<PAGE>
DELAWARE(SM)
INVESTMENTS
===========
Delaware S&P 500 Index Fund
Total Return
2000 Semi-annual report
<PAGE>
A TRADITION OF SOUND INVESTING SINCE 1929
-----------------------------------------
TABLE OF CONTENTS
- -----------------
Letter to Shareholders 1
Portfolio Management
Review 3
Financial Statements
Statement of Net Assets 4
Statement of Operations 7
Statements of Changes in
Net Assets 8
Financial Highlights 9
Notes to Financial
Statements 11
A Commitment To Our Investors
Experienced
/ / Our seasoned investment professionals average more than 15 years'
experience.
/ / For over 70 years, we have managed money in a variety of investment styles
that have weathered a full range of economic and market environments. We
opened our first mutual fund in 1938.
Disciplined
/ / We follow strict investment policies and clear buy/sell guidelines.
/ / We strive to balance risk and reward in order to provide relatively
conservative investment alternatives within any given asset class.
Consistent
/ / We believe consistent processes are the best way to seek consistent
investment performance.
/ / Our commitment to style consistency has earned us the confidence of
discriminating institutional and individual investors to manage over $46
billion in assets as of March 31, 2000.
Comprehensive
/ / We offer more than 70 mutual funds in these asset classes.
o Large-cap equity o High-yield bonds
o Mid-cap equity o Investment grade bonds
o Small-cap equity o Municipal bonds (24 single-state funds)
o International equity o International fixed-income
o Balanced
/ / Our funds are available through financial advisers who can offer you
individualized attention and valuable investment advice.
Funds are not FDIC insured and are not guaranteed. It is possible to lose the
principal amount invested.
(C) Delaware Distributors, L.P.
<PAGE>
"PERFORMANCE OF THE MAJOR U.S. EQUITY MARKETS REMAINED STRONG DURING THE
SIX-MONTH PERIOD ENDED MARCH 31, 2000, DRIVEN BY RISING PRODUCTIVITY AND
CORPORATE EARNINGS."
Dear Shareholder
May 12, 2000
Recap of Events - If you could capture the markets' behavior over the last six
months in a single word, that word would be "erratic."
Performance of the major U.S. equity markets remained strong during the
six-month period ended March 31, 2000, driven by rising productivity and
corporate earnings. However, inflation fears prompted the Federal Reserve Board
to continue its more restrictive monetary policy. The Fed followed up its
interest rate increases of June 30 and August 24, 1999 with three additional
quarter-point rate hikes between November 1999 and March 2000. As of this
writing, the federal funds rate -- the rate banks charge each other on overnight
loans -- is 6.0%, the highest it has been in five years.
While these rate increases seemed to have had little impact on U.S economic
growth, they did create a more volatile stock market environment, especially for
the "old economy" stocks of the Dow Jones Industrial Average. The high-flying
technology companies and small capitalization companies tracked by the NASDAQ
composite index, were less affected by higher interest rates in 1999. In fact,
soaring prices and demand for technology stocks kept prices high and were
largely responsible for the overall market's impressive gains through December
1999 (Source: Bloomberg).
In late February and March 2000, however, concerns over rising interest rates,
potential inflation and high stock prices began to take their toll on all market
sectors, leading to several bouts of volatility. After passing the 5000
milestone in early March, the NASDAQ composite fell sharply several times during
the month, but each time recovered. The S&P 500 Index fell sharply in February
only to gain ground in March, reaching a high of 1550 on March 24, 2000. The Dow
finished the quarter down -0.5%, while the S&P 500 Index returned 7.7% and the
NASDAQ closed the quarter up 12.3% (Source: Bloomberg).
Delaware S&P 500 Index Fund began operations on January 12, 2000. The Fund,
which is sub-advised by State Street Global Advisors, intends to invest in all
500 stocks that make up the Standard & Poor's 500 Composite Stock Price Index in
the same proportion as their weighting in the Index. The Fund strives to match
the investment performance of the Index as closely as possible.
