<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
File No. 33-40991
File No. 811-6322
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. _________ [ ]
Post-Effective Amendment No. 19 [X]
---------
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 19
-----
DELAWARE POOLED TRUST, INC.
- ------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
1818 Market Street, Philadelphia, Pennsylvania 19103
- ------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (215) 255-2923
--------------
George M. Chamberlain, Jr., 1818 Market Street, Philadelphia, PA 19103
- ------------------------------------------------------------------------------
(Name and Address of Agent for Service)
Approximate Date of Public Offering: October 14, 1997
----------------
It is proposed that this filing will become effective:
_____ immediately upon filing pursuant to paragraph (b)
__X__ on October 14, 1997 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 December 27, 1996.
<PAGE>
--- C O N T E N T S ---
This Post-Effective Amendment No. 19 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
* This Post-Effective Amendment relates to the Registrant's 14 series of
shares: 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 Labor Select International Equity Portfolio, The High-Yield Bond
Portfolio, The Real Estate Investment Trust Portfolio, The Real Estate
Investment Trust Portfolio II, The Global Equity Portfolio and The Emerging
Markets Portfolio (each a "Portfolio" and together, the "Portfolios").
<PAGE>
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>
* All Portfolios, except information about REIT Fund A Class, REIT Fund B
Class, REIT Fund C Class and REIT Fund Institutional Class of The Real Estate
Investment Trust Portfolio appear in separate prospectuses and are covered by
a separate cross-reference sheet, which appears next in this filing.
<PAGE>
CROSS-REFERENCE SHEET
PART A
<TABLE>
<CAPTION>
Location in
Item No. Description Prospectuses
- -------- ----------- ------------
The Real Estate Investment
Trust Portfolio
REIT Fund A Class/ REIT Fund
REIT Fund B Class/ Institutional
REIT Fund C Class Class
<S> <C> <C> <C>
1 Cover Page...................................................... Cover Page Cover Page
2 Synopsis........................................................ Fund Expenses Fund Expenses
3 Condensed Financial Information................................. Financial Financial
Highlights Highlights
4 General Description of Registrant .............................. Investment Investment
Objective, Policies Objective,
and Risk Policies and
Considerations Risk
Considerations
5 Management of the Fund ......................................... Management Management
of the Fund of the Fund
6 Capital Stock and Other Securities ............................. Dividends and Capital Dividends and
Gains Distributions; Capital Gains
Taxes Distributions;
Taxes
7 Purchase of Securities Being Offered............................ Cover; Purchase of Cover;
Shares; Management Purchase of
of the Fund Shares;
Management of
the Fund
8 Redemption or Repurchase........................................ Purchase of Shares; Purchase of
Redemption of Shares Shares;
Redemption of
Shares
9 Legal Proceedings............................................... None None
</TABLE>
<PAGE>
PART B*
<TABLE>
<CAPTION>
Location in Statement
Item No. Description of Additional Information
- -------- ----------- -------------------------
<S> <C> <C>
All Portfolios
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>
PART C
<TABLE>
<CAPTION>
Item No. Description Location in Part C
- -------- ----------- ------------------
All Portfolios
<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 an open-end management investment
company. The Fund consists of 14 portfolios (collectively, the "Portfolios,"
or, individually, a "Portfolio") offering no-load investment alternatives for
institutional clients and high net-worth individuals. Investors may make
investments in only one or in more than one of the following Portfolios:
<TABLE>
<CAPTION>
<S> <C>
EQUITY ORIENTED FIXED-INCOME ORIENTED
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 Labor Select International Equity Portfolio The High-Yield Bond Portfolio
The Real Estate Investment Trust Portfolio
The Real Estate Investment Trust Portfolio II
The Global Equity Portfolio
The Emerging Markets 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 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 October 14, 1997,
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
The Real Estate Investment Trust Portfolio offers five classes of shares. This
Prospectus relates only to The Real Estate Investment Trust Portfolio class,
which is being offered for sale to investors beginning October 14, 1997. The
other classes are subject to sales charges and/or other expenses, which may
affect their performance. To obtain the Prospectus that relates to such
other classes write to Delaware Distributors, L.P. at 1818 Market Street,
Philadelphia, PA 19103 or call 1-800-523-4640 for Class A, B and C shares or
1-800-828-5052 for institutional class shares. References to The Real Estate
Investment Trust Portfolio in this Prospectus shall mean The Real Estate
Investment Trust Portfolio class, unless otherwise noted.
