SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
File No. 33-40991
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 12 [ X ]
-----
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 12
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DELAWARE POOLED TRUST, INC.
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(Exact Name of Registrant as Specified in Charter)
1818 Market Street, Philadelphia, Pennsylvania 19103
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (215) 255-2923
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George M. Chamberlain, Jr., 1818 Market Street, Philadelphia, PA 19103
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(Name and Address of Agent for Service)
Approximate Date of Public Offering: August 30, 1996
---------------
It is proposed that this filing will become effective:
______ immediately upon filing pursuant to paragraph (b)
__X___ on August 30, 1996 pursuant to paragraph (b)
______ 60 days after filing pursuant to paragraph (a)(1)
______ on (date) pursuant to paragraph (a)(1)
______ 75 days after filing pursuant to paragraph (a)(2)
______ on (date) pursuant to paragraph (a)(2) of Rule 485
Registrant has registered an indefinite amount of securities
under the Securities Act of 1933 pursuant to Section 24(f)
of the Investment Company Act of 1940. The Rule 24f-2 Notice for
Registrant's most recent fiscal year was filed on November 17, 1995.
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
--- C O N T E N T S ---
This Post-Effective Amendment No. 12 to Registration File No. 33-40991
includes the following:
1. Facing Page
2. Contents Page
3. Cross-Reference Sheet
4. Part A - Prospectus
5. Part B - Statement of Additional Information
6. Part C - Other Information
7. Signatures
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
CROSS-REFERENCE SHEET
PART A
<TABLE>
<CAPTION>
Item No. Description Location in Prospectus
- -------- ----------- ----------------------
<S> <C> <C>
1 Cover Page.................................................... Cover
2 Fund Expenses................................................. Fund Expenses
3 Condensed Financial Information............................... Financial Highlights
4 General Description of Registrant ............................ Investment Objectives, Policies
and Risk Considerations
5 Management of the Fund ....................................... Management of the Fund
6 Capital Stock and Other Securities ........................... Dividends and Capital Gains
Distributions; Taxes
7 Purchase of Securities Being Offered.......................... Cover; Purchase of Shares;
Management of the Fund
8 Redemption or Repurchase...................................... Purchase of Shares;
Redemption of Shares
9 Legal Proceedings............................................. None
</TABLE>
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
PART B
<TABLE>
<CAPTION>
Location in Statement
Item No. Description of Additional Information
- -------- ----------- -------------------------
<S> <C> <C>
10 Cover Page.................................................... Cover
11 Table of Contents............................................. Table of Contents
12 General Information and History............................... General Information
13 Investment Objectives and Policies............................ Investment Policies, Portfolio
Techniques and Risk
Considerations
14 Management of the Registrant.................................. Officers and Directors
15 Control Persons and Principal Holders
of Securities................................................ Officers and Directors
16 Investment Advisory and
Other Services............................................... Investment Management
Agreements; Officers and
Directors; General Information;
Financial Statements
17 Brokerage Allocation.......................................... Trading Practices and Brokerage
18 Capital Stock and Other Securities............................ Capitalization and Noncumulative
Voting (under General
Information)
19 Purchase, Redemption and Pricing of
Securities Being Offered..................................... Purchasing Shares; Determining
Net Asset Value; Redemption
and Repurchase
20 Tax Status.................................................... Accounting and Tax Issues; Taxes
21 Underwriters ................................................. Purchasing Shares
22 Calculation of Performance Data............................... Performance Information
23 Financial Statements.......................................... Financial Statements
</TABLE>
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
PART C
<TABLE>
<CAPTION>
Item No. Description Location in Part C
- -------- ----------- -------------------------
<S> <C> <C>
24 Financial Statements and Exhibits............................. Item 24
25 Persons Controlled by or under Common
Control with Registrant.................................... Item 25
26 Number of Holders of Securities............................... Item 26
27 Indemnification............................................... Item 27
28 Business and Other Connections of
Investment Adviser........................................... Item 28
29 Principal Underwriters........................................ Item 29
30 Location of Accounts and Records.............................. Item 30
31 Management Services........................................... Item 31
32 Undertakings.................................................. Item 32
</TABLE>
<PAGE>
DELAWARE POOLED TRUST
Delaware Pooled Trust, Inc. ("Fund") is a no-load, open-end management
investment company. The Fund consists of 12 portfolios (collectively, the
"Portfolios," or, individually, a "Portfolio") offering investment alternatives
for institutional clients. Investors may make investments in only one or in more
than one of the following Portfolios:
<TABLE>
<CAPTION>
EQUITY ORIENTED FIXED-INCOME ORIENTED
<S> <C>
The Defensive Equity Portfolio The Fixed Income Portfolio
The Aggressive Growth Portfolio The Limited-Term Maturity Portfolio
The International Equity Portfolio The Global Fixed Income Portfolio
The Defensive Equity Small/Mid-Cap Portfolio The International Fixed Income Portfolio
The Defensive Equity Utility Portfolio The High-Yield Bond Portfolio
The Labor Select International Equity Portfolio
The Real Estate Investment Trust Portfolio
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Fund is designed to meet the investment needs of discerning institutional
investors and high net-worth individuals who desire experienced investment
management and place a premium on personal service.
The High-Yield Bond Portfolio of the Fund invests up to 100% of its assets in
lower rated fixed-income securities, commonly known as "junk bonds," which
involve greater risks, including default risks, than higher rated fixed-income
securities. Purchasers should carefully assess these risks before investing in
The High-Yield Bond Portfolio. See "INVESTMENT OBJECTIVES, POLICIES AND RISK
CONSIDERATIONS" and "ADDITIONAL INVESTMENT INFORMATION - HIGH-YIELD, HIGH RISK
SECURITIES."
This Prospectus is designed to set forth concisely the information about the
Fund that a prospective institutional client should know before investing and it
should be retained for future reference. Additional information about the Fund
is contained in a Statement of Additional Information dated August 30, 1996, as
it may be amended from time to time. That information is incorporated herein by
reference and is available without charge upon request from the Fund:
Delaware Pooled Trust, Inc.
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
1-800-231-8002
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page Page
<S> <C> <C> <C>
Fund Expenses Additional Investment Information
Financial Highlights Investment Limitations
Delaware Pooled Trust Summary Management of the Fund
Fund Officers and Portfolio Managers Shareholder Services
Risk Factors Dividends and Capital Gains
Investment Objectives, Policies Distributions
and Risk Considerations Taxes
Purchase of Shares Performance Information
Redemption of Shares Appendix A--Ratings
</TABLE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is:
August 30, 1996
-2-
<PAGE>
FUND EXPENSES
The following tables illustrate all expenses and fees that a shareholder of the
Fund can expect to incur. The purpose of the tables is to assist the investor in
understanding the various expenses that an investor in the Fund will bear
directly or indirectly. With respect to The Fixed Income Portfolio, The
Limited-Term Maturity Portfolio, The International Fixed Income Portfolio, The
Defensive Equity Small/Mid-Cap Portfolio, The Defensive Equity Utility
Portfolio, The Labor Select International Equity Portfolio, The Real Estate
Investment Trust Portfolio and The High-Yield Bond Portfolio, the amounts set
forth below corresponding to the caption "Other Expenses" are based on estimates
for the Portfolios' initial fiscal year in which they conduct operations. With
respect to The Defensive Equity Portfolio, The Aggressive Growth Portfolio, The
International Equity Portfolio and The Global Fixed Income Portfolio, the
amounts set forth below corresponding to the caption "Other Expenses" are based
on actual results for the Portfolios' most recently completed fiscal year.
<TABLE>
<CAPTION>
===================================================================================================================================
The The The The The Limited- The Global The
Defensive Aggressive International Fixed Term Fixed International
Shareholder Equity Growth Equity Income Maturity Income Fixed Income
Transaction Expenses Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales Charge Imposed on
Purchases None None None None None None None
- -----------------------------------------------------------------------------------------------------------------------------------
Sales Charge Imposed on
Reinvested
Dividends None None None None None None None
- -----------------------------------------------------------------------------------------------------------------------------------
Redemption Fees None None None None None None None
- -----------------------------------------------------------------------------------------------------------------------------------
Exchange Fees None None None None None None None
===================================================================================================================================
===================================================================================================================================
Annual Fund The The The The The Limited- The Global The
Operating Expenses Defensive Aggressive International Fixed Term Fixed International
(as a percentage of Equity Growth Equity Income Maturity Income Fixed Income
average net assets) Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
Investment Advisory Fees
After Voluntary Waiver and .51%* .63%* .75%* .32%* .22%* .42%* .02%*
Reimbursement
- -----------------------------------------------------------------------------------------------------------------------------------
12b-1 Fees None None None None None None None
- -----------------------------------------------------------------------------------------------------------------------------------
Other Expenses .17% .30% .15% .21% .21% .18% .58%
---- ---- ---- ---- ---- ---- ----
- -----------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses
After Voluntary Waiver and
Reimbursement .68%* .93%* .90%* .53%* .43%* .60%* .60%*
==== ==== ==== ==== ==== ==== ====
===================================================================================================================================
</TABLE>
-3-
<PAGE>
* With respect to The Defensive Equity Portfolio, The Aggressive Growth
Portfolio, The Fixed Income Portfolio and The Limited-Term Maturity
Portfolio, Delaware Investment Advisers elected voluntarily to waive that
portion, if any, of the annual Investment Advisory Fees payable by a
particular Portfolio and to reimburse a Portfolio for its expenses to the
extent necessary to ensure that the expenses of that Portfolio (exclusive of
taxes, interest, brokerage commissions and extraordinary expenses) do not
exceed, as a percentage of average net assets, on an annualized basis, the
amounts noted above corresponding to the caption "Total Operating Expenses
After Voluntary Waiver and Reimbursement" during the period from
commencement of the public offering for the Portfolio through October 31,
1996. Similarly, Delaware International Advisers Ltd. ("Delaware
International"), the investment adviser to The International Equity
Portfolio, voluntarily elected to waive that portion, if any, of its annual
Investment Advisory Fees and to reimburse the Portfolio for its expenses to
the extent necessary to ensure that the expenses of that Portfolio
(exclusive of taxes, interest, brokerage commissions and extraordinary
expenses) do not exceed, as a percentage of average net assets, on an
annualized basis, .96% during the period from commencement of the public
offering for the Portfolio through October 31, 1996. With respect to The
Global Fixed Income Portfolio and The International Fixed Income Portfolio,
Delaware International, the Portfolios' investment adviser, voluntarily
elected to waive that portion, if any, of its annual Investment Advisory
Fees and to reimburse each Portfolio for its expenses to the extent
necessary to ensure that the expenses of that Portfolio (exclusive of taxes,
interest, brokerage commissions and extraordinary expenses) do not exceed,
as a percentage of average net assets, on an annualized basis, the amounts
noted above corresponding to the caption "Total Operating Expenses After
Voluntary Waiver and Reimbursement" during the period from commencement of
the public offering for the Portfolio through October 31, 1996. In the
absence of such voluntary waivers, Total Operating Expenses (as a percentage
of average net assets) are or are expected to equal .71%, 1.08%, .61%, .51%,
.68%, and 1.08%, respectively, for The Defensive Equity, The Aggressive
Growth, The Fixed Income, The Limited-Term Maturity, The Global Fixed Income
and The International Fixed Income Portfolios. The actual expenses of The
International Equity Portfolio were .90% for the fiscal year ended October
31, 1995 and therefore the waiver noted above was not triggered. Other
Expenses for The International Fixed Income Portfolio are estimates derived
from The Global Fixed Income Portfolio and assume the voluntary waiver of
fees will be in effect. See "MANAGEMENT OF THE FUND" for a recital of the
Investment Advisory Fees to which each adviser is entitled under its
Investment Management Agreement.
-4-
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
The Defensive The Labor The Real
Equity Small/ The Defensive Select Estate
Shareholder Mid-Cap Equity Utility International Investment The High-Yield
Transaction Expenses Portfolio Portfolio Equity Portfolio Trust Portfolio Bond Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales Charge Imposed on Purchases None None None None None
- -----------------------------------------------------------------------------------------------------------------------------------
Sales Charge Imposed on Reinvested
Dividends None None None None None
- -----------------------------------------------------------------------------------------------------------------------------------
Redemption Fees None None None None None
- -----------------------------------------------------------------------------------------------------------------------------------
Exchange Fees None None None None None
===================================================================================================================================
===================================================================================================================================
Annual Fund The Defensive The Labor The Real
Operating Expenses Equity Small/ The Defensive Select Estate
(as a percentage of Mid-Cap Equity Utility International Investment The High-Yield
average net assets) Portfolio Portfolio Equity Portfolio Trust Portfolio Bond Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
Investment Advisory Fees .65%** .35%** .75%** .75%** .45%**
- -----------------------------------------------------------------------------------------------------------------------------------
12b-1 Fees None None None None None
- -----------------------------------------------------------------------------------------------------------------------------------
Other Expenses .14% .14% .21% .14% .14%
----
- -----------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses After
Voluntary Waiver and Reinvestment .79%** .49%** .96%** .89%** .59%**
==== ==== ==== ==== ====
===================================================================================================================================
</TABLE>
** All expense figures are estimates assuming that each Portfolio has average
net assets equal to $75 million. With respect to The Defensive Equity
Small/Mid-Cap Portfolio, The Defensive Equity Utility Portfolio, The Real
Estate Investment Trust Portfolio and The High-Yield Bond Portfolio,
Delaware Investment Advisers has elected voluntarily to waive that portion,
if any, of the annual Investment Advisory Fee payable by such Portfolios and
to reimburse each Portfolio for its expenses to the extent necessary to
ensure that the expenses of each Portfolio (exclusive of taxes, interest,
brokerage commissions and extraordinary expenses) do not exceed, as a
percentage of average net assets, on an annualized basis, .79%, .49%, .89%
and .59%, respectively, during the period from the commencement of the
public offering of such Portfolios through October 31, 1996. Similarly,
Delaware International, the investment adviser to The Labor Select
International Equity Portfolio, has elected voluntarily to waive that
portion, if any, of the annual Investment Advisory Fee payable by The Labor
Select International Equity Portfolio and to reimburse the Portfolio for its
expenses to the extent necessary to ensure that the expenses of that
Portfolio (exclusive of taxes, interest, brokerage commissions and
extraordinary expenses) do not exceed, as a percentage of average net
assets, on an annualized basis, .96% of such Portfolio's average net assets
during the period from the commencement of the public offering of the
Portfolio through October 31, 1996. Other Expenses for each of the
Portfolios are estimated. See "MANAGEMENT OF THE FUND" for a recital of the
Investment Advisory Fees to which each adviser is entitled under its
Investment Management Agreement.
-5-
<PAGE>
The following example illustrates the expenses that you would incur on a $1,000
investment, assuming (1) a 5% annual rate of return, and (2) redemption at the
end of each time period. As noted in the table above, the Fund charges no
redemption fees.
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
The Defensive Equity Portfolio $7 $22 $38 $85
The Aggressive Growth Portfolio 9 30 51 114
The International Equity Portfolio 9 29 50 111
The Fixed Income Portfolio 5 17 30 66
The Limited-Term Maturity Portfolio 4 14 24 54
The Global Fixed Income Portfolio 6 19 33 75
The International Fixed Income Portfolio 6 19 33 75
1 year* 3 years*
------- --------
The Defensive Equity Small/Mid-Cap Portfolio $8 $25
The Defensive Equity Utility Portfolio 5 16
The Labor Select International Equity Portfolio 10 31
The Real Estate Investment Trust Portfolio 9 28
The High-Yield Bond Portfolio 6 19
</TABLE>
*Assumes net assets of each Portfolio equal to $75 million.
This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be greater or less than those
shown.
-6-
<PAGE>
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following financial highlights of The Defensive Equity Portfolio, The
Aggressive Growth Portfolio, The International Equity Portfolio and The Global
Fixed Income Portfolio through October 31, 1995 are derived from the financial
statements of each of those Portfolios of the Fund and have been audited by
Ernst & Young LLP, independent auditors. The data should be read in conjunction
with the financial statements, related notes, and the report of Ernst & Young
LLP covering such financial information and highlights all of which are
incorporated by reference into the Statement of Additional Information.
Unaudited financial highlights for the period ended April 30, 1996 are also
provided below for those four Portfolios as well as for The Real Estate
Investment Trust Portfolio and The Labor Select International Equity Portfolio.
This data should be read in conjunction with the financial statements and
related notes for the period ended April 30, 1996, all of which are incorporated
by reference into the Statement of Additional Information.
Further information about The Defensive Equity, The Aggressive Growth, The
International Equity and The Global Fixed Income Portfolios' performance is
contained in their Annual Report to shareholders for the fiscal year ended
October 31, 1995 and further information about those Portfolios' performance as
well as The Real Estate Investment Trust Portfolio's and The Labor Select
International Equity Portfolio's performance is contained in their Semi-Annual
Report to shareholders for the period ended April 30, 1996. A copy of the Annual
Report (including the report of Ernst & Young LLP) and the Semi-Annual Report
may be obtained from the Fund upon request at no charge.
Unaudited financial highlights for the period March 12, 1996 (date of initial
sale) through July 31, 1996 are also provided below for The Fixed Income
Portfolio. The data should be read in conjunction with the financial statements
and related notes which are included in the Statement of Additional Information.
Except for the initial sale of shares to Delaware Management Company, Inc., The
Defensive Equity Small/Mid-Cap Portfolio, The Defensive Equity Utility
Portfolio, The Limited-Term Maturity Portfolio, The International Fixed Income
Portfolio and The High-Yield Bond Portfolio have sold no shares to investors.
Consequently, no financial highlights are presented for these five Portfolios.
- ------------------------------------------------------------------------------
-7-
<PAGE>
<TABLE>
<CAPTION>
The Defensive
Equity Portfolio
------------------------------------------------------------------
(Unaudited)
Period Period
11/1/95 2/3/92(2)
through Year ended through
4/30/96(1) 10/31/95 10/31/94 10/31/93 10/31/92
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.............................$14.6600 $13.0800 $12.7300 $10.6600 $10.0000
Income From Investment Operations
- ---------------------------------
Net Investment Income............................................ 0.1995 0.4303 0.3203 0.2841 0.2291
Net Gains (Losses) on Securities
(both realized and unrealized)................................ 1.8905 1.9797 0.6527 2.3159 0.5109
------ ------ ------ ------ ------
Total from Investment Operations............................ 2.0900 2.4100 0.9730 2.6000 0.7400
------ ------ ------ ------ ------
Less Distributions
- ------------------
Dividends (from net investment income)........................... (0.3600) (0.3400) (0.2800) (0.3200) (0.0800)
Distributions (from capital gains)............................... (1.1600) (0.4900) (0.3430) (0.2100) none
Returns of Capital............................................... none none none none none
---- ---- ---- ---- ----
Total Distributions......................................... (1.5200) (0.8300) (0.6230) (0.5300) (0.0800)
-------- -------- -------- -------- --------
Net Asset Value, End of Period...................................$15.2300 $14.6600 $13.0800 $12.7300 $10.6600
======== ======== ======== ======== ========
- ------------------------------------------
Total Return..................................................... 14.95%(3) 19.77%(3) 7.96%(3) 25.17%(3) 10.13%(3)
- ------------
- ------------------------------------------
Ratios/Supplemental Data
- -------------------------
Net Assets, End of Period (000's omitted)........................ $66,884 $51,947 $37,323 $13,418 $4,473
Ratio of Expenses to Average Daily Net Assets.................... 0.67% 0.68% 0.68% 0.68% 0.68%
Ratio of Expenses to Average Daily Net Assets
Prior to Expense Limitations................................ 0.71% 0.71% 0.82% 1.38% 2.38%
Ratio of Net Investment Income to Average Daily Net Assets....... 2.79% 3.33% 3.26% 2.90% 3.65%
Ratio of Net Investment Income to Average Daily Net Assets
Prior to Expense Limitations................................ 2.75% 3.30% 3.12% 2.20% 1.95%
Portfolio Turnover Rate.......................................... 71% 88% 73% 37% 28%
</TABLE>
- -----------
(1) Ratios have been annualized, but total return has not been annualized.
(2) Date of initial sale; ratios and total return have been annualized.
(3) Total return reflects the expense limitations referenced in Fund Expenses.
-8-
<PAGE>
<TABLE>
<CAPTION>
The Aggressive
Growth Portfolio
-----------------------------------------------------------------
(Unaudited)
Period Period
11/1/95 2/27/92(2)
through Year ended through
4/30/96(1) 10/31/95 10/31/94 10/31/93 10/31/92
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.......................... $12.8600 $11.0100 $11.2000 $9.0400 $10.0000
Income From Investment Operations
- ---------------------------------
Net Investment Income......................................... (0.0138) 0.0428 0.0075 0.0181 0.0167
Net Gains (Losses) on Securities
(both realized and unrealized)............................. 2.4563 2.0552 0.0325 2.1589 (0.9767)
------ ------ ------ ------ --------
Total from Investment Operations......................... 2.4425 2.0980 0.0400 2.1770 (0.9600)
------ ------ ------ ------ --------
Less Distributions
- ------------------
Dividends (from net investment income)........................ (0.0425) (0.0120) (0.0200) (0.0170) none
Distributions (from capital gains)............................ (0.6200) (0.2360) (0.2100) none none
Returns of Capital............................................ none none none none none
---- ---- ---- ---- ----
Total Distributions...................................... (0.6625) (0.2480) (0.2300) (0.0170) none
-------- -------- -------- -------- ----
Net Asset Value, End of Period................................ $14.6400 $12.8600 $11.0100 $11.2000 $9.0400
======== ======== ======== ======== =======
- ------------------------------------------
Total Return.................................................. 19.76%(3) 19.61%(3) 0.34%(3) 24.10%(3) (13.89%)(3)
- ------------
- ------------------------------------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period (000's omitted)..................... $26,248 $29,092 $22,640 $20,478 $4,538
Ratio of Expenses to Average Daily Net Assets................. 0.92% 0.93% 0.93% 0.93% 0.93%
Ratio of Expenses to Average Daily Net Assets
Prior to Expense Limitations............................. 1.02% 1.08% 1.17% 1.40% 2.56%
Ratio of Net Investment Income to Average Daily Net Assets.... (0.29%) 0.37% 0.07% 0.23% 0.28%
Ratio of Net Investment Income to Average Daily Net Assets
Prior to Expense Limitations............................. (0.39%) 0.22% (0.17%) (0.24%) (1.35%)
Portfolio Turnover Rate....................................... 73% 64% 43% 81% 34%
</TABLE>
- ---------
(1) Ratios have been annualized, but total return has not been annualized.
(2) Date of initial sale; ratios and total return have been annualized.
(3) Total return reflects the expense limitations referenced in Fund Expenses.
-9-
<PAGE>
<TABLE>
<CAPTION>
The International
Equity Portfolio
------------------------------------------------------------------
(Unaudited)
Period Period
11/1/95 2/4/92(2)
through Year ended through
4/30/96(1) 10/31/95 10/31/94 10/31/93 10/31/92
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $13.1200 $13.1100 $11.9900 $9.5000 $10.0000
Income From Investment Operations
- ---------------------------------
Net Investment Income....................................... 0.2925 0.4749 0.1440 0.2414 0.2282
Net Gains (Losses) on Securities
(both realized and unrealized)........................... 1.3975 0.0011 1.2360 2.5686 (0.6282)
------ ------ ------ ------ --------
Total from Investment Operations....................... 1.6900 0.4760 1.3800 2.8100 (0.4000)
------ ------ ------ ------ --------
Less Distributions
- ------------------
Dividends (from net investment income)...................... (0.4300) (0.1700) (0.1600) (0.3200) (0.1000)
Distributions (from capital gains). . . . . . . . .......... (0.1500) (0.2960) (0.1000) none none
Returns of Capital.......................................... none none none none none
---- ---- ---- ---- ----
Total Distributions.................................... (0.5800) (0.4660) (0.2600) (0.3200) (0.1000)
-------- -------- -------- -------- --------
Net Asset Value, End of Period.............................. $14.2300 $13.1200 $13.1100 $11.9900 $9.5000
======== ======== ======== ======== =======
- ------------------------------------------
Total Return................................................ 13.25% 3.91% 11.66%(3) 30.28%(3) (5.44%)(3)
- ------------
- ------------------------------------------
Ratios/Supplemental Data
- ---------------------------
Net Assets, End of Period (000's omitted)................... $204,424 $156,467 $70,820 $24,288 $5,966
Ratio of Expenses to Average Daily Net Assets............... 0.89% 0.90% 0.94% 0.96% 0.96%
Ratio of Expenses to Average Daily Net Assets
Prior to Expense Limitations........................... --- --- 0.97% 1.38% 2.94%
Ratio of Net Investment Income to Average Daily Net Assets.. 4.70% 4.81% 1.36% 2.98% 4.67%
Ratio of Net Investment Income to Average Daily Net Assets
Prior to Expense Limitations........................... --- --- 1.33% 2.56% 2.69%
Portfolio Turnover Rate..................................... 6% 20% 22% 28% 2%
</TABLE>
- ----------
(1) Ratios have been annualized, but total return has not been annualized.
(2) Date of initial sale; ratios and total return have been annualized.
(3) Total return reflects the expense limitations referenced in Fund Expenses.
-10-
<PAGE>
<TABLE>
<CAPTION>
The Global
Fixed Income Portfolio
-------------------------------------------------------
(Unaudited)
Period Period
11/1/95 11/30/92(2)
through Year ended through
4/30/96(1) 10/31/95 10/31/94 10/31/93
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.................................. $11.0400 $9.7900 $11.0900 $10.0000
Income From Investment Operations
- ---------------------------------
Net Investment Income................................................. 0.5113 0.7357 0.4189 0.9547
Net Gains (Losses) on Securities
(both realized and unrealized)..................................... 0.1207 0.9243 (0.1929) 0.7433
-------- -------- -------- --------
Total from Investment Operations................................. 0.6320 1.6600 0.2260 1.6980
-------- -------- -------- --------
Less Distributions
- ------------------
Dividends (from net investment income)................................ (0.7200) (0.4100) (0.9490) (0.6080)
Distributions (from capital gains).................................... (0.2020) none (0.5770) none
Returns of Capital.................................................... none none none none
-------- -------- -------- --------
Total Distributions.............................................. (0.9220) (0.4100) (1.5260) (0.6080)
-------- -------- -------- --------
Net Asset Value, End of Period........................................ $10.7500 $11.0400 $9.7900 $11.0900
======== ======== ======= ========
- ------------------------------------------
Total Return.......................................................... 5.95%(3) 17.38%(3) (2.07%)(3) 18.96%(3)
- ------------
- ------------------------------------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period (000's omitted)............................. $145,389 $99,161 $42,266 $29,313
Ratio of Expenses to Average Daily Net Assets......................... 0.60% 0.60% 0.62% 0.62%
Ratio of Expenses to Average Daily Net Assets
Prior to Expense Limitations..................................... 0.70% 0.68% 0.76% 0.88%
Ratio of Net Investment Income to Average Daily Net Assets............ 8.03% 6.73% 3.62% 10.68%
Ratio of Net Investment Income to Average Daily Net Assets
Prior to Expense Limitations..................................... 7.93% 6.65% 3.48% 10.42%
Portfolio Turnover Rate............................................... 63% 77% 205% 198%
</TABLE>
- --------
(1) Ratios have been annualized, but total return has not been annualized.
(2) Date of initial sale; ratios and total return have been annualized.
(3) Total return reflects the expense limitations referenced in Fund Expenses.
-11-
<PAGE>
<TABLE>
<CAPTION>
The Labor Select The Real Estate
International Investment The Fixed
Equity Portfolio Trust Portfolio Income Portfolio
------------------- ----------------- -----------------
(Unaudited) (Unaudited) (Unaudited)
Period Period Period
12/19/95(1) 12/6/95(1) 3/12/96(1)
through through through
4/30/96 4/30/96 7/31/96
<S> <C> <C> <C>
Net Asset Value, Beginning of Period................................. $10.0000 $10.0000 $10.0000
Income From Investment Operations
- ---------------------------------
Net Investment Income................................................ 0.1063 0.2882 0.2312
Net Gains (Losses) on Securities
(both realized and unrealized).................................... 0.9537 0.3718 (0.1600)
------ ------ --------
Total from Investment Operations................................ 1.0600 0.6600 0.0712
------ ------ ------
Less Distributions
- ------------------
Dividends (from net investment income)............................... (0.0400) (0.1000) (0.2312)
Distributions (from capital gains)................................... none none none
Returns of Capital................................................... none none none
---- ---- ----
Total Distributions............................................. (0.0400) (0.1000) (0.2312)
-------- -------- --------
Net Asset Value, End of Period....................................... $11.0200 $10.5600 $9.8400
======== ======== =======
- ------------------------------------------
Total Return......................................................... 10.62%(2) 6.63%(2) 0.73%(2)
- ------------
- ------------------------------------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period (000's omitted)............................ $16,745 $21,849 $8,664
Ratio of Expenses to Average Daily Net Assets........................ 0.96% 0.89% 0.53%
Ratio of Expenses to Average Daily Net Assets
Prior to Expense Limitations.................................... 2.56% 1.05% 1.31%
Ratio of Net Investment Income to Average Daily Net Assets........... 4.28% 6.88% 6.09%
Ratio of Net Investment Income to Average Daily Net Assets
Prior to Expense Limitations.................................... 2.68% 6.72% 5.31%
Portfolio Turnover Rate.............................................. 9% 106% 345%
</TABLE>
- -------------
(1) Date of initial sale; ratios have been annualized, but total return has not
been annualized.
(2) Total return reflects the expense limitations referenced in Fund Expenses.
-12-
<PAGE>
DELAWARE POOLED TRUST SUMMARY
THE FUND
The Fund consists of 12 Portfolios offering eligible investors a broad range of
investment choices coupled with the advantage of a no-load mutual fund with the
service companies of The Delaware Group providing customized services as
investment adviser, administrator and distributor. Each Portfolio, other than
The Defensive Equity Utility Portfolio, The Real Estate Investment Trust
Portfolio, The Global Fixed Income Portfolio and The International Fixed Income
Portfolio, is a diversified fund as defined by the Investment Company Act of
1940 ("1940 Act"). The Defensive Equity Utility Portfolio, The Real Estate
Investment Trust Portfolio, The Global Fixed Income Portfolio and The
International Fixed Income Portfolio are nondiversified funds as defined by the
1940 Act. The investment objectives and principal policies of each of the 12
Portfolios are as follows:
The Defensive Equity Portfolio--seeks to realize maximum long-term total return,
consistent with reasonable risk, through investments in equity securities of
companies which, at the time of purchase, have dividend yields above the current
yield of the Standard & Poor's 500 Stock Index and which, in the opinion of
Delaware Investment Advisers, offer capital gains potential as well.
The Aggressive Growth Portfolio--seeks to realize maximum long-term capital
growth by investing in equity securities of smaller and medium-sized companies
that, in the opinion of Delaware Investment Advisers, offer, at the time of
purchase, superior long-term growth potential.
The International Equity Portfolio--seeks to achieve maximum long-term total
return by investing primarily in equity securities of issuers organized or
having a majority of their assets in or deriving a majority of their operating
income outside of the United States which, in the opinion of Delaware
International, are undervalued, at the time of purchase, based on rigorous
fundamental analysis conducted by the investment adviser.
The Defensive Equity Small/Mid-Cap Portfolio--seeks to realize maximum long-term
total return. The Portfolio seeks to achieve this objective by investing in
equity securities of companies which, at the time of purchase, have dividend
yields above the current yield of the Standard & Poor's 500 Stock Index, have a
market capitalization below that of the third decile of companies registered on
the New York Stock Exchange, and which, in Delaware Investment Advisers'
opinion, offer capital gains potential.
The Defensive Equity Utility Portfolio--seeks to realize maximum long-term total
return. The Portfolio seeks to achieve this objective by investing at least 65%
of its total assets in equity securities of utility companies which, at the time
of purchase, have dividend yields above the current yield of the Standard &
Poor's 500 Stock Index and which, in the opinion of Delaware Investment
Advisers, offer capital gains potential.
The Labor Select International Equity Portfolio--seeks to achieve maximum
long-term total return. The Portfolio seeks to achieve this objective by
investing primarily in equity securities of issuers organized or having a
majority of their assets in or deriving a majority of their operating income
outside of the United States which, in the opinion of Delaware International,
are undervalued, at the time of purchase, based on rigorous fundamental analysis
conducted by the investment adviser, and furthermore, present certain
characteristics that are compatible or operate in accordance with certain
investment policies or restrictions followed by organized labor.
-13-
<PAGE>
The Real Estate Investment Trust Portfolio--seeks to achieve maximum long-term
total return. Capital appreciation is a secondary objective. The Portfolio seeks
to achieve its objectives by investing at least 65% of its total assets in
equity securities of real estate investment trusts.
The Fixed Income Portfolio--seeks to realize maximum long-term total return,
consistent with reasonable risk, by investing in a diversified portfolio of
investment grade fixed-income obligations. The Portfolio will include U.S.
government securities, mortgage-backed securities, corporate bonds and other
fixed-income securities.
The Limited-Term Maturity Portfolio--seeks to provide a high level of current
income, consistent with the preservation of principal and reasonable risk. The
Portfolio will include U.S. government securities, mortgage-backed securities,
corporate bonds and other fixed-income securities. At no time will the average
maturity of the Portfolio exceed five years.
The Global Fixed Income Portfolio--seeks to achieve current income consistent
with the preservation of investors' principal. The Portfolio seeks to achieve
this objective by investing primarily in fixed-income securities of issuers
organized or having a majority of their assets in or deriving a majority of
their operating income in at least three different countries, one of which may
be the United States and that may also provide the potential for capital
appreciation.
The International Fixed Income Portfolio--seeks to achieve current income
consistent with the preservation of investors' principal. The Portfolio seeks to
achieve this objective by investing primarily in fixed-income securities of
issuers organized or having a majority of their assets in or deriving a majority
of their operating income in at least three different countries outside of the
United States and that may also provide the potential for capital appreciation.
Under normal circumstances, the Portfolio intends to invest in securities that
are denominated in foreign currencies.
The High-Yield Bond Portfolio--seeks high total return. The Portfolio seeks to
achieve its objective by investing primarily in bonds rated B- or higher by
Standard & Poor's Ratings Group ("S&P") or B3 or higher by Moody's Investors
Service, Inc. ("Moody's ").
For further information, see "INVESTMENT OBJECTIVES, POLICIES AND RISK
CONSIDERATIONS" and "ADDITIONAL INVESTMENT INFORMATION."
INVESTMENT MANAGEMENT
Delaware Investment Advisers, a division of Delaware Management Company, Inc.
("Delaware"), acts as investment adviser to The Defensive Equity, The Aggressive
Growth, The Fixed Income, The Limited-Term Maturity, The Defensive Equity
Small/Mid-Cap, The Defensive Equity Utility, The Real Estate Investment Trust
and The High-Yield Bond Portfolios. The investment management fees payable to
Delaware Investment Advisers by these Portfolios are, respectively, .55%, .80%,
.40%, .30%, .65%, .35%, .75% and .45% of the respective Portfolio's average net
assets. Lincoln Investment Management, Inc., acts as sub-adviser to Delaware
with respect to The Real Estate Investment Trust Portfolio and receives 30% of
the management fee paid to Delaware. Delaware International, an affiliate of
Delaware, is the investment adviser to The
-14-
<PAGE>
International Equity, The Global Fixed Income, The International Fixed Income
and The Labor Select International Equity Portfolios. The investment management
fees payable to Delaware International by The International Equity Portfolio,
The Global Fixed Income Portfolio, The International Fixed Income Portfolio and
The Labor Select International Equity Portfolio are, respectively, .75%, .50%,
.50% and .75% of the respective Portfolio's average net assets. In addition, out
of the investment advisory fees to which they are otherwise entitled, Delaware
and Delaware International pay their proportionate share of the fees paid to
unaffiliated directors by the Fund, except that Delaware will make no such
payments out of the fees it receives for managing The Defensive Equity
Small/Mid-Cap, The Defensive Equity Utility, The Real Estate Investment Trust
and The High-Yield Bond Portfolios and Delaware International will make no such
payments out of the fees it receives for managing The International Fixed Income
and The Labor Select International Equity Portfolios. See "MANAGEMENT OF THE
FUND."
-15-
<PAGE>
FUND OFFICERS AND PORTFOLIO MANAGERS
Wayne A. Stork
Chairman
A graduate of Brown University, Mr. Stork also attended the NYU Graduate School
of Business Administration while a senior transportation analyst at the Irving
Trust Company. He joined Delaware in 1962 as a security analyst covering a wide
range of industry groups. In 1975, he became Chief Investment Officer of
Delaware Investment Advisers, President in 1984, and in 1990 was named Chairman.
Mr. Stork is a Director of Delaware Management Company, Inc. and its affiliates,
and is Chairman of the Delaware Group of funds. He is a member of the Institute
of Chartered Financial Analysts and the Financial Analysts Federation.
Winthrop S. Jessup
President and Chief Executive Officer
Mr. Jessup is a graduate of Brown University where he majored in Economics. He
was a Vice President of Kidder, Peabody & Co. Inc. prior to joining Delaware in
1977. In 1988, he was named Executive Vice President of Delaware Management
Company, Inc. and its Delaware Investment Advisers division. Mr. Jessup is also
Executive Vice President of the Delaware Group of funds, and a Director of
Delaware Management Company, Inc. and its affiliates.
David G. Tilles
Managing Director and Chief Investment Officer - Delaware International Advisers
Ltd.
Mr. Tilles was educated at the Sorbonne, Warwick University and Heidelberg
University. Prior to joining Delaware in 1990 as Managing Principal and Chief
Investment Officer of Delaware International Advisers Ltd., he spent 16 years
with Hill Samuel Investment Management Group in London, serving in a number of
investment capacities. His most recent position prior to joining Delaware was
Chief Investment Officer of Hill Samuel Investment Advisers Ltd.
George E. Deming
Vice President/Senior Portfolio Manager - The Defensive Equity Portfolio
Mr. Deming received his BA in Economics and Political Science from the
University of Vermont and an MA in International Affairs from the University of
Pennsylvania. Prior to joining Delaware in 1978, he was responsible for
portfolio management and institutional sales at White, Weld & Co., Inc. He is a
member of the Financial Analysts of Philadelphia. Mr. Deming has managed The
Defensive Equity Portfolio since its inception.
Edward N. Antoian
Vice President/Senior Portfolio Manager - The Aggressive Growth Portfolio
Mr. Antoian holds a BS from The State University of New York at Albany and
earned an MBA in Finance from the University of Pennsylvania's Wharton School.
Mr. Antoian began his career with Price Waterhouse. Prior to joining Delaware in
1984, he worked in the Institutional Equity Department of E. F. Hutton in
Philadelphia. He is a Chartered Financial Analyst and a member of the
Philadelphia Finance Association and the Philadelphia Securities Association.
Mr. Antoian has managed The Aggressive Growth Portfolio since its inception.
-16-
<PAGE>
Gerald S. Frey
Vice President/Senior Portfolio Manager - The Aggressive Growth Portfolio
Mr. Frey holds a BA in Economics from Bloomsburg University and an MBA from
Wilkes College. He has approximately 20 years' experience in the money
management business. Prior to joining the Delaware Group in 1996, he was a
Senior Director with Morgan Grenfell Capital Management in New York. Mr. Frey
has managed The Aggressive Growth Portfolio since June 1996.
Timothy W. Sanderson
Director/Senior Portfolio Manager - Delaware International Advisers Ltd. (The
International Equity Portfolio)
A graduate of University College, Oxford, Mr. Sanderson began his investment
career in 1979 with Hill Samuel Investment Management Group. Prior to joining
Delaware International Advisers Ltd. in 1990 as Senior Portfolio Manager and
Director, he was an analyst and senior portfolio manager for Hill Samuel where,
since 1987, he had responsibility for Pacific Basin research and the management
of international institutional portfolios. Mr. Sanderson has managed The
International Equity Portfolio since its inception.
David C. Dalrymple
Vice President/Senior Portfolio Manager - The Defensive Equity Small/Mid-Cap
Portfolio
Mr. Dalrymple holds a BS in Business Administration from Clarkson College in
Potsdam, NY, and an MBA from Cornell's Johnson School of Management in Ithaca,
NY. Prior to joining Delaware Management Company in December of 1991, he spent
five years as an assistant portfolio manager for Lord Abbett and Co. in New
York. Mr. Dalrymple is a Chartered Financial Analyst and a member of the
Financial Analysts of Philadelphia. Mr. Dalrymple has managed The Defensive
Equity Small/Mid-Cap Portfolio since its inception.
Clive A. Gillmore
Director/Senior Portfolio Manager - Delaware International Advisers Ltd. (The
Labor Select International Equity Portfolio)
A graduate of the Warwick University, England, and the London Business School
Investment Program, Mr. Gillmore joined Delaware in 1990 after eight years of
investment experience. His most recent position prior to joining Delaware was as
a Pacific Basin equity analyst and senior portfolio manager for Hill Samuel
Investment Advisers Ltd. Prior to that, Mr. Gillmore was an analyst and
portfolio manager for Legal and General Investment in the United Kingdom. Mr.
Gillmore has managed of The Labor Select International Equity Portfolio since
its inception.
George H. Burwell
Vice President/Senior Portfolio Manager - The Real Estate Investment Trust
Portfolio
Mr. Burwell holds a BA from the University of Virginia with a major in Political
Science and a minor in Economics. Prior to joining the Delaware Group in 1992,
Mr. Burwell was a portfolio manager for Midlantic Bank in Edison, New Jersey,
where he managed an equity mutual fund and three commingled funds. He has also
held the position of security analyst with Balis & Born in New York and First
Fidelity Bank in New Jersey. Mr. Burwell is a Chartered Financial Analyst. Mr.
Burwell has served as a portfolio manager of The Real Estate Investment Trust
Portfolio since its inception.
-17-
<PAGE>
Babak Zenouzi
Vice President/Portfolio Manager - The Real Estate Investment Trust Portfolio
Mr. Zenouzi holds a BS in Finance and Economics from Babson College in
Wellesley, Massachusetts, and an MS in Finance from Boston College. Prior to
joining Delaware in 1992, he was with The Boston Company where he held the
positions of assistant vice president, senior financial analyst, financial
analyst and portfolio accountant. Mr. Zenouzi has served as a portfolio manager
of The Real Estate Investment Trust Portfolio since its inception.
Steven R. Brody
Senior Vice President/Director of Real Estate Operations - Lincoln Investment
Management, Inc. Sub-adviser to The Real Estate Investment Trust Portfolio
Mr. Brody, a graduate of Miami (Ohio) University, joined Lincoln following 15
years in the commercial mortgage and real estate industry with another insurance
company, a commercial bank and a mortgage banking firm. He is responsible for
Lincoln's mortgage, real estate equity, private placement and mezzanine finance
activities, and the day-to-day operations of Lincoln Investment Management. Mr.
Brody has been active in the Mortgage Bankers Association of America and the
Urban Land Institute and is a Fellow of the Life Office Management Association.
He serves on the boards of Lincoln Investment Management, Indiana Institute of
Technology, and The Malpas Trust. Mr. Brody has served as a sub-adviser for The
Real Estate Investment Trust Portfolio since its inception.
John F. Robertson
Assistant Vice President/Real Estate Investments - Lincoln Investment
Management, Inc. Sub-adviser to The Real Estate Investment Trust Portfolio
Mr. Robertson holds a BA from Wabash College where he was graduated magna cum
laude and awarded membership into Phi Beta Kappa, and an MBA with emphasis in
finance and real estate from Indiana University. Prior to joining Lincoln
Investment Management, Inc.'s Real Estate Debt Group in 1993, he was a
consultant with Ernst & Young's Special Services Group where he specialized in
the valuation of all types of commercial real estate. Mr. Robertson has
completed numerous courses toward the MAI designation and is a candidate for the
CFA designation. Mr. Robertson has served as a sub-adviser for The Real Estate
Investment Trust Portfolio since its inception.
Lawrence T. Kissko
Vice President/Real Estate Equity - Lincoln Investment Management, Inc.
Sub-adviser to The Real Estate Investment Trust Portfolio
Mr. Kissko holds a BS degree in Management Science from Rensselaer Polytechnic
Institute and an MBA in Finance from State University of New York at Albany. He
is responsible for real estate asset management as well as the real estate
equity production effort of Lincoln Investment Management, Inc. Mr. Kissko
joined Lincoln in 1983, following a five-year association with Union Mutual Life
Insurance Company of Portland, Maine. Prior to that, he was associated with
Massachusetts Mutual Life Insurance Company. He is a Chartered Financial
Analyst. Mr. Kissko has served as a sub-adviser for The Real Estate Investment
Trust Portfolio since its inception.
-18-
<PAGE>
Gary A. Reed
Vice President/Senior Portfolio Manager - The Fixed Income Portfolio
Mr. Reed holds an AB in Economics from the University of Chicago and an MA in
Economics from Columbia University. He began his investment career in 1978 with
The Equitable Life Assurance Society, specializing in credit analysis. Prior to
joining Delaware Investment Advisers in 1989, Mr. Reed served as Vice President
and Manager of the Fixed Income Department at Irving Trust Company. Mr. Reed has
managed both discretionary and structured fixed-income portfolios and is
experienced with a broad range of high-grade fixed-income securities.
Additionally, he has developed investment programs for Decommissioning Trust
Funds and supervised their management. Mr. Reed has managed The Fixed Income
Portfolio since its inception.
Ian G. Sims
Director/Senior Portfolio Manager - Delaware International Advisers Ltd. (The
Global Fixed Income Portfolio and The International Fixed Income Portfolio)
Mr. Sims is a graduate of the University of Leicester and holds a postgraduate
degree in statistics from the University of Newcastle-Upon-Tyne. He joined
Delaware International Advisers Ltd. in 1990 as a senior international
fixed-income and currency manager. Mr. Sims began his investment career with the
Standard Life Assurance Co., and subsequently moved to the Royal Bank of Canada
Investment Management International Company, where he was an international
fixed-income manager. Prior to joining Delaware, he was a senior fixed-income
and currency portfolio manager with Hill Samuel Investment Advisers Ltd. Mr.
Sims has managed The Global Fixed Income Portfolio since its inception and will
manage The International Fixed Income Portfolio when it commences operations.
Paul A. Matlack
Vice President/Senior Portfolio Manager - The High-Yield Bond Portfolio
Mr. Matlack is a graduate of the University of Pennsylvania and received his MBA
in Finance from George Washington University. He began his career with Mellon
Bank as a credit specialist analyzing leveraged transactions in the chemical and
pharmaceutical industries. He subsequently served as a loan officer in Mellon's
Corporate Lending Division and in the Special Industries Group at Provident
National Bank, before joining Delaware in 1989. He is a Chartered Financial
Analyst. Mr. Matlack has served as a portfolio manager of The High-Yield Bond
Portfolio since its inception.
Gerald T. Nichols
Vice President/Senior Portfolio Manager - The High-Yield Bond Portfolio
Mr. Nichols is a graduate of the University of Kansas, where he received an MS
in Finance and a BS in Business Administration. Prior to joining Delaware in
1989, he was the investment officer for a merchant banking firm with interests
in the insurance and thrift industries. Mr. Nichols began his career in the
high-yield bond market with Waddell and Reed, Inc. in 1983 where, as a
high-yield credit analyst, he followed a variety of industries. He is a
Chartered Financial Analyst. Mr. Nichols has served as a portfolio manager of
The High-Yield Bond Portfolio since its inception.
-19-
<PAGE>
Maria E. Pollack
Assistant Vice President and Administrative Manager
Ms. Pollack joined the Delaware organization in 1982 and has served in a number
of senior administrative capacities. After attending Chestnut Hill College and
Temple University, she began her career as executive assistant to the Chairman
of the Delaware Group of funds and Delaware Investment Advisers. Prior to
becoming Administrative Manager for the Fund, she was responsible for
coordinating administrative activity for institutional shareholders in another
investment program maintained by Delaware Group.
ADMINISTRATIVE SERVICES
Delaware Service Company, Inc., an affiliate of Delaware Management Company,
Inc. and Delaware International Advisers Ltd., provides the Fund with
administrative, dividend disbursing, accounting and transfer agency services.
See "MANAGEMENT OF THE FUND."
SPECIAL REPORTS AND OTHER SERVICES
The Fund provides client shareholders with annual audited financial reports and
unaudited semi-annual financial reports. In addition, the investment advisers'
dedicated service staff may also provide client shareholders detailed monthly
appraisals of the status of their account and complete reviews of portfolio
assets, performance results and other pertinent data. Finally, the investment
advisers' service staff expects to conduct personal reviews no less than
annually with each shareholder, with interim telephone updates and other
communications, as appropriate. The Fund's dedicated telephone number
(1-800-231-8002) is available for shareholder inquiries during normal business
hours. The net asset values for the Portfolios are also available by using the
above "800" telephone number. Written correspondence should be addressed to:
Delaware Pooled Trust, Inc.
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
Attn: Client Services
From time to time, certain institutional separate accounts advised by Delaware
Investment Advisers or Delaware International may invest in the Fund's
Portfolios. The Portfolios may experience relatively large investments or
redemptions as a result of the institutional separate accounts either purchasing
or redeeming the Portfolios' shares. These transactions will affect the
Portfolios, since Portfolios that experience redemptions may be required to sell
portfolio securities, and Portfolios that receive additional cash will need to
invest it. While it is impossible to predict the overall impact of these
transactions over time, there could be adverse effects on portfolio management
to the extent the Portfolios may be required to sell securities or invest cash
at times when they would not otherwise do so. Delaware Investment Advisers and
Delaware International, representing the interests of the Portfolios, is
committed to minimizing the impact of such transactions on the Portfolios. In
addition, Delaware Investment Advisers and Delaware International, as adviser to
the institutional separate accounts, is also committed to minimizing the impact
on the Portfolios to the extent it is consistent with pursuing the investment
objectives of the institutional separate accounts.
If permitted under applicable law, in cases where a shareholder of any of the
Portfolios has an investment counseling relationship with Delaware Investment
Advisers or Delaware International, Delaware Investment
-20-
<PAGE>
Advisers or Delaware International may, at its discretion, reduce the
shareholder's investment counseling fees by an amount equal to the pro-rata
advisory fees paid by the respective Portfolio. This procedure would be utilized
with clients having contractual relationships based on total assets managed by
Delaware Investment Advisers or Delaware International to avoid situations where
excess advisory fees might be paid to Delaware Investment Advisers or Delaware
International. In no event will a client pay higher total advisory fees as a
result of the client's investment in a Portfolio.
See "SHAREHOLDER SERVICES."
CUSTODIAL SERVICES
The Chase Manhattan Bank, 4 Chase Metrotech Center, Brooklyn, NY 11245 serves as
custodian for The Global Fixed Income, The International Equity, The Labor
Select International Equity, The Real Estate Investment Trust, The High-Yield
Bond, The International Fixed Income and The Defensive Equity Utility
Portfolios. Bankers Trust Company, One Bankers Trust Plaza, New York, NY 10006
serves as custodian for The Defensive Equity, The Aggressive Growth, The Fixed
Income, The Limited-Term Maturity and The Defensive Equity Small/Mid-Cap
Portfolios.
HOW TO INVEST
Shares of each Portfolio are offered directly to institutions and high net-worth
individuals investors at net asset value with no sales commissions or 12b-1
charges. The minimum initial investment for a Portfolio of the Fund is
$1,000,000. There is no minimum for subsequent investments in a Portfolio where
the minimum initial investment has been satisfied. In addition, eligible
investors in The International Equity Portfolio may, under certain
circumstances, be required to make their investments in the Portfolio pursuant
to instructions of the Fund, by a contribution of securities in-kind to the
Portfolio or by following another procedure that will have the same economic
effect as an in-kind purchase; in either case, such investors will be required
to pay the brokerage or other transaction costs arising in connection with
acquiring the subject securities. At such time as the Fund receives appropriate
regulatory approvals to do so in the future, under certain circumstances, the
Fund may, at its sole discretion, allow eligible investors who have an existing
investment counseling relationship with Delaware Investment Advisers or Delaware
International to make investments in any of the Fund's Portfolios by a
contribution of securities in-kind to such Portfolios. See "PURCHASE OF SHARES."
HOW TO REDEEM
Shares of each Portfolio may be redeemed at any time, without cost, at the net
asset value per share of the Portfolio next determined after receipt of the
redemption request. The redemption price may be more or less than the purchase
price and the redemption may be in cash or, under certain circumstances,
in-kind. If a shareholder reduces their investment in a Portfolio below
$500,000, their investment in that Portfolio may be subject to redemption. In
addition, investors in The International Equity, The Labor Select International
Equity, The Global Fixed Income and The International Fixed Income Portfolios
may, under certain circumstances, be required to accept their redemption,
pursuant to instructions from the Fund, in-kind in portfolio securities or, at
the election of the investor, by following another procedure that will have the
same economic effect as an in-kind redemption; in either case, such investors
will be required to pay the brokerage or other transaction costs arising in
connection with the sale of the subject securities. See "REDEMPTION OF SHARES."
-21-
<PAGE>
RISK FACTORS
An investment in the Fund entails certain risks and considerations about which
an investor should be aware.
Because both The Aggressive Growth Portfolio (which seeks long-term capital
growth) and The Defensive Equity Small/Mid-Cap Portfolio (which seeks to
maximize long-term total return) invest primarily in small- to medium-sized
companies, the Portfolios' investments are likely to involve a higher degree of
liquidity risk and price volatility than if investments were made in larger
capitalization securities. The Aggressive Growth Portfolio and The Real Estate
Investment Trust Portfolio also may, under certain circumstances, use certain
futures contracts and options on futures contracts, as well as options on stock.
The International Equity, The Labor Select International Equity, The Global
Fixed Income and The International Fixed Income Portfolios will invest in
securities of foreign issuers which normally are denominated in foreign
currencies and may hold foreign currency directly. In addition, The Defensive
Equity Utility, The Real Estate Investment Trust and The High-Yield Bond
Portfolios may invest up to 10% of their total assets in foreign securities.
Consequently, these Portfolios may be affected by changes in currency rates and
exchange control regulations and may incur costs in connection with conversions
between currencies. To hedge this currency risk associated with investments in
non-U.S. dollar denominated securities, a Portfolio may invest in forward
foreign currency contracts. Those activities pose special risks which do not
typically arise in connection with investments in U.S. securities. In addition,
The Defensive Equity Utility, The Real Estate Investment Trust and The
International Fixed Income Portfolios may engage in foreign currency options and
futures transactions. For a discussion of the risks associated with these
instruments see "RISKS OF TRANSACTIONS IN OPTIONS, FUTURES AND FORWARD
CONTRACTS."
The foreign securities in which The International Equity, The Labor Select
International Equity, The Global Fixed Income and The International Fixed Income
Portfolios (and The Defensive Equity Utility, The Real Estate Investment Trust
and The High-Yield Bond Portfolios, up to 10% of their total assets) may invest
from time to time may be listed primarily on foreign exchanges which trade on
days when the New York Stock Exchange is closed (such as Saturday). As a result,
the net asset value of the Portfolios may be significantly affected by such
trading on days when shareholders will have no access to the Portfolios. See
"VALUATION OF SHARES."
The Real Estate Investment Trust Portfolio concentrates its investments in the
real estate industry, and The Defensive Equity Utility Portfolio concentrates
its investments in the utility industry. As a consequence, the net asset values
of the Portfolios can be expected to fluctuate in light of the factors affecting
those industries, and may fluctuate more widely than a portfolio that invests in
a broader range of industries. The Defensive Equity Utility and The Real Estate
Investment Trust Portfolios may be more susceptible to any single economic,
political or regulatory occurrence affecting the utility or real estate
industry, respectively.
The High-Yield Bond Portfolio invests in lower rated fixed-income securities,
which, while generally having higher yields, are subject to factors, such as
reduced creditworthiness of issuers, increased risks of default and a more
limited and less liquid secondary market than higher rated securities. These
securities are subject to greater volatility and risk of loss of income and
principal than are higher rated securities. See "INVESTMENT OBJECTIVES, POLICIES
AND RISK CONSIDERATIONS" and "ADDITIONAL INVESTMENT INFORMATION--HIGH-YIELD,
HIGH RISK SECURITIES."
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The Fixed Income, The Limited-Term Maturity, The Global Fixed Income and The
International Fixed Income Portfolios will normally experience annual portfolio
turnover rates exceeding 100%, but those rates are not expected to exceed 250%
with respect to The Fixed Income Portfolio and 200% with respect to The Limited-
Term Maturity, The Global Fixed Income and The International Fixed Income
Portfolios. Such relatively high portfolio turnover rates involve
correspondingly higher brokerage commissions, for equity transactions, and other
transaction costs and may affect the taxes payable by the Portfolios'
shareholders that are subject to federal income tax. See "INVESTMENT OBJECTIVES,
POLICIES AND RISK CONSIDERATIONS," "PORTFOLIO TRANSACTIONS" and "TAXES."
The Fixed Income, The Limited-Term Maturity and The Global Fixed Income
Portfolios may invest in collateralized mortgage obligations and those
Portfolios, as well as The Real Estate Investment Trust Portfolio, may invest in
mortgage-backed securities. See "ADDITIONAL INVESTMENT INFORMATION--
MORTGAGE-BACKED SECURITIES."
The Real Estate Investment Trust Portfolio, by investing primarily in securities
of real estate investment trusts, is subject to interest rate risk, in that as
interest rates decline, the value of the Portfolio's investment in real estate
investment trusts can be expected to rise. Conversely, when interest rates rise,
the value of the Portfolio's investments in real estate investment trusts
holding fixed rate obligations can be expected to decline. See "ADDITIONAL
INVESTMENT INFORMATION--REITS."
Each of the 12 Portfolios may lend its portfolio securities, may invest in
repurchase agreements and may purchase securities on a when-issued basis.
While The Defensive Equity Utility Portfolio, The Real Estate Investment Trust
Portfolio, The Global Fixed Income Portfolio and The International Fixed Income
Portfolio intend to seek to qualify as a "diversified" investment company under
provisions of Subchapter M of the Internal Revenue Code, they will not be
diversified under the 1940 Act. Thus, while at least 50% of each Portfolio's
total assets will be represented by cash, cash items, certain qualifying
securities and other securities limited in respect of any one issuer to an
amount not greater than 5% of the Portfolio's total assets, it will not satisfy
the 1940 Act requirement in this respect, which applies that test to 75% of the
Portfolio's assets. A nondiversified portfolio is believed to be subject to
greater risk because adverse effects on the portfolio's security holdings may
affect a larger portion of the overall assets.
Each of the investment strategies identified above involves special risks which
are described under "INVESTMENT OBJECTIVES, POLICIES AND RISK CONSIDERATIONS"
and "ADDITIONAL INVESTMENT INFORMATION" in this Prospectus and "INVESTMENT
POLICIES, PORTFOLIO TECHNIQUES AND RISK CONSIDERATIONS" in the Statement of
Additional Information.
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INVESTMENT OBJECTIVES, POLICIES
AND RISK CONSIDERATIONS
The investment objective of each Portfolio of the Fund is described below,
together with the policies each Portfolio employs in its efforts to achieve its
objective. There is no assurance that a Portfolio will attain its objective. The
investment objective of each Portfolio is fundamental and may only be changed by
a majority approval of that Portfolio's shareholders. Unless otherwise noted,
the investment policies described below are not fundamental policies and may be
changed without shareholder approval.
THE DEFENSIVE EQUITY PORTFOLIO
The Defensive Equity Portfolio's investment objective is to realize maximum
long-term total return, consistent with reasonable risk. The Portfolio seeks to
achieve this objective by investing in equity securities of companies which, at
the time of purchase, have dividend yields above the current yield of the
Standard & Poor's 500 Stock Index ("S&P 500 Index") and which, in the investment
adviser's opinion, offer capital gains potential as well.
In selecting Portfolio securities, the investment adviser places an emphasis on
strong relative performance in falling markets. The Portfolio invests primarily
in equity securities of U.S. companies, although from time to time the Portfolio
will include sponsored or unsponsored American Depository Receipts actively
traded in the United States. Under normal market conditions, at least 65% of the
Portfolio's total assets will be invested in equity securities. Equity
securities for this purpose include, but are not limited to, common stocks,
securities convertible into common stocks and securities having common stock
characteristics, such as rights and warrants to purchase common stocks. The
Portfolio also may purchase preferred stock. The Portfolio may hold cash or
invest in short-term debt securities and other money market instruments when, in
the investment adviser's opinion, such holdings are prudent given then
prevailing market conditions. Except when the investment adviser believes a
temporary defensive approach is appropriate, the Portfolio, normally, will not
hold more than 5% of its total assets in cash or such short-term investments.
All these short-term investments will be of the highest quality as determined by
a nationally-recognized statistical rating organization (e.g., AAA by S&P or Aaa
by Moody's) or be of comparable quality as determined by the investment adviser.
Appendix A--Ratings to this Prospectus describes the ratings of S&P and Moody's.
See "ADDITIONAL INVESTMENT INFORMATION" for further details concerning these and
other investment policies.
The investment adviser seeks to invest in high-yielding equity securities and
believes that, although capital gains are important, the dividend return
component will be a significant portion of the expected total return. The
investment adviser believes that a diversified portfolio of such high-yielding
stocks will outperform the market over the long-term, as well as preserve
principal in difficult market environments. Companies considered for purchase
generally will exhibit the following characteristics at the time of purchase: 1)
a dividend yield greater than the prevailing yield of the S&P 500 Index; 2) a
price-to-book ratio lower than the average large capitalization company; and 3)
a below-market price-to-earnings ratio.
The investment adviser takes a long-term investment approach by placing a strong
emphasis on its ability to determine attractive values and, generally, does not
seek to respond to short-term changes in the market. It is anticipated that the
annual turnover rate of the Portfolio will not exceed 100% under normal
circumstances.
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The Portfolio will maintain diversity among economic sectors and industries and
will not invest 25% or more of its total assets in the stocks of issuers in any
one industry, nor, ordinarily, more than 5%, at the time of purchase, of any one
company.
THE AGGRESSIVE GROWTH PORTFOLIO
The Aggressive Growth Portfolio's investment goal is to realize maximum
long-term capital growth. The Portfolio seeks to attain this objective by
investing in equity securities of smaller and medium-sized companies which, in
the opinion of the investment adviser, present, at the time of purchase,
significant long-term growth potential. In pursuing this objective, current
income is expected to be incidental.
The Portfolio invests primarily in growth-oriented common stocks of small- to
medium-sized domestic corporations. Such companies, in the investment adviser's
view, generally are those companies that have total market capitalization
between $100 million and $2.5 billion at the time of purchase. The Portfolio may
invest in securities issued by companies having a capitalization outside that
range when, in the investment adviser's opinion, such a company exhibits the
same characteristics and growth potential as companies within the range. Equity
securities for this purpose include, but are not to be limited to, common
stocks, securities convertible into common stocks and securities having common
stock characteristics, such as rights and warrants to purchase common stocks.
The Portfolio also may purchase preferred stock. Although the investment adviser
does not pursue a market timing approach to investing, the Portfolio may hold
cash or invest in short-term debt securities or other money market instruments
when, in the investment adviser's opinion, such holdings are prudent given the
prevailing market conditions. Except when the investment adviser believes a
temporary defensive approach is appropriate, the Portfolio, normally, will not
hold more than 10% of its total assets in cash or such short-term investments,
but, on occasion, may hold as much as 30% of its total assets in cash or such
short-term investments. All such holdings will be of the highest quality as
determined by a nationally-recognized statistical rating organization (e.g., AAA
by S&P or Aaa by Moody's) or be of comparable quality as determined by the
investment adviser. See "ADDITIONAL INVESTMENT INFORMATION."
The Portfolio may also, to a limited extent, enter into futures contracts on
stocks, purchase or sell options on such futures, engage in certain options
transactions on stocks and enter into closing transactions with respect to those
activities. However, these activities will not be entered into for speculative
purposes, but rather to facilitate the ability quickly to deploy into the stock
market the Portfolio's positions in cash, short-term debt securities and other
money market instruments, at times when the Portfolio's assets are not fully
invested in equity securities. Such positions will generally be eliminated when
it becomes possible to invest in securities that are appropriate for the
Portfolio. See "ADDITIONAL INVESTMENT INFORMATION--FUTURES CONTRACTS AND OPTIONS
ON FUTURES CONTRACTS" and "OPTIONS" for a further discussion of these investment
policies.
The Portfolio will not invest 25% or more of its total assets in securities of
companies which conduct their principal business activities in specific
industries. The Portfolio expects to invest in small- to medium-sized companies
that have been in existence for at least three years (including the operation of
any predecessor company) but which have the potential, in the investment
adviser's judgment, for significant long-term capital growth. The investment
adviser assesses economic, industry, market and company developments to select
investments in promising emerging growth companies that are expected to benefit
from new technology, new
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products or services, research discoveries, rejuvenated management and the like.
However, the Portfolio may invest in any equity security which, in the
investment adviser's judgment, provides the potential for significant capital
appreciation.
The investment adviser believes that consistent earnings per share growth is
just as important as high absolute growth. Because the Portfolio seeks long-term
capital growth by investing primarily in small- to medium-sized companies, its
investments are likely to involve a higher degree of liquidity risk and price
volatility than larger capitalization securities.
The investment adviser does not normally intend to respond to short-term market
fluctuations or to acquire securities for the purpose of short-term trading;
however, the investment adviser may take advantage of short-term opportunities
that are consistent with its investment objective. It is anticipated that the
annual turnover rate of the Portfolio, under normal circumstances, will not
exceed 100%.
THE INTERNATIONAL EQUITY PORTFOLIO
The investment objective of The International Equity Portfolio is to achieve
maximum long-term total return. The Portfolio seeks to achieve its objective by
investing primarily in equity securities of issuers organized or having a
majority of their assets or deriving a majority of their operating income
outside the United States, and which, in the investment adviser's opinion, are
undervalued at the time of purchase based on fundamental analysis employed by
the investment adviser.
In selecting portfolio securities the investment adviser emphasizes strong
performance in falling markets relative to other mutual funds focusing on
international equity investments. Equity securities in which the Portfolio may
invest include, but are not limited to, common stocks and securities convertible
into common stock and securities having common stock characteristics, such as
rights and warrants to purchase common stocks. Additionally, the Portfolio may
from time to time, hold its assets in cash (which may be U.S. dollars or foreign
currency, including European Currency Units ("ECU")) or may invest in short-term
debt securities or other money market instruments. Except when the investment
adviser believes a temporary defensive approach is appropriate, the Portfolio
generally will not hold more than 5% of its assets in cash or such short-term
instruments. All such holdings will be of the highest quality as determined by a
nationally-recognized statistical rating organization (e.g., AAA by S&P or Aaa
by Moody's) or of comparable quality as determined by the Portfolio's investment
adviser.
The Portfolio may hold up to 15% of its assets in foreign fixed-income
securities when, in the investment adviser's opinion, equity securities are
overvalued and such fixed-income securities present an opportunity for returns,
over an 18-month period, greater than those available through investments in
equity securities or the short-term investments described above. The foreign
fixed-income securities in which the Portfolio may invest may be U.S. dollar or
foreign currency denominated, including ECU, and must have a government or
government agency backed credit status which would include, but not be limited
to, supranational entities. A supranational entity is an entity established or
financially supported by the national governments of one or more countries to
promote development or reconstruction. They include: The World Bank, European
Investment Bank, Asian Development Bank, European Economic Community and the
Inter-American Development Bank. Such fixed-income securities will be, at the
time of purchase, of the highest quality (e.g.,
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<PAGE>
AAA by S&P or Aaa by Moody's) or of comparable quality as determined by the
Portfolio's investment adviser. See "ADDITIONAL INVESTMENT INFORMATION" for a
further description of these and other investment policies.
The investment adviser's approach in selecting investments for the Portfolio is
oriented to individual stock selection and is value driven. In selecting stocks
for the Portfolio, the investment adviser identifies those stocks which it
believes will provide the highest total return over a market cycle taking into
consideration the movement in the price of the individual security, and the
impact of currency adjustment on a United States domiciled, dollar-based
investor. The investment adviser conducts extensive fundamental research on a
global basis, and it is through this research effort that securities which, in
the investment adviser's opinion, have the potential for maximum long-term total
return are identified. The center of the fundamental research effort is a value
oriented dividend discount methodology toward individual securities and market
analysis which isolates value across country boundaries. This approach focuses
on future anticipated dividends and discounts the value of those dividends back
to what they would be worth if they were being paid today. Comparisons of the
values of different possible investments are then made. The investment adviser's
management approach is long-term in orientation, but it is expected that the
annual turnover rate of the Portfolio will not exceed 150% under normal
circumstances. See "PORTFOLIO TRANSACTIONS" and "TAXES."
