment
objectives. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 with an annual 5% return over the time shown.(4) This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
<TABLE>
<CAPTION>
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CLASS Consultant Institutional
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<S> <C> <C>
1 year $53 $41
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3 years $309 $271
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</TABLE>
1 Exchanges are subject to the requirements of each Delaware Investments
fund. A front-end sales charge may apply if you exchange your shares
into a fund that has a front-end sales charge.
2 The Board of Trustees set the 12b-1 fee for the Consultant Class at
0.12%. The maximum annual 12b-1 plan expenses permitted under the 12b-1
plan for the Consultant Class are 0.30% of average daily net assets.
3 The investment manager has contracted to waive fees and pay expenses
through November 30, 2000 in order to prevent total operating expenses
(excluding any 12b-1 expenses, taxes, interest, brokerage fees and
extraordinary expenses) from exceeding 0.40% of average daily net
assets.
4 The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example reflects the net
operating expenses with expense waivers for the one-year period and the
total operating expenses without expense waivers for years two and
three.
4
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How we manage the Fund
Our investment strategies
S&P 500 Index Fund is a stock fund that seeks to track the performance of the
Standard & Poor's 500 Composite Stock Index, which emphasizes large U.S.
companies. We employ a passive management strategy by normally investing in all
500 stocks included in the Index. We generally invest in each stock in roughly
the same proportion as represented in the Index. We seek to replicate as closely
as possible the aggregate risk characteristics and industry diversification of
the Index.
Although we intend to invest in all 500 stocks in the Index, there is no
predetermined number of stocks that the Fund must hold. S&P may change the
composition of the Index from time to time. We will attempt to reflect those
changes as soon as practical. The Fund is usually fully invested. We may buy and
sell stock index futures, and buy option on stock indexes and on stock index
futures to maintain market exposure and manage cash flow.
We do not anticipate that the Fund will be able to invest in all 500 stocks in
the Index until it has at least $50 million in assets under management. Until
that time, the Fund will purchase a representative sample of the stocks listed
in the Index in our effort to replicate the total return of the Index.
We may purchase other types of securities, such as Standard & Poor's Depository
Receipts, American Depository Receipts, high quality short-term debt securities,
and certain derivatives.
To the extent that the Fund seeks to replicate the S&P 500 Index using such
sampling techniques, a close correlation between the Fund's performance and the
performance of the Index is anticipated in both rising and falling markets. The
Fund will attempt to achieve a correlation between the performance of its
portfolio and that of the Index of at least 0.95, before deduction of Fund
expenses. A correlation of 1.00 would represent perfect correlation between
portfolio and index performance. It is anticipated that the correlation of the
Fund's performance to that of the Index will increase as the size of the Fund
increases. The Fund's ability to achieve significant correlation between Fund
and Index performance may be affected by changes in securities markets, changes
in the composition of the Index and the timing of purchases and redemptions of
Fund shares. We will monitor correlation.
S&P 500 Index Fund's investment objective - to seek to replicate the total
return of the Standard & Poor's 500 Composite Stock Price Index - is a
non-fundamental objective. This means that the Board of Trustees may change the
objective without obtaining shareholder approval. If the objective were changed,
we would notify shareholders before the change in the objective became
effective.
5
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<TABLE>
<CAPTION>
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The securities we typically invest in How we use them
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<S> <C>
Common stocks: Securities that represent shares of We will invest primarily in common stocks. Generally, we will
ownership in a corporation. Stockholders participate in the seek to invest in all 500 stocks included in the S&P 500 Index.
corporation's profits and losses, proportionate to the
number of shares they own.
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American Depositary Receipts: ADRs are issued by a U.S. We generally invest only in those ADRs included in the S&P 500 Index.
bank and represent the bank's holdings of a stated number
of shares of a foreign corporation. An ADR entitles the
holder to all dividends and capital gains earned by the
underlying foreign shares. ADRs are bought and sold the
same as U.S. securities.
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Futures Contracts and Options on Futures Contracts: Futures For hedging purposes, we may have the Fund enter into futures
contracts are agreements for the purchase or sale of a contracts that relate to securities included in the S&P 500 Index or
specified quantity of securities or the cash value of an that relate to the Index. We may also purchase and write call and
index at a specified future date at a price agreed upon put options on such contracts.
when the contract is made. Under such contracts no delivery
of the actual securities making up the index takes place.
Rather, upon expiration of the contract, settlement is made
by exchanging cash in an amount equal to the difference
between the contract price and the closing price of the
index at expiration, net of variation margin previously
paid.
Options on futures contracts give the purchaser the right
to assume a position at a specified price in a futures
contract at any time before expiration of the option
contract.
Certain options and futures may be considered to be
derivative securities.