S&P 500 is a trademark of the McGraw-Hill Companies, Inc. and has been licensed
for use by Delaware Management Holdings, Inc. The Fund is not sponsored,
endorsed, sold or promoted by Standard & Poor's and Standard and Poor's makes no
representation regarding the advisability of investing in the Fund.
1
<PAGE>
Market Outlook - In our opinion, the overall outlook for the U.S. stock market
appears positive. We are encouraged that the Federal Reserve is making policy
decisions in an attempt to prevent future problems. Although we may see more
bouts of stock market volatility in the coming months, we believe the Fed's
moves may eventually result in more realistic market valuations across a broader
array of stocks. This environment would benefit Delaware S&P 500 Index Fund,
which offers investors exposure to a broad market segment. We thank you for your
investment in the Delaware S&P 500 Index Fund and we look forward to sharing our
results with you next fall.
Sincerely,
/s/ Wayne A. Stork /s/ David K. Downes
- ------------------------------------ --------------------------------------
Wayne A. Stork David K. Downes
Chairman, President and Chief Executive Officer,
Delaware Investments Family of Funds Delaware Investments Family of Funds
2
<PAGE>
PORTFOLIO MANAGEMENT REVIEW
---------------------------
Stephen B. May
Portfolio Manager
State Street Global Advisors
May 12, 2000
FUND BASICS
- -----------
Fund Objectives
Seeks to replicate the total return of the Standard & Poor's 500 Composite Stock
Price Index.
Assets Under Management
$16.32 million
Number of Holdings
121
Fund Start Date
January 12, 2000
Your Fund Manager
Stephen B. May holds a BS in Finance from Bentley College and an MBA from Boston
College. He is a Principal and Portfolio Manager at State Street Global
Advisors, where he manages several mutual funds as well as several separately
managed funds. Previously, he worked in State Street's passive U.S. Equities
operations. He is a member of the Financial Management Association and is
working toward the Certified Financial Analyst designation.
NASDAQ Symbols
Institutional Class DSPNX
Consultant Class DSPCX
The Fund's Results
Delaware S&P 500 Index Fund began operations on January 12, 2000 with an initial
investment of $12 million. The Fund intends to follow a passive investment
strategy of investing in all of the stocks that make up the Standard & Poor's
500 Composite Stock Price Index. However, the initial size of the Fund limited
the number of holdings that we were able to purchase cost effectively. In order
to avoid having to pay the excessive transaction fees associated with the
purchase of a small number of all 500 stocks, we employed an optimization
technique. By using a computer program to scan the universe of stocks that make
up the Index, we selected 121 of the largest stocks to produce a portfolio that
closely matches the characteristics of the Index.
By selecting the stocks that have recently been responsible for most of the
Index's performance, we believe your Fund will be able to closely track the
returns of the S&P 500 Index. During your Fund's first fiscal year, our goal is
to track the Index's performance within 100 basis points (1 percent). As the
Fund's assets increase, we will be able to purchase all of the stocks in the
Index and expect to track the Index's performance more closely.
The Fund's ability to achieve significant correlation with the Index may be
affected by the amount of the Fund's assets, changes in securities markets and
the composition of the Index, and the timing of purchases and redemptions of
Fund shares. 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.