While the Portfolio is not subject to any specific geographic diversification
requirements, it will, under normal conditions, invest at least 65% of its total
assets in equity securities of issuers organized or having a majority of their
assets or deriving a majority of their operating income in at least three
different countries outside the United States. Investments will be made mainly
in marketable securities of companies located in developed countries, but the
stock markets of developing countries are rapidly becoming accessible and the
Portfolio may hold securities of issuers located in any developing country
determined to be appropriate by the investment adviser. Investments in
obligations of foreign issuers involve somewhat different investment risks than
those affecting obligations of United States issuers. The risks posed by
investments in emerging or developing countries frequently are greater. See
"ADDITIONAL INVESTMENT INFORMATION--FOREIGN INVESTMENT INFORMATION."
Currency considerations carry a special risk for a portfolio of international
securities, and the investment adviser employs a purchasing power parity
approach to evaluate currency risk. In this regard, the Portfolio will actively
carry on hedging activities, and may invest in forward foreign currency exchange
contracts to hedge currency risks associated with the purchase of individual
securities denominated in a particular currency. See "ADDITIONAL INVESTMENT
INFORMATION--FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS."
THE DEFENSIVE EQUITY SMALL/MID-CAP PORTFOLIO
The Defensive Equity Small/Mid-Cap Portfolio's investment objective is to
realize maximum long-term total return. The Portfolio seeks to achieve this
objective by investing primarily in equity securities of companies which, at the
time of purchase, have dividend yields above the current yield of the S&P 500
Index, have a market capitalization below that of the third decile of companies
registered on the New York Stock Exchange, and, in the investment adviser's
opinion, offer capital gains potential as well.
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<PAGE>
In selecting Portfolio securities, the investment adviser places an emphasis on
strong relative performance in falling markets. The Portfolio invests primarily
in equity securities of U.S. companies, although from time to time the Portfolio
will include sponsored or unsponsored American Depository Receipts actively
traded in the United States. Under normal market conditions, at least 65% of the
value of the Portfolio's total assets will be invested in equity securities of
companies that currently have a total market capitalization of less than $3
billion. Equity securities for this purpose include common stocks, securities
convertible into common stocks and securities having common stock
characteristics, such as rights and warrants to purchase common stocks. The
Portfolio also may purchase preferred stock, and certain other non-traditional
equity securities. See "ADDITIONAL INVESTMENT INFORMATION--CONVERTIBLE, DEBT AND
NON-TRADITIONAL EQUITY SECURITIES" and "AMERICAN DEPOSITORY RECEIPTS" for
further details concerning these and other investment policies.
The Portfolio may hold cash or invest in short-term debt securities and other
money market instruments when, in the investment adviser's opinion, such
holdings are prudent given then prevailing market conditions. Except when the
investment adviser believes a temporary defensive approach is appropriate, the
Portfolio, normally, will not hold more than 5% of its total assets in cash or
such short-term investments. All these short-term investments will be of the
highest quality as determined by a nationally-recognized statistical rating
organization (e.g., AAA by S&P or Aaa by Moody's) or be of comparable quality as
determined by the investment adviser. See "ADDITIONAL INVESTMENT INFORMATION"
and "APPENDIX A-RATINGS" for further details concerning these and other
investment policies.
The investment adviser seeks to invest in high-yielding equity securities of
small- and mid-cap companies and believes that, although capital gains are
important, the dividend return component will be a significant portion of the
expected total return. Further, the investment adviser believes that, although
more volatile, small- and mid-cap companies will provide higher returns over the
long-term. In the investment adviser's opinion, a diversified portfolio of such
high-yielding, small- and mid-cap companies will outperform the market over the
long-term, as well as preserve principal in difficult market environments.
Companies considered for purchase generally will exhibit the following
characteristics at the time of purchase: 1) a dividend yield greater than the
prevailing yield of the S&P 500 Index; and 2) market capitalization below that
of the third decile of companies registered on the New York Stock Exchange. Such
companies, in the investment adviser's view, generally are those companies that
currently have a total market capitalization of less than $3 billion at the time
of purchase.
The Portfolio expects to invest in companies in the capitalization range
described above, and that have been in existence for at least three years
(including the operation of any predecessor company) but which have the
potential, in the investment adviser's judgment, for providing long-term total
return. Because the Portfolio seeks long-term total return by investing
primarily in small- to mid-cap companies, its investments are likely to involve
a higher degree of liquidity risk and price volatility than investments in
larger capitalization securities.
The investment adviser takes a long-term investment approach by placing a strong
emphasis on its ability to determine attractive values and, generally, does not
seek to respond to short-term changes in the market. It is anticipated that the
annual turnover rate of the Portfolio will generally not exceed 100% under
normal circumstances. The Portfolio will maintain diversity among economic
sectors and industries and will not invest 25% or more of its total assets in
the stocks of issuers in any one industry, nor, ordinarily, more than 5%, at the
time of purchase, of any one company.
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THE DEFENSIVE EQUITY UTILITY PORTFOLIO
The Defensive Equity Utility Portfolio's investment objective is to realize
maximum long-term total return. The Portfolio seeks to achieve this objective by
investing primarily in equity securities of utility companies which, at the time
of purchase, have dividend yields above the current yield of the S&P 500 Index
and which, in the investment adviser's opinion, offer capital gains potential as
well. The Portfolio will operate as a nondiversified fund as defined by the 1940
Act.
In selecting Portfolio securities, the investment adviser places an emphasis on
strong relative performance in falling markets. The Portfolio invests primarily
in equity securities of U.S. utility companies, although from time to time the
Portfolio will include sponsored or unsponsored American Depository Receipts
actively traded in the United States. Under normal market conditions, at least
65% of the value of the Portfolio's total assets will be invested in equity
securities of utility companies. The Portfolio may invest in the equity
securities of electric utilities, and other regulated utilities including, but
not limited to, natural gas pipelines, water utilities and telephone utilities.
The Portfolio may also invest in the equity securities of utility holding
companies. Equity securities for this purpose include common stocks, securities
convertible into common stocks and securities having common stock
characteristics, such as rights and warrants to purchase common stocks. The
Portfolio also may purchase preferred stock and convertible securities. See
"ADDITIONAL INVESTMENT INFORMATION--CONVERTIBLE, DEBT AND NON-TRADITIONAL EQUITY
SECURITIES" and "AMERICAN DEPOSITORY RECEIPTS" for a further discussion of these
investment policies.
The Portfolio may also invest up to 35% of its total assets in the debt
securities of utility companies. Generally, these debt securities will be
investment grade quality as determined by a nationally-recognized statistical
rating organization (e.g., BBB or better by S&P or Baa or better by Moody's) or
be of comparable quality as determined by the investment adviser. The Portfolio
may invest up to 10% of its assets in fixed-income securities rated below
investment grade, including foreign government securities as discussed below.
The Portfolio may also invest up to 10% of its assets in securities of foreign
issuers. See "ADDITIONAL INVESTMENT INFORMATION--FOREIGN INVESTMENT INFORMATION"
and "HIGH-YIELD, HIGH RISK SECURITIES" for a further discussion of these
investment policies.
In connection with the Portfolio's ability to invest up to 10% of its total
assets in the securities of foreign issuers, currency considerations may present
risks if the Portfolio holds international securities. In this regard, the
Portfolio may carry on hedging activities, and may invest in forward foreign
currency exchange contracts to hedge currency risks associated with the purchase
of individual securities denominated in a particular currency. See "ADDITIONAL
INVESTMENT INFORMATION--FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS."
The Portfolio may hold cash or invest in short-term debt securities and other
money market instruments when, in the investment adviser's opinion, such
holdings are prudent given then prevailing market conditions. Except when the
investment adviser believes a temporary defensive approach is appropriate, the
Portfolio, normally, will not hold more than 5% of its total assets in cash or
such short-term investments. All these short-term investments will be of the
highest quality as determined by a nationally-recognized statistical rating
organization (e.g., AAA by S&P or Aaa by Moody's) or be of comparable quality as
determined by the investment adviser. See "ADDITIONAL INVESTMENT INFORMATION"
for further details concerning these and other investment policies.
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<PAGE>
The investment adviser seeks to invest primarily in high-yielding equity
securities of utility companies and believes that, although capital gains are
important, the dividend return component will be a significant portion of the
expected total return. Further, the investment adviser believes that utility
companies will provide higher income and competitive long-term total returns.
The investment adviser believes that a diversified portfolio of such
high-yielding utility companies will provide more consistent returns than the
broad market, as well as preserve principal in difficult market environments.
Equity securities of companies considered for purchase generally will exhibit a
dividend yield greater than the prevailing yield of the S&P 500 Index.
The investment adviser takes a long-term investment approach by placing a strong
emphasis on its ability to determine attractive values and, generally, does not
seek to respond to short-term changes in the market. It is anticipated that the
annual turnover rate of the Portfolio will generally not exceed 100% under
normal circumstances. The Portfolio will not maintain diversity among economic
sectors and industries due to the specific nature of its investment objective,
but will not invest, ordinarily, more than 5% of its total assets, at the time
of purchase, in the securities of any one company.
THE LABOR SELECT INTERNATIONAL EQUITY PORTFOLIO
The investment objective of The Labor Select International Equity Portfolio is
to achieve maximum long-term total return. The Portfolio seeks to achieve its
objective by investing primarily in equity securities of issuers organized or
having a majority of their assets or deriving a majority of their operating
income outside of the United States, and which, in the investment adviser's
opinion, are undervalued at the time of purchase based on rigorous fundamental
analysis employed by the investment adviser. In addition to following these
quantitative guidelines, the Portfolio's investment adviser will select
securities of issuers that present certain characteristics that are compatible
or operate in accordance with certain investment policies or restrictions
followed by organized labor.
In selecting portfolio securities, the investment adviser emphasizes strong
performance in falling markets relative to other mutual funds focusing on
international equity investments. Equity securities in which the Portfolio may
invest include common stocks and securities convertible into common stock and
securities having common stock characteristics, such as rights and warrants to
purchase common stocks. Additionally, the Portfolio may, from time to time, hold
its assets in cash (which may be U.S. dollars or foreign currency, including the
ECU) or may invest in short-term debt securities or other money market
instruments. Except when the investment adviser believes a temporary defensive
approach is appropriate, the Portfolio generally will not hold more than 5% of
its assets in cash or such short-term instruments. All such holdings will be of
the highest quality as determined by a nationally-recognized statistical rating
organization (e.g., AAA by S&P or Aaa by Moody's) or be of comparable quality as
determined by the Portfolio's investment adviser.
The Portfolio may hold up to 15% of its assets in foreign fixed-income
securities when, in the investment adviser's opinion, equity securities are
overvalued and such fixed-income securities present an opportunity for returns
greater than those available through investments in equity securities or the
short-term investments described above. The foreign fixed-income securities in
which the Portfolio may invest may be U.S. dollar or foreign currency
denominated, including the ECU, and must have a government or government agency
backed credit status which would include, but not be limited to, supranational
entities. A supranational entity is an entity established or financially
supported by the national governments of one or more countries to
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promote development or reconstruction. They include: the World Bank, European
Investment Bank, Asian Development Bank, European Economic Community and the
Inter-American Development Bank. Such fixed-income securities will be, at the
time of purchase, of the highest quality (e.g., AAA by S&P or Aaa by Moody's) or
be of comparable quality as determined by the Portfolio's investment adviser.
See "ADDITIONAL INVESTMENT INFORMATION" for a further description of these and
other investment policies.
The investment adviser's approach in selecting investments for the Portfolio is
primarily quantitatively oriented to individual stock selection and is value
driven. In selecting stocks for the Portfolio, the investment adviser identifies
those stocks which it believes will provide the highest total return over a
market cycle, taking into consideration the movement in the price of the
individual security, the impact of currency adjustment on a United States
domiciled, dollar-based investor and the investment guidelines described below.
The investment adviser conducts extensive fundamental research on a global
basis, and it is through this research effort that securities which, in the
investment adviser's opinion, have the potential for maximum long-term total
return are identified. The center of the fundamental research effort is a value
oriented dividend discount methodology toward individual securities and market
analysis which isolates value across country boundaries. This approach focuses
on future anticipated dividends and discounts the value of those dividends back
to what they would be worth if they were being paid today. Comparisons of the
values of different possible investments are then made.
Supplementing the adviser's quantitative approach to stock selection, the
investment adviser will, in managing the Portfolio, also attempt to follow
certain qualitative investment guidelines which seek to identify issuers that
present certain characteristics that are compatible or operate in accordance
with certain investment policies or restrictions followed by organized labor.
These qualitative investment guidelines include country screens, as well as
additional issuer-specific criteria. The country screens require that the
securities are of issuers domiciled in those countries that are included in the
Morgan Stanley Capital International Europe, Australia and Far East ("EAFE")
Index and Canada, as long as the country does not appear on any list of
prohibited or boycotted nations of the AFL-CIO or certain other labor
organizations. Nations that are presently in the EAFE Index include Japan, the
United Kingdom, Germany, France and The Netherlands. In addition, the Portfolio
will tend to favor investment in issuers located in those countries that the
investment adviser perceives as enjoying favorable relations with the United
States. Pursuant to the Portfolio's issuer-specific criteria, the Portfolio will
(1) invest only in companies which are publicly traded; (2) focus on companies
that show, in the investment adviser's opinion, evidence of pursuing fair labor
practices; (3) focus on companies that have not been subject to penalties or
tariffs imposed by applicable U.S. government agencies for unfair trade
practices within the previous two years; and (4) not invest in initial public
offerings. In the opinion of the Portfolio's investment adviser, evidence of
pursuing fair labor practices would include whether a company has demonstrated
patterns of non-compliance with applicable labor or health and safety laws. The
qualitative labor sensitivity factors that the Portfolio's investment adviser
will utilize in selecting securities will vary over time, and will be solely in
the adviser's discretion.
While the Portfolio is not subject to any specific geographic diversification
requirements, it will, under normal conditions, invest at least 65% of its total
assets in equity securities of issuers organized or having a majority of their
assets or deriving a majority of their operating income in at least three
different countries outside the United States, and which comply with the
parameters described above. Investments in obligations of foreign issuers
involve somewhat different investment risks than those affecting obligations of
United States issuers. The risks posed by investments in foreign countries
frequently are greater. See "ADDITIONAL INVESTMENT INFORMATION--FOREIGN
INVESTMENT INFORMATION."
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The investment adviser does not normally intend to respond to short-term market
fluctuations or to acquire securities for the purpose of short-term trading;
however, the investment adviser may take advantage of short-term opportunities
that are consistent with its investment objective. It is anticipated that the
annual turnover rate of the Portfolio, under normal circumstances, will
generally not exceed 100%.
Currency considerations carry a special risk for a portfolio of international
securities, and the investment adviser employs a purchasing power parity
approach to evaluate currency risk. In this regard, the Portfolio may actively
carry on hedging activities, and may invest in forward foreign currency exchange
contracts to hedge currency risks associated with the purchase of individual
securities denominated in a particular currency. See "ADDITIONAL INVESTMENT
INFORMATION--FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS."
THE REAL ESTATE INVESTMENT TRUST PORTFOLIO
The investment objective of The Real Estate Investment Trust Portfolio is to
achieve maximum long-term total return. Capital appreciation is a secondary
objective. The Portfolio seeks to achieve its objectives by investing in
securities of companies principally engaged in the real estate industry. Under
normal circumstances, at least 65% of the Portfolio's total assets will be
invested in equity securities of real estate investment trusts ("REITs"). The
Portfolio will operate as a nondiversified fund as defined by the 1940 Act.
The Portfolio invests in equity securities of REITs and other real estate
industry operating companies ("REOCs"). For purposes of the Portfolio's
investments, a REOC is a company that derives at least 50% of its gross revenues
or net profits from either (1) the ownership, development, construction,
financing, management or sale of commercial, industrial or residential real
estate, or (2) products or services related to the real estate industry, such as
building supplies or mortgage servicing. The Portfolio's investments in equity
securities of REITs and REOCs may include, from time to time, sponsored or
unsponsored American Depository Receipts actively traded in the United States.
Equity securities for this purpose include common stocks, securities convertible
into common stocks and securities having common stock characteristics, such as
rights and warrants to purchase common stocks. The Portfolio may also purchase
preferred stock. The Portfolio may invest up to 10% of its assets in foreign
securities, and in convertible securities. See "ADDITIONAL INVESTMENT
INFORMATION--FOREIGN INVESTMENT INFORMATION," "AMERICAN DEPOSITORY RECEIPTS" and
"CONVERTIBLE, DEBT AND NON-TRADITIONAL EQUITY SECURITIES" for further discussion
of these investment policies. The Portfolio may also invest in mortgage-backed
securities. See "MORTGAGE-BACKED SECURITIES" for more detailed information about
this investment policy.
The Portfolio may hold cash or invest in short-term debt securities and other
money market instruments when, in the investment adviser's opinion, such
holdings are prudent given then prevailing market conditions. Except when the
investment adviser believes a temporary defensive approach is appropriate, the
Portfolio will not hold more than 5% of its total assets in cash or such
short-term investments. All these short-term investments will be of the highest
quality as determined by a nationally-recognized statistical rating organization
(e.g. AAA by S&P or Aaa by Moody's) or be of comparable quality as determined by
the Portfolio's investment adviser. See "ADDITIONAL INVESTMENT INFORMATION" for
further details concerning these and other investment policies.
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Although the Portfolio does not invest directly in real estate, the Portfolio
does invest primarily in REITs, and may purchase equity securities of REOCs.
Thus, because the Portfolio concentrates its investments in the real estate
industry, an investment in the Portfolio may be subject to certain risks
associated with direct ownership of real estate and with the real estate
industry in general. These risks include, among others: possible declines in the
value of real estate; risks related to general and local economic conditions;
possible lack of availability of mortgage funds; overbuilding; extended
vacancies of properties; increases in competition; property taxes and operating
expenses; changes in zoning laws; costs resulting from the clean-up of, and
liability to third parties resulting from, environmental problems; casualty for
condemnation losses, uninsured damages from floods, earthquakes or other natural
disasters; limitations on and variations in rents; and changes in interest
rates.
The Portfolio may invest without limitation in shares of REITs. REITs are pooled
investment vehicles which invest primarily in income-producing real estate or
real estate related loans or interests. REITs are generally classified as equity
REITs, mortgage REITs or a combination of equity and mortgage REITs. Equity
REITs invest the majority of their assets directly in real property and derive
income primarily from the collection of rents. Equity REITs can also realize
capital gains by selling properties that have appreciated in value. Mortgage
REITs invest the majority of their assets in real estate mortgages and derive
income from the collection of interest payments. Like investment companies such
as the Fund, REITs are not taxed on income distributed to shareholders provided
they comply with several requirements in the Internal Revenue Code of 1986, as
amended (the "Code"). REITs are subject to substantial cash flow dependency,
defaults by borrowers, self-liquidation, and the risk of failing to qualify for
tax-free pass-through of income under the Code, and/or to maintain exemptions
from the 1940 Act. By investing in REITs indirectly through the Portfolio, a
shareholder bears not only a proportionate share of the expenses of the
Portfolio, but also, indirectly, similar expenses of the REITs. For a further
discussion of the risks presented by investing in REITs, see "ADDITIONAL
INVESTMENT INFORMATION--REITS."
While the Portfolio does not intend to invest directly in real estate, the
Portfolio could, under certain circumstances, own real estate directly as a
result of a default on securities the Portfolio owns. In addition, if the
Portfolio has rental income or income from the direct disposition of real
property, the receipt of such income may adversely affect the Portfolio's
ability to retain its tax status as a regulated investment company.
The Portfolio may also, to a limited extent, enter into futures contracts on
stocks, purchase or sell options on such futures, engage in certain options
transactions on stocks and enter into closing transactions with respect to those
activities. However, these activities will not be entered into for speculative
purposes, but rather to facilitate the ability quickly to deploy into the stock
market the Portfolio's positions in cash, short-term debt securities and other
money market instruments, at times when the Portfolio's assets are not fully
invested in equity securities. Such positions will generally be eliminated when
it becomes possible to invest in securities that are appropriate for the
Portfolio. See "ADDITIONAL INVESTMENT INFORMATION--FUTURES CONTRACTS AND OPTIONS
ON FUTURES CONTRACTS" and "OPTIONS" for a further discussion of these investment
policies.
In connection with the Portfolio's ability to invest up to 10% of its total
assets in the securities of foreign issuers, currency considerations may present
risks if the Portfolio holds international securities. Currency considerations
carry a special risk for a portfolio of international securities. In this
regard, the Portfolio may actively carry on hedging activities, and may invest
in forward foreign currency exchange contracts to hedge
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currency risks associated with the purchase of individual securities denominated
in a particular currency. See "ADDITIONAL INVESTMENT INFORMATION--FORWARD
FOREIGN CURRENCY EXCHANGE CONTRACTS."
The investment adviser does not normally intend to respond to short-term market
fluctuations or to acquire securities for the purpose of short-term trading;
however, the investment adviser may take advantage of short-term opportunities
that are consistent with its investment objective. It is anticipated that the
annual turnover rate of the Portfolio, under normal circumstances, will
generally not exceed 100%.
THE FIXED INCOME PORTFOLIO
The Fixed Income Portfolio's investment objective is to realize maximum
long-term total return, consistent with reasonable risk. It seeks to achieve its
objective by investing in a diversified portfolio of investment grade
fixed-income obligations, including securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities ("U.S. government securities"),
mortgage-backed securities, asset-backed securities, corporate bonds and other
fixed-income securities.
It seeks maximum long-term total return by investing in debt securities having
an average effective maturity (that is, the market value weighted average time
to repayment of principal) of between one to ten years. Short- and
intermediate-term debt securities (under ten years) form the core of the
Portfolio, with long-term bonds (over ten years) purchased as well when the
investment adviser believes they will enhance return without significantly
increasing risk. Average effective maturity may exceed the above range when the
investment adviser believes opportunities for enhanced returns exceed risk.
Typically, approximately 50% of the Portfolio's assets will be invested in U.S.
government securities, mortgage-backed securities and asset-backed securities.
All securities purchased by the Portfolio will have an investment grade rating
at the time of purchase. Investment grade fixed-income obligations will be those
rated BBB or better by S&P or Baa or better by Moody's or those deemed to be of
comparable quality by the investment adviser. Obligations rated BBB and Baa have
speculative characteristics. To the extent that the rating of a debt obligation
held by the Portfolio falls below BBB or Baa, the Portfolio, as soon as
practicable, will dispose of the security, unless such disposal would be
detrimental to the Portfolio in light of market conditions. See "ADDITIONAL
INVESTMENT INFORMATION--U.S. GOVERNMENT SECURITIES" and "MORTGAGE-BACKED
SECURITIES" for more detailed information about these and other investment
policies.
The Portfolio will normally experience an annual portfolio turnover rate
exceeding 100%, but that rate is not expected to exceed 250%. A 100% turnover
rate would occur if all of the securities in the Portfolio were sold and
replaced within one year. The rate of portfolio turnover is not a limiting
factor when the investment adviser deems it desirable to purchase or sell
securities. High portfolio turnover (over 100%) involves correspondingly greater
brokerage commissions and other transaction costs and may affect taxes payable
by the Portfolio's shareholders that are subject to federal income taxes. The
turnover rate may also be affected by cash requirements from redemptions and
repurchases of the Portfolio's shares. The degree of Portfolio activity may
affect brokerage costs of the Portfolio and taxes payable by institutional
shareholders that are subject to federal income taxes. See "PORTFOLIO
TRANSACTIONS" and "TAXES."
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THE LIMITED-TERM MATURITY PORTFOLIO
The Limited-Term Maturity Portfolio seeks to realize a high level of current
income, consistent with the preservation of principal and reasonable risk. It
seeks to achieve its objective by investing in a diversified portfolio of
investment grade fixed-income securities including: U.S. government securities,
mortgage-backed securities, asset-backed securities, corporate bonds and other
fixed-income securities. The Portfolio will not exceed an average effective
maturity (that is, the market value weighted average time to repayment of
principal) of five years and will invest at least a majority of its assets in
U.S. government securities and mortgage-backed securities. The Portfolio also
may hold up to 30% of its assets in investment grade corporate fixed-income
obligations (other than mortgage-backed securities and U.S. government
securities) and asset-backed securities, but may not invest more than 10% of
its assets in such investment grade corporate fixed-income securities rated, at
the time of purchase, Baa by Moody's or BBB by S&P or determined to be of
comparable quality by the investment adviser. To the extent that the rating of a
debt obligation held by the Portfolio falls below BBB or Baa, the Portfolio, as
soon as practicable, will dispose of the security, unless such disposal would be
detrimental to the Portfolio in light of market conditions.
The Limited-Term Maturity Portfolio will normally experience an annual portfolio
turnover rate exceeding 100%, but that rate is not expected to exceed 200%. See
"INVESTMENT OBJECTIVES, POLICIES AND RISK CONSIDERATIONS--THE FIXED INCOME
PORTFOLIO" for a discussion of the implication of a portfolio turnover rate
exceeding 100%.
THE GLOBAL FIXED INCOME PORTFOLIO
The Portfolio seeks to realize current income consistent with the preservation
of investors' principal. It seeks to achieve its objective by investing
primarily in fixed-income securities that may also provide the potential for
capital appreciation. The Portfolio is a global fund. As such, it may invest in
securities issued in any currency and may hold foreign currency. Under normal
circumstances, at least 65% of the Portfolio's assets will be invested in the
fixed-income securities of issuers organized or having a majority of their
assets in or deriving a majority of their operating income in at least three
different countries, one of which may be the United States. Securities of
issuers within a given country may be denominated in the currency of another
country or in multinational currency units such as the ECU. The Portfolio will
operate as a nondiversified fund as defined by the 1940 Act.
The investment adviser's approach in selecting investments for the portfolio is
oriented to country selection and is value driven. In selecting fixed-income
instruments for the Portfolio, the investment adviser identifies those
countries' fixed-income markets which it believes will provide the United
States' domiciled investor the highest yield over a market cycle, while also
offering the opportunity for capital gain and currency appreciation. The
investment adviser conducts extensive fundamental research on a global basis,
and it is through this effort that attractive fixed-income markets are selected
for investment. The core of the fundamental research effort is a value oriented
discounted income stream methodology which isolates value across country
boundaries. This approach focuses on future coupon and redemption payments and
discounts the value of those payments back to what they would be worth if they
were to be paid today. Comparisons of the values of different possible
investments are then made. The investment adviser's management approach is
long-term in orientation, and it is therefore expected that the annual turnover
of the portfolio will not exceed 200% under normal circumstances. See "PORTFOLIO
TRANSACTIONS" and "TAXES."
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The Portfolio will attempt to achieve its objective by investing in a broad
range of fixed-income securities, including debt obligations of foreign and U.S.
companies which are generally rated A or better by S&P or Moody's or, if
unrated, are deemed to be of comparable quality by Delaware International, as
well as foreign and U.S. government securities with the limitation noted below.
The Portfolio may invest up to 5% of its assets in fixed-income securities rated
below investment grade, including foreign government securities as discussed
below. See "ADDITIONAL INVESTMENT INFORMATION--HIGH-YIELD, HIGH RISK
SECURITIES." The Portfolio may also invest in zero coupon bonds, and in the debt
securities of supranational entities denominated in any currency. The Portfolio
may also invest in mortgage-backed securities. See "ADDITIONAL INVESTMENT
INFORMATION--MORTGAGE-BACKED SECURITIES."
Zero coupon bonds are debt obligations which do not entitle the holder to any
periodic payments of interest prior to maturity or a specified date when the
securities begin paying current interest, and therefore are issued and traded at
a discount from their face amounts or par value. A supranational entity is an
entity established or financially supported by the national governments of one
or more countries to promote reconstruction or development. Examples of
supranational entities include, among others, the World Bank, the European
Economic Community, the European Coal and Steel Community, the European
Investment Bank, the Inter-Development Bank, the Export-Import Bank and the
Asian Development Bank. For increased safety, the Portfolio currently
anticipates that a large percentage of its assets will be invested in U.S.
government securities and foreign government securities and securities of
supranational entities.
With respect to U.S. government securities, the Portfolio may invest only in
securities issued or guaranteed as to the payment of principal and interest by
the U.S. government, and those of its agencies or instrumentalities which are
backed by the full faith and credit of the United States. Direct obligations of
the U.S. government which are available for purchase by the Portfolio include
bills, notes, bonds and other debt securities issued by the U.S. Treasury. These
obligations differ mainly in interest rates, maturities and dates of issuance.
Agencies whose obligations are backed by the full faith and credit of the United
States include the Farmers Home Administration, Federal Financing Bank and
others. When the Portfolio's investment adviser believes a temporary defensive
approach is appropriate, the Portfolio may hold up to 100% of its assets in such
U.S. government securities and certain other short-term instruments. See
"ADDITIONAL INVESTMENT INFORMATION--U.S. GOVERNMENT SECURITIES" and "SHORT-TERM
INVESTMENTS."
With respect to securities issued by foreign governments, their agencies,
instrumentalities or political subdivisions, the Portfolio will generally invest
in such securities if they have been rated AAA or AA by S&P or Aaa or Aa by
Moody's or, if unrated, have been determined by the investment adviser to be of
comparable quality. As noted above, the Portfolio may invest up to 5% of its
assets in non-investment grade fixed-income securities. These investments may
include foreign government securities, some of which may be so-called Brady
Bonds. See "ADDITIONAL INFORMATION--HIGH-YIELD, HIGH RISK SECURITIES." The
Portfolio may also invest in sponsored or unsponsored American Depository
Receipts or European Depository Receipts. While the Portfolio may purchase
securities of issuers in any foreign country, developed or underdeveloped, it is
currently anticipated that the countries in which the Portfolio may invest will
include, but not be limited to, Canada, Germany, the United Kingdom, New
Zealand, France, The Netherlands, Belgium, Spain, Switzerland, Ireland, Denmark,
Portugal, Italy, Austria, Norway, Sweden, Finland, Luxembourg, Japan and
Australia. With respect to certain countries, investments by an investment
company may only be made through investments in closed-end investment companies
that in turn are authorized to
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invest in the securities of issuers in such countries. Any investment the
Portfolio may make in other investment companies is limited in amount by the
1940 Act and would involve the indirect payment of a portion of the expenses,
including advisory fees, of such other investment companies. See "ADDITIONAL
INVESTMENT INFORMATION--FOREIGN INVESTMENT INFORMATION" and "AMERICAN DEPOSITORY
RECEIPTS."
Currency considerations carry a special risk for a portfolio of international
securities and the investment adviser employs a purchasing power parity approach
to evaluate currency risk. In this regard, the Portfolio will actively carry on
hedging activities, and may invest in forward foreign currency exchange
contracts to hedge currency risks associated with its portfolio of securities.
See "ADDITIONAL INVESTMENT INFORMATION-- FORWARD FOREIGN CURRENCY EXCHANGE
CONTRACTS."
It is anticipated that the average weighted maturity of the Portfolio will be in
the five-to-ten year range. If, however, the investment adviser anticipates a
declining interest rate environment, the average weighted maturity may be
extended beyond ten years. Conversely, if the investment adviser anticipates a
rising rate environment, the average weighted maturity may be shortened to less
than five years. The Portfolio will not invest 25% or more of its total assets
in the securities of issuers all of which conduct their principal business
activities in the same industry.
THE INTERNATIONAL FIXED INCOME PORTFOLIO
The Portfolio seeks to realize current income consistent with the preservation
of investors' principal. It seeks to achieve its objective by investing
primarily in fixed-income securities that may also provide the potential for
capital appreciation. The Portfolio is an international fund. As such, it may
invest in securities issued in any currency and may hold foreign currency. Under
normal circumstances, at least 65% of the Portfolio's assets will be invested in
the fixed-income securities of issuers organized or having a majority of their
assets in or deriving a majority of their operating income in at least three
different countries outside of the United States. Under normal circumstances,
the Portfolio intends to invest in securities which are denominated in foreign
currencies. Securities of issuers within a given country may be denominated in
the currency of another country or in multinational currency units such as ECU.
The Portfolio will operate as a nondiversified fund as defined by the 1940 Act.
The investment adviser's approach in selecting investments for the portfolio is
oriented to country selection and is value driven. In selecting fixed-income
instruments for the Portfolio, the investment adviser identifies those
countries' fixed-income markets which it believes will provide the United States
domiciled investor the highest yield over a market cycle, while also offering
the opportunity for capital gain and currency appreciation. The investment
adviser conducts extensive fundamental research on a global basis, and it is
through this effort that attractive fixed-income markets are selected for
investment. The core of the fundamental research effort is a value oriented
discounted income stream methodology which isolates value across country
boundaries. This approach focuses on future coupon and redemption payments and
discounts the value of those payments back to what they would be worth if they
were to be paid today. Comparisons of the values of different possible
investments are then made. The investment adviser's management approach is
long-term in orientation, but, it is expected that the annual turnover of the
portfolio will be approximately 200% under normal circumstances. See "PORTFOLIO
TRANSACTIONS" and "TAXES."
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The Portfolio will attempt to achieve its objective by investing in a broad
range of fixed-income securities, including debt obligations of foreign
companies which are generally rated A or better by S&P or Moody's or, if
unrated, are deemed to be of comparable quality by Delaware International, as
well as, foreign government securities with the limitation noted below. The
Portfolio may invest up to 5% of its assets in fixed-income securities rated
below investment grade, including foreign government securities as discussed
below. See "ADDITIONAL INVESTMENT INFORMATION--HIGH-YIELD, HIGH RISK
SECURITIES." The Portfolio may also invest in zero coupon bonds, and in the debt
securities of supranational entities denominated in any currency.
Zero coupon bonds are debt obligations which do not entitle the holder to any
periodic payments of interest prior to maturity or a specified date when the
securities begin paying current interest, and therefore are issued and traded at
a discount from their face amounts or par value. A supranational entity is an
entity established or financially supported by the national governments of one
or more countries to promote reconstruction or development. Examples of
supranational entities include, among others, the World Bank, the European
Economic Community, the European Coal and Steel Community, the European
Investment Bank, the Inter-Development Bank, the Export-Import Bank and the
Asian Development Bank. For increased safety, the Portfolio currently
anticipates that a large percentage of its assets will be invested in foreign
government securities and securities of supranational entities.
With respect to U.S. government securities, the Portfolio may invest only in
securities issued or guaranteed as to the payment of principal and interest by
the U.S. government, and those of its agencies or instrumentalities which are
backed by the full faith and credit of the United States. Direct obligations of
the U.S. government which are available for purchase by the Portfolio include
bills, notes, bonds and other debt securities issued by the U.S. Treasury. These
obligations differ mainly in interest rates, maturities and dates of issuance.
Agencies whose obligations are backed by the full faith and credit of the United
States include the Farmers Home Administration, Federal Financing Bank and
others. When the Portfolio's investment adviser believes a temporary defensive
approach is appropriate, the Portfolio may hold up to 100% of its assets in such
U.S. government securities and certain other short-term instruments. See
"ADDITIONAL INVESTMENT INFORMATION--U.S. GOVERNMENT SECURITIES" and "SHORT-TERM
INVESTMENTS."
With respect to securities issued by foreign governments, their agencies,
instrumentalities or political subdivisions, the Portfolio will generally invest
in such securities if they have been rated AAA or AA by S&P or Aaa or Aa by
Moody's or, if unrated, have been determined by the investment adviser to be of
comparable quality. As noted above, the Portfolio may invest up to 5% of its
assets in non-investment grade fixed-income securities. These investments may
include foreign government securities, some of which may be so-called Brady
Bonds. See "ADDITIONAL INFORMATION--HIGH-YIELD, HIGH RISK SECURITIES." The
Portfolio may also invest in sponsored or unsponsored American Depository
Receipts or European Depository Receipts. While the Portfolio may purchase
securities of issuers in any foreign country, developed or underdeveloped, it is
currently anticipated that the countries in which the Portfolio may invest will
include, but not be limited to, Canada, Germany, the United Kingdom, New
Zealand, France, The Netherlands, Belgium, Spain, Switzerland, Ireland, Denmark,
Portugal, Italy, Austria, Norway, Sweden, Finland, Luxembourg, Japan and
Australia. With respect to certain countries, investments by an investment
company may only be made through investments in closed-end investment companies
that in turn are authorized to invest in the securities of issuers in such
countries. Any investment the Portfolio may make in other
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investment companies is limited in amount by the 1940 Act and would involve the
indirect payment of a portion of the expenses, including advisory fees, of such
other investment companies. See "ADDITIONAL INVESTMENT INFORMATION--FOREIGN
INVESTMENT INFORMATION" and "AMERICAN DEPOSITORY RECEIPTS."
Currency considerations carry a special risk for a portfolio of international
securities and the investment adviser employs a purchasing power parity approach
to evaluate currency risk. In this regard, the Portfolio will actively carry on
hedging activities, and may utilize a wide range of hedging instruments,
including options, futures contracts, and related options, and forward foreign
currency exchange contracts to hedge currency risks associated with its
portfolios of securities. See "ADDITIONAL INVESTMENT INFORMATION--FORWARD
FOREIGN CURRENCY EXCHANGE CONTRACTS, FUTURES CONTRACTS AND OPTIONS ON FUTURES
CONTRACTS" and "OPTIONS."
It is anticipated that the average weighted maturity of the Portfolio will be in
the five-to-ten year range. If, however, the investment adviser anticipates a
declining interest rate environment, the average weighted maturity may be
extended beyond ten years. Conversely, if the investment adviser anticipates a
rising rate environment, the average weighted maturity may be shortened to less
than five years. The Portfolio will not invest 25% or more of its total assets
in the securities of issuers all of which conduct their principal business
activities in the same industry.
THE HIGH-YIELD BOND PORTFOLIO
The High-Yield Bond Portfolio's investment objective is to seek high total
return. The Portfolio seeks to achieve its objective by investing primarily in
bonds rated B- or higher by S&P or B3 or higher by Moody's or, if unrated,
judged to be of comparable quality by the investment adviser.
The Portfolio will invest at least 80% of its assets at the time of purchase in:
(1) corporate bonds that may be rated B- or higher by S&P or B3 or higher by
Moody's, or that may be unrated (which may be more speculative in nature than
rated bonds); (2) securities issued or guaranteed by the U.S Government, its
agencies or instrumentalities; or (3) commercial paper of companies rated A-1 or
A-2 by S&P or rated P-1 or P-2 by Moody's or, if unrated, judged to be of
comparable quality by the investment adviser. The Portfolio may also invest in
income-producing securities, including common stocks and preferred stocks, some
of which may have convertible features or attached warrants and which may be
speculative. See "ADDITIONAL INVESTMENT INFORMATION--CONVERTIBLE, DEBT AND
NON-TRADITIONAL EQUITY SECURITIES" for a further discussion of these investment
policies. The Portfolio may invest up to 10% of its total assets in securities
of issuers domiciled in foreign countries. The Portfolio may hold cash or invest
in short-term debt securities and other money market instruments when, in the
investment adviser's opinion, such holdings are prudent given then prevailing
market conditions. Except when the investment adviser believes a temporary
defensive approach is appropriate, the Portfolio normally will not hold more
than 5% of its total assets in cash or such short-term investments. All these
short-term investments will be of the highest quality as determined by a
nationally-recognized statistical rating organization (e.g., AAA by S&P or Aaa
by Moody's) or, if unrated, judged to be of comparable quality as determined by
the investment adviser. See "ADDITIONAL INVESTMENT INFORMATION" for further
details concerning these and other investment policies.
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Although the Portfolio does not generally purchase a substantial amount of zero
coupon bonds or pay-in-kind (PIK) bonds, from time to time, the Portfolio may
acquire zero coupon bonds and, to a lesser extent, PIK bonds. Zero coupon bonds
and PIK bonds are generally considered to be more interest-sensitive than income
bearing bonds, to be more speculative than interest-bearing bonds, and to have
certain tax consequences which could, under certain circumstances, be adverse to
the Portfolio. For example, the Portfolio accrues, and is required to distribute
to shareholders income on its zero coupon bonds. However, the Portfolio may not
receive the cash associated with this income until the bonds are sold or mature.
If the Portfolio did not have sufficient cash to make the required distribution
of accrued income, the Portfolio could be required to sell other securities in
its portfolio or to borrow to generate the cash required.
With respect to U.S. government securities, the Portfolio may invest only in
securities issued or guaranteed as to the payment of principal and interest by
the U.S. government, and those of its agencies or instrumentalities which are
backed by the full faith and credit of the United States. Direct obligations of
the U.S. government which are available for purchase by the Portfolio include
bills, notes, bonds and other debt securities issued by the U.S. Treasury. These
obligations differ mainly in interest rates, maturities and dates of issuance.
Agencies whose obligations are backed by the full faith and credit of the United
States include the Farmers Home Administration, Federal Financing Bank and
others. See "ADDITIONAL INVESTMENT INFORMATION--U.S. GOVERNMENT SECURITIES."
The investment adviser does not normally intend to respond to short-term market
fluctuations or to acquire securities for the purpose of short-term trading;
however, the investment adviser may take advantage of short-term opportunities
that are consistent with its investment objective. It is anticipated that the
annual turnover rate of the Portfolio, under normal circumstances, will
generally not exceed 100%.
It is anticipated that the Portfolio's assets will be invested primarily in
unrated corporate bonds and bonds rated B- or higher by S&P or B3 or higher by
Moody's, or, if unrated, judged to be of comparable quality by the investment
adviser. The market values of fixed-income securities generally fall when
interest rates rise and, conversely, rise when interest rates fall. Lower rated
and unrated fixed-income securities tend to reflect short-term corporate and
market developments to a greater extent than higher rated fixed-income
securities, which react primarily to fluctuations in the general level of
interest rates. These lower rated or unrated securities generally have higher
yields, but, as a result of factors such as reduced creditworthiness of issuers,
increased risks of default and a more limited and less liquid secondary market,
are subject to greater volatility and risks of loss of income and principal than
are higher rated securities. The investment adviser will attempt to reduce such
risks through portfolio diversification, credit analysis, and attention to
trends in the economy, industries and financial markets.
Investing in these so-called "junk" or "high-yield" bonds entails certain risks,
including the risk of loss of principal, which may be greater than the risks
involved in investment grade bonds, and which should be considered by investors
contemplating an investment in the Portfolio. Such bonds are sometimes issued by
companies whose earnings at the time of issuance are less than the projected
debt service on the junk bonds. Some of the principal risks to which junk bonds
are subject are discussed below.
Although the market for high-yield bonds has been in existence for many years,
including periods of economic downturns, the high-yield market grew rapidly
during the long economic expansion which took place in the United States during
the 1980s. During the economic expansion, the use of high-yield debt securities
to fund
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highly leveraged corporate acquisitions and restructurings increased
dramatically. As a result, the high-yield market grew substantially during the
economic expansion. Although experts disagree on the impact recessionary periods
have had and will have on the high-yield market, some analysts believe a
protracted economic downturn would severely disrupt the market for high-yield
bonds, would adversely affect the value of outstanding bonds and would adversely
affect the ability of high-yield issuers to repay principal and interest. Those
analysts cite volatility experienced in the high-yield market in the past as
evidence for their position. It is likely that protracted periods of economic
uncertainty would result in increased volatility in the market prices of
high-yield bonds, an increase in the number of high-yield bond defaults and
corresponding volatility in the Portfolio's net asset value.
In addition, if, as a result of volatility in the high-yield market or other
factors, the Portfolio experiences substantial net redemptions of the
Portfolio's shares for a sustained period of time, the Portfolio may be required
to sell securities without regard to the investment merits of the securities to
be sold. If the Portfolio sells a substantial number of securities to generate
proceeds for redemptions, the asset base of the Portfolio will decrease and the
Portfolio's expense ratios may increase.
Furthermore, the secondary market for high-yield securities is currently
dominated by institutional investors, including mutual funds and certain
financial institutions. There is generally no established retail secondary
market for high-yield securities. As a result, the secondary market for
high-yield securities is more limited and less liquid than other secondary
securities markets. The high-yield secondary market is particularly susceptible
to liquidity problems when the institutions which dominate it temporarily cease
buying bonds for regulatory, financial or other reasons, such as the savings and
loan crisis. A less liquid secondary market may have an adverse effect on the
Portfolio's ability to dispose of particular issues, when necessary, to meet the
Portfolio's liquidity needs or in response to a specific economic event, such as
the deterioration in the creditworthiness of the issuer. In addition, a less
liquid secondary market makes it more difficult for the Portfolio to obtain
precise valuations of the high-yield securities in its portfolio. During periods
involving such liquidity problems, judgment plays a greater role in valuing
high-yield securities than is normally the case. The secondary market for
high-yield securities is also generally considered to be more likely to be
disrupted by adverse publicity and investor perceptions than the more
established secondary securities markets. The Portfolio's privately placed
high-yield securities are particularly susceptible to the liquidity and
valuation risks outlined above.
Finally, there are a variety of legislative actions which have been taken or
which are considered from time to time by the United States Congress which could
adversely affect the market for high-yield bonds. For example, Congressional
legislation limited the deductibility of interest paid on certain high-yield
bonds used to finance corporate acquisitions. Also, Congressional legislation
has, with some exceptions, generally prohibited federally-insured savings and
loan institutions from investing in high-yield securities. Regulatory actions
have also affected the high-yield market. For example, many insurance companies
have restricted or eliminated their purchase of high-yield bonds as a result of,
among other factors, actions taken by the National Association of Insurance
Commissioners. If similar legislative and regulatory actions are taken in the
future, they could result in further tightening of the secondary market for
high-yield issues, could reduce the number of new high-yield securities being
issued and could make it more difficult for the Portfolio to attain its
investment objective.
See "ADDITIONAL INVESTMENT INFORMATION--HIGH-YIELD, HIGH RISK SECURITIES" for
further information about high-yield securities.
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PURCHASE OF SHARES
Shares of each Portfolio may be purchased without a sales commission, at net
asset value per share next determined after (i) the Fund has been notified by
telephone of your purchase order and (ii) Federal Funds have been delivered to
the Fund's bank account maintained with The Chase Manhattan Bank or Bankers
Trust Company ("Custodian Banks"). Shares of The International Equity Portfolio
may, under certain circumstances, be required to be purchased in-kind, as noted
below. At such time as the Fund receives appropriate regulatory approvals to do
so in the future, under certain circumstances, the Fund may, at its sole
discretion, allow eligible investors who have an existing investment counseling
relationship with Delaware Investment Advisers or Delaware International to make
investments in the Portfolios by a contribution of securities in-kind to such
Portfolios. See "VALUATION OF SHARES."
The minimum initial investment for a Portfolio is $1,000,000.
By Federal Funds Wire
Purchases of shares of a Portfolio may only be made by having your bank wire
Federal Funds to CoreStates Bank, N.A. as described below. In order for share
purchases to be priced at the end of a given business day, the Fund must be
notified by telephone and Federal Funds must be received no later than the close
of regular trading on the New York Stock Exchange ("NYSE") (ordinarily, 4 p.m.,
Eastern time) on days when the Exchange is open. If notice is given or Federal
Funds are delivered after that time, the purchase order will be priced on the
following business day. In order to ensure prompt receipt of your Federal Funds
Wire and processing of your purchase order, it is important that the following
steps be taken:
1. Telephone the Fund (Toll Free: 1-800-231-8002) and provide us with the
account name, address, telephone number, Tax Identification Number, the
Portfolio(s) selected, the amount being wired and by which bank and which
specific branch, if applicable. We will provide you with a Fund account number.
2. Instruct your bank to wire the specified amount of Federal Funds to
CoreStates Bank, N.A., Philadelphia, PA, ABA #031000011, DSC Wire Purchase Bank
Account #1412893401. The funds should be sent to the attention of Delaware
Pooled Trust, Inc. (be sure to have your bank include the name of the
Portfolio(s) selected, the account number assigned to you and your account
name).
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Federal Funds purchase orders will be accepted only on a day on which the Fund,
the NYSE and the Custodian Banks are open for business.
3. Complete the Account Registration Form within two days and mail it to:
Delaware Pooled Trust, Inc.
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
Attn: Client Services
In-Kind Purchases or Similar Procedures (The International Equity Portfolio)
Institutions proposing to invest an amount which at the time they telephone the
Fund (as required above), would constitute 5% or more of the assets of The
International Equity Portfolio will, under normal circumstances, be required to
make purchases by tendering securities in which the Portfolio otherwise would
invest or, by following another procedure that will have the same economic
effect as an in-kind purchase. In either case, an investor that is required to
purchase shares pursuant to those procedures will be required to pay the
brokerage or other transaction costs of acquiring the subject securities.
Prospective investors will be notified when they telephone the Fund whether
their investment must be made in-kind or by such other procedure and, if
in-kind, what securities must be tendered. The purchase price per share for such
investors shall be the net asset value next determined after, as the case may
be, (1) delivery of cash or securities to the Custodian Banks and/or (2) the
assignment to the Portfolio by a prospective purchaser on trade date of the
investor's right to delivery of securities as to which brokerage orders have
been placed (but, as to which settlement is yet to occur) and delivery of cash
in an amount necessary to pay for those securities on settlement date. The
assets provided to the Portfolio pursuant to these procedures shall be valued
consistent with the same valuation procedures used to calculate the Portfolio's
net asset value. See "VALUATION OF SHARES." Such investors should contact the
Fund at (1-800-231-8002) for further information.
ADDITIONAL INVESTMENTS
You may add to your shareholder account at any time and in any amount.
Procedures are the same as those to be followed for a new account, in as much as
it is very important to notify the Fund of your impending purchase by first
calling the Fund (1-800-231-8002). Then you must be sure that your bank follows
the same procedures as described above with respect to the wiring of Federal
Funds to CoreStates Bank, N.A. Additional investments in The International
Equity Portfolio are subject to the same procedures and requirements (including
the in-kind or similar procedures) set forth above.
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REDEMPTION OF SHARES
You may withdraw all or any portion of the amount in your account by redeeming
shares at any time. The Fund will redeem shares of each Portfolio at its net
asset value next determined after receipt of your redemption request in
accordance with the following instructions. On days that the Fund, the NYSE and
the Custodian Banks are open for business, the net asset value of the Fund's
Portfolios are determined as of the close of regular trading of the NYSE
(ordinarily, 4 p.m., Eastern time). See "VALUATION OF SHARES."
Shares of the Fund may be redeemed by mail, FAX message, or telephone. No charge
is made for redemption. The proceeds of any redemption may be more or less than
the purchase price of your shares depending on the market value of the
investment securities held by the Portfolio. Shares of The International Equity
Portfolio, The Labor Select International Equity Portfolio, The Global Fixed
Income Portfolio and The International Fixed Income Portfolio may, under certain
circumstances, be required to be redeemed in-kind in portfolio securities, as
noted below.
By Mail or FAX Message
Each Portfolio will redeem its shares at the net asset value next determined on
the date the request is received in "good order." Your request should be
addressed to:
Delaware Pooled Trust, Inc.
Attn: Client Services
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
FAX # 215-255-8864
"Good order" for purposes of mail or FAX message redemptions means that the
request to redeem must include the following documentation:
a. A letter of instruction specifying the number of shares or dollar amount to
be redeemed signed by the appropriate corporate or organizational officer(s)
exactly as it appears on the Account Registration Form.
b. If you wish to change the name of the commercial bank or account designation
to receive the redemption proceeds as provided in the Account Registration Form,
then a separate written request must be submitted to the Fund at the above
address and copies of this request sent to both the current commercial bank and
the new designee bank. Prior to redemption, the Fund will telephonically confirm
the change with both the current and the new designee banks. Further
clarification of these procedures can be obtained by calling the Fund.
By Telephone
If you have previously elected the Telephone Redemption Option on the Account
Registration Form, you can request a redemption of your shares by calling the
Fund and requesting the redemption proceeds be wired to the commercial bank or
account designation identified in the Account Registration Form. Shares cannot
be redeemed by telephone if stock certificates are held for those shares or, in
the case of The International Equity
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Portfolio, The Labor Select International Equity Portfolio, The Global Fixed
Income Portfolio or The International Fixed Income Portfolio, in instances when
the special in-kind redemption procedures are triggered, as described below.
Please contact the Fund for further details. In times of drastic market
conditions, the telephone redemption option may be difficult to implement. If
you experience difficulty in making a telephone redemption, your request may be
made by mail or FAX message, pursuant to the procedures described above. It will
be implemented at the net asset value next determined after it is received.
Neither the Fund, the Portfolios nor the Fund's transfer agent, Delaware Service
Company, Inc., is responsible for any losses incurred in acting upon written or
telephone instructions for redemption or exchange of Portfolio shares which are
reasonably believed to be genuine. With respect to such telephone transactions,
the Fund will ensure that reasonable procedures are used to confirm that
instructions communicated by telephone are genuine (including verification of a
form of personal identification) as, if it does not, the Fund or Delaware
Service Company, Inc. may be liable for any losses due to unauthorized or
fraudulent transactions. A written confirmation will be provided for all
purchase, exchange and redemption transactions initiated by telephone.
To change the name of the commercial bank or account designated to receive the
redemption proceeds, a written request must be sent to the Fund at the address
above. Requests to change the bank or account designation must be signed by the
appropriate person(s) authorized to act on behalf of the shareholder.
The Fund's telephone redemption privileges and procedures may be modified or
terminated by the Fund only upon written notice to the Fund's client
shareholders.
Redemptions In-Kind or Similar Procedures (The International Equity, The Labor
Select International Equity, The Global Fixed Income and The International Fixed
Income Portfolios)
Institutions proposing to redeem an amount which, at the time they notify the
Fund of their intention to redeem (as described below), would constitute 5% or
more of the assets of The International Equity Portfolio, The Labor Select
International Equity Portfolio, The Global Fixed Income Portfolio or The
International Fixed Income Portfolio will, under normal circumstances, be
required to accept their redemption proceeds in-kind in Portfolio securities,
unless they elect another procedure which will have the same economic effect as
an in-kind redemption. In either case, an investor that is required to redeem
shares pursuant to this election must bear the brokerage or other transaction
costs of selling the Portfolio securities representing the value of their
redeemed shares. Any Portfolio securities delivered upon redemption will be
valued as described in "VALUATION OF SHARES." Investors in these Portfolios
should contact the Fund at (1-800-231-8002) for further information.
Eligible investors who have an existing investment counseling relationship with
Delaware Investment Advisers or Delaware International will not be subject to
the Fund's in-kind redemption requirements until such time as the Fund receives
appropriate regulatory approvals to permit such redemptions for the account of
such eligible investors.
IMPORTANT REDEMPTION INFORMATION
Because the Fund's shares are sold to institutions and high net-worth
individuals investors with a relatively high investment minimum, Fund
shareholders likely will hold a significant number of Fund shares. For this
reason, the Fund requests that shareholders proposing to make a large redemption
order give the Fund at least
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ten days advanced notice of any such order. This request can easily be satisfied
by calling the Fund at (1-800- 231-8002), and giving notification of your future
intentions. Once a formal redemption order is received, the Fund, in the case of
redemptions to be made in cash, normally will make payment for all shares
redeemed under this procedure within three business days of receipt of the
order. In no event, however, will payment be made more than seven days after
receipt of a redemption request in good order. The Fund may suspend the right of
redemption or postpone the date at times when the NYSE is closed, or under any
emergency circumstances as determined by the Securities and Exchange Commission
("Commission").
With respect to The International Equity, The Labor Select International Equity,
The Global Fixed Income and The International Fixed Income Portfolios, as noted
above, or if the Fund otherwise determines that it would be detrimental to the
best interests of the remaining shareholders of a Portfolio to make payment
wholly or partly in cash, the Fund may pay the redemption proceeds in whole or
in part by a distribution in-kind of securities held by a Portfolio in lieu of
cash in conformity with applicable rules of the Commission. Investors may incur
brokerage charges on the sale of Portfolio securities so received in payment of
redemptions.
Due to the relatively high cost of maintaining shareholder accounts, the Fund
reserves the right to redeem shares in a Portfolio if the value of your holdings
in that Portfolio is below $500,000. The Fund, however, will not redeem shares
based solely upon market reductions in net asset value. If the Fund intends to
take such action, a shareholder would be notified and given 90 days to make an
additional investment before the redemption is processed.
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ADDITIONAL INVESTMENT INFORMATION
U.S. GOVERNMENT SECURITIES
The U.S. government securities in which the various Portfolios may invest for
temporary purposes and otherwise (see "INVESTMENT OBJECTIVES, POLICIES AND RISK
CONSIDERATIONS"), include a variety of securities which are issued or guaranteed
as to the payment of principal and interest by the U.S. government, and by
various agencies or instrumentalities which have been established or sponsored
by the U.S. government.
U.S. Treasury securities are backed by the "full faith and credit" of the United
States. Securities issued or guaranteed by federal agencies and U.S. government
sponsored instrumentalities may or may not be backed by the full faith and
credit of the United States. In the case of securities not backed by the full
faith and credit of the United States, investors in such securities look
principally to the agency or instrumentality issuing or guaranteeing the
obligation for ultimate repayment, and may not be able to assert a claim against
the United States itself in the event the agency or instrumentality does not
meet its commitment. Agencies which are backed by the full faith and credit of
the United States include the Export-Import Bank, Farmers Home Administration,
Federal Financing Bank, and others. Certain agencies and instrumentalities, such
as the Government National Mortgage Association ("GNMA"), are, in effect, backed
by the full faith and credit of the United States through provisions in their
charters that they may make "indefinite and unlimited" drawings on the Treasury,
if needed to service its debt. Debt from certain other agencies and
instrumentalities, including the Federal Home Loan Bank and Federal National
Mortgage Association, are not guaranteed by the United States, but those
institutions are protected by the discretionary authority for the U.S. Treasury
to purchase certain amounts of their securities to assist the institutions in
meeting their debt obligations. Finally, other agencies and instrumentalities,
such as the Farm Credit System and the Federal Home Loan Mortgage Corporation,
are federally chartered institutions under U.S. government supervision, but
their debt securities are backed only by the creditworthiness of those
institutions, not the U.S. government.
Some of the U.S. government agencies that issue or guarantee securities include
the Export-Import Bank of the United States, Farmers Home Administration,
Federal Housing Administration, Maritime Administration, Small Business
Administration, and the Tennessee Valley Authority.
An instrumentality of a U.S. government agency is a government agency organized
under Federal charter with government supervision. Instrumentalities issuing or
guaranteeing securities include, among others, Federal Home Loan Banks, the
Federal Land Banks, Central Bank for Cooperatives, Federal Immediate Credit
Banks and the Federal National Mortgage Association.
MORTGAGE-BACKED SECURITIES
The Real Estate Investment Trust, The Fixed Income, The Limited-Term Maturity
and The Global Fixed Income Portfolios may invest in mortgage-backed securities
issued or guaranteed by the U.S. government, its agencies or instrumentalities
or by government sponsored corporations. Those securities include, but are not
limited to, GNMA certificates. Such securities differ from other fixed-income
securities in that principal is paid back by the borrower over the length of the
loan rather than returned in a lump sum at maturity. When
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prevailing interest rates rise, the value of a GNMA security may decrease as do
other debt securities. When prevailing interest rates decline, however, the
value of GNMA securities may not rise on a comparable basis with other debt
securities because of the prepayment feature of GNMA securities. Additionally,
if a GNMA certificate is purchased at a premium above its principal value
because its fixed rate of interest exceeds the prevailing level of yields, the
decline in price to par may result in a loss of the premium in the event of
prepayment. Funds received from prepayments may be reinvested at the prevailing
interest rates which may be lower than the rate of interest that had previously
been earned.
The Portfolios also may invest in collateralized mortgage obligations ("CMOs")
and real estate mortgage investment conduits ("REMICs"). CMOs are debt
securities issued by U.S. government agencies or by financial institutions and
other mortgage lenders and collateralized by a pool of mortgages held under an
indenture. CMOs are issued in a number of classes or series with different
maturities. The classes or series are retired in sequence as the underlying
mortgages are repaid. REMICs, which were authorized under the Tax Reform Act of
1986, are private entities formed for the purpose of holding a fixed pool of
mortgages secured by an interest in real property. REMICs are similar to CMOs in
that they issue multiple classes of securities. To the extent any
privately-issued CMOs or REMICs in which the Portfolios may invest are
considered by the Commission to be investment companies, the Portfolios will
limit their investments in such securities in a manner consistent with the
provisions of the 1940 Act.
The mortgages backing these securities include conventional 30-year fixed rate
mortgages, graduated payment mortgages and adjustable rate mortgages. These
mortgages may be supported by various types of insurance, may be backed by GNMA
certificates or other mortgage pass-throughs issued or guaranteed by the U.S.
government, its agencies or instrumentalities. However, the guarantees do not
extend to the mortgage-backed securities' value, which is likely to vary
inversely with fluctuations in interest rates. These certificates are in most
cases "pass-through" instruments, through which the holder receives a share of
all interest and principal payments from the mortgages underlying the
certificate. Because the prepayment characteristics of the underlying mortgages
vary, it is not possible to predict accurately the average life or realized
yield of a particular issue of pass-through certificates. During periods of
declining interest rates, prepayment of mortgages underlying mortgage-backed
securities can be expected to accelerate. When the mortgage obligations are
prepaid, the Portfolio may reinvest the prepaid amounts in securities, the yield
of which reflects interest rates prevailing at the time. Moreover, prepayments
of mortgages which underlie securities purchased at a premium could result in
capital losses.
Certain CMOs and REMICs may have variable or floating interest rates and others
may be stripped. Stripped mortgage securities have greater market volatility
than other types of mortgage securities in which the Portfolios may invest.
Stripped mortgage securities are usually structured with two classes that
receive different proportions of the interest and principal distributions on a
pool of mortgage assets. A common type of stripped mortgage security will have
one class receiving some of the interest and most of the principal from the
mortgage assets, while the other class will receive most of the interest and the
remainder of the principal. In the most extreme case, one class will receive all
of the interest (the "interest-only" class), while the other class will receive
all of the principal (the "principal-only" class). The yield to maturity on an
interest-only class is extremely sensitive not only to changes in prevailing
interest rates but also to the rate of principal payments (including
prepayments) on the related underlying mortgage assets, and a rapid rate of
principal payments may have a material adverse effect on a Portfolio's yield to
maturity. If the underlying mortgage assets experience greater than anticipated
prepayments of principal, a Portfolio may fail to fully recoup its initial
investment in these securities even if the securities are rated in the highest
rating categories.
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Although stripped mortgage securities are purchased and sold by institutional
investors through several investment banking firms acting as brokers or dealers,
these securities were only recently developed. As a result, established trading
markets have not yet been fully developed and, accordingly, these securities are
generally illiquid and to such extent, together with any other illiquid
investments, will not exceed 10% of a Portfolio's net assets.
CMOs and REMICs issued by private entities are not government securities and are
not directly guaranteed by any government agency. They are secured by the
underlying collateral of the private issuer. Each of the Portfolios may invest
in such private-backed securities but, the Portfolios, other than The Fixed
Income Portfolio, will do so (i) only if the securities are 100% collateralized
at the time of issuance by securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities and (ii) currently, only if they
are rated at the time of purchase in the two highest grades by a
nationally-recognized statistical rating agency.
The Fixed Income Portfolio may invest up to 20% of its total assets in CMOs and
REMICs issued by private entities which are not collateralized by securities
issued or guaranteed by the U.S. government, its agencies or instrumentalities,
so-called non-agency mortgage-backed securities. Investments in these securities
may be made only if the securities (i) are rated at the time of purchase in the
four top rating categories by a nationally-recognized statistical rating
organization (e.g., BBB or better by S&P or Baa or better by Moody's) and (ii)
represent interests in whole-loan mortgages, multi-family mortgages, commercial
mortgages and other mortgage collateral supported by a first mortgage lien on
real estate. Non-agency mortgage-backed securities are subject to the interest
rate and prepayment risks, described above, to which other CMOs and REMICs
issued by private issuers are subject. Non-agency mortgage-backed securities may
also be subject to a greater risk of loss of interest and principal because they
are not collateralized by securities issued or guaranteed by the U.S.
government. In addition, timely information concerning the loans underlying
these securities may not be as readily available and the market for these
securities may be less liquid than other CMOs and REMICs.
ASSET-BACKED SECURITIES
The Fixed Income and Limited-Term Maturity Portfolios may also invest in
securities which are backed by assets such as receivables on home equity and
credit card loans, receivables regarding automobile, mobile home and
recreational vehicle loans, wholesale dealer floor plans and leases or other
loans or financial receivables currently available or which may be developed in
the future. All such securities must be rated in one of the four highest rating
categories by a reputable credit rating agency (e.g., BBB by S&P or Baa by
Moody's). Such receivables are securitized in either a pass-through or a
pay-through structure. Pass-through securities provide investors with an income
stream consisting of both principal and interest payments in respect of the
receivables in the underlying pool. Pay-through asset-backed securities are debt
obligations issued usually by a special purpose entity, which are collateralized
by the various receivables and in which the payments on the underlying
receivables provide the funds to pay the debt service on the debt obligations
issued.
The rate of principal payment on asset-backed securities generally depends upon
the rate of principal payments received on the underlying assets. Such rate of
payments may be affected by economic and various other factors such as changes
in interest rates or the concentration of collateral in a particular geographic
area. Therefore, the yield may be difficult to predict and actual yield to
maturity may be more or less than the anticipated yield to maturity. Due to the
shorter maturity of the collateral backing such securities, there tends to be
less of a risk of substantial prepayment than with mortgage-backed securities
but the risk of such a
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prepayment does exist. See "MORTGAGE-BACKED SECURITIES," above. Such
asset-backed securities do, however, involve certain risks not associated with
mortgage-backed securities, including the risk that security interests cannot be
adequately or in many cases, ever, established and other risks which may be
peculiar to particular classes of collateral. For example, with respect to
credit card receivables, a number of state and federal consumer credit laws give
debtors the right to set off certain amounts owed on the credit cards, thereby
reducing the outstanding balance. In the case of automobile receivables, there
is a risk that the holders may not have either a proper or first security
interest in all of the obligations backing such receivables due to the large
number of vehicles involved in a typical issuance and technical requirements
under state laws. Therefore, recoveries on repossessed collateral may not always
be available to support payments on the securities.
SHORT-TERM INVESTMENTS
The short-term investments in which The Defensive Equity, The Aggressive Growth,
The International Equity, The Defensive Equity Small/Mid-Cap, The Defensive
Equity Utility, The Labor Select International Equity, The Real Estate
Investment Trust, The Global Fixed Income, The International Fixed Income and
The High-Yield Bond Portfolios may invest consistent with the limits recited
above (see "INVESTMENT OBJECTIVES, POLICIES AND RISK CONSIDERATIONS") are:
(1) Time deposits, certificates of deposit (including marketable variable rate
certificates of deposit) and bankers' acceptances issued by a U.S. commercial
bank. Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate. Time
deposits maturing in more than seven days will not be purchased by a Portfolio,
and time deposits maturing from two business days through seven calendar days
will not exceed 10% of the total assets of a Portfolio, in the case of The
Defensive Equity, The Aggressive Growth, The International Equity, The Global
Fixed Income and The International Fixed Income Portfolios, and 15% of the total
assets of a Portfolio, in the case of The Defensive Equity Small/Mid-Cap, The
Defensive Equity Utility, The Real Estate Investment Trust and The High-Yield
Bond Portfolios. Certificates of deposit are negotiable short-term obligations
issued by commercial banks against funds deposited in the issuing institution.
Variable rate certificates of deposit are certificates of deposit on which the
interest rate is periodically adjusted prior to their stated maturity based upon
a specified market rate. A bankers' acceptance is a time draft drawn on a
commercial bank by a borrower usually in connection with an international
commercial transaction (to finance the import, export, transfer or storage of
goods).