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Options on Securities and Securities Indices: Options We may write and purchase covered put and call options on securities
represent a right to buy or sell a security at an agreed included in the S&P 500 Index or that relate to the Index. Option
upon price at a future date. The purchaser of an option transactions of the Fund will be conducted so that the total amount
may or may not choose to go through with the transaction. paid on premiums for all put and call options outstanding will not
exceed 5% of the value of the Fund's total assets. Further, we will
Options on securities indices are similar to options on not have the Fund write a put or call option or combination thereof
securities except there is no transfer of a security and if, as a result, the aggregate value of all securities or collateral
settlement is in cash. A call option on a securities index used to cover its outstanding options would exceed 25% of the value
grants the purchaser of the call, for a premium paid to the of the Fund's total assets.
seller, the right to receive in cash an amount equal to the
difference between the closing value of the index and the
exercise price of the option times a multiplier established
by the exchange upon which the option is traded.
Certain options may be considered to be derivative
securities.
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Repurchase agreements: An agreement between a buyer, such Typically, we use repurchase agreements as a short-term investment
as the Fund, and a seller of securities in which the seller for the Fund's cash position. In order to enter into these
agrees to buy the securities back within a specified time repurchase agreements, the Fund must have collateral of at least
at the same price the buyer paid for them, plus an amount 102% of the repurchase price.
equal to an agreed upon interest rate. Repurchase
agreements are often viewed as equivalent to cash.
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</TABLE>
6
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<TABLE>
<CAPTION>
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<S> <C>
Restricted securities: Privately placed securities whose We may invest in privately placed securities that are eligible for
resale is restricted under securities law. resale only among certain institutional buyers without registration,
including Rule 144A Securities. Restricted securities that are
determined to be illiquid may not exceed the Fund's 15% limit on
illiquid securities, which is described below.
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Illiquid securities: Securities that do not have a ready We may invest up to 15% of net assets in illiquid securities,
market, and cannot be easily sold within seven days at including repurchase agreements with maturities of over seven days.
approximately the price that the Fund has valued them.
- ------------------------------------------------------------- ---------------------------------------------------------------------
</TABLE>
The Fund may also invest in other securities, such as Standard & Poor's
Depositary Receipts, high quality short-term debt securities, and certain
derivatives. Please see the Statement of Additional Information for additional
descriptions and risk information on these securities as well as those listed in
the table above. You can find additional information about the investments in
the Fund's portfolio in the annual or semi-annual shareholder report.
Lending securities
The Fund may lend up to one-third of its assets to qualified dealers and
investors for their use in security transactions.
Purchasing securities on a when-issued or delayed delivery basis
The Fund may buy or sell securities on a when-issued or delayed delivery basis;
that is, paying for securities before delivery or taking delivery at a later
date. The Fund will designate cash or securities in amounts sufficient to cover
its obligations, and will value the designated assets daily.
Borrowing from banks
The Fund may borrow money as a temporary measure for extraordinary purposes or
to facilitate redemptions. Borrowing money could result in the Fund being unable
to meet its investment objective.
Portfolio turnover
We anticipate that securities will be sold from the Fund only to reflect certain
changes in its benchmark index (including mergers or changes in the composition
of the index) or to accommodate cash flows into and out of the Fund while
maintaining the similarity of the Fund to the benchmark index. Accordingly, the
turnover rate for the Fund is not expected to exceed 50%, a generally lower
turnover rate than for most actively managed investment companies.
7
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The risks of investing in the Fund
Investing in any mutual fund involves risk, including the risk that you may
receive little or no return on your investment, and the risk that you may lose
part or all of the money you invest. Before you invest in the Fund you should
carefully evaluate the risks. An investment in the Fund typically provides the
best results when held for a number of years. The following are the chief risks
you assume when investing in the Fund. Please see the Statement of Additional
Information for further discussion of these risks and the other risks not
discussed here.
<TABLE>
<CAPTION>
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Risks How we strive to manage them
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<S> <C>
Market risk is the risk that all or a majority We maintain a long-term investment approach and focus on stocks we
of the securities in a certain market -- like believe can appreciate over an extended time frame regardless of
the stock or bond market -- will decline in interim market fluctuations. We do not try to predict overall
value because of factors such as economic stock market movements and though we may hold securities for any
conditions, future expectations or investor amount of time, we typically do not trade for short-term purposes.
confidence.
We reserve the right to hold a substantial part of the Fund's
assets in cash or cash equivalents as a temporary, defensive
strategy.
- ------------------------------------------------- --------------------------------------------------------------------
Industry and security risk is the risk that the The amount of the Fund's assets invested in any one industry and
value of securities in a particular industry or in any individual security is limited.
the value of an individual stock or bond will
decline because of changing expectations for
the performance of that industry or for the
individual company issuing the stock.
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Futures and options risk is the possibility We will use options and futures for hedging purposes. We will not
that the Fund may experience a significant loss use futures and option for speculative reasons.
if it employs an options or futures strategy
related to a securities or a market index and
that security or index moves in the opposite
direction from what the was anticipated.