<PAGE>
TABLE OF CONTENTS
Page Page
---- ----
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 Valuation of Shares
Redemption of Shares Portfolio Transactions
Performance Information
General Information
Appendix A--Ratings
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:
October 14, 1997
3
<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 High-Yield Bond Portfolio, The Global Equity
Portfolio, The Emerging Markets Portfolio and The Real Estate Investment
Trust Portfolio II, the amounts set forth below corresponding to the caption
"Other Expenses" are based on estimates for the initial fiscal year in which
they conduct operations. For the Real Estate Investment Trust Portfolio,
"Other Expenses" represent an estimate of the expenses anticipated for the
initial fiscal year in which The Real Estate Investment Trust Portfolio class
is to be offered. That class of shares will be made available for the first
time after the date of this Prospectus. The estimate for the new class'
expenses is based on the actual results for the most recently completed fiscal
year for the only class offered by the Portfolio prior to the date of this
Prospectus. See Financial Highlights.
With respect to The Defensive Equity Portfolio, The Aggressive Growth
Portfolio, The International Equity Portfolio, The Global Fixed Income
Portfolio and The Labor Select International Equity 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 Inter-
The The The Inter- The The Limited- Maturity national
Shareholder Defensive Aggressive national Term Fixed Global Fixed
Transaction Equity Growth Equity Income Fixed Income Income
Expenses Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales Charge None None None None None None None
Imposed on
Purchases
- -----------------------------------------------------------------------------------------------------------------------------------
Sales Charge None None None None None None None
Imposed on
Reinvested
Dividends
- -----------------------------------------------------------------------------------------------------------------------------------
Redemption Fees None None None None None None None
- -----------------------------------------------------------------------------------------------------------------------------------
Exchange Fees None None None None None None None
===================================================================================================================================
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Annual Fund
Operating
Expenses (as The The The The The Limited- The Global The
a percentage Defensive Aggressive International Fixed Term Fixed International
of average Equity Growth Equity Income Maturity Income Fixed Income
net assets) Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment Advisory 0.52%* 0.69%* 0.75%* 0.00%* 0.22%* 0.43%* 0.02%*
Fees After Voluntary
Waiver and Payment
- -----------------------------------------------------------------------------------------------------------------------------------
12b-1 Fees None None None None None None None
- -----------------------------------------------------------------------------------------------------------------------------------
Other Expenses 0.15% 0.21% 0.14% 0.53% 0.21% 0.17% 0.58%
- -----------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating 0.67%* 0.90%* 0.89%* 0.53%* 0.43%* 0.60%* 0.60%*
Expenses After
Voluntary Waiver
and Payment
===================================================================================================================================
</TABLE>
* The above information for The Defensive Equity Portfolio, The Aggressive
Growth Portfolio, The International EquitPortfolio and The Global Fixed
Income Portfolio reflects the expenses these Portfolios incurred for the
Fund's fiscal year ended October 31, 1996. For the Fixed Income Portfolio,
which first sold shares publicly March 12, 1996 and The Limited-Term Maturity
Portfolio, which has not yet commenced operations, "Other Expenses" are based
on estimates for their first full year of operations. The International Fixed
Income Portfolio did not sell shares publicly until April 11, 1997;
consequently, "Other Expenses" for this Portfolio are based on estimated
amounts derived from The Global Fixed Income Portfolio assuming the voluntary
waiver of fees in effect.