A Portfolio will not invest in any security issued by a commercial bank unless
(i) the bank has total assets of at least $1 billion or, in the case of a bank
which does not have total assets of at least $1 billion, the aggregate
investment made in any one such bank is limited to $100,000 and the principal
amount of such investment is insured in full by the Federal Deposit Insurance
Corporation, (ii) it is a member of the Federal Deposit Insurance Corporation,
and (iii) the bank or its securities have received the highest quality rating by
a nationally-recognized statistical rating organization;
(2) Commercial paper with the highest quality rating by a nationally-recognized
statistical rating organization (e.g., A-1 by S&P or Prime-1 by Moody's) or, if
not so rated, of comparable quality as determined by a Portfolio's investment
adviser;
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(3) Short-term corporate obligations with the highest quality rating by a
nationally-recognized statistical rating organization (e.g., AAA by S&P or Aaa
by Moody's) or, if not so rated, of comparable quality as determined by a
Portfolio's investment adviser;
(4) U.S. government securities (see "U.S. GOVERNMENT SECURITIES"); and
(5) Repurchase agreements collateralized by securities listed above.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES
Each Portfolio of the Fund may purchase securities on a when-issued or delayed
delivery basis. In such transactions, instruments are purchased with payment and
delivery taking place in the future in order to secure what is considered to be
an advantageous yield or price at the time of the transaction. Delivery of and
payment for these securities may take as long as a month or more after the date
of the purchase commitment. Each Portfolio will maintain with its Custodian Bank
a separate account with a segregated portfolio of securities in an amount at
least equal to these commitments. The payment obligation and the interest rates
that will be received are each fixed at the time a Portfolio enters into the
commitment and no interest accrues to the Portfolio until settlement. Thus, it
is possible that the market value at the time of settlement could be higher or
lower than the purchase price if the general level of interest rates has
changed. It is a current policy of the Portfolios not to enter into when-issued
commitments exceeding in the aggregate 15% of the market value of the
Portfolio's total assets less liabilities other than the obligations created by
these commitments.
REPURCHASE AGREEMENTS
Each Portfolio may enter into repurchase agreements with brokers, dealers or
banks deemed to be creditworthy by a Portfolio's investment adviser under
guidelines of the Fund's directors. In a repurchase agreement, a Portfolio buys
securities from a seller that has agreed to repurchase it at a mutually agreed
upon date and price, reflecting the interest rate effective for the term of the
agreement. The term of these agreements is usually from overnight to one week
and never exceeds one year. Not more than 10% of a Portfolio's assets may be
invested in repurchase agreements having a maturity in excess of seven days in
the case of The Defensive Equity, The Aggressive Growth, The International
Equity, The Global Fixed Income and The International Fixed Income Portfolios,
and 15% of the total assets of a Portfolio, in the case of The Defensive Equity
Small/Mid-Cap, The Defensive Equity Utility, The Labor Select International
Equity, The Real Estate Investment Trust and The High-Yield Bond Portfolios.
Repurchase agreements may be viewed as a fully collateralized loan of money by a
Portfolio to the seller. The Portfolio always receives securities as collateral
with a market value at least equal to the purchase price and this value is
maintained during the term of the agreement. If the seller defaults and the
collateral value declines, a Portfolio might incur a loss. If bankruptcy
proceedings are commenced with respect to the seller, a Portfolio's realization
upon the collateral may be delayed or limited. Each Portfolio may invest cash
balances in a joint repurchase agreement in accordance with an Order the
Delaware Group has obtained from the Commission under Section 17(d) of the 1940
Act.
SECURITIES LENDING ACTIVITIES
Each Portfolio may loan up to 25% of its assets to qualified broker/dealers or
institutional investors for their use relating to short sales or other security
transactions.
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(DPT-I)
The major risk to which a Portfolio would be exposed on a loan transaction is
the risk that the borrower would go bankrupt at a time when the value of the
security goes up. Therefore, a Portfolio will only enter into loan arrangements
after a review of all pertinent facts by the investment adviser, subject to
overall supervision by the Board of Directors, including the creditworthiness of
the borrowing broker, dealer or institution and then only if the consideration
to be received from such loans would justify the risk. Creditworthiness will be
monitored on an ongoing basis by the investment adviser.
BORROWING FROM BANKS
Each Portfolio may borrow money as a temporary measure or to facilitate
redemptions. No Portfolio has the intention of increasing its net income through
borrowing. Any borrowing will be done from a bank and, consistent with
Commission rules, immediately after any borrowing is in an amount which exceeds
5% of its net assets, there must be asset coverage of at least 300%. In the
event the asset coverage declines below 300%, a Portfolio would take steps to
reduce the amount of its borrowings so that asset coverage would equal at least
300%. Securities will not be purchased while a Portfolio has an outstanding
borrowing.
FOREIGN INVESTMENT INFORMATION
The International Equity Portfolio, The Labor Select International Equity
Portfolio, The Global Fixed Income Portfolio and The International Fixed Income
Portfolio (and The Defensive Equity Utility, The Real Estate Investment Trust
and The High-Yield Bond Portfolios, up to 10% of their total assets) will invest
in securities of foreign issuers and may hold foreign currency. Investments in
obligations of foreign issuers involve somewhat different investment risks than
those affecting obligations of United States issuers. There is limited publicly
available information with respect to foreign issuers, and foreign issuers are
not subject to uniform accounting, auditing and financial standards and
requirements comparable to those applicable to domestic companies. There is also
less government supervision and regulation of foreign securities exchanges,
brokers and listed companies than in the United States and it is more difficult
to enforce legal rights outside of the U.S. Many foreign securities markets have
substantially less volume than U.S. national securities exchanges, and
securities of some foreign issuers are less liquid and more volatile than
securities of comparable domestic issuers. Settlement practices of certain
foreign countries may include delays and may otherwise differ from those
customary in U.S. markets. Brokerage commissions and other transaction costs on
foreign securities exchanges are generally higher than in the United States. It
is also expected that the expenses for custodial arrangements of The
International Equity, The Defensive Equity Utility, The Labor Select
International Equity, The Real Estate Investment Trust, The Global Fixed Income,
The International Fixed Income and The High-Yield Bond Portfolios' foreign
securities will be somewhat greater than the expenses for the custodial
arrangements for U.S. securities of equal value. Dividends and interest paid by
foreign issuers may be subject to withholding and other foreign taxes. Although
in some countries a portion of these taxes is recoverable, the non-recovered
portion of foreign withholding taxes will reduce the income a Portfolio receives
from the companies comprising the Portfolio's investments. See "TAXES."
Additional risks include future political and economic developments, the
possibility that a foreign jurisdiction might impose or change withholding taxes
on income payable with respect to foreign securities, possible seizure,
nationalization or expropriation of the foreign issuer or foreign deposits and
the possible adoption of foreign government restrictions such as exchange
controls. Also, because a Portfolio may hold foreign currency and because stocks
of foreign companies are normally denominated in foreign currencies, the
Portfolio may be affected favorably or unfavorably by changes in currency rates
and exchange control regulations, and may incur costs in connection with
conversions between various currencies. See "FORWARD FOREIGN CURRENCY EXCHANGE
CONTRACTS," below.
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(DPT-I)
The risks noted above often are heightened for investments in emerging or
developing countries. Compared to the United States and other developed
countries, emerging or developing countries may have relatively unstable
governments, economies based on only a few industries, and securities markets
that trade a small number of securities. Prices on these exchanges tend to be
volatile and, in the past, securities in these countries have offered greater
potential for gain (as well as loss) than securities of companies located in
developed countries. Further, investments by foreign investors are subject to a
variety of restrictions in many emerging or developing countries. These
restrictions may take the form of prior governmental approval, limits on the
amount or type of securities held by foreigners, and limits on the type of
companies in which foreigners may invest. Additional restrictions may be imposed
at any time by these or other countries in which a Portfolio invests. In
addition, the repatriation of both investment income and capital from several
foreign countries is restricted and controlled under certain regulations,
including in some cases the need for certain government consents. Although these
restrictions may in the future make it undesirable to invest in emerging or
developing countries, the Portfolios' investment advisers do not believe that
any current repatriation restrictions would affect their decision to invest in
such countries.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
As noted above, the foreign investments made by The International Equity, The
Defensive Equity Utility, The Labor Select International Equity, The Real Estate
Investment Trust, The Global Fixed Income and The International Fixed Income
Portfolios present currency considerations which pose special risks. The
investment advisers use a purchasing power parity approach to evaluate currency
risk. A purchasing power parity approach attempts to identify the amount of
goods and services that a dollar will buy in the United States and compares that
to the amount of a foreign currency required to buy the same amount of goods and
services in another country. When the dollar buys less abroad, the foreign
currency may be considered to be overvalued. When the dollar buys more abroad,
the foreign currency may be considered to be undervalued. Eventually, currencies
should trade at levels that should make it possible for the dollar to buy the
same amount of goods and services overseas as in the United States.
Although The International Equity Portfolio, The Defensive Equity Utility
Portfolio, The Labor Select International Equity Portfolio, The Real Estate
Investment Trust Portfolio, The Global Fixed Income Portfolio and The
International Fixed Income Portfolio value their assets daily in terms of U.S.
dollars, they do not intend to convert their holdings of foreign currencies into
U.S. dollars on a daily basis. A Portfolio will, however, from time to time,
purchase or sell foreign currencies and/or engage in forward foreign currency
transactions in order to expedite settlement of Portfolio transactions and to
minimize currency value fluctuations. A Portfolio may conduct its foreign
currency exchange transactions on a spot (i.e., cash) basis at the spot rate
prevailing in the foreign currency exchange market or through entering into
contracts to purchase or sell foreign currencies at a future date (i.e., a
"forward foreign currency" contract or "forward" contract). A Portfolio will
convert currency on a spot basis from time to time, and investors should be
aware of the costs of currency conversion.
A forward contract involves an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days from the date
of the contract, agreed upon by the parties, at a price set at the time of the
contract.
A Portfolio may enter into forward contracts to "lock in" the price of a
security it has agreed to purchase or sell, in terms of U.S. dollars or other
currencies in which the transaction will be consummated. By entering into a
forward contract for the purchase or sale, for a fixed amount of U.S. dollars or
foreign currency, of the
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amount of foreign currency involved in the underlying security transaction, a
Portfolio will be able to protect itself against a possible loss resulting from
an adverse change in currency exchange rates during the period between the date
the security is purchased or sold and the date on which payment is made or
received.
For example, when the investment adviser believes that the currency of a
particular foreign country may suffer a significant decline against the U.S.
dollar or against another currency, a Portfolio may enter into a forward
contract to sell, for a fixed amount of U.S. dollars or other appropriate
currency, the amount of foreign currency approximating the value of some or all
of the Portfolio's securities denominated in such foreign currency. A Portfolio
will not enter into forward contracts or maintain a net exposure to such
contracts where the consummation of the contracts would obligate the Portfolio
to deliver an amount of foreign currency in excess of the value of the
Portfolio's securities or other assets denominated in that currency.
The Portfolios may enter into forward contracts to hedge the currency risk
associated with the purchase of individual securities denominated in particular
currencies. In the alternative, the Portfolios may also engage in currency
"cross hedging" when, in the opinion of the investment advisers, as appropriate,
the historical relationship among foreign currencies suggests that the
Portfolios may achieve the same protection for a foreign security at reduced
cost and/or administrative burden through the use of a forward contract relating
to a currency other than the U.S. dollar or the foreign currency in which the
security is denominated.
At the maturity of a forward contract, a Portfolio may either sell the portfolio
security and make delivery of the foreign currency, or it may retain the
security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract with the same currency trader
obligating it to purchase, on the same maturity date, the same amount of the
foreign currency. The Portfolio may realize gain or loss from currency
transactions.
With respect to forward foreign currency contracts, the precise matching of
forward contract amounts and the value of the securities involved is generally
not possible since the future value of such securities in foreign currencies
will change as a consequence of market movements in the value of those
securities between the date the forward contract is entered into and the date it
matures. The projection of short-term currency strategy is highly uncertain.
It is impossible to forecast the market value of Portfolio securities at the
expiration of the contract. Accordingly, it may be necessary for a Portfolio to
purchase additional foreign currency on the spot market (and bear the expense of
such purchase) if the market value of the security is less than the amount of
foreign currency the Portfolio is obligated to deliver and if a decision is made
to sell the security and make delivery of the foreign currency. Conversely, it
may be necessary to sell on the spot market some of the foreign currency
received upon the sale of a Portfolio security if its market value exceeds the
amount of foreign currency the Portfolio is obligated to deliver.
HIGH-YIELD, HIGH RISK SECURITIES
The International Fixed Income Portfolio and The Global Fixed Income Portfolio
may each invest up to 5% of its assets in high risk, high-yield fixed-income
securities of foreign governments, including so-called Brady Bonds. In addition,
The Defensive Equity Utility Portfolio may invest up to 10% of its total assets
in fixed-income securities rated below investment grade. These securities are
rated lower than BBB by S&P and Baa by Moody's or, if unrated, are considered by
the investment adviser to have characteristics similar to such rated securities.
Finally, The High-Yield Bond Portfolio invests primarily in securities rated B-
or higher by
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S&P or B3 or higher by Moody's or, if unrated, judged to be of comparable
quality by the investment adviser. See "APPENDIX A--RATINGS" to this Prospectus
for more rating information. The discussion in this section supplements the
description of the risks of high-yield securities found earlier in this
Prospectus in "INVESTMENT OBJECTIVES, POLICIES AND RISK CONSIDERATIONS - THE
HIGH-YIELD BOND PORTFOLIO," and investors should refer to that Section for a
further discussion of the risks of high-yield bonds.
Fixed-income securities of this type are considered to be of poor standing and
predominantly speculative. Such securities are subject to a substantial degree
of credit risk. In the past, the high-yields from these bonds have more than
compensated for their higher default rates. There can be no assurance, however,
that yields will continue to offset default rates on these bonds in the future.
The Portfolios' investment advisers intend to maintain an adequately diversified
portfolio of these bonds. While diversification can help to reduce the effect of
an individual default on the Portfolios, there can be no assurance that
diversification will protect the Portfolios from widespread bond defaults
brought about by a sustained economic downturn.
Medium and low-grade bonds held by the Portfolios may be issued as a consequence
of corporate restructurings, such as leveraged buy-outs, mergers, acquisitions,
debt recapitalizations or similar events. Also, these bonds are often issued by
smaller, less creditworthy companies or by highly leveraged (indebted) firms,
which are generally less able than more financially stable firms to make
scheduled payments of interest and principal. The risks posed by bonds issued
under such circumstances are substantial.
The economy and interest rates may affect these high-yield, high risk securities
differently from other securities. Prices have been found to be less sensitive
to interest rate changes than higher rated investments, but more sensitive to
adverse economic changes or individual corporate developments. Also, during an
economic downturn or substantial period of rising interest rates, highly
leveraged issuers may experience financial stress which would adversely affect
their ability to service principal and interest payment obligations, to meet
projected business goals and to obtain additional financing. Changes by
recognized rating agencies in their rating of any security and in the ability of
an issuer to make payments of interest and principal will also ordinarily have a
more dramatic effect on the values of these investments than on the values of
higher rated securities. Such changes in value will not affect cash income
derived from these securities, unless the issuers fail to pay interest or
dividends when due. Such changes will, however, affect the Portfolios' net asset
value per share.
The International Fixed Income and The Global Fixed Income Portfolios also have
the ability to invest in Brady Bonds issued pursuant to the Brady Plan. Brady
Bonds are debt securities issued under the framework of the Brady Plan, an
initiative announced by former U.S. Treasury Secretary Nicholas F. Brady in 1989
as a mechanism for debtor nations to restructure their outstanding external
indebtedness (generally, commercial bank debt). In restructuring its external
debt under the Brady Plan framework, a debtor nation negotiates with its
existing bank lenders as well as multilateral institutions such as the World
Bank and the International Monetary Fund. The Brady Plan framework, as it has
developed, contemplates the exchange of commercial bank debt for new issued
bonds ("Brady Bonds"). The investment advisers believe that economic reforms
undertaken by countries in connection with the issuance of Brady Bonds make the
debt of countries which have issued or have announced plans to issue Brady Bonds
an attractive opportunity for investment. Investors, however, should recognize
that the Brady Plan only sets forth general guiding principles for economic
reform and debt reduction, emphasizing that solutions must be negotiated on a
case-by-case basis between debtor nations and their creditors. In addition,
Brady Bonds have been issued only recently and, accordingly, do not have a long
payment history. See "FOREIGN INVESTMENT INFORMATION," above.
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FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
In order to remain fully invested, to facilitate investments in equity
securities and to reduce transaction costs, The Aggressive Growth Portfolio and
The Real Estate Investment Trust Portfolio may, to a limited extent, enter into
futures contracts, purchase or sell options on futures contracts and engage in
certain transactions in options on securities, and may enter into closing
transactions with respect to such activities. The Portfolios will only enter
into these transactions for hedging purposes if it is consistent with the
Portfolios' investment objectives and policies and the Portfolios will not
engage in such transactions to the extent that obligations relating to futures
contracts, options on futures contracts and options on securities (see "FUTURES
CONTRACTS AND OPTIONS ON FUTURES CONTRACTS--OPTIONS ON SECURITIES"), in the
aggregate, exceed 25% of the Portfolios' assets.
Additionally, The International Fixed Income Portfolio may enter into futures
contracts, purchase or sell options on futures contracts, and trade in options
on foreign currencies, and may enter into closing transactions with respect to
such activities. The Portfolios will enter into such transactions to hedge or
"cross hedge" the currency risks associated with its investments, as described
under "FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS," above.
The Aggressive Growth Portfolio and The Real Estate Investment Trust Portfolio
may enter into contracts for the purchase or sale for future delivery of
securities. When a futures contract is sold, the Portfolios incur a contractual
obligation to deliver the securities underlying the contract at a specified
price on a specified date during a specified future month. A purchase of a
futures contract means the acquisition of a contractual right to obtain delivery
to the Portfolio of the securities called for by the contract at a specified
price during a specified future month. Because futures contracts require only a
small initial margin deposit, the Portfolios would then be able to keep a cash
reserve applicable to meet potential redemptions while at the same time being
effectively fully invested.
Foreign currency futures contracts operate similarly to futures contracts
concerning securities. When The International Fixed Income Portfolio sells a
futures contract on a foreign currency, it is obligated to deliver that foreign
currency at a specified future date. Similarly, a purchase by the Portfolio
gives it a contractual right to receive a foreign currency. This enables the
Portfolio to "lock in" exchange rates.
The Portfolios may also purchase and write options to buy or sell futures
contracts. Options on futures are similar to options except that options on
futures give the purchaser the right, in return for the premium paid, to assume
a position in a futures contract, rather than actually to purchase or sell the
futures contract, at a specified exercise price at any time during the period of
the option. The Portfolios will not enter into futures contracts and options
thereon to the extent that more than 5% of a Portfolio's assets are required as
futures contract margin deposits and premiums on options and only to the extent
that obligations under such futures contracts and options thereon would not
exceed 20% of the Portfolio's total assets.
To the extent that interest or exchange rates move in an unexpected direction,
the Portfolio may not achieve the anticipated benefits of investing in futures
contracts and options thereon, or may realize a loss. To the extent that a
Portfolio purchases an option on a futures contract and fails to exercise the
option prior to the exercise date, it will suffer a loss of the premium paid.
Further, the possible lack of a secondary market would prevent the Portfolio
from closing out its positions relating to futures.
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OPTIONS
Options on Securities
The Aggressive Growth Portfolio and The Real Estate Investment Trust Portfolio
may write covered call options on U.S. securities, purchase call options on such
securities and enter into closing transactions related thereto. A Portfolio may
also purchase put options on U.S. securities, may write secured put options on
such securities and enter into closing transactions related thereto.
A covered call option obligates the writer, in return for the premium received,
to sell one of its securities to the purchaser of the option for an agreed price
up to an agreed date. The advantage is that the writer receives premium income
and the purchaser may hedge against an increase in the price of securities it
ultimately wishes to buy. A Portfolio will only purchase call options to the
extent that premiums paid on all outstanding call options do not exceed 2% of
the Portfolio's total assets.
A put option obligates the writer, in return for the premium received, to buy
the security underlying the option at the exercise price during the option
period, and the purchaser of the option has the right to sell the security to
the writer. Each Portfolio will only write put options on a secured basis which
means that the Portfolio will maintain, in a segregated account with its
Custodian Bank, cash or U.S. government securities in an amount not less than
the exercise price of the option at all times during the option period. A
Portfolio will only purchase put options if the Portfolio owns the security
covered by the put option at the time of purchase and to the extent that the
premiums on all outstanding put options do not exceed 2% of the Portfolio's
total assets. The advantage is that the writer receives premium income while the
purchaser can be protected should the market value of the security decline.
Closing transactions essentially let the Portfolios offset put options or call
options prior to exercise or expiration. If a Portfolio cannot effect closing
transactions, it may have to hold a security it would otherwise sell or deliver
a security it might want to hold.
The Portfolios may use both exchange-traded and over-the-counter options.
Certain over-the-counter options may be illiquid. The Aggressive Growth
Portfolio will only invest in such options to the extent consistent with its 10%
limit on investments in illiquid securities, and The Real Estate Investment
Trust Portfolio will only invest in such options to the extent consistent with
its 15% limit on investments in illiquid securities.
With respect to writing covered call options, the Portfolios may lose the
potential market appreciation of the securities subject to the option, if the
investment adviser's judgment is wrong and the price of the security moves in
the opposite direction from what was anticipated. In purchasing put and call
options, the premium paid by a Portfolio plus any transaction costs will reduce
any benefit realized by the Portfolio upon exercise of the option. When writing
put options, the Portfolios may be required, when the put is exercised, to
purchase securities at higher prices than current market prices.
Options on Foreign Currencies
The International Fixed Income Portfolio may purchase call options and write
covered call options on foreign currencies and enter into related closing
transactions. The Portfolio may also purchase put options and write secured put
options on foreign currencies and enter into related closing transactions. The
Portfolio will enter
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into such transactions to hedge or "cross hedge" the currency risks associated
with its investments, as described under "FORWARD FOREIGN CURRENCY EXCHANGE
CONTRACTS," above.
Options on foreign currencies operate similarly to options on securities. The
purchase of an option on a foreign currency may constitute an effective hedge
against fluctuations in exchange rates although, in the event of a rate movement
adverse to the Portfolio's position, the Portfolio may forfeit the entire amount
of the premium plus any related transaction costs. As in the case of other types
of options, the writing of an option on a foreign currency will constitute only
a partial hedge, up to the amount of the premium received, and the Portfolio
could be required to purchase or sell foreign currencies at disadvantageous
exchange rates, thereby incurring losses.
The Portfolio will write call options only if they are "covered" and put options
only if they are secured. A call written by the Portfolio will be considered
covered if the Portfolio owns short-term debt securities with a value equal to
the face amount of the option contract and denominated in the currency upon
which the call is written. A put option written by the Portfolio will be
considered secured if, so long as the Portfolio is obligated as the writer of
the put, it segregates with its Custodian Bank cash or liquid high grade debt
securities equal at all times to the aggregate exercise price of the put.
RISKS OF TRANSACTIONS IN OPTIONS, FUTURES AND FORWARD CONTRACTS
The use of futures contracts, options on futures contracts, forward contracts
and certain options for hedging and other non-speculative purposes as described
above involves certain risks. For example, a lack of correlation between price
changes of an option or futures contract and the assets being hedged could
render a Portfolio's hedging strategy unsuccessful and could result in losses.
The same results could occur if movements of foreign currencies do not correlate
as expected by the investment adviser at a time when a Portfolio is using a
hedging instrument denominated in one foreign currency to protect the value of a
security denominated in a second foreign currency against changes caused by
fluctuations in the exchange rate for the dollar and the second currency. If the
direction of securities prices, interest rates or foreign currency prices is
incorrectly predicted, the Portfolio will be in a worse position than if such
transactions had not been entered into. In addition, since there can be no
assurance that a liquid secondary market will exist for any contract purchased
or sold, a Portfolio may be required to maintain a position (and in the case of
written options may be required to continue to hold the securities used as
cover) until exercise or expiration, which could result in losses. Further,
options and futures contracts on foreign currencies, and forward contracts,
entail particular risks related to conditions affecting the underlying currency.
Over-the-counter transactions in options and forward contracts also involve
risks arising from the lack of an organized exchange trading environment.
RESTRICTED/ILLIQUID SECURITIES
Each Portfolio may invest in restricted securities, including securities
eligible for resale without registration pursuant to Rule 144A ("Rule 144A
Securities") under the Securities Act of 1933 ("1933 Act"). Rule 144A exempts
many privately placed and legally restricted securities from the registration
requirements of the 1933 Act and permits such securities to be freely traded
among certain institutional buyers such as the Portfolios.
Each Portfolio, other than The Defensive Equity Small/Mid-Cap, The Defensive
Equity Utility, The Labor Select International Equity, The Real Estate
Investment Trust, The High-Yield Bond and The International Fixed Income
Portfolios, may invest no more than 10% of the value of its net assets in
illiquid securities. The
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Defensive Equity Small/Mid-Cap, The Defensive Equity Utility, The Labor Select
International Equity, The Real Estate Investment Trust, The High-Yield Bond and
The International Fixed Income Portfolios may each invest no more than 15% of
the value of its net assets in illiquid securities. Illiquid securities, for
purposes of this policy, include repurchase agreements maturing in more than
seven days.
While maintaining oversight, the Board of Directors has delegated to each
Portfolio's investment adviser the day-to-day functions of determining whether
or not individual Rule 144A Securities are liquid for purposes of a Portfolio's
limitation on investments in illiquid assets. The Board has instructed each
Portfolio's investment adviser to consider the following factors in determining
the liquidity of a Rule 144A Security: (i) the frequency of trades and trading
volume for the security; (ii) whether at least three dealers are willing to
purchase or sell the security and the number of potential purchasers; (iii)
whether at least two dealers are making a market in the security; and (iv) the
nature of the security and the nature of the marketplace trades (e.g., the time
needed to dispose of the security, the method of soliciting offers, and the
mechanics of transfer).
If an investment adviser determines that a Rule 144A Security which was
previously determined to be liquid is no longer liquid and, as a result, the
Portfolio's holdings of illiquid securities exceed the Portfolio's 10% or 15%
limit, as applicable, on investment in such securities, the investment adviser
will determine what action shall be taken to ensure that the Portfolio continues
to adhere to such limitation.
CONVERTIBLE, DEBT AND NON-TRADITIONAL EQUITY SECURITIES
From time to time, The Defensive Equity Utility Portfolio may invest in
convertible securities of issuers in the utility industry. In addition, a
portion of The Defensive Equity Small/Mid-Cap and The High-Yield Bond
Portfolios' assets may be invested in convertible and debt securities of issuers
in any industry, and The Real Estate Investment Trust Portfolio's assets may be
invested in convertible securities of issuers in the real estate industry. A
convertible security is a security which may be converted at a stated price
within a specified period of time into a certain quantity of the common stock of
the same or a different issuer. Convertible and debt securities are senior to
common stocks in a corporation's capital structure, although convertible
securities are usually subordinated to similar nonconvertible securities.
Convertible and debt securities provide a fixed-income stream and the
opportunity, through its conversion feature, to participate in the capital
appreciation resulting from a market price advance in the convertible security's
underlying common stock. Just as with debt securities, convertible securities
tend to increase in market value when interest rates decline and tend to
decrease in value when interest rates rise. However, the price of a convertible
security is also influenced by the market value of the security's underlying
common stock and tends to increase as the market value of the underlying stock
rises, whereas it tends to decrease as the market value of the underlying stock
declines. Convertible and debt securities acquired by The Defensive Equity
Small/Mid-Cap, The Defensive Equity Utility, The Real Estate Investment Trust
and The High-Yield Bond Portfolios may be rated below investment grade, or
unrated. These lower rated convertible and debt securities are subject to credit
risk considerations substantially similar to such considerations affecting high
risk, high-yield bonds, commonly referred to as "junk bonds." See "INVESTMENT
OBJECTIVES, POLICIES AND RISK CONSIDERATIONS--THE HIGH-YIELD BOND PORTFOLIO" and
"HIGH-YIELD, HIGH RISK SECURITIES" for a further discussion of these types of
investments.
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The Defensive Equity Small/Mid-Cap, The Defensive Equity Utility, The Real
Estate Investment Trust and The High-Yield Bond Portfolios may invest in
convertible preferred stocks that offer enhanced yield features, such as
Preferred Equity Redemption Cumulative Stock ("PERCS"), which provide an
investor, such as a Portfolio, with the opportunity to earn higher dividend
income than is available on a company's common stock. A PERCS is a preferred
stock which generally features a mandatory conversion date, as well as a capital
appreciation limit which is usually expressed in terms of a stated price. Upon
the conversion date, most PERCS convert into common stock of the issuer (PERCS
are generally not convertible into cash at maturity). Under a typical
arrangement, if after a predetermined number of years the issuer's common stock
is trading at a price below that set by the capital appreciation limit, each
PERCS would convert to one share of common stock. If, however, the issuer's
common stock is trading at a price above that set by the capital appreciation
limit, the holder of the PERCS would receive less than one full share of common
stock. The amount of that fractional share of common stock received by the PERCS
holder is determined by dividing the price set by the capital appreciation limit
of the PERCS by the market price of the issuer's common stock. PERCS can be
called at any time prior to maturity, and hence do not provide call protection.
However, if called early, the issuer may pay a call premium over the market
price to the investor. This call premium declines at a preset rate daily, up to
the maturity date of the PERCS.
The Defensive Equity Small/Mid-Cap, The Defensive Equity Utility, The Real
Estate Investment Trust and The High-Yield Bond Portfolios may also invest in
other enhanced convertible securities. These include but are not limited to ACES
(Automatically Convertible Equity Securities), PEPS (Participating Equity
Preferred Stock), PRIDES (Preferred Redeemable Increased Dividend Equity
Securities), SAILS (Stock Appreciation Income Linked Securities), TECONS (Term
Convertible Notes), QICS (Quarterly Income Cumulative Securities) and DECS
(Dividend Enhanced Convertible Securities). ACES, PEPS, PRIDES, SAILS, TECONS,
QICS and DECS all have the following features: they are company-issued
convertible preferred stock; unlike PERCS, they do not have capital appreciation
limits; they seek to provide the investor with high current income, with some
prospect of future capital appreciation; they are typically issued with three to
four-year maturities; they typically have some built-in call protection for the
first two to three years; investors have the right to convert them into shares
of common stock at a preset conversion ratio or hold them until maturity; and
upon maturity, they will automatically convert to either cash or a specified
number of shares of common stock.
REITS
The Real Estate Investment Trust Portfolio's investment in REITs presents
certain further risks that are unique and in addition to the risks associated
with investing in the real estate industry in general. Equity REITs may be
affected by changes in the value of the underlying property owned by the REITs,
while mortgage REITs may be affected by the quality of any credit extended.
REITs are dependent on management skills, are not diversified, and are subject
to the risks of financing projects. REITs whose underlying assets include
long-term health care properties, such as nursing, retirement and assisted
living homes, may be impacted by federal regulations concerning the health care
industry.
REITs (especially mortgage REITs) are also subject to interest rate risks - when
interest rates decline, the value of a REIT's investment in fixed rate
obligations can be expected to rise. Conversely, when interest rates rise, the
value of a REIT's investment in fixed rate obligations can be expected to
decline. In contrast, as
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interest rates on adjustable rate mortgage loans are reset periodically, yields
on a REIT's investments in such loans will gradually align themselves to reflect
changes in market interest rates, causing the value of such investments to
fluctuate less dramatically in response to interest rate fluctuations than would
investments in fixed rate obligations.
REITs may have limited financial resources, may trade less frequently and in a
limited volume, and may be subject to more abrupt or erratic price movements
than other securities.
AMERICAN DEPOSITORY RECEIPTS
The Defensive Equity, The Defensive Equity Small/Mid-Cap, The Defensive Equity
Utility, The Real Estate Investment Trust, The Global Fixed Income and The
International Fixed Income Portfolios may invest in sponsored and unsponsored
American Depository Receipts ("ADRs") that are actively traded in the United
States. ADRs are receipts typically issued by a U.S. bank or trust company which
evidence ownership of underlying securities issued by a foreign corporation.
"Sponsored" ADRs are issued jointly by the issuer of the underlying security and
a depository, and "unsponsored" ADRs are issued without the participation of the
issuer of the deposited security. Holders of unsponsored ADRs generally bear all
the costs of such facilities and the depository of an unsponsored ADR facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited security or to pass through voting
rights to the holders of such receipts in respect of the deposited securities.
Therefore, there may not be a correlation between information concerning the
issuer of the security and the market value of an unsponsored ADR.
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INVESTMENT LIMITATIONS
Each Portfolio's investment objectives, their designation as a diversified
portfolio or, in the case of The Defensive Equity Utility, The Real Estate
Investment Trust, The Global Fixed Income and The International Fixed Income
Portfolios, as non-diversified portfolios, and their policies concerning
portfolio lending, borrowing from a bank and concentration of investments in
specific industries may not be changed unless authorized by the vote of a
majority of a Portfolio's outstanding voting securities. A "majority vote of the
outstanding voting securities" is the vote by the holders of the lesser of a)
67% or more of a Portfolio's voting securities present in person or represented
by proxy; or b) more than 50% of the outstanding voting securities. The
Statement of Additional Information lists other more specific investment
restrictions of each Portfolio which may not be changed without a majority
shareholder vote.
Except as specified above and under the heading "INVESTMENT OBJECTIVES, POLICIES
AND RISK CONSIDERATIONS" in this Prospectus and as described under "INVESTMENT
POLICIES, PORTFOLIO TECHNIQUES AND RISK CONSIDERATIONS" in the Statement of
Additional Information, the foregoing investment policies are not fundamental
and the directors may change such policies without an affirmative vote of a
"majority of the Fund's outstanding voting securities," as defined in the 1940
Act.
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MANAGEMENT OF THE FUND
Directors
The business and affairs of the Fund and its Portfolios are managed under the
direction of the Fund's Board of Directors. See "FUND OFFICERS AND PORTFOLIO
MANAGERS" in the Prospectus Summary and the Fund's Statement of Additional
Information for additional information about the Fund's officers and directors.
Investment Advisers
Delaware Investment Advisers, a division of Delaware Management Company, Inc.
("Delaware"), furnishes investment advisory services to The Defensive Equity,
The Aggressive Growth, The Defensive Equity Small/Mid-Cap, The Defensive Equity
Utility, The Real Estate Investment Trust, The Fixed Income, The Limited-Term
Maturity and The High-Yield Bond Portfolios. Lincoln Investment Management, Inc.
("Lincoln"), a wholly owned subsidiary of Lincoln National Corporation, acts as
sub-adviser to Delaware with respect to The Real Estate Investment Portfolio. In
its capacity as sub-adviser, Lincoln furnishes Delaware with investment
recommendations, asset allocation advice, research, economic analysis and other
investment services with respect to the securities in which The Real Estate
Investment Trust Portfolio may invest. Delaware and its predecessors have been
managing the funds in the Delaware Group since 1938. On October 31, 1995,
Delaware and its affiliate, Delaware International, were supervising in the
aggregate more than $27 billion in assets in various institutional or separately
managed (approximately $16,961,505,000) and investment company (approximately
$10,172,570,000) accounts. Lincoln (formerly named Lincoln National Investment
Management Company) was incorporated in 1930. Lincoln's primary activity is
institutional fixed-income investment management and consulting. Such activity
includes fixed-income portfolios, private placements, real estate debt and
equity, and asset/liability management. As of December 31, 1995, Lincoln had
over $37 billion in assets under management. Lincoln provides investment
management services to Lincoln National Corporation, its principal subsidiaries
and affiliated registered investment companies, and acts as investment adviser
to other unaffiliated clients.
Delaware International Advisers Ltd. ("Delaware International") furnishes
investment advisory services to The International Equity Portfolio, The Labor
Select International Equity Portfolio, The Global Fixed Income Portfolio and The
International Fixed Income Portfolio. Several of the principals of Delaware
International were previously associated with a registered investment adviser
which managed the assets of a registered investment company. Delaware
International commenced operations as a registered investment adviser in
December 1990.
Delaware has entered into Investment Advisory Agreements with the Fund on behalf
of The Defensive Equity, The Aggressive Growth, The Defensive Equity
Small/Mid-Cap, The Defensive Equity Utility, The Real Estate Investment Trust,
The Fixed Income, The Limited-Term Maturity and The High-Yield Bond Portfolios.
Delaware has also entered into a Sub-Advisory Agreement with Lincoln with
respect to The Real Estate Investment Trust Portfolio. Delaware International
has entered into Investment Advisory Agreements with the Fund on behalf of The
International Equity Portfolio, The Labor Select International Equity Portfolio,
The Global Fixed Income Portfolio and The International Fixed Income Portfolio.
Under these Agreements, Delaware and Delaware International, subject to the
control and supervision of the Fund's Board of Directors and in conformance with
the stated investment objectives and policies of the Portfolios with which they
have an agreement, manage the investment and reinvestment of the assets of the
Portfolios with which they have agreements. In this regard, it is their
responsibility to make investment decisions for the respective Portfolios.
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As compensation for the services to be rendered under their advisory agreements,
Delaware or, as relevant, Delaware International is entitled to an advisory fee
calculated by applying a quarterly rate, based on the following annual
percentage rates, to the Portfolio's average daily net assets for the quarter:
Portfolio Rate
The Defensive Equity Portfolio .55%
The Aggressive Growth Portfolio .80%
The International Equity Portfolio .75%
The Defensive Equity Small/Mid-Cap Portfolio .65%
The Defensive Equity Utility Portfolio .35%
The Labor Select International Equity Portfolio .75%
The Real Estate Investment Trust Portfolio .75%*
The Fixed Income Portfolio .40%
The Limited-Term Maturity Portfolio .30%
The Global Fixed Income Portfolio .50%
The International Fixed Income Portfolio .50%
The High-Yield Bond Portfolio .45%
* Lincoln receives 30% of the advisory fee paid to Delaware for acting as
sub-adviser to Delaware with respect to The Real Estate Investment Trust
Portfolio.
As noted in "FUND EXPENSES," Delaware or, as relevant, Delaware International
elected voluntarily to waive that portion, if any, of its investment advisory
fees and to reimburse a Portfolio's expenses to the extent necessary to ensure
that a Portfolio's expenses (investment advisory fees, plus certain other noted
expenses) do not exceed, on an annualized basis, the amounts noted in that
section of this Prospectus through October 31, 1996. In addition, out of the
investment advisory fees to which they are otherwise entitled, Delaware and
Delaware International pay their proportionate share of the fees paid to
unaffiliated directors by the Fund, except that Delaware will make no such
payments out of the fees it receives for managing The Defensive Equity
Small/Mid-Cap, The Defensive Equity Utility, The Real Estate Investment Trust
and The High-Yield Bond Portfolios, and Delaware International will make no such
payments out of the fees it receives for managing The Labor Select International
Equity and The International Fixed Income Portfolios. With respect to The
Defensive Equity, The Aggressive Growth and The Global Fixed Income Portfolios,
the investment management fees earned were .54%, .79% and .50%, respectively, of
average daily net assets for the fiscal year ended October 31, 1995. After
considering the waiver of fees by the respective investment adviser, as
described above, the fees paid by The Defensive Equity, The Aggressive Growth
and The Global Fixed Income Portfolios amounted to .51%, .63% and .42%,
respectively, of average daily net assets. For the fiscal year ended October 31,
1995, the investment management fee paid by The International Equity Portfolio
amounted to .75% of average daily net assets. The advisory fees payable by The
Aggressive Growth, The International Equity, The Labor Select International
Equity and The Real Estate Investment Trust Portfolios, while higher than the
advisory fees paid by other mutual funds in general, are comparable to fees paid
by other mutual funds with similar objectives and policies to the Portfolios.
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Delaware is an indirect, wholly owned subsidiary of Delaware Management
Holdings, Inc. ("DMH"). On April 3, 1995, a merger between DMH and a wholly
owned subsidiary of Lincoln National Corporation ("Lincoln National") was
completed. DMH, Delaware and Delaware International are now indirect, wholly
owned subsidiaries, and subject to the ultimate control, of Lincoln National.
Lincoln Investment Management, Inc. ("Lincoln"), the sub-adviser to Delaware
with respect to The Real Estate Investment Trust Portfolio, is a wholly owned
subsidiary of Lincoln National. Delaware, Delaware International and Lincoln may
be deemed to be affiliated persons under the 1940 Act, as the three companies
are each under the ultimate control of Lincoln National. Lincoln National, with
headquarters in Fort Wayne, Indiana, is a diversified organization with
operations in many aspects of the financial services industry, including
insurance and investment management. In connection with the merger, new
Investment Management Agreements between the Fund on behalf of The Defensive
Equity Portfolio, The Aggressive Growth Portfolio, The Fixed Income Portfolio
and The Limited-Term Maturity Portfolio and Delaware, and new Investment
Management Agreements between the Fund on behalf of The International Equity
Portfolio, The Global Fixed Income Portfolio and The International Fixed Income
Portfolio and Delaware International were executed following shareholder
approval. Delaware's address is One Commerce Square, 2005 Market Street,
Philadelphia, PA 19103. Delaware International's address is Veritas House, 125
Finsbury Pavement, London, England EC2A INQ. Lincoln's address is 200 E. Berry
Street, Fort Wayne, IN 46802.
Administrator
Delaware Service Company, Inc., an affiliate of Delaware and an indirect, wholly
owned subsidiary of DMH, provides the Fund with administrative services pursuant
to the Amended and Restated Shareholders Services Agreement with the Fund on
behalf of the Portfolios. The services provided under the Amended and Restated
Shareholders Services Agreement are subject to the supervision of the officers
and directors of the Fund, and include day-to-day administration of matters
related to the corporate existence of the Fund, maintenance of its records,
preparation of reports, supervision of the Fund's arrangements with its
Custodian Banks, and assistance in the preparation of the Fund's registration
statements under Federal and State laws. The Amended and Restated Shareholders
Services Agreement also provides that Delaware Service Company, Inc. will
provide the Fund with dividend disbursing and transfer agent services. Delaware
Service Company, Inc. is located at 1818 Market Street, Philadelphia, PA 19103.
For its services under the Amended and Restated Shareholders Services Agreement,
the Fund pays Delaware Service Company, Inc. an annual fixed fee, payable
monthly, and allocated among the Portfolios of the Fund based on the relative
percentage of assets of each Portfolio. Delaware Service Company, Inc. also
provides accounting services to the Fund pursuant to the terms of a separate
agreement.
Distributor
Delaware Distributors, L.P. ("DDLP"), 1818 Market Street, Philadelphia, PA
19103, serves as the exclusive Distributor of the shares of the Fund's
Portfolios. Under its Distribution Agreements with the Fund on behalf of each
Portfolio, DDLP sells shares of the Fund upon the terms and at the current
offering price described in this Prospectus. DDLP is not obligated to sell any
certain number of shares of the Fund. DDLP is an indirect, wholly owned
subsidiary of DMH.
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Expenses
Each Portfolio is responsible for payment of certain other fees and expenses
(including legal fees, accountants' fees, custodial fees and printing and
mailing costs) specified in the Amended and Restated Shareholders Services
Agreement and each of the respective Distribution Agreements. The ratios of
expenses to average daily net assets for The Defensive Equity, The Aggressive
Growth and The Global Fixed Income Portfolios were .68%, .93% and .60%,
respectively, for the fiscal year ended October 31, 1995. These ratios reflect
the waiver of fees by the respective investment adviser, as described above. The
ratio of expenses to average daily net assets for The International Equity
Portfolio was .90% for the fiscal year ended October 31, 1995.
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SHAREHOLDER SERVICES
Special Reports and Other Services
The Fund provides client shareholders with annual audited financial reports and
unaudited semi-annual financial reports. In addition, the investment advisers'
dedicated service staff may also provide client shareholders a detailed monthly
appraisal of the status of their account and a complete review of portfolio
assets, performance results and other pertinent data. Finally, the investment
advisers expect to conduct personal reviews no less than annually with each
client shareholder, with interim telephone updates and other communication, as
appropriate. The Fund's dedicated telephone number, (1-800-231-8002), is
available for shareholder inquiries during normal business hours. The net asset
values for the Portfolios are also available by using the above "800" telephone
number.
Exchange Privilege
Each Portfolio's shares may be exchanged for shares of the Fund's other
Portfolios based on the respective net asset values of the shares involved and
as long as a Portfolio's minimum is satisfied. Exchange requests should be sent
to Delaware Pooled Trust, Inc., One Commerce Square, 2005 Market Street,
Philadelphia, PA 19103, Attn: Client Services. Such an exchange would be
considered a taxable event in instances where an institutional shareholder is
subject to tax. The exchange privilege is only available with respect to
Portfolios that are registered for sale in a shareholder's state of residence.
The Fund reserves the right to suspend or terminate, or amend the terms of, the
exchange privilege upon 60 days' written notice to client shareholders.
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DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The Fund maintains the following dividend and capital gains policies for its 12
Portfolios.
The Fixed Income, The Limited-Term Maturity and The International Fixed Income
Portfolios expect to declare dividends daily and distribute them monthly. The
Defensive Equity Utility, The High-Yield Bond and The Global Fixed Income
Portfolios expect to declare dividends monthly and distribute them monthly. The
Defensive Equity Small/Mid-Cap, The Defensive Equity, The International Equity
and The Labor Select International Equity Portfolios expect to declare and
distribute all of their net investment income to shareholders as dividends
quarterly. The Aggressive Growth and The Real Estate Investment Trust Portfolios
expect to declare and distribute all of their net investment income to
shareholders as dividends annually.
Net capital gains, if any, will be distributed annually. Unless a shareholder
elects to receive dividends and capital gains distributions in cash, all
dividends and capital gains distributions shall be automatically paid in
additional shares at net asset value of the Portfolio.
In addition, in order to satisfy certain distribution requirements of the Tax
Reform Act of 1986, each Portfolio may declare special year-end dividend and
capital gains distributions during November or December to shareholders of
record on a date in such month. Such distributions, if received by shareholders
by January 31, are deemed to have been paid by a Portfolio and received by
shareholders on the earlier of the date paid or December 31 of the prior year.
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TAXES
General
Each Portfolio within the Fund has qualified or intends to qualify, and each
intends to continue to qualify, as a regulated investment company under the
Internal Revenue Code (the "Code"). As such, a Portfolio will not be subject to
federal income or excise tax to the extent its earnings are distributed to its
shareholders as provided in the Code.
Each Portfolio intends to distribute substantially all of its net investment
income and net capital gains. Dividends from net investment income or net
short-term capital gains will be taxable to you as ordinary income, whether
received in cash or in additional shares. For corporate investors, dividends
paid by the Equity Oriented Portfolios, with the exception of The International
Equity and The Labor Select International Equity Portfolios, from net investment
income will generally qualify, in part, for the intercorporate
dividends-received deduction. However, the portion of the dividends so qualified
depends on the aggregate qualifying dividend income received by a Portfolio from
domestic (U.S.) sources. Of the dividends paid by The Defensive Equity and The
Aggressive Growth Portfolios for the fiscal year ended October 31, 1995, 39% and
9%, respectively, were eligible for this deduction.
Distributions paid by a Portfolio from long-term capital gains, whether received
in cash or in additional shares, are taxable to those investors who are subject
to income taxes as long-term capital gains, regardless of the length of time an
investor has owned shares in a Portfolio. The Portfolios do not seek to realize
any particular amount of capital gains during a year; rather, realized gains are
a byproduct of Portfolio management activities. Consequently, capital gains
distributions may be expected to vary considerably from year to year. Also, for
those investors subject to tax, if purchases of shares in a Portfolio are made
shortly before the record date for a dividend or capital gains distribution, a
portion of the investment will be returned as a taxable distribution.
The sale of shares of a Portfolio is a taxable event and may result in a capital
gain or loss to shareholders subject to tax. Capital gain or loss may be
realized from an ordinary redemption of shares or an exchange of shares between
two mutual funds (or two portfolios of a mutual fund). Any loss incurred on the
sale or exchange of the shares of a Portfolio, held for six months or less, will
be treated as a long-term capital loss to the extent of capital gain dividends
received with respect to such shares.
Each year, the Fund will mail to you information on the amount and tax status of
each Portfolio's dividends and distributions. Shareholders should consult their
own tax advisers regarding specific questions as to federal, state, local or
foreign taxes.
The Fund is required to withhold 31% of taxable dividends capital gains
distributions, and redemptions paid to shareholders who have not complied with
IRS taxpayer identification regulations. You may avoid this withholding
requirement by certifying on your Account Registration Form your proper Taxpayer
Identification Number and by certifying that you are not subject to backup
withholding.
The International Equity Portfolio, The Labor Select International Equity
Portfolio, The Global Fixed Income Portfolio and The International Fixed Income
Portfolio - Foreign Taxes
Each of The International Equity Portfolio, The Labor Select International
Equity Portfolio, The Global Fixed Income Portfolio and The International Fixed
Income Portfolio may elect to "pass-through" to its shareholders
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the amount of foreign income taxes paid by such Portfolio. A Portfolio will make
such an election only if it deems it to be in the best interests of its
shareholders.
If this election is made, shareholders of a Portfolio will be required to
include in their gross income their pro-rata share of foreign taxes paid by the
Portfolio. However, shareholders will be able to treat their pro-rata share of
foreign taxes as either an itemized deduction or a foreign tax credit (but not
both) against U.S. income taxes on their tax return.
The tax discussion set forth above is included for general information only.
Prospective investors should consult their own tax advisers concerning the
federal, state, local or foreign tax consequences of an investment in the Fund.
Additional information on tax matters is included in the Statement of Additional
Information.
VALUATION OF SHARES
The net asset value per share of each Portfolio is determined by dividing the
total market value of the Portfolio's investments and other assets, less any
liabilities, by the total outstanding shares of the Portfolio. Net asset value
per share is determined as of the close of regular trading on the NYSE on each
day the NYSE is open for business. Securities listed on a U.S. securities
exchange for which market quotations are available are valued at the last quoted
sale price on the day the valuation is made. Price information on listed
securities is taken from the exchange where the security is primarily traded.
Securities listed on a foreign exchange are valued at the last quoted sale price
available before the time when net assets are valued. Unlisted securities and
listed securities not traded on the valuation date for which market quotations
are readily available are valued at a price that is considered to best represent
fair value within a range not in excess of the current asked price nor less than
the current bid prices. Domestic equity securities traded over-the-counter,
domestic equity securities which are not traded on the valuation date and U.S.
government securities are priced at the mean of the bid and ask price.
Bonds and other fixed-income securities are valued according to the broadest and
most representative market, which will ordinarily be the over-the-counter
market. In addition, bonds and other fixed-income securities may be valued on
the basis of prices provided by a pricing service when such prices are believed
to reflect the fair market value of such securities. The prices provided by a
pricing service are determined without regard to bid or last sale prices but
take into account institutional size trading in similar groups of securities and
any developments related to the specific securities. Securities not priced in
this manner are valued at the most recent quoted mean price, or, when stock
exchange valuations are used, at the latest quoted sale price on the day of
valuation. If there is no such reported sale, the latest quoted mean price will
be used. Securities with remaining maturities of 60 days or less are valued at
amortized cost, if it approximates market value. In the event that amortized
cost does not approximate market value, market prices as determined above will
be used.
Exchange-traded options are valued at the last reported sales price or, if no
sales are reported, at the mean between the last reported bid and ask prices.
Non-exchange traded options are valued at fair value using a mathematical model.
Futures contracts are valued at their daily quoted settlement price. The value
of other assets and securities for which no quotations are readily available
(including restricted securities) are determined in good faith at fair value
using methods determined by the Fund's Board of Directors.
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The securities in which The International Equity Portfolio, The Labor Select
International Equity Portfolio, The Global Fixed Income Portfolio and The
International Fixed Income Portfolio (and, to a limited extent, The Defensive
Equity Utility Portfolio, The Real Estate Investment Trust Portfolio and The
High-Yield Bond Portfolio) may invest from time to time may be listed primarily
on foreign exchanges which trade on days when the NYSE is closed (such as
Saturday). As a result, the net asset value of those Portfolios may be
significantly affected by such trading on days when shareholders have no access
to the Portfolios.
For purposes of calculating net asset value per share, all assets and
liabilities initially expressed in foreign currencies will be converted into
U.S. dollars at the mean between the bid and ask price of such currencies
against the U.S. dollar as provided by an independent pricing service or any
major bank, including the Custodian Banks. Forward foreign currency contracts
are valued at the mean price of the contracts. Interpolated values will be
derived when the settlement date of the contract is on an interim period for
which quotations are not available.
PORTFOLIO TRANSACTIONS
In purchasing and selling securities for each of the Portfolios, the Fund (and,
in the case of The International Equity Portfolio, The Labor Select
International Equity Portfolio, The Global Fixed Income Portfolio and The
International Fixed Income Portfolio, the investment adviser) uses its best
efforts to obtain the best available price and most favorable execution and may,
where relevant, pay higher commissions in recognition of brokerage services
which in the opinion of the Fund's trading department (and, in the case of The
International Equity Portfolio, The Labor Select International Equity Portfolio,
The Global Fixed Income Portfolio and The International Fixed Income Portfolio,
the investment adviser) are necessary and in the best interest of the Fund's
shareholders. In selecting broker/dealers to execute the securities transactions
for the Portfolios, consideration will be given to such factors as the price of
the security, the rate of any commission, the size and difficulty of the order,
the reliability, integrity, financial condition, general execution and
operational capabilities of competing broker/dealers, and any brokerage and
research services which they provide to the Fund. These services may be used by
the investment advisers in servicing any of their other accounts. Some
securities considered for investment by each of the Fund's Portfolios may also
be appropriate for other clients served by the investment advisers. If a
purchase or sale of securities consistent with the investment policies of a
Portfolio and one or more of these other clients served by the investment
advisers is considered at or about the same time, transactions in such
securities will be allocated among the Portfolio and clients in a manner deemed
fair and reasonable. Although there is no specified formula for allocating such
transactions, the various allocation methods used and the results of such
allocations are subject to periodic review by the Fund's directors.
Subject to best price and execution, Portfolio orders may be placed with
qualified broker/dealers who recommend the Fund's Portfolios or who act as
agents in the purchase of shares of the Portfolios for their clients. The
portfolio turnover rates for the fiscal years ended October 31, 1994 and 1995
for The Defensive Equity Portfolio were 73% and 88%, respectively. The portfolio
turnover rates for the fiscal years ended October 31, 1994 and 1995 for The
Aggressive Growth Portfolio were 43% and 64%, respectively. The portfolio
turnover rates for the fiscal years ended October 31, 1994 and 1995 for The
International Equity Portfolio were 22% and 20%, respectively. The portfolio
turnover rates for the fiscal years ended October 31, 1994 and 1995 for The
Global Fixed Income Portfolio were 205% and 77%, respectively. See "PORTFOLIO
TURNOVER" under "TRADING PRACTICES AND BROKERAGE" in the Statement of Additional
Information.
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PERFORMANCE INFORMATION
From time to time, the Portfolios may quote yield in advertising and other types
of sales literature. The current yield for each of these Portfolios will be
calculated by dividing the annualized net investment income earned by each of
the Portfolios during a recent 30-day period by the offering price per share
(net asset value) on the last day of the period. The yield information provides
for semi-annual compounding which assumes that net investment income is earned
and reinvested at a constant rate and annualized at the end of a six-month
period. Each Portfolio also may quote total return performance in advertising
and other types of literature. Total return will be based on a hypothetical
$1,000 investment, reflecting the reinvestment of all distributions at net asset
value at the beginning of the specific period. Each presentation will include,
as relevant, the average annual total return for one-, five- and ten-year
periods. Each Portfolio may also advertise aggregate and average total return
information over additional periods of time.
Yield and net asset value fluctuate and are not guaranteed. Past performance is
not an indication of future results.
GENERAL INFORMATION
Description of Common Stock
The Fund was organized as a Maryland corporation on May 30, 1991. The Articles
of Incorporation permit the Fund to issue one billion shares of common stock
with $.01 par value and fifty million shares have been allocated to each
Portfolio. The Board of Directors has the power to designate one or more classes
of shares of common stock and to classify and reclassify any unissued shares
with respect to such classes.
The shares of each Portfolio, when issued, will be fully paid, non-assessable,
fully transferable and redeemable at the option of the holder. The shares have
no preference as to the conversion, exchange, dividends, retirement or other
features and have no preemptive rights. The shares of each Portfolio have
noncumulative voting rights, which means that the holders of more than 50% of
the shares voting for the election of directors can elect 100% of the directors
if they choose to do so. Shares of each Portfolio entitled to vote on a matter
will vote in the aggregate and not by Portfolio, except when the matter to be
voted upon affects only the interests of shareholders of a particular Portfolio
or when otherwise expressly required by law. The Fund does not issue
certificates for shares unless a shareholder submits a specific request. Under
Maryland law, the Fund is not required, and does not intend, to hold annual
meetings of its shareholders unless, under certain circumstances, it is required
to do so under the 1940 Act.
Custodian Banks
The Chase Manhattan Bank, 4 Chase Metrotech Center, Brooklyn, NY 11245 serves as
custodian for The Global Fixed Income, The International Equity, The Labor
Select International Equity, The Real Estate Investment Trust, The High-Yield
Bond, The International Fixed Income and The Defensive Equity Utility
Portfolios. Bankers Trust Company, One Bankers Trust Plaza, New York, NY 10006
serves as custodian for The Defensive Equity, The Aggressive Growth, The Fixed
Income, The Limited-Term Maturity and The Defensive Equity Small/Mid-Cap
Portfolios.
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Independent Auditors
Ernst & Young LLP, Two Commerce Square, 2001 Market Street, Suite 4000,
Philadelphia, PA 19103, serves as independent auditors for the Fund.
Expenses
Each Portfolio is responsible for all its own expenses other than those borne by
its investment adviser under the relevant Investment Advisory Agreement and the
distributor under the Distribution Agreement.
Litigation
The Fund is not involved in any litigation.
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APPENDIX A--RATINGS
Bonds
Excerpts from Moody's description of its bond ratings: Aaa--judged to be the
best quality. They carry the smallest degree of investment risk; Aa--judged to
be of high quality by all standards; A--possess favorable attributes and are
considered "upper medium" grade obligations; Baa--considered as medium grade
obligations. Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time; Ba--judged to have
speculative elements; their future cannot be considered as well assured. Often
the protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class; B--generally lack
characteristics of the desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over any long period
of time may be small; Caa--are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest; Ca--represent obligations which are speculative in a high degree. Such
issues are often in default or have other marked shortcomings; C--the lowest
rated class of bonds and issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.
Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa to B. The modifier 1 indicates that company ranks in the
higher end of its generic category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the company ranks in the lower end of
its generic rating category.
Excerpts from S&P's description of its bond ratings: AAA--highest grade
obligations. They possess the ultimate degree of protection as to principal and
interest; AA--also qualify as high grade obligations, and in the majority of
instances differ from AAA issues only in a small degree; A--strong ability to
pay interest and repay principal although more susceptible to changes in
circumstances; BBB--regarded as having an adequate capacity to pay interest and
repay principal; BB, B, CCC, CC--regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the lowest degree of
speculation and CC the highest degree of speculation. While such debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions; C--reserved
for income bonds on which no interest is being paid; D--in default, and payment
of interest and/or repayment of principal is in arrears.
Plus (+) or minus (-) Ratings may be modified by a plus or minus sign,
reflecting the relative standing within the major rating categories.
Commercial Paper
Excerpts from Moody's description of its two highest commercial paper ratings:
P-1-the highest grade possessing greatest relative strength; P-2-second highest
grade possessing less relative strength than the highest grade.
Excerpts from S&P's description of its two highest commercial paper ratings:
A-1-judged to be the highest investment grade category possessing the highest
relative strength; A-2-investment grade category possessing less relative
strength than the highest rating.
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PART B
DELAWARE POOLED TRUST, INC.
STATEMENT OF ADDITIONAL INFORMATION
August 30, 1996
-----------------------------------
Delaware Pooled Trust, Inc. ("Fund") is a no-load, open-end management
investment company. The Fund consists of 12 series ("Portfolios") offering a
broad range of investment choices. The Fund is designed to provide clients with
attractive alternatives for meeting their investment needs. Shares of the
Portfolios are offered with no sales charge or exchange or redemption fee. This
Statement of Additional Information addresses information of the Fund applicable
to each of the 12 Portfolios.
This Statement of Additional Information is not a prospectus but should
be read in conjunction with the Prospectus of the Fund dated August 30, 1996. To
obtain a Prospectus, please write to the Delaware Pooled Trust, Inc. at One
Commerce Square, 2005 Market Street, Philadelphia, PA 19103, Attn: Client
Services or call the Fund at 1-800-231-8002.
TABLE OF CONTENTS
Page
----
Investment Policies, Portfolio Techniques and
Risk Considerations
Accounting and Tax Issues
Performance Information
Trading Practices and Brokerage
Purchasing Shares
Determining Net Asset Value
Redemption and Repurchase
Dividends and Capital Gain Distributions
Taxes
Investment Management Agreements
Officers and Directors
General Information
Financial Statements
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INVESTMENT POLICIES, PORTFOLIO TECHNIQUES AND RISK CONSIDERATIONS
Investment Restrictions
The Fund has adopted the following restrictions for each of the
Portfolios (except where otherwise noted) which, along with its respective
investment objective, cannot be changed without approval by the holders of a
"majority" of the respective Portfolio's outstanding shares, which is a vote by
the holders of the lesser of a) 67% or more of the voting securities present in
person or by proxy at a meeting, if the holders of more than 50% of the
outstanding voting securities are present or represented by proxy; or b) more
than 50% of the outstanding voting securities. The percentage limitations
contained in the restrictions and policies set forth herein apply at the time a
Portfolio purchases securities.
Each Portfolio shall not:
1. Make loans, except to the extent that purchases of debt obligations
(including repurchase agreements), in accordance with a Portfolio's investment
objective and policies, are considered loans, and except that each Portfolio may
loan up to 25% of its respective assets to qualified broker/dealers or
institutional investors for their use relating to short sales or other security
transactions.
2. Purchase or sell real estate or real estate limited partnerships,
but this shall not otherwise prevent a Portfolio from investing in securities
secured by real estate or interests therein, and except that The Real Estate
Investment Trust Portfolio may own real estate directly as a result of a default
on securities the Portfolio owns.
3. Engage in the underwriting of securities of other issuers, except
that in connection with the disposition of a security, a Portfolio may be deemed
to be an "underwriter" as that term is defined in the Securities Act of 1933.
4. Make any investment which would cause more than 25% of the market or
other fair value of its respective total assets to be invested in the securities
of issuers all of which conduct their principal business activities in the same
industry, except that The Defensive Equity Utility Portfolio shall invest in
excess of 25% of its total assets in the securities of issuers in the utility
industry, and The Real Estate Investment Trust Portfolio shall invest in excess
of 25% of its total assets in the securities of issuers in the real estate
industry. This restriction does not apply to obligations issued or guaranteed by
the U.S. government, its agencies or instrumentalities.
5. Purchase or sell commodities or commodity contracts, except that The
Aggressive Growth Portfolio, The Real Estate Investment Trust Portfolio and The
International Fixed Income Portfolio may enter into futures contracts and may
purchase and sell options on futures contracts in accordance with the
Prospectus, subject to investment restriction 6 below.
6. Enter into futures contracts or options thereon, except that The
Aggressive Growth Portfolio, The Real Estate Investment Trust Portfolio and The
International Fixed Income Portfolio may each enter into futures contracts and
options thereon to the extent that not more than 5% of its assets are required
as futures contract margin deposits and premiums on options and only to the
extent that obligations under such contracts and transactions represent not more
than 20% of its total assets.
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7. Make short sales of securities, or purchase securities on margin,
except that The Aggressive Growth Portfolio, The Real Estate Investment Trust
Portfolio and The International Fixed Income Portfolio may satisfy margin
requirements with respect to futures transactions.
8. Purchase or retain the securities of any issuer which has an
officer, director or security holder who is a director or officer of the Fund or
of either of the investment advisers if or so long as the directors and officers
of the Fund and of the investment advisers together own beneficially more than
5% of any class of securities of such issuer.
9. Invest in interests in oil, gas and other mineral leases or other
mineral exploration or development programs.
10. Borrow money, except as a temporary measure for extraordinary
purposes or to facilitate redemptions. Any borrowing will be done from a bank
and to the extent that such borrowing exceeds 5% of the value of its respective
net assets, asset coverage of at least 300% is required. In the event that such
asset coverage shall at any time fall below 300%, a Portfolio shall, within
three days thereafter (not including Sunday or holidays) or such longer period
as the Securities and Exchange Commission ("Commission") may prescribe by rules
and regulations, reduce the amount of its borrowings to such an extent that the
asset coverage of such borrowings shall be at least 300%. No investment
securities will be purchased while a Portfolio has an outstanding borrowing. A
Portfolio will not pledge more than 10% of its respective net assets. A
Portfolio will not issue senior securities as defined in the Investment Company
Act of 1940 (the "1940 Act"), except for notes to banks.
In addition to the restrictions set forth above, in connection with the
qualification of a Portfolio's shares for sale in certain states, a Portfolio
may not invest in warrants if such warrants, valued at the lower of cost or
market, would exceed 5% of the value of a Portfolio's net assets. Included
within such amount, but not to exceed 2% of a Portfolio's net assets may be
warrants which are not listed on the New York Stock Exchange or American Stock
Exchange. Warrants acquired by a Portfolio in units or attached to securities
may be deemed to be without value.
Additional Fundamental Investment Restrictions
The following additional investment restrictions apply to each of the
Portfolios, except The Defensive Equity Small/Mid-Cap Portfolio, The Defensive
Equity Utility Portfolio, The Labor Select International Equity Portfolio, The
Real Estate Investment Trust Portfolio, The International Fixed Income Portfolio
and The High- Yield Bond Portfolio, or as otherwise noted. They cannot be
changed without approval by the holders of a "majority" of the respective
Portfolio's outstanding shares, as described above.
Each Portfolio shall not:
1. As to 75% of its respective total assets, invest more than 5% of its
respective total assets in the securities of any one issuer (other than
obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities). This restriction shall also apply to The Defensive Equity
Small/Mid-Cap Portfolio, The Labor Select International Equity Portfolio and The
High-Yield Bond Portfolio. This restriction shall apply to only 50% of the total
assets of The Global Fixed Income Portfolio.
2. Invest in securities of other investment companies, except by
purchase in the open market involving only customary brokers' commissions or in
connection with a merger, consolidation or other acquisition or as may otherwise
be permitted by the 1940 Act.
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3. Purchase more than 10% of the outstanding voting securities of any
issuer, or invest in companies for the purpose of exercising control or
management.
4. Write, purchase or sell options, puts, calls or combinations thereof
with respect to securities, except that The Aggressive Growth Portfolio may: (a)
write covered call options with respect to any or all parts of its portfolio
securities; (b) purchase call options to the extent that the premiums paid on
all outstanding call options do not exceed 2% of the Portfolio's total assets;
(c) write secured put options; and (d) purchase put options, if the Portfolio
owns the security covered by the put option at the time of purchase, and
provided that premiums paid on all put options outstanding do not exceed 2% of
its total assets. The Portfolio may sell call or put options previously
purchased and enter into closing transactions with respect to the activities
noted above.
5. Invest more than 5% of the value of its respective total assets in
securities of companies less than three years old. Such three-year period shall
include the operation of any predecessor company or companies.
6. Invest more than 10% of its respective total assets in repurchase
agreements maturing in more than seven days and other illiquid assets.
For purposes of investment restriction 6, it is the Fund's policy,
changeable without shareholder vote, that "illiquid assets" include securities
of foreign issuers which are not listed on a recognized U.S. or foreign exchange
and for which a bona fide market does not exist at the time of purchase or
subsequent valuation.
The Defensive Equity Small/Mid-Cap Portfolio, The Defensive Equity Utility
Portfolio, The Labor Select International Equity Portfolio, The Real Estate
Investment Trust Portfolio, The International Fixed Income Portfolio and The
High-Yield Bond Portfolio
The following additional investment restrictions apply to The Defensive
Equity Small/Mid-Cap Portfolio, The Defensive Equity Utility Portfolio, The
Labor Select International Equity Portfolio, The Real Estate Investment Trust
Portfolio, The International Fixed Income Portfolio and The High-Yield Bond
Portfolio. Unlike the investment restrictions listed above, these are
non-fundamental investment restrictions and may be changed by the Fund's Board
of Directors without shareholder approval.