Futures and options also involve additional
expenses, which could reduce any benefit or
increase any loss that the Fund may gain from
using the strategy.
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Foreign risk is the risk that foreign We typically invest only a small portion of the Fund's portfolio
securities may be adversely affected by in foreign corporations indirectly through American Depositary
political instability, changes in currency Receipts. When we do purchase ADRs, they are generally denominated
exchange rates, foreign economic conditions or in U.S. dollars and traded on a U.S. exchange.
inadequate regulatory and accounting standards.
- ------------------------------------------------- --------------------------------------------------------------------
Liquidity risk is the possibility that We limit exposure to illiquid securities.
securities cannot be readily sold within seven
days at approximately the price that the Fund
has valued them.
- ------------------------------------------------- --------------------------------------------------------------------
</TABLE>
8
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Who manages the Fund
Investment manager and sub-adviser
The Fund is managed by Delaware Management Company, a series of Delaware
Management Business Trust which is an indirect, wholly owned subsidiary of
Delaware Management Holdings, Inc. State Street Global Advisors, a division of
State Street Corporation, is the Fund's sub-adviser. As sub-adviser, State
Street Global Advisors is responsible for day-to-day management of the Fund's
assets. Delaware Management Company administers the Fund's business affairs and
has ultimate responsibility for all investment advisory services for the Fund.
Delaware Management Company also supervises the sub-adviser's performance. For
their services to the Fund, Delaware and State Street will be paid 0.07% as a
percentage of average daily net assets for the fiscal year.
Portfolio manager
James B. May has primary responsibility for making investment decisions for S&P
500 Index Fund. Mr. May is a Principal and Portfolio Manager at State Street
Global Advisors, where he manages several mutual funds as well as several
separately managed funds. Mr. May works in State Street Global Advisors U.S.
Passive Equity group. Prior to that time he worked State Street's passive U.S.
Equities operations department. Mr. May holds a BS in Finance from Bentley
College and his MBA from Boston College. He is a member of the Financial
Management Association and is working toward the CFA designation.
9
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Who's who?
This diagram shows the various organizations involved with managing,
administering, and servicing the Delaware Investments funds.
<TABLE>
<CAPTION>
Board of Trustees
<S> <C> <C>
Investment manager The Fund Custodian
Delaware Management Company The Chase Manhattan Bank
One Commerce Square 4 Chase Metrotech Center
Philadelphia, PA 19103 Brooklyn, NY 11245
Sub-adviser
State Street Global Advisors
Two International Place
Boston, MA 02110
Portfolio manager Distributor Service agent
(see page 9 for details) Delaware Distributors, L.P. Delaware Service Company,
Inc. 1818 Market Street 1818 Market Street
Philadelphia, PA 19103 Philadelphia, PA 19103
Financial advisers
Shareholders
</TABLE>
Board of Trustees A mutual fund is governed by a Board of Trustees which has
oversight responsibility for the management of the fund's business affairs.
Trustees establish procedures and oversee and review the performance of the
investment manager, the distributor and others that perform services for the
fund. At least 40% of the Board of Trustees must be independent of the fund's
investment manager and distributor. These independent fund trustees, in
particular, are advocates for shareholder interests.
Investment manager An investment manager is a company responsible for selecting
portfolio investments consistent with the objective and policies stated in the
mutual fund's prospectus. The investment manager places portfolio orders with
broker/dealers and is responsible for obtaining the best overall execution of
those orders. A written contract between a mutual fund and its investment
manager specifies the services the manager performs. Most management contracts
provide for the manager to receive an annual fee based on a percentage of the
fund's average daily net assets. The manager is subject to numerous legal
restrictions, especially regarding transactions between itself and the funds it
advises.
Sub-adviser A sub-adviser is a company generally responsible for the management
of the fund's assets. They are selected and supervised by the investment
manager.
Portfolio managers Portfolio managers are employed by the investment manager or
sub-adviser to make investment decisions for individual portfolios on a
day-to-day basis.
Custodian Mutual funds are legally required to protect their portfolio
securities and most funds place them with a qualified bank custodian who
segregates fund securities from other bank assets.
Distributor Most mutual funds continuously offer new shares to the public
through distributors who are regulated as broker-dealers and are subject to
National Association of Securities Dealers, Inc. (NASD) rules governing mutual
fund sales practices.
Service agent Mutual fund companies employ service agents (sometimes called
transfer agents) to maintain records of shareholder accounts, calculate and
disburse dividends and capital gains and prepare and mail shareholder statements
and tax information, among other functions. Many service agents also provide
customer service to shareholders.
Financial advisers Financial advisers provide advice to their clients--analyzing
their financial objectives and recommending appropriate funds or other
investments. Financial advisers are compensated for their services, generally
through sales commissions, and through 12b-1 and/or service fees deducted from
the fund's assets.