Top Portfolio Holdings
March 31, 2000
<TABLE>
<CAPTION>
Company Industry Percentage of Net Assets
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Microsoft Computers & Technology 4.19%
- -----------------------------------------------------------------------------------------------------
2. Cisco Systems Computers & Technology 4.00%
- -----------------------------------------------------------------------------------------------------
3. General Electric Electronics & Electrical Equipment 3.77%
- -----------------------------------------------------------------------------------------------------
4. Intel Electronics & Electrical Equipment 3.40%
- -----------------------------------------------------------------------------------------------------
5. Wal-Mart Stores Retail 1.86%
- -----------------------------------------------------------------------------------------------------
6. Exxon Mobil Energy 1.85%
- -----------------------------------------------------------------------------------------------------
7. Oracle Computers & Technology 1.73%
- -----------------------------------------------------------------------------------------------------
8. International Business Machines Computers & Technology 1.71%
- -----------------------------------------------------------------------------------------------------
9. Citigroup Banking, Finance & Insurance 1.51%
- -----------------------------------------------------------------------------------------------------
10. Lucent Technologies Telecommunications 1.47%
- -----------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
Statement of Net Assets
Delaware S&P 500 Index Fund
- ---------------------------
Number of Market
March 31, 2000 (Unaudited) Shares Value
- --------------------------------------------------------------------------------
Common Stock - 94.26%
Aerospace & Defense - 1.81%
Boeing ................................................. 1,960 $ 74,358
Honeywell International ................................ 1,597 84,142
Textron ................................................ 922 56,127
United Technologies .................................... 1,290 81,512
----------
296,139
----------
Automobiles & Automotive Parts - 1.43%
Ford Motor ............................................. 2,552 117,233
General Motors ......................................... 1,394 115,441
----------
232,674
----------
Banking, Finance & Insurance - 11.40%
Allstate ............................................... 3,790 90,249
American Express ....................................... 880 131,065
American International Group ........................... 2,103 230,279
Bank One ............................................... 3,141 107,971
Bank of America ........................................ 2,548 133,611
Chase Manhattan ........................................ 1,366 119,098
Citigroup .............................................. 4,160 246,740
Federal Home Loan Mortgage ............................. 1,604 70,877
Fannie Mae ............................................. 1,537 86,744
First Union ............................................ 2,808 104,598
Fleet Boston Financial ................................. 2,935 107,128
Merrill Lynch & Company ................................ 898 94,290
Morgan Stanley Dean Witter ............................. 1,738 141,756
National City .......................................... 4,248 87,615
Wells Fargo ............................................ 2,653 108,607
----------
1,860,628
----------
Cable, Media & Publishing - 3.24%
CBS .................................................... 1,346 76,217
Clear Channel Communications ........................... 800 55,250
Gannett ................................................ 1,240 87,265
MediaOne Group ......................................... 953 77,193
Time Warner ............................................ 1,689 168,900
Viacom Class B ......................................... 1,206 63,617
----------
528,442
----------
Chemicals - 1.94%
Dow Chemical ........................................... 786 89,604
DuPont(E.I.)deNemours .................................. 1,578 83,437
Monsanto ............................................... 1,400 72,100
PPG Industries ......................................... 1,362 71,250
----------
316,391
----------
Computers & Technology - 21.19%
3Com ................................................... 700 38,938
America Online ......................................... 3,024 203,364
Apple Computer ......................................... 383 52,016
Automatic Data Processing .............................. 1,602 77,297
Compaq Computers ....................................... 3,034 80,780
Cisco Systems .......................................... 8,433 651,976
Computer Associates International ...................... 1,167 69,071
<PAGE>
Number of Market
Shares Value
- --------------------------------------------------------------------------------
Common Stock (continued)
Computers & Technology (continued)
Dell Computer .......................................... 3,496 $ 188,566
EMC .................................................... 1,434 179,250
Electronic Data Systems ................................ 1,003 64,380
Hewlett-Packard ........................................ 1,381 183,069
International Business Machines ........................ 2,365 279,070
Micron Technology ...................................... 505 63,630
Microsoft .............................................. 6,434 683,613
Oracle ................................................. 3,609 281,728
Sun Microsystems ....................................... 2,121 198,744
Veritas Software ....................................... 300 39,300
Yahoo .................................................. 717 122,876
----------
3,457,668
----------
Consumer Products - 3.19%
Corning ................................................ 480 93,120
Gillete ................................................ 1,821 68,629
Kimberly-Clark ......................................... 1,307 73,192
Minnesota Mining & Manufacturing ....................... 923 81,743
Procter & Gamble ....................................... 1,276 71,775
Tyco International ..................................... 2,640 131,670
----------
520,129
----------
Electronics & Electrical Equipment - 10.00%