Except as noted below, each of The Defensive Equity Small/Mid-Cap
Portfolio, The Defensive Equity Utility Portfolio, The Labor Select
International Equity Portfolio, The Real Estate Investment Trust Portfolio, The
International Fixed Income Portfolio and The High-Yield Bond Portfolio shall
not:
1. As to 50% of the respective total assets of The Defensive Equity
Utility Portfolio, The Real Estate Investment Trust Portfolio and The
International Fixed Income Portfolio, invest more than 5% of its respective
total assets in the securities of any one issuer (other than obligations issued
or guaranteed by the U.S. government, its agencies or instrumentalities).
2. Invest in securities of other investment companies, except by
purchase in the open market involving only customary brokers' commissions or in
connection with a merger, consolidation or other acquisition or as may otherwise
be permitted by the 1940 Act.
3. Invest more than 5% of the value of its respective total assets in
securities of companies less than three years old. Such three-year old period
shall include the operation of any predecessor company or companies. This
restriction shall not apply to The Real Estate Investment Trust Portfolio and
its investment in the securities of real estate investment trusts.
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<PAGE>
4. Purchase more than 10% of the outstanding voting securities of any
issuer, or invest in companies for the purpose of exercising control or
management.
5. Write, purchase or sell options, puts, calls or combinations thereof
with respect to securities, except that The Real Estate Investment Trust
Portfolio may: (a) write covered call options with respect to any or all parts
of its portfolio securities; (b) purchase call options to the extent that the
premiums paid on all outstanding call options do not exceed 2% of the
Portfolio's total assets; (c) write secured put options; and (d) purchase put
options, if the Portfolio owns the security covered by the put option at the
time of purchase, and provided that premiums paid on all put options outstanding
do not exceed 2% of its total assets. The Portfolio may sell call or put options
previously purchased and enter into closing transactions with respect to the
activities noted above.
6. Invest more than 15% of its respective total assets, determined at
the time of purchase, in repurchase agreements maturing in more than seven days
and other illiquid assets.
For purposes of investment restriction 6, it is the Fund's policy that
"illiquid assets" include securities of foreign issuers which are not listed on
a recognized U.S. or foreign exchange and for which no bona fide market exists
at the time of purchase.
The following information supplements the information provided in the
Fund's Prospectus.
Foreign Investment Information (The International Equity Portfolio, The
Defensive Equity Utility Portfolio, The Labor Select International Equity
Portfolio, The Real Estate Investment Trust Portfolio, The Global Fixed Income
Portfolio, The International Fixed Income Portfolio and The High-Yield Bond
Portfolio)
Investors in The International Equity Portfolio, The Labor Select
International Equity Portfolio, The Global Fixed Income Portfolio and The
International Fixed Income Portfolio (as well as in The Defensive Equity Utility
Portfolio, The Real Estate Investment Trust Portfolio and The High-Yield Bond
Portfolio, each of which possesses a limited ability to invest in foreign
securities) should recognize that investing in securities issued by foreign
corporations and foreign governments involves certain considerations, including
those set forth in the Prospectus, which are not typically associated with
investments in United States issuers. Since the securities of foreign issuers
are frequently denominated in foreign currencies, and since each Portfolio may
temporarily hold uninvested reserves in bank deposits in foreign currencies,
these Portfolios will be affected favorably or unfavorably by changes in
currency rates and in exchange control regulations, and may incur costs in
connection with conversions between various currencies. The investment policies
of each Portfolio, except The High-Yield Bond Portfolio, permit each to enter
into forward foreign currency exchange contracts and permit The International
Fixed Income Portfolio to engage in certain options and futures activities, in
order to hedge holdings and commitments against changes in the level of future
currency rates. See "FOREIGN CURRENCY TRANSACTIONS (THE INTERNATIONAL EQUITY
PORTFOLIO, THE DEFENSIVE EQUITY UTILITY PORTFOLIO, THE LABOR SELECT
INTERNATIONAL EQUITY PORTFOLIO, THE REAL ESTATE INVESTMENT TRUST PORTFOLIO, THE
GLOBAL FIXED INCOME PORTFOLIO AND THE INTERNATIONAL FIXED INCOME PORTFOLIO),"
below.
There has been in the past, and there may be again in the future, an
interest equalization tax levied by the United States in connection with the
purchase of foreign securities such as those purchased by the Portfolios.
Payment of such interest equalization tax, if imposed, would reduce a
Portfolio's rate of return on its investment. Dividends paid by foreign issuers
may be subject to withholding and other foreign taxes which may decrease the net
return on such investments as compared to dividends paid to a Portfolio by
United States
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<PAGE>
issuers. Special rules govern the federal income tax treatment of certain
transactions denominated in terms of a currency other than the U.S. dollar or
determined by reference to the value of one or more currencies other than the
U.S. dollar. The types of transactions covered by the special rules include, as
relevant, the following: (i) the acquisition of, or becoming the obligor under,
a bond or other debt instrument (including, to the extent provided in Treasury
Regulations, preferred stock); (ii) the accruing of certain trade receivables
and payables; and (iii) the entering into or acquisition of any forward contract
and similar financial instrument if such instrument is not "marked to market."
The disposition of a currency other than the U.S. dollar by a U.S. taxpayer is
also treated as a transaction subject to the special currency rules. With
respect to transactions covered by the special rules, foreign currency gain or
loss is calculated separately from any gain or loss on the underlying
transaction and is normally taxable as ordinary gain or loss. A taxpayer may
elect to treat as capital gain or loss foreign currency gain or loss arising
from certain identified forward contracts that are capital assets in the hands
of the taxpayer and which are not part of a straddle. The Treasury Department
has authority to issue regulations under which certain transactions subject to
the special currency rules that are part of a "section 988 hedging transaction"
(as defined in the Internal Revenue Code of 1986, as amended (the "Code"), and
the Treasury Regulations) will be integrated and treated as a single transaction
or otherwise treated consistently for purposes of the Code. Any gain or loss
attributable to the foreign currency component of a transaction engaged in by a
Portfolio which is not subject to the special currency rules (such as foreign
equity investments other than certain preferred stocks) will be treated as
capital gain or loss and will not be segregated from the gain or loss on the
underlying transaction. It is anticipated that some of the non-U.S. dollar
denominated investments and foreign currency contracts the Portfolios may make
or enter into will be subject to the special currency rules described above.
Foreign Currency Transactions (The International Equity Portfolio, The Defensive
Equity Utility Portfolio, The Labor Select International Equity Portfolio, The
Real Estate Investment Trust Portfolio, The Global Fixed Income Portfolio and
The International Fixed Income Portfolio)
The International Equity Portfolio, The Labor Select International
Equity Portfolio, The Global Fixed Income Portfolio and The International Fixed
Income Portfolio (as well as The Defensive Equity Utility Portfolio and The Real
Estate Investment Trust Portfolio, consistent with their limited ability to
invest in foreign securities) may purchase or sell currencies and/or engage in
forward foreign currency transactions in order to expedite settlement of
portfolio transactions and to minimize currency value fluctuations.
Forward foreign currency contracts are traded in the interbank market
conducted directly between currency traders (usually large commercial banks) and
their customers. A forward contract generally has no deposit requirement, and no
commissions are charged at any stage for trades. A Portfolio will account for
forward contracts by marking to market each day at daily exchange rates.
When a Portfolio enters into a forward contract to sell, for a fixed
amount of U.S. dollars or other appropriate currency, the amount of foreign
currency approximating the value of some or all of its assets denominated in
such foreign currency, its Custodian Bank will place or will cause to be placed
cash or liquid equity or debt securities in a separate account of that Portfolio
in an amount not less than the value of that Portfolio's total assets committed
to the consummation of such forward contracts. If the additional cash or
securities placed in the separate account declines, additional cash or
securities will be placed in the account on a daily basis so that the value of
the account will equal the amount of that Portfolio's commitments with respect
to such contracts.
As noted in the Prospectus, The International Fixed Income Portfolio
may also enter into transactions involving foreign currency options, futures
contracts and options on futures contracts, in order to minimize the currency
risk in its investment portfolio.
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Foreign currency options are traded in a manner substantially similar
to options on securities. In particular, an option on foreign currency provides
the holder with the right to purchase, in the case of a call option, or to sell,
in the case of a put option, a stated quantity of a particular currency for a
fixed price up to a stated expiration date. The writer of the option undertakes
the obligation to deliver, in the case of a call option, or to purchase, in the
case of a put option, the quantity of the currency called for in the option,
upon exercise of the option by the holder.
As in the case of other types of options, the holder of an option on
foreign currency is required to pay a one-time, non-refundable premium, which
represents the cost of purchasing the option. The holder can lose the entire
amount of this premium, as well as related transaction costs, but not more than
this amount. The writer of the option, in contrast, generally is required to
make initial and variation margin payments, similar to margin deposits required
in the trading of futures contacts and the writing of other types of options.
The writer is therefore subject to risk of loss beyond the amount originally
invested and above the value of the option at the time it is entered into.
Certain options on foreign currencies, like forward contracts, are
traded over-the-counter through financial institutions acting as market-makers
in such options and the underlying currencies. Such transactions therefore
involve risks not generally associated with exchange-traded instruments. Options
on foreign currencies may also be traded on national securities exchanges
regulated by the Commission or commodities exchanges regulated by the Commodity
Futures Trading Commission.
A foreign currency futures contract is a bilateral agreement providing
for the purchase and sale of a specified type and amount of a foreign currency.
By its terms, a futures contract provides for a specified settlement date on
which, in the case of the majority of foreign currency futures contracts, the
currency underlying the contract is delivered by the seller and paid for by the
purchaser, or on which, in the case of certain futures contracts, the difference
between the price at which the contract was entered into and the contract's
closing value is settled between the purchaser and seller in cash. Futures
contracts differ from options in that they are bilateral agreements, with both
the purchaser and the seller equally obligated to complete the transactions. In
addition, futures contracts call for settlement only on the expiration date, and
cannot be "exercised" at any other time during their term.
The purchase or sale of a futures contract also differs from the
purchase or sale of a security or the purchase of an option in that no purchase
price is paid or received. Instead, an amount of cash or cash equivalents, which
varies but may be as low as 5% or less of the value of the contract, must be
deposited with the broker as "initial margin" as a good faith deposit.
Subsequent payments to and from the broker referred to as "variation margin" are
made on a daily basis as the value of the currency underlying the futures
contract fluctuates, making positions in the futures contract more or less
valuable, a process known as "marking to the market."
A futures contract may be purchased or sold only on an exchange, known
as a "contract market," designated by the Commodity Futures Trading Commission
for the trading of such contract, and only through a registered futures
commission merchant which is a member of such contract market. A commission must
be paid on each completed purchase and sale transaction. The contract market
clearinghouse guarantees the performance of each party to a futures contract by
in effect taking the opposite side of such contract. At any time prior to the
expiration of a futures contract, a trader may elect to close out its position
by taking an opposite position on the contract market on which the position was
entered into, subject to the availability of a secondary market, which will
operate to terminate the initial position. At that time, a final determination
of
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<PAGE>
variation margin is made and any loss experienced by the trader is required to
be paid to the contract market clearing house while any profit due to the trader
must be delivered to it.
A call option on a futures contract provides the holder with the right
to purchase, or enter into a "long" position in, the underlying futures
contract. A put option on a futures contract provides the holder with the right
to sell, or enter into a "short" position, in the underlying futures contract.
In both cases, the option provides for a fixed exercise price up to a stated
expiration date. Upon exercise of the option by the holder, the contract market
clearinghouse establishes a corresponding short position for the writer of the
option, in the case of a call option, or a corresponding long position in the
case of a put option and the writer delivers to the holder the accumulated
balance in the writer's margin account which represents the amount by which the
market price of the futures contract at exercise exceeds, in the case of a call,
or is less than, in the case of a put, the exercise price of the option on the
futures contract. In the event that an option written by the Portfolio is
exercised, the Portfolio will be subject to all the risks associated with the
trading of futures contracts, such as payment of variation margin deposits. In
addition, the writer of an option on a futures contract, unlike the holder, is
subject to initial and variation margin requirements on the option position.
A position in an option on a futures contract may be terminated by the
purchaser or seller prior to expiration by effecting a closing purchase or sale
transaction, subject to the availability of a liquid secondary market, which is
the purchase or sale of an option of the same series (i.e., the same exercise
price and expiration date) as the option previously purchased or sold. The
difference between the premiums paid and received represents the trader's profit
or loss on the transaction.
An option becomes worthless to the holder when it expires. Upon
exercise of an option, the exchange or contract market clearinghouse assigns
exercise notices on a random basis to those of its members which have written
options of the same series and with the same expiration date. A brokerage firm
receiving such notices then assigns them on a random basis to those of its
customers which have written options of the same series and expiration date. A
writer therefore has no control over whether an option will be exercised against
it, nor over the timing of such exercise.
Brady Bonds (The Global Fixed Income Portfolio and The International Fixed
Income Portfolio)
The Global Fixed Income Portfolio and The International Fixed Income
Portfolio may invest, within the limits specified in the Prospectus, in Brady
Bonds and other sovereign debt securities of countries that have restructured or
are in the process of restructuring sovereign debt pursuant to the Brady Plan.
Brady Bonds are debt securities issued under the framework of the Brady Plan, an
initiative announced by then U.S. Treasury Secretary Nicholas F. Brady in 1989,
as a mechanism for debtor nations to restructure their outstanding external
indebtedness (generally, commercial bank debt). In restructuring its external
debt under the Brady Plan framework, a debtor nation negotiates with its
existing bank lenders as well as multilateral institutions such as the World
Bank and the International Monetary Fund (the "IMF"). The Brady Plan framework,
as it has developed, contemplates the exchange of commercial bank debt for newly
issued bonds (Brady Bonds). The World Bank and/or the IMF support the
restructuring by providing funds pursuant to loan agreements or other
arrangements which enable the debtor nation to collateralize the new Brady Bonds
or to repurchase outstanding bank debt at a discount. Under these arrangements
with the World Bank and/or the IMF, debtor nations have been required to agree
to the implementation of certain domestic monetary and fiscal reforms. Such
reforms have included the liberalization of trade and foreign investment, the
privatization of state-owned enterprises and the setting of targets for public
spending and borrowing. These policies and programs seek to promote the debtor
country's ability to service its external obligations and promote its economic
growth and development. Investors should recognize that the Brady Plan only sets
forth general guiding principles for economic reform and debt reduction,
emphasizing that solutions must be negotiated on a case-by-case basis
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<PAGE>
between debtor nations and their creditors. The investment adviser to the
Portfolios believes that economic reforms undertaken by countries in connection
with the issuance of Brady Bonds make the debt of countries which have issued or
have announced plans to issue Brady Bonds an attractive opportunity for
investment.
To date, Mexico, Costa Rica, Venezuela, Uruguay and Nigeria have issued
approximately $50 billion of Brady Bonds, and Argentina, Brazil and the
Philippines have announced plans to issue approximately $90 billion, based on
current estimates, of Brady Bonds. Investors should recognize that Brady Bonds
have been issued only recently, and accordingly do not have a long payment
history. Agreements implemented under the Brady Plan to date are designed to
achieve debt and debt-service reduction through specific options negotiated by a
debtor nation with its creditors. As a result, the financial packages offered by
each country differ. The types of options have included the exchange of
outstanding commercial bank debt for bonds issued at 100% of face value of such
debt, bonds issued at a discount of face value of such debt, bonds bearing an
interest rate which increases over time and bonds issued in exchange for the
advancement of new money by existing lenders. Certain Brady Bonds have been
collateralized as to principal due at maturity by U.S. Treasury zero coupon
bonds with a maturity equal to the final maturity of such Brady Bonds, although
the collateral is not available to investors until the final maturity of the
Brady Bonds. Collateral purchases are financed by the IMF, the World Bank and
the debtor nations' reserves. In addition, the first two or three interest
payments on certain types of Brady Bonds may be collateralized by cash or
securities agreed upon by creditors.
Options on Securities, Futures Contracts and Options on Futures Contracts
(The Aggressive Growth Portfolio and The Real Estate Investment Trust
Portfolio)
In order to remain fully invested, and to reduce transaction costs, The
Aggressive Growth Portfolio and The Real Estate Investment Trust Portfolio may,
to the limited extent identified in the Prospectus, use futures contracts,
options on futures contracts and options on securities and may enter into
closing transactions with respect to such activities. The Portfolios may only
enter into these transactions for hedging purposes, if it is consistent with the
Portfolios' investment objectives and policies. The Portfolios will not engage
in such transactions to the extent that obligations resulting from these
activities in the aggregate exceed 25% of the Portfolios' assets.
Options
The Aggressive Growth Portfolio and The Real Estate Investment Trust
Portfolio may purchase call options, write call options on a covered basis,
write secured put options and purchase put options on a covered basis only.
The Portfolios may invest in options that are either exchange-listed or
traded over-the-counter. Certain over-the-counter options may be illiquid. Thus,
it may not be possible to close options positions and this may have an adverse
impact on the Portfolios' ability to effectively hedge their securities. The
Aggressive Growth Portfolio will not invest more than 10% of its assets in
illiquid securities, and The Real Estate Investment Trust Portfolio will not
invest more than 15% of its assets in illiquid securities.
A. Covered Call Writing--The Portfolios may write covered call options
from time to time on such portion of their securities as the investment adviser
determines is appropriate given the limited circumstances under which the
Portfolios intend to engage in this activity. A call option gives the purchaser
of such option the right to buy and the writer (in this case a Portfolio) the
obligation to sell the underlying security at the exercise price during the
option period. If the security rises in value, however, the Portfolio may not
fully participate in the market appreciation.
-9-
<PAGE>
During the option period, a covered call option writer may be assigned
an exercise notice by the broker/dealer through whom such call option was sold
requiring the writer to deliver the underlying security against payment of the
exercise price. This obligation is terminated upon the expiration of the option
period or at such earlier time in which the writer effects a closing purchase
transaction. A closing purchase transaction cannot be effected with respect to
an option once the option writer has received an exercise notice for such
option.
With respect to options on actual portfolio securities owned by the
Portfolios, a Portfolio may enter into closing purchase transactions. A closing
purchase transaction is one in which the Portfolio, when obligated as a writer
of an option, terminates its obligation by purchasing an option of the same
series as the option previously written.
Consistent with the limited purposes for which the Portfolios intend to
engage in the writing of covered calls, closing purchase transactions will
ordinarily be effected to realize a profit on an outstanding call option, to
prevent an underlying security from being called, to permit the sale of the
underlying security or to enable the Portfolios to write another call option on
the underlying security with either a different exercise price or expiration
date or both.
The Portfolios may realize a net gain or loss from a closing purchase
transaction depending upon whether the net amount of the original premium
received on the call option is more or less than the cost of effecting the
closing purchase transaction. Any loss incurred in a closing purchase
transaction may be partially or entirely offset by the premium received from a
sale of a different call option on the same underlying security. Such a loss may
also be wholly or partially offset by unrealized appreciation in the market
value of the underlying security. Conversely, a gain resulting from a closing
purchase transaction could be offset in whole or in part by a decline in the
market value of the underlying security.
If a call option expires unexercised, a Portfolio will realize a
short-term capital gain in the amount of the premium on the option, less the
commission paid. Such a gain, however, may be offset by depreciation in the
market value of the underlying security during the option period. If a call
option is exercised, a Portfolio will realize a gain or loss from the sale of
the underlying security equal to the difference between the cost of the
underlying security, and the proceeds of the sale of the security plus the
amount of the premium on the option, less the commission paid.
The market value of a call option generally reflects the market price
of an underlying security. Other principal factors affecting market value
include supply and demand, interest rates, the price volatility of the
underlying security and the time remaining until the expiration date.
The Portfolios will write call options only on a covered basis, which
means that the Portfolios will own the underlying security subject to a call
option at all times during the option period. Unless a closing purchase
transaction is effected, the Portfolios would be required to continue to hold a
security which they might otherwise wish to sell, or deliver a security it would
want to hold. Options written by the Portfolios will normally have expiration
dates between one and nine months from the date written. The exercise price of a
call option may be below, equal to, or above the current market value of the
underlying security at the time the option is written.
B. Purchasing Call Options--The Portfolios may purchase call options to
the extent that premiums paid by the Portfolios do not aggregate more than 2% of
their total assets. When a Portfolio purchases a call option, in return for a
premium paid by the Portfolio to the writer of the option, the Portfolio obtains
the right
-10-
<PAGE>
to buy the security underlying the option at a specified exercise price at any
time during the term of the option. The writer of the call option, who receives
the premium upon writing the option, has the obligation, upon exercise of the
option, to deliver the underlying security against payment of the exercise
price. The advantage of purchasing call options is that the Portfolios may alter
portfolio characteristics and modify portfolio maturities without incurring the
cost associated with portfolio transactions.
The Portfolios may, following the purchase of a call option, liquidate
their positions by effecting a closing sale transaction. This is accomplished by
selling an option of the same series as the option previously purchased. The
Portfolios will realize a profit from a closing sale transaction if the price
received on the transaction is more than the premium paid to purchase the
original call option; the Portfolios will realize a loss from a closing sale
transaction if the price received on the transaction is less than the premium
paid to purchase the original call option.
Although the Portfolios will generally purchase only those call options
for which there appears to be an active secondary market, there is no assurance
that a liquid secondary market on an exchange will exist for any particular
option, or at any particular time, and for some options no secondary market on
an exchange may exist. In such event, it may not be possible to effect closing
transactions in particular options, with the result that the Portfolios would
have to exercise their options in order to realize any profit and would incur
brokerage commissions upon the exercise of such options and upon the subsequent
disposition of the underlying securities acquired through the exercise of such
options. Further, unless the price of the underlying security changes
sufficiently, a call option purchased by a Portfolio may expire without any
value to the Portfolio.
C. Purchasing Put Options--The Portfolios may purchase put options to
the extent premiums paid by the Portfolios do not aggregate more than 2% of
their total assets. The Portfolios will, at all times during which they hold a
put option, own the security covered by such option.
A put option purchased by the Portfolios gives them the right to sell
one of their securities for an agreed price up to an agreed date. Consistent
with the limited purposes for which the Portfolios intend to purchase put
options, the Portfolios intend to purchase put options in order to protect
against a decline in the market value of the underlying security below the
exercise price less the premium paid for the option ("protective puts"). The
ability to purchase put options will allow a Portfolio to protect unrealized
gain in an appreciated security in its portfolio without actually selling the
security. If the security does not drop in value, the Portfolio will lose the
value of the premium paid. The Portfolio may sell a put option which it has
previously purchased prior to the sale of the securities underlying such option.
Such sales will result in a net gain or loss depending on whether the amount
received on the sale is more or less than the premium and other transaction
costs paid on the put option which is sold.
The Portfolios may sell a put option purchased on individual portfolio
securities. Additionally, the Portfolios may enter into closing sale
transactions. A closing sale transaction is one in which a Portfolio, when it is
the holder of an outstanding option, liquidates its position by selling an
option of the same series as the option previously purchased.
D. Writing Put Options--A put option written by a Portfolio obligates
it to buy the security underlying the option at the exercise price during the
option period and the purchaser of the option has the right to sell the security
to the Portfolio. During the option period, the Portfolio, as writer of the put
option, may be assigned an exercise notice by the broker/dealer through whom the
option was sold requiring the Portfolio to make payment of the exercise price
against delivery of the underlying security. The obligation terminates upon
expiration of the put option or at such earlier time at which the writer effects
a closing
-11-
<PAGE>
purchase transaction. A Portfolio may write put options on a secured basis which
means that the Portfolio will maintain in a segregated account with its
Custodian Bank, cash or U.S. government securities in an amount not less than
the exercise price of the option at all times during the option period. The
amount of cash or U.S. government securities held in the segregated account will
be adjusted on a daily basis to reflect changes in the market value of the
securities covered by the put option written by the Portfolios. Consistent with
the limited purposes for which the Portfolios intend to engage in the writing of
put options, secured put options will generally be written in circumstances
where the investment adviser wishes to purchase the underlying security for the
Portfolios at a price lower than the current market price of the security. In
such event, a Portfolio would write a secured put option at an exercise price
which, reduced by the premium received on the option, reflects the lower price
it is willing to pay.
Following the writing of a put option, the Portfolios may wish to
terminate the obligation to buy the security underlying the option by effecting
a closing purchase transaction. This is accomplished by buying an option of the
same series as the option previously written. The Portfolios may not, however,
effect such a closing transaction after they have been notified of the exercise
of the option.
Futures and Options on Futures
Consistent with the limited circumstances under which The Aggressive
Growth Portfolio and The Real Estate Investment Trust Portfolio will use
futures, the Portfolios may enter into contracts for the purchase or sale for
future delivery of securities. While futures contracts provide for the delivery
of securities, deliveries usually do not occur. Contracts are generally
terminated by entering into an offsetting transaction. When a Portfolio enters
into a futures transaction, it must deliver to the futures commission merchant
selected by the Portfolio an amount referred to as "initial margin." This amount
is maintained by the futures commission merchant in an account at the
Portfolio's Custodian Bank. Thereafter, a "variation margin" may be paid by the
Portfolio to, or drawn by the Portfolio from, such account in accordance with
controls set for such account, depending upon changes in the price of the
underlying securities subject to the futures contract.
Consistent with the limited purposes for which the Portfolios may
engage in these transactions, a Portfolio may enter into such futures contracts
to protect against the adverse effects of fluctuations in interest rates without
actually buying or selling the securities. For example, if interest rates are
expected to increase, a Portfolio might enter into futures contracts for the
sale of debt securities. Such a sale would have much the same effect as selling
an equivalent value of the debt securities owned by the Portfolio. If interest
rates did increase, the value of the debt securities in the portfolio would
decline, but the value of the futures contracts to the Portfolio would increase
at approximately the same rate, thereby keeping the net asset value of the
Portfolio from declining as much as it otherwise would have. Similarly, when it
is expected that interest rates may decline, futures contracts may be purchased
to hedge in anticipation of subsequent purchases of securities at higher prices.
Because the fluctuations in the value of futures contracts should be similar to
those of debt securities, a Portfolio could take advantage of the anticipated
rise in value of debt securities without actually buying them until the market
had stabilized. At that time, the futures contracts could be liquidated and the
Portfolio could then buy debt securities on the cash market.
With respect to options on futures contracts, when a Portfolio is not
fully invested, it may purchase a call option on a futures contract to hedge
against a market advance due to declining interest rates. The purchase of a call
option on a futures contract is similar in some respects to the purchase of a
call option on an individual security. Depending on the pricing of the option
compared to either the price of the futures contract upon which it is based, or
the price of the underlying debt securities, it may or may not be less risky
than ownership of the futures contract or underlying debt securities.
-12-
<PAGE>
The writing of a call option on a futures contract constitutes a
partial hedge against the declining price of the security which is deliverable
upon exercise of the futures contract. If the futures price at the expiration of
the option is below the exercise price, the Portfolio will retain the full
amount of the option premium which provides a partial hedge against any decline
that may have occurred in the Portfolio's holdings. The writing of a put option
on a futures contract constitutes a partial hedge against the increasing price
of the security which is deliverable upon exercise of the futures contract. If
the futures price at the expiration of the option is higher than the exercise
price, the Portfolio will retain the full amount of option premium which
provides a partial hedge against any increase in the price of securities which
the Portfolio intends to purchase.
If a put or call option that a Portfolio has written is exercised, the
Portfolio will incur a loss which will be reduced by the amount of the premium
it receives. Depending on the degree of correlation between changes in the value
of its portfolio securities and changes in the value of its futures positions, a
Portfolio's losses from existing options on futures may, to some extent, be
reduced or increased by changes in the value of portfolio securities. The
purchase of a put option on a futures contract is similar in some respects to
the purchase of protective puts on portfolio securities. For example, consistent
with the limited purposes for which the Portfolios will engage in these
activities, a Portfolio will purchase a put option on a futures contract to
hedge the Portfolio's securities against the risk of rising interest rates.
To the extent that interest rates move in an unexpected direction, the
Portfolios may not achieve the anticipated benefits of futures contracts or
options on futures contracts or may realize a loss. For example, if a Portfolio
is hedged against the possibility of an increase in interest rates which would
adversely affect the price of securities held in its portfolio and interest
rates decrease instead, the Portfolio will lose part or all of the benefit of
the increased value of its securities which it has because it will have
offsetting losses in its futures position. In addition, in such situations, if
the Portfolio had insufficient cash, it may be required to sell securities from
its portfolio to meet daily variation margin requirements. Such sales of
securities may, but will not necessarily, be at increased prices which reflect
the rising market. The Portfolios may be required to sell securities at a time
when it may be disadvantageous to do so.
Further, with respect to options on futures contracts, the Portfolios
may seek to close out an option position by writing or buying an offsetting
position covering the same securities or contracts and have the same exercise
price and expiration date. The ability to establish and close out positions on
options will be subject to the maintenance of a liquid secondary market, which
cannot be assured.
* * *
From time to time, the Portfolios may also, as noted below, engage in
the following investment techniques:
Asset-Backed Securities (The Fixed Income Portfolio and The Limited-Term
Maturity Portfolio)
The Fixed Income and The Limited-Term Maturity Portfolios may invest a
portion of their assets in asset-backed securities. The rate of principal
payment on asset-backed securities generally depends on the rate of principal
payments received on the underlying assets. Such rate of payments may be
affected by economic and various other factors such as changes in interest rates
or the concentration of collateral in a particular geographic area. Therefore,
the yield may be difficult to predict and actual yield to maturity may be more
or less than the anticipated yield to maturity. The credit quality of most
asset-backed securities depends primarily on the credit quality of the assets
underlying such securities, how well the entities issuing the securities are
insulated from the credit risk of the originator or affiliated entities, and the
amount of credit support provided to the securities.
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<PAGE>
Asset-backed securities are often backed by a pool of assets
representing the obligations of a number of different parties. To lessen the
effect of failures by obligors on underlying assets to make payments, such
securities may contain elements of credit support. Such credit support falls
into two categories: (i) liquidity protection, and (ii) protection against
losses resulting from ultimate default by an obligor on the underlying assets.
Liquidity protection refers to the provision of advances, generally by the
entity administering the pool of assets, to ensure that the receipt of payments
due on the underlying pool is timely. Protection against losses resulting from
ultimate default enhances the likelihood of payments of the obligations on at
least some of the assets in the pool. Such protection may be provided through
guarantees, insurance policies or letters of credit obtained by the issuer or
sponsor from third parties, through various means of structuring the transaction
or through a combination of such approaches. The Portfolios will not pay any
additional fees for such credit support, although the existence of credit
support may increase the price of a security.
Examples of credit support arising out of the structure of the
transaction include "senior-subordinated securities" (multiple class securities
with one or more classes subordinate to other classes as to the payment of
principal thereof and interest thereon, with the result that defaults on the
underlying assets are borne first by the holders of the subordinated class),
creation of "reserve funds" (where cash or investments, sometimes funded from a
portion of the payments on the underlying assets, are held in reserve against
future losses) and "over collateralization" (where the scheduled payments on, or
the principal amount of, the underlying assets exceeds that required to make
payments of the securities and pay any servicing or other fees). The degree of
credit support provided for each issue is generally based on historical
information respecting the level of credit risk associated with the underlying
assets. Delinquencies or losses in excess of those anticipated could adversely
affect the return on an investment in such issue.
Repurchase Agreements
While each Portfolio is permitted to do so, it normally does not invest
in repurchase agreements, except to invest cash balances or for temporary
defensive purposes.
The funds in the Delaware Group, including the Fund, have obtained an
exemption from the joint- transaction prohibitions of Section 17(d) of the 1940
Act to allow the Delaware Group funds jointly to invest cash balances. Each
Portfolio may invest cash balances in a joint repurchase agreement in accordance
with the terms of the Order and subject generally to the conditions described
below.
A repurchase agreement is a short-term investment by which the
purchaser acquires ownership of a debt security and the seller agrees to
repurchase the obligation at a future time and set price, thereby determining
the yield during the purchaser's holding period. Should an issuer of a
repurchase agreement fail to repurchase the underlying security, the loss to a
Portfolio, if any, would be the difference between the repurchase price and the
market value of the security. Each Portfolio will limit its investments in
repurchase agreements to those which its respective investment adviser, under
the guidelines of the Board of Directors, determines to present minimal credit
risks and which are of high quality. In addition, a Portfolio must have
collateral of at least 100% of the repurchase price, including the portion
representing the Portfolio's yield under such agreements which is monitored on a
daily basis.
Portfolio Loan Transactions
Each Portfolio may loan up to 25% of its assets to qualified
broker/dealers or institutional investors for their use relating to short sales
or other security transactions.
It is the understanding of the Fund that the staff of the Commission
permits portfolio lending by registered investment companies if certain
conditions are met. These conditions are as follows: 1) each
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<PAGE>
transaction must have 100% collateral in the form of cash, short-term U.S.
government securities, or irrevocable letters of credit payable by banks
acceptable to the Fund from the borrower; 2) this collateral must be valued
daily and should the market value of the loaned securities increase, the
borrower must furnish additional collateral to a Portfolio; 3) a Portfolio must
be able to terminate the loan after notice, at any time; 4) a Portfolio must
receive reasonable interest on any loan, and any dividends, interest or other
distributions on the lent securities, and any increase in the market value of
such securities; 5) a Portfolio may pay reasonable custodian fees in connection
with the loan; and 6) the voting rights on the lent securities may pass to the
borrower; however, if the Board of Directors of the Fund know that a material
event will occur affecting an investment loan, they must either terminate the
loan in order to vote the proxy or enter into an alternative arrangement with
the borrower to enable the directors to vote the proxy.
The major risk to which a Portfolio would be exposed on a loan
transaction is the risk that the borrower would go bankrupt at a time when the
value of the security goes up. Therefore, a Portfolio will only enter into loan
arrangements after a review of all pertinent facts by the respective investment
adviser, under the supervision of the Board of Directors, including the
creditworthiness of the borrowing broker, dealer or institution and then only if
the consideration to be received from such loans would justify the risk. Credit-
worthiness will be monitored on an ongoing basis by the respective investment
adviser.
Rule 144A Securities
Each Portfolio may invest in restricted securities, including
securities eligible for resale without registration pursuant to Rule 144A ("Rule
144A Securities") under the Securities Act of 1933. Rule 144A Securities are
traded among qualified institutional investors. While maintaining oversight, the
Board of Directors has delegated to the respective investment adviser the
day-to-day function of determining whether or not individual Rule 144A
Securities are liquid for purposes of each Portfolio's limitation (whether 15%
or 10% of total assets) on investments in illiquid assets. The Board has
instructed the respective investment adviser to consider the following factors
in determining the liquidity of a Rule 144A Security: (i) the frequency of
trades and trading volume for the security; (ii) whether at least three dealers
are willing to purchase or sell the security and the number of other potential
purchasers; (iii) whether at least two dealers are making a market in the
security; and (iv) the nature of the security and the nature of the marketplace
trades (e.g., the time needed to dispose of the security, the method of
soliciting offers, and the mechanics of transfer).
Investing in Rule 144A Securities could have the effect of increasing
the level of a Portfolio's illiquidity to the extent that qualified
institutional buyers become, for a time, uninterested in purchasing these
securities. After the purchase of a Rule 144A Security, however, the Board of
Directors and the respective investment adviser will continue to monitor the
liquidity of that security to ensure that a Portfolio has no more than 10% or
15%, as appropriate, of its total assets in illiquid securities.
-15-
<PAGE>
ACCOUNTING AND TAX ISSUES
When The Aggressive Growth Portfolio, The Real Estate Investment Trust
Portfolio and The International Fixed Income Portfolio writes a call, or
purchases a put option, an amount equal to the premium received or paid by it is
included in the section of the Portfolio's assets and liabilities as an asset
and as an equivalent liability.
In writing a call, the amount of the liability is subsequently "marked
to market" to reflect the current market value of the option written. The
current market value of a written option is the last sale price on the principal
exchange on which such option is traded or, in the absence of a sale, the mean
between the last bid and ask prices. If an option which a Portfolio has written
expires on its stipulated expiration date, the Portfolio recognizes a short-term
capital gain. If a Portfolio enters into a closing purchase transaction with
respect to an option which the Portfolio has written, the Portfolio realizes a
short-term gain (or loss if the cost of the closing transaction exceeds the
premium received when the option was sold) without regard to any unrealized gain
or loss on the underlying security, and the liability related to such option is
extinguished. If a call option which a Portfolio has written is exercised, the
Portfolio realizes a capital gain or loss from the sale of the underlying
security on foreign currency and the proceeds from such sale are increased by
the premium originally received.
The premium paid by a Portfolio for the purchase of a put option is
reported in the section of the Portfolio's assets and liabilities as an
investment and subsequently adjusted daily to the current market value of the
option. For example, if the current market value of the option exceeds the
premium paid, the excess would be unrealized appreciation and, conversely, if
the premium exceeds the current market value, such excess would be unrealized
depreciation. The current market value of a purchased option is the last sale
price on the principal exchange on which such option is traded or, in the
absence of a sale, the mean between the last bid and ask prices. If an option
which the Portfolio has purchased expires on the stipulated expiration date, the
Portfolio realizes a short-term or long-term capital loss for federal income tax
purposes in the amount of the cost of the option. If the Portfolio exercises a
put option, it realizes a capital gain or loss (long-term or short-term,
depending on the holding period of the underlying security) from the sale of the
underlying security and the proceeds from such sale will be decreased by the
premium originally paid.
Other Tax Requirements
Each Portfolio has qualified or intends to qualify, and each that has
qualified intends to continue to qualify, as a regulated investment company
under Subchapter M of the Code. Accordingly, a Portfolio will not be subject to
federal income tax to the extent its earnings are distributed. Each Portfolio
must meet several requirements to maintain its status as a regulated investment
company. Among these requirements are: (i) that at least 90% of its investment
company taxable income be derived from dividends, interest, payment with respect
to securities loans and gains from the sale or disposition of securities or
foreign currencies, or other income derived with respect to its business of
investing in such securities or currencies; (ii) that at the close of each
quarter of its taxable year at least 50% of the value of its assets consist of
cash and cash items, government securities, securities of other regulated
investment companies and, subject to certain diversification requirements, other
securities, and, with respect to its remaining assets, no more than 25% of the
value of such assets is invested in the securities (other than U.S. government
securities and securities of other regulated investment companies) of any one
issuer, or of two or more issuers which are controlled by a Portfolio and which
are engaged in the same or similar trades or businesses; and (iii) that less
than 30% of its gross income be derived from sales of securities held for less
than three months.
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<PAGE>
The requirement that not more than 30% of gross income be derived from
gains from the sale or other disposition of securities held for less than three
months may restrict The Aggressive Growth Portfolio and The Real Estate
Investment Trust Portfolio in their ability to write covered call options on
securities which they have held less than three months, to write options which
expire in less than three months, to sell securities which have been held less
than three months and to effect closing purchase transactions with respect to
options which have been written less than three months prior to such
transactions. Consequently, in order to avoid realizing a gain within the
three-month period, the Portfolios may be required to defer the closing out of a
contract beyond the time when it might otherwise be advantageous to do so. The
Portfolios may also be restricted in the sale of purchased put options and the
purchase of put options for the purpose of hedging underlying securities because
of the application of the short sale holding period rules with respect to such
underlying securities.
The straddle rules of Section 1092 may apply. Generally, the straddle
provisions require the deferral of losses to the extent of unrecognized gains
related to the offsetting positions in the straddle. Excess losses, if any, can
be recognized in the year of loss. Deferred losses will be carried forward and
recognized in the following year, subject to the same limitation.
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<PAGE>
PERFORMANCE INFORMATION
From time to time, the Fund may state each Portfolio's total return in
advertisements and other types of literature. Any statements of total return
performance data will be accompanied by information on the Portfolio's average
annual total rate of return over the most recent one-, five-, and ten-year
periods, as relevant. The Fund may also advertise aggregate and average total
return information of each Portfolio over additional periods of time.
Each Portfolio's average annual total rate of return is based on a
hypothetical $1,000 investment that includes capital appreciation and
depreciation during the stated periods. The following formula will be used for
the actual computations:
n
P(1+T) = ERV
Where: P = a hypothetical initial purchase order of $1,000;
T = average annual total return;
n = number of years;
ERV = redeemable value of the
hypothetical $1,000 purchase
at the end of the period.
Aggregate or cumulative total return is calculated in a similar manner,
except that the results are not annualized. Each calculation assumes that all
distributions are reinvested at net asset value.
The performance, as shown below, is the average annual total return
quotations for The Defensive Equity, The Aggressive Growth, The International
Equity and The Global Fixed Income Portfolios through April 30, 1996. Securities
prices fluctuated during the period covered and the past results should not be
considered as representative of future performance.
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<PAGE>
Average Annual Total Return(1)
The The
Defensive Aggressive
Equity Growth
Portfolio Portfolio
1 year 1 year
ended ended
4/30/96 26.92% 4/30/96 36.42%
3 years 3 years
ended ended
4/30/96 17.80% 4/30/96 19.38%
Period Period
2/3/92(2) 2/27/92(2)
through through
4/30/96 17.73% 4/30/96 12.12%
The
The Global
International Fixed
Equity Income
Portfolio Portfolio
1 year 1 year
ended ended
4/30/96 18.28% 4/30/96 18.14%
Period
3 years 11/30/92(2)
ended through
4/30/96 12.92% 4/30/96 12.37%
Period
2/4/92(2)
through
4/30/96 12.43%
(1) Certain expenses of the Portfolios have been waived and reimbursed by
the respective investment adviser. In the absence of such waiver and
reimbursement, performance would have been affected negatively.
(2) Date of initial sale.
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<PAGE>
The performance, as shown below, is the aggregate total return
quotations for The Labor Select International Equity Portfolio and The Real
Estate Investment Trust Portfolio through April 30, 1996. Aggregate total return
through July 31, 1996 is provided below for The Fixed Income Portfolio.
Securities prices fluctuated during the period covered and the past results
should not be considered as representative of future performance.
Aggregate Total Return(1)
<TABLE>
<CAPTION>
The
Labor The
Select Real Estate The
International Investment Fixed
Equity Trust Income
Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C> <C>
Period Period Period
12/19/95(2) 12/6/95(2) 3/12/96(2)
through through through
4/30/96 10.62% 4/30/96 6.63% 7/31/96 0.73%
</TABLE>
(1) Certain expenses of the Portfolios have been waived and reimbursed by
the respective investment adviser. In the absence of such waiver and
reimbursement, performance would have been affected negatively.
(2) Date of initial sale; total return for this short of a time period may
not be representative of longer-term results.
The Fund may also quote each Portfolio's current yield, calculated as
described below, in advertisements and investor communications.
The yield computation is determined by dividing the net investment
income per share earned during the period by the maximum offering price per
share on the last day of the period and annualizing the resulting figure,
according to the following formula:
a--b 6
YIELD = 2[(---- + 1) -- 1]
cd
Where: a = dividends and interest earned during the period;
b = expenses accrued for the period (net of reimbursements);
c = the average daily number of shares outstanding during
the period that were entitled to receive dividends;
d = the maximum offering price per share on the last day of
the period.
-20-
<PAGE>
The above formula will be used in calculating quotations of yield,
based on specific 30-day periods identified in advertising by the Portfolio.
Yield quotations are based on the Portfolio's net asset value on the last day of
the period and will fluctuate depending on the period covered. The yields for
The Global Fixed Income Portfolio and The Fixed Income Portfolio as of July 31,
1996 were 7.04% and 6.24%, respectively. Each yield reflects the waiver and
reimbursement commitment by its investment adviser.
Investors should note that income earned and dividends paid by The
Fixed Income Portfolio, The Limited-Term Maturity Portfolio, The Global Fixed
Income Portfolio, The International Fixed Income Portfolio and The High-Yield
Bond Portfolio will also vary depending upon fluctuation in interest rates and
performance of each Portfolio. The net asset value of these five Portfolios will
fluctuate in value inversely to movements in interest rates and, therefore, will
tend to rise when interest rates fall and fall when interest rates rise.
Likewise, the net asset value for these Portfolios will vary from day to day
depending upon fluctuation in the prices of the securities held by each
Portfolio. Thus, investors should consider net asset value fluctuation as well
as yield in making an investment decision.
Each Portfolio's total return performance will be computed by adding
all reinvested income and realized securities profits distributions plus the
change in net asset value during a specific period and dividing by the net asset
value at the beginning of the period. The computation will not reflect the
impact of any income taxes payable by shareholders (who are subject to such tax)
on the reinvested distributions included in the calculation. Portfolio shares
are sold without a sales charge. Because security prices fluctuate, past
performance should not be considered as a representation of the results which
may be realized from an investment in the Portfolios in the future.
From time to time, performance of each Portfolio in the Fund may be
compared to various industry indices. For example, the Fund may quote actual
total return performance, dividend results and other performance information of
The Defensive Equity Portfolio, that invests primarily in domestic equities, in
advertising and other types of literature and may compare that information to,
or may separately illustrate similar information reported by the Standard &
Poor's 500 Stock Index and the Dow Jones Industrial Average, and other unmanaged
indices. The Standard & Poor's 500 Stock Index and the Dow Jones Industrial
Average are industry-accepted unmanaged indices of generally-conservative
securities used for measuring general market performance. The total return
performance reported will reflect the reinvestment of all distributions on a
quarterly basis and market price fluctuations. The indices do not take into
account any management expenses or other fees. In seeking a particular
investment objective, the Portfolios that invest primarily in equities may
include common stocks considered by the investment adviser to be more aggressive
than those tracked by these indices.
From time to time, the Fund may quote actual total return and/or yield
performance for each Portfolio in advertising and other types of literature
compared to indices or averages of alternative financial products available to
prospective investors. For example, the performance comparisons may include the
average return of various bank instruments, some of which may carry certain
return guarantees, offered by leading banks and thrifts as monitored by Bank
Rate Monitor, and those of generally-accepted corporate bond and government
security price indices of various durations prepared by Lehman Brothers and
Salomon Brothers, Inc. These indices are not managed for any investment goal.
-21-
<PAGE>
Current interest rate and yield information on government debt
obligations of various durations, as reported weekly by the Federal Reserve
(Bulletin H.15), may also be used. Current industry rate and yield information
on all industry available fixed-income securities, as reported weekly by The
Bond Buyer, may also be used in preparing comparative illustrations. In
addition, the Consumer Price Index, the most commonly used measure of inflation,
may be used in preparing performance comparisons. The Consumer Price Index, as
prepared by the U.S. Bureau of Labor Statistics, indicates the cost fluctuations
of a representative group of consumer goods. It does not represent a return from
an investment.
Statistical and/or performance information and various indices compiled
and maintained by organizations such as the following may also be used in
preparing exhibits comparing certain industry trends to comparable Fund activity
and performance:
CDA Technologies, Inc. is a performance evaluation service that
maintains a statistical database of performance, as reported by a
diverse universe of independently-managed mutual funds.
Ibbotson Associates, Inc. is a consulting firm that provides a variety
of historical data including total return, capital appreciation and
income on the stock market as well as other investment asset classes,
and inflation. With its permission, this information will be used
primarily for comparative purposes and to illustrate general financial
planning principles.
Interactive Data Corporation is a statistical access service that
maintains a database of various industry indicators, such as historical
and current price/earnings information and individual equity and
fixed-income price and return information.
Compustat Industrial Databases, a service of Standard & Poor's Ratings
Group, may also be used in preparing performance and historical stock
and bond market exhibits. This firm maintains fundamental databases
that provide financial, statistical and market information covering
more than 7,000 industrial and non-industrial companies.
Russell Indexes is an investment analysis service that provides both
current and historical stock performance information, focusing on the
business fundamentals of those firms issuing the security.
Morgan Stanley Capital International is a research firm that maintains
a statistical database of international securities. It also compiles
and maintains a number of unmanaged indices of international
securities. These indices are designed to measure the performance of
the stock markets outside of the USA. Primary coverage of Europe,
Canada, Mexico, Australia and the Far Eastern markets, and that of
international industry groups are included.
Lehman Brothers is a statistical research firm that maintains databases
of U.S. and international bond markets and corporate and
government-backed securities of various maturities. This information,
as well as unmanaged indices compiled and maintained by Lehman
Brothers, will be used in preparing comparative illustrations.
-22-
<PAGE>
Wellesley Group Inc. is an investment management consulting firm
specializing in investment and market research for endowments and
pension plans. Wellesley Group will be maintaining, on behalf of the
Fund, peer group comparison composites for each Portfolio of the Fund.
The peer group composites will be constructed by selecting
publicly-offered mutual funds that have investment objectives that are
similar to those maintained by each Portfolio in the Fund. Wellesley
Group will also be preparing performance analyses of actual Fund
performance, and benchmark index exhibits, for inclusion in client
quarterly review packages.
FT-Actuaries World Indices are jointly compiled by The Financial Times,
Ltd.; Goldman, Sachs & Co.; and Wood Mackenzie & Co., Ltd. in
conjunction with the Institute of Actuaries and the Faculty of
Actuaries. Indices maintained by this group primarily focus on
compiling statistical information on international financial markets
and industry sectors, stock and bond issues and certain fundamental
information about the companies issuing the securities. Statistical
information on international currencies is also maintained.
The Fund may also promote each Portfolio's yield and/or total return
performance and use comparative performance information computed by and
available from certain industry and general market research publications, such
as Lipper Analytical Services, Inc.
The following tables are an example, for purposes of illustration only,
of cumulative total return performance through April 30, 1996 for The Defensive
Equity, The Aggressive Growth, The International Equity, The Global Fixed
Income, The Labor Select International Equity and The Real Estate Investment
Trust Portfolios. Cumulative total return performance through July 31, 1996 for
The Fixed Income Portfolio is shown below. For these purposes, the calculations
assume the reinvestment of any capital gains distributions and income dividends
paid during the indicated periods. Comparative information on certain indices is
also included.
-23-
<PAGE>
Cumulative Total Return(1)
<TABLE>
<CAPTION>
The The
Defensive Dow S&P Aggressive Russell
Equity Jones 500 Growth 2000-
Portfolio Industrial Index Portfolio Stock
<S> <C> <C> <C> <C> <C> <C>
3 months 3 months
ended ended
4/30/96 3.46% 3.77% 3.40% 4/30/96 11.08% 10.85%
6 months 6 months
ended ended
4/30/96 14.95% 18.42% 13.67% 4/30/96 19.76% 18.43%
9 months 9 months
ended ended
4/30/96 18.32% 20.38% 18.34% 4/30/96 22.62% 17.54%
1 year 1 year
ended ended
4/30/96 26.92% 31.99% 30.08% 4/30/96 36.42% 33.01%
3 years 3 years
ended ended
4/30/96 63.48% 75.70% 60.78% 4/30/96 70.16% 63.73%
Period Period
2/3/92(2) 2/27/92(2)
through through
4/30/96 99.82% 93.92% 79.55% 4/30/96 61.24% 81.85%
</TABLE>
(1) Certain expenses of the Portfolios have been waived and reimbursed by
the respective investment adviser. In the absence of such waiver and
reimbursement, performance would have been affected negatively.
(2) Date of initial sale.
-24-
<PAGE>
Cumulative Total Return(1)
<TABLE>
<CAPTION>
The The Salomon
International S&P Global Fixed World
Equity 500 Income Government
Portfolio EAFE Index Portfolio Bond
<S> <C> <C> <C> <C> <C> <C>
3 months 3 months
ended ended
4/30/96 4.63% 5.45% 3.40% 4/30/96 0.85% (1.05%)
6 months 6 months
ended ended
4/30/96 13.25% 13.21% 13.67% 4/30/96 5.95% (0.12%)
9 months 9 months
ended ended
4/30/96 10.80% 8.03% 18.34% 4/30/96 11.69% (0.68%)
1 year 1 year
ended ended
4/30/96 18.28% 11.41% 30.08% 4/30/96 18.14% 2.97%
Period
3 years 11/30/92(2)
ended through
4/30/96 44.00% 37.20% 60.78% 4/30/96 48.94% 33.50%
Period
2/4/92(2)
through
4/30/96 64.28% 50.97% 79.55%
</TABLE>
(1) Certain expenses of the Portfolios have been waived and reimbursed by
the respective investment adviser. In the absence of such waiver and
reimbursement, performance would have been affected negatively.
(2) Date of initial sale.
-25-
<PAGE>
Cumulative Total Return(1)
The
Labor
Select
International
Equity
Portfolio EAFE
Period
12/19/95(2)
through
4/30/96 10.62% 5.88%
The Real
Estate
Investment NAREIT
Trust Equity
Portfolio REIT
Period
12/6/95(2)
through
4/30/96 6.63% 8.41%
Lehman
Brothers
The Government/
Fixed Corporate
Income Intermediate
Portfolio Bond
Period
3/12/96(2)
through
7/31/96 0.73% (0.15%)
(1) Certain expenses of the Portfolios have been waived and reimbursed by
the respective investment adviser. In the absence of such waiver and
reimbursement, performance would have been affected negatively.
(2) Date of initial sale; total return for this short of a time period may
not be representative of longer-term results.
-26-
<PAGE>
In addition, information will be provided that discusses the overriding
investment philosophies of Delaware Investment Advisers, a division of Delaware
Management Company, Inc. ("Delaware"), the investment adviser to The Defensive
Equity, The Aggressive Growth, The Defensive Equity Small/Mid-Cap, The Defensive
Equity Utility, The Real Estate Investment Trust, The Fixed Income, The
Limited-Term Maturity and The High-Yield Bond Portfolios, and Delaware
International Advisers Ltd. ("Delaware International"), an affiliate of Delaware
and the investment adviser to The International Equity, The Labor Select
International Equity, The Global Fixed Income and The International Fixed Income
Portfolios and how those philosophies impact each Portfolio in the strategies
the Fund employs in seeking Portfolio objectives. Since the investment
disciplines being employed for each Portfolio in the Fund are based on the
disciplines and strategies employed by Delaware and Delaware International to
manage institutional separate accounts, investment strategies and disciplines of
these entities may also be discussed.
The Defensive Equity Portfolio's strategy relies on the consistency,
reliability and predictability of corporate dividends. Dividends tend to rise
over time, despite market conditions, and keep pace with rising prices; they are
paid out in "current" dollars. Just as important, current dividend income can
help lessen the effects of adverse market conditions. This equity dividend
discipline, coupled with the potential for capital gains, seeks to provide
investors with a consistently higher total-rate-of-return over time. In
implementing this strategy, the investment adviser seeks to buy securities with
a yield higher than the average of the S&P 500 Index. If a security held by the
Portfolio moves out of the acceptable yield range, it typically is sold. This
strict buy/sell discipline is instrumental in implementing The Defensive Equity
Portfolio strategy.
THE POWER OF COMPOUNDING
When you opt to reinvest your current income for additional Portfolio
shares, your investment is given yet another opportunity to grow. It's called
the Power of Compounding.
COMPOUNDED RETURNS
Results of various assumed fixed rates of return on a $1,000,000
investment compounded monthly for 10 years:
7% 9% 11% 13%
Rate of Rate of Rate of Rate of
Return Return Return Return
----------- ---------- ---------- ----------
12-'85 $1,072,290 $1,093,807 $1,115,719 $1,138,032
12-'86 $1,149,806 $1,196,414 $1,244,829 $1,295,118
12-'87 $1,232,926 $1,308,645 $1,388,879 $1,473,886
12-'88 $1,322,054 $1,431,405 $1,549,598 $1,677,330
12-'89 $1,417,626 $1,565,681 $1,728,916 $1,908,856
12-'90 $1,520,106 $1,712,553 $1,928,984 $2,172,341
12-'91 $1,629,994 $1,873,202 $2,152,204 $2,472,194
12-'92 $1,747,827 $2,048,921 $2,401,255 $2,813,438
12-'93 $1,874,177 $2,241,124 $2,679,125 $3,201,783
12-'94 $2,009,661 $2,451,357 $2,989,150 $3,643,733
-27-
<PAGE>
Results of various assumed fixed rates of return on a $1,000,000
investment compounded quarterly for 10 years:
8% 10% 12% 14%
Rate of Rate of Rate of Rate of
Return Return Return Return
----------- ---------- ---------- ----------
12-'85 $1,082,432 $1,103,813 $1,125,509 $1,147,523
12-'86 $1,171,659 $1,218,403 $1,266,770 $1,316,809
12-'87 $1,268,242 $1,344,889 $1,425,761 $1,511,069
12-'88 $1,372,786 $1,484,506 $1,604,706 $1,733,986
12-'89 $1,485,947 $1,638,617 $1,806,111 $1,989,789
12-'90 $1,608,437 $1,808,726 $2,032,794 $2,283,328
12-'91 $1,741,024 $1,996,495 $2,287,927 $2,620,172
12-'92 $1,884,540 $2,203,757 $2,575,083 $3,006,707
12-'93 $2,039,887 $2,432,535 $2,898,278 $3,450,266
12-'94 $2,208,039 $2,685,064 $3,262,038 $3,959,259
These figures are calculated assuming a fixed constant investment
return and assume no fluctuation in the value of principal. These figures, which
do not reflect payment of applicable taxes, are not intended to be a projection
of future results and do not reflect actual performance results of any of the
Portfolios.
-28-
<PAGE>
TRADING PRACTICES AND BROKERAGE
The Fund (and, in the case of The International Equity, The Labor
Select International Equity, The Global Fixed Income and The International Fixed
Income Portfolios, their investment adviser) selects brokers or dealers to
execute transactions for the purchase or sale of portfolio securities on the
basis of its judgment of their professional capability to provide the service.
The primary consideration is to have brokers or dealers execute transactions at
best price and execution. Best price and execution refers to many factors,
including the price paid or received for a security, the commission charged, the
promptness and reliability of execution, the confidentiality and placement
accorded the order and other factors affecting the overall benefit obtained by
the account on the transaction. A number of trades are made on a net basis where
securities either are purchased directly from the dealer or are sold to the
dealer. In these instances, there is no direct commission charged but there is a
spread (the difference between the buy and sell price) which is the equivalent
of a commission. When a commission is paid, the Fund pays reasonably competitive
brokerage commission rates based upon the professional knowledge of its trading
department (and, in the case of The International Equity, The Labor Select
International Equity, The Global Fixed Income and The International Fixed Income
Portfolios, their investment adviser) as to rates paid and charged for similar
transactions throughout the securities industry. In some instances, the Fund
pays a minimal share transaction cost when the transaction presents no
difficulty.
During the fiscal years ended October 31, 1993, 1994 and 1995, the
aggregate dollar amounts of brokerage commissions paid by The Defensive Equity
Portfolio amounted to $14,686, $59,381 and $108,104, respectively. During the
fiscal years ended October 31, 1993, 1994 and 1995, such payments by The
Aggressive Growth Portfolio amounted to $32,320, $19,391 and $26,361,
respectively. During the fiscal years ended October 31, 1993, 1994 and 1995,
such payments by The International Equity Portfolio amounted to $10,651, $94,890
and $280,594, respectively. During the period ended October 31, 1993 and for the
fiscal years ended October 31, 1994 and 1995, such payments by the Global Fixed
Income Portfolio amounted to $4,595, $12,391 and $1,545, respectively.
The investment advisers may allocate out of all commission business
generated by all of the funds and accounts under management by them, brokerage
business to brokers or dealers who provide brokerage and research services.
These services include advice, either directly or through publications or
writings, as to the value of securities, the advisability of investing in,
purchasing or selling securities, and the availability of securities or
purchasers or sellers of securities; furnishing of analyses and reports
concerning issuers, securities or industries; providing information on economic
factors and trends; assisting in determining portfolio strategy; providing
computer software and hardware used in security analyses; and providing
portfolio performance evaluation and technical market analyses. Such services
are used by the investment advisers in connection with their investment
decision-making process with respect to one or more funds and accounts they
manage, and may not be used, or used exclusively, with respect to the fund or
account generating the brokerage.
During the fiscal year ended October 31, 1995, portfolio transactions
of The Defensive Equity, The Aggressive Growth, The International Equity and The
Global Fixed Income Portfolios in the amounts of $18,899,257, $7,358,635,
$15,150,785 and $1,299,555, respectively, resulting in brokerage commissions of
$24,293, $17,951, $41,913 and $1,545, respectively, were directed to brokers for
brokerage and research services provided.
As provided in the Securities Exchange Act of 1934 and each Portfolio's
Investment Management Agreement, higher commissions are permitted to be paid to
broker/dealers who provide brokerage and research services than to
broker/dealers who do not provide such services if such higher commissions are
deemed reasonable in relation to the value of the brokerage and research
services provided. Although transactions are
-29-
<PAGE>
directed to broker/dealers who provide such brokerage and research services, the
Fund believes that the commissions paid to such broker/dealers are not, in
general, higher than commissions that would be paid to broker/dealers not
providing such services and that such commissions are reasonable in relation to
the value of the brokerage and research services provided. In some instances,
services may be provided to the investment advisers which constitute in some
part brokerage and research services used by the investment advisers in
connection with their investment decision-making process and constitute in some
part services used by them in connection with administrative or other functions
not related to their investment decision-making process. In such cases, the
investment advisers will make a good faith allocation of brokerage and research
services and will pay out of their own resources for services used by them in
connection with administrative or other functions not related to their
investment decision-making process. In addition, so long as no fund is
disadvantaged, portfolio transactions which generate commissions or their
equivalent are allocated to broker/dealers who provide daily portfolio pricing
services to the Fund and to other funds in the Delaware Group. Subject to best
price and execution, commissions allocated to brokers providing such pricing
services may or may not be generated by the funds receiving the pricing service.
Combined orders for two or more accounts or funds engaged in the
purchase or sale of the same security may be placed if the judgment is made that
joint execution is in the best interest of each participant and will result in
best price and execution. Transactions involving commingled orders are allocated
in a manner deemed equitable to each account or fund. When a combined order is
executed in a series of transactions at different prices, each account
participating in the order may be allocated an average price obtained from the
executing broker. It is believed that the ability of the accounts to participate
in volume transactions will generally be beneficial to the accounts and funds.
Although it is recognized that, in some cases, the joint execution of orders
could adversely affect the price or volume of the security that a particular
account or fund may obtain, it is the opinion of the investment advisers and the
Fund's Board of Directors that the advantages of combined orders outweigh the
possible disadvantages of separate transactions.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to seeking best price and execution,
orders may be placed with broker/dealers that have agreed to defray certain
Portfolio expenses, such as custodian fees.
Portfolio Turnover
Portfolio trading will be undertaken principally to accomplish each
Portfolio's objective in relation to anticipated movements in the general level
of interest rates. A Portfolio is free to dispose of portfolio securities at any
time, subject to complying with the Code and the 1940 Act, when changes in
circumstances or conditions make such a move desirable in light of the
investment objective. A Portfolio will not attempt to achieve or be limited to a
predetermined rate of portfolio turnover. Such a turnover always will be
incidental to transactions undertaken with a view to achieving a Portfolio's
investment objective.
The degree of portfolio activity may affect brokerage costs of a
Portfolio and taxes payable by a Portfolio's shareholders. A turnover rate of
100% would occur, for example, if all the investments in a Portfolio's
securities at the beginning of the year were replaced by the end of the year. In
investing for capital appreciation, a relevant Portfolio may hold securities for
any period of time. Portfolio turnover will also be increased by The Aggressive
Growth Portfolio and The Real Estate Investment Trust Portfolio if the Portfolio
writes a large number of call options which are subsequently exercised. To the
extent a Portfolio realizes gains on securities held for less than six months,
such gains are taxable to the shareholder subject to tax or to a Portfolio at
ordinary income tax rates. The turnover rate also may be affected by cash
requirements from redemptions and repurchases of Portfolio shares. Total
brokerage costs generally increase with higher portfolio turnover rates.
-30-
<PAGE>
Under normal circumstances: (1) the annual portfolio turnover rate of
The International Equity Portfolio is not expected to exceed 50%; (2) the annual
portfolio turnover rate of The Global Fixed Income Portfolio, The International
Fixed Income Portfolio and The Limited-Term Maturity Portfolio is not expected
to exceed 200%; (3) the annual portfolio turnover rate of The Defensive Equity
Portfolio, The Aggressive Growth Portfolio, The Defensive Equity Small/Mid-Cap
Portfolio, The Defensive Equity Utility Portfolio, The Labor Select
International Equity Portfolio, The Real Estate Investment Trust Portfolio and
The High-Yield Bond Portfolio is not expected to exceed 100%; and (4) the annual
portfolio turnover rate of The Fixed Income Portfolio is not expected to exceed
250%. The portfolio turnover rate of a Portfolio is calculated by dividing the
lesser of purchases or sales of securities for the particular fiscal year by the
monthly average of the value of the securities owned by the Portfolio during the
particular fiscal year, exclusive of securities whose maturities at the time of
acquisition are one year or less.
The portfolio turnover rates for the fiscal years ended October 31,
1994 and 1995 were 73% and 88%, respectively, for The Defensive Equity
Portfolio, 43% and 64%, respectively, for The Aggressive Growth Portfolio, 22%
and 20%, respectively, for The International Equity Portfolio and 205% and 77%,
respectively, for The Global Fixed Income Portfolio. The portfolio turnover rate
experienced by The Global Fixed Income Portfolio for the period ended October
31, 1994 was the result of unusual volatility in the European markets following
the breakdown of the prevailing European exchange rate mechanism, the
implementation of an investment strategy designed to avoid certain foreign
withholding taxes and management's shift in country exposure following
modification of the composition of a benchmark index.
-31-
<PAGE>
PURCHASING SHARES
The following supplements the disclosure provided in the Fund's
Prospectus.
Shares of each Portfolio are sold on a continuous basis directly to
institutions and high net-worth individuals at the net asset value next
determined after the receipt of a purchase order and a Federal Funds wire as
described more fully in the Prospectus. See "DETERMINING NET ASSET VALUE." The
minimum for initial investments is $1,000,000 for each Portfolio. There are no
minimums for subsequent investments. See the Prospectus for special purchase
procedures and requirements that may be applicable to prospective investors in
The International Equity Portfolio. At such time as the Fund receives
appropriate regulatory approvals to do so in the future, under certain
circumstances, the Fund may, at its sole discretion, allow eligible investors
who have an existing investment counseling relationship with Delaware Investment
Advisers or Delaware International to make investments in the Portfolios by a
contribution of securities in-kind to such Portfolios.
Delaware Distributors, L.P. serves as the national distributor for each
Portfolio's shares. See the Prospectus for information on how to invest. The
Fund reserves the right to suspend sales of Portfolio shares, and reject any
order for the purchase of Portfolio shares if in the opinion of management such
rejection is in the Portfolio's best interest.
Certificates representing shares purchased are not ordinarily issued.
However, such purchases are confirmed to the investor and credited to the
shareholder's account on the books maintained on behalf of the Fund. The
investor will have the same rights of ownership with respect to such shares as
if certificates had been issued. An investor may receive a certificate
representing shares purchased by sending a letter to the Fund requesting the
certificate. No charge is assessed by the Fund for any certificate issued.
Investors who hold certificates representing any of their shares may only redeem
these shares by written requests.
-32-
<PAGE>
DETERMINING NET ASSET VALUE
Orders for purchases of shares of a Portfolio are effected at the net
asset value of that Portfolio next calculated after receipt of the order by the
Fund and Federal Funds wire by the Portfolio's Custodian Bank.
Net asset value is computed at the close of regular trading on the New
York Stock Exchange, generally 4 p.m., Eastern time, on days when the New York
Stock Exchange is open and an order to purchase or sell shares of a Portfolio
has been received or is on hand, having been received since the last previous
computation of net asset value. The New York Stock Exchange is scheduled to be
open Monday through Friday throughout the year except for New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas. When the New York Stock Exchange is closed, the Fund
will generally be closed, pricing calculations will not be made and purchase and
redemption orders will not be processed.
The net asset value per share of each Portfolio is determined by
dividing the total market value of the Portfolio's investments and other assets,
less any liabilities, by the total outstanding shares of the Portfolio.
Securities listed on a U.S. securities exchange for which market quotations are
available are valued at the last quoted sale price on the day the valuation is
made. Price information on listed securities is taken from the exchange where
the security is primarily traded. Securities listed on a foreign exchange are
valued at the last quoted sale price available before the time when net assets
are valued. Unlisted securities and listed securities not traded on the
valuation date for which market quotations are readily available are valued at a
price that is considered to best represent fair value within a range not in
excess of the current ask prices nor less than the current bid prices. Domestic
over-the-counter equities, domestic equity securities that are not traded and
U.S. government securities (and those of its agencies and instrumentalities) are
priced at the mean of the bid and ask price.