10
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Shareholders Like shareholders of other companies, mutual fund shareholders have
specific voting rights, including the right to elect trustees. Material changes
in the terms of a fund's management contract must be approved by a shareholder
vote, and funds seeking to change fundamental investment objectives or policies
must also seek shareholder approval.
11
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About your account
Consultant Class
o Consultant Class shares may be purchased through financial advisers,
including brokers, financial institutions and other entities that have a
dealer agreement with the Fund's distributor or a service agreement with
the Fund. It is available only to retirement plans administered by
Retirement Financial Services, Inc. and rollover individual retirement
accounts from such plans.
o Consultant Class shares do not have an up-front sales charge.
o Consultant Class shares are subject to an annual 12b-1 fee no greater than
0.30% (currently the 12b-1 fee is set at 0.12%) of average daily net
assets. The 12b-1 fee is typically used to compensate your financial
adviser for the ongoing guidance and service he or she provides to you.
o Consultant Class shares are not subject to a contingent deferred sales
charge.
Institutional Class
Institutional Class shares are available for purchase only by the
following:
o retirement plans introduced by persons not associated with brokers or
dealers that are primarily engaged in the retail securities business and
rollover individual retirement accounts from such plans
o tax-exempt employee benefit plans of the manager or its affiliates and
securities dealer firms with a selling agreement with the distributor
o institutional advisory accounts of the manager, or its affiliates and those
having client relationships with Delaware Investment Advisers, an affiliate
of the manager, or its affiliates and their corporate sponsors, as well as
subsidiaries and related employee benefit plans and rollover individual
retirement accounts from such institutional advisory accounts
o a bank, trust company and similar financial institution investing for its
own account or for the account of its trust customers for whom such
financial institution is exercising investment discretion in purchasing
shares of the Class, except where the investment is part of a program that
requires payment to the financial institution of a Rule 12b-1 Plan fee
o registered investment advisers investing on behalf of clients that consist
solely of institutions and high net-worth individuals having at least
$1,000,000 entrusted to the adviser for investment purposes, but only if
the adviser is not affiliated or associated with a broker or dealer and
derives compensation for its services exclusively from its clients for such
advisory services
o Institutional Class shares do not have an up-front sales charge.
o Institutional Class shares are not subject to a front-end or contingent
o Institutional Class shares are not subject to an annual 12b-1 fee.
The Consultant Class of the Fund has adopted a separate 12b-1 plan that allows
it to pay distribution fees for the sales and distribution of its shares.
Because these fees are paid out of the Fund's assets on an ongoing basis, over
time these fees will increase the cost of your investment and may cost you more
than paying other types of sales charges.
12
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How to buy shares
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Through your financial adviser
Your financial adviser can handle all the details of purchasing shares,
including opening an account. Your adviser may charge a separate fee for this
service.
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By mail
Complete an investment slip and mail it with your check, made payable to the
fund and class of shares you wish to purchase, to Delaware Investments, 1818
Market Street, Philadelphia, PA 19103-3682. If you are making an initial
purchase by mail, you must include a completed investment application (or an
appropriate retirement plan application if you are opening a retirement account)
with your check.
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By wire
Ask your bank to wire the amount you want to invest to First Union Bank, ABA
#031201467, Bank Account number 2014 12893 4013. Include your account number and
the name of the fund in which you want to invest. If you are making an initial
purchase by wire, you must call us so we can assign you an account number.
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By exchange
You can exchange all or part of your investment in one or more funds in the
Delaware Investments family for shares of other funds in the family. Please keep
in mind, however, that under most circumstances you are allowed to exchange only
between like classes of shares. To open a Consultant Class account by exchange,
call the Shareholder Service Center at 800.523.1918. To open an Institutional
Class account by exchange, call a Client Services Representative at
800.510.4015.
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Through automated shareholder services
You can purchase or exchange Consultant Class shares through Delaphone, our
automated telephone service, or through our web site,
www.delawareinvestments.com. For more information about how to sign up for these
services, call our Shareholder Service Center at 800.523.1918.
13
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About your account (continued)
How to buy shares (continued)
There is no minimum purchase requirements for retirement plans. If you are
buying Consultant Class shares in an IRA or Roth IRA, the minimum purchase is
$250, and you can make additional investments of only $25. The minimum for an
Education IRA is $500.
There are no minimum purchase requirements for the Institutional Class, but
certain eligibility requirements must be satisfied.
The price you pay for shares will depend on when we receive your purchase order.
If we or an authorized agent receive your order before the close of trading on
the New York Stock Exchange (normally 4:00 p.m. Eastern Time) on a business day,
you will pay that day's closing share price which is based on the Fund's net
asset value. If we receive your order after the close of trading, you will pay
the next business day's price. A business day is any day that the New York Stock
Exchange is open for business. We reserve the right to reject any purchase
order.