Conexant Systems ....................................... 514 36,494
Emerson Electric ....................................... 1,717 90,786
General Electric ....................................... 3,963 615,008
Intel .................................................. 4,204 554,665
Motorola ............................................... 1,042 148,355
Texas Instruments ...................................... 1,164 186,240
----------
1,631,548
----------
Energy - 6.86%
Atlantic Richfield ..................................... 1,066 90,610
Conoco - Class B ....................................... 3,263 83,614
Chevron ................................................ 1,112 102,790
Enron .................................................. 1,460 109,318
Exxon Mobil ............................................ 3,869 301,057
Phillips Petroleum ..................................... 2,221 102,721
Royal Dutch Petroleum .................................. 2,627 151,217
Schlumberger Limited ................................... 1,338 102,357
Texaco ................................................. 1,403 75,236
----------
1,118,920
----------
Food, Beverage & Tobacco - 2.63%
Coca Cola .............................................. 2,824 132,551
Pepsico ................................................ 2,194 75,830
Philip Morris .......................................... 5,129 108,350
UST .................................................... 3,200 50,000
Unilever NV ............................................ 1,300 62,563
----------
429,294
----------
4
<PAGE>
Statement of Net Assets (continued)
Number of Market
Delaware S&P 500 Index Fund Shares Value
- -------------------------------------------------------------------------------
Common Stock (continued)
Healthcare & Pharmaceuticals - 8.05%
Abbott Laboratories .................................... 2,429 $ 85,470
American Home Products ................................. 1,785 95,720
Amgen .................................................. 1,445 88,686
Bristol-Myers Squibb ................................... 2,294 132,478
Johnson & Johnson ...................................... 1,795 125,762
Lilly (Eli) ............................................ 1,387 87,381
Medtronic .............................................. 1,852 95,262
Merck & Company ........................................ 2,705 168,048
Pfizer ................................................. 4,673 170,857
Pharmacia & Upjohn ..................................... 1,200 71,100
Schering-Plough ........................................ 2,173 79,858
Warner-Lambert ......................................... 1,166 113,685
----------
1,314,307
----------
Industrial Machinery - 1.18%
Applied Materials ...................................... 1,360 128,180
Caterpillar ............................................ 1,635 64,480
----------
192,660
----------
Leisure, Lodging & Entertainment - 1.64%
Carnival Cruise Lines .................................. 1,716 42,578
McDonald's ............................................. 2,773 104,161
Walt Disney ............................................ 2,905 120,194
----------
266,933
----------
Metals & Mining - 0.34%
Alcoa .................................................. 800 56,200
----------
56,200
----------
Paper & Forest Products - 0.77%
International Paper .................................... 1,494 63,869
Weyerhaeuser ........................................... 1,074 61,218
----------
125,087
----------
Retail - 5.66%
Costco Wholesale ....................................... 1,544 81,157
The Gap ................................................ 1,450 72,228
Home Depot ............................................. 2,928 188,856
Kohl's ................................................. 580 59,450
Safeway ................................................ 1,500 67,875
Target ................................................. 1,247 93,213
Wal-Mart Stores ........................................ 5,477 303,974
Walgreen ............................................... 2,200 56,650
----------
923,403
----------
Telecommunications - 12.04%
A T & T ................................................ 3,646 205,087
Alltel ................................................. 1,221 76,999
Bell Atlantic .......................................... 1,940 118,582
BellSouth .............................................. 2,423 113,881
Comcast - Special Class A .............................. 1,558 67,578
GTE .................................................... 1,272 90,312
Global Crossing Limited ................................ 1,240 50,763
Lucent Technologies .................................... 3,943 239,537
<PAGE>
Number of Market
Shares Value
- --------------------------------------------------------------------------------
Common Stock (continued)
Telecommunications (continued)
MCI Worldcom ........................................... 3,735 $ 169,242
Network Appliance ...................................... 548 45,347
Nextel Communications .................................. 600 88,950
Nortel Networks ........................................ 1,890 238,140
Qualcomm ............................................... 978 146,028
SBC Communications ..................................... 4,162 174,804
Sprint ................................................. 1,002 65,443
U.S.West ............................................... 1,010 73,351
----------
1,964,044
----------
Transportation & Shipping - 0.43%
Burlington Northern Santa Fe ........................... 3,156 69,827
----------
69,827
----------
Utilities - 0.46%
Sprint ................................................. 1,193 75,159
----------
75,159
----------
Total Common Stock (cost $14,750,040) .................. 15,379,453
----------
5
<PAGE>
Statement of Net Assets (continued)
Principal Market
Delaware S&P 500 Index Fund Amount Value
- --------------------------------------------------------------------------------
Repurchase Agreements - 5.73%
With Chase Manhattan 6.03% 4/3/00
(dated 3/31/00, collateralized by $344,000
U.S. Treasury Notes 4.75% due 2/15/04,
market value $327,093) ............................... $319,000 $ 319,000
With PaineWebber 6.05% 4/3/00
(dated 3/31/00, collateralized by $89,000
U.S. Treasury Notes 6.375% due 3/31/01,
market value $88,786 and $91,000 U.S.