Bonds and other fixed-income securities are valued according to the
broadest and most representative market, which will ordinarily be the
over-the-counter market. Net asset value includes interest on fixed-income
securities, which is accrued daily. In addition, bonds and other fixed-income
securities may be valued on the basis of prices provided by a pricing service
when such prices are believed to reflect the fair market value of such
securities. The prices provided by a pricing service are determined without
regard to bid or last sale prices but take into account institutional size
trading in similar groups of securities and any developments related to the
specific securities. Securities not priced in this manner are valued at the most
recent quoted mean price or, when stock exchange valuations are used, at the
latest quoted sale price on the day of valuation. If there is no such reported
sale, the latest quoted mean price will be used. Securities with remaining
maturities of 60 days or less are valued at amortized cost, if it approximates
market value. In the event that amortized cost does not approximate market
value, market prices as determined above will be used.
Exchange-traded options are valued at the last reported sales price or,
if no sales are reported, at the mean between the last reported bid and ask
prices. Non-exchange traded options are valued at fair value using a
mathematical model. Futures contracts are valued at their daily quoted
settlement price. The value of other assets and securities for which no
quotations are readily available (including restricted securities) are
determined in good faith at fair value using methods determined by the Fund's
Board of Directors.
The securities in which The International Equity Portfolio, The Labor
Select International Equity Portfolio, The Global Fixed Income Portfolio and The
International Fixed Income Portfolio (as well as The Defensive Equity Utility
Portfolio, The Real Estate Investment Trust Portfolio and The High-Yield Bond
Portfolio, to the limited extent described in the Prospectus) may invest from
time to time may be listed
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<PAGE>
primarily on foreign exchanges which trade on days when the New York Stock
Exchange is closed (such as Saturday). As a result, the net asset value of those
Portfolios may be significantly affected by such trading on days when
shareholders have no access to the Portfolios.
For purposes of calculating net asset value per share, all assets and
liabilities initially expressed in foreign currencies will be converted into
U.S. dollars at the mean between the bid and ask prices of such currencies
against the U.S. dollar as provided by an independent pricing service or any
major bank, including the Custodian Banks. Forward foreign currency contracts
are valued at the mean price of the contract. Interpolated values will be
derived when the settlement date of the contract is on an interim period for
which quotations are not available.
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<PAGE>
REDEMPTION AND REPURCHASE
The following supplements the disclosure provided in the Fund's
Prospectus.
Each Portfolio may suspend redemption privileges or postpone the date
of payment (i) during any period that the New York Stock Exchange is closed, or
trading on the New York Stock Exchange is restricted as determined by the
Commission, (ii) during any period when an emergency exists as defined by the
rules of the Commission as a result of which it is not reasonably practicable
for a Portfolio to dispose of securities owned by it, or fairly to determine the
value of its assets, and (iii) for such other periods as the Commission may
permit.
No charge is made by any Portfolio for redemptions. Payment for shares
redeemed or repurchased may be made either in cash or in-kind, or partly in cash
and partly in-kind. Any portfolio securities paid or distributed in-kind would
be valued as described in "DETERMINING NET ASSET VALUE." Subsequent sales by an
investor receiving a distribution in-kind could result in the payment of
brokerage commissions. Payment for shares redeemed ordinarily will be made
within three business days, but in no case later than seven days, after receipt
of a redemption request in good order. See "REDEMPTION OF SHARES" in the
Prospectus for special redemption procedures and requirements that may be
applicable to shareholders in The International Equity Portfolio, The Labor
Select International Equity Portfolio, The Global Fixed Income Portfolio and The
International Fixed Income Portfolio. Eligible investors who have an existing
investment counseling relationship with Delaware Investment Advisers or Delaware
International will not be subject to the Fund's in-kind redemption requirements
until such time as the Fund receives appropriate regulatory approvals to permit
such redemptions for the account of such investors.
The Fund has elected to be governed by Rule 18f-1 under the 1940 Act
pursuant to which the Fund is obligated to redeem shares solely in cash up to
the lesser of $250,000 or 1% of the net asset value of each Portfolio during any
90-day period for any one shareholder.
The value of a Portfolio's investments is subject to changing market
prices. Redemption proceeds may be more or less than the shareholder's cost
depending upon the market value of the Portfolio's securities. Thus, a
shareholder redeeming shares of a Portfolio may, if such shareholder is subject
to federal income tax, sustain either a gain or loss, depending upon the price
paid and the price received for such shares.
Smaller Accounts
Due to the relatively higher cost of maintaining small accounts, the
Fund reserves the right to redeem Portfolio shares in any of its accounts at the
then-current net asset value if as a result of redemption or transfer a
shareholder's investment in a Portfolio has a value of less than $500,000.
However, before the Fund redeems such shares and sends the proceeds to the
shareholder, the shareholder will be notified in writing that the value of the
shares in the account is less than $500,000 and will be allowed 90 days from
that date of notice to make an additional investment to meet the required
minimum. Any redemption in an inactive account established with a minimum
investment may trigger mandatory redemption.
Expedited Telephone Redemptions
The Fund has available certain redemption privileges, as described
below. They are unavailable to shareholders of The International Equity
Portfolio, The Labor Select International Equity Portfolio, The Global Fixed
Income Portfolio and The International Fixed Income Portfolio whose redemptions
trigger the special in-kind redemption procedures. See the Prospectus. The Fund
reserves the right to suspend or terminate these expedited payment procedures at
any time in the future.
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<PAGE>
Shareholders wishing to redeem shares for which certificates have not
been issued may call the Fund at (1-800-231-8002) prior to 4 p.m., Eastern time,
and have the proceeds mailed to them at the record address. Checks payable to
the shareholder(s) of record will normally be mailed three business days, but no
later than seven days, after receipt of the redemption request.
In addition, redemption proceeds can be transferred to your
predesignated bank account by wire or by check by calling the Fund, as described
above. The Telephone Redemption Option on the Account Registration Form must
have been elected by the shareholder and filed with the Fund before the request
is received. Payment will be made by wire or check to the bank account
designated on the authorization form as follows:
1. Payment By Wire: Request that Federal Funds be wired to the bank
account designated on the Account Registration Form. Redemption proceeds will
normally be wired on the next business day following receipt of the redemption
request. There is no charge for this service. If the proceeds are wired to the
shareholder's account at a bank which is not a member of the Federal Reserve
System, there could be a delay in the crediting of the funds to the
shareholder's bank account.
2. Payment by Check: Request a check be mailed to the bank account
designated on the Account Registration Form. Redemption proceeds will normally
be mailed three business days, but no later than seven days, from the date of
the telephone request. This procedure will take longer than the Payment by Wire
option (1 above) because of the extra time necessary for the mailing and
clearing of the check after the bank receives it. If expedited payment under
these procedures could adversely affect a Portfolio, the Fund may take up to
seven days to pay the shareholder.
To reduce the risk of attempted fraudulent use of the telephone
redemption procedure, payment will be made only to the bank account designated
on the Account Registration Form. If a shareholder wishes to change the bank
account designated for such redemption, a written request in accordance with the
instructions set forth in the Prospectus will be required.
Exchange Privilege
Shares of each Portfolio of the Fund may be exchanged for shares of any
other Portfolio. Exchange requests should be sent to Delaware Pooled Trust,
Inc., One Commerce Square, 2005 Market Street, Philadelphia, PA 19103 Attn:
Client Services.
Any such exchange will be based on the respective net asset values of
the shares involved and will be subject to the minimum investment requirements
noted above. There is no sales commission or charge of any kind and the shares
of the Portfolio into which the exchange is made, if necessary, must be
registered in the state in which the investor is domiciled. Before making an
exchange, a shareholder should consider the investment objectives of the
Portfolio to be purchased.
Exchange requests may be made either by mail, FAX message or by
telephone. Telephone exchanges will be accepted only if the certificates for the
shares to be exchanged are held by the Fund for the account of the shareholder
and the registration of the two accounts will be identical. Requests for
exchanges received prior to 4 p.m., Eastern time, for the Portfolios will be
processed as of the close of business on the same day. Requests received after
this time will be processed on the next business day. Exchanges may also be
subject to limitations as to amounts or frequency, and to other restrictions
established by the Board of Directors to assure that such exchanges do not
disadvantage a Portfolio and its shareholders. Exchanges into and out of The
-36-
<PAGE>
International Equity Portfolio, The Labor Select International Equity Portfolio,
The Global Fixed Income Portfolio and The International Fixed Income Portfolio
shall be subject to the special purchase and redemption procedures identified in
sections of the Prospectus entitled "PURCHASE OF SHARES" and "REDEMPTION OF
SHARES."
For federal income tax purposes, an exchange between Portfolios is a
taxable event for shareholders subject to federal income tax, and, accordingly,
a gain or loss may be realized. The Fund reserves the right to suspend or
terminate or amend the terms of the exchange privilege upon 60 days' written
notice to client shareholders.
* * *
Neither the Fund, the Portfolios nor the Fund's transfer agent,
Delaware Service Company, Inc., is responsible for any losses incurred in acting
upon written or telephone instructions for redemption or exchange of Portfolio
shares which are reasonably believed to be genuine. With respect to such
telephone transactions, the Fund will ensure that reasonable procedures are used
to confirm that instructions communicated by telephone are genuine (including
verification of a form of personal identification) as, if it does not, the Fund
or Delaware Service Company, Inc. may be liable for any losses due to
unauthorized or fraudulent transactions. A written confirmation will be provided
for all purchase, exchange and redemption transactions initiated by telephone.
-37-
<PAGE>
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
Each Portfolio has qualified or intends to qualify, and each that has
qualified intends to continue to qualify, as a regulated investment company
under Subchapter M of the Code. As such, the Fund will not be subject to federal
income tax on net investment income and net realized capital gains which are
distributed to shareholders.
The Fund's policy is to distribute substantially all of each
Portfolio's net investment income and any net realized capital gains in the
amount and at the times that will avoid any federal income or excise taxes.
Unless a shareholder elects to receive dividends and capital gains distributions
in cash, all dividends and capital gains distributions shall be automatically
reinvested in the Portfolios of the Fund. The amounts of any dividend or capital
gains distributions cannot be predicted.
All dividends out of net investment income, together with distributions
from short-term capital gains, will be taxable to those shareholders who are
subject to income taxes as ordinary income. (These distributions may be eligible
for the dividends-received deductions for corporations.) Any net long-term
capital gains distributed to those shareholders who are subject to income tax
will be taxable as such, regardless of the length of time a shareholder has
owned their shares. Of the dividends paid by The Defensive Equity and The
Aggressive Growth Portfolios for the fiscal year ended October 31, 1995, 39% and
9%, respectively, were eligible for the dividends-received deduction for
corporations.
Undistributed net investment income is included in the Portfolio's net
assets for the purpose of calculating net asset value per share. Therefore on
the "ex-dividend" date, the net asset value per share excludes the dividend
(i.e., is reduced by the per share amount of the dividend). Dividends paid
shortly after the purchase of shares by an investor, although in effect a return
of capital, are taxable to shareholders who are subject to tax.
Each Portfolio of the Fund is treated as a separate entity (and hence
as a separate "regulated investment company") for federal tax purposes. Any net
capital gains recognized by a Portfolio are distributed to its investors without
need to offset (for federal income tax purposes) such gains against any net
capital losses of another Portfolio.
Each year, the Fund will mail to you information on the amount and tax
status of each Portfolio's dividends and distributions. Shareholders should
consult their own tax advisers regarding specific questions as to federal, state
or local taxes.
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<PAGE>
TAXES
The following supplements the tax disclosure provided in the Fund's
Prospectus.
Futures Contracts and Stock Options
(The Aggressive Growth Portfolio and The Real Estate Investment Trust Portfolio)
The Aggressive Growth Portfolio's and The Real Estate Investment Trust
Portfolio's transactions in options and futures contracts will be subject to
special tax rules that may affect the amount, timing and character of
distributions to shareholders. For example, certain positions held by a
Portfolio on the last business day of each taxable year will be marked to market
(i.e., treated as if closed out) on such day, and any gain or loss associated
with such positions will be treated as 60% long-term and 40% short-term capital
gain or loss. Certain positions held by a Portfolio that substantially diminish
its risk of loss with respect to other positions in a Portfolio will constitute
"straddles," which are subject to special tax rules that may cause deferral of
the Portfolio's losses, adjustments in the holding periods of Portfolio
securities and conversion of short-term into long-term capital losses. Certain
tax elections exist for straddles which could alter the effects of these rules.
The Portfolios will limit their activities in options and futures contracts to
the extent necessary to meet the requirements of Subchapter M of the Code.
Forward Currency Contracts
(The International Equity Portfolio, The Defensive Equity Utility Portfolio,
The Labor Select International Equity Portfolio, The Real Estate Investment
Trust Portfolio, The Global Fixed Income Portfolio and The International Fixed
Income Portfolio)
The International Equity Portfolio, The Defensive Equity Utility
Portfolio, The Labor Select International Equity Portfolio, The Real Estate
Investment Trust Portfolio, The Global Fixed Income Portfolio and The
International Fixed Income Portfolio will be required for federal income tax
purposes to recognize any gains and losses on forward currency contracts as of
the end of each taxable year as well as those actually realized during the year.
In most cases, any such gain or loss recognized with respect to a forward
currency contract is considered to be ordinary income or loss. Furthermore,
forward currency futures contracts which are intended to hedge against a change
in the value of securities held by these Portfolios may affect the holding
period of such securities and, consequently, the nature of the gain or loss on
such securities upon disposition.
Special tax considerations also apply with respect to foreign
investments of these Portfolios. For example, certain foreign exchange gains and
losses (including exchange gains and losses on forward currency contracts)
realized by the Portfolio will be treated as ordinary income or losses.
State and Local Taxes
Shares of the Fund are exempt from Pennsylvania county personal
property tax.
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<PAGE>
INVESTMENT MANAGEMENT AGREEMENTS
Delaware Investment Advisers, a division of Delaware Management
Company, Inc. ("Delaware"), One Commerce Square, Philadelphia, PA 19103,
furnishes investment management services to The Defensive Equity, The Aggressive
Growth, The Fixed Income, The Limited-Term Maturity, The Defensive Equity
Small/Mid-Cap, The Defensive Equity Utility, The Real Estate Investment Trust
and The High-Yield Bond Portfolios, subject to the supervision and direction of
the Fund's Board of Directors. Delaware International Advisers Ltd. ("Delaware
International"), Veritas House, 125 Finsbury Pavement, London, England EC2A 1NQ,
furnishes similar services to The International Equity, The Labor Select
International Equity, The Global Fixed Income and The International Fixed Income
Portfolios, subject to the supervision and direction of the Fund's Board of
Directors. Lincoln Investment Management, Inc. ("Lincoln") serves as sub-adviser
to Delaware with respect to The Real Estate Investment Trust Portfolio.
Lincoln's address is 200 E. Berry Street, Fort Wayne, Indiana 46802.
Delaware and its predecessors have been managing the funds in the
Delaware Group since 1938. On October 31, 1995, Delaware and its affiliate,
Delaware International, were supervising in the aggregate more than $27 billion
in assets in various institutional or separately managed (approximately
$16,961,505,000) and investment company (approximately $10,172,570,000)
accounts.
Lincoln (formerly Lincoln National Investment Management Company) was
incorporated in 1930. As of December 31, 1995, Lincoln had over $37 billion in
assets under management.
The Investment Management Agreements for The Defensive Equity, The
Aggressive Growth, The Fixed Income, The Limited-Term Maturity, The
International Equity, The Global Fixed Income and The International Fixed Income
Portfolios are each dated April 3, 1995 and were approved by shareholders on
March 29, 1995. The Investment Management Agreements for The Defensive Equity
Small/Mid-Cap, The Defensive Equity Utility, The Labor Select International
Equity, The Real Estate Investment Trust and The High-Yield Bond Portfolios are
each dated November 29, 1995 and were approved by the initial shareholders on
November 30, 1995. The Sub-Advisory Agreement for The Real Estate Investment
Trust Portfolio is dated November 29, 1995 and was approved by the initial
shareholder on November 30, 1995.
Each such Agreement has an initial term of two years and may be renewed
after its initial term only so long as such renewal and continuance are
specifically approved at least annually by the Board of Directors or by vote of
a majority of the outstanding voting securities of the Portfolio, and only if
the terms of the renewal thereof have been approved by the vote of a majority of
the directors of the Fund who are not parties thereto or interested persons of
any such party, cast in person at a meeting called for the purpose of voting on
such approval. Each Agreement is terminable without penalty on 60 days' notice
by the directors of the Fund or by the investment adviser. Each Agreement will
terminate automatically in the event of its assignment.
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<PAGE>
As compensation for the services to be rendered under their advisory
agreements, Delaware or, as relevant, Delaware International is entitled to an
advisory fee calculated by applying a quarterly rate, based on the following
annual percentage rates, to the Portfolio's average daily net assets for the
quarter:
Portfolio Rate
--------- ----
The Defensive Equity Portfolio .55%
The Aggressive Growth Portfolio .80%
The International Equity Portfolio .75%
The Defensive Equity Small/Mid-Cap Portfolio .65%
The Defensive Equity Utility Portfolio .35%
The Labor Select International Equity Portfolio .75%
The Real Estate Investment Trust Portfolio .75%*
The Fixed Income Portfolio .40%
The Limited-Term Maturity Portfolio .30%
The Global Fixed Income Portfolio .50%
The International Fixed Income Portfolio .50%
The High-Yield Bond Portfolio .45%
* Delaware has entered into a sub-advisory agreement with Lincoln with
respect to The Real Estate Investment Trust Portfolio. As compensation
for its services as sub-adviser to Delaware, Lincoln is entitled to
receive a sub-advisory fee equal to 30% of the investment management
fee under Delaware's Investment Management Agreement with the Fund on
behalf of the Portfolio.
Out of the investment advisory fees to which they are otherwise
entitled, Delaware and Delaware International pay their proportionate share of
the fees paid to unaffiliated directors by the Fund, except that Delaware
International will make no such payments out of the fees it receives from
managing The International Fixed Income and The Labor Select International
Equity Portfolios and Delaware will make no such payments out of the fees it
receives from managing The Defensive Equity Small/Mid-Cap, The Defensive Equity
Utility, The Real Estate Investment Trust and The High-Yield Bond Portfolios.
With respect to The Defensive Equity, The Aggressive Growth, The Fixed
Income and The Limited- Term Maturity Portfolios, Delaware had elected
voluntarily to waive that portion, if any, of the annual investment advisory
fees payable by a particular Portfolio and to reimburse a Portfolio for its
expenses to the extent necessary to ensure that the expenses of that Portfolio
(exclusive of taxes, interest, brokerage commissions and extraordinary expenses)
did not exceed, on an annualized basis, respectively, .68%, .93%, .53% and .43%,
as a percentage of average net assets during the period from the commencement of
the public offering for the Portfolio through October 31, 1992. These waivers
and reimbursement commitments have been extended through October 31, 1996.
Similarly, Delaware International, the investment adviser to The International
Equity Portfolio and The International Fixed Income Portfolio, voluntarily
elected to waive that portion, if any, of its annual investment advisory fees
and to reimburse a particular Portfolio for its expenses to the extent necessary
to ensure that the expenses of that Portfolio (exclusive of taxes, interest,
brokerage commissions and extraordinary expenses) did not exceed, on an
annualized basis, respectively, .96% and .62%, as a percentage of average net
assets. For The International Equity Portfolio, the waiver and
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<PAGE>
reimbursement commitment applied to the period from the commencement of the
public offering for the Portfolio through October 31, 1992. Such waiver and
reimbursement commitment has been extended through October 31, 1996. For The
International Fixed Income Portfolio the waiver and reimbursement commitment
applied to the period from the commencement of the public offering for the
Portfolio through April 30, 1994. Such waiver and reimbursement commitment for
The International Fixed Income Portfolio has been modified to provide that such
expenses of the Portfolio do not exceed, on an annual basis, .60% through
October 31, 1996. Delaware International, also the investment adviser to The
Global Fixed Income Portfolio, voluntarily elected to waive that portion, if
any, of its annual investment advisory fees and to reimburse the Portfolio for
its expenses to the extent necessary to ensure that the expenses of that
Portfolio (exclusive of taxes, interest, brokerage commissions and extraordinary
expenses) did not exceed, on an annualized basis, .62% from the commencement of
the public offering of the Portfolio through October 31, 1993. Such waiver and
reimbursement commitment had been extended through October 31, 1994, but
modified, effective November 1, 1994 through October 31, 1996, to provide that
such expenses of the Portfolio do not exceed, on an annualized basis, .60%.
Amounts will be prorated over each Portfolio's initial fiscal period from
commencement of operations, if less than a complete fiscal year.
With respect to The Defensive Equity Small/Mid-Cap Portfolio, The
Defensive Equity Utility Portfolio, The Real Estate Investment Trust Portfolio
and The High-Yield Bond Portfolio, Delaware Investment Advisers has elected
voluntarily to waive that portion, if any, of the annual Investment Advisory Fee
payable by such Portfolios and to reimburse each Portfolio for its expenses to
the extent necessary to ensure that the expenses of each Portfolio (exclusive of
taxes, interest, brokerage commissions and extraordinary expenses) do not
exceed, as a percentage of average net assets, on an annualized basis, .79%,
.49%, .89% and .59%, respectively, during the period from the commencement of
the public offering of such Portfolios through October 31, 1996. Similarly,
Delaware International, the investment adviser to The Labor Select International
Equity Portfolio, has elected voluntarily to waive that portion, if any, of the
annual Investment Advisory Fee payable by The Labor Select International Equity
Portfolio and to reimburse the Portfolio for its expenses to the extent
necessary to ensure that the expenses of that Portfolio (exclusive of taxes,
interest, brokerage commissions and extraordinary expenses) do not exceed, on an
annualized basis, .96% of such Portfolio's average net assets during the period
from the commencement of the public offering of the Portfolio through October
31, 1996. Other Operating Expenses for each of the Portfolios are estimated.
For the fiscal years ended October 31, 1993, 1994 and 1995, the
investment management fees earned with respect to The Defensive Equity Portfolio
amounted to $43,337, $121,537, and $255,586, respectively, and no amount was
paid for 1993, $88,345 was paid for 1994 and $237,776 was paid for 1995, due to
the waiver of fees noted above. For the fiscal years ended October 31, 1993,
1994 and 1995, the investment management fees earned with respect to The
Aggressive Growth Portfolio amounted to $110,380, $171,517, and $202,809,
respectively, and $43,519 was paid for 1993, $118,977 was paid for 1994 and
$163,397 was paid for 1995, due to the waiver of fees noted above. For the
fiscal years ended October 31, 1993 and 1994, the investment management fees
earned with respect to The International Equity Portfolio amounted to $95,454
and $390,070, respectively, and $39,792 was paid for 1993 and $374,822 was paid
for 1994, due to the waiver of fees noted above. For the fiscal year ended
October 31, 1995, the investment management fee paid by The International Equity
Portfolio was $792,936. For the period November 30, 1992 (date of initial sale)
to October 31, 1993 and for the fiscal years ended October 31, 1994 and 1995,
the investment management fees earned with respect to The Global Fixed Income
Portfolio amounted to $107,750, $175,663 and $349,107, respectively, and $51,238
was paid for 1993, $124,905 was paid for 1994 and $293,883 was paid for 1995,
due to the waiver of fees noted above.
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<PAGE>
On October 31, 1995, the total net assets of the Fund were
$336,708,762, broken down as follows: The Defensive Equity
Portfolio--$51,947,097; The Aggressive Growth Portfolio--$29,091,884; The
International Equity Portfolio--$156,467,112; The Fixed Income
Portfolio--$21,000; The Limited-Term Maturity Portfolio-- $21,000; and The
Global Fixed Income Portfolio--$99,160,669.
Delaware is an indirect, wholly owned subsidiary of Delaware
Management Holdings, Inc. ("DMH").
Except for the expenses borne by the investment advisers under their
respective Investment Management Agreements and the distributor under the
Distribution Agreements, each Portfolio is responsible for all of its own
expenses. Among others, these include each Portfolio's proportionate share of
rent and certain other administrative expenses; the investment management fees;
transfer and dividend disbursing agent fees and costs; custodian expenses;
federal and state securities registration fees; proxy costs; and the costs of
preparing prospectuses and reports sent to shareholders. The ratios of expenses
to average daily net assets for The Defensive Equity, The Aggressive Growth and
The Global Fixed Income Portfolios for the fiscal year ended October 31, 1995
were .68%, .93% and .60%, respectively, which reflect the waiver of fees by the
respective investment adviser, as described above. The ratio of expenses to
average daily net assets for The International Equity Portfolio for the fiscal
year ended October 31, 1995 was .90%.
By California regulation, the respective investment advisers are
required to waive certain fees and reimburse the Portfolios they manage for
certain expenses to the extent that the Portfolios' operating expenses,
exclusive of taxes, interest, brokerage commissions and extraordinary expenses,
exceed 2 1/2% of its first $30 million of average daily net assets, 2% of the
next $70 million of average daily net assets and 1 1/2% of any additional
average daily net assets. For the period ended October 31, 1995, no such
reimbursement was necessary or paid.
Distribution and Service
Delaware Distributors, L.P. (which formerly conducted business as
Delaware Distributors, Inc.), located at 1818 Market Street, Philadelphia, PA
19103, serves as the national distributor for The Defensive Equity, The
Aggressive Growth, The Fixed Income, The Limited-Term Maturity, The
International Equity, The Global Fixed Income and The International Fixed Income
Portfolios under separate Distribution Agreements dated April 3, 1995. It is the
national distributor for The Defensive Equity Small/Mid-Cap, The Defensive
Equity Utility, The Labor Select International Equity, The Real Estate
Investment Trust and The High-Yield Bond Portfolios under separate Distribution
Agreements dated November 29, 1995. Delaware Distributors, L.P. is an affiliate
of the investment advisers and bears all of the costs of promotion and
distribution. Prior to January 3, 1995, Delaware Distributors, Inc. ("DDI")
served as the national distributor of the Fund's shares. On that date, Delaware
Distributors, L.P., a newly formed limited partnership, succeeded to the
business of DDI. All officers and employees of DDI became officers and employees
of Delaware Distributors, L.P. DDI is the corporate general partner of Delaware
Distributors, L.P. and both DDI and Delaware Distributors, L.P. are indirect,
wholly owned subsidiaries of DMH.
Delaware Service Company, Inc., an affiliate of Delaware, is the Fund's
shareholder servicing, dividend disbursing and transfer agent for each Portfolio
pursuant to an Amended and Restated Shareholders Services Agreement dated
November 29, 1995. Delaware Service Company, Inc. also provides accounting
services to the Fund pursuant to the terms of a separate agreement. Delaware
Service Company, Inc.'s principal business address is 1818 Market Street,
Philadelphia, PA 19103. It is also an indirect, wholly owned subsidiary of DMH.
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<PAGE>
OFFICERS AND DIRECTORS
The business and affairs of the Fund are managed under the direction of
its Board of Directors. As of July 31, 1996, no one account held 25% or more of
the outstanding shares of any of the Fund's Portfolios.
As of July 31, 1996, the management believes the following accounts
held 5% or more of the outstanding shares of a Portfolio:
Portfolio Name and Address of Account Share Amount Percentage
- --------- --------------------------- ------------ ----------
Defensive
Equity
- ----------
Northern Trust
TRST PHH Group
P.O. Box 92956
Chicago, IL 60690 506,201 11.66%
The Northern Trust Bank
Trst Childrens Memorial
Hospital
Self Insurance Foundation
Fund A
22-89799 / 2-55243
P.O. Box 92956
Chicago, IL 60690 383,785 8.84%
Strafe & Co.
For Consolidated Products
Profit Sharing Plan
P.O. Box 160
Westerville, OH 43086 380,492 8.77%
Commerce Bank of
Kansas City
Trst Burns & McDonnell
Employee
Stock Ownership Plan
P.O. Box 412817
Mailstop EP2-1
Kansas City, MO 64141 315,541 7.27%
The Northern Trust Company
TRST Children's Memorial
Pension Trust
22-45691 / 2-255243
P.O. Box 92956
Chicago, IL 60690 309,898 7.14%
Metz Baking Company
Master Pension Trust
1014 Nebraska Street
Sioux City, IA 51105 273,375 6.30%
Cherrytrust & Co.
FBO Colorado Open Shop
Employers Pension Trust
C/O The Bank of Cherry
Creek NA
3033 E. First Ave
Denver, CO 80206 357,627 5.93%
<PAGE>
Aggressive
Growth
- -----------
Blue Cross & Blue Shield
of Connecticut Inc.
Employee Retirement Plan
370 Bassett Rd.
North Haven, CT 06473 1,010,542 52.80%
The Hillman Foundation Inc.
2000 Grant Building
Pittsburgh, PA 15219 346,926 18.13%
St. Elizabeth Hospital
Medical C1044 Belmont Ave.
Youngstown, OH 44504 330,878 17.29%
Crestar Bank
Cust the College of William
and Mary
Room 224 Private Funds Office
P.O. Box 8795
Blow Memorial Hall
Williamsburg, VA 23187 112,664 5.89%
International
Equity
- -------------
The Salvation Army
440 West Nyack Road
West Nyack, NY 10994 4,982,061 27.10%
Father Flanagan's
Foundation
FU 14100 Crawford St.
Boys Town, NE 68010 2,100,182 11.43%
National City Trust
Company
Cust University of
Kentucky
101 S. Fifth St.
Louisville, KY 40202 1,162,671 6.33%
Mac & Co.
A/C LCPF0763222
Mutual Fund Operations
P.O. Box 3198
Pittsburgh, PA 15230 1,012,170 5.51%
Amherst H. Wilder
Foundation
919 Lafond Ave.
St. Paul, MN 55104 934,665 5.08%
<PAGE>
Fixed Income
- ------------
Delaware Management
Company
Attn Joe Hastings- 17th Fl.
1818 Market Street
Philadelphia, PA 19103 309,208 35.13%
The City of Groton
295 Meridian Street
Groton, CT 06340 285,088 32.40%
Crestar Bank
Cust The College of William
and Mary
Room 224 Private Funds Office
P.O. Box 8795
Blow Memorial Hall
Williamsburg, VA 23187 169,468 19.26%
City of Easton
Aggregated Pension Trust Fund
650 Ferry Street
Easton, PA 18042 103,966 11.81%
Global Fixed
Income
- ------------
St. Louis University
3500 Lindell Blvd.
St. Louis, MO 63103 3,243,548 21.44%
Washington Suburban
Sanitary Coemployees
Retirement Plan
14501 Sweitzer Ln.
Laurel, MD 20707 2,722,941 18.00%
Optima Health Inc.
Master Custody
C/O Chase Manhattan Bank
770 Broadway
New York, NY 10003 2,581,826 17.07%
Amherst H. Wilder Foundation
919 Lafond Ave.
St. Paul, MN 55104 1,593,944 10.53%
City of Brockton
Contributory Retirement
System
50 School Street
Brockton, MA 02401 908,031 6.00%
<PAGE>
Labor Select
International
Equity
- ------------
Operating Engineers LCL 101
PEN 301 E. Armour Blvd.
Suite 203
Kansas City, MO 64111 1,021,306 51.33%
The Lincoln National
Life Insurance Company
1300 S. Clinton Street
Fort Wayne, IN 46802 502,491 25.25%
First of America Trust
Company
Cust Plumbers and
Steamfitters
Local 137 Pension Trust
Intl Portfolio
Account 031946007
P.O. Box 4042
Kalamazoo, MI 49002 182,814 9.19%
Architectural & Ornamental
Ironworkers Local 63
2525 West Lexington
Broadview, IL 60153 157,363 7.91%
Real Estate
Investment
Trust
- ----------
The Lincoln National
Life Insurance Company
1300 S. Clinton Street
Fort Wayne, IN 46802 1,508,183 72.90%
American States Insurance
Company
500 N. Meridian St.
Indianapolis, IN 46204 504,887 24.40%
<PAGE>
DMH Corp., Delaware Management Company, Inc., Delaware Distributors,
L.P., Delaware Distributors, Inc., Delaware Service Company, Inc., Delaware
Management Trust Company, Delaware International Holdings Ltd., Founders
Holdings, Inc., Delaware International Advisers Ltd., Delaware Capital
Management, Inc. and Delaware Investment & Retirement Services, Inc. are direct
or indirect, wholly owned subsidiaries of DMH. On April 3, 1995, a merger
between DMH and a wholly owned subsidiary of Lincoln National Corporation
("Lincoln National") was completed. In connection with the merger, new
Investment Management Agreements between the Fund on behalf of The Defensive
Equity Portfolio, The Aggressive Growth Portfolio, The Fixed Income Portfolio
and The Limited-Term Maturity Portfolio and Delaware, and new Investment
Management Agreements between the Fund on behalf of The International Equity
Portfolio, The Global Fixed Income Portfolio and The International Fixed Income
Portfolio and Delaware International were executed following shareholder
approval. DMH, Delaware and Delaware International are now indirect, wholly
owned subsidiaries, and subject to the ultimate control, of Lincoln National.
Lincoln National, with headquarters in Fort Wayne, Indiana, is a diversified
organization with operations in many aspects of the financial services industry,
including insurance and investment management.
Certain officers and directors of the Fund hold identical positions in
each of the other funds in the Delaware Group. Directors and principal officers
of the Fund are noted below along with their ages and their business experience
for the past five years. Unless otherwise noted, the address of each officer and
director is One Commerce Square, Philadelphia, PA 19103.
*Wayne A. Stork (59)
Chairman and Director of the Fund, Delaware Distributors, Inc.,
Delaware Capital Management, Inc. and Delaware Investment &
Retirement Services, Inc.
Chairman,President, Chief Executive Officer, Director and/or Trustee
of each of the other 17 investment companies in the Delaware
Group, Delaware Management Holdings, Inc., DMH Corp., Delaware
International Holdings Ltd. and Founders Holdings, Inc.
Chairman,President, Chief Executive Officer, Chief Investment Officer
and Director of Delaware Management Company, Inc.
Chairman, Chief Executive Officer and Director of Delaware
International Advisers Ltd.
Director of Delaware Service Company, Inc.
During the past five years, Mr. Stork has served in various executive
capacities at different times within the Delaware
organization.
- ----------
* Director affiliated with the investment manager of the Fund and considered an
"interested person" as defined in the 1940 Act.
-45-
<PAGE>
Winthrop S. Jessup (50)
President and Chief Executive Officer of the Fund.
Executive Vice President of the 17 other investment companies in the
Delaware Group and Delaware Management Holdings, Inc.
President and Director of Delaware Capital Management, Inc.
Executive Vice President and Director of DMH Corp., Delaware
Management Company, Inc., Delaware International Holdings
Ltd. and Founders Holdings, Inc.
Vice Chairman and Director of Delaware Distributors, Inc.
Vice Chairman of Delaware Distributors, L.P.
Director of Delaware Service Company, Inc., Delaware International
Advisers Ltd., Delaware Management Trust Company and Delaware
Investment & Retirement Services, Inc.
During the past five years, Mr. Jessup has served in various
executive capacities at different times within the Delaware
organization.
Richard G. Unruh, Jr. (56)
Executive Vice President of the Fund and each of the other 17
investment companies in the Delaware Group.
Executive Vice President and Director of Delaware Management Company,
Inc.
Senior Vice President of Delaware Management Holdings, Inc.
Director of Delaware International Advisers Ltd.
During the past five years, Mr. Unruh has served in various executive
capacities at different times within the Delaware
organization.
Paul E. Suckow (49)
Executive Vice President/Chief Investment Officer, Fixed Income of the
Fund, each of the other 17 investment companies in the
Delaware Group and Delaware Management Company, Inc.
Executive Vice President and Director of Founders Holdings, Inc.
Senior Vice President/Chief Investment Officer, Fixed Income of
Delaware Management Holdings, Inc.
Director of Founders CBO Corporation.
Before returning to the Delaware Group in 1993, Mr. Suckow was
Executive Vice President and Director of Fixed Income for
Oppenheimer Management Corporation, New York, NY from 1985 to
1992. Prior to that, Mr. Suckow was a fixed-income portfolio
manager for the Delaware Group.
Walter P. Babich (68)
Director and/or Trustee of the Fund and each of the other 17 investment
companies in the Delaware Group.
460 North Gulph Road, King of Prussia, PA 19406.
Board Chairman, Citadel Constructors, Inc.
From 1986 to 1988, Mr. Babich was a partner of Irwin & Leighton and
from 1988 to 1991, he was a partner of I&L Investors.
-46-
<PAGE>
Anthony D. Knerr (57)
Director and/or Trustee of the Fund and each of the other 17 investment
companies in the Delaware Group.
500 Fifth Avenue, New York, NY 10110.
Founder and Managing Director, Anthony Knerr & Associates.
From 1982 to 1988, Mr. Knerr was Executive Vice President/Finance and
Treasurer of Columbia University, New York. From 1987 to
1989, he was also a lecturer in English at the University.
In addition, Mr. Knerr was Chairman of The Publishing Group,
Inc., New York, from 1988 to 1990. Mr. Knerr founded The
Publishing Group, Inc. in 1988.
Ann R. Leven (55)
Director and/or Trustee of the Fund and each of the other 17 investment
companies in the Delaware Group.
785 Park Avenue, New York, NY 10021.
Treasurer, National Gallery of Art.
From 1984 to 1990, Ms. Leven was Treasurer and Chief Fiscal Officer
of the Smithsonian Institution, Washington, DC, and from 1975
to 1992, she was Adjunct Professor of Columbia Business
School.
W. Thacher Longstreth (75)
Director and/or Trustee of the Fund and each of the other 17 investment
companies in the Delaware Group.
City Hall, Philadelphia, PA 19107.
Philadelphia City Councilman.
Charles E. Peck (70)
Director and/or Trustee of the Fund and each of the other 17 investment
companies in the Delaware Group.
P.O. Box 1102, Columbia, MD 21044.
Secretary/Treasurer, Enterprise Homes, Inc.
From 1981 to 1990, Mr. Peck was Chairman and Chief Executive
Officer of The Ryland Group, Inc., Columbia, MD.
-47-
<PAGE>
David K. Downes (56)
Senior Vice President/Chief Administrative Officer/Chief Financial
Officer of the Fund, each of the other 17 investment companies
in the Delaware Group and Delaware Management Company, Inc.
Chairman and Director of Delaware Management Trust Company.
Chief Executive Officer and Director of Delaware Investment &
Retirement Services, Inc.
Senior Vice President/Chief Administrative Officer/Chief Financial
Officer/Treasurer of Delaware Management Holdings, Inc.
Senior Vice President/Chief Financial Officer/Treasurer and Director
of DMH Corp.
Senior Vice President/Chief Administrative Officer and Director of
Delaware Distributors, Inc.
Senior Vice President/Chief Administrative Officer of Delaware
Distributors, L.P.
Senior Vice President/Chief Administrative Officer/Chief Financial
Officer and Director of Delaware Service Company, Inc.
Chief Financial Officer and Director of Delaware International
Holdings Ltd.
Senior Vice President/Chief Financial Officer/Treasurer of Delaware
Capital Management, Inc.
Senior Vice President/Chief Financial Officer and Director of Founders
Holdings, Inc.
Director of Delaware International Advisers Ltd.
Before joining the Delaware Group in 1992, Mr. Downes was Chief
Administrative Officer, Chief Financial Officer and Treasurer
of Equitable Capital Management Corporation, New York, from
December 1985 through August 1992, Executive Vice President
from December 1985 through March 1992 and Vice Chairman from
March 1992 through August 1992.
George M. Chamberlain, Jr. (49)
Senior Vice President and Secretary of the Fund, each of the other 17
investment companies in the Delaware Group, Delaware
Management Holdings, Inc. and Delaware Distributors, L.P.
Executive Vice President, Secretary and Director of Delaware
Management Trust Company.
Senior Vice President, Secretary and Director of DMH Corp.,
Delaware Management Company, Inc., Delaware Distributors,
Inc., Delaware Service Company, Inc., Founders Holdings, Inc.,
Delaware Investment & Retirement Services, Inc. and Delaware
Capital Management, Inc.
Secretary and Director of Delaware International Holdings Ltd.
Director of Delaware International Advisers Ltd.
Attorney.
During the past five years, Mr. Chamberlain has served in various
capacities at different times within the Delaware
organization.
George E. Deming (54)
Vice President/Senior Portfolio Manager of The Defensive Equity
Portfolio.
Vice President/Senior Portfolio Manager of Delaware Investment
Advisers.
Before joining the Delaware Group in 1978, Mr. Deming was responsible
for portfolio management and institutional sales at White
Weld & Co., Inc. He is a member of the Financial Analysts of
Philadelphia.
During the past five years, Mr. Deming has served in various
capacities at different times within the Delaware
organization.
-48-
<PAGE>
Edward N. Antoian (40)
Vice President/Senior Portfolio Manager of the Fund, of seven other
investment companies in the Delaware Group and of Delaware
Management Company, Inc.
During the past five years, Mr. Antoian has served in such capacities
within the Delaware organization.
Gerald S. Frey (50)
Vice President/Senior Portfolio Manager of the Fund, of seven other
investment companies in the Delaware Group and of Delaware
Management Company, Inc.
Before joining the Delaware Group in 1996, Mr. Frey was a Senior
Director with Morgan Grenfell Capital Management, New York, NY
from 1986 to 1995.
Gary A. Reed (41)
Vice President/Senior Portfolio Manager of the Fund, of nine other
investment companies in the Delaware Group, of Delaware
Management Company, Inc. and Delaware Capital Management, Inc.
Vice President/Senior Portfolio Manager of Delaware Capital
Management, Inc.
During the past five years, Mr. Reed has served in such capacities
within the Delaware organization.
Gerald T. Nichols (38)
Vice President/Senior Portfolio Manager of the Fund, of 11 other
investment companies in the Delaware Group and of Delaware
Management Company, Inc.
Vice President of Founders Holdings, Inc.
Treasurer/Assistant Secretary and Director of Founders CBO Corporation.
During the past five years, Mr. Nichols has served in various
capacities at different times within the Delaware
organization.
Paul A. Matlack (36)
Vice President/Senior Portfolio Manager of the Fund, of 11 other
investment companies in the Delaware Group and of Delaware
Management Company, Inc.
Vice President of Founders Holdings, Inc.
President and Director of Founders CBO Corporation.
During the past five years, Mr. Matlack has served in various
capacities at different times within the Delaware
organization.
George H. Burwell (34)
Vice President/Senior Portfolio Manager of the Fund, of seven other
investment companies in the Delaware Group and of Delaware
Management Company, Inc.
Before joining the Delaware Group in 1992, Mr. Burwell was a
portfolio manager for Midlantic Bank, New Jersey. In addition,
he was a security analyst for Balis & Zorn, New York and for
First Fidelity Bank, New Jersey.
David C. Dalrymple (38)
Vice President/Senior Portfolio Manager of the Fund, of seven other
investment companies in the Delaware Group and of Delaware
Management Company, Inc.
Before joining the Delaware Group in 1991, Mr. Dalrymple was an
Assistant Portfolio Manager for Lord Abbett and Company,
New York, N.Y. from 1986 to 1991.
-49-
<PAGE>
Baback Zenouzi (33)
Vice President/Portfolio Manager of the Fund and of nine other
investment companies in the Delaware Group.
Vice President/Assistant Portfolio Manager of Delaware Investment
Advisers.
Before joining the Delaware Group in 1992, Mr. Zenouzi held
positions of Assistant Vice President, Senior Financial
Analyst and Portfolio Accountant for The Boston Company,
Boston, MA from 1986 to 1991.
Joseph H. Hastings (46)
Vice President/Corporate Controller of the Fund, each of the other
17 investment companies in the Delaware Group, Delaware
Management Holdings, Inc., DMH Corp., Delaware Management
Company, Inc., Delaware Distributors, L.P., Delaware
Distributors, Inc., Delaware Service Company, Inc., Delaware
Capital Management, Inc., Founders Holdings, Inc. and Delaware
International Holdings Ltd.
Chief Financial Officer/Treasurer of Delaware Investment & Retirement
Services, Inc.
Executive Vice President/Chief Financial Officer/Treasurer of Delaware
Management Trust Company.
Assistant Treasurer of Founders CBO Corporation.
1818 Market Street, Philadelphia, PA 19103.
Before joining the Delaware Group in 1992, Mr. Hastings was Chief
Financial Officer for Prudential Residential Services, L.P.,
New York, NY from 1989 to 1992. Prior to that, Mr. Hastings
served as Controller and Treasurer for Fine Homes
International, L.P., Stamford, CT from 1987 to 1989.
Michael P. Bishof (34)
Vice President/Treasurer of the Fund, each of the other 17
investment companies in the Delaware Group, Delaware
Management Company, Inc., Delaware Distributors, Inc.,
Delaware Distributors, L.P., Delaware Service Company, Inc.
and Founders Holdings, Inc.
Vice President/Manager of Investment Accounting of Delaware
International Holdings Ltd.
Assistant Treasurer of Founders CBO Corporation.
Before joining the Delaware Group in 1995, Mr. Bishof was a Vice
President for Bankers Trust, New York, NY from 1994 to 1995,
a Vice President for CS First Boston Investment Management,
New York, NY from 1993 to 1994 and an Assistant Vice
President for Equitable Capital Management Corporation,
New York, NY from 1987 to 1993.
-50-
<PAGE>
The following is a compensation table listing for each director
entitled to receive compensation, the aggregate compensation received from the
Fund and the total compensation received from all Delaware Group funds for the
fiscal year ended October 31, 1995 and an estimate of annual benefits to be
received upon retirement under the Delaware Group Retirement Plan for
Directors/Trustees as of April 18, 1996.
<TABLE>
<CAPTION>
Pension or
Retirement Estimated Total
Benefits Annual Compensation
Aggregate Accrued Benefits from all 17
Compensation as Part of Upon Delaware
Name from Fund Fund Expenses Retirement* Group Funds
<S> <C> <C> <C> <C>
W. Thacher Longstreth $2,179 None $30,000 $58,188
Ann R. Leven $2,475 None $30,000 $66,324
Walter P. Babich $2,502 None $30,000 $67,324
Anthony D. Knerr $2,029 None $30,000 $57,635
Charles E. Peck $2,179 None $30,000 $58,188
</TABLE>
* Under the terms of the Delaware Group Retirement Plan for
Directors/Trustees, each disinterested director who, at the time of his or
her retirement from the Board, has attained the age of 70 and served on the
Board for at least five continuous years, is entitled to receive payments
from each fund in the Delaware Group for a period equal to the lesser of
the number of years that such person served as a director or the remainder
of such person's life. The amount of such payments will be equal, on an
annual basis, to the amount of the annual retainer that is paid to
directors of each fund at the time of such person's retirement. If an
eligible director retired as of April 18, 1996, he or she would be entitled
to annual payments totaling $30,000, in the aggregate, from all of the
funds in the Delaware Group, based on the number of funds in the Delaware
Group as of that date.
-51-
<PAGE>
GENERAL INFORMATION
Custody Arrangements
The Chase Manhattan Bank, 4 Chase Metrotech Center, Brooklyn, NY 11245
serves as custodian for The Global Fixed Income, The International Equity, The
Labor Select International Equity, The Real Estate Investment Trust, The
High-Yield Bond, The International Fixed Income and The Defensive Equity Utility
Portfolios. Bankers Trust Company, One Bankers Trust Plaza, New York, NY 10006
serves as custodian for The Defensive Equity, The Aggressive Growth, The Fixed
Income, The Limited-Term Maturity and The Defensive Equity Small/Mid-Cap
Portfolios. The Chase Manhattan Bank serves as custodian for all Portfolios with
respect to foreign securities.
With respect to foreign securities, The Chase Manhattan Bank makes
arrangements with subcustodians who were approved by the directors of the Fund
in accordance with Rule 17f-5 of the 1940 Act. In the selection of foreign
subcustodians, the directors consider a number of factors, including, but not
limited to, the reliability and financial stability of the institution, the
ability of the institution to provide efficiently the custodial services
required for the Fund, and the reputation of the institutions in the particular
country or region.
Capitalization
The Fund has a present authorized capitalization of one billion shares of
capital stock with a $.01 par value per share. The Board of Directors has
allocated fifty million shares to each Portfolio. While all shares have equal
voting rights on matters affecting the entire Fund, each Portfolio would vote
separately on any matter which affects only that Portfolio, such as any change
in its own investment objective and policy or action to dissolve a Portfolio and
as otherwise prescribed by the 1940 Act. Shares of each Portfolio have a
priority in that Portfolios' assets, and in gains on and income from the
portfolio of that Portfolio. Shares have no preemptive rights, are fully
transferable and, when issued, are fully paid and nonassessable.
The legality of the issuance of the shares offered hereby, pursuant to
registration under the 1940 Act Rule 24f-2, has been passed upon for the Fund by
Messrs. Stradley, Ronon, Stevens & Young, LLP, Philadelphia, Pennsylvania.
Noncumulative Voting
Portfolio shares have noncumulative voting rights which means that the
holders of more than 50% of the shares of the Fund voting for the election of
directors can elect all the directors if they choose to do so, and, in such
event, the holders of the remaining shares will not be able to elect any
directors.
This Statement of Additional Information does not include all of the
information contained in the Registration Statement which is on file with the
Securities and Exchange Commission.
-52-
<PAGE>
FINANCIAL STATEMENTS
Ernst & Young LLP serves as the independent auditor for the Fund and, in
its capacity as such, audits the financial statements contained in the Fund's
Annual Reports. The Defensive Equity, The Aggressive Growth, The International
Equity and The Global Fixed Income Portfolios' Statements of Net Assets,
Statements of Assets and Liabilities, Statements of Operations, Statements of
Changes in Net Assets and Notes to Financial Statements, and The Fixed Income
and The Limited-Term Maturity Portfolios' Statements of Assets and Liabilities
and Notes to Financial Statements as well as the reports of Ernst & Young LLP,
independent auditors, for the fiscal year ended October 31, 1995 are included in
the Fund's Annual Reports to shareholders. The financial statements, the notes
relating thereto and the report of Ernst & Young LLP, listed above are
incorporated by reference from the Annual Reports into this Statement of
Additional Information. Unaudited financial statements and the notes relating
thereto for each Portfolio for the period ended April 30, 1996 are incorporated
by reference from the Semi-Annual Reports into this Statement of Additional
Information. Unaudited financial information for the period March 12, 1996 (date
of initial sale) through July 31, 1996 for The Fixed Income Portfolio is
attached to this Statement of Additional Information.
-53-
<PAGE>
Delaware Pooled Trust, Inc.-The Fixed Income Portfolio
Statement of Net Assets
July 31,1996
(Unaudited)
<TABLE>
<CAPTION>
Principal Market
Amount Value
<S> <C> <C> <C> <C>
CORPORATE BONDS: 19.98%
ADVANTA Medium-Term Note 7.00% 05/01/01 $ 115,000 $ 113,706
Ahmanson (HF) 6.35% 09/01/98 100,000 99,500
AVCO Financial 5.50% 05/01/98 90,000 88,650
Banponce 6.75% 12/15/05 100,000 93,750
Chrysler Financial 6.35% 03/15/99 150,000 148,875
Credit Foncier De France 8.00% 01/14/02 85,000 87,019
Ford Motor Credit Global 6.25% 11/08/00 140,000 136,500
GMAC 8.50% 01/01/03 100,000 106,125
Greyhound Financial Medium-Term Note 8.79% 11/15/01 100,000 107,125
International Lease Finance 6.50% 08/15/99 100,000 99,375
Kohl's 6.70% 02/01/06 100,000 93,625
MEPC Finance 7.50% 05/01/03 95,000 95,000
News America Holdings 9.125% 10/15/99 80,000 85,000
Norwest 6.125% 10/15/00 150,000 146,063
Travelers/Aetna Property & Casualty 6.75% 04/15/01 100,000 99,125
U.S. Bancorp 8.125% 05/15/02 125,000 131,094
-----------
Total Corporate Bonds (cost $1,744,040) 1,730,532
-----------
ASSET-BACKED SECURITES: 14.73%
ADVANTA Series 93-1A2 5.95% 05/25/09 88,021 84,474
American Finance Home Equity
Series 92-5 A 7.20% 02/15/08 86,467 86,034
Case Equipment Loan Trust
Series 95-B A3 6.15% 09/15/02 100,000 99,250
Dayton Hudson Credit Card Master Trust
Series 95-1A 6.10% 02/25/02 100,000 99,321
First Bank Auto Receivables Grantor Trust
Series 95-B A 6.40% 07/17/00 92,554 92,582
Ford Credit Auto Loan Master Trust
Series 95-1 A 6.50% 08/55/02 100,000 98,940
IMC Home Equity Loan Trust
Series 95-3A2 6.50% 11/25/10 140,000 138,152
Neiman-Marcus Group Credit Card Master Trust
Series 95-1 A 7.60% 06/15/03 150,000 153,840
Nomura Asset Securities
Series 95-2 2A2 6.25% 01/25/26 200,000 198,180
UCFC Home Equity Loan
Series 96-B1 A3 7.30% 04/15/14 125,000 125,788
World Omni Automobile Lease Securitization Trust
Series 95-A 6.05% 11/25/01 100,000 99,500
-----------
Total Asset-Backed Securites (cost $1,281,631) 1,276,061
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS: 9.78%
Asset Securitization Corporation
Series 96-D2 A1 6.92% 02/14/29 198,628 191,645
<PAGE>
Series 95-MD4 A1 7.10% 08/13/29 198,073 194,050
Nomura Asset Securities
Series 95-MD3 8.17% 03/04/20 189,481 195,816
Residential Accredit Loans
Series 96-Q52 A6 7.45% 04/25/23 135,000 131,936
Residential Asset Securitization Trust
Series 96-A4 A5 7.50% 09/25/26 135,000 133,629
-----------
Total Collateralized Mortgage Obligations (cost $856,070) 847,076
-----------
MORTGAGE-BACKED SECURITIES: 25.63%
Federal Home Loan Mortgage Corporation 6.00% 03/01/11 195,075 184,285
Federal Home Loan Mortgage Corporation 6.00% 04/01/11 296,292 279,903
Federal Home Loan Mortgage Corporation 7.00% 05/01/24 138,128 133,337
Federal Home Loan Mortgage Corporation 7.00% 04/01/26 447,555 430,492
Federal National Mortgage Association 6.50% 04/01/11 205,295 198,238
Federal National Mortgage Association 7.00% 02/01/24 308,994 297,793
Government National Mortgage Association 9.00% 02/15/17 382,768 404,897
Government National Mortgage Association 9.50% 09/15/19 271,195 291,873
-----------
Total Mortgage-Backed Securites (cost $2,235,342) 2,220,818
-----------
U.S. TREASURY OBLIGATIONS: 27.21%
U.S. Treasury Notes 5.875% 04/30/98 890,000 886,048
U.S. Treasury Notes 6.375% 06/30/97 920,000 924,333
U.S. Treasury Notes 6.375% 01/15/00 450,000 449,087
U.S. Treasury Notes 6.50% 05/15/05 100,000 98,284
-----------
Total U.S. Treasury Obligations (cost $2,360,226) 2,357,752
-----------
REPURCHASE AGREEMENTS: 1.81%
With Chase Manhattan 5.60% 8/1/96
(dated 7/31/96, collateralized by $54,000 U.S. Treasury
Bills due 1/16/97, market value $52,885) 52,000 52,000
With J.P. Morgan Securities 5.60% 8/1/96
(dated 7/31/96, collateralized by $52,000 U.S. Treasury
Notes 6.00% due 8/31/97, market value $53,688) 53,000 53,000
With PaineWebber 5.60% 8/1/96
(dated 7/31/96, collateralized by $49,000 U.S. Treasury
Notes 8.50% due 11/15/00, market value $53,681) 52,000 52,000
-----------
Total Repurchase Agreements (cost $157,000) 157,000
-----------
TOTAL MARKET VALUE OF SECURITIES: 99.14%
(cost $8,634,309) $ 8,589,239
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES: 0.86% 74,344
-----------
NET ASSETS APPLICABLE TO 880,095 SHARES ($.01 PAR
VALUE) OUTSTANDING; EQUIVALENT TO $9.84 PER SHARE: 100.00% $ 8,663,583
===========
- ---------------------------------------------------------------------------------------------------
COMPONENTS OF NET ASSETS AT JULY 31, 1996:
Common stock, $.01 par value, 500,000,000 shares authorized $ 8,750,472
to the Fund with 50,000,000 shares allocated to this Portfolio
Accumulated undistributed income (loss):
Net investment income 26
Net realized loss on investments (41,845)
Net unrealized depreciation of investments (45,070)
-----------
Total net assets $ 8,663,583
============
</TABLE>
See accompanying notes
<PAGE>
Delaware Pooled Trust, Inc.-
The Fixed Income Portfolio
Statement of Operations
For the period March 12, 1996* to July 31, 1996
(Unaudited)
INVESTMENT INCOME:
Interest $ 175,328
EXPENSES:
Management fees 9,976
Amortization of deferred registration fees 8,453
Registration fees 4,792
Custodian fees 2,985
Amortization of organization expenses 2,004
Professional fees 1,902
Reports and statements to shareholders 1,592
Salaries 801
Dividend disbursing and transfer agent fees
and expenses 650
Directors' fees 593
Taxes (other than taxes on income) 527
Other 319
----------
34,594
Less expenses absorbed by
Delaware Management Company, Inc. (20,614)
----------
13,980
----------
NET INVESTMENT INCOME: 161,348
----------
NET REALIZED AND UNREALIZED LOSS
ON INVESTMENTS:
Net realized loss from
security transactions (41,845)
Net unrealized depreciation of
investments during the period (45,070)
----------
NET REALIZED AND UNREALIZED LOSS
ON INVESTMENTS (86,915)
----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 74,433
==========
*Date of initial sale
See accompanying notes
<PAGE>
Delaware Pooled Trust, Inc.-
The Fixed Income Portfolio
Statement of Changes in Net Assets
For the period March 12, 1996* to July 31, 1996
(Unaudited)
OPERATIONS:
Net investment income $ 161,348
Net realized loss on investments (41,845)
Net unrealized depreciation of
investments (45,070)
----------
Net increase in net assets resulting
from operations 74,433
----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (161,322)
----------
Net realized gain from security transactions -
----------
(161,322)
----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 8,569,080
Net asset value of shares issued upon
reinvestment of dividends from
net investment income 160,392
----------
8,729,472
----------
Cost of shares repurchased -
----------
Increase in net assets derived from
capital share transactions 8,729,472
----------
NET INCREASE IN NET ASSETS: 8,642,583
NET ASSETS:
Beginning of period 21,000
----------
End of period $8,663,583
==========
Undistributed net investment income $ 26
==========
*Date of initial sale.
See accompanying notes
<PAGE>
Delaware Pooled Trust, Inc.-
The Fixed Income Portfolio
Notes to Financial Statements
July 31, 1996
(Unaudited)
Delaware Pooled Trust, Inc. (The "Fund") is registered as a diversified open-end
investment company under the Investment Company Act of 1940, as amended. The
Fund is organized as a Maryland Corporation and offers 12 separate Portfolios
("Portfolios"), The Defensive Equity Portfolio, The Aggressive Growth Portfolio,
The Real Estate Investment Trust Portfolio, The Fixed Income Portfolio, The
International Equity Portfolio, The Labor Select International Equity Portfolio
and The Global Fixed Income Portfolio had commenced operations prior to July 31,
1996. The investment objective of the Portfolio is to seek to achieve a
maximum long-term total return, consistent with reasonable risk, by investing
in diversified investment-grade bonds, including U.S. government, mortgage-
backed, corporate, and other fixed-income securities.
1. Significant Accounting Policies
The following accounting policies are in accordance with generally accepted
accounting principles and are consistently followed by the Portfolio:
Security Valuation - Securities listed on an exchange are valued at the last
quoted sales price as of 4:00 pm EST on the valuation date. Securities not
traded or securities not listed on an exchange are valued at the mean of the
last quoted bid and asked prices. Long-term debt securities are valued by an
independent pricing service and such prices are believed to reflect the fair
value of such securities. Money market instruments having less than 60 days to
maturity are valued at amortized cost which approximates market value.
Federal Income Taxes - The Portfolio intends to continue to qualify as a
regulated investment company and make the requisite distributions to
shareholders. Accordingly, no provision for federal income taxes is required in
the financial statements.
Repurchase Agreements - The Portfolio may invest in a pooled cash account along
with other members of the Delaware Group 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
Portfolio's custodian bank until the maturity of the respective repurchase
agreements. Each repurchase agreement is at least 100% collateralized. However,
in the event of default or bankruptcy by the counterparty to the agreement,
realization of the collateral may be subject to legal proceedings.
Other - Expenses common to all funds within the Delaware Group of Funds are
allocated amongst the funds on the basis of average net assets. Security
transactions are recorded on the date the securities are purchased or sold
(trade date). Costs used in calculating realized gains and losses on the sale of
investment securities are those of the specific securities sold. Dividend income
is recorded on the ex-dividend date and interest income is recorded on an
accrual basis. Original issue discounts are accreted to interest income over the
lives of the respective securities.
Certain fund expenses are paid directly by brokers. The amount of these expenses
was less than 0.01% of the Portfolio's average net assets.
<PAGE>
Notes to Financial Statements (Continued)
2. Investment Management
In accordance with the terms of the Investment Management Agreement, the
Portfolio pays Delaware Management Company, Inc.(DMC), the Investment Manager of
the Portfolio, a fee which is calculated daily at the annual rate of 0.40% on
the average daily net assets, less fees paid to the independent directors.
DMC has elected voluntarily to waive its fee and reimburse the Portfolio to the
extent necessary to insure that the annual operating expenses exclusive of
taxes, interest, brokerage commissions and extraordinary expenses do not exceed
0.53% of average net assets through October 31, 1996. Total expenses absorbed by
DMC for the period ended July 31, 1996 were $20,614.
The Fund has engaged Delaware Service Company, Inc. (DSC), an affiliate of DMC
to serve as dividend disbursing and transfer agent for the Portfolio. For the
period ended July 31, 1996, the Portfolio expensed $650 for these services.
On July 31, 1996, the Portfolio had expenses payable relating to operations to
DMC and its affiliates of $61,042.
Certain officers of DMC are officers, directors, and/or employees of the Fund.
These officers, directors, and employees are paid no compensation by the
Portfolio.
<PAGE>
Notes to Financial Statements (Continued)
3. Investments
During the period ended July 31, 1996, the Portfolio made purchases of
$7,729,542 and sales of $1,583,519 of investment securities other than U.S.
government securities and temporary cash investments.
Investment securities based on cost for federal income tax purposes at July 31,
1996, are as follows:
Cost of investments $8,634,309
Aggregate unrealized appreciation 9,272
Aggregate unrealized depreciation (54,342)
----------
Market value of investments $8,589,239
==========
The net realized loss for federal income tax purposes for the period ended July
31, 1996, was $41,845.
4. Capital Stock
Transactions in capital stock shares were as follows:
3/12/96*
to
7/31/96
-------
Shares sold 861,726
Shares issued upon reinvestment of
dividends from net investment
income 16,269
-------
877,995
Shares repurchased -
-------
Net increase 877,995
=======
*Date of initial sale.
<PAGE>
Notes to Financial Statements (Continued)
5. Concentration of Credit Risk
The Fixed Income Portfolio invests in securities whose value is derived from an
underlying pool of mortgages or consumer loans. Prepayment of these loans may
shorten the stated maturity of the respective obligation and may result in a
loss of premium, if any has been paid.
6. Financial Highlights
Selected data for each share of the Portfolio outstanding throughout each period
were as follows:
3/12/96(1)
to
7/31/96
-------
Net asset value, beginning of period $10.0000
Income (loss) from investment operations:
Net investment income 0.2312
Net realized and unrealized
loss from security transactions (0.1600)
Total from investment operations 0.0712
------
Less distributions:
Dividends from net investment income (0.2312)
Distributions from net realized gain
from security transactions -
------
Total distributions (0.2312)
Net asset value, end of period $ 9.8400
========
Total return 0.73%
Ratios/Supplemental data:
Net assets, end of period (000 omitted) $ 8,664
Ratio of expenses to average net assets 0.53%
Ratio of net investment income to average net assets 6.09%
Portfolio turnover 345%
- ----------
1 Date of initial sale; ratios have been annualized and total return has not
been annualized.
2 Ratio of expenses to average net assets prior to expense limitation was
1.31% for the period ended July 31, 1996.
3 Ratio of net investment income to average net assets prior to expense
limitation was 5.31% for the period ended July 31, 1996.
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
PART C
Other Information
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Part A - Financial Highlights
*Part B - Statements of Net Assets
Statements of Assets and Liabilities
Statements of Operations
Statements of Changes in Net Assets
Notes to Financial Statements
Accountant's Report
* The financial statements and Accountant's Report listed above
are incorporated into Part B by reference to the Registrant's
Annual Reports for the fiscal year ended October 31, 1995 for
The Defensive Equity, The Aggressive Growth, The Global Fixed
Income and The International Equity Portfolios. The
Statements of Assets and Liabilities, Notes to Financial
Statements and Accountant's Reports for The Fixed Income and
The Limited-Term Maturity Portfolios are incorporated into
Part B by reference to the Registrant's Annual Reports for
those Portfolios for the fiscal year ended October 31, 1995.
In addition, unaudited financial statements for each
Portfolio for the period ended April 30, 1996 are
incorporated into Part B by reference to the Registrant's
Semi-Annual Reports. The Registrant's Semi-Annual Reports
were filed electronically with the Commission on June __,
1996. Unaudited financial statements for The Fixed Income
Portfolio for the period ended July 31, 1996 are also
included in Part B.
(b) Exhibits:
(1) Articles of Incorporation.
(a) Articles of Incorporation, as amended
and supplemented through November 28,
1995, incorporated into this filing by
reference to Post- Effective Amendment
No. 8 filed September 15, 1995 and
Post- Effective Amendment No. 9 filed
November 24, 1995.
i
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
(2) By-Laws. By-Laws, as amended to date,
incorporated into this filing by reference to
Post-Effective Amendment No. 8 filed September
15, 1995.
(3) Voting Trust Agreement. Inapplicable.
(4) Copies of All Instruments Defining the Rights of
Holders.
(a) Articles of Incorporation and Articles
Supplementary.
(1) Articles Fifth and Ninth of the
Articles of Incorporation (May
29, 1991), Article Fifth of
Articles of Amendment (October
10, 1991), Article Second of
Articles Supplementary
(September 21, 1992), Article
Second of Articles
Supplementary (August 3, 1993),
Article Second of Articles
Supplementary (October 12,
1994) incorporated into this
filing by reference to Post-
Effective Amendment No. 8 filed
September 15, 1995.
(2) Article Fourth of Articles
Supplementary (November 28,
1995) incorporated into this
filing by reference to
Post-Effective Amendment No. 9
filed November 24, 1995.
(b) By-Laws. Articles II, III and XIV of
the By-Laws incoporated into this
filing by reference to Post-Effective
Amendment No. 8 filed September 15,
1995.
(5) Investment Management Agreements.
(a)(1) Executed Investment Management
Agreements between Delaware Management
Company, Inc. and the Registrant on
behalf of The Defensive Equity, The
Aggressive Growth, The Fixed Income and
The Limited-Term Maturity Portfolios
(April 3, 1995) incorporated into this
filing by reference to Post-Effective
Amendment No. 8 filed September 15,
1995.
(a)(2) Executed Investment Management
Agreements between Delaware
International Advisers Ltd. and the
Registrant on behalf of The
International Equity, The Global Fixed
Income and The International Fixed
Income Portfolios (April 3, 1995)
incorporated into this filing by
reference to Post-Effective Amendment
No. 8 filed September 15, 1995.
ii
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
(a)(3) Executed Investment Management
Agreements between Delaware Management
Company, Inc. and the Registrant on
behalf of The Defensive Equity
Small/Mid-Cap, The Defensive Equity
Utility, The High-Yield Bond and The
Real Estate Investment Trust Portfolios
(November 29, 1995) incorporated into
this filing by reference to
Post-Effective Amendment No. 10 filed
February 23, 1996.
(a)(4) Executed Investment Management
Agreement between Delaware
International Advisers Ltd. and the
Registrant on behalf of The Labor
Select International Equity Portfolio
(November 29, 1995) incorporated into
this filing by reference to
Post-Effective Amendment No. 10 filed
February 23, 1996.