We determine the Fund's net asset value (NAV) per share at the close of trading
of the New York Stock Exchange each business day that the Exchange is open. We
calculate this value by adding the market value of all the securities and assets
in the Fund's portfolio, deducting all liabilities, and dividing the resulting
number by the number of shares outstanding. The result is the net asset value
per share. We price securities and other assets for which market quotations are
available at their market value. We price fixed-income securities on the basis
of valuations provided to us by an independent pricing service that uses methods
approved by the board of trustees. Any fixed-income securities that have a
maturity of less than 60 days we price at amortized cost. For all other
securities, we use methods approved by the board of trustees that are designed
to price securities at their fair market value.
14
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How to redeem shares
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Through your financial adviser
Your financial adviser can handle all the details of redeeming your shares. Your
adviser may charge a separate fee for this service.
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By mail
You can redeem your shares (sell them back to the fund) by mail by writing to:
Delaware Investments, 1818 Market Street, Philadelphia, PA 19103-3682. All
owners of the account must sign the request, and for redemptions of more than
$50,000, you must include a signature guarantee for each owner. Signature
guarantees are also required when redemption proceeds are going to an address
other than the address of record on an account.
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By telephone
You can redeem up to $50,000 of your shares by telephone. You may have the
proceeds sent to you by check, or, if you redeem at least $1,000 of shares, you
may have the proceeds sent directly to your bank by wire. Bank information must
be on file before you request a wire redemption.
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By wire
You can redeem $1,000 or more of your shares and have the proceeds deposited
directly to your bank account the next business day after we receive your
request. If you request a wire deposit, a bank wire fee may be deducted from
your proceeds. Bank information must be on file before you request a wire
redemption.
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Through automated shareholder services
You can redeem Consultant Class shares through Delaphone, our automated
telephone service, or through our web site, www.delawareinvestments.com. For
more information about how to sign up for these services, call our Shareholder
Service Center at 800.523.1918.
15
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About your account (continued)
How to redeem shares (continued)
If you hold your shares in certificates, you must submit the certificates with
your request to sell the shares. We recommend that you send your certificates by
certified mail.
When you send us a properly completed request to redeem or exchange shares
before the close of trading on the New York Stock Exchange (normally 4:00 p.m.
Eastern Time), you will receive the net asset value as determined on the
business day we receive your request. We will deduct any applicable contingent
deferred sales charges. You may also have to pay taxes on the proceeds from your
sale of shares. We will send you a check, normally the next business day, but no
later than seven days after we receive your request to sell your shares. If you
purchased your shares by check, we will wait until your check has cleared, which
can take up to 15 days, before we send your redemption proceeds.
If you are required to pay a contingent deferred sales charge when you redeem
your shares, the amount subject to the fee will be based on the shares' net
asset value when you purchased them or their net asset value when you redeem
them, whichever is less. This arrangement assures that you will not pay a
contingent deferred sales charge on any increase in the value of your shares.
You also will not pay the charge on any shares acquired by reinvesting dividends
or capital gains. If you exchange shares of one fund for shares of another, you
do not pay a contingent deferred sales charge at the time of the exchange. If
you later redeem those shares, the purchase price for purposes of the contingent
deferred sales charge formula will be the price you paid for the original
shares--not the exchange price. The redemption price for purposes of this
formula will be the NAV of the shares you are actually redeeming.
Account minimums
If you redeem Consultant Class shares and your account balance falls below
$1,000 ($250 for IRAs or $500 for Education IRAs) for three or more consecutive
months, you will have until the end of the current calendar quarter to raise the
balance to the minimum. If your account is not at the minimum by the required
time, you will be charged a $9 fee for that quarter and each quarter after that
until your account reaches the minimum balance. If your account does not reach
the minimum balance, the Fund may redeem your account after 60 days' written
notice to you.
If you redeem Institutional Class shares and your account balance falls below
$250, the Fund may redeem your account after 60 days.
Exchanges
You can exchange all or part of your shares for shares of the same class in
another Delaware Investments fund. If you exchange shares to a fund that has a
sales charge you will pay any applicable sales charges on your new shares. You
don't pay sales charges on shares that are acquired through the reinvestment of
dividends. You may have to pay taxes on your exchange. When you exchange shares,
you are purchasing shares in another fund so you should be sure to get a copy of
the fund's prospectus and read it carefully before buying shares through an
exchange. You may not exchange your shares for Class B and Class C shares of the
funds in the Delaware Investments family.