With respect to The Defensive Equity Portfolio, The Aggressive Growth
Portfolio, The Fixed Income Portfolio and The Limited-Term Maturity
Portfolio, Delaware Investment Advisers has elected voluntarily to waive that
portion, if any, of the annual Investment Advisory Fees payable by a
Portfolio and to pay a Portfolio's expenses to the extent necessary to ensure
that "Total Fund Operating 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, 0.68%, 0.93%,
0.53% and 0.43%, respectively, during the period from November 1, 1996
through October 31, 1997. In the absence of such voluntary waivers and
payments, "Investment Advisory Fees" (as a percentage of net assets) would
be, or is estimated to be, 0.55%, 0.80%, 0.40%, 0.30%, respectively, and
"Total Fund Operating Expenses" (as a percentage of average net assets) would
be 0.70%, 1.01%, 1.20%, 0.51%, respectively, for The Defensive Equity, The
Aggressive Growth, The Fixed Income and The Limited-Term Maturity Portfolios.
Similarly, Delaware International Advisers Ltd. ("Delaware International"),
the investment adviser to The International Equity Portfolio, The Global
Fixed Income Portfolio and The International Fixed Income Portfolio, has
elected voluntarily to waive that portion, if any, of its annual Investment
Advisory Fees and to pay the Portfolio's 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, 0.96%, 0.60% and
0.60%, respectively, during the period from November 1,
5
<PAGE>
1996 through October 31, 1997. In the absence of such voluntary waivers and
payments, "Investment Advisory Fees" (as a percentage of net assets) would be
0.50% and 0.50%, respectively, and "Total Fund Operating Expenses" (as a
percentage of average net assets) would be 0.66%, and 1.08%, respectively for
The Global Fixed Income and The International Fixed Income Portfolios. The
actual "Total Operating Expenses" of The International Equity Portfolio were
0.89% for the fiscal year ended October 31, 1996 and therefore the voluntary
waiver and payment noted above was not triggered.
<TABLE>
<CAPTION>
===================================================================================================================================
The
Defensive The Labor The Real The Real The
Shareholder Equity Select Estate Estate High- The The
Transaction Small/ International Investment Investment Yield Global Emerging
Expenses Mid-Cap Equity Trust Trust Bond Equity Markets
Portfolio Portfolio Portfolio Portfolio II Portfolio Portfolio Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales Charge None None None None None None None
Imposed on
Purchases
- -----------------------------------------------------------------------------------------------------------------------------------
Sales Charge None None None None None None None
Imposed on
Reinvested
Dividends
- -----------------------------------------------------------------------------------------------------------------------------------
Purchase None None None None None 0.40% 0.75%
Reimbursement
Fees*
- -----------------------------------------------------------------------------------------------------------------------------------
Redemption None None None None None 0.30% 0.75%
Reimbursement
Fees*
- -----------------------------------------------------------------------------------------------------------------------------------
Exchange Fees None None None None None None None
===================================================================================================================================
===================================================================================================================================
Annual Fund The Defensive
Operating Equity The Labor Select The Real The Real
Expenses (as a Small/ International Estate Estate The The The
percentage Mid-Cap Equity Investment Investment High-Yield Global Emerging
of average Portfolio Portfolio Trust Trust Bond Equity Markets
net assets) Portfolio Portfolio Portfolio Portfolio Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
Investment Advisory 0.65%** 0.32%** 0.53%** 0.53%** 0.45%** 0.36%** 0.00%**
Fees After Voluntary
Waiver and
Payment
- -----------------------------------------------------------------------------------------------------------------------------------
12b-1 Fees None None None None None None None