(b) Executed Sub-Advisory Agreement
(November 29, 1995) between Delaware
Management Company, Inc. and Lincoln
Investment Management, Inc. on behalf
of the Registrant for The Real Estate
Investment Trust Portfolio incorporated
into this filing by reference to
Post-Effective Amendment No. 10 filed
February 23, 1996.
(6) (a) Distribution Agreements.
(i) Executed Distribution
Agreements (April 3, 1995)
between Delaware Distributors,
L.P. and the Registrant on
behalf of The Defensive Equity,
The Aggressive Growth, The
International Equity, The
Global Fixed Income, The Fixed
Income, The Limited-Term
Maturity and The International
Fixed Income Portfolios to be
filed by Post-Effective
Amendment.
(ii) Executed Distribution
Agreements (November 29, 1995)
between Delaware Distributors,
L.P. and the Registrant on
behalf of The Defensive Equity
Small/Mid-Cap, The Defensive
Equity Utility, The High-Yield
Bond, The Labor Select
International Equity and The
Real Estate Investment Trust
Portfolios to be filed by
Post-Effective Amendment.
(b-d) Inapplicable.
iii
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
(7) Bonus, Profit Sharing, Pension Contracts.
(a)(1) Amended and Restated Profit Sharing
Plan (November 17, 1994) incorporated
into this filing by reference to
Post-Effective Amendment No. 8 filed
September 15, 1995.
(a)(2) Amendment to Profit Sharing Plan
(December 21, 1995) incorporated into
this filing by reference to
Post-Effective Amendment No. 10 filed
February 23, 1996.
(8) Custodian Agreements.
(a) Form of Custodian Agreement (1996)
between the Registrant and Bankers
Trust Company on behalf of The
Defensive Equity, The Aggressive
Growth, The Fixed Income, The
Limited-Term Maturity and The Defensive
Equity Small/Mid-Cap Portfolios
attached as Exhibit.
(b) Executed Custodian Agreement (1996)
between the Registrant and The Chase
Manhattan Bank on behalf of The Global
Fixed Income, The International Equity,
The Labor Select International Equity,
The Real Estate Investment Trust, The
High-Yield Bond, The International
Fixed Income and The Defensive Equity
Utility Portfolios included as
Module.
(c) Form of Securities Lending Agreement
(1996) between the Registrant and
Bankers Trust Company on behalf of The
Defensive Equity, The Aggressive
Growth, The Fixed Income, The
Limited-Term Maturity and The Defensive
Equity Small/Mid-Cap Portfolios
attached as Exhibit.
(d) Form of Securities Lending Agreement
(1996) between the Registrant and The
Chase Manhattan Bank on behalf of The
Global Fixed Income, The International
Equity, The Labor Select International
Equity, The Real Estate Investment
Trust, The High-Yield Bond, The
International Fixed Income and The
Defensive Equity Utility
Portfolios attached as Exhibit.
(9) Other Material Contracts. Executed Third Amended
and Restated Shareholders Services Agreement
(November 29, 1995) between Delaware Service
Company, Inc. and the Registrant on behalf of
each Portfolio incorporated into this filing by
reference to Post-Effective Amendment No. 10
filed February 23, 1996.
iv
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
(10) Opinion of Counsel. Filed with letter relating
to Rule 24f-2 on November 17, 1995.
(11) Consent of Auditors. Attached as Exhibit.
(12) Inapplicable.
(13) Undertaking of Initial Shareholder. Incorporated
into this filing by reference to Pre-Effective
Amendment No. 1 filed August 16, 1991.
(14-15) Inapplicable.
(16) Schedules of Computation for each Performance
Quotation.
(a) Incorporated into this filing by
reference to Post-Effective Amendment
No. 8 filed September 15, 1995 and
Post-Effective Amendment No. 11 filed
May 24, 1996.
(b) Schedules of Computation for each
Performance Quotation for each
Portfolio not previously filed attached
as Exhibit.
(17) Financial Data Schedules.
(a) Incorporated into this filing by
reference to Post-Effective Amendment
No. 10 filed February 23, 1996.
(b) Financial Data Schedules for the period
ended April 30, 1996 for each Portfolio
attached as Exhibit.
(c) Financial Data Schedule for The Fixed
Income Portfolio for the period ended
July 31, 1996 attached as Exhibit.
(18) Inapplicable.
(19) Other: Directors' Power of Attorney.
Incorporated into this filing by
reference to Post-Effective Amendment
No. 8 filed September 15, 1995.
Item 25. Persons Controlled by or under Common Control with Registrant. None.
v
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
Item 26. Number of Holders of Securities.
(1) (2)
Number of
Title of Class Record Holders
-------------- --------------
The Defensive Equity Portfolio:
Common Stock Par Value 29 Accounts as of
$.01 Per Share July 31, 1996
The Aggressive Growth Portfolio:
Common Stock Par Value 44 Accounts as of
$.01 Per Share July 31, 1996
The International Equity Portfolio:
Common Stock Par Value 43 Accounts as of
$.01 Per Share July 31, 1996
The Global Fixed Income Portfolio:
Common Stock Par Value 23 Accounts as of
$.01 Per Share July 31, 1996
The Fixed Income Portfolio:
Common Stock Par Value 5 Accounts as of
$.01 Per Share July 31, 1996
The Limited-Term
Maturity Portfolio:
Common Stock Par Value 1 Account as of
$.01 Per Share July 31, 1996
The International Fixed
Income Portfolio:
Common Stock Par Value 1 Account as of
$.01 Per Share July 31, 1996
The Defensive Equity Small/
Mid-Cap Portfolio:
Common Stock Par Value 0 Accounts as of
$.01 Per Share July 31, 1996
vi
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
Number of
Title of Class Record Holders
-------------- --------------
The Defensive Equity Utility
Portfolio:
Common Stock Par Value 0 Accounts as of
$.01 Per Share July 31, 1996
The High-Yield Bond Portfolio:
Common Stock Par Value 0 Accounts as of
$.01 Per Share July 31, 1996
The Labor Select International
Equity Portfolio:
Common Stock Par Value 10 Accounts as of
$.01 Per Share July 31, 1996
The Real Estate Investment
Trust Portfolio:
Common Stock Par Value 9 Accounts as of
$.01 Per Share July 31, 1996
Item 27. Indemnification. Incorporated into this filing by reference to
initial Registration Statement filed May 31, 1991.
vii
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
Item 28. Business and Other Connections of Investment Adviser.
(a) Delaware Management Company, Inc. ("DMC") serves as
investment manager to The Defensive Equity Portfolio, The Aggressive Growth
Portfolio, The Fixed Income Portfolio, The Limited-Term Maturity Portfolio, The
Defensive Equity Small/Mid-Cap Portfolio, The Defensive Equity Utility
Portfolio, The High-Yield Bond Portfolio and The Real Estate Investment Trust
Portfolio. In addition, DMC also serves as investment manager or sub-adviser to
certain of the other funds in the Delaware Group (Delaware Group Delaware Fund,
Inc., Delaware Group Trend Fund, Inc., Delaware Group Value Fund, Inc., Delaware
Group DelCap Fund, Inc., Delaware Group Decatur Fund, Inc., Delaware Group
Delchester High-Yield Bond Fund, Inc., Delaware Group Government Fund, Inc.,
Delaware Group Limited-Term Government Funds, Inc., Delaware Group Cash Reserve,
Inc., Delaware Group Tax-Free Fund, Inc., DMC Tax-Free Income
Trust-Pennsylvania, Delaware Group Tax-Free Money Fund, Inc., Delaware Group
Premium Fund, Inc., Delaware Group Global & International Funds, Inc., Delaware
Group Adviser Funds, Inc., Delaware Group Dividend and Income Fund, Inc. and
Delaware Group Global Dividend and Income Fund, Inc.) and provides investment
advisory services to institutional accounts, primarily retirement plans and
endowment funds. In addition, certain directors of DMC also serve as
directors/trustees of the other Delaware Group funds, and certain officers are
also officers of these other funds. A company indirectly owned by DMC's parent
company acts as principal underwriter to the mutual funds in the Delaware Group
(see Item 29 below) and another such company acts as the shareholder servicing,
dividend disbursing and transfer agent for all of the mutual funds in the
Delaware Group.
The following persons serving as directors or officers of DMC have
held the following positions during the past two years:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with DMC and its Affiliates and
Business Address* Other Positions and Offices Held
- ------------------ -----------------------------------------------------
<S> <C>
Wayne A. Stork Chairman of the Board, President, Chief Executive Officer, Chief
Investment Officer and Director of Delaware Management Company,
Inc.; Chairman of the Board and Director of the Registrant, Delaware
Distributors, Inc., Delaware Capital Management, Inc. and Delaware
Investment & Retirement Services, Inc.; President, Chairman of the
Board, Chief Executive Officer and Director of each of the other funds
in the Delaware Group, Delaware Management Holdings, Inc., DMH
Corp., Delaware International Holdings Ltd. and Founders Holdings,
Inc.; Chairman, Chief Executive Officer and Director of Delaware
International Advisers, Ltd.; and Director of Delaware Service
Company, Inc.
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
viii
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with DMC and its Affiliates and
Business Address* Other Positions and Offices Held
- ------------------ -----------------------------------------------------
<S> <C>
Winthrop S. Jessup Executive Vice President and Director of Delaware Management
Company, Inc., DMH Corp., Delaware International Holdings Ltd. and
Founders Holdings, Inc.; President and Chief Executive Officer of the
Registrant; Executive Vice President of each of the other funds in the
Delaware Group and Delaware Management Holdings, Inc.; Vice
Chairman of Delaware Distributors, L.P.; Vice Chairman and Director of
Delaware Distributors, Inc.; Director of Delaware Service Company,
Inc., Delaware Management Trust Company, Delaware International
Advisers Ltd. and Delaware Investment & Retirement Services, Inc.; and
President and Director of Delaware Capital Management, Inc.
Richard G. Unruh, Jr. Executive Vice President and Director of Delaware Management Company,
Inc.; Executive Vice President of the Registrant and each of the other
funds in the Delaware Group; Senior Vice President of Delaware
Management Holdings, Inc.; and Director of Delaware International
Advisers Ltd.
Board of Directors, Chairman of Finance Committee, Keystone Insurance
Company since 1989, 2040 Market Street, Philadelphia, PA; Board of
Directors, Chairman of Finance Committee, Mid Atlantic, Inc. since 1989,
2040 Market Street, Philadelphia, PA
Paul E. Suckow Executive Vice President/Chief Investment Officer, Fixed Income of
Delaware Management Company, Inc., the Registrant and each of the
other funds in the Delaware Group; Senior Vice President/Chief
Investment Officer, Fixed Income of Delaware Management Holdings,
Inc.; Executive Vice President and Director of Founders Holdings, Inc.;
and Director of Founders CBO Corporation
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
ix
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with DMC and its Affiliates and
Business Address* Other Positions and Offices Held
- ------------------ -----------------------------------------------------
<S> <C>
David K. Downes Senior Vice President, Chief Administrative Officer and Chief Financial
Officer of Delaware Management Company, Inc., the Registrant and
each of the other funds in the Delaware Group; Chairman and Director
of Delaware Management Trust Company; Senior Vice President, Chief
Administrative Officer, Chief Financial Officer and Treasurer of
Delaware Management Holdings, Inc.; Senior Vice President, Chief
Financial Officer, Treasurer and Director of DMH Corp.; Senior Vice
President and Chief Administrative Officer of Delaware Distributors,
L.P.; Senior Vice President, Chief Administrative Officer and Director
of Delaware Distributors, Inc.; Senior Vice President, Chief
Administrative Officer, Chief Financial Officer and Director of
Delaware Service Company, Inc.; Chief Financial Officer and Director
of Delaware International Holdings Ltd.; Senior Vice President, Chief
Financial Officer and Treasurer of Delaware Capital Management, Inc.;
Senior Vice President, Chief Financial Officer and Director of Founders
Holdings, Inc.; Chief Executive Officer and Director of Delaware
Investment & Retirement Services, Inc.; and Director of Delaware
International Advisers Ltd.
Chief Executive Officer, Chief Financial Officer and Treasurer of
Forewarn, Inc. since 1992, 8 Clayton Place, Newtown Square, PA
George M. Chamberlain, Jr. Senior Vice President, Secretary and Director of Delaware Management
Company, Inc., DMH Corp., Delaware Distributors, Inc., Delaware
Service Company, Inc., Founders Holdings, Inc., Delaware Capital
Management, Inc. and Delaware Investment & Retirement Services, Inc.;
Senior Vice President and Secretary of the Registrant, each of the other
funds in the Delaware Group, Delaware Distributors, L.P. and Delaware
Management Holdings, Inc.; Executive Vice President, Secretary and
Director of Delaware Management Trust Company; Secretary and
Director of Delaware International Holdings Ltd.; and Director of
Delaware International Advisers Ltd.
Director of ICI Mutual Insurance Co. since 1992, P.O. Box 730,
Burlington, VT
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
x
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with DMC and its Affiliates and
Business Address* Other Positions and Offices Held
- ------------------ -----------------------------------------------------
<S> <C>
Richard J. Flannery Managing Director/Corporate Tax & Affairs of Delaware Management
Company, Inc., Delaware Management Holdings, Inc., DMH Corp.,
Delaware Distributors, L.P., Delaware Distributors, Inc., Delaware
Service Company, Inc., Delaware Management Trust Company,
Founders CBO Corporation, Delaware Capital Management, Inc. and
Delaware Investment & Retirement Services, Inc.; Vice President of the
Registrant and each of the other funds in the Delaware Group; Managing
Director/Corporate Tax & Affairs and Director of Founders Holdings,
Inc.; Managing Director and Director of Delaware International
Holdings Ltd.; and Director of Delaware International Advisers Ltd.
Limited Partner of Stonewall Links, L.P. since 1991, Bulltown Rd.,
Elverton, PA; Director and Member of Executive Committee of
Stonewall Links, Inc. since 1991, Bulltown Rd., Elverton, PA
Michael P. Bishof(1) Vice President and Treasurer of Delaware Management Company, Inc.,
the Registrant, each of the other funds in the Delaware Group, Delaware
Distributors, L.P., Delaware Distributors, Inc., Delaware Service
Company, Inc. and Founders Holdings, Inc.; Vice President and
Manager of Investment Accounting of Delaware International Holdings
Ltd.; and Assistant Treasurer of Founders CBO Corporation.
Eric E. Miller Vice President and Assistant Secretary of Delaware Management
Company, Inc., the Registrant, each of the other funds in the Delaware
Group, Delaware Management Holdings, Inc., DMH Corp., Delaware
Distributors, L.P., Delaware Distributors Inc., Delaware Service
Company, Inc., Delaware Management Trust Company, Founders
Holdings, Inc., Delaware Capital Management, Inc. and Delaware
Investment & Retirement Services, Inc.
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
xi
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with DMC and its Affiliates and
Business Address* Other Positions and Offices Held
- ------------------ -----------------------------------------------------
<S> <C>
Richelle S. Maestro Vice President and Assistant Secretary of Delaware Management
Company, Inc., the Registrant, each of the other funds in the Delaware
Group, Delaware Management Holdings, Inc., Delaware Distributors,
L.P., Delaware Distributors, Inc., Delaware Service Company, Inc.,
DMH Corp., Delaware Management Trust Company, Delaware Capital
Management, Inc., Founders Holdings, Inc. and Delaware Investment &
Retirement Services, Inc.; Secretary of Founders CBO Corporation; and
Assistant Secretary of Delaware International Holdings Ltd.
General Partner of Tri-R Associates since 1989, 10001 Sandmeyer Ln.,
Philadelphia, PA
John M. Zerr(2) Vice President and Assistant Secretary of Delaware Management
Company, Inc., the Registrant, each of the other funds in the Delaware
Group, DMH Corp., Delaware Distributors, L.P., Delaware Capital
Management, Inc. and Delaware Investment & Retirement Services, Inc.
Secretary and Counsel of Renovisions, Inc. since 1990, 4284 South Dixi
Road, Resaca, GA
Joseph H. Hastings Vice President/Corporate Controller of Delaware Management Company,
Inc., the Registrant, each of the other funds in the Delaware Group,
Delaware Management Holdings, Inc., DMH Corp., Delaware
Distributors, L.P., Delaware Distributors, Inc., Delaware Service
Company, Inc., Delaware Capital Management, Inc., Founders Holdings,
Inc. and Delaware International Holdings Ltd.; Executive Vice President,
Chief Financial Officer and Treasurer of Delaware Management Trust
Company; Chief Financial Officer and Treasurer of Delaware Investment
& Retirement Services, Inc.; and Assistant Treasurer of Founders CBO
Corporation
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
xii
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with DMC and its Affiliates and
Business Address* Other Positions and Offices Held
- ------------------ -----------------------------------------------------
<S> <C>
Bruce A. Ulmer Vice President/Director of Internal Audit of Delaware Management
Company, Inc., the Registrant, each of the other funds in the Delaware
Group, Delaware Management Holdings, Inc., DMH Corp. and Delaware
Management Trust Company; and Vice President/Internal Audit of
Delaware Investment & Retirement Services, Inc.
Steven T. Lampe(3) Vice President/Taxation of Delaware Management Company, Inc., the
Registrant, each of the other funds in the Delaware Group, Delaware
Management Holdings, Inc., DMH Corp., Delaware Distributors, L.P.,
Delaware Distributors, Inc., Delaware Service Company, Inc., Delaware
Management Trust Company, Founders Holdings, Inc., Founders CBO
Corporation, Delaware Investment & Retirement Services, Inc. and
Delaware Capital Management, Inc.
Lisa O. Brinkley Vice President/Compliance of Delaware Management Company, Inc., the
Registrant, each of the other funds in the Delaware Group, DMH Corp.,
Delaware Distributors, L.P., Delaware Distributors, Inc., Delaware
Service Company, Inc., Delaware Management Trust Company, Delaware
Capital Management, Inc. and Delaware Investment & Retirement Services,
Inc.
Rosemary E. Milner Vice President/Legal of Delaware Management Company, Inc., the
Registrant, each of the other funds in the Delaware Group, Delaware
Distributors, L.P. and Delaware Distributors, Inc.
Douglas L. Anderson Vice President/Operations of Delaware Management Company, Inc. and
Delaware Service Company, Inc.; and Vice President/Operations and
Director of Delaware Management Trust Company
Michael T. Taggart Vice President/Facilities Management and Administrative Services of
Delaware Management Company, Inc.
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
xiii
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with DMC and its Affiliates and
Business Address* Other Positions and Offices Held
- ------------------ -----------------------------------------------------
<S> <C>
Gerald T. Nichols Vice President/Senior Portfolio Manager of Delaware Management Company,
Inc., the Registrant, each of the tax-exempt funds, the fixed income
funds and the closed-end funds in the Delaware Group; Vice President of
Founders Holdings, Inc.; and Treasurer, Assistant Secretary and Director
of Founders CBO Corporation
J. Michael Pokorny Vice President/Senior Portfolio Manager of Delaware Management
Company, Inc., the Registrant, each of the tax-exempt funds and the
fixed income funds in the Delaware Group
Gary A. Reed Vice President/Senior Portfolio Manager of Delaware Management Company,
Inc., the Registrant, each of the tax-exempt funds and the fixed income
funds in the Delaware Group and Delaware Capital Management, Inc.
Paul A. Matlack Vice President/Senior Portfolio Manager of Delaware Management Company,
Inc., the Registrant, each of the tax-exempt funds, the fixed income
funds and the closed-end funds in the Delaware Group; Vice President of
Founders Holdings, Inc.; and President and Director of Founders CBO
Corporation
Patrick P. Coyne Vice President/Senior Portfolio Manager of Delaware Management Company,
Inc., the Registrant, each of the tax-exempt funds and the fixed income
funds in the Delaware Group
Roger A. Early Vice President/Senior Portfolio Manager of Delaware Management Company,
Inc., the Registrant, each of the tax-exempt funds and the fixed income
funds in the Delaware Group
Edward N. Antoian Vice President/Senior Portfolio Manager of Delaware Management
Company, Inc., the Registrant and each of the equity funds in the
Delaware Group
General Partner of Zeke Investment Partners since 1991, 569 Canterbury
Lane, Berwyn, PA
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
xiv
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with DMC and its Affiliates and
Business Address* Other Positions and Offices Held
- ------------------ -----------------------------------------------------
<S> <C>
George H. Burwell Vice President/Senior Portfolio Manager of Delaware Management
Company, Inc., the Registrant and each of the equity funds in the
Delaware Group
John B. Fields Vice President/Senior Portfolio Manager of Delaware Management Company,
Inc., the Registrant, each of the equity funds in the Delaware Group and
Delaware Capital Management, Inc.
David C. Dalrymple Vice President/Senior Portfolio Manager of Delaware Management
Company, Inc., the Registrant and each of the equity funds in the
Delaware Group
George E. Deming Vice President/Senior Portfolio Manager of The Defensive Equity
Portfolio; and Director of Delaware International Advisers, Ltd.
Gerald S. Frey(4) Vice President/Senior Portfolio Manager of Delaware Management
Company, Inc., the Registrant and each of the other equity funds in the
Delaware Group
Babak Zenouzi Vice President/Portfolio Manager of The Real Estate Investment Trust
Portfolio and each of the other equity funds and closed-end funds in the
Delaware Group
Faye P. Staples(5) Vice President/Human Resources of Delaware Management Company, Inc.,
Delaware Distributors, L.P. and Delaware Distributors, Inc.; and Vice
President/Director of Human Resources of Delaware Service Company, Inc.
Daniel H. Carlson(6) Vice President/Marketing Manager of Delaware Management Company,
Inc.
</TABLE>
1 VICE PRESIDENT/GLOBAL INVESTMENT MANAGEMENT OPERATIONS, Bankers Trust and
VICE PRESIDENT, CS First Boston Investment Management prior to June 1995.
2 ATTORNEY, Ballard, Spahr, Andrews and Ingersoll prior to July 1995.
3 TAX MANAGER, Price Waterhouse prior to October 1995.
4 SENIOR DIRECTOR, Morgan Grenwell Capital Management prior to June 1996.
5 VICE PRESIDENT/HUMAN RESOURCES, Nova Care prior to September 1995.
6 PRINCIPAL AND CONSULTANT, Buck Consultants prior to October 1995.
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
xv
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
(b) Delaware International Advisers Ltd. ("Delaware
International") serves as investment manager to The International Equity
Portfolio, The Global Fixed Income Portfolio, The International Fixed Income
Portfolio and The Labor Select International Equity Portfolio. In addition,
Delaware International also serves as investment manager or sub-adviser to
certain of the other funds in the Delaware Group (Delaware Group Premium Fund,
Inc., Delaware Group Global & International Funds, Inc. and Delaware Group
Global Dividend and Income Fund, Inc.) and provides investment advisory services
to institutional accounts primarily retirement plans and endowment funds.
The following persons serving as directors or officers of
Delaware International have held the following positions during the past two
years:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Delaware International Advisers Ltd.
Business Address and its Affiliates and Other Positions and Offices Held
- ------------------ ---------------------------------------------------------------
<S> <C>
*Wayne A. Stork Chairman of the Board, Chief Executive Officer and Director of
Delaware International Advisers Ltd.; Chairman of the Board and
Director of the Registrant, Delaware Distributors, Inc., Delaware Capital
Management, Inc. and Delaware Investment & Retirement Services, Inc.;
President, Chief Executive Officer, Chairman of the Board and Director
of each of the other funds in the Delaware Group, Delaware
Management Holdings, Inc., DMH Corp., Delaware International
Holdings Ltd. and Founders Holdings, Inc.; Chairman of the Board,
President, Chief Executive Officer, Chief Investment Officer and
Director of Delaware Management Company, Inc.; and Director of
Delaware Service Company, Inc.
**G. Roger H. Kitson Vice Chairman and Director of Delaware International Advisers Ltd.
**David G. Tilles Managing Director, Chief Investment Officer and Director of Delaware
International Advisers Ltd.
**John Emberson Secretary/Compliance Officer/Finance Director and Director of Delaware
International Advisers Ltd.
</TABLE>
* Business address is 1818 Market Street, Philadelphia, PA 19103.
** Business address is Veritas House, 125 Finsbury Pavement,
London, England EC2A 1NQ.
xvi
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Delaware International Advisers Ltd.
Business Address and its Affiliates and Other Positions and Offices Held
- ------------------ ---------------------------------------------------------------
<S> <C>
*David K. Downes Director of Delaware International Advisers Ltd.; Senior Vice President,
Chief Administrative Officer, Chief Financial Officer and Treasurer of
Delaware Management Holdings, Inc.; Senior Vice President, Chief
Administrative Officer, Chief Financial Officer of Delaware
Management Company, Inc., the Registrant and each of the other funds
in the Delaware Group; Chairman and Director of Delaware
Management Trust Company; Senior Vice President, Chief Financial
Officer, Treasurer and Director of DMH Corp.; Senior Vice President
and Chief Administrative Officer of Delaware Distributors, L.P.; Senior
Vice President, Chief Administrative Officer and Director of Delaware
Distributors, Inc; Senior Vice President, Chief Administrative Officer,
Chief Financial Officer and Director of Delaware Service Company,
Inc.; Chief Financial Officer and Director of Delaware International
Holdings Ltd.; Senior Vice President, Chief Financial Officer and
Treasurer of Delaware Capital Management, Inc.; Senior Vice President,
Chief Financial Officer and Director of Founders Holdings, Inc.; and
Chief Executive Officer and Director of Delaware Investment &
Retirement Services, Inc.
Chief Executive Officer, Chief Financial Officer and Treasurer of
Forewarn, Inc. since 1992, 8 Clayton Place, Newtown Square, PA
*George M. Chamberlain, Jr. Director of Delaware International Advisers Ltd.; Senior Vice President
and Secretary of the Registrant, each of the other funds in the Delaware
Group, Delaware Distributors, L.P. and Delaware Management
Holdings, Inc.; Senior Vice President, Secretary and Director of
Delaware Management Company, Inc., DMH Corp., Delaware
Distributors, Inc., Delaware Service Company, Inc., Founders Holdings,
Inc., Delaware Capital Management, Inc. and Delaware Investment &
Retirement Services, Inc.; Executive Vice President, Secretary and
Director of Delaware Management Trust Company; and Secretary and
Director of Delaware International Holdings Ltd.
Director of ICI Mutual Insurance Co. since 1992, P.O. Box 730,
Burlington, VT
</TABLE>
* Business address is 1818 Market Street, Philadelphia, PA 19103.
** Business address is Veritas House, 125 Finsbury Pavement, London,
England EC2A 1NQ.
xvii
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Delaware International Advisers Ltd.
Business Address and its Affiliates and Other Positions and Offices Held
- ------------------ ---------------------------------------------------------------
<S> <C>
*Winthrop S. Jessup Director of Delaware International Advisers Ltd., Delaware Management
Trust Company, Delaware Service Company, Inc. and Delaware
Investment & Retirement Services, Inc.; President and Chief Executive
Officer of the Registrant; Executive Vice President of each of the other
funds in the Delaware Group and Delaware Management Holdings, Inc.;
Executive Vice President and Director of DMH Corp., Delaware
Management Company, Inc., Delaware International Holdings Ltd. and
Founders Holdings, Inc.; Vice Chairman of Delaware Distributors, L.P.;
Vice Chairman and Director of Delaware Distributors, Inc.; and
President and Director of Delaware Capital Management, Inc.
*Richard G. Unruh, Jr. Director of Delaware International Advisers Ltd.; Executive Vice
President and Director of Delaware Management Company, Inc.;
Executive Vice President of the Registrant and each of the other funds
in the Delaware Group; and Senior Vice President of Delaware
Management Holdings, Inc.
Board of Directors, Chairman of Finance Committee, Keystone Insurance
Company since 1989, 2040 Market Street, Philadelphia, PA; Board of
Directors, Chairman of Finance Committee, Mid Atlantic, Inc. since 1989,
2040 Market Street, Philadelphia, PA
</TABLE>
* Business address is 1818 Market Street, Philadelphia, PA 19103.
** Business address is Veritas House, 125 Finsbury Pavement,
London, England EC2A 1NQ.
xviii
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Delaware International Advisers Ltd.
Business Address and its Affiliates and Other Positions and Offices Held
- ------------------ ---------------------------------------------------------------
<S> <C>
*Richard J. Flannery Director of Delaware International Advisers Ltd; Vice President of the
Registrant and each of the other funds in the Delaware Group; Managing
Director/Corporate Tax & Affairs of Delaware Management Holdings,
Inc., DMH Corp., Delaware Management Company, Inc., Delaware
Distributors, L.P., Delaware Distributors, Inc., Delaware Service
Company, Inc., Delaware Management Trust Company, Founders CBO
Corporation, Delaware Capital Management, Inc. and Delaware
Investment & Retirement Services, Inc.; Managing Director/Corporate &
Tax Affairs and Director of Founders Holdings, Inc.; and Managing
Director and Director of Delaware International Holdings Ltd.
Limited Partner of Stonewall Links, L.P. since 1991, Bulltown Rd.,
Elverton, PA; Director and Member of Executive Committee of
Stonewall Links, Inc. since 1991, Bulltown Rd., Elverton, PA
*John C. E. Campbell Director of Delaware International Advisers Ltd.
*George E. Deming Director of Delaware International Advisers Ltd.
**Timothy W. Sanderson Senior Portfolio Manager, Deputy Compliance Officer, Director Equity
Research and Director of Delaware International Advisers Ltd.
**Clive A. Gillmore Senior Portfolio Manager, Director U.S. Mutual Fund Liaison and
Director of Delaware International Advisers Ltd.
**Hamish O. Parker Senior Portfolio Manager, Director U.S. Marketing Liaison and Director
of Delaware International Advisers Ltd.
**Ian G. Sims Senior Portfolio Manager, Deputy Managing Director and Director of
Delaware International Advisers Ltd.
**Elizabeth A. Desmond Senior Portfolio Manager of Delaware International Advisers Ltd.
**Gavin A. Hall Senior Portfolio Manager of Delaware International Advisers Ltd.
</TABLE>
* Business address is 1818 Market Street, Philadelphia, PA 19103.
** Business address is Veritas House, 125 Finsbury Pavement,
London, England EC2A 1NQ.
xix
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
(c) Lincoln Investment Management Company, Inc. serves as
sub-adviser to The Real Estate Investment Trust Portfolio. Lincoln Investment
Management Company, Inc. also serves as sub- adviser to Delaware Group Adviser
Funds, Inc. and investment manager to Lincoln National Convertible Securities
Fund, Inc., Lincoln National Income Fund, Inc., Lincoln National Aggressive
Growth Fund, Inc., Lincoln National Bond Fund, Inc., Lincoln National Capital
Appreciation Fund, Inc., Lincoln National Equity-Income Fund, Inc., Lincoln
National Global Asset Allocation Fund, Inc., Lincoln National Growth and Income
Fund, Inc., Lincoln National International Fund, Inc., Lincoln National Managed
Fund, Inc., Lincoln National Money Market Fund, Inc., Lincoln National Social
Awareness Fund, Inc., Lincoln National Special Opportunities Fund, Inc. and to
other clients. Lincoln Investment Management Company, Inc. is registered with
the Securities and Exchange Commission as an investment adviser and has acted as
an investment adviser to investment companies for over 40 years.
Information regarding the officers and directors of Lincoln
Investment Management Company, Inc. and the positions they held during the past
two years follows:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Lincoln Investment Management Company,
Business Address* Inc. and its Affiliates and Other Positions and Offices Held
- ------------------ ---------------------------------------------------------------
<S> <C>
H. Thomas McMeekin President and Director of Lincoln Investment Management, Inc.,
Lincoln National Convertible Securities Fund, Inc. and Lincoln National
Income Fund, Inc.; President, Chief Executive Officer and Director of
Lincoln National Mezzanine Corporation; Executive Vice President
(previously Senior Vice President) and Chief Investment Officer of
Lincoln National Corporation; and Director of Lincoln Advisor Funds,
Inc., The Lincoln National Life Insurance Company, Lynch & Mayer,
Inc. and Vantage Global Advisors, Inc.
Dennis A. Blume Senior Vice President and Director of Lincoln Investment Management,
Inc. and Lincoln National Realty Corporation; Vice President of Lincoln
Advisor Funds, Inc.; and Director of Lynch & Mayer, Inc. and Vantage
Global Advisors, Inc.
</TABLE>
* Business address of each is 200 East Berry Street, Fort Wayne, IN 46802.
xx
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Lincoln Investment Management Company,
Business Address* Inc. and its Affiliates and Other Positions and Offices Held
- ------------------ ---------------------------------------------------------------
<S> <C>
Steven R. Brody Director, Senior Vice President and Assistant Treasurer of Lincoln
Investment Management, Inc.; Vice President, Treasurer and Chief
Financial Officer of Lincoln Advisor Funds, Inc.; Director and Vice
President of Lincoln National Mezzanine Corporation; Vice President of
The Lincoln National Life Insurance Company; Director of Lincoln
National Realty Corporation; Treasurer of Lincoln National Convertible
Securities Fund, Inc. and Lincoln National Income Fund, Inc.; and
Assistant Treasurer of Lincoln Financial Group, Inc., Lincoln National
Aggressive Growth Fund, Inc., Lincoln National Bond Fund, Inc.,
Lincoln National Capital Appreciation Fund, Inc., Lincoln National
Equity-Income Fund, Inc., Lincoln National Global Asset Allocation
Fund, Inc., Lincoln National Growth and Income Fund, Inc., Lincoln
National Health & Casualty Insurance Company, Lincoln National
International Fund, Inc., Lincoln National Life Reinsurance Company,
Lincoln National Managed Fund, Inc., Lincoln National Money Market
Fund, Inc., Lincoln National Reassurance Company, Lincoln National
Social Awareness Fund, Inc. and Lincoln National Special Opportunities
Fund, Inc.
Ann L. Warner Senior Vice President (previously Vice President) of Lincoln Investment
Management, Inc.; Director of Lincoln National Convertible Securities
Fund, Inc.; Director and Vice President of Lincoln National Income
Fund, Inc.; and Vice President of Lincoln Advisor Funds, Inc.
JoAnn E. Becker Vice President of Lincoln Investment Management, Inc., Lincoln
Advisor Funds, Inc. and The Lincoln National Life Insurance Company;
and Director of LNC Equity Sales Corporation, The Richard Leahy
Corporation and Professional Financial Planning, Inc.
David A. Berry Vice President of Lincoln Investment Management, Inc., Lincoln
Advisor Funds, Inc., Lincoln National Convertible Securities Fund, Inc.
and Lincoln National Income Fund, Inc.
Anne E. Bookwalter Vice President (previously Second Vice President) of Lincoln
Investment Management, Inc.; and Director of Professional Financial
Planning, Inc.
</TABLE>
*Business address of each is 200 East Berry Street, Fort Wayne, IN 46802.
xxi
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Lincoln Investment Management Company,
Business Address* Inc. and its Affiliates and Other Positions and Offices Held
- ------------------ ---------------------------------------------------------------
<S> <C>
Philip C. Byrde Vice President of Lincoln Investment Management, Inc.
Patrick R. Chasey Vice President of Lincoln Investment Management, Inc.
Garrett W. Cooper Vice President of Lincoln Investment Management, Inc.
David C. Fischer Vice President of Lincoln Investment Management, Inc. and
Lincoln National Income Fund, Inc.
Luc N. Girard Vice President of Lincoln Investment Management, Inc. and The
Lincoln National Life Insurance Company
Donald P. Groover Vice President of Lincoln Investment Management, Inc.
Previously Senior Economist/Senior Consultant, Chalke, Inc., Chantilly,
VA
William N. Holm, Jr. Vice President of Lincoln Investment Management, Inc.; and Vice
President and Director of Lincoln National Mezzanine Corporation
Jennifer C. Hom Vice President (previously Portfolio Manager) of Lincoln Investment
Management, Inc.
John A. Kellogg Vice President of Lincoln Investment Management, Inc. and Lincoln
National Realty Corporation
Timothy H. Kilfoil Vice President of Lincoln Investment Management, Inc.
Lawrence T. Kissko Vice President of Lincoln Investment Management, Inc.; Vice President
and Director Lincoln National Realty Corporation; and Vice President of
The Lincoln National Life Insurance Company
Walter M. Korinke Vice President of Lincoln Investment Management, Inc.
Lawrence M. Lee Vice President of Lincoln Investment Management, Inc. and Lincoln
National Realty Corporation
</TABLE>
*Business address of each is 200 East Berry Street, Fort Wayne, IN 46802.
xxii
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Lincoln Investment Management Company,
Business Address* Inc. and its Affiliates and Other Positions and Offices Held
- ------------------ ---------------------------------------------------------------
<S> <C>
Thomas A. McAvity, Jr. Vice President of Lincoln Investment Management, Inc.
John David Moore Vice President of Lincoln Investment Management, Inc.
Oliver H. G. Nichols Vice President of Lincoln Investment Management, Inc., The Lincoln
National Life Insurance Company and Lincoln National Realty
Corporation
David C. Patch Vice President of Lincoln Investment Management, Inc.
Joseph T. Pusateri Vice President of Lincoln Investment Management, Inc. and Lincoln
National Realty Corporation
Gregory E. Reed Vice President of Lincoln Investment Management, Inc.
Bill L. Sanders Vice President of Lincoln Investment Management, Inc.; and Sales Vice
President of The Lincoln National Life Insurance Company
Roy D. Shimer Vice President of Lincoln Investment Management, Inc.
Gerald M. Weiss Vice President of Lincoln Investment Management, Inc.
Jon A. Boscia Director (previously President) of Lincoln Investment Management, Inc.;
Director of Lincoln National Foundation, Inc. and First Penn-Pacific
Life Insurance Company; President, Chief Operating Officer and
Director of The Lincoln National Life Insurance Company; and
President of Lincoln Financial Group, Inc.
</TABLE>
*Business address of each is 200 East Berry Street, Fort Wayne, IN 46802.
xxiii
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Lincoln Investment Management Company,
Business Address* Inc. and its Affiliates and Other Positions and Offices Held
- ------------------ ---------------------------------------------------------------
<S> <C>
Janet C. Whitney Vice President and Treasurer of Lincoln Investment Management, Inc.,
The Financial Alternative, Inc., Financial Alternative Resources, Inc.,
Financial Choices, Inc., Financial Investments, Inc., Financial Investment
Services, Inc., The Financial Resources Department, Inc., Investment
Alternatives, Inc., The Investment Center, Inc., The Investment Group,
Inc., LNC Administrative Services Corporation, LNC Equity Sales
Corporation, The Richard Leahy Corporation, Lincoln National
Aggressive Growth Fund, Inc., Lincoln National Bond Fund, Inc.,
Lincoln National Capital Appreciation Fund, Inc., Lincoln National
Equity-Income Fund, Inc., Lincoln National Global Assets Allocation
Fund, Inc., Lincoln National Growth and Income Fund, Inc., Lincoln
National Health & Casualty Insurance Company, Lincoln National
Intermediaries, Inc., Lincoln National International Fund, Inc., Lincoln
National Managed Fund, Inc., Lincoln National Management Services,
Inc., Lincoln National Mezzanine Corporation, Lincoln National Money
Market Fund, Inc. Lincoln National Realty Corporation, Lincoln
National Risk Management, Inc., Lincoln National Social Awareness
Fund, Inc., Lincoln National Special Opportunities Fund, Inc., Lincoln
National Structured Settlement, Inc., Personal Financial Resources, Inc.,
Personal Investment Services, Inc., Special Pooled Risk Administrators,
Inc., Underwriters & Management Services, Inc.; Vice President and
Treasurer (previously Vice President and General Auditor) of Lincoln
National Corporation; and Assistant Treasurer of First Penn-Pacific Life
Insurance Company
</TABLE>
*Business address of each is 200 East Berry Street, Fort Wayne, IN 46802.
xxiv
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Lincoln Investment Management Company,
Business Address* Inc. and its Affiliates and Other Positions and Offices Held
- ------------------ ---------------------------------------------------------------
<S> <C>
C. Suzanne Womack Secretary of Lincoln Investment Management, Inc., Corporate Benefit
Systems Services Corporation, The Financial Alternative, Inc., Financial
Alternative Resources, Inc., Financial Choices, Inc., The Financial
Resources Department, Inc., Financial Investment Services, Inc.,
Financial Investments, Inc., Insurance Services, Inc., Investment
Alternatives, Inc., The Investment Center, Inc. (TN), The Investment
Group, Inc., LNC Administrative Services Corporation, LNC Equity
Sales Corporation, The Richard Leahy Corporation, Lincoln Advisor
Funds, Inc., Lincoln Life Improved Housing, Inc., Lincoln National
(China) Inc., Lincoln National Convertible Securities Fund, Inc., Lincoln
National Health & Casualty Insurance Company, Lincoln National
Income Fund, Inc., Lincoln National Intermediaries, Inc., Lincoln
National Life Reinsurance Company, Lincoln National Management
Services, Inc., Lincoln National Mezzanine Corporation, Lincoln
National Realty Corporation, Lincoln National Reassurance Company,
Lincoln National Reinsurance Company (Barbados) Limited, Lincoln
National Reinsurance Company Limited, Lincoln National Risk
Management, Inc., Lincoln National Structured Settlement, Inc., Old
Fort Insurance Company, Ltd., Personal Financial Resources, Inc.,
Personal Investment Services, Inc., Professional Financial Planning, Inc.,
Reliance Life Insurance Company of Pittsburgh, Special Pooled Risk
Administrators, Inc. and Underwriters & Management Services, Inc.;
Vice President, Secretary and Director of Lincoln National Foundation,
Inc.; Secretary and Assistant Vice President of Lincoln National
Corporation and The National Life Insurance Company; and Assistant
Secretary of Lincoln National Aggressive Growth Fund, Inc., Lincoln
National Bond Fund, Inc., Lincoln National Capital Appreciation Fund,
Inc., Lincoln National Equity-Income Fund, Inc., Lincoln National
Global Asset Allocation Fund, Inc., Lincoln National Growth and
Income Fund, Inc., Lincoln National International Fund, Inc., Lincoln
National Managed Fund, Inc., Lincoln National Money Market Fund,
Inc., Lincoln National Social Awareness Fund, Inc., Lincoln National
Special Opportunities Fund, Inc. and Lincoln National Variable Annuity
Funds A & B
</TABLE>
*Business address of each is 200 East Berry Street, Fort Wayne, IN 46802.
xxv
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
Item 29. Principal Underwriters.
(a) Delaware Distributors, L.P. serves as principal
underwriter for all the mutual funds in the Delaware
Group.
(b) Information with respect to each director, officer or
partner of principal underwriter:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ------------------ --------------------- ---------------------
<S> <C> <C>
Delaware Distributors, Inc. General Partner None
Delaware Management Limited Partner Investment Manager to
Company, Inc. The Defensive Equity,
The Aggressive Growth,
The Fixed Income,
The Limited-Term
Maturity, The Defensive
Equity Small/Mid-Cap,
The Defensive Equity
Utility, The High-Yield
Bond and The Real Estate
Investment Trust
Portfolios
Delaware Capital
Management, Inc. Limited Partner None
Winthrop S. Jessup Vice Chairman President and Chief
Executive Officer
Keith E. Mitchell President and Chief None
Executive Officer
David K. Downes Senior Vice President and Senior Vice President/
Chief Administrative Officer Chief Administrative
Officer/Chief Financial
Officer
</TABLE>
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
xxvi
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ------------------ --------------------- ---------------------
<S> <C> <C>
George M. Chamberlain, Jr. Senior Vice President/ Senior Vice President/
Secretary Secretary
J. Lee Cook Senior Vice President/ None
Eastern Sales Division
Thomas E. Sawyer Senior Vice President/ None
Western Sales Division
Stephen H. Slack Senior Vice President/ None
Wholesaler
William F. Hostler Senior Vice President/ None
Marketing Services
Dana B. Hall Senior Vice President/ None
Key Accounts
Minette van Noppen Senior Vice President/ None
Retirement Services
J. Chris Meyer Senior Vice President/ None
Product Development
Richard J. Flannery Managing Director/Corporate Vice President
& Tax Affairs
Eric E. Miller Vice President/ Vice President/
Assistant Secretary Assistant Secretary
Richelle S. Maestro Vice President/ Vice President/
Assistant Secretary Assistant Secretary
John M. Zerr Vice President/ Vice President/
Assistant Secretary Assistant Secretary
Michael P. Bishof Vice President/Treasurer Vice President/Treasurer
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
xxvii
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ------------------ --------------------- ---------------------
<S> <C> <C>
Joseph H. Hastings Vice President/ Vice President/
Corporate Controller Corporate Controller
Steven T. Lampe Vice President/Taxation Vice President/Taxation
Rosemary E. Milner Vice President/Legal Vice President/Legal
Lisa O. Brinkley Vice President/ Vice President/
Compliance Compliance
Susan J. Black Vice President/Manager of None
Key Accounts
Daniel H. Carlson Vice President/ None
Marketing
Diane M. Anderson Vice President/ None
Retirement Services
Denise F. Guerriere Vice President/Client Services None
Julia R. Vander Els Vice President/ None
Client Services
Jerome J. Alrutz Vice President/ None
Client Services
Joanne A. Mettenheimer Vice President/ None
National Accounts
Christopher H. Price Vice President/Annuity None
Marketing & Administration
Steven J. DeAngelis Vice President/ None
Product Development
Susan T. Friestedt Vice President/Customer None
Service
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
xxviii
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ------------------ --------------------- ---------------------
<S> <C> <C>
Dinah J. Huntoon Vice President/ None
Product Development
Soohee Lee Vice President/ None
Product Development
Ellen M. Krott Vice President/ None
Communications
Holly W. Riemel Vice President/ None
Telemarketing
Frank Albanese Vice President/Wholesaler None
Terrence L. Bussard Vice President/Wholesaler None
William S. Carroll Vice President/Wholesaler None
William S. Castetter Vice President/Wholesaler None
Thomas J. Chadie Vice President/Wholesaler None
Douglas R. Glennon Vice President/Wholesaler None
William M. Kimbrough Vice President/Wholesaler None
Mac McAuliffe Vice President/Wholesaler None
Patrick L. Murphy Vice President/Wholesaler None
Henry W. Orvin Vice President/Wholesaler None
Philip G. Rickards Vice President/Wholesaler None
Michael W. Rose Vice President/Wholesaler None
Robert E. Stansbury Vice President/Wholesaler None
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
xxix
<PAGE>
Form N-1A
File No. 33-40991
Delaware Pooled Trust, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ------------------ --------------------- ---------------------
<S> <C> <C>
Larry D. Stone Vice President/Wholesaler None
Faye P. Staples Vice President/Human Resources None
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
(c) Not Applicable.
Item 30. Location of Accounts and Records.
All accounts and records are maintained in the Philadelphia office
- 1818 Market Street, Philadelphia, PA 19103 or One Commerce
Square, Philadelphia, PA 19103.
Item 31. Management Services. None.
Item 32. Undertakings.
(a) Not Applicable.
(b) The Registrant hereby undertakes to file a post-effective
amendment, using financial statements which need not be
certified, within four to six months from the initial public
offering of shares of The Limited-Term Maturity, The
International Fixed Income, The Defensive Equity
Small/Mid-Cap, The Defensive Equity Utility and The
High-Yield Bond Portfolios.
(c) The Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's
latest annual report to shareholders, upon request and
without charge.
(d) The Registrant hereby undertakes to promptly call a meeting
of shareholders for the purpose of voting upon the question
of removal of any director when requested in writing to do so
by the record holders of not less than 10% of the outstanding
shares.
xxx
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, this Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in this City of Philadelphia and Commonwealth of Pennsylvania on
this 19th day of August, 1996.
DELAWARE POOLED TRUST, INC.
By /s/ Wayne A. Stork
---------------------------------
Wayne A. Stork
Chairman of the Board
and Director
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Wayne A. Stork Chairman of the Board August 19, 1996
- ----------------------------- and Director
Wayne A. Stork
/s/ David K. Downes Senior Vice President/Chief Administrative August 19, 1996
- ----------------------------- Officer/Chief Financial Officer (Principal
David K. Downes Financial Officer and Principal
Accounting Officer)
/s/Walter P. Babich * Director August 19, 1996
- -----------------------------
Walter P. Babich
/s/Anthony D. Knerr * Director August 19, 1996
- -----------------------------
Anthony D. Knerr
/s/Ann R. Leven * Director August 19, 1996
- -----------------------------
Ann R. Leven
/s/W. Thacher Longstreth * Director August 19, 1996
- -----------------------------
W. Thacher Longstreth
/s/Charles E. Peck * Director August 19, 1996
- -----------------------------
Charles E. Peck
By /s/ Wayne A. Stork
---------------------------------
Wayne A. Stork
as Attorney-in-Fact for
each of the persons indicated
</TABLE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Exhibits
to
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Exhibit
- ----------- -------
<S> <C>
EX-99.B8A Form of Custodian Agreement (1996) between the Registrant and Bankers Trust
Company on behalf of The Defensive Equity, The Aggressive Growth, The Fixed
Income, The Limited-Term Maturity and The Defensive Equity Small/Mid-Cap
Portfolios
EX-99.B8B Executed Custodian Agreement (1996) between the Registrant and The Chase
(Module Name Manhattan Bank on behalf of The Global Fixed Income, The International
(CHASE_CUST_AGR) Equity, The Labor Select International Equity, The Real Estate Investment Trust,
The High-Yield Bond, The International Fixed Income and The Defensive Equity
Utility Portfolios
EX-99.B8C Form of Securities Lending Agreement (1996) between the Registrant and Bankers
Trust Company on behalf of The Defensive Equity, The Aggressive Growth, The Fixed
Income, The Limited-Term Maturity and The Defensive Equity Small/Mid-Cap
Portfolios
EX-99.B8D Form of Securities Lending Agreement (1996) between the Registrant and
The Chase Manhattan Bank on behalf of The Global Fixed Income, The
International Equity, The Labor Select International Equity, The Real
Estate Investment Trust, The High-Yield Bond, The International Fixed
Income and The Defensive Equity Utility Portfolios
EX-99.B11 Consent of Auditors
EX-99.B16B Schedules of Computation for each Performance Quotation for each Portfolio not
previously electronically filed
EX-27 Financial Data Schedules
(Exhibits 17(b)
and 17(c))
</TABLE>
<PAGE>
Mutual Fund/Business Trust/Series
Form of Agreement
Subject to Board Approval
CUSTODIAN AGREEMENT
AGREEMENT dated as of _____________, 199_ between BANKERS TRUST COMPANY (the
"Custodian") and [name of customer] (the "Customer").
WHEREAS, the Customer may be organized with one or more series of shares,
each of which shall represent an interest in a separate portfolio of Securities
and Cash (each as hereinafter defined) (all such existing and additional series
now or hereafter listed on Exhibit A being hereafter referred to individually as
a "Portfolio" and collectively, as the "Portfolios"); and
WHEREAS, the Customer desires to appoint the Custodian as custodian on
behalf of the Portfolios under the terms and conditions set forth in this
Agreement, and the Custodian has agreed to so act as custodian.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. Employment of Custodian. The Customer hereby employs the Custodian as
custodian of all assets of each Portfolio which are delivered to and accepted by
the Custodian or any Subcustodian (as that term is defined in Section 4) (the
"Property") pursuant to the terms and conditions set forth herein. Without
limitation, such Property shall include stocks and other equity interests of
every type, evidences of indebtedness, other instruments representing same or
rights or obligations to receive, purchase, deliver or sell same and other
non-cash investment property of a Portfolio which is acceptable for deposit
("Securities") and cash from any source and in any currency ("Cash"). The
Custodian shall not be responsible for any property of a Portfolio held or
received by the Customer or others and not delivered to the Custodian or any
Subcustodian.
2. Maintenance of Securities and Cash at Custodian and Subcustodian
Locations. Pursuant to Instructions, the Customer shall direct the Custodian to
(a) settle Securities transactions and maintain cash in the country or other
jurisdiction in which the principal trading market for such Securities is
located, where such Securities are to be presented for payment or where such
Securities are acquired and (b) maintain cash and cash equivalents in such
countries in amounts reasonably necessary to effect the Customer's transactions
in such Securities. Instructions to settle Securities transactions in any
country shall be deemed to authorize the holding of such Securities and Cash in
that country.
3. Custody Account. The Custodian agrees to establish and maintain one or
more custody accounts on its books each in the name of a Portfolio (each, an
"Account") for any and all Property from time to time received and accepted by
the Custodian or any Subcustodian for the account of such Portfolio. Upon
delivery by the Customer to the Custodian of any Property belonging to a
Portfolio, the Customer shall, by Instructions (as hereinafter defined in
Section 14), specifically indicate which Portfolio such Property belongs or if
such Property belongs to more than one Portfolio shall allocate
<PAGE>
such Property to the appropriate Portfolio. The Custodian shall allocate such
Property to the Accounts in accordance with the Instructions; provided that the
Custodian shall have the right, in its sole discretion, to refuse to accept any
Property that is not in proper form for deposit for any reason. The Customer on
behalf of each Portfolio, acknowledges its responsibility as a principal for all
of its obligations to the Custodian arising under or in connection with this
Agreement, warrants its authority to deposit in the appropriate Account any
Property received therefor by the Custodian or a Subcustodian and to give, and
authorize others to give, instructions relative thereto. The Custodian may
deliver securities of the same class in place of those deposited in the Account.
The Custodian shall hold, keep safe and protect as custodian for each
Account, on behalf of the Customer, all Property in such Account. All
transactions, including, but not limited to, foreign exchange transactions,
involving the Property shall be executed or settled solely in accordance with
Instructions (which shall specifically reference the Account for which such
transaction is being settled), except that until the Custodian receives
Instructions to the contrary, the Custodian will:
(a) collect all interest and dividends and all other income and payments,
whether paid in cash or in kind, on the Property, as the same become payable and
credit the same to the appropriate Account;
(b) present for payment all Securities held in an Account which are called,
redeemed or retired or otherwise become payable and all coupons and other income
items which call for payment upon presentation to the extent that the Custodian
or Subcustodian is actually aware of such opportunities and hold the cash
received in such Account pursuant to this Agreement;
(c) (i) exchange Securities where the exchange is purely ministerial
(including, without limitation, the exchange of temporary securities for those
in definitive form and the exchange of warrants, or other documents of
entitlement to securities, for the Securities themselves) and (ii) when
notification of a tender or exchange offer (other than ministerial exchanges
described in (i) above) is received for an Account, endeavor to receive
Instructions, provided that if such Instructions are not received in time for
the Custodian to take timely action, no action shall be taken with respect
thereto;
(d) whenever notification of a rights entitlement or a fractional interest
resulting from a rights issue, stock dividend or stock split is received for an
Account and such rights entitlement or fractional interest bears an expiration
date, if after endeavoring to obtain Instructions such Instructions are not
received in time for the Custodian to take timely action or if actual notice of
such actions was received too late to seek Instructions, sell in the discretion
of the Custodian (which sale the Customer hereby authorizes the Custodian to
make) such rights entitlement or fractional interest and credit the Account with
the net proceeds of such sale;
(e) execute in the Customer's name for an Account, whenever the Custodian
deems it appropriate, such ownership and other certificates as may be required
to obtain the payment of income from the Property in such Account;
(f) pay for each Account, any and all taxes and levies in the nature of
taxes imposed on interest, dividends or other similar income on the Property in
such Account by any governmental authority. In the event there is insufficient
Cash available in such Account to pay such taxes and levies, the Custodian shall
notify the Customer of the amount of the shortfall and the Customer, at its
option, may deposit additional Cash in such Account or take steps to have
sufficient Cash available. The Customer agrees, when and if requested by the
Custodian and required in connection with the payment of any such taxes to
cooperate with the Custodian in furnishing information, executing documents or
otherwise; and
<PAGE>
(g) appoint brokers and agents for any of the ministerial transactions
involving the Securities described in (a) - (f), including, without limitation,
affiliates of the Custodian or any Subcustodian.
4. Subcustodians and Securities Systems. The Customer authorizes and
instructs the Custodian to hold the Property in each Account in custody accounts
which have been established by the Custodian with (a) one of its U.S. branches
or another U.S. bank or trust company or branch thereof located in the U.S.
which is itself qualified under the Investment Company Act of 1940, as amended
("1940 Act"), to act as custodian (individually, a "U.S. Subcustodian"), or a
U.S. securities depository or clearing agency or system in which the Custodian
or a U.S. Subcustodian participates (individually, a "U.S. Securities System")
or (b) one of its non-U.S. branches or majority-owned non-U.S. subsidiaries, a
non-U.S. branch or majority-owned subsidiary of a U.S. bank or a non-U.S. bank
or trust company, acting as custodian (individually, a "non-U.S. Subcustodian";
U.S. Subcustodians and non-U.S. Subcustodians, collectively, "Subcustodians"),
or a non-U.S. depository or clearing agency or system in which the Custodian or
any Subcustodian participates (individually, a "non-U.S. Securities System";
U.S. Securities System and non-U.S. Securities System, collectively, Securities
System"), provided that in each case in which a U.S. Subcustodian or U.S.
Securities System is employed, each such Subcustodian or Securities System shall
have been approved by Instructions; provided further that in each case in which
a non-U.S. Subcustodian or non-U.S. Securities System is employed, (a) such
Subcustodian or Securities System either is (i) a "qualified U.S. bank" as
defined by Rule 17f-5 under the 1940 Act ("Rule 17f-5") or (ii) an "eligible
foreign custodian" within the meaning of Rule 17f-5 or such Subcustodian or
Securities System is the subject of an order granted by the U.S. Securities and
Exchange Commission ("SEC") exempting such agent or the subcustody arrangements
thereto from all or part of the provisions of Rule 17f-5 and (b) the agreement
between the Custodian and such non-U.S. Subcustodian has been approved by
Instructions; it being understood that the Custodian shall have no liability or
responsibility for determining whether the approval of any Subcustodian or
Securities System has been proper under the 1940 Act or any rule or regulation
thereunder.
Upon receipt of Instructions, the Custodian agrees to cease the employment
of any Subcustodian or Securities System with respect to the Customer, and if
desirable and practicable, appoint a replacement subcustodian or securities
system in accordance with the provisions of this Section. In addition, the
Custodian may, at any time in its discretion, upon written notification to the
Customer, terminate the employment of any Subcustodian or Securities System.
Upon request of the Customer, the Custodian shall deliver to the Customer
annually a certificate stating: (a) the identity of each non-U.S. Subcustodian
and non-U.S. Securities System then acting on behalf of the Custodian and the
name and address of the governmental agency or other regulatory authority that
supervises or regulates such non-U.S Subcustodian and non-U.S. Securities
System; (b) the countries in which each non-U.S. Subcustodian or non-U.S.
Securities System is located; and (c) so long as Rule 17f-5 requires the
Customer's Board of Trustees to directly approve its foreign custody
arrangements, such other information relating to such non-U.S. Subcustodians and
non-U.S. Securities Systems as may reasonably be requested by the Customer to
ensure compliance with Rule 17f-5. So long as Rule 17f-5 requires the Customer's
Board of Trustees to directly approve its foreign custody arrangements, the
Custodian also shall furnish annually to the Customer information concerning
such non-U.S. Subcustodians and non-U.S. Securities Systems similar in kind and
scope as that furnished to the Customer in connection with the initial approval
of this Agreement. Custodian agrees to promptly notify the Customer if, in the
normal course of its custodial activities, the Custodian has reason to believe
that any non-U.S. Subcustodian or non-U.S. Securities System has ceased to be a
qualified U.S. bank or an eligible foreign custodian each within the meaning of
Rule 17f-5 or has ceased to be subject to an exemptive order from the SEC.
<PAGE>
5. Use of Subcustodian. With respect to Property in an Account which is
maintained by the Custodian in the custody of a Subcustodian employed pursuant
to Section 4:
(a) The Custodian will identify on its books as belonging to the Customer on
behalf of a Portfolio, any Property held by such Subcustodian.
(b) Any Property in the Account held by a Subcustodian will be subject only
to the instructions of the Custodian or its agents.
(c) Property deposited with a Subcustodian will be maintained in an account
holding only assets for customers of the Custodian.
(d) Any agreement the Custodian shall enter into with a non-U.S.
Subcustodian with respect to the holding of Property shall require that (i) the
Account will be adequately indemnified or its losses adequately insured; (ii)
the Securities are not subject to any right, charge, security interest, lien or
claim of any kind in favor of such Subcustodian or its creditors except a claim
for payment in accordance with such agreement for their safe custody or
administration and expenses related thereto, (iii) beneficial ownership of such
Securities be freely transferable without the payment of money or value other
than for safe custody or administration and expenses related thereto, (iv)
adequate records will be maintained identifying the Property held pursuant to
such Agreement as belonging to the Custodian, on behalf of its customers and (v)
to the extent permitted by applicable law, officers of or auditors employed by,
or other representatives of or designated by, the Custodian, including the
independent public accountants of or designated by, the Customer be given access
to the books and records of such Subcustodian relating to its actions under its
agreement pertaining to any Property held by it thereunder or confirmation of or
pertinent information contained in such books and records be furnished to such
persons designated by the Custodian.
6. Use of Securities System. With respect to Property in the Account(s)
which are maintained by the Custodian or any Subcustodian in the custody of a
Securities System employed pursuant to Section 4:
(a) The Custodian shall, and the Subcustodian will be required by its
agreement with the Custodian to, identify on its books such Property as being
held for the account of the Custodian or Subcustodian for its customers.
(b) Any Property held in a Securities System for the account of the
Custodian or a Subcustodian will be subject only to the instructions of the
Custodian or such Subcustodian, as the case may be.
(c) Property deposited with a Securities System will be maintained in an
account holding only assets for customers of the Custodian or Subcustodian, as
the case may be, unless precluded by applicable law, rule, or regulation.
(d) The Custodian shall provide the Customer with any report obtained by the
Custodian on the Securities System's accounting system, internal accounting
control and procedures for safeguarding securities deposited in the Securities
System.
7. Agents. The Custodian may at any time or times in its sole discretion
appoint (or remove) any other U.S. bank or trust company which is itself
qualified under the 1940 Act to act as custodian, as its agent to carry out such
of the provisions of this Agreement as the Custodian may from time to time
direct;
<PAGE>
provided, however, that the appointment of any agent shall not relieve the
Custodian of its responsibilities or liabilities hereunder.
8. Records, Ownership of Property, Statements, Opinions of Independent
Certified Public Accountants.
(a) The ownership of the Property whether Securities, Cash and/or other
property, and whether held by the Custodian or a Subcustodian or in a Securities
System as authorized herein, shall be clearly recorded on the Custodian's books
as belonging to the appropriate Account and not for the Custodian's own
interest. The Custodian shall keep accurate and detailed accounts of all
investments, receipts, disbursements and other transactions for each Account.
All accounts, books and records of the Custodian relating thereto shall be open
to inspection and audit at all reasonable times during normal business hours by
any person designated by the Customer. All such accounts shall be maintained and
preserved in the form reasonably requested by the Customer. The Custodian will
supply to the Customer from time to time, as mutually agreed upon, a statement
in respect to any Property in an Account held by the Custodian or by a
Subcustodian. In the absence of the filing in writing with the Custodian by the
Customer of exceptions or objections to any such statement within sixty (60)
days of the mailing thereof, the Customer shall be deemed to have approved such
statement and in such case or upon written approval of the Customer of any such
statement, such statement shall be presumed to be for all purposes correct with
respect to all information set forth therein.
(b) The Custodian shall take all reasonable action as the Customer may
request to obtain from year to year favorable opinions from the Customer's
independent certified public accountants with respect to the Custodian's
activities hereunder in connection with the preparation of the Customer's Form
N-1A and the Customer's Form N-SAR or other periodic reports to the SEC and with
respect to any other requirements of the SEC.
(c) At the request of the Customer, the Custodian shall deliver to the
Customer a written report prepared by the Custodian's independent certified
public accountants with respect to the services provided by the Custodian under
this Agreement, including, without limitation, the Custodian's accounting
system, internal accounting control and procedures for safeguarding Cash and
Securities, including Cash and Securities deposited and/or maintained in a
securities system or with a Subcustodian. Such report shall be of sufficient
scope and in sufficient detail as may reasonably be required by the Customer and
as may reasonably be obtained by the Custodian.
(d) The Customer may elect to participate in any of the electronic on-line
service and communications systems offered by the Custodian which can provide
the Customer, on a daily basis, with the ability to view on-line or to print on
hard copy various reports of Account activity and of Securities and/or Cash
being held in any Account. To the extent that such service shall include market
values of Securities in an Account, the Customer hereby acknowledges that the
Custodian now obtains and may in the future obtain information on such values
from outside sources that the Custodian considers to be reliable and the
Customer agrees that the Custodian (i) does not verify or represent or warrant
either the reliability of such service nor the accuracy or completeness of any
such information furnished or obtained by or through such service and (ii) shall
be without liability in selecting and utilizing such service or furnishing any
information derived therefrom.
9. Holding of Securities, Nominees, etc. Securities in an Account which are
held by the Custodian or any Subcustodian may be held by such entity in the name
of the Customer, on behalf of a Portfolio, in the Custodian's or Subcustodian's
name, in the name of the Custodian's or Subcustodian's nominee, or in bearer
form. Securities that are held by a Subcustodian or which are eligible for
deposit in a Securities System as provided above may be maintained with the
Subcustodian or the Securities System in an account for the Custodian's or
Subcustodian's customers, unless prohibited by law, rule, or
<PAGE>
regulation. The Custodian or Subcustodian, as the case may be, may combine
certificates representing Securities held in an Account with certificates of the
same issue held by it as fiduciary or as a custodian. In the event that any
Securities in the name of the Custodian or its nominee or held by a Subcustodian
and registered in the name of such Subcustodian or its nominee are called for
partial redemption by the issuer of such Security, the Custodian may, subject to
the rules or regulations pertaining to allocation of any Securities System in
which such Securities have been deposited, allot, or cause to be allotted, the
called portion of the respective beneficial holders of such class of security in
any manner the Custodian deems to be fair and equitable.
10. Proxies, etc. With respect to any proxies, notices, reports or other
communications relative to any of the Securities in any Account, the Custodian
shall perform such services and only such services relative thereto as are (i)
set forth in Section 3 of this Agreement, (ii) described in Exhibit B attached
hereto (as such service therein described may be in effect from time to time)
(the "Proxy Service") and (iii) as may otherwise be agreed upon between the
Custodian and the Customer. The liability and responsibility of the Custodian in
connection with the Proxy Service referred to in (ii) of the immediately
preceding sentence and in connection with any additional services which the
Custodian and the Customer may agree upon as provided in (iii) of the
immediately preceding sentence shall be as set forth in the description of the
Proxy Service and as may be agreed upon by the Custodian and the Customer in
connection with the furnishing of any such additional service and shall not be
affected by any other term of this Agreement. Neither the Custodian nor its
nominees or agents shall vote upon or in respect of any of the Securities in an
Account, execute any form of proxy to vote thereon, or give any consent or take
any action (except as provided in Section 3) with respect thereto except upon
the receipt of Instructions relative thereto.
11. Segregated Account. To assist the Customer in complying with the
requirements of the 1940 Act and the rules and regulations thereunder, the
Custodian shall, upon receipt of Instructions, establish and maintain a
segregated account or accounts on its books for and on behalf of a Portfolio.
12. Settlement Procedures. Securities will be transferred, exchanged or
delivered by the Custodian or a Subcustodian upon receipt by the Custodian of
Instructions which include all information required by the Custodian. Settlement
and payment for Securities received for an Account and delivery of Securities
out of such Account may be effected in accordance with the customary or
established securities trading or securities processing practices and procedures
in the jurisdiction or market in which the transaction occurs, including,
without limitation, delivering Securities to the purchaser thereof or to a
dealer therefor (or an agent for such purchaser or dealer) against a receipt
with the expectation of receiving later payment for such Securities from such
purchaser or dealer, as such practices and procedures may be modified or
supplemented in accordance with the standard operating procedures of the
Custodian in effect from time to time for that jurisdiction or market. The
Custodian shall not be liable for any loss which results from effecting
transactions in accordance with the customary or established securities trading
or securities processing practices and procedures in the applicable jurisdiction
or market.