In certain circumstances, Class A shares of the Delaware Investments funds may
be subject to a contingent deferred sales charge for up to two years after
purchase. This would occur if the fund normally had a front-end sales charge,
but the shares were purchased without paying a sales charge and a financial
adviser was paid a commission on the purchase. If you purchase Class A shares of
another fund in this manner, you may exchange them for shares of the Fund's
Consultant or Institutional Class. You will not have to pay the contingent
deferred sales charge at the time of the exchange. However, you may have to pay
the contingent deferred sales if you later redeem your shares of the Fund's A or
Consultant Class or if you exchange them for shares of another fund and then
redeem those shares. The time that you are invested in the Fund will count
toward the fulfillment of the two-year holding period.
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Special services
To help make investing with us as easy as possible, and to help you build your
investments, we offer the following special services to Consultant Class
shareholders.
Automatic Investing Plan
The Automatic Investing Plan allows you to make regular monthly or quarterly
investments directly from your checking account.
Direct Deposit
With Direct Deposit you can make additional investments through payroll
deductions, recurring government or private payments such as social security or
direct transfers from your bank account.
Wealth Builder Option
With the Wealth Builder Option you can arrange automatic monthly exchanges
between your shares in one or more Delaware Investments funds. Wealth Builder
exchanges are subject to the same rules as regular exchanges (see below) and
require a minimum monthly exchange of $100 per fund.
Dividend Reinvestment Plan
Through our Dividend Reinvestment Plan, you can have your distributions
reinvested in your account or the same share class in another fund in the
Delaware Investments family. The shares that you purchase through the Dividend
Reinvestment Plan are not subject to a front-end sales charge or to a contingent
deferred sales charge. Under most circumstances, you may reinvest dividends only
into like classes of shares.
MoneyLineSM On Demand Service
Through our MoneyLineSM On Demand Service, you or your financial adviser may
transfer money between your Fund account and your predesignated bank account by
telephone request. This service is not available for retirement plans, except
for purchases into IRAs. MoneyLine has a minimum transfer of $25 and a maximum
transfer of $50,000.
MoneyLine Direct Deposit Service
Through our MoneyLine Direct Deposit Service you can have $25 or more in
dividends and distributions deposited directly to your bank account. Delaware
Investments does not charge a fee for this service; however, your bank may
assess one. This service is not available for retirement plans.
Systematic Withdrawal Plan
Through our Systematic Withdrawal Plan you can arrange a regular monthly or
quarterly payment from your account made to you or someone you designate. If the
value of your account is $5,000 or more, you can make withdrawals of at least
$25 monthly, or $75 quarterly. You may also have your withdrawals deposited
directly to your bank account through our MoneyLine Direct Deposit Service.
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Dividends, distributions and taxes
Dividends, if any, are paid quarterly. Capital gains, if any, are paid annually.
We automatically reinvest all dividends and any capital gains.
Tax laws are subject to change, so we urge you to consult your tax adviser about
your particular tax situation and how it might be affected by current tax law.
The tax status of your dividends from the Fund is the same whether you reinvest
your dividends or receive them in cash. Distributions from the Fund's long-term
capital gains are taxable as capital gains, while distributions from short-term
capital gains and net investment income are generally taxable as ordinary
income. Any capital gains may be taxable at different rates depending on the
length of time the Fund held the assets. In addition, you may be subject to
state and local taxes on distributions.
We will send you a statement each year by January 31 detailing the amount and
nature of all dividends and capital gains that you were paid for the prior year.
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Certain management considerations
About the S&P 500 Index
The S&P 500 Index. The S&P 500 Index is composed of 500 common stocks which are
chosen by Standard & Poor's Corporation ("Standard & Poor's") to best capture
the price performance of a large cross-section of the US publicly traded stock
market. The Index is structured to approximate the general distribution of
industries in the US economy. The inclusion of a stock in the S&P 500 Index in
no way implies that Standard & Poor's believes the stock to be an attractive
investment, nor is Standard & Poor's a sponsor or in any way affiliated with the
Fund. The 500 securities, most of which trade on the New York Stock Exchange,
represent approximately 75% of the market value of all US common stocks. Each
stock in the S&P 500 Index is weighted by its market capitalization. That is,
each security is weighted by its total market value relative to the total market
values of all the securities in the Index. Component stocks included in the S&P
500 Index are chosen with the aim of achieving a distribution at the index level
representative of the various components of the US GNP and therefore do not
represent the 500 largest companies. Aggregate market value and trading activity
are also considered in the selection process. A limited percentage of the Index
may include foreign securities.