Treasury Notes 5.25% due 5/31/01, market
value $90,966 and $43,000 U.S. Treasury
Notes 11.875% due 11/15/03,
market value $52,870 and $91,000
U.S. Treasury Notes 5.875% due
11/15/04, market value $90,974) ...................... 317,000 317,000
With Prudential Securities 6.00% 4/3/00
(dated 3/31/00, collateralized by $303,000
U.S. Treasury Notes 6.00% due 8/15/00,
market value $305,080) ............................... 299,000 299,000
-----------
Total Repurchase Agreements
(cost $935,000) ...................................... 935,000
-----------
Total Market Value of Securities - 99.99%
(cost $15,685,040) ................................... 16,314,453
Receivables and Other Assets Net of
Liabilities - 0.01% .................................. 1,158
-----------
Net Assets Applicable to 1,850,664 Shares
Outstanding - 100.00% ................................ $16,315,611
===========
Net Asset Value - Delaware S&P 500
Index Fund Consultant Class
($345,390 / 39,181 shares) ........................... $8.82
-----
Net Asset Value - Delaware S&P 500
Index Fund Institutional Class
($15,970,221 / 1,811,483 shares) ..................... $8.82
-----
Components of Net Assets at March 31, 2000:
Shares of beneficial interest,
(unlimited authorization - no par) ................... $15,648,933
Undistributed net investment income .................... 37,265
Net unrealized appreciation of investments ............. 629,413
-----------
Total net assets ....................................... $16,315,611
===========
See accompanying notes
6
<PAGE>
Statement of Operations
For the period January 12, 2000* through Delaware S&P 500 Index Fund
March 31, 2000 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income:
Dividends .............................................. $34,077
Interest ............................................... 14,494 $ 48,571
------- --------
Expenses:
Dividend disbursing and transfer agent
fees and expenses ..................................... 12,137
Registration fees ...................................... 11,752
Custodian fees ......................................... 4,815
Professional fees ...................................... 4,639
Reports and statements to shareholders ................. 3,850
Management fees ........................................ 2,000
Accounting and administration .......................... 1,950
Trustee's fees ......................................... 331
Taxes (other than taxes on income) ..................... 135
Distribution expenses .................................. 54
Other .................................................. 2,886
-------
44,549
--------
Less expenses absorbed or waived ....................... (32,852)
Less expenses paid indirectly .......................... (391)
--------
Total expenses ......................................... 11,306
--------
Net Investment Income: ................................. 37,265
--------
Net Unrealized Gain on Investments:
Net change in unrealized appreciation/depreciation
of investments ........................................ 629,413
--------
Unrealized Gain on Investments: ........................ 629,413
--------
Net Increase in Net Assets Resulting from Operations: .. $666,678
========
- ----------------------
*Date of commencement of operations.