Notwithstanding that the Custodian may settle purchases and sales against,
or credit income to, an Account, on a contractual basis, as outlined in the
Investment Manager User Guide provided to the Customer by the Custodian, the
Custodian may, at its sole option, reverse such credits or debits to the
appropriate Account in the event that the transaction does not settle, or the
income is not received in a timely manner, and the Customer agrees to hold the
Custodian harmless from any losses which may result therefrom.
Except as otherwise may be agreed upon by the parties hereto, the Custodian
shall not be required to comply with Instructions to settle the purchase of any
Securities for an Account unless there is sufficient Cash in such Account at the
time or to settle the sale of any Securities in such Account unless such
Securities are in deliverable form. Notwithstanding the foregoing, if the
purchase price of such securities exceeds
<PAGE>
the amount of Cash in an Account at the time of settlement of such purchase, the
Custodian may, in its sole discretion, but in no way shall have any obligation
to, permit an overdraft in such Account in the amount of the difference solely
for the purpose of facilitating the settlement of such purchase of securities
for prompt delivery for such Account. The Customer agrees to immediately repay
the amount of any such overdraft in the ordinary course of business and further
agrees to indemnify and hold the Custodian harmless from and against any and all
losses, costs, including, without limitation the cost of funds, and expenses
incurred in connection with such overdraft. The Customer agrees that it will not
use the Account to facilitate the purchase of securities without sufficient
funds in the Account (which funds shall not include the proceeds of the sale of
the purchased securities).
13. Permitted Transactions. The Customer agrees that it will cause
transactions to be made pursuant to this Agreement only upon Instructions in
accordance Section 14 and only for the purposes listed below.
(a) In connection with the purchase or sale of Securities at prices as
confirmed by Instructions.
(b) When Securities are called, redeemed or retired, or otherwise become
payable.
(c) In exchange for or upon conversion into other securities alone or other
securities and cash pursuant to any plan or merger, consolidation,
reorganization, recapitalization or readjustment.
(d) Upon conversion of Securities pursuant to their terms into other
securities.
(e) Upon exercise of subscription, purchase or other similar rights
represented by Securities.
(f) For the payment of interest, taxes, management or supervisory fees,
distributions or operating expenses.
(g) In connection with any borrowings by the Customer requiring a pledge of
Securities, but only against receipt of amounts borrowed.
(h) In connection with any loans, but only against receipt of collateral as
specified in Instructions which shall reflect any restrictions applicable to the
Customer.
(i) For the purpose of redeeming shares of the capital stock of the Customer
against delivery of the shares to be redeemed to the Custodian, a Subcustodian
or the Customer's transfer agent.
(j) For the purpose of redeeming in kind shares of the Customer against
delivery of the shares to be redeemed to the Custodian, a Subcustodian or the
Customer's transfer agent.
(k) For delivery in accordance with the provisions of any agreement among
the Customer, on behalf of a Portfolio, the Custodian and a broker-dealer
registered under the Securities Exchange Act of 1934 and a member of the
National Association of Securities
<PAGE>
Dealers, Inc., relating to compliance with the rules of The Options Clearing
Corporation, the Commodities Futures Trading Commission and of any registered
national securities exchange, or of any similar organization or organizations,
regarding escrow or other arrangements in connection with transactions by the
Customer.
(l) For release of Securities to designated brokers under covered call
options, provided, however, that such Securities shall be released only upon
payment to the Custodian of monies for the premium due and a receipt for the
Securities which are to be held in escrow. Upon exercise of the option, or at
expiration, the Custodian will receive the Securities previously deposited from
broker. The Custodian will act strictly in accordance with Instructions in the
delivery of Securities to be held in escrow and will have no responsibility or
liability for any such Securities which are not returned promptly when due other
than to make proper request for such return.
(m) For spot or forward foreign exchange transactions to facilitate security
trading or receipt of income from Securities related transactions.
(n) Upon the termination of this Agreement as set forth in Section 20.
(o) For other proper purposes.
The Customer agrees that the Custodian shall have no obligation to verify
the purpose for which a transaction is being effected.
14. Instructions. The term "Instructions" means instructions from the
Customer in respect of any of the Custodian's duties hereunder which have been
received by the Custodian at its address set forth in Section 21 below (i) in
writing (including, without limitation, facsimile transmission) or by tested
telex signed or given by such one or more person or persons as the Customer
shall have from time to time authorized in writing to give the particular class
of Instructions in question and whose name and (if applicable) signature and
office address have been filed with the Custodian, or (ii) which have been
transmitted electronically through an electronic on-line service and
communications system offered by the Custodian or other electronic instruction
system acceptable to the Custodian, or (iii) a telephonic or oral communication
by one or more persons as the Customer shall have from time to time authorized
to give the particular class of Instructions in question and whose name has been
filed with the Custodian; or (iv) upon receipt of such other form of
instructions as the Customer may from time to time authorize in writing and
which the Custodian has agreed in writing to accept. Instructions in the form of
oral communications shall be confirmed by the Customer by tested telex or
writing in the manner set forth in clause (i) above, but the lack of such
confirmation shall in no way affect any action taken by the Custodian in
reliance upon such oral instructions prior to the Custodian's receipt of such
confirmation. Instructions may relate to specific transactions or to types or
classes of transactions, and may be in the form of standing instructions.
The Custodian shall have the right to assume in the absence of notice to the
contrary from the Customer that any person whose name is on file with the
Custodian pursuant to this Section has been authorized by the Customer to give
the Instructions in question and that such authorization has not been revoked.
The Custodian may act upon and conclusively rely on, without any liability to
the Customer or any other person or entity for any losses resulting therefrom,
any Instructions reasonably believed by it to be furnished by the proper person
or persons as provided above.
15. Standard of Care. The Custodian shall be responsible for the performance
of only such duties as are set forth herein or contained in Instructions given
to the Custodian which are not contrary to the provisions of this Agreement. The
Custodian will use
<PAGE>
reasonable care with respect to the safekeeping of Property in each Account and,
except as otherwise expressly provided herein, in carrying out its obligations
under this Agreement. So long as and to the extent that it has exercised
reasonable care, the Custodian shall not be responsible for the title, validity
or genuineness of any Property or other property or evidence of title thereto
received by it or delivered by it pursuant to this Agreement and shall be held
harmless in acting upon, and may conclusively rely on, without liability for any
loss resulting therefrom, any notice, request, consent, certificate or other
instrument reasonably believed by it to be genuine and to be signed or furnished
by the proper party or parties, including, without limitation, Instructions, and
shall be indemnified by the Customer for any losses, damages, costs and expenses
(including, without limitation, the fees and expenses of counsel) incurred by
the Custodian and arising out of action taken or omitted with reasonable care by
the Custodian hereunder or under any Instructions. The Custodian shall be liable
to the Customer for any act or omission to act of any Subcustodian to the same
extent as if the Custodian committed such act itself. With respect to a
Securities System, the Custodian shall only be responsible or liable for losses
arising from employment of such Securities System caused by the Custodian's own
failure to exercise reasonable care. In the event of any loss to the Customer by
reason of the failure of the Custodian or a Subcustodian to utilize reasonable
care, the Custodian shall be liable to the Customer to the extent of the
Customer's actual damages at the time such loss was discovered without reference
to any special conditions or circumstances. In no event shall the Custodian be
liable for any consequential or special damages. The Custodian shall be entitled
to rely, and may act, on advice of counsel (who may be counsel for the Customer)
on all matters and shall be without liability for any action reasonably taken or
omitted pursuant to such advice.
In the event the Customer subscribes to an electronic on-line service and
communications system offered by the Custodian, the Customer shall be fully
responsible for the security of the Customer's connecting terminal, access
thereto and the proper and authorized use thereof and the initiation and
application of continuing effective safeguards with respect thereto and agree to
defend and indemnify the Custodian and hold the Custodian harmless from and
against any and all losses, damages, costs and expenses (including the fees and
expenses of counsel) incurred by the Custodian as a result of any improper or
unauthorized use of such terminal by the Customer or by any others.
All collections of funds or other property paid or distributed in respect of
Securities in an Account, including funds involved in third-party foreign
exchange transactions, shall be made at the risk of the Customer.
Subject to the exercise of reasonable care, the Custodian shall have no
liability for any loss occasioned by delay in the actual receipt of notice by
the Custodian or by a Subcustodian of any payment, redemption or other
transaction regarding Securities in each Account in respect of which the
Custodian has agreed to take action as provided in Section 3 hereof. The
Custodian shall not be liable for any loss resulting from, or caused by, or
resulting from acts of governmental authorities (whether de jure or de facto),
including, without limitation, nationalization, expropriation, and the
imposition of currency restrictions; devaluations of or fluctuations in the
value of currencies; changes in laws and regulations applicable to the banking
or securities industry; market conditions that prevent the orderly execution of
securities transactions or affect the value of Property; acts of war, terrorism,
insurrection or revolution; strikes or work stoppages; the inability of a local
clearing and settlement system to settle transactions for reasons beyond the
control of the Custodian; hurricane, cyclone, earthquake, volcanic eruption,
nuclear fusion, fission or radioactivity, or other acts of God.
The Custodian shall have no liability in respect of any loss, damage or
expense suffered by the Customer, insofar as such loss, damage or expense arises
from the performance of the Custodian's duties hereunder by reason of the
Custodian's reliance upon records that were maintained for the Customer by
entities other than the Custodian prior to the Custodian's employment under this
Agreement.
The provisions of this Section shall survive termination of this Agreement.
<PAGE>
16. Investment Limitations and Legal or Contractual Restrictions or
Regulations. The Custodian shall not be liable to the Customer and the Customer
agrees to indemnify the Custodian and its nominees, for any loss, damage or
expense suffered or incurred by the Custodian or its nominees arising out of any
violation of any investment restriction or other restriction or limitation
applicable to the Customer or any Portfolio pursuant to any contract or any law
or regulation. The provisions of this Section shall survive termination of this
Agreement.
17. Fees and Expenses. The Customer agrees to pay to the Custodian such
compensation for its services pursuant to this Agreement as may be mutually
agreed upon in writing from time to time and the Custodian's reasonable
out-of-pocket or incidental expenses in connection with the performance of this
Agreement, including (but without limitation) legal fees as described herein
and/or deemed necessary in the judgment of the Custodian to keep safe or protect
the Property in the Account. The initial fee schedule is attached hereto as
Exhibit C. The Customer hereby agrees to hold the Custodian harmless from any
liability or loss resulting from any taxes or other governmental charges, and
any expense related thereto, which may be imposed, or assessed with respect to
any Property in an Account and also agrees to hold the Custodian, its
Subcustodians, and their respective nominees harmless from any liability as a
record holder of Property in such Account. The Custodian is authorized to charge
the applicable Account for such items and the Custodian shall have a lien on the
Property in the applicable Account for any amount payable to the Custodian under
this Agreement, including but not limited to amounts payable pursuant to the
last paragraph of Section 12 and pursuant to indemnities granted by the Customer
under this Agreement. The provisions of this Section shall survive the
termination of this Agreement.
18. Tax Reclaims. With respect to withholding taxes deducted and which may
be deducted from any income received from any Property in an Account, the
Custodian shall perform such services with respect thereto as are described in
Exhibit D attached hereto and shall in connection therewith be subject to the
standard of care set forth in such Exhibit D. Such standard of care shall not be
affected by any other term of this Agreement.
19. Amendment, Modifications, etc. No provision of this Agreement may be
amended, modified or waived except in a writing signed by the parties hereto. No
waiver of any provision hereto shall be deemed a continuing waiver unless it is
so designated. No failure or delay on the part of either party in exercising any
power or right under this Agreement operates as a waiver, nor does any single or
partial exercise of any power or right preclude any other or further exercise
thereof or the exercise of any other power or right.
20. Termination. (a) Termination of Entire Agreement. This Agreement may be
terminated by the Customer or the Custodian by ninety (90) days' written notice
to the other; provided that notice by the Customer shall specify the names of
the persons to whom the Custodian shall deliver the Securities in each Account
and to whom the Cash in such Account shall be paid. If notice of termination is
given by the Custodian, the Customer shall, within ninety (90) days following
the giving of such notice, deliver to the Custodian a written notice specifying
the names of the persons to whom the Custodian shall deliver the Securities in
each Account and to whom the Cash in such Account shall be paid. In either case,
the Custodian will deliver such Securities and Cash to the persons so specified,
after deducting therefrom any amounts which the Custodian determines to be owed
to it under Sections 12, 17, and 23. In addition, the Custodian may in its
discretion withhold from such delivery such Cash and Securities as may be
necessary to settle transactions pending at the time of such delivery. The
Customer grants to the Custodian a lien and right of setoff against the Account
and all Property held therein from time to time in the full amount of the
foregoing obligations. If within ninety (90) days following the giving of a
notice of termination by the Custodian, the Custodian does not receive from the
Customer a written notice specifying the names of the persons to whom the
Custodian shall deliver the Securities in each Account and to whom the Cash in
such Account shall be paid, the Custodian, at its
<PAGE>
election, may deliver such Securities and pay such Cash to a bank or trust
company doing business in the State of New York to be held and disposed of
pursuant to the provisions of this Agreement, or may continue to hold such
Securities and Cash until a written notice as aforesaid is delivered to the
Custodian, provided that the Custodian's obligations shall be limited to
safekeeping.
(b) Termination as to One or More Portfolios. This Agreement may be
terminated by the Customer or the Custodian as to one or more Portfolios (but
less than all of the Portfolios) by delivery of an amended Exhibit A deleting
such Portfolios, in which case termination as to such deleted Portfolios shall
take effect ninety (90) days after the date of such delivery, or such earlier
time as mutually agreed. The execution and delivery of an amended Exhibit A
which deletes one or more Portfolios shall constitute a termination of this
Agreement only with respect to such deleted Portfolio(s), shall be governed by
the preceding provisions of Section 20 as to the identification of a successor
custodian and the delivery of Cash and Securities of the Portfolio(s) so deleted
to such successor custodian, and shall not affect the obligations of the
Custodian and the Customer hereunder with respect to the other Portfolios set
forth in Exhibit A, as amended from time to time.
21. Notices. Except as otherwise provided in this Agreement, all requests,
demands or other communications between the parties or notices in connection
herewith (a) shall be in writing, hand delivered or sent by telex, telegram,
cable, facsimile or other means of electronic communication agreed upon by the
parties hereto addressed, if to the Customer, to:
if to the Custodian, to:
or in either case to such other address as shall have been furnished to the
receiving party pursuant to the provisions hereof and (b) shall be deemed
effective when received, or, in the case of a telex, when sent to the proper
number and acknowledged by a proper answerback.
22. Several Obligations of the Portfolios. With respect to any obligations
of the Customer on behalf of each Portfolio and each of its related Accounts
arising out of this Agreement, the Custodian shall look for payment or
satisfaction of any obligation solely to the assets and property of the
Portfolio and such Accounts to which such obligation relates as though the
Customer had separately contracted with the Custodian by separate written
instrument with respect to each Portfolio and its related Accounts.
23. Security for Payment. To secure payment of all obligations due
hereunder, the Customer hereby grants to Custodian a continuing security
interest in and right of setoff against each Account and all Property held
therein from time to time in the full amount of such obligations; provided that,
if there is more than one Account and the obligations secured pursuant to this
Section can be allocated to a specific Account or the Portfolio related to such
Account, such security interest and right of setoff will be limited to Property
held for that Account only and its related Portfolio. Should the Customer fail
to pay promptly any amounts owed hereunder, Custodian shall be entitled to use
available Cash in the Account or applicable Account, as the case may be, and to
dispose of Securities in the Account or such applicable Account as is necessary.
In any such case and without limiting the foregoing, Custodian shall be entitled
to take such other
<PAGE>
action(s) or exercise such other options, powers and rights as Custodian now or
hereafter has as a secured creditor under the New York Uniform Commercial Code
or any other applicable law.
24. Representations and Warranties.
(a) The Customer hereby represents and warrants to the Custodian that:
(i) the employment of the Custodian and the allocation of fees, expenses and
other charges to any Account as herein provided, is not prohibited by law or any
governing documents or contracts to which the Customer is subject;
(ii) the terms of this Agreement do not violate any obligation by which the
Customer is bound, whether arising by contract, operation of law or otherwise;
(iii) this Agreement has been duly authorized by appropriate action and when
executed and delivered will be binding upon the Customer and each Portfolio in
accordance with its terms; and
(iv) the Customer will deliver to the Custodian such evidence of such
authorization as the Custodian may reasonably require, whether by way of a
certified resolution or otherwise.
(b) The Custodian hereby represents and warrants to the Customer that:
(i) the terms of this Agreement do not violate any obligation by which the
Custodian is bound, whether arising by contract, operation of law or otherwise;
(ii) this Agreement has been duly authorized by appropriate action and when
executed and delivered will be binding upon the Custodian in accordance with its
terms;
(iii) the Custodian will deliver to the Customer such evidence of such
authorization as the Customer may reasonably require, whether by way of a
certified resolution or otherwise; and
(iv) Custodian is qualified as a custodian under Section 26(a) of the 1940
Act and warrants that it will remain so qualified or upon ceasing to be so
qualified shall promptly notify the Customer in writing.
25. Governing Law and Successors and Assigns. This Agreement shall be
governed by the law of the State of New York and shall not be assignable by
either party, but shall bind the successors in interest of the Customer and the
Custodian.
26. Publicity. Customer shall furnish to Custodian at its office referred to
in Section 21 above, prior to any distribution thereof, copies of any material
prepared for distribution to any persons who are not parties hereto that refer
in any way to the Custodian. Customer shall not distribute or permit the
distribution of such materials if Custodian reasonably objects in writing
<PAGE>
within ten (10) business days of receipt thereof (or such other time as may be
mutually agreed) after receipt thereof. The provisions of this Section shall
survive the termination of this Agreement.
27. Representative Capacity and Binding Obligation. A copy of the
[Declaration of Trust/Trust Instrument] of the Customer is on file with The
Secretary of the [Commonwealth of Massachusetts/ State of Delaware], and notice
is hereby given that this Agreement is not executed on behalf of the Trustees of
the Customer as individuals, and the obligations of this Agreement are not
binding upon any of the Trustees, officers or shareholders of the Customer
individually but are binding only upon the assets and property of the
Portfolios.
The Custodian agrees that no shareholder, trustee or officer of the Customer
may be held personally liable or responsible for any obligations of the Customer
arising out of this Agreement.
28. Submission to Jurisdiction. Any suit, action or proceeding arising out
of this Agreement may be instituted in any State or Federal court sitting in the
City of New York, State of New York, United States of America, and the Customer
irrevocably submits to the non-exclusive jurisdiction of any such court in any
such suit, action or proceeding and waives, to the fullest extent permitted by
law, any objection which it may now or hereafter have to the laying of venue of
any such suit, action or proceeding brought in such a court and any claim that
such suit, action or proceeding was brought in an inconvenient forum.
29. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original. This Agreement shall
become effective when one or more counterparts have been signed and delivered by
each of the parties hereto.
30. Confidentiality. The parties hereto agree that each shall treat
confidentially the terms and conditions of this Agreement and all information
provided by each party to the other regarding its business and operations. All
confidential information provided by a party hereto shall be used by any other
party hereto solely for the purpose of rendering services pursuant to this
Agreement and, except as may be required in carrying out this Agreement, shall
not be disclosed to any third party without the prior consent of such providing
party. The foregoing shall not be applicable to any information that is publicly
available when provided or thereafter becomes publicly available other than
through a breach of this Agreement, or that is required or requested to be
disclosed by any bank or other regulatory examiner of the Custodian, Customer,
or any Subcustodian, any auditor of the parties hereto, by judicial or
administrative process or otherwise by applicable law or regulation.
31. Severability. If any provision of this Agreement is determined to be
invalid or unenforceable, such determination shall not affect the validity or
enforceability of any other provision of this Agreement.
32. Headings. The headings of the paragraphs hereof are included for
convenience of reference only and do not form a part of this Agreement.
[NAME OF CUSTOMER]
By:___________________________
Name:_________________________
Title: _______________________
BANKERS TRUST COMPANY
By:___________________________
Name:_________________________
Title: _______________________
<PAGE>
EXHIBIT A
To Custodian Agreement dated as of ______________, 199_ between Bankers
Trust Company and ____________________.
LIST OF PORTFOLIOS
The following is a list of Portfolios referred to in the first WHEREAS
clause of the above-referred to Custodian Agreement. Terms used herein as
defined terms unless otherwise defined shall have the meanings ascribed to them
in the above-referred to Custodian Agreement.
Dated as of: [NAME OF CUSTOMER]
By:___________________________
Name:_________________________
Title: _______________________
BANKERS TRUST COMPANY
By:___________________________
Name:_________________________
Title: _______________________
<PAGE>
EXHIBIT B
To Custodian Agreement dated as of _____________, 199_ between Bankers Trust
Company and ___________________.
PROXY SERVICE
The following is a description of the Proxy Service referred to in Section
10 of the above referred to Custodian Agreement. Terms used herein as defined
terms shall have the meanings ascribed to them therein unless otherwise defined
below.
The Custodian provides a service, described below, for the transmission of
corporate communications in connection with shareholder meetings relating to
Securities held in Argentina, Australia, Austria, Canada, Denmark, Finland,
France, Germany, Greece, Hong Kong, Indonesia, Ireland, Italy, Japan, Korea,
Malaysia, Mexico, Netherlands, New Zealand, Pakistan, Poland, Singapore, South
Africa, Spain, Sri Lanka, Sweden, United Kingdom, United States, and Venezuela.
For the United States and Canada, the term "corporate communications" means the
proxy statements or meeting agenda, proxy cards, annual reports and any other
meeting materials received by the Custodian. For countries other than the United
States and Canada, the term "corporate communications" means the meeting agenda
only and does not include any meeting circulars, proxy statements or any other
corporate communications furnished by the issuer in connection with such
meeting. Non-meeting related corporate communications are not included in the
transmission service to be provided by the Custodian except upon request as
provided below.
The Custodian's process for transmitting and translating meeting agendas
will be as follows:
1) If the meeting agenda is not provided by the issuer in the English
language, and if the language of such agenda is in the official language of the
country in which the related security is held, the Custodian will as soon as
practicable after receipt of the original meeting agenda by a Subcustodian
provide an English translation prepared by that Subcustodian.
2) If an English translation of the meeting agenda is furnished, the local
language agenda will not be furnished unless requested.
Translations will be free translations and neither the Custodian nor any
Subcustodian will be liable or held responsible for the accuracy thereof or any
direct or indirect consequences arising therefrom, including without limitation
arising out of any action taken or omitted to be taken based thereon.
If requested, the Custodian will, on a reasonable efforts basis, endeavor to
obtain any additional corporate communication such as annual or interim reports,
proxy statements, meeting circulars, or local language agendas, and provide them
in the form obtained.
Timing in the voting process is important and, in that regard, upon receipt
by the Custodian of notice from a Subcustodian, the Custodian will provide a
notice to the Customer indicating the deadline for receipt of its instructions
to enable the voting process to take place effectively and efficiently. As
<PAGE>
- 2 -
voting procedures will vary from market to market, attention to any required
procedures will be very important. Upon timely receipt of voting instructions,
the Custodian will promptly forward such instructions to the applicable
Subcustodian. If voting instructions are not timely received, the Custodian
shall have no liability or obligation to take any action.
For Securities held in markets other than those set forth in the first
paragraph, the Custodian will not furnish the material described above or seek
voting instructions. However, if requested to exercise voting rights at a
specific meeting, the Custodian will endeavor to do so on a reasonable efforts
basis without any assurance that such rights will be so exercised at such
meeting.
If the Custodian or any Subcustodian incurs extraordinary expenses in
exercising voting rights related to any Securities pursuant to appropriate
instructions or direction (e.g., by way of illustration only and not by way of
limitation, physical presence is required at a meeting and/or travel expenses
are incurred), such expenses will be reimbursed out of the Account containing
such Securities unless other arrangements have been made for such reimbursement.
It is the intent of the Custodian to expand the Proxy Service to include
jurisdictions which are not currently included as set forth in the second
paragraph hereof. The Custodian will notify the Customer as to the inclusion of
additional countries or deletion of existing countries after their inclusion or
deletion and this Exhibit B will be deemed to be automatically amended to
include or delete such countries as the case may be.
Dated as of: [NAME OF CUSTOMER]
By:___________________________
Name:_________________________
Title: _______________________
BANKERS TRUST COMPANY
By:___________________________
Name:_________________________
Title: _______________________
<PAGE>
EXHIBIT C
To Custodian Agreement dated as of ______________, 199_ between Bankers
Trust Company and ____________________.
CUSTODY FEE SCHEDULE
This Exhibit C shall be amended upon delivery by the Custodian of a new Exhibit
C to the Customer and acceptance thereof by the Customer and shall be effective
as of the date of acceptance by the Customer or a date agreed upon between the
Custodian and the Customer.
<PAGE>
EXHIBIT D
To Custodian Agreement dated as of ______________, 199_ between Bankers
Trust Company and ____________________.
TAX RECLAIMS
Pursuant to Section 18 of the above referred to Custodian Agreement, the
Custodian shall perform the following services with respect to withholding taxes
imposed or which may be imposed on income from Property in any Account. Terms
used herein as defined terms shall unless otherwise defined have the meanings
ascribed to them in the above referred to Custodian Agreement.
When withholding tax has been deducted with respect to income from any
Property in an Account, the Custodian will actively pursue on a reasonable
efforts basis the reclaim process, provided that the Custodian shall not be
required to institute any legal or administrative proceeding against any
Subcustodian or other person. The Custodian will provide fully detailed
advices/vouchers to support reclaims submitted to the local authorities by the
Custodian or its designee. In all cases of withholding, the Custodian will
provide full details to the Customer. If exemption from withholding at the
source can be obtained in the future, the Custodian will notify the Customer and
advise what documentation, if any, is required to obtain the exemption. Upon
receipt of such documentation from the Customer, the Custodian will file for
exemption on the Customer's behalf and notify the Customer when it has been
obtained.
In connection with providing the foregoing service, the Custodian shall be
entitled to apply categorical treatment of the Customer according to the
Customer's nationality, the particulars of its organization and other relevant
details that shall be supplied by the Customer. It shall be the duty of the
Customer to inform the Custodian of any change in the organization, domicile or
other relevant fact concerning tax treatment of the Customer and further to
inform the Custodian if the Customer is or becomes the beneficiary of any
special ruling or treatment not applicable to the general nationality and
category or entity of which the Customer is a part under general laws and treaty
provisions. The Custodian may rely on any such information provided by the
Customer.
In connection with providing the foregoing service, the Custodian may also
rely on professional tax services published by a major international accounting
firm and/or advice received from a Subcustodian in the jurisdictions in
question. In addition, the Custodian may seek the advice of counsel or other
professional tax advisers in such jurisdictions. The Custodian is entitled to
rely, and may act, on information set forth in such services and on advice
received from a Subcustodian, counsel or other professional tax advisers and
shall be without liability to the Customer for any action reasonably taken or
omitted pursuant to information contained in such services or such advice.
<PAGE>
Dated as of: [NAME OF CUSTOMER]
By:___________________________
Name:_________________________
Title: _______________________
BANKERS TRUST COMPANY
By:___________________________
Name:_________________________
Title: _______________________
CHASE
GLOBAL CUSTODY AGREEMENT
AGREEMENT, effective May 1, 1996, between THE CHASE MANHATTAN BANK, N.A.
(the "Bank") and those registered investment companies listed on Schedule A
hereto (each a Customer ) on behalf of certain of their respective series,
as listed on Schedule A (individually and collectively the Series ).
1. Customer Accounts.
The Bank agrees to establish and maintain the following accounts
("Accounts"):
(a) A custody account in the name of the Customer on behalf of each
Series ("Custody Account") for any and all stocks, shares, bonds, debentures,
notes, mortgages or other obligations for the payment of money, bullion, coin
and any certificates, receipts, warrants or other instruments representing
rights to receive, purchase or subscribe for the same or evidencing or
representing any other rights or interests therein and other similar property
whether certificated or uncertificated as may be received by the Bank or its
Subcustodian (as defined in Section 3) for the account of the Customer
("Securities"); and
(b) A deposit account in the name of the Customer on behalf of each
Series ("Deposit Account") for any and all cash in any currency received by
the Bank or its Subcustodian for the account of the Customer, which cash
shall not be subject to withdrawal by draft or check.
The Customer warrants its authority to: 1) deposit the cash and
Securities ("Assets") received in the Accounts and 2) give Instructions (as
defined in Section 11) concerning the Accounts. Such Instructions shall
specifically indicate to which Series such Assets belong or, if such Assets
belong to more than one Series, shall allocate such Assets to the appropriate
Series. The Bank may deliver securities of the same class in place of those
deposited in the Custody Account.
Upon written agreement between the Bank and the Customer, additional
Accounts may be established and separately accounted for as additional
Accounts under the terms of this Agreement.
2. Maintenance of Securities and Cash at Bank and Subcustodian Locations.
Unless Instructions specifically require another location acceptable to
the Bank:
(a) Securities will be held in the country or other jurisdiction in
which the principal trading market for such Securities is located, where such
Securities are to be presented for payment or where such Securities are
acquired; and
(b) Cash will be credited to an account in a country or other
jurisdiction in which such cash may be legally deposited or is the legal
currency for the payment of public or private debts.
To the extent available and permissible under applicable law and
regulation, Cash held pursuant to Instructions shall be held in interest
bearing accounts. If interest bearing accounts are not available, such cash
may be held in non-interest bearing accounts. The Bank is authorized to
maintain cash balances on deposit for the Customer with itself or one of its
affiliates. Interest bearing accounts shall bear interest at such reasonable
rates of interest as may from time to time be paid on such accounts by the
Bank or its affiliates.
(iii) For each Series that is exclusively a domestic Series, the following
additional provisions shall apply:
(x) In the event that during a given calendar month a Series has maintained
an average daily cash balance greater than zero, the Bank shall provide an
earnings credit against custody fees otherwise owing hereunder by such Series
during such calendar month in an amount equal to the product of (A) 75% of
the 90 day U.S. government Treasury bill rate as quoted in the Wall Street
Journal for the last Business Day (being a day on which the Bank is open
for the transaction of all its ordinary business) of such calendar month, (B)
the average daily cash balance for such month, and (C) the number of days in
such calendar month divided by 365.
(y) In the event that during a given calendar month a Series has maintained
an average daily cash balance less than or equal to zero, the Bank shall be
paid interest on such amount by such Series in an amount equal to the product
of (A) the Overnight Fed Funds Rate (as defined below) plus 25 basis points
for the last Business Day of such calendar month, (B) the average daily cash
balance for such month, and (C) the number of days in such calendar month
divided by 365.
(z) For purposes of (y) above, the term Overnight Fed Funds Rate shall mean
the weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds brokers,
as published by the Federal Reserve Bank of New York (with the rate for the
last Business Day of a given calendar month being the rate so published on
the Business Day immediately following such Day), or, if such rate is note so
published, the average quotations, for the last Business Day of a given
calendar month, of such transactions received by the Bank from three Federal
funds brokers of recognized standing selected by the Bank.
If the Customer wishes to have any of its Assets held in the custody of
an institution other than the established Subcustodians as defined in Section
3 (or their securities depositories), such arrangement must be authorized by
a written agreement, signed by the Bank and the Customer.
3. Subcustodians and Securities Depositories.
The Bank may act under this Agreement through the subcustodians listed
in Schedule B of this Agreement with which the Bank has entered into
subcustodial agreements ("Subcustodians"). The Customer authorizes the Bank
to hold Assets in the Accounts in accounts which the Bank has established
with one or more of its branches or Subcustodians. The Bank and
Subcustodians are authorized to hold any of the Securities in their account
with any securities depository in which they participate.
The Bank reserves the right to add new, replace or remove Subcustodians.
The Customer will be given reasonable notice by the Bank of any amendment to
Schedule B. Upon request by the Customer, the Bank will identify the name,
address and principal place of business of any Subcustodian of the Customer's
Assets and the name and address of the governmental agency or other
regulatory authority that supervises or regulates such Subcustodian.
Upon receipt of Instructions, the Bank shall cease using any
Subcustodian with respect to the customer, and arrange for delivery of
Securities held with such Subcustodian to another entity as designated by the
Customer; provided that, the Bank shall have no responsibility for the
performance of such other entity.
4. Use of Subcustodian.
(a) The Bank will identify the Assets on its books as belonging to the
Customer.
(b) A Subcustodian will hold such Assets together with assets belonging
to other customers of the Bank in accounts identified on such Subcustodian's
books as special custody accounts for the exclusive benefit of customers of
the Bank.
(c) Any Assets in the Accounts held by a Subcustodian will be subject
only to the instructions of the Bank or its agent. Any Securities held in a
securities depository for the account of a Subcustodian will be subject only
to the instructions of such Subcustodian.
(d) Any agreement the Bank enters into with a Subcustodian for holding
its customer's assets shall provide that: (i) such assets will not be subject
to any right, charge, security interest, lien or claim of any kind in favor
of such Subcustodian except for safe custody or administration, (ii) the
beneficial ownership of such assets will be freely transferable without the
payment of money or value other than for safe custody or administration;
(iii) adequate records will be maintained identifying the assets held
pursuant to such agreement as belonging to the customers of the Bank; (iv)
subject to applicable law, Subcustodian shall permit independent public
accountants for Bank and customers of the Bank reasonable access to
Subcustodian s books and records as they pertain to the subcustody account in
connection with such accountants' examination of the books and records of
such account; and (v) the Bank will receive periodic reports with respect to
the safekeeping of assets in the subcustody account, including advices and/or
notifications of any transfers to or from such subcustody account. The
foregoing shall not apply to the extent of any special agreement or
arrangement made by the Customer with any particular Subcustodian.
(e) Upon request of the Customer, the Bank shall deliver to the Customer
annually a report stating: (i) the identity of each Subcustodian then acting
on behalf of the Bank and the name and address of the governmental agency or
other regulatory authority that supervises or regulates such Subcustodian;
(ii) the countries in which each Subcustodian is located; and (iii) as long
as Securities and Exchange Commission ("SEC") Rule 17f-5 under the Investment
Company Act of 1940, as amended ("1940 Act"), requires the Customer s Board
of Directors/Trustees directly to approve its foreign custody arrangements,
such other information relating to such Subcustodians as may reasonably be
requested by the Customer to ensure compliance with Rule 17f-5. As long as
Rule 17f-5 requires the Customer s Board of Directors/Trustees directly to
approve its foreign custody arrangements, the Bank shall also furnish
annually to the Customer information concerning such Subcustodians similar in
kind and scope as that furnished to the Customer in connection with the
initial approval hereof. The Bank shall timely advise the Customer of any
material adverse change in the facts or circumstances upon which such
information is based where such changes would affect the eligibility of the
Subcustodian under Rule 17f-5 as soon as practicable after it becomes aware
of any such material adverse change in the normal course of its custodial
activities.
5. Deposit Account Transactions
(a) The Bank or its Subcustodians will make payments from the Deposit
Account upon receipt of Instructions which include all information required
by the Bank.
(b) In the event that any payment to be made under this Section 5
exceeds the funds available in the Deposit Account, the Bank, in its
discretion, may advance the Customer such excess amount which shall be deemed
a loan payable on demand, bearing interest at the rate customarily charged by
the Bank on similar loans.
(c) If the Bank credits the Deposit Account on a payable date, or at
any time prior to actual collection and reconciliation to the Deposit
Account, with interest, dividends, redemptions or any other amount due, the
Customer will promptly return any such amount upon oral or written
notification: (i) that such amount has not been received in the ordinary
course of business or (ii) that such amount was incorrectly credited. If the
Customer does not promptly return any amount upon such notification, the Bank
shall be entitled, upon oral or written notification to the Customer, to
reverse such credit by debiting the Deposit Account for the amount previously
credited. The Bank or its Subcustodian shall have no duty or obligation to
institute legal proceedings, file a claim or a proof of claim in any
insolvency proceeding or take any other action with respect to the collection
of such amount, but may act for the Customer upon Instructions after
consultation with the Customer.
6. Custody Account Transactions.
(a) Securities will be transferred, exchanged or delivered by the Bank
or its Subcustodian upon receipt by the Bank of Instructions which include
all information required by the Bank. Settlement and payment for Securities
received for, and delivery of Securities out of, the Custody Account may be
made in accordance with the customary or established securities trading or
securities processing practices and procedures in the jurisdiction or market
in which the transaction occurs, including, without limitation, delivery of
Securities to a purchaser, dealer or their agents against a receipt with the
expectation of receiving later payment and free delivery. Delivery of
Securities out of the Custody Account may also be made in any manner
specifically required by Instructions acceptable to the Bank.
(b) The Bank shall credit or debit the Accounts on a contractual
settlement date with cash or Securities with respect to any sale, exchange or
purchase of Securities in those countries set forth in Appendix A hereto;
provided that, the Bank may amend Appendix A from time to time in its sole
discretion and shall advise the Customer of such amendments. Otherwise,
transactions will be credited or debited to the Accounts on the date cash or
Securities are actually received by the Bank and reconciled to the Account.
(i) The Bank may reverse credits or debits made to the Accounts in its
discretion if the related transaction fails to settle within a reasonable
period, determined by the Bank in its discretion, after the contractual
settlement date for the related transaction; provided that, the Bank shall
give Customer prior notification of any such reversal. Where the foregoing
notification is oral, the Bank shall promptly provide written confirmation of
the same (which confirmation may be electronic).
(ii) If any Securities delivered pursuant to this Section 6 are returned
by the recipient thereof, the Bank may reverse the credits and debits of the
particular transaction at any time.
7. Actions of the Bank.
The Bank shall follow Instructions received regarding assets held in the
Accounts. However, until it receives Instructions to the contrary, the Bank
will:
(a) Present for payment any Securities which are called, redeemed or
retired or otherwise become payable and all coupons and other income items
which call for payment upon presentation, to the extent that the Bank or
Subcustodian is actually aware of such opportunities.
(b) Execute in the name of the Customer such ownership and other
certificates as may be required to obtain payments in respect of Securities.
(c) Exchange interim receipts or temporary Securities for definitive
Securities.
(d) Appoint brokers and agents for any transaction involving the
Securities, including, without limitation, affiliates of the Bank or any
Subcustodian, subject to applicable SEC rules and regulations under the Act.
(e) Issue statements to the Customer, at times mutually agreed upon,
identifying the Assets in the Accounts.
The Bank will send the Customer an advice or notification of any
transfers of Assets to or from the Accounts. Such statements, advices or
notifications shall indicate the identity of the entity having custody of the
Assets. Unless the Customer advises the Bank orally and then promptly sends
the Bank a written exception or objection to any Bank statement within 180
days of receipt, the Customer shall be deemed to have approved such
statement.
All collections of funds or other property paid or distributed in
respect of Securities in the Custody Account shall be made at the risk of the
Customer. Subject to the standard of care in Section 12 hereof, the Bank shall
have no liability for any loss occasioned by delay in the actual receipt of
notice by the Bank or by its Subcustodians of any payment, redemption or other
transaction regarding Securities in the Custody Account in respect of which
the Bank has agreed to take any action under this Agreement.
8. Corporate Actions; Proxies; Tax Reclaims.
a. Corporate Actions. Whenever the Bank receives information
concerning the Securities which requires discretionary action by the
beneficial owner of the Securities (other than a proxy), such as subscription
rights, bonus issues, stock repurchase plans and rights offerings, or legal
notices or other material intended to be transmitted to securities holders
("Corporate Actions"), the Bank will give the Customer written notice (which
may be electronic) of such Corporate Actions to the extent that the Bank's
central corporate actions department has actual knowledge of a Corporate
Action in time to notify its customers.
When a rights entitlement or a fractional interest resulting from a
rights issue, stock dividend, stock split or similar Corporate Action is
received which bears an expiration date, the Bank will endeavor to obtain
Instructions from the Customer or its Authorized Person (as defined in Section
10 hereof), but if Instructions are not received in time for the Bank to take
timely action, or actual notice of such Corporate Action was received too
late to seek Instructions, the Bank is authorized to sell such rights
entitlement or fractional interest and to credit the Deposit Account with the
proceeds or take any other action it deems, in good faith, to be appropriate
in which case it shall be held harmless for any such action.
b. Proxy Voting. With respect to domestic U.S. and Canadian Securities
(the latter if held in DTC), the Bank will send to the Customer or the
Authorized Person (as defined in Section 10) for a Custody Account, such proxies
(signed in blank, if issued in the name of the Bank's nominee or the nominee
of a central depository) and communications with respect to Securities in the
Custody Account as call for voting or relate to legal proceedings within a
reasonable time after sufficient copies are received by the Bank for
forwarding to its customers. In addition, the Bank will follow coupon
payments, redemptions, exchanges or similar matters with respect to
Securities in the Custody Account and advise the Customer or the Authorized
Person for such Account of rights issued, tender offers or any other
discretionary rights with respect to such Securities, in each case, of which
the Bank has received notice from the issuer of the Securities, or as to
which notice is published in publications routinely utilized by the Bank for
this purpose.
With respect to Securities other than the foregoing, proxy voting
services shall be provided in accordance with separate proxy voting agreement
annexed hereto a Appendix B.
The foregoing proxy voting services may be provided by Bank, in whole or
in part, by one or more third parties appointed by the Bank (which may be
affiliates of the Bank), provided that the Bank shall be liable for the
performance of any such third parties to the same extent as the Bank would
have been if it performed such services itself..
c. Tax Reclaims. (i) Subject to the provisions hereof, the Bank will
apply for a reduction of withholding tax and any refund of any tax paid or
tax credits which apply in each applicable market in respect of income
payments on Securities for the benefit of the Customer which the Bank
believes may be available to such Customer. Where such reports are available,
the Bank shall periodically report to Customer concerning the making of
applications for a reduction of withholding tax and refund of any tax paid or
tax credits which apply in each applicable market in respect of income
payments on Securities for the benefit of the Customer.
(ii) The provision of tax reclaim services by the Bank is conditional
upon the Bank receiving from the beneficial owner of Securities (A) a
declaration of its identity and place of residence and (B) certain other
documentation (pro forma copies of which are available from the Bank). The
Bank shall use reasonable means to advise the Customer of the declarations,
documentation and information which the Customer is to provide to the Bank in
order for the Bank to provide the tax reclaim services described herein. The
Customer acknowledges that, if the Bank does not receive such declarations,
documentation and information, additional United Kingdom taxation will be
deducted from all income received in respect of Securities issued outside the
United Kingdom and that U.S. non-resident alien tax or U.S. backup
withholding tax will be deducted from U.S. source income. The Customer shall
provide to the Bank such documentation and information as it may require in
connection with taxation, and warrants that, when given, this information
shall be true and correct in every respect, not misleading in any way, and
contain all material information. The Customer undertakes to notify the Bank
immediately if any such information requires updating or amendment.
(iii) Subject to subsection (vii) hereof, the Bank shall not be liable
to the Customer or any third party for any tax, fines or penalties payable by
the Bank or the Customer, and shall be indemnified accordingly, whether these
result from the inaccurate completion of documents by the Customer or any
third party, or as a result of the provision to the Bank or any third party
of inaccurate or misleading information or the withholding of material
information by the Customer or any other third party, or as a result of any
delay of any revenue authority or any other matter beyond the control of the
Bank.
(iv) The Customer confirms that the Bank is authorized to deduct from
any cash received or credited to the Cash Account any taxes or levies
required by any revenue or governmental authority for whatever reason in
respect of the Securities or Cash Accounts.
(v) The Bank shall perform tax reclaim services only with respect to
taxation levied by the revenue authorities of the countries notified to the
Customer from time to time and the Bank may, by notification in writing, at
its absolute discretion, supplement or amend the markets in which the tax
reclaim services are offered. Other than as expressly provided in this sub-
clause, the Bank shall have no responsibility with regard to the Customer's
tax position or status in any jurisdiction. Except as provided in Section
8(c)(ii) and pursuant to Instructions, the Bank shall take no action in the
servicing of the Customer s Securities which, in and of itself, creates a
taxable nexus for the Customer in any jurisdiction other than with respect to
interest, dividends and capital gains that may otherwise be subject to tax by
such jurisdiction with respect to a foreign investor not otherwise engaged in
a trade or business in such jurisdiction in a given taxable year. Bank shall
not be liable for any tax liability caused, directly or indirectly, by
Customer's actions or status in any jurisdiction.
(vi) In connection with obtaining tax relief, the Customer confirms
that the Bank is authorized to disclose any information requested by any
revenue authority or any governmental body in relation to the Customer or the
Securities and/or Cash held for the Customer. This provision does not
authorize any other voluntary disclosure to any revenue authority or any
governmental body without the prior written consent of Customer.
(vii) Tax reclaim services may be provided by the Bank or, in whole or
in part, by one or more third parties appointed by the Bank (which may be
affiliates of the Bank); provided that the Bank shall be liable for the
performance of any such third party to the same extent as the Bank would have
been if it performed such services itself.
9. Nominees.
Securities which are ordinarily held in registered form may be
registered in a nominee name of the Bank, Subcustodian or securities
depository, as the case may be. The Bank may without notice to the Customer
cause any such Securities to cease to be registered in the name of any such
nominee and to be registered in the name of the Customer. In the event that
any Securities registered in a nominee name are called for partial redemption
by the issuer, the Bank may allot the called portion to the respective
beneficial holders of such class of security in any manner the Bank deems to
be fair and equitable. The Customer agrees to hold the Bank, Subcustodians,
and their respective nominees harmless from any liability arising directly or
indirectly from their status as a mere record holder of Securities in the
Custody Account.
10. Authorized Persons.
As used in this Agreement, the term "Authorized Person" means employees
or agents including investment managers as have been designated by written
notice from the Customer or its designated agent to act on behalf of the
Customer under this Agreement. Such persons shall continue to be Authorized
Persons until such time as the Bank receives Instructions from the Customer
or its designated agent that any such employee or agent is no longer an
Authorized Person.
11. Instructions.
The term "Instructions" means instructions of any Authorized Person
received by the Bank, via telephone, telex, TWX, facsimile transmission, bank
wire or other teleprocess or electronic instruction or trade information
system acceptable to the Bank which the Bank reasonably believes in good
faith to have been given by Authorized Persons or which are transmitted with
proper testing or authentication pursuant to terms and conditions which the
Bank may specify. Unless otherwise expressly provided, all Instructions
shall continue in full force and effect until canceled or superseded. For
purposes hereof, reasonableness shall mean compliance with applicable
procedures.
Any Instructions delivered to the Bank by telephone (including cash
transfer instructions as described below) shall promptly thereafter be
confirmed in writing by any two Authorized Persons (which confirmation may
bear the facsimile signature of such Persons), but the Customer will hold the
Bank harmless for the failure of such Authorized Persons to send such
confirmation in writing, the failure of such confirmation to conform to the
telephone instructions received or the Bank's failure to produce such
confirmation at any subsequent time; provided that, where the Bank receives
a telephone Instruction from an Authorized Person requiring the transfer of
cash, prior to executing such Instruction the Bank will, to confirm such
Instruction, call back any one of the individuals on a list of persons
authorized to confirm such oral transfer Instructions (which Person shall be
a person other than the initiator of the transfer Instruction) and the Bank
shall not execute the Instruction until it has received such confirmation.
Either party may electronically record any Instructions given by telephone,
and any other telephone discussions with respect to the Custody Account. The
Customer shall be responsible for safeguarding any testkeys, identification
codes or other security devices which the Bank shall make available to the
Customer or its Authorized Persons.
12. Standard of Care; Liabilities.
(a) The Bank shall be responsible for the performance of only such
duties as are set forth in this Agreement or expressly contained in
Instructions which are consistent with the provisions of this Agreement as
follows:
(i) The Bank will use reasonable care with respect to its obligations
under this Agreement and the safekeeping of Assets. The Bank shall be liable
to the Customer for any loss which shall occur as the result of the failure
of a Subcustodian to exercise reasonable care with respect to the safekeeping
of such Assets to the same extent that the Bank would be liable to the
Customer if the Bank were holding such Assets in New York. In the event that
Securities are lost by reason of the failure of the Bank or its Subcustodian
to use reasonable care, the Bank shall be liable to the Customer based on the
market value of the property which is the subject of the loss on the date it
is replaced by the Bank and without reference to any special conditions or
circumstances, it being understood that for purposes of measuring damages
hereunder, the value of Securities which are sold by the Customer prior to
the replacement thereof shall be equal to the sale price thereof less the
expenses of such sale incurred by the Customer. The Bank shall act with
reasonable promptness in making such replacements. In no event shall the
Bank be liable for special, indirect or consequential loss or damage of any
kind whatsoever (including but not limited to lost profits), even if the Bank
has been advised of the likelihood of such loss or damage and regardless of
the form of action. Subject to the Bank's obligations pursuant to Section 4(e)
hereof, the Bank will not be responsible for the insolvency of any
Subcustodian which is not a branch or affiliate of Bank.
(ii) The Bank will not be responsible for any act, omission, default or
the solvency of any broker or agent which it or a Subcustodian appoints
unless such appointment was made negligently or in bad faith.
(iii) (a) The Bank shall be indemnified by, and without liability to
the Customer for any action taken or omitted by the Bank whether pursuant to
Instructions or otherwise pursuant to this Agreement if such act or omission
was in good faith, without negligence. In performing its obligations under
this Agreement, the Bank may rely on the genuineness of any Customer document
which it reasonably believes in good faith to have been validly executed.
(b) The Bank shall hold Customer harmless from, and shall indemnify Customer
for, any loss, liability, claim or expense incurred by Customer (including,
but not limited to, Customer's reasonable legal fees) to the extent that such
loss, liability, claim or expense arises from the negligence or willful mis-
conduct on the part of the Bank or a Subcustodian; provided that, in no event
shall the Bank be liable for special, indirect or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits),
even if the Bank has been advised of the likelihood of such loss or damage
and regardless of the form of action. Subject to the Bank's obligations
pursuant to Section 4(e) hereof, the Bank will not be responsible for the
insolvency of any Subcustodian which is not a branch or affiliate of Bank.
(iv) The Customer agrees to pay for and hold the Bank harmless from any
liability or loss resulting from the imposition or assessment of any taxes or
other governmental charges, and any related expenses with respect to income
from or Assets in the Accounts.
(v) The Bank shall be entitled to rely, and may act, upon the advice of
counsel (who may be counsel for the Customer) on all matters and shall be
without liability for any action reasonably taken or omitted pursuant to such
advice.
(vi) The Bank need not maintain any insurance for the benefit of the
Customer.
(vii) Without limiting the foregoing, the Bank shall not be liable
for any loss which results from: 1) the general risk of investing, or 2)
investing or holding Assets in a particular country including, but not
limited to, losses resulting from nationalization, expropriation or other
governmental actions; regulation of the banking or securities industry;
currency restrictions, devaluations or fluctuations; and market conditions
which prevent the orderly execution of securities transactions or affect the
value of Assets.
(viii) Neither party shall be liable to the other for any loss due to
forces beyond their control including, but not limited to strikes or work
stoppages, acts of war or terrorism, insurrection, revolution, nuclear
fusion, fission or radiation, or acts of God.
(b) Consistent with and without limiting the first paragraph of this
Section 12, it is specifically acknowledged that the Bank shall have no duty
or responsibility to:
(i) question Instructions or make any suggestions to the Customer or an
Authorized Person regarding such Instructions;
(ii) supervise or make recommendations with respect to investments or
the retention of Securities;
(iii) advise the Customer or an Authorized Person regarding any
default in the payment of principal or income of any security other than a
Security.
(iv) except as may be otherwise provided in any securities lending
agreement between the Customer and the Bank, evaluate or report to the
Customer or an Authorized Person regarding the financial condition of any
broker, agent or other party to which Securities are delivered or payments
are made pursuant to this Agreement;
(v) except for trades settled at DTC where the broker provides to the
Bank the trade confirmation and the Customer provides for the Bank to receive
the trade instruction, review or reconcile trade confirmations received from
brokers. The Customer or its Authorized Persons (as defined in Section 10)
issuing Instructions shall bear any responsibility to review such
confirmations against Instructions issued to and statements issued by the
Bank.
(c) The Customer authorizes the Bank to act, hereunder, in its capacity
as a custodian notwithstanding that the Bank or any of its divisions or
affiliates may have a material interest in a transaction, or circumstances
are such that the Bank may have a potential conflict of duty or interest
including the fact that the Bank or any of its affiliates may provide
brokerage services to other customers, act as financial advisor to the issuer
of Securities, act as a lender to the issuer of Securities, act in the same
transaction as agent for more than one customer, have a material interest in
the issue of Securities, or earn profits from any of the activities listed
herein.
13. Fees and Expenses.
The Customer agrees to pay the Bank for its services under this
Agreement such amount as may be agreed upon in writing ("Fee Schedule"),
together with the Bank's reasonable out-of-pocket or incidental expenses (as
further defined in the Fee Schedule), including, but not limited to, legal
fees. The Bank shall have a lien on and is authorized to charge any Accounts
of the Customer for any amount owing to the Bank under any provision of this
Agreement.
14. Miscellaneous.
(a) Foreign Exchange Transactions. To facilitate the administration of
the Customer's trading and investment activity, the Bank is authorized to
enter into spot or forward foreign exchange contracts with the Customer or an
Authorized Person for the Customer and may also provide foreign exchange
through its subsidiaries, affiliates or Subcustodians. Instructions,
including standing instructions, may be issued with respect to such contracts
but the Bank may establish rules or limitations concerning any foreign
exchange facility made available. In all cases where the Bank, its
subsidiaries, affiliates or Subcustodians enter into a foreign exchange
contract related to Accounts, the terms and conditions of the then current
foreign exchange contract of the Bank, its subsidiary, affiliate or
Subcustodian and, to the extent not inconsistent, this Agreement shall apply
to such transaction.
(b) Certification of Residency, etc. The Customer certifies that it is
a resident of the United States and agrees to notify the Bank of any changes
in residency. The Bank may rely upon this certification or the certification
of such other facts as may be required to administer the Bank's obligations
under this Agreement. The Customer will indemnify the Bank against all
losses, liability, claims or demands arising directly or indirectly from any
such certifications.
(c) Access to Records. Applicable accounts, books and records of the
Bank shall be open to inspection and audit at all reasonable times during
normal business hours upon reasonable advance notice by Customer s
independent public accountants and by employees of Customer designated to the
Bank. All such materials shall, to the extent applicable, be maintained and
preserved in conformity with the Act and the rules and regulations
thereunder, including without limitation, SEC Rules 31a-1 and 31a-2. Subject
to restrictions under applicable law, the Bank shall also obtain an
undertaking to permit the Customer's independent public accountants
reasonable access to the records of any Subcustodian which has physical
possession of any Assets as may be required in connection with the
examination of the Customer's books and records.
(d) Governing Law; Successors and Assigns. This Agreement shall be
governed by the laws of the State of New York and shall not be assignable by
either party, but shall bind the successors in interest of the Customer and
the Bank.
(e) Entire Agreement; Applicable Riders. Customer represents that the
Assets deposited in the Accounts are Mutual Fund assets subject to certain
Securities and Exchange Commission ("SEC") rules and regulations.
This Agreement consists exclusively of this document together with
Schedules A and B, Appendices 1 and 2, Exhibits I - _______ and the following
Rider(s) [Check applicable rider(s)]:
X MUTUAL FUND
----
X SPECIAL TERMS AND CONDITIONS
----
There are no other provisions of this Agreement, and this Agreement
supersedes any other agreements, whether written or oral, between the
parties. Any amendment to this Agreement must be in writing, executed by
both parties.
(f) Severability. In the event that one or more provisions of this
Agreement are held invalid, illegal or unenforceable in any respect on the
basis of any particular circumstances or in any jurisdiction, the validity,
legality and enforceability of such provision or provisions under other
circumstances or in other jurisdictions and of the remaining provisions will
not in any way be affected or impaired.
(g) Waiver. Except as otherwise provided in this Agreement, no failure
or delay on the part of either party in exercising any power or right under
this Agreement operates as a waiver, nor does any single or partial exercise
of any power or right preclude any other or further exercise, or the exercise
of any other power or right. No waiver by a party of any provision of this
Agreement, or waiver of any breach or default, is effective unless in writing
and signed by the party against whom the waiver is to be enforced.
(h) Notices. All notices under this Agreement shall be effective when
actually received. Any notices or other communications which may be required
under this Agreement are to be sent to the parties at the following addresses
or such other addresses as may subsequently be given to the other party in
writing:
Bank: The Chase Manhattan Bank, N.A.
4 Chase MetroTech Center
Brooklyn, NY 11245
Attention: Global Custody Division
or telex:
-------------------------------------
Customer: Delaware Group of Funds
1818 Market St.
Philadelphia, PA 19103
att: Messrs. Bishof and O Conner
or telex:
--------------------------------------
(i) Termination. This Agreement may be terminated by the Customer or
the Bank by giving sixty (60) days written notice to the other, provided that
such notice to the Bank shall specify the names of the persons to whom the
Bank shall deliver the Assets in the Accounts. If notice of termination is
given by the Bank, the Customer shall, within sixty (60) days following
receipt of the notice, deliver to the Bank Instructions specifying the names
of the persons to whom the Bank shall deliver the Assets. In either case the
Bank will deliver the Assets to the persons so specified, after deducting any
amounts which the Bank determines in good faith to be owed to it under
Section 13. If within sixty (60) days following receipt of a notice of
termination by the Bank, the Bank does not receive Instructions from the
Customer specifying the names of the persons to whom the Bank shall deliver
the Assets, the Bank, at its election, may deliver the Assets to a bank or
trust company doing business in the State of New York to be held and disposed
of pursuant to the provisions of this Agreement, or to Authorized Persons, or
may continue to hold the Assets until Instructions are provided to the Bank;
provided that, where the Bank is the terminating party and the Bank had not
notified the Customer that termination was for breach of this Agreement by
the Customer, such 60 day period shall be extended for an additional period
as requested by Customer of up to 120 days.
Termination as to One or More Series. This Agreement may be terminated
as to one or more Series (but less than all the Series) by delivery of an
amended Schedule A deleting such Series, in which case termination as to the
deleted Series shall take effect sixty (60) days after the date of such
delivery. The execution and delivery of an amended Schedule A which deletes
one or more Series, shall constitute a termination hereof only with respect
to such deleted Series, shall be governed by the preceding provisions of
Section 14 as to the identification of a successor custodian and the delivery
of the Assets of the Series so deleted to such successor custodian, and shall
not affect the obligations of the Bank and the Customer hereunder with
respect to the other Series set forth in Schedule A, as amended from time to
time.
(j) Several Obligations of the Series. With respect to any obligations
of the Customer on behalf of the Series and their related Accounts arising
hereunder, the Custodian shall look for payment or satisfaction of any such
obligation solely to the assets and property of the Series and such Accounts
to which such obligation relates as though the Customer had separately
contracted with the Custodian by separate written instrument with respect to
each Series and its Accounts.
CUSTOMER
By: /s/ Michael P. Bishof
---------------------
Title Vice President and Treasurer
THE CHASE MANHATTAN BANK, N.A.
By: /s/ Rosemary M. Stidmon
-----------------------
Title Vice President
STATE OF Pennsylvania)
: ss.
COUNTY OF Philadelphia)
On this 9th day of July, 1996, before me personally came Michael P. Bishof,
to me known, who being by me duly sworn, did depose and say that he resides
in Blue Bell, PA at 110 Spyglass Drive; that he is Vice President/Treasurer
of Delaware Group of Funds, the entity described in and which executed the
foregoing instrument; that he knows the seal of said entity, that the seal
affixed to said instrument is such seal, that it was so affixed by order of
said entity, and that he signed his name thereto by like order.
/s/ Maritza H. Cruzado
-----------------------
Maritza H. Cruzado
Notary
Sworn to before me this 9th
day of July, 1996.
STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK )
On this 24th day of May, 1996, before me personally came Rosemary
Stidmon, to me known, who being by me duly sworn, did depose and say that she
resides in New Providence, NJ at 31 Sagamore Drive; that she is a Vice
President of THE CHASE MANHATTAN BANK, (National Association), the
corporation described in and which executed the foregoing instrument; that
she knows the seal of said corporation, that the seal affixed to said
instrument is such corporate seal, that it was so affixed by order of the
Board of Directors of said corporation, and that she signed her name thereto
by like order.
Sworn to before me this 24th
day of May, 1996.
/s/ Laiyee Ng
- -------------
Laiyee Ng
Notary
Schedule A
Delaware Pooled Trust, Inc. - Global Fixed Income Portfolio
Delaware Pooled Trust, Inc. - International Equity Portfolio
Delaware Pooled Trust, Inc. - Labor Select International Equity Portfolio
Delaware Pooled Trust, Inc. - Real Estate Investment Trust Portfolio
Delaware Pooled Trust, Inc. - High Yield Portfolio
Delaware Pooled Trust, Inc. - International Fixed Income Portfolio
Delaware Pooled Trust, Inc. - Defensive Equity Utility Portfolio
Delaware Group Global & International Funds, Inc. - International Equity Fund
Delaware Group Global & International Funds, Inc. - Global Assets Fund
Delaware Group Global & International Funds, Inc. - Global Bond Fund
Delaware Group Global & International Funds, Inc. - Emerging Markets Fund
Delaware Group Premium Fund, Inc. - International Equity Series
Delaware Group Premium Fund, Inc. - Equity Income Series
Delaware Group Premium Fund, Inc. - High Yield Series
Delaware Group Premium Fund, Inc. - Capital Reserves Series
Delaware Group Premium Fund, Inc. - Money Market Series
Delaware Group Premium Fund, Inc. - Growth Series
Delaware Group Premium Fund, Inc. - Multiple Strategy Series
Delaware Group Premium Fund, Inc. - Value Series
Delaware Group Premium Fund, Inc. - Emerging Growth Series
Delaware Group Premium Fund, Inc. - Global Bond Series
Delaware Group Delchester High-Yield Bond Fund, Inc.
Delaware Group Delaware Fund, Inc. - Delaware Fund
Delaware Group Delaware Fund, Inc. - Devon Fund
Delaware Group Value Fund, Inc.
Delaware Group DelCap Fund, Inc.
Delaware Group Dividend & Income Fund, Inc.
Delaware Group Advisor Funds, Inc. - Enterprise Fund
Delaware Group Advisor Funds, Inc. - U.S. Growth Fund
Delaware Group Advisor Funds, Inc. - World Growth Fund
Delaware Group Advisor Funds, Inc. - New Pacific Fund
Delaware Group Advisor Funds, Inc. - Federal Bond Fund
Delaware Group Advisor Funds, Inc. - Corporate Income Fund
March, 1996 Schedule B
SUB-CUSTODIANS EMPLOYED BY
THE CHASE MANHATTAN BANK, N.A. LONDON, GLOBAL CUSTODY
<TABLE>
<CAPTION>
<S> <C> <C>
COUNTRY SUB-CUSTODIAN CORRESPONDENT BANK
ARGENTINA The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Arenales 707, 5th Floor Buenos Aires
De Mayo 130/140
1061Buenos Aires
ARGENTINA
AUSTRALIA The Chase Manhattan Bank The Chase Manhattan Bank
Australia Limited Australia Limited
36th Floor Sydney
World Trade Centre
Jamison Street
Sydney
New South Wales 2000
AUSTRALIA
AUSTRIA Creditanstalt - Bankverein Credit Lyonnais
Schottengasse 6 Vienna
A - 1011, Vienna
AUSTRIA
BANGLADESH Standard Chartered Bank Standard Chartered Bank
18-20 Motijheel C.A. Dhaka
Box 536,
Dhaka-1000
BANGLADESH
BELGIUM Generale Bank Credit Lyonnais Bank
3 Montagne Du Parc Brussels
1000 Bruxelles
BELGIUM
BOTSWANA Barclays Bank of Botswana Limited Barclays Bank of Botswana
Barclays House Gaborone
Khama Crescent
Gaborone
BOTSWANA
BRAZIL Banco Chase Manhattan, S.A. Banco Chase Manhattan S.A.
Chase Manhattan Center Sao Paulo
Rua Verbo Divino, 1400
Sao Paulo, SP 04719-002
BRAZIL
CANADA The Royal Bank of Canada Royal Bank of Canada
Royal Bank Plaza Toronto
Toronto
Ontario M5J 2J5
CANADA
Canada Trust Royal Bank of Canada
Canada Trust Tower Toronto
BCE Place
161 Bay at Front
Toronto
Ontario M5J 2T2
CANADA
CHILE The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Agustinas 1235 Santiago
Casilla 9192
Santiago
CHILE
COLOMBIA Cititrust Colombia S.A. Cititrust Colombia S.A.
Sociedad Fiduciaria Sociedad Fiduciaria
Carrera 9a No 99-02 Santafe de Bogota
Santafe de Bogota, DC
COLOMBIA
CZECH REPUBLIC
Ceskoslovenska Obchodni Banka, A.S. Komercni Banka, A.S.,
Na Prikope 14 Praha
115 20 Praha 1
CZECH REPUBLIC
DENMARK Den Danske Bank Den Danske Bank
2 Holmens Kanala DK 1091 Copenhagen
Copenhagen
DENMARK
EGYPT National Bank of Egypt National Bank of Egypt
24 Sherif Street Cairo
Cairo
EGYPT
EUROBONDS Cedel S.A. ECU:Lloyds Bank PLC
67 Boulevard Grande Duchesse Charlotte International Banking Division
LUXEMBOURG London
A/c The Chase Manhattan Bank, N.A. For all other currencies: see
London relevant country
A/c No. 17817
EURO CDS First Chicago Clearing Centre ECU:Lloyds Bank PLC
27 Leadenhall Street Banking Division London
London EC3A 1AA For all other currencies: see
UNITED KINGDOM relevant country
FINLAND Merita Bank KOP Merita Bank KOP
Aleksis Kiven 3-5 Helsinki
00500 Helsinki
FINLAND
FRANCE Banque Paribas Societe Generale
Ref 256 Paris
BP 141
3, Rue D'Antin
75078 Paris
Cedex 02
FRANCE
GERMANY Chase Bank A.G. Chase Bank A.G.
Alexanderstrasse 59 Frankfurt
Postfach 90 01 09
60441 Frankfurt/Main
GERMANY
GHANA Barclays Bank of Ghana Barclays Bank
Barclays House Accra
High Street
Accra
GHANA
GREECE Barclays Bank Plc National Bank of Greece S.A.
1 Kolokotroni Street Athens
10562 Athens A/c Chase Manhattan Bank, N.A.,
GREECE London
A/c No. 040/7/921578-68
HONG KONG The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
40/F One Exchange Square Hong Kong
8, Connaught Place
Central, Hong Kong
HONG KONG
HUNGARY Citibank Budapest Rt. Citibank Budapest Rt.
Vaci Utca 19-21 Budapest
1052 Budapest V
HUNGARY
INDIA The Hongkong and Shanghai The Hongkong and Shanghai
Banking Corporation Limited Banking Corporation Limited
52/60 Mahatma Gandhi Road Bombay
Bombay 400 001
INDIA
Deutsche Bank AG, Bombay Branch Deutsche Bank
Securities & Custody Services Bombay
Kodak House
222 D.N. Road, Fort
Bombay 400 001
INDIA
INDONESIA The Hongkong and Shanghai The Chase Manhattan Bank, N.A.
Banking Corporation Limited Jakarta
World Trade Center
J1. Jend Sudirman Kav. 29-31
Jakarta 10023
INDONESIA
IRELAND Bank of Ireland Allied Irish Bank
International Financial Services Centre Dublin
1 Harbourmaster Place
Dublin 1
IRELAND
ISRAEL Bank Leumi Le-Israel B.M. Bank Leumi Le-Israel B.M.
19 Herzl Street Tel Aviv
61000 Tel Aviv
ISRAEL
ITALY The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Piazza Meda 1 Milan
20121 Milan
ITALY
JAPAN The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
1-3 Marunouchi 1-Chome Tokyo
Chiyoda-Ku
Tokyo 100
JAPAN
JORDAN Arab Bank Limited Arab Bank Limited
P O Box 950544-5 Amman
Amman
Shmeisani
JORDAN
KENYA Barclays Bank of Kenya Barclays Bank of Kenya
Third Floor Nairobi
Queensway House
Nairobi
Kenya
LUXEMBOURG
Banque Generale du Luxembourg S.A. Banque Generale du Luxembourg
50 Avenue J.F. Kennedy S.A.
L-2951 LUXEMBOURG Luxembourg
MALAYSIA The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Pernas International Kuala Lumpur
Jalan Sultan Ismail
50250, Kuala Lumpur
MALAYSIA
MAURITIUS Hongkong and Shanghai Banking The Hongkong and Shanghai Banking
Corporation Ltd Corporation Ltd.