"Standard & Poor's," "S&P," "Standard & Poor's 500," and "500" are trademarks of
Standard & Poor's and have been licensed for use by the Fund. The Fund is not
sponsored, endorsed, sold or promoted by Standard & Poor's. Standard & Poor's
makes no representation or warranty, express or implied, to the shareholders of
the Fund regarding the advisability of investing in securities generally or in
the Fund particularly or the ability of the S&P 500 Index to track general stock
market performance. Standard & Poor's only relationship to the Fund is the
licensing of the trademarks and tradenames of Standard & Poor's including the
S&P 500 Index, which is determined, composed and calculated by Standard & Poor's
without regard to the Fund. Standard & Poor's has no obligation to take the
needs of the shareholders of the Fund into consideration in determining,
composing or calculating this Index. Standard & Poor's is not responsible for
and has not participated in the determination of the prices and amount of the
Fund or the timing of the issuance or sale of the shares or in the determination
or calculation of the equation by which the shares of the Fund are to be
redeemed. Standard & Poor's has no obligation or liability in connection with
the administration, marketing or trading of the Fund.
STANDARD & POOR'S DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE
INDEX OR ANY DATA INCLUDED THEREIN AND STANDARD & POOR'S SHALL HAVE NO LIABILITY
FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. STANDARD & POOR'S MAKES NO
WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE FUND OR THE
SHAREHOLDERS OF THE FUND OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDEX
OR ANY DATA INCLUDED THEREIN. STANDARD & POOR'S MAKES NO EXPRESS OR IMPLIED
WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE INDEX OR ANY DATA INCLUDED
THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL STANDARD &
POOR'S HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL
DAMAGES (INCLUDING LOST PROFITS) EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH
DAMAGES.
Year 2000
As with other mutual funds, financial and business organizations and individuals
around the world, the Fund could be adversely affected if the computer systems
used by its service providers do not properly process and calculate date-related
information from and after January 1, 2000. This is commonly known as the "Year
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2000 Problem." The Fund is taking steps to obtain satisfactory assurances that
its major service providers are taking steps reasonably designed to address the
Year 2000 Problem on the computer systems that the service providers use.
However, there can be no assurance that these steps will be sufficient to avoid
any adverse impact on the business of the Fund. The Year 2000 Problem may also
adversely affect the issuers of securities in which the Fund invests. The
portfolio manager and investment professionals of the Fund consider Year 2000
compliance (including, but not limited to, any or all of the following: impact
on business, cost of compliance plan review and contingency planning, and vendor
compliance) in the securities selection and investment process. However, there
can be no guarantee that, even with their due diligence efforts, they will be
able to predict the effect of Year 2000 on any company or the performance of its
securities.
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Financial highlights
Financial highlights are not provided for the Fund because it commenced
operations after the close of its fiscal year.
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How to use this glossary
The glossary includes definitions of investment terms used throughout the
Prospectus. If you would like to know the meaning of an investment term that is
not explained in the text please check the glossary.
Amortized cost
Amortized cost is a method used to value a fixed income security that starts
with the face value of the security and then adds or subtracts from that value
depending on whether the purchase price was greater or less than the value of
the security at maturity. The amount greater or less than the par value is
divided equally over the time remaining until maturity.
Capital
The amount of money you invest.
Capital appreciation
An increase in the value of an investment.
Capital gains distributions
Payments to mutual fund shareholders of profits (realized gains) from the sale
of a fund's portfolio securities. Usually paid once a year; may be either
short-term gains or long-term gains.
Commission
The fee an investor pays to a financial adviser for investment advice and help
in buying or selling mutual funds, stocks, bonds or other securities.
Compounding
Earnings on an investment's previous earnings.
Consumer Price Index (CPI)
Measurement of U.S. inflation; represents the price of a basket of commonly
purchased goods.
Contingent deferred sales charge (CDSC)
Fee charged by some mutual funds when shares are redeemed (sold back to the
fund) within a set number of years; an alternative method for investors to
compensate a financial adviser for advice and service, rather than an up-front
commission.
Cost basis
The original purchase price of an investment, used in determining capital gains
and losses.
Depreciation
A decline in an investment's value.
Diversification
The process of spreading investments among a number of different securities,
asset classes or investment styles to reduce the risks of investing.
Dividend distribution
Payments to mutual fund shareholders of dividends passed along from the fund's
portfolio of securities.
Expense ratio
A mutual fund's total operating expenses, expressed as a percentage of its total
net assets. Operating expenses are the costs of running a mutual fund, including
management fees, offices, staff, equipment and expenses related to maintaining
the fund's portfolio of securities and distributing its shares. They are paid
from the fund's assets before any earnings are distributed to shareholders.
Financial adviser
Financial professional (e.g., broker, banker, accountant, planner or insurance
agent) who analyzes clients' finances and prepares personalized programs to meet
objectives.
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Inflation
The increase in the cost of goods and services over time. U.S. inflation is
frequently measured by changes in the Consumer Price Index (CPI).
Investment goal
The objective, such as long-term capital growth or high current income, that a
mutual fund pursues.
Management fee
The amount paid by a mutual fund to the investment adviser for management
services, expressed as an annual percentage of the fund's average daily net
assets.
Market capitalization
The value of a corporation determined by multiplying the current market price of
a share of common stock by the number of shares held by shareholders. A
corporation with one million shares outstanding and the market price per share
of $10 has a market capitalization of $10 million.