See accompanying notes
7
<PAGE>
Statements of Changes in Net Assets
Delaware S&P 500 Index Fund
- --------------------------------------------------------------------------------
1/12/00* to
3/31/00
(Unaudited)
Increase in Net Assets from Operations:
Net investment income .................................. $ 37,265
Net change in unrealized appreciation/depreciation
of investments ....................................... 629,413
-----------
Net increase in net assets resulting from operations ... 666,678
-----------
Capital Share Transactions:
Proceeds from shares sold:
Consultant Class ....................................... 408,978
Institutional Class .................................... 15,494,455
-----------
15,903,433
Cost of shares repurchased:
Consultant Class ....................................... (75,035)
Institutional Class .................................... (179,465)
-----------
(254,500)
-----------
Increase in net assets derived from capital share
transactions .......................................... 15,648,933
-----------
Net Increase in Net Assets: ............................ 16,315,611
Net Assets:
Beginning of period .................................... --
-----------
End of period .......................................... $16,315,611
===========
- ---------------------
*Date of commencement of operations.
See accompanying notes
8
<PAGE>
Financial Highlights
Selected data for each share of the Fund outstanding Delaware S&P 500 Index
throughout each period were as follows: Fund Consultant Class
- --------------------------------------------------------------------------------
1/12/00(1) to
3/31/00
(Unaudited)
Net asset value, beginning of period ........................ $8.500
Income from investment operations:
Net investment income(2) ................................... 0.057
Net realized and unrealized gain on investments ............ 0.263
------
Total from investment operations ............................ 0.320
------
Net asset value, end of period .............................. $8.820
======
Total return(3) ............................................. 3.77%
Ratios and supplemental data:
Net assets, end of period (000 omitted) .................... $345
Ratio of expenses to average net assets .................... 0.52%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly ................... 1.78%
Ratio of net investment income to average net assets ....... 1.36%
Ratio of net investment income to average net assets prior...
to expense limitation and expenses paid indirectly ........ 0.10%
Portfolio turnover ......................................... 0%
- ----------------------
(1) Date of commencement of operations; ratios have been annualized and total
return has not been annualized.
(2) The average share outstanding method has been applied for per share
information.
(3) 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.
See accompanying notes
9
<PAGE>
Financial Highlights (continued)
Selected data for each share of the Fund outstanding Delaware S&P 500 Index
throughout each period were as follows: Fund Institutional Class
- --------------------------------------------------------------------------------
1/12/00(1) to
3/31/00
(Unaudited)
Net asset value, beginning of period ...................... $8.500
Income from investment operations:
Net investment income(2) ................................. 0.059
Net realized and unrealized gain on investments .......... 0.261
------
Total from investment operations ......................... 0.320
------
Net asset value, end of period ............................ $8.820
------
Total return(3) ........................................... 3.77%
Ratios and supplemental data:
Net assets, end of period (000 omitted) .................. $15,970
Ratio of expenses to average net assets .................. 0.40%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly ................. 1.65%
Ratio of net investment income to average net assets ..... 1.31%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly ...... 0.06%
Portfolio turnover ....................................... 0%
- ----------------------
(1) Date of commencement of operations; ratios have been annualized and total
return has not been annualized.
(2) The average share outstanding method has been applied for per share
information.
(3) 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.
See accompanying notes
10
<PAGE>
Notes to Financial Statements
March 31, 2000 (Unaudited)
- --------------------------------------------------------------------------------
Delaware Foundation Funds (the "Trust") is registered as a diversified
open-end investment company under the Investment Company Act of 1940, as
amended. The Trust is organized as a Delaware Business Trust and offers four
portfolios: the Delaware Growth Portfolio, the Delaware Balanced Portfolio, the
Delaware Income Portfolio , and the Delaware S&P 500 Index Fund. These financial
statements pertain only to the Delaware S&P 500 Index Fund (the "Fund"), which
offers two classes of shares, the Delaware S&P 500 Index Fund Consultant Class
and the Delaware S&P 500 Index Fund Institutional Class. Neither class has a
sales charge. The objective of the Fund is to seek to replicate the total return
of the Standard & Poor's 500 Composite Stock Price Index.
1. Significant Accounting Policies
The following accounting policies are in accordance with accounting principles
generally accepted in the United States and are consistently followed by the
Fund.
Security Valuation - All equity securities are valued at the last quoted sales
price as of the close of the NYSE on the valuation date. If on a particular day
an equity security does not trade, then the mean between the bid and asked
prices will be used. 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 Funds' Board of Trustees.