- -----------------------------------------------------------------------------------------------------------------------------------
Other Expenses 0.14% 0.60% 0.33% 0.33% 0.14% 0.60% 0.00%
- -----------------------------------------------------------------------------------------------------------------------------------
Total Fund 0.79%** 0.92%** 0.86%** 0.86%** 0.59%** 0.96%** 1.55%**
Operating
Expenses
After Voluntary
Waiver
and Payment
===================================================================================================================================
</TABLE>
* A purchase reimbursement fee and a redemption reimbursement fee each equal
to 0.75% (as a percentage of the dollar amount purchased or redeemed, as the
case may be) are assessed against investors in shares of The Emerging Markets
Portfolio . For The Global Equity Portfolio those fees are 0.40% for
purchases and 0.30% for redemptions. Both fees are paid to
6
<PAGE>
the Portfolio that assess them. These fees are designed to reflect an
approximation of the brokerage and related transaction costs associated with
the investment of an investor's purchase amount or the disposition of
assets to meet redemptions, and to limit the extent to which The Emerging
Markets Portfolio or The Global Equity Portfolio (and, indirectly, the
Portfolio's existing shareholders) would have to bear such costs. In lieu of
the purchase reimbursement fee, investors in The Global Equity Portfolio may
elect to invest by a contribution of securities or follow procedures that
have the same economic effect as such a contribution. See "HOW TO INVEST,"
"PURCHASE OF SHARES," "HOW TO REDEEM," "REDEMPTION OF SHARES" and "PURPOSE OF
REIMBURSEMENT FEES -- THE EMERGING MARKETS AND THE GLOBAL EQUITY
PORTFOLIOS."
** The above information for The Labor Select International Equity Portfolio
reflects the expenses the Portfolio incurred for the Fund's fiscal year ended
October 31, 1996. Since The Defensive Equity Small/Mid-Cap Portfolio, The
Global Equity Portfolio and The Real Estate Investment Trust Portfolio II
have not commenced operations; the Fund has not commenced selling shares of
The Real Estate Investment Trust Portfolio as of the date of this Prospectus;
and The High-Yield Bond Portfolio and The Emerging Markets Portfolio did not
sell shares until, respectively, December 12, 1996 and April 14, 1997, "Other
Expenses" is based on estimated amounts each Portfolio expects to pay during
their first full fiscal year of operations. For The Real Estate Investment
Trust Portfolio and The Real Estate Investment Trust Portfolio II, "Other
Expenses" are estimates based on the expenses incurred by the original (and
then only) class of shares of The Real Estate Investment Trust Portfolio for
the Fund's fiscal year ended October 31, 1996. Such original class of shares,
like The Real Estate Investment Trust Portfolio class being offered in this
Prospectus, carried no front-end sales charge and was not subject to Rule
12b-1 expenses. Effective October 14, 1997, that original class has been
redesignated REIT Fund A Class, which is offered by a separate prospectus.
With respect to The Defensive Equity Small/Mid-Cap 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 each such Portfolio and to pay such Portfolio's expenses
to the extent necessary to ensure that "Total Operating 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, 0.79% and 0.59%, respectively, during the period
from the commencement of the public offering of such Portfolio through
October 31, 1997. With respect to The Real Estate Investment Trust Portfolio
and The Real Estate Investment Trust Portfolio II, the voluntary waiver and
commitment to pay expenses would limit the relevant expenses to 0.86% through
April 30, 1998. The expense cap for The Real Estate Investment Trust
Portfolio through October 14, 1997 was 0.89%. In the absence of such
voluntary waivers and payments, "Investment Advisory Fees" (as a percentage
of average net assets) would be 0.65%, 0.45%, 0.75% and 0.75% and "Total Fund
Operating Expenses" (as a percentage of average net assets) would be 0.79%,
0.59%, 1.02% and 1.02%, respectively, for The Defensive Equity Small/Mid-Cap
Portfolio, The High-Yield Bond Portfolio, The Real Estate Investment Trust
Portfolio and The Real Estate Investment Trust Portfolio II.