National Association of Securities Dealers (NASD)
A self-regulating organization, consisting of brokerage firms (including
distributors of mutual funds), that is responsible for overseeing the actions of
its members.
Net asset value (NAV)
The daily dollar value of one mutual fund share. Equal to a fund's net assets
divided by the number of shares outstanding.
Preferred stock
Preferred stock has preference over common stock in the payment of dividends and
liquidation of assets. Preferred stocks also often pays dividends at a fixed
rate and is sometimes convertible into common stock.
Price-to-earnings ratio
A measure of a stock's value calculated by dividing the current market price of
a share of stock by its annual earnings per share. A stock selling for $100 per
share with annual earnings per share of $5 has a P/E of 20.
Principal
Amount of money you invest (also called capital). Also refers to a bond's
original face value, due to be repaid at maturity.
Prospectus
The official offering document that describes a mutual fund, containing
information required by the SEC, such as investment objectives, policies,
services and fees.
Redeem
To cash in your shares by selling them back to the mutual fund.
Risk
Generally defined as variability of value; also credit risk, inflation risk,
currency and interest rate risk. Different investments involve different types
and degrees of risk.
S&P 500 Index
The Standard & Poor's 500 Composite Stock Index; an unmanaged index of 500
widely held common stocks that is often used to represent performance of the
U.S. stock market.
Sales charge
Charge on the purchase or redemption of fund shares sold through financial
advisers. May vary with the amount invested. Typically used to compensate
advisers for advice and service provided.
SEC (Securities and Exchange Commission)
Federal agency established by Congress to administer the laws governing the
securities industry, including mutual fund companies.
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Share classes
Different classifications of shares; mutual fund share classes offer a variety
of sales charge choices.
Signature guarantee
Certification by a bank, brokerage firm or other financial institution that a
customer's signature is valid; signature guarantees can be provided by members
of the STAMP program.
Standard deviation
A measure of an investment's volatility; for mutual funds, measures how much a
fund's total return has typically varied from its historical average.
Statement of Additional Information (SAI)
The document serving as "Part B" of a fund's prospectus that provides more
detailed information about the fund's organization, investments, policies and
risks.
Stock
An investment that represents a share of ownership (equity) in a corporation.
Stocks are often referred to as equities.
Total return
An investment performance measurement, expressed as a percentage, based on the
combined earnings from dividends, capital gains and change in price over a given
period.
Volatility
The tendency of an investment to go up or down in value by different magnitudes.
Investments that generally go up or down in value in relatively small amounts
are considered "low volatility" investments, whereas those investments that
generally go up or down in value in relatively large amounts are considered
"high volatility" investments.
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Delaware S&P 500 Index Fund
Additional information about the Fund's investments will be available in the
Fund's annual and semi-annual report to shareholders. In the Fund's shareholder
report, you will find a discussion of the market conditions and investment
strategies that significantly affected the Fund's performance during the report
period. You can find more detailed information about the Fund in the current
Statement of Additional Information, which we have filed electronically with the
Securities and Exchange Commission (SEC) and which is legally a part of this
prospectus. If you want a free copy of the Statement of Additional Information,
the annual or semi-annual report, or if you have any questions about investing
in the Fund, you can write to us at 1818 Market Street, Philadelphia, PA 19103,
or call toll-free 800.523.1918. You may also obtain additional information about
the Fund from your financial adviser.
You can find reports and other information about the Fund on the SEC web site
(http://www.sec.gov), or you can get copies of this information, after payment
of a duplicating fee, by writing to the Public Reference Section of the SEC,
Washington, D.C. 20549-6009. Information about the Fund, including its Statement
of Additional Information, can be reviewed and copied at the Securities and
Exchange Commission's Public Reference Room in Washington, D.C. You can get
information on the public reference room by calling the SEC at 1.800.SEC.0330.
Web site
www.delawareinvestments.com
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E-mail
[email protected]
Shareholder Service Center (Consultant Class)
800.523.1918
Call the Shareholder Service Center Monday to Friday, 8 a.m. to 8 p.m. Eastern
time:
o For fund information; literature; price, yield and performance figures.
o For information on existing regular investment accounts and retirement plan
accounts including wire investments; wire redemptions; telephone
redemptions and telephone exchanges.
Client Services Representative (Institutional Class)
800.510.4015
Delaphone Service
800.362.FUND (800.362.3863)
o For convenient access to account information or current performance
information on all Delaware Investments Funds seven days a week, 24 hours a
day, use this Touch-Tone(R) service.
Investment Company Act file number: 811- 08457
Delaware S&P 500 Index Fund Symbols
CUSIP
Consultant Class 2463664050
Institutional Class 2463665040
DELAWARE
INVESTMENTS
Philadelphia * London