Federal Income Taxes - The Fund intends 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 accounting principles generally
accepted in the United States.
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 102% 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.
<PAGE>
- --------------------------------------------------------------------------------
Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Other - Expenses common to all funds within the Delaware Investments Family of
Funds are allocated amongst the funds on the basis of average net assets.
Security transactions are recorded on the date the securities are purchased or
sold (trade date). Costs used in calculating realized gains and losses on the
sale of investment securities are those of the specific securities sold.
Dividend income is recorded on the ex-dividend date and interest income is
recorded on the accrual basis. The Fund declares and pays dividends from net
investment income and capital gains, if any, annually.
Certain expenses of the fund are paid through commission arrangements with
brokers. These transactions are done subject to best execution. The amount of
this expense was approximately $301 for the period ended March 31, 2000. The
Fund may receive earnings credit used to offset custody fees when positive
balances are maintained at the custodian. These credits were $90 for the period
ended March 31, 2000. The commission arrangements and the earnings credit are
combined as expenses paid indirectly in the Statement of Operations.
2. Investment Management and Other Transactions with Affiliates
In accordance with the terms of the Investment Management Agreement, the Fund
pays Delaware Management Company ("DMC"), the Investment Manager of the Fund, an
annual fee which is calculated at the rate of 0.02% on average daily net assets.
At March 31, 2000, the Fund had a liability for investment management fees, and
other expenses payable to DMC of $2,000.
DMC has entered into a sub-advisory agreement with State Street Global Advisors,
a division of State Street Corporation, with respect to the management of the
Fund. For the services provided to DMC, DMC pays the subadvisor a annual fee
which is calculated at the rate of 0.05% of average daily net assets. The Fund
does not pay any fees to the subadvisor.
DMC has elected to waive the portion, if any, of the management fee and
reimburse the Fund to the extent that annual operating expenses, exclusive of
taxes, interest, distribution fees, brokerage commissions and extraordinary
expenses exceed 0.40% of average daily net assets of the Fund through November
30, 2000.
11
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
2. Investment Management and Other Transactions with Affiliates
(continued)
The Fund has engaged Delaware Service Company, Inc. ("DSC"), an affiliate of
DMC, to provide dividend disbursing, transfer agent and accounting and
administration services. The Fund pays DSC a monthly fee based on the number of
shareholder accounts, shareholder transactions and average net assets, subject
to certain minimums. At March 31, 2000, the Fund had a liability for such fees
and other expenses payable to DSC of $7,554.
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 assets of the Consultant Class. At March 31,
2000, the Fund had a liability for such fees and other expenses payable to DDLP
of $206.
Certain officers of DMC, DSC and DDLP are officers, trustees and/or employees of
the Fund. These officers, trustees and employees are paid no compensation by the
Fund.
3. Investments
During the period ended March 31, 2000, the Fund made purchases and sales of
investment securities other than U.S. government securities and temporary cash
investments as follows:
Purchases .................................................... $14,750,040
Sales ........................................................ $0
At March 31, 2000, the aggregate cost of securities and unrealized appreciation
(depreciation) for federal income tax purposes for the Fund were as follows:
Cost of investments: ......................................... $15,685,040
-----------
Aggregate unrealized appreciation ............................ $ 1,342,108
Aggregate unrealized depreciation ............................ $ (712,695)
-----------
Net unrealized appreciation .................................. $ 629,413
===========
4. Capital Shares
Transactions in capital stock shares were as follows:
1/12/00* to
3/31/00
(Unaudited)
Shares sold:
Consultant Class ........................................... 48,363
Institutional Class ........................................ 1,832,996
-----------
1,881,359
-----------
Shares repurchased:
Consultant Class ........................................... (9,182)
Institutional Class ........................................ (21,514)
-----------
(30,696)
-----------
Net increase ................................................. 1,850,663
===========
*Date of commencement of operations.
12
<PAGE>
DELAWARE INVESTMENTS FAMILY OF FUNDS
- ------------------------------------
Complete information on any fund offered by Delaware Investments can be found in
each fund's current prospectus. Prospectuses for all funds offered by Delaware
Investments are available from your financial adviser. Please read the
prospectus carefully before you invest or send money.