Curepipe Road Curepipe
Curepipe
MAURITIUS
MEXICO The Chase Manhattan Bank, S.A. No correspondent Bank
(Equities)Montes Urales no. 470, 4th Floor
Col. Lomas de Chapultepec
11000 Mexico D.F.
(Government Banco Nacional de Mexico, No correspondent Bank
Bonds) Avenida Juarez No. 104 - 11 Piso
06040 Mexico D.F.
MEXICO
MOROCCO Banque Commerciale du Maroc Banque Commerciale du Maroc
2 Boulevard Moulay Youssef Casablanca
Casablanca 20000
MOROCCO
NETHERLANDS
ABN AMRO N.V. Generale Bank
Securities Centre Nederland N.V.
P O Box 3200 Rotterdam
4800 De Breda
NETHERLANDS
NEW ZEALAND
National Nominees Limited National Bank of New Zealand
Level 2 BNZ Tower Wellington
125 Queen Street
Auckland
NEW ZEALAND
NORWAY Den Norske Bank Den Norske Bank
Kirkegaten 21 Oslo
Oslo 1
NORWAY
PAKISTAN Citibank N.A. Citibank N.A.
I.I. Chundrigar Road Karachi
AWT Plaza
Karachi
PAKISTAN
Deutsche Bank Deutsche Bank
Unitowers Karachi
I.I. Chundrigar Road
Karachi
PAKISTAN
PERU Citibank, N.A. Citibank N.A.
Camino Real 457 Lima
CC Torre Real - 5th Floor
San Isidro, Lima 27
PERU
PHILIPPINES
The Hongkong and Shanghai The Hongkong and Shanghai
Banking Corporation Limited Banking Corporation Limited
Hong Kong Bank Centre 3/F Manila
San Miguel Avenue
Ortigas Commercial Centre
Pasig Metro Manila
PHILIPPINES
POLAND Bank Polska Kasa Opieki S.A. Bank Polska Kasa Opieki S.A.
Curtis Plaza Warsaw
Woloska 18
02-675 Warsaw
POLAND
For Mutual Funds:
Bank Handlowy W. Warsawie. S.A. Bank Polska Kasa Opieki S.A.
Custody Dept. Warsaw
Capital Markets Centre
Ul, Nowy Swiat 6/12
00-920 Warsaw
POLAND
PORTUGAL Banco Espirito Santo & Comercial Banco Nacional Ultra Marino
de Lisboa Lisbon
Servico de Gestaode Titulos
R. Mouzinho da Silveira, 36 r/c
1200 Lisbon
PORTUGAL
SHANGHAI The Hongkong and Shanghai Citibank
(CHINA) Banking Corporation Limited New York
Shanghai Branch
Corporate Banking Centre
Unit 504, 5/F Shanghai Centre
1376 Nanjing Xi Lu
Shanghai
THE PEOPLE'S REPUBLIC OF CHINA
SHENZHEN The Hongkong and Shanghai The Chase Manhattan Bank, N.A.
(CHINA) Banking Corporation Limited Hong Kong
1st Floor
Central Plaza Hotel
No.1 Chun Feng Lu
Shenzhen
THE PEOPLE'S REPUBLIC OF CHINA
SINGAPORE The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Shell Tower Singapore
50 Raffles Place
Singapore 0104
SINGAPORE
SLOVAK REPUBLIC
Ceskoslovenska Obchodni Banka, A.S. Ceskoslovenska Obchodni Banka
Michalska 18 Slovak Republic
815 63 Bratislava
SLOVAK REPUBLIC
SOUTH AFRICA
Standard Bank of South Africa Standard Bank of South Africa
Standard Bank Chambers South Africa
46 Marshall Street
Johannesburg 2001
SOUTH AFRICA
SOUTH KOREA
The Hongkong & Shanghai The Hongkong & Shanghai
Banking Corporation Limited Banking Corporation Limited
6/F Kyobo Building Seoul
#1 Chongro, 1-ka Chongro-Ku,
Seoul
SOUTH KOREA
SPAIN The Chase Manhattan Bank, N.A. Banco Bilbao Vizcaya,
Calle Peonias 2 Madrid
7th Floor
La Piovera
28042 Madrid
SPAIN
SRI LANKA The Hongkong & Shanghai The Hongkong & Shangai
Banking Corporation Limited Banking Corporation Limited
Unit #02-02 West Block, Colombo
World Trade Center
Colombo 1,
SRI LANKA
SWEDEN Skandinaviska Enskilda Banken Svenska Handelsbanken
Kungstradgardsgatan 8 Stockholm
Stockholm S-106 40
SWEDEN
SWITZERLAND
Union Bank of Switzerland Union Bank of Switzerland
45 Bahnhofstrasse Zurich
8021 Zurich
SWITZERLAND
TAIWAN The Chase Manhattan Bank, N.A. No correspondent Bank
115 Min Sheng East Road - Sec 3,
9th Floor
Taipei
TAIWAN
Republic of China
THAILAND The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Bubhajit Building Bangkok
20 North Sathorn Road
Silom, Bangrak
Bangkok 10500
THAILAND
TUNISIA Banque Internationale Arabe de Tunisie Banque Internationale Arabe de
70-72 Avenue Habib Bourguiba Tunisie, Tunisia
P.O. Box 520
1080 Tunis Cedex
Tunisia
TURKEY The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Emirhan Cad. No: 145 Istanbul
Atakule, A Blok Kat:11
80700-Dikilitas/Besiktas
Istanbul
Turkey
U.K. The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Woolgate House London
Coleman Street
London EC2P 2HD
UNITED KINGDOM
URUGUAY The First National Bank of Boston The First National Bank of Boston
Zabala 1463 Montevideo
Montevideo
URUGUAY
U.S.A. The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
1 Chase Manhattan Plaza New York
New York
NY 10081
U.S.A.
VENEZUELA Citibank N.A. Citibank N.A.
Carmelitas a Altagracia Caracas
Edificio Citibank
Caracas 1010
VENEZUELA
ZAMBIA Barclays Bank of Zambia Barclays Bank of Zambia
Kafue House Lusaka
Cairo Road
P.O.Box 31936
Lusaka
ZAMBIA
ZIMBABWE Barclays Bank of Zimbabwe Barclays Bank of Zimbabwe
Ground Floor Harare
Tanganyika House
Corner of 3rd Street & Union Avenue
Harare
ZIMBABWE
</TABLE>
<PAGE>
Form of Agreement
Subject to Board Approval
___________, 1996
Bankers Trust Company
One Bankers Trust Plaza
New York, NY 10006
USA
RE: Securities Lending Agreement
Dear Sirs:
This letter will confirm our agreement, as set forth below, pursuant to
which Bankers Trust Company ("BTC") will be authorized to lend on our behalf
certain securities held by BTC as trustee and/or custodian:
1. Appointment of Agent
(a) Until this Agreement is terminated pursuant to Section 11, BTC is
authorized as our agent to lend on a disclosed basis our securities held in
custody by BTC to such borrowers as appear on your approved list of borrowers, a
copy of which you may obtain at any time upon request, at the time of any loan
and on such terms as BTC shall in its sole discretion decide. Such borrowers may
include Bankers Trust International PLC, an affiliate of BTC, if we provide BTC
with our authorization in the form attached as Exhibit A hereto, and certain
United Kingdom entities, if we provide BTC with our authorization in the form
attached hereto as Exhibit B. BTC shall further be authorized as our agent to
sign agreements with borrowers, ownership or other certificates as may be
required by the Internal Revenue Service or any other tax authorities, and to
take any other actions necessary to effect such loans.
(b) We acknowledge that BTC acts as agent for other securities lending
clients who may hold some of the same securities as we may hold and,
accordingly, that any given loan to a borrower may be allocated among several of
BTC's clients. We agree that BTC shall have full discretion to allocate such
loans among BTC's clients as it deems appropriate and shall have no obligation
to include us in any such allocation.
(c) We represent that:(i) [COMPANY] is a ________________ established
pursuant to _____________________; (ii) we have and will have the right to lend
<PAGE>
the securities subject to loans hereunder; (iii) the assets subject to this
Agreement [do / do not] consist of assets which are deemed to be plan assets
under the Employee Retirement Income Security Act of 1974, or the Internal
Revenue Code of 1986, each as amended; (iv) the execution, delivery and
performance of this Agreement are within our powers, have been and remain duly
authorized by all necessary action and will not violate or constitute a default
under any applicable law or regulation or of any decree, order, judgment,
agreement or instrument binding on us; (v) no consent (including, but not
limited to, exchange control consents) of any applicable governmental authority
or body is necessary, except for such consents as have been obtained and are in
full force and effect, and all conditions of which have been duly complied with;
and (vi) this Agreement constitutes a legal, valid and binding obligation
enforceable against us in accordance with its terms.
2. Remuneration
Unless otherwise agreed, BTC shall pay us a fee for each loan equal to an
agreed percentage of (a) in the case of loans not collateralized by cash, the
fee paid by the borrower to BTC with respect to each loan, and (b) in the case
of loans collateralized by cash, the difference between (i) the net realized
income derived from approved investments of the cash collateral, minus (ii) the
borrower's rebate. BTC shall receive any fee paid by the borrower and, provided
that BTC shall have actually received payment of such fees from the borrower,
credit our portion of such fees to our account monthly.
3. Statements of Loan Activity and Fees
BTC shall promptly advise us by written or electronic means of any loan
entered into by BTC on our behalf. In addition, BTC shall send us a monthly
statement summarizing securities lending activity (including revenues therefrom)
for the previous month effected by BTC on our behalf.
4. Distributions on Loaned Securities and Collateral
All borrowers shall be required to pay or otherwise deliver to BTC all
substitute payments in respect of interest payments, dividends, or other
distributions made on the loaned securities. Such payments shall be credited by
BTC to our account upon receipt by BTC of such payments from the borrower,
unless otherwise agreed upon by the parties. We authorize BTC to pay, provided
that the borrower is not in default under its agreement with BTC, to the
borrower all interest payments received by BTC on Government Securities (as
defined in Section 6(a)) held by BTC as collateral for our loans.
5. Recalls of Securities
(a) Unless otherwise agreed by us, we may instruct BTC to terminate any loan
in whole or in part by giving BTC written notice thereof (a "Recall Notice").
BTC shall thereupon promptly recall the securities from the borrower, within the
recall period specified by BTC's agreement with the borrower, which
<PAGE>
shall not be later than the fifth business day (but, in the case of U.S. equity
securities, the third business day, and, in the case of Government Securities,
the first business day) following the business day on which BTC gives a notice
recalling the securities to the borrower (the "Recall Period"). If, on the day
BTC receives the Recall Notice, (i) the borrower is closed for business or (ii)
the principal market for the loaned securities is closed for trading, the Recall
Period will commence on the next business day on which both the borrower and the
principal trading market are open.
(b) If any loaned security is not returned by a borrower by the expiration
of the applicable recall period, BTC shall notify us of such fact. BTC shall
take all steps which BTC deems appropriate to secure the prompt return of the
securities pursuant to BTC's agreement with the borrower (which may include the
liquidation of collateral and the purchase of replacement securities).
6. Collateral
(a) Unless otherwise indicated to us by BTC, prior to or simultaneously with
the delivery of our securities to a borrower, BTC shall obtain and hold on our
behalf collateral having a value not less than the value (the "Margin
Requirement") specified in Exhibit C hereto. The collateral shall consist of (i)
cash, (ii) securities issued or guaranteed by the United States Government or
its agencies ("Government Securities"), or (iii) letters of credit issued by
banks as may be acceptable to BTC.
(b) BTC will mark to market loaned securities and collateral (if the
collateral is represented by Government Securities) on a daily basis, and if on
any day, the aggregate market value of the collateral held by BTC for loans made
to any one borrower is less than the Margin Requirement, BTC shall obtain from
such borrower pursuant to BTC's agreement with the borrower such additional
collateral so that the aggregate market value of the collateral is not less than
the Margin Requirement. We understand that BTC may be obligated to release
collateral in excess of the Margin Requirement to the borrower when so required
by BTC's agreement with the borrower.
(c) We authorize BTC to invest, on our behalf and for our account, any cash
collateral received from a borrower in any of the instruments described in
Exhibit C hereto, including any such instrument issued by, purchased through or
entered into with BTC or its affiliates. We acknowledge that such cash
collateral is invested at our risk, and if, upon termination of any loan, the
cash collateral held by BTC for our account is less than the amount required to
be returned to the borrower under BTC's agreement with the borrower, we will
provide BTC with cash in the amount of any such deficiency.
7. Indemnification
(a) In the event that any loan is terminated and the loaned Securities or
any portion thereof shall not have been returned to BTC by or on behalf of
<PAGE>
Borrower within the time specified by BTC's agreement with the borrower, BTC
shall at its expense (i) within one (1) business day after the expiration of the
Recall Period, replace the loaned Securities (or any portion thereof not so
returned) with a like amount of the loaned securities of the same issuer, class
and denomination, and hold us harmless from any brokerage commission, fees, and
New York State or City transfer taxes incurred by BTC in the purchase of such
replacement securities or (ii) if BTC is unable to purchase such securities on
the open market, credit our account with an amount of cash in U.S. dollars equal
to the Market Value (as defined below) of such unreturned loaned Securities
determined at the close of business as of the date on which the loaned
Securities should have been returned plus, until such time as the events in (i)
or (ii) are consummated, all financial benefits derived from the beneficial
ownership of the loaned Securities which have accrued on the loaned Securities
whether or not received from Borrower. The Market Value of any securities listed
on a national securities exchange will be the last sales price on the principal
exchange on which trading occurred on the date the Market Value is determined
or, if there was no sale on any such exchange on such date, the last bid price
quoted. The Market Value of securities traded in the over-the-counter market
will be the last quoted bid price in the over-the-counter market as reported by
the National Quotation Bureau Incorporated or any successor organization. The
Market Value of Government Securities shall be the price as quoted by a
generally recognized pricing service for the business day preceding the date of
determination (or, if not so quoted on such day, the next preceding day on which
they were so quoted). The Market Value of securities the principal trading
market for which is outside the United States will be the last sale price on the
principal exchange on which they are traded, or if there was no sale on that
date, the last sale price on the next preceding day on which there was such a
sale on such exchange, all as quoted in the DataSheet Service of the Interactive
Data Corporation, or, if not therein quoted, then as quoted by any such
exchange; the foreign exchange rate used to calculate the Market Value of
foreign securities not denominated in U.S. dollars shall be the foreign exchange
rate quoted by Bankers Trust Company at the close of business in New York on the
preceding day. The Market Value of securities for which market quotations are
not readily available over a reasonable period of time, will be the average of
values quoted by three major investment banking firms which are mutually
agreeable to BTC and us.
(b) In the event that BTC shall be required to make any payment to us or
shall incur any loss or expense pursuant to (a) above, it shall, to the extent
of such payment or loss or expense, be subrogated to, and succeed to, all of our
rights against the borrower and to the collateral involved; to the extent the
collateral consists of cash or Government Securities, we shall contemporaneously
with any such payment to us by BTC surrender same to BTC for its sole
disposition.
(c) Except as provided in this Section 7, BTC shall have no liability to us
for any failure of a borrower to return loaned securities.
8. BTC's Relationship with a Borrower.
<PAGE>
We acknowledge that BTC and/or its affiliates may be a creditor of, for its
own account or in a fiduciary capacity, or generally engage in any kind of
commercial or investment banking business with, a borrower to whom BTC has lent
our securities. Without limiting the generality of the foregoing, BTC shall not
be required to disclose to us any financial information about a borrower
obtained in the course of its relationship with such borrower.
9. Notices
All notices under this Agreement, including Recall Notices, shall be in
writing and sent by mail or facsimile, addressed as follows:
If to BTC:
Bankers Trust Company
c/o BTNY Services, Inc.
34 Exchange Place
Jersey City, NJ 07302
U.S.A.
Attention: Securities Lending Unit
Facsimile No.: (201) 860-2587
If to us:
[CLIENT NAME]
[ADDRESS]
ATTENTION:
FACSIMILE NO.:
Notices shall be effective upon receipt. The address indicated above
for either party may be changed by prior written notice to the other party.
10. Indemnification and Reimbursement of Agent, etc.
(a) We agree to indemnify BTC and to hold BTC harmless from any liabilities,
losses, costs or expenses (including reasonable attorneys' fees) which BTC may
incur in connection with this Agreement or the transactions contemplated hereby;
provided that such indemnification shall not extend to liabilities, losses,
costs or expenses to the extent that such liabilities, losses, costs or expenses
(i) are found by a final judgment of a court of competent jurisdiction to have
resulted from BTC's own willful misconduct or gross negligence or (ii) result
from BTC's indemnity provided in Section 7.
(b) We agree that BTC's duties and responsibilities shall only be those
expressly set forth herein and that BTC may consult with counsel and be fully
<PAGE>
protected with respect to any action taken or omitted to be taken in good faith
upon advice of such counsel.
(c) We agree that BTC may rely on any certificate, statement, request,
consent, agreement or other instrument which it believes to be genuine and to
have been signed or presented by a proper person or persons.
11. Termination
Either party may terminate this Agreement by giving not less than five
business days written notice to the other party. Such termination shall be
effective on the date specified therein, provided that such termination notice
shall not constitute a notice pursuant to Section 5 unless so specified by us,
and further provided that this Agreement shall continue to govern all
outstanding loans until the termination thereof.
12. Governing Law and Legal Proceedings
(a) This Agreement shall be governed by and construed in accordance with the
laws of the State of New York (without giving effect to conflicts of laws
principles thereof).
(b) We hereby agree that any legal action or proceeding arising out of or
relating to this Agreement may be brought in the courts of the State of New
York, the courts of the United States of America located in the City of New York
or in any other court having jurisdiction with respect thereto, and we hereby
irrevocably consent to service of process in any said action or proceeding in
any of such courts by the mailing of copies thereof, postage prepaid, to us at
[ADDRESS OF DESIGNATED AGENT FOR SERVICE OF PROCESS IN NEW YORK], such service
to be effective 10 days after such mailing. We hereby waive, in relation to any
such action or proceeding, [any sovereign immunity or other immunity to suit or
to the execution or attachment (whether before or after judgment) to which we or
any of our property may be or become entitled, or](1) any defense to any action
or proceeding based on venue or that the action has been brought in an
inconvenient forum.
13. Force Majeure
Notwithstanding any other provision contained herein, BTC shall not be
liable for any action taken, or any failure to take any action required to be
taken hereunder or otherwise to fulfill BTC's obligations hereunder in the event
and to the extent that the taking of such action or such failure arises out of
or is caused by acts of governmental authorities (whether de jure or de facto),
- --------
(1) Can delete for U.S. Clients
<PAGE>
including nationalization, expropriation, the imposition of currency
restrictions, war, insurrection, riot, revolution, terrorism or civil commotion;
acts of God, accident, fire, water damage, explosion, hurricane, cyclone,
earthquake, volcanic eruption, nuclear fusion, fission, or radioactivity;
mechanical breakdown, computer or system failure or computer virus, failure or
malfunctioning of any communications media for whatever reason; interruption
(whether partial or total) of power supplies or other utility or service; strike
or other stoppage (whether partial or total) of labor; any law, decree,
regulation or order of any government or governmental body (including any court
or tribunal); or any other cause (whether similar or dissimilar to any of the
foregoing) whatsoever beyond BTC's control.
14. Miscellaneous
This Agreement constitutes the entire agreement of the parties with respect
to BTC's acting as our agent in connection with the loan of our securities which
we have placed in custody with BTC, and supersedes all prior understandings,
written or oral, or any previous agreement with respect thereto. Neither party
shall be bound by any modifications of this Agreement unless it has so agreed in
writing.
If the terms hereof accurately reflect our agreement, please so indicate by
signing below.
[CLIENT NAME]
By: _____________________
Name:
Title:
AGREED TO AND ACCEPTED BY
AS OF THE DATE HEREOF:
BANKERS TRUST COMPANY
By: _______________________
Name:
Title:
<PAGE>
Exhibit A
Authorization to Lend to Bankers Trust International PLC
The following procedures will be employed to ensure that each loan to
Bankers Trust International ("BTI"), wholly owned subsidiary established under
English law of Bankers Trust Company ("Bankers Trust"), is made in conformity
with the requirements of the Department of Labor.
1. Loans of securities to BTI will be competitively negotiated. Each
prospective transaction with BTI will be evaluated by comparing rates and terms
offered by BTI to those offered by other unrelated borrowers on our approved
list of borrowers. Any loan of securities to BTI will be at market rates and in
no event less favorable than a loan of such securities, if such loan could be
made at the same time under the same circumstances to an unaffiliated borrower.
2. Bankers Trust will maintain transactional and market records which
contain information to assure that all loans made to BTI are effectively at
arms-length terms. These records will contain data pertaining to loans made to
BTI and other bids, if any, made for such loans or other rates on similar loans
by unaffiliated borrowers. You may obtain a copy of such records upon written
request.
3. As is the case with loans to unrelated approved borrowers, if prevailing
market interest or rebate rates change, the rates on outstanding loans to BTI
will be adjusted accordingly.
4. All loans to BTI will be made on terms which are substantively identical
to those contained in the standard Bankers Trust UK Securities Lending Agreement
("the Securities Lending Agreement"), which is our contract for loans to
unrelated approved UK borrowers. Among other things, the Securities Lending
Agreement with BTI will provide the lending client with all right, title and
interest in the collateral delivered by the borrower.
A copy of the BTI Securities Lending Agreement is available to you at any
time upon request. We will provide you at least thirty (30) days advance written
notice of any substantive amendments or changes to the Securities Lending
Agreement with BTI.
5. As is Bankers Trust's present policy for all loans to unrelated
borrowers, any and all loans to BTI will be:
(a) Collateralized for each loan transaction in an amount equal to the
agreed upon percentage, which shall be at least 102% of the market value of
securities, plus accrued interest (in the case of debt securities). We will mark
loans to market on a daily basis to ensure that the loan collateral is
maintained at the agreed upon percentage.
<PAGE>
As is the case with loans to unrelated approved borrowers, permissible
collateral will include any combination of the following:
- Cash collateral which will be invested for you if you so request by
Bankers Trust, in the investment vehicle that you have chosen for the investment
of your cash collateral, a current description of which is available upon
request.
- Securities issued or guaranteed by the United States Government or any
agency thereof.
- Letters of credit issued by banks as may be acceptable to Bankers Trust (a
current list of such institutions is available upon request, at any time.) In no
event will Bankers Trust, or any affiliate of Bankers Trust, be the issuer of a
letter of credit in connection with the securities lending program.
(b) Cancelable by you or by Bankers Trust at any time. Upon termination of a
loan, the securities are required to be returned to us as your agent on the day
that would be the standard settlement day in the principal market in which
securities are traded, for transactions effected on the business day on which
Bankers Trust as your agent gives notice of termination to BTI, in no event to
exceed 5 business days in the market in which the security is traded.
6. You may receive a copy of BTI's most recent available audited and
unaudited financial statements upon request. Should we believe there to be any
material adverse change in the financial condition of BTI, we will promptly
advise you of such change and ask you for your approval to continue lending to
BTI.
7. In case of a default by BTI in any securities loan transaction, Bankers
Trust will promptly notify you of such fact and use all appropriate means as
your agent to enforce your rights under the BTI Securities Lending Agreement
against BTI. In such event, you may, if you so choose, at your expense, assume
the rights of Bankers Trust to enforce the terms of the BTI Securities Lending
Agreement against BTI.
8. The current monthly report furnished to you, covering all securities
loans outstanding in the previous month, enables you to review all lending
activity for your account, including BTI loans and all other loan transactions.
The format includes a list of outstanding loans and loans that terminated during
the prior month, showing the number of securities involved, value of securities
and collateral, daily and monthly rate of interest or rebate rates and number of
days securities have been out on loan. A weekly report of specific outstanding
loans is also available, upon request.
By:__________________________
Name:
Title:
<PAGE>
Exhibit B
LOANS TO UK COUNTERPARTIES
Certain of the borrowers to which Bankers Trust Company ("BTC") may loan our
securities held in trust and/or custody are entities which are organized and
existing under the laws of the United Kingdom ("UK Counterparties"). Loans to UK
Counterparties will be made by BTC as our agent pursuant to a form of securities
lending agreement governed by the laws of the United Kingdom (the "UK
Agreement") which is available to us upon request.
[In order to ensure that securities loans to such UK Counterparties which do
not at the present time meet the requirements of Prohibited Transaction
Exemption 81-6 or another available exemption do not result in a prohibited
transaction under ERISA, BTC will require such borrowers to represent to BTC
that they are not a "party in interest" within the meaning of ERISA with respect
to any pension or retirement plan the assets of which are being lent.](2)
By signing this authorization, we grant our consent to BTC making, on our
behalf, the following representations and warranties to such UK Counterparties:
(1) We are duly authorized and empowered to perform our respective
duties and obligations under the UK Agreement;
(2) We are not restricted under the terms of our constitution or
in any other manner from lending securities in accordance with
the UK Agreement or from otherwise performing our obligations
thereunder; and
(3) We are absolutely entitled to pass full beneficial ownership
of all securities loaned under the UK Agreement to the
applicable UK Counterparty free from all liens, charges and
encumbrances.
We authorize BTC as our agent to(a) disclose our name to the UK Inland
Revenue for approval of us as an approved lender to a UK Counterparty and (b)
undertake to the Inland Revenue on our behalf to lend securities on certain
specified terms, with which BTC as our agent will comply. We agree to provide
BTC with all documents, certificates or other information necessary to enable
BTC to make the appropriate filings on our behalf with the Inland Revenue to
become an approved lender to UK Counterparties. [We understand such approval is
necessary to enable the UK Counterparty to make manufactured payments in respect
of interest, dividends or other distributions on the loaned securities without
deduction of [UK] withholding tax.](3) [We understand such approval is necessary
in order to prevent certain UK tax costs arising for the UK Counterparty.](4)
- --------
2 For ERISA clients.
3 For use with clients resident and subject to tax in a jurisdiction having a
double tax treaty with the UK containing an "other income" article exempting
such income from UK tax.
4 For use with other clients.
<PAGE>
In order to make loans to UK Counterparties, we understand that we will be
required to submit to the non-exclusive jurisdiction of the courts of England in
connection with any disputes which may arise out of or in connection with the UK
Agreement, and waive any objection to proceedings in such courts whether on the
grounds of sovereignty, venue or that the proceedings have been brought in an
inconvenient forum. By signing this authorization, we also consent to BTC's
entering into such agreements on our behalf.
Except as specifically described above, all provisions of the
Securities Lending Agreement between us and BTC shall be applicable to loans to
UK Counterparties.
THE LENDING OF SECURITIES TO UK COUNTERPARTIES IS AUTHORIZED UNDER THE
PROCEDURES DESCRIBED ABOVE SUBJECT TO ANY LIMITATIONS SET FORTH BELOW.
By:________________________
Name:
Title:
<PAGE>
EXHIBIT C
I. Margin Requirements Referred to in Section 6(a)
For loans of securities the principal trading market for which is in
the United States, 102%, and for loans of securities the principal trading
market for which is outside the United States, 105%, of the aggregate market
value of the loaned securities plus any accrued but unpaid distributions
thereon.
II. Investment Vehicles Referred to in Section 6 (c)
[List]
<PAGE>
___________, 1996
Bankers Trust Company
One Bankers Trust Plaza
New York, NY 10004
U.S.A.
Re: Securities Lending Agreement
Dear Sirs:
In accordance with Section 2 of the securities lending agreement
between you and us dated ___________ 1996, we hereby confirm our agreement that
the fee paid by the borrower with respect to each loan of securities thereunder
shall be apportioned between us as __% for us and __% for BTC.
Very truly yours,
[CUSTOMER]
By: _____________________
Name:
Title:
AGREED TO AND ACCEPTED:
BANKERS TRUST COMPANY
By: _______________________
Name:
Title:
SECURITIES LENDING AGREEMENT ("Lending Agreement"), dated as of
, 1996 between ("Lender"), having its principal
place of business at , and The
Chase Manhattan Bank, N.A. ("Chase"), having its principal place of business at
One Chase Manhattan Plaza, New York, New York 10081.
It is hereby agreed as follows:
Section 1 - Definitions
Unless the context clearly requires otherwise, the following words
shall have the meanings set forth below when used herein:
a. "Account" shall mean the securities account established and maintained by
Chase on behalf of Lender pursuant to, as the case may be, a separate custody
agreement or a separate directed trust agreement ("Agreement") between Chase and
Lender, which Agreement provides, inter alia, for the safekeeping of Securities
received by Chase from time to time on behalf of Lender.
b. "Agreement" shall have the meaning assigned thereto in Section 1(a)
hereof.
c. "Authorized Investment" shall mean any type of instrument, security,
participation or other property in which Cash Collateral may be invested or
reinvested, as described in Section 5(f) hereof and Appendix 4 hereto (and as
such Appendix may be amended from time to time by written agreement of the
parties).
d. "Authorized Person" shall mean, except to the extent that Chase is
advised to the contrary by Proper Instruction, any person who is authorized to
give instructions to Chase pursuant to the Agreement and any mandates given to
Chase in connection with such Agreement. An Authorized Person shall continue to
be so until such time as Chase receives Proper Instructions that nay such person
is no longer an Authorized Person.
e. "Borrower" shall mean an entity listed on Appendix 1 hereto, other than
an entity which Chase shall have been instructed to delete from list pursuant to
Written Instructions and as such Appendix may be amended in accordance with
Section 4(b) hereof.
f. "Business Day" shall have the meaning assigned thereto in the applicable
MSLA.
g. "Buy-in" shall have the meaning assigned thereto in Section 7(c) hereof.
<PAGE>
h. "Cash Collateral" shall mean fed funds, New York Clearing House
Association funds and such non-U.S. currencies as may be pledged by a Borrower
in connection with a particular Loan.
i. "Collateral" shall have the meaning assigned thereto in the applicable
MSLA, together with Cash Collateral.
j. "Collateral Account" shall mean, as the case may be, an account
maintained by Chase with itself, with any Depository or with any Triparty
Institution and designated as a Collateral Account for the purpose of holding
any one or more of Collateral, Authorized Investments, and Proceeds in
connection with Loans hereunder.
k. "Collateral Amount" shall have the meaning assigned thereto in Section
5(c) hereof.
l. "Collateral Criterion" shall have the meaning assigned thereto in Section
5(c) hereof.
m. "Depository" shall mean: (1) the Depository Trust Company, the
Participants' Trust Company and any other securities depository or clearing
agency (and each of their respective successors and nominees) registered with
the U.S. Securities and Exchange Commission or registered with or regulated by
the applicable foreign equivalent thereof or otherwise able to act as a
securities depository or clearing agency, (ii) any transnational depository,
(iii) the Federal Reserve book-entry system for the receiving and delivering of
U.S. Government Securities, and (iv) any other national system for the receiving
and delivering of that country's government securities.
n. "Difference" shall have the meaning assigned thereto in Section 7(c)
hereof.
o. "Distributions" shall have the meaning assigned thereto in Section
3(b)(v) hereof.
p. "Dollars" shall have the meaning assigned thereto in Section 7(b) hereof.
q. "Due Date" shall have the meaning assigned thereto in Section 7(b)
hereof.
r. "Insolvency Event" shall have the meaning assigned thereto in Section
7(b) hereof.
s. "Letter of Credit" shall have the meaning assigned thereto in the
applicable MSLA and be issued by a bank listed on Appendix 2 hereto (as such
list may be amended by Chase from time to time on notice to Lender), other than
a bank deleted from such list pursuant to Written Instruction.
<PAGE>
t. "Loan" shall mean a loan of Securities hereunder and under the applicable
MSLA.
u. "Loan Fee" shall mean the amount payable by a Borrower to Chase pursuant
to the applicable MSLA in connection with Loans collateralized other than by
Cash Collateral.
v. "Market Value" shall have the meaning assigned thereto in the applicable
MSLA.
w. "MSLA" shall mean a master securities lending agreement between Chase and
a Borrower, pursuant to which Chase as agent lends securities on behalf of its
customers (including Lender) from time to time. A copy of Chase's standard form
of MSLA, including the international addendum thereto, is annexed as Appendix 3.
x. "Net Assets" shall have the meaning assigned thereto in Section 8 hereof.
y. "Net Realized Income" shall have the meaning thereto in Section 8 hereof.
z. "Oral Instructions" shall have the meaning assigned thereto in Section 10
hereof.
aa. "Proceeds" shall mean interest, dividends and other payments and
Distributions received by Chase in connection with Authorized Investments.
bb. "Proper Instructions" shall mean Oral Instructions and Written
Instructions.
cc. "Rebate" shall mean the amount payable by Chase on behalf of Lender to a
Borrower in connection with Loans collateralized by Cash Collateral.
dd. "Return Date" shall have the meaning assigned thereto in Section 7(c)
hereof.
ee. "Securities" shall mean government securities (including U.S. Government
Securities), equity securities, bonds, debentures, other corporate debt
securities, notes, mortgages or other obligations, and any certificates,
warrants or other instruments representing rights to receive, purchase, or
subscribe for the same, or evidencing or representing any other rights or
interests therein and held pursuant to the Agreement.
ff. "Term Loan" shall have the meaning assigned thereto in Section 5(i)
hereof.
<PAGE>
gg. "Triparty Institution" shall mean a financial institution with which
Chase shall have previously entered a triparty agreement among itself, such
Triparty Institution and a particular Borrower providing, among other things,
for the holding of Collateral in a Collateral Account at such Triparty
Institution in Chase's name on behalf of Chase's lending customers and for the
substitution of Collateral; provided, however, that any substituted Collateral
shall meet the then standards for acceptable Collateral set by Chase.
hh. "U.S. Government Security" shall mean book-entry securities issued by
the U.S. Treasury defined in Subpart 0 of Treasury Department Circular No. 300
and any successor provisions) and any other securities issued or fully
guaranteed by the United States government or any agency, instrumentality or
establishment of the U.S. government, including, without limitation, securities
commonly known as "Ginnie Maes," Sally Maes," "Fannie Maes" and "Freddie Maes".
ii. "Written Instructions" shall have the meaning assigned thereto in
Section 10 hereof.
Section 2 - Appointment, Authority
(a) Appointment. Lender hereby appoints Chase as its agent to lend
Securities in the Account on Lender's behalf on a fully disclosed basis to
Borrowers from time to time in accordance with the terms hereof and on such
terms and conditions and at such times as Chase shall determine and Chase may
exercise all rights and powers provided under any MSLA as may be incidental
thereto, and Chase hereby accepts appointment as such agent and agrees to so
act.
(b) Authority. Lender hereby authorizes and empowers Chase to execute in
Lender's name on its behalf and at its risk all agreements and documents as may
be necessary to carry out any of the powers herein granted to Chase. Lender
grants Chase the authority set forth herein notwithstanding its awareness that
Chase, in its individual capacity or acting in a fiduciary capacity for other
accounts, may have transactions with the same institutions to which Chase may be
lending Securities hereunder, which transactions may give rise to actual or
potential conflict of interest situations. Chase shall not be bound to: (i)
account to Lender for any sum received or profit made by Chase for its own
account or the account of any other person or (ii) disclose or refuse to
disclose any information or take any other action if the same would or might in
Chase's judgment, made in good faith, constitute a breach of any law or
regulation or be otherwise actionable with respect to Chase; provided that, in
circumstances mentioned in (ii) above, Chase shall promptly inform Lender of the
relevant facts (except where doing so would, or might in Chase's judgment, made
in good faith, constitute a breach of any law or regulation or be otherwise
actionable as aforesaid).
<PAGE>
Section 3 - Representation and Warranties
(a) Representations of each party. Each party hereto represents and warrants
to the other that: (i) it has the power to execute and deliver this Lending
Agreement, to enter into the transactions contemplated hereby, and to perform
its obligations hereunder; (ii) it has taken all necessary action to authorize
such execution, delivery, and performance; (iii) this Lending Agreement
constitutes a legal, valid, and binding obligation enforceable against it; and
(iv) the execution, delivery, and performance by it of this Lending Agreement
shall at all times comply with all applicable laws and regulations.
(b) Representations of Lender. Lender represents and warrants to Chase that:
(i) this Lending Agreement is, and each Loan shall be, legally and validly
entered into, and does not and shall not violate any statute, regulation, rule,
order or judgment binding on Lender, or any provision of Lender's charter or
by-laws, or any agreement binding on Lender or affecting its property, and is
enforceable against Lender in accordance with its terms, except as enforcement
may be limited by bankruptcy, insolvency or similar laws, or by equitable
principles relating to or limiting creditors' rights generally; (ii) the person
executing this Lending Agreement and all Authorized Persons acting on behalf of
Lender has and have been duly and properly authorized to do so; (iii) it is
lending Securities as principal and shall not transfer, assign or encumber its
interest in, or rights with respect to, any Securities available for Loan
hereunder; (iv) it is the beneficial owner of all Securities or otherwise has
the right to lend Securities; and (v) it is entitled to receive all interest,
dividends and other distributions ("Distributions") made by the issuer with
respect thereto. Lender shall promptly identify to Chase by notice, which notice
may be oral, any Securities that are no longer subject to the representations
contained in (b).
Section 4 - Borrowers
(a) MSLA. Lender hereby acknowledges receipt of the form of MSLA and
authorizes Chase to lend Securities in the Account to Borrowers thereunder
pursuant to an agreement substantially in the form thereof.
(b) Borrowers. Securities may be lent to any Borrower selected by Chase in
Chase's sole discretion, in accordance with the terms hereof. In that
connection, Appendix 1 may be amended from time to time by Chase on notice to
Lender.
<PAGE>
Section 5 - Loans
(a) Securities to be lent, Lending opportunities, Loan initiation. All
Securities of Lender held by Chase that are issued, settled or traded in the
markets that have been approved by Chase from time to time for purposes of
Chase's discretionary securities lending program shall be subject to the terms
hereof. Chase shall seek to assure that Lender receives a fair allocation of
lending opportunities vis-a-vis other lenders, taking into account the demand
for and availability of Securities, types of Collateral, eligibility of
Borrowers, limitations on investments of Cash Collateral, tax treatment, and
similar commercial factors. From time to time, Chase may lend to Borrowers
Securities held in the Account (except Securities that are no longer subject to
the representations set forth in Section 3) and shall deliver such Securities
against receipt of Collateral in accordance with the applicable MSLA. Chase
shall have the right to decline to make any Loans to any Borrower and to
discontinue lending to any Borrower in its sole discretion and without notice to
Lender.
(b) Receipt of Collateral, Collateral substitution. For each Loan, Chase
shall receive and hold Letters of Credit received as Collateral and Chase or a
Triparty Institution shall receive and hold all other Collateral required by the
applicable MSLA in a Collateral Account, and Chase is hereby authorized and
directed, without obtaining any further approval from Lender, to invest and
reinvest all or substantially all Cash Collateral. Chase shall credit, or where
applicable shall have a Triparty Institution credit, all Collateral, Authorized
Investments and Proceeds to a Collateral Account and Chase shall not mark its
books and records to identify Lender's interest therein, it being understood,
however, that all monies credited to a Collateral Account may for purposes of
investment be commingled with cash collateral held for other lenders of
securities on whose behalf Chase may act. Chase may, in its sole discretion,
liquidate any Authorized Investment and credit the net proceeds in a Collateral
Account. Chase shall accept substitutions of Collateral in accordance with the
applicable MSLA and shall credit, or where applicable shall have a Triparty
Institution credit, all such substitutions to a Collateral Account.
(c) Mark to market procedures. (i) Chase shall require initial Collateral
for a Loan in an amount determined by applying the then applicable "Collateral
Criterion" (as defined below) to the Market Value of the Security that is the
subject of the Loan. The Collateral Criterion with respect to a given Security
shall be an amount equal to the then applicable percentage (currently 102% for
securities issued in the U.S. and 105% for securities issued outside of the
U.S.) of the Market Value of the Security (plus accrued interest, if any, with
respect to debt securities) which is the subject of a Loan as determined as of
the close of trading on the preceding Business Day. (ii) Each Business Day Chase
shall determine if the Market Value of all Collateral received by Chase from a
given Borrower in connection with all loans to such Borrower from all lenders is
at least equal to the aggregate amount ("Collateral Amount") determined by
applying the applicable Collateral Criterion to each security on loan to such
Borrower from all lenders. (iii) In accordance with general market practice, the
Market Value of certain securities (including, without limitation, U.S.
Government Securities) whether on Loan or received as Collateral, may be
determined on a same day basis by reference to recognized pricing services.
<PAGE>
(d) Demand for additional Collateral. If the determination made in Section
5(c)(ii) above demonstrates that the Market Value of all Collateral received
from a given Borrower is not at least equal to the Collateral Amount, Chase
shall demand additional Collateral from such Borrower in accordance with the
applicable MSLA so as to meet the Collateral Amount by making specific Loans;
provided that, Chase may from time to time establish de minimis guidelines
pursuant to which a mark would not be made even where the aggregate Collateral
Amount has not been met.
(e) Changes in procedures applicable to Collateral. The Collateral
procedures set forth in Sections 5(b)-(d) above reflect Chase's current practice
and may be changed by Chase from time to time based on general market conditions
(including volatility of Securities on Loan and of securities Collateral), the
Market Value of Securities on Loan to a given Borrower, and in accordance with
general market practice and regulatory requirements. Chase shall notify Lender
of material revisions to the foregoing procedures.
(f) Investment of Cash Collateral. (i) Chase is hereby authorized to invest
and reinvest cash Collateral in accordance with the investment guidelines (and
the interpretations, procedures and definitions included therewith) annexed
hereto as Appendix 4. (ii) Authorized Investments are made for the account of,
and at the sole risk of, Lender. In that connection, Lender shall pay to Chase
on demand in cash an amount equal to any deficiency in the amount of Collateral
available for return to a Borrower pursuant to an applicable MSLA.
(g) Lender's rights with respect to Securities on Loan; Distribution and
voting rights. (i) An amount equal to the amount of all Distributions paid with
respect to Securities on Loan that Lender would have received had such
Securities not been on Loan shall be credited to Lender's account on the date
such Distributions are delivered by Borrower to Chase. Any non-cash Distribution
on Securities on Loan which is in the nature of a stock split or a stock
dividend, shall be added to the Loan (and shall be considered to constitute
Securities on Loan) as of the date such non-cash Distribution is received by the
Borrower and shall be subject to the provisions of this Lending Agreement;
provided that the Lender may, by giving chase ten (10) Business Days' notice
prior to the date of such non-cash Distribution (or such different amount of
time as Chase may from time to time require on advice to Lender), direct Chase
to request that the Borrower deliver such non-cash Distribution to Chase
pursuant to the applicable MSLA, in which case Chase shall credit such non-cash
Distribution to Lender's account on the date it is delivered to Chase. Without
regard to the reference to "delivered" in the foregoing, the "AutoCredit"
provisions of the Agreement shall apply where a Borrower fails to make a
Distribution payment to Chase, the effect of which would be for Chase to credit
Lender's account with Distributions on the payable date. (ii) During the term of
any Loan, Chase will permit the Securities on Loan to be transferred into the
name of and be voted by the Borrower or others. Lender shall not be entitled to
participate in any dividend reinvestment program or to vote proxies with respect
to Securities that are eligible for Loan (whether or not actually on Loan) as of
the applicable record date for such Securities.
(h) Advances, overdrafts and indebtedness, Security Interest. Chase may, in
its sole discretion, advance funds on behalf of Lender in order to pay to
<PAGE>
Borrowers any Rebates or to return to Borrowers Cash Collateral to which they
are entitled pursuant to the applicable MSLA. Lender shall repay Chase on demand
the amount of any advance or any other amount owned by Lender hereunder plus
accrued interest at a rate per annum not to exceed the rate customarily charged
by Chase for such loans at the time such loan is made and shall otherwise be on
such terms and conditions as Chase customarily makes such loans available. In
order to secure repayment of any advance or other indebtedness of Lender to
Chase arising hereunder, Chase shall have a continuing lien and security
interest in and to all assets now or hereafter held in the Account and any
Collateral Account (to which Lender is entitled hereunder) and any other
property at any time held by it for the benefit of Lender or in which Lender may
have an interest which is then in Chase's possession or control or in the
possession or control of any third party acting on Chase's behalf. In this
regard, Chase shall be entitled to all the rights and remedies of a pledgee
under common law and a secured party under the New York Uniform Commercial Code
and/or any other applicable laws and/or regulations as then in effect.
(i) Termination of a Loan. (i) Loans shall generally be terminable on
demand. With the prior approval of Lender, however, Loans may be made on the
basis of a reasonably anticipated termination date ("Term Loan") and without
providing for the right of substitution of equivalent Securities. Termination of
a Term Loan prior to its anticipated termination date by either Lender or
Borrower may result in the terminating party having to pay non-terminating party
damages based on the cost of obtaining a replacement loan. (ii) Chase shall
terminate any Loan of Securities to a Borrower as soon as practicable after (a)
receipt by Chase of a notice of termination of the respective MSLA; (b) receipt
by Chase of Written Instructions directing it to terminate a Loan; (c) receipt
by Chase of Written Instructions instructing it to delete from Appendix 2 the
Borrower to whom such Loans was made; (d) receipt by Chase of Written
Instructions advising that the Security subject to a Loan is no longer subject
to the representation contained in Section 3 hereof; (e) receipt by Chase of
notice advising that an Event of Default (as defined in the applicable MSLA) has
occurred and is continuing beyond any applicable grace period; (f) whenever
Chase, in its sole discretion, elects to terminate such Loan other than a Term
Loan; or (g) termination of this Lending Agreement. (iii) If Securities which
are the subject of a Loan being terminated are to be sold by Lender, Written
Instructions shall in no event be given to Chase later than the trade date
established by Lender for such sale or such earlier date of which Chase may
advise Lender from time to time with respect to particular markets. Chase shall
not be liable for any failure of a Borrower to return Securities on Loans in a
time fashion.
(j) Recordkeeping and Reports. Chase shall establish and maintain such
records as are reasonably necessary to account for Loans that are made and the
income derived therefrom. Chase shall provide Lender with a monthly statement
describing the Loans made during the preceding month, and the income derived
from Loans, during the period covered by such statement. A party shall comply
with the reasonable requests of the other party for information necessary to the
requester's performance of its duties hereunder.
Section 6 - Default by Borrower
<PAGE>
(1) Chase may assume (unless it has actual knowledge to the contrary) that
any representations made by a Borrower in connection with any Loan are true,
that no event which is or may become an Event of Default (as defined in the
applicable MSLA) has occurred and that a Borrower has complied with its
obligations under the applicable MSLA. Subject to Sections 7(b)-(d), Chase shall
have no responsibility for the accuracy or completeness of any information
supplied, or for any breach of any obligation, by any Borrower under or in
connection with any MSLA or Loan. Chase shall not be liable as a result of
taking or omitting to take any action provided that Chase shall have carried out
its responsibilities hereunder in good faith. (ii) If any Borrower with respect
to any Loan affected pursuant hereto and pursuant to the applicable MSLA fails
to return any loaned Securities when due thereunder for reasons other than
relating to the solvency of the Borrower, Chase shall then take whatever action
its deems appropriate in accordance with general market practice and Chase's
reasonable judgment, including, but no necessarily limited to, claiming
compensation from such Borrower on behalf of Lender in the event a trade
executed by Lender fails on account of such Borrower's failure timely to have
returned Securities on Loan or, where Chase deems it necessary, such other
action as may be permitted by the applicable MSLA, including collecting any
applicable MSLA fails to return any Securities on Loan when due thereunder for
reasons relating to the solvency of the Borrower, Chase shall take such action
as its deems appropriate in accordance with Chase's reasonable judgment under
the applicable MSLA.
Section 7 - Standard of Care, Liabilities, Indemnification
(a) Standard of care, Liabilities. Except as provided in paragraphs (b) and
(c) hereof, Chase shall be liable for any costs, expenses, damages, liabilities
or claims (including attorneys' and accountants' fees) incurred by Lender,
except those costs, expenses, damages, liabilities and claims arising out of the
negligence, bad faith or willful misconduct of Chase. Chase shall have no
obligation hereunder for: (i) costs, expenses, damages, liabilities or claims
(including attorneys' and accountants' fees), which are sustained or incurred by
Lender by reason of any action or inaction by any pricing service, any
Depository or a Triparty Institution or their respective successors or nominees;
and (ii) any failure to perform any obligation due to any matters beyond the
control of Chase. In no event shall Chase be liable for indirect or
consequential damages or lost profits or loss of business, arising hereunder or
in connection herewith, even if previously informed of the possibility of such
damages and regardless of the form of action.
Except for any costs or expenses incurred by Chase in performing its
obligations pursuant to paragraphs (b) and (c) hereof any ordinary operating
expenses incurred by Chase in providing services hereunder, Lender shall
indemnify Chase and hold it harmless from and against any and all costs,
expenses, damages, liabilities or claims, including reasonable fees and expenses
of counsel, which Chase may sustain or incur or which may be asserted against
Chase by reason of or as a result of any action taken or omitted by Chase in
connection with operating under this Lending Agreement or enforcing Lender's
rights under the applicable MSLA, other than those costs, expenses, damages,
liabilities or claims arising out of the negligence, bad faith or willful
misconduct of Chase. The foregoing indemnity shall be a continuing obligation of
the Lender, its successors and
<PAGE>
assigns, notwithstanding the termination of any Loans hereunder or of this
Lending Agreement. Chase may charge any amounts to which it is entitled
hereunder against the Account, and Lender shall be entitled to an accounting of
all amounts so charged. Actions taken or omitted in reliance upon Proper
Instructions, or upon any information, order, indenture, stock certificate,
power of attorney, assignment, affidavit or other instrument reasonably believed
by Chase, in good faith, to be genuine or bearing the signature of a person or
persons believed, in good faith, to be authorized to sign, countersign or
execute the same, shall be conclusively presumed to have been taken or omitted
in good faith.
(b) Indemnification of Lender in respect to Distributions. If the Borrower
in respect of any Loan effected pursuant hereto and pursuant to the applicable
MSLA fails, as a result of its bankruptcy, insolvency, reorganization,
liquidation, receivership or similar event (each an "Insolvency Event"), to
remit to Chase for Lender's account any Distributions on or with respect to
Securities on Loan when due (the "Due Date") in accordance with such MSLA and
such Due Date occurs at least one day prior to an Insolvency Event then Chase
shall at its expense (subject to paragraph (d) hereof) and within one (1)
Business Day of the Due Date, undertake the following: (i) with respect to
Distributions in the form of cash, Chase shall credit Lender's account with the
full amount of such Distributions and (ii) with respect to Distributions in the
form of securities, Chase shall, at its option, either purchase replacement
securities (of an equal amount of the same issue, class, type or series as the
Distributions) on the principal market in which such securities are traded or
credit Lender's account with the market value in United States dollars
("Dollars") of such Distributions on the Due Date as determined by Chase in good
faith. Market value shall be determined by Chase in accordance with the
applicable MSLA, including the computation of Dollar equivalents where
Securities on Loan and/or Collateral (and Proceeds) are denominated in a
currency other than Dollars.
(c) Indemnification of Lender in respect of Securities. If the Borrower in
respect of any Loan effected pursuant hereto and pursuant to the applicable MSLA
fails to return any Securities on Loan to Chase for Lender's account when due
thereunder (the "Return Date") which is the date of default, then Chase shall,
at its expense (subject to paragraph (d) hereof) and within one (1) Business Day
of the Return Date, credit Lender's account in Dollars with the difference
("Difference") (where a positive number), if any, between (x) the market value
of such lent Securities on the Return Date (including, in the case of debt
Securities, accrued but unpaid interest), and (y) in the case of Loans
collateralized by (i) Cash Collateral, the greater of (A) the Market Value of
the Cash Collateral on the date of initial pledge as adjusted for any subsequent
marks-to-market through the Return Date and (B) the Market Value of Cash
Collateral investments on the Return Date, (ii) non-Cash Collateral comprising
securities Collateral, the greater of the Market Value of such Collateral on the
(A) Business Day immediately preceding the Return Date and (B) Return Date, or
(iii) non-Cash Collateral comprising Letter of Credit Collateral, the Market
Value of the Letter of Credit Collateral on the date of initial pledge as
adjusted for any subsequent marks-to-market through the Return Date. Market
Value shall be determined by Chase in accordance with the applicable MSLA,
including the computation of Dollar equivalents where Securities on Loan and/or
Collateral (and Proceeds) are denominated in a currency other than Dollars.
Where Cash Collateral
<PAGE>
and non-Cash Collateral have each been allocated to a Loan as of the Return
Date, the Difference payable by Chase shall be computed in accordance with the
foregoing as if there had been two Loans in effect on the Return Date, one
collateralized by Cash Collateral and the other collateralized by non-Cash
Collateral. In lieu of paying Lender the Difference, Chase may, at its sole
option and expense, purchase for Lender's account ("Buy-in") replacement
securities of the same issue, type, class, and series as that of the Securities
on Loan.
(d) Subrogation. If Chase makes a payment or a purchase pursuant to Section
7(b) or effects a Buy-in pursuant to Section 7(c), or if Chase effects a
Difference payment pursuant to Section 7(c) on account of a failure to return
Securities on Loan not arising from an Insolvency Event, Chase shall, to the
extent of such payment, purchase, Difference payment or Buy-in, be subrogated
to, and Lender shall assign and be deemed to have assigned to Chase, all of its
rights in, to and against the Borrower (and any guarantor thereof) in respect of
such Loan, any Collateral pledged by the Borrower in respect of such Loan, and
all proceeds of such Collateral. In the event that Lender receives or is
credited with any payment, benefit or value from or on behalf of the Borrower in
respect of rights to which Chase is subrogated as provided herein, Lender shall
promptly remit or pay to Chase the same (or its Dollar equivalent) but only to
the extent that Lender has been paid all amounts owed to it by Borrower.
Section 8 - Chase Compensation
(a) In connection with each Loan hereunder, Lender shall pay to Chase a fee
equal to ___% of (i) earnings (less any Rebate paid by Chase to a Borrower)
derived from Authorized Investments in connection with Loans collateralized by
cash, and (ii) any Securities Loan Fee paid or payable by the Borrower on Loans
not collateralized by cash. (b) The fee payable to Chase for services performed
pursuant to Section 5(f) hereof shall be equal to one tenth of the one percent
(0.1%) of the Fund's average daily Assets (with "Fund" being as defined in
Appendix 4 hereto). All securities in the Fund shall be valued based on their
amortized cost. Fees shall be accrued and charged daily against the Fund's yield
or assets, as appropriate, and shall be payable monthly in arrears on the first
business day of the month following the month in which earned. (c) Chase is
authorized, on a monthly basis, to charge all the foregoing fees (together with
reasonable expenses incurred by Chase hereunder) and any other amounts owed by
Lender hereunder against the Account and/or a Collateral Account.
Section 9 - Taxes
Lender shall be responsible for all filings, tax returns and reports on any
Loans undertaken by Chase on Lender's behalf which are to be made to any
authority whether governmental or otherwise and for the payment of all unpaid
calls, taxes (including, without limitations, any value added tax), imposts,
levies or duties due on any principal or interest, or any other liability or
payments arising out of or in connection with any Securities or any Collateral,
and in so far as Chase is under obligation (whether of a governmental nature or
otherwise) to pay the same on Lender's behalf Chase may do so out of any monies
or assets held by it pursuant to the terms of the Agreement or hereunder.
<PAGE>
Section 10 - Instructions
(a)(i) Written Instructions. "Written Instructions" shall mean written
communications actually received by Chase from an Authorized Person or from a
person reasonably believed by Chase to be an Authorized Person by letter,
memorandum, telegram, cable, telex, telecopy facsimile, computer, video (CRT)
terminal or other on-line system, or any other method reasonably acceptable to
Chase and whereby Chase is able to verify with a reasonable degree of certainty
the identity of the sender of such communications or with communications are
transmitted with proper testing or authentication pursuant to terms and
conditions which Chase may specify. (ii) Oral Instructions. "Oral Instructions"
shall mean oral communications actually received by Chase from an Authorized
Person or from a person reasonably believed by Chase to be an Authorized Person.
Oral Instructions shall promptly thereafter be confirmed in writing by an
Authorized Person (which confirmation may bear the facsimile signature of such
Person), but Lender will hold Chase harmless for the failure of an Authorized
Person to send such confirmation in writing, the failure of such confirmation to
conform to the Oral Instructions received, or Chase's failure to produce such
confirmation at any subsequent time. Lender shall be responsible for
safeguarding any testkeys, identification codes or other security devices which
Chase may make available to Lender or its Authorized Persons.
(b) Unless otherwise expressly provided, all Proper Instructions shall
continue in full force and effect until canceled or superseded.
Section 11 - Pricing Services
Chase may use any pricing service referred to in an applicable MSLA and any
other recognized pricing service (including itself and any of its affiliates) in
order to perform its valuation responsibilities with respect to Securities,
Collateral and Authorized Investments, and Lender shall hold Chase harmless from
and against any loss or damage suffered or incurred as a result of errors or
omissions of any such pricing service.
Section 12 - Termination
This Lending Agreement may be terminated at any time by either party upon
delivery to the other party of notice specifying the date of such termination,
which shall be not less than 30 days after the date of receipt of such notice.
Notwithstanding any such notice, this Lending Agreement shall continue in full
force and effect with respect to all Loans outstanding on the termination date,
which Loans shall, however, be terminated as soon as reasonably practicable.
Section 13 - Miscellaneous
(a) Legal proceedings. Chase may refrain from bringing any legal action or
proceeding arising out of or in connection with any Loan until it shall have
received such security as it may require for all costs, expenses (including
legal fees) and liabilities which it will or may expend or incur in relation
thereto.
<PAGE>
(b) Integration, Lending Agreement to Govern. This Lending Agreement and the
Agreement contain the complete agreement of the parties with respect to the
subject matter hereof and supersede and replace any previously made proposals,
representations, warranties or agreements with respect thereto by the parties.
In the event of any conflict between this Lending Agreement, and the Agreement,
this Lending Agreement shall govern.
(c) Notice. Unless expressly provided herein to the contrary, notices
hereunder shall be in writing, and delivered by telecopier, overnight express
mail, first-class postage prepaid, delivered personally or by receipt courier
service. All such notices which are mailed shall be deemed delivered upon
receipt. Notices shall be addresses as follows (or to such other address as a
party may from time to time designate on notice duly given in accordance with
this paragraph): notices to Chase shall be addressed to it at 2 Chase Manhattan
Plaza, 19th Floor, New York, New York 10081, Attention: Securities Lending
Division; notices to be given to Lender shall be addressed to it at its offices
at Attention: .
(d) Amendments, Waiver. This Lending Agreement may be modified only by a
written amendment signed by both parties, and no waiver of any provisions hereof
shall be effective unless expressed in a writing signed by the party to be
charged.
(e) Government Law, Consent to Jurisdiction, Waiver of Immunity. This
Lending Agreement shall be construed in accordance with laws of the State of New
York, without regard to the conflict of laws principles thereof. Chase and
Lender each hereby consents to the jurisdiction of a state or federal court
situated in New York City, New York in connection with any dispute arising
hereunder and Lender hereby waives any claim of forum non conveniens to the
extent that it may lawfully do so. To the extent that in any jurisdiction Lender
may now or hereafter be entitled to claim, for itself or its assets, immunity
from suit, execution, attachment (before or after judgment) or other legal
process, Lender irrevocably shall not claim, and it hereby waives, such
immunity.
<PAGE>
(f) Counterparts, Headings. This Lending Agreement may be executed in
several counterparts, each one of which shall constitute an original, and all
collectively shall constitute but one instrument. The headings of the sections
hereof are included for convenience of reference only and do not form part of
this Lending Agreement.
(g) Severability. Any provisions of this Lending Agreement which may be
determined by competent authority to be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition, or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceably in any jurisdiction
shall not invalidate or render unenforceable such provisions in any other
jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Lending Agreement as of
the date first above-written.
[Insert name of LENDER] THE CHASE MANHATTAN BANK, N.A.
By: By:
Title: Title:
<PAGE>
Exhibit 99.B11
Consent of Independent Auditors
We consent to the references to our firm under the captions "Financial
Highlights" in the Prospectus and "Financial Statements" in the Statement of
Additional Information of Delaware Pooled Trust, Inc. and to the incorporation
by reference in this Post-Effective Amendment No. 12 to the Registration
Statement (Form N-1A) (No. 33-40991) of Delaware Pooled Trust, Inc. of our
report dated December 8, 1995, included in the 1995 Annual Report to
Shareholders of Delaware Pooled Trust, Inc.
/s/ Ernst & Young LLP
---------------------
Ernst & Young LLP
Philadelphia, Pennsylvania
August 21, 1996
<PAGE>
DELAWARE POOLED TRUST, INC.-THE FIXED INCOME PORTFOLIO
TOTAL RETURN PERFORMANCE
LIFE OF FUND
- ---------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $10.00
Initial Shares 100.000
Fiscal Beginning Dividends ReinvestedCumulative
Year Shares for Period Shares Shares
- ---------------------------------------------------
1996| 100.000 | $0.231 2.365 | 102.365
- ---------------------------------------------------
Ending Shares 102.365
Ending NAV x $9.84
---------
Investment Return $1,007.27
- ------------------------
Investment Return $1,007.27
Less Initial Investment $1,000.00
---------
$7.27 /$1,000.00 x 100
Total Return: 0.73%
<PAGE>
Delaware Pooled Trust, Inc.- The Fixed Income Portfolio
Yield Quotation for the Month Ended July 31, 1996
Interest Earned $47,394
Expenses Accrued $3,759
Net Income $43,635
Average Shares Outstanding 863,534
Maximum Offering Price
July 31, 1996 $9.84
Yield 6.24%
Delaware Pooled Trust, Inc.-
The Fixed Income Portfolio 47,394 - 3,759 6
2 [ ----------------- + 1 ) -1 ]
[(863,534 x 9.84)
<PAGE>
Delaware Pooled Trust, Inc.- The Global Fixed Income Portfolio
Yield Quotation for the Month Ended July 31, 1996
Interest Earned $1,035,939
Expenses Accrued $81,953
Net Income $953,986
Average Shares Outstanding 15,024,033
Maximum Offering Price
July 31, 1996 $10.98
Yield 7.04%
Delaware Pooled Trust, Inc.-
The Fixed Income Portfolio 1,035,939 - 81,953 6
2 [ ------------------ + 1 ) -1 ]
[(15,024,033 x 10.98)
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<PERIOD-END> APR-30-1996
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<INVESTMENTS-AT-VALUE> 203,724,927
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<OTHER-ITEMS-LIABILITIES> 73,754
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<SHARES-COMMON-PRIOR> 11,923,447
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<ACCUMULATED-NET-GAINS> (597,493)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 23,074,952
<NET-ASSETS> 204,424,118
<DIVIDEND-INCOME> 1,866,685
<INTEREST-INCOME> 440,146
<OTHER-INCOME> 0
<EXPENSES-NET> 778,851
<NET-INVESTMENT-INCOME> 1,527,980
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<APPREC-INCREASE-CURRENT> 18,385,762
<NET-CHANGE-FROM-OPS> 21,894,291
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<DISTRIBUTIONS-OF-INCOME> 5,247,569
<DISTRIBUTIONS-OF-GAINS> 1,816,432
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<NUMBER-OF-SHARES-SOLD> 2,350,873
<NUMBER-OF-SHARES-REDEEMED> 428,875
<SHARES-REINVESTED> 524,635
<NET-CHANGE-IN-ASSETS> 85,647,108
<ACCUMULATED-NII-PRIOR> 3,284,687
<ACCUMULATED-GAINS-PRIOR> 2,561,013
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 657,773
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 778,851
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<PER-SHARE-NII> 0.293
<PER-SHARE-GAIN-APPREC> 1.397
<PER-SHARE-DIVIDEND> .430
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<PER-SHARE-NAV-END> 14.230
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<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> APR-30-1996
<INVESTMENTS-AT-COST> 58,357,618
<INVESTMENTS-AT-VALUE> 66,583,031
<RECEIVABLES> 1,061,863
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 65,285
<TOTAL-ASSETS> 67,710,179
<PAYABLE-FOR-SECURITIES> 666,338
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 159,629
<TOTAL-LIABILITIES> 825,967
<SENIOR-EQUITY> 43,920
<PAID-IN-CAPITAL-COMMON> 55,394,622
<SHARES-COMMON-STOCK> 4,392,030
<SHARES-COMMON-PRIOR> 3,544,072
<ACCUMULATED-NII-CURRENT> 365,985
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,854,272
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8,225,413
<NET-ASSETS> 66,884,212
<DIVIDEND-INCOME> 908,570
<INTEREST-INCOME> 101,823
<OTHER-INCOME> 0
<EXPENSES-NET> 196,594
<NET-INVESTMENT-INCOME> 813,799
<REALIZED-GAINS-CURRENT> 2,896,191
<APPREC-INCREASE-CURRENT> 4,297,333
<NET-CHANGE-FROM-OPS> 8,007,323
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,312,008
<DISTRIBUTIONS-OF-GAINS> 4,186,924
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 660,965
<NUMBER-OF-SHARES-REDEEMED> 188,421
<SHARES-REINVESTED> 375,414
<NET-CHANGE-IN-ASSETS> 14,937,115
<ACCUMULATED-NII-PRIOR> 864,194
<ACCUMULATED-GAINS-PRIOR> 4,145,005
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<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 160,839
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 206,191
<AVERAGE-NET-ASSETS> 58,710,601
<PER-SHARE-NAV-BEGIN> 14.660
<PER-SHARE-NII> 0.200
<PER-SHARE-GAIN-APPREC> 1.890
<PER-SHARE-DIVIDEND> 0.360
<PER-SHARE-DISTRIBUTIONS> 1.160
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.230
<EXPENSE-RATIO> 0.670
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
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<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> APR-30-1996
<INVESTMENTS-AT-COST> 19,470,975
<INVESTMENTS-AT-VALUE> 26,333,422
<RECEIVABLES> 105,096
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 111,150
<TOTAL-ASSETS> 26,549,668
<PAYABLE-FOR-SECURITIES> 185,169
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 116,628
<TOTAL-LIABILITIES> 301,797
<SENIOR-EQUITY> 17,930
<PAID-IN-CAPITAL-COMMON> 15,765,846
<SHARES-COMMON-STOCK> 1,792,964
<SHARES-COMMON-PRIOR> 2,261,640
<ACCUMULATED-NII-CURRENT> (36,172)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,637,820
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,862,447
<NET-ASSETS> 26,247,871
<DIVIDEND-INCOME> 30,470
<INTEREST-INCOME> 49,544
<OTHER-INCOME> 0
<EXPENSES-NET> 115,981
<NET-INVESTMENT-INCOME> (35,967)
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<APPREC-INCREASE-CURRENT> 1,179,350
<NET-CHANGE-FROM-OPS> 4,830,635
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 81,854
<DISTRIBUTIONS-OF-GAINS> 1,194,103
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<NUMBER-OF-SHARES-SOLD> 15,437
<NUMBER-OF-SHARES-REDEEMED> 584,267
<SHARES-REINVESTED> 100,154
<NET-CHANGE-IN-ASSETS> (2,844,013)
<ACCUMULATED-NII-PRIOR> 81,647
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<GROSS-EXPENSE> 128,838
<AVERAGE-NET-ASSETS> 26,365,731
<PER-SHARE-NAV-BEGIN> 12.860
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<NAME> THE LIMITED-TERM MATURITY PORTFOLIO
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<NAME> THE DEFENSIVE EQUITY SMALL/MID-CAP PORTFOLIO
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<NAME> THE DEFENSIVE EQUITY UTILITY PORTFOLIO
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<NAME> THE LABOR SELECT INTERNATIONAL EQUITY PORTFOLIO
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<NAME> DELAWARE POOLED TRUST, INC.
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<NUMBER> 11
<NAME> THE REAL ESTATE INVESTMENT TRUST PORTFOLIO
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<NAME> DELAWARE POOLED TRUST, INC.
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<NUMBER> 12
<NAME> THE HIGH-YIELD BOND PORTFOLIO
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<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000875352
<NAME> DELAWARE POOLED TRUST, INC.
<SERIES>
<NUMBER> 13
<NAME> THE FIXED INCOME PORTFOLIO
<S> <C>
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