<TABLE>
<CAPTION>
<S> <C> <C>
Growth of Capital International and Global Tax-Exempt Income
o Technology and Innovation o Emerging Markets Fund o National High-Yield
Fund o New Pacific Fund Municipal Bond Fund
o Select Growth Fund o Overseas Equity Fund o Tax-Free USA Fund
o Trend Fund o International Equity Fund o Tax-Free Insured Fund
o Growth Opportunities Fund* o Global Equity Fund o Tax-Free USA
o Small Cap Value Fund o Global Bond Fund Intermediate Fund
o U.S. Growth Fund o State Tax-Free Funds**
o Tax-Efficient Equity Fund Current Income
o Social Awareness Fund o Delchester Fund Stability of Principal
o High-Yield o Cash Reserve
Total Return Opportunities Fund o Tax-Free Money Fund
o Blue Chip Fund o Strategic Income Fund
o Devon Fund o Corporate Bond Fund Asset Allocation
o Growth and Income Fund o Extended Duration o Foundation Funds
o Decatur Equity Bond Fund Growth Portfolio
Income Fund o American Government Balanced Portfolio
o REIT Fund Bond Fund Income Portfolio
o Balanced Fund o U.S. Government
Securities Fund
o Limited-Term
Government Fund
</TABLE>
* Formerly known as DelCap Fund.
** Available for the following states: Arizona, California, Colorado, Florida,
Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, North Dakota, New Jersey,
New Mexico, New York, Ohio, Oregon, Pennsylvania and Wisconsin. Insured and
intermediate bond funds are available in selected states.
<PAGE>
DELAWARE(SM) For Shareholders
INVESTMENTS 1.800.523.1918
- ---------------------
Philadelphia o London For Securities Dealers
1.800.362.7500
For Financial Institutions
Representatives Only
1.800.659.2265
www.delawareinvestments.com
This semi-annual report is for the information of Delaware S&P 500 Index Fund
shareholders, but it may be used with prospective investors when preceded or
accompanied by a current Prospectus for Delaware S&P 500 Index Fund and the
Delaware Investments Performance Update for the most recently completed calendar
quarter. The prospectus sets forth details about charges, expenses, investment
objectives and operating policies of the Fund. You should read the prospectus
carefully before you invest. The figures in this report represent past results
which are not a guarantee of future results. The return and principal value of
an investment in the Fund will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
BOARD OF TRUSTEES Charles E. Peck Investment Manager
Retired Delaware Management Company
Wayne A. Stork Fredericksburg, VA Philadelphia, PA
Chairman
Delaware Investments Family of Funds Janet L. Yeomans International Affiliate
Philadelphia, PA Vice President and Treasurer Delaware International Advisers Ltd.
3M Corporation London, England
Walter P. Babich St. Paul, MN
Board Chairman Subadviser
Citadel Constructors, Inc. State Street Global Advisors
King of Prussia, PA AFFILIATED OFFICERS Boston, MA
David K. Downes Charles E. Haldeman, Jr. National Distributor
President and Chief Executive Officer President and Chief Executive Officer Delaware Distributors, L.P.
Delaware Investments Family of Funds Delaware Management Holdings, Inc. Philadelphia, PA
Philadelphia, PA Philadelphia, PA
Shareholder Servicing, Dividend
John H. Durham Richard J. Flannery Disbursing and Transfer Agent
Private Investor Executive Vice President Delaware Service Company, Inc.
Horsham, PA and General Counsel Philadelphia, PA
Delaware Investments Family of Funds
Anthony D. Knerr Philadelphia, PA 1818 Market Street
Consultant, Anthony Knerr & Associates Philadelphia, PA 19103-3682
New York, NY Bruce D. Barton
President and Chief Executive Officer
Ann R. Leven Delaware Distributors, L.P.
Former Treasurer, National Gallery of Art Philadelphia, PA
Washington, DC
Thomas F. Madison
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN
</TABLE>
(3118) Printed in the USA
SA-491 [3/00] PP 5/00 (J5855)