Similarly, Delaware International, the investment adviser to The Labor Select
International Equity Portfolio, The Global Equity Portfolio and The Emerging
Markets Portfolio, has elected voluntarily to waive that portion, if any, of
the annual Investment Advisory Fee payable by each such Portfolio and to pay
such Portfolio's expenses to the extent necessary to ensure that "Total
Operating 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, 0.92%, 0.96% and
1.55%, respectively, during the period from the commencement of the public
offering of the Portfolio through October 31, 1997. Separately, with respect
to The Emerging Markets Portfolio, Delaware International has elected
voluntarily to limit its annual Investment Advisory Fee to no more than 1.00%
of the Portfolio's average daily net assets during the period from October 1,
1997 through October 31, 1998. The effect of the current fee waiver with
respect to "Total Operating Expenses" and the 1.00% fee limitation set forth
in the preceding two sentences with respect to The Emerging Markets Portfolio
is that the annual Investment Advisory Fee paid to Delaware International on
behalf of that Portfolio will be an amount equal to the lesser of 1.00% or
the amount necessary to limit "Total Operating Expenses" of the Portfolio
(exclusive of taxes, interest, brokerage commissions and extraordinary
expenses) to no more than 1.55% of average net assets, on an annualized
basis. Delaware International has also voluntarily agreed that the annual
Investment Advisory Fee payable to Delaware International on behalf of The
Emerging Markets Portfolio will not exceed 1.00% unless shareholders of the
Portfolio have been notified of the change to the 1.00% fee limitation at
7
<PAGE>
least one year in advance of such increase. In the absence of such voluntary
waivers and payments, "Investment Advisory Fees" (as a percentage of average
net assets) would be 0.75%, 0.75% and 1.20%, respectively, and "Total Fund
Operating Expenses" (as a percentage of average net assets) would be 1.30%,
1.35% and 1.86%, respectively, for The Labor Select International Equity
Portfolio, The Global Equity Portfolio and The Emerging Markets Portfolio.
8
<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. The following examples also assume the voluntary waiver
of the management fee and/or other payments of expenses by the investment
adviser as discussed in this Prospectus. For The Emerging Markets and The
Global Equity Portfolios, the expenses include the purchase reimbursement and
redemption reimbursement fees payable to the Portfolios. No other Portfolio
charges these fees.
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
The Defensive Equity Portfolio $7 $21 $37 $ 83
The Aggressive Growth Portfolio 9 29 50 111
The International Equity Portfolio 9 28 49 110
The Labor Select International Equity Portfolio 9 29 51 113
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 High-Yield Bond Portfolio* 6 19
The Global Equity Portfolio* 10 31
The Real Estate Investment Trust Portfolio** 9 28
The Real Estate Investment Trust Portfolio II** 9 28
The Emerging Markets Portfolio* 36 68
</TABLE>
For The Emerging Markets and The Global Equity Portfolios, the only
Portfolios subject to a redemption reimbursement fee, you would pay the
following expenses on the same investment, assuming no redemption:
<TABLE>
<CAPTION>
1 year 3 years
------ -------
<S> <C> <C>
The Emerging Markets Portfolio $26 $58
The Global Equity Portfolio
</TABLE>
* Assumes net assets of each Portfolio equal to $75 million.
** Based upon the expenses incurred by the original (and then only) class of
shares offered by The Real Estate Investment Trust Portfolio for the Fund's
fiscal year ended October 31, 1996. That original class, which has been
redesignated REIT Fund A Class and is offered by a separate prospectus,
carried no front-end sales charge or Rule 12b-1 distribution fees through
October 14, 1997.
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.
9
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights are derived from the financial statements of
The Defensive Equity Portfolio, The Aggressive Growth Portfolio, The
International Equity Portfolio, The Global Fixed Income Portfolio, The Labor
Select International Equity Portfolio, The Real Estate Investment Trust
Portfolio and The Fixed Income Portfolio of Delaware Pooled Trust, Inc. included
in, or incorporated by reference into the Statement of Additional Information
and, for periods ending on or before October 31, 1996 have been audited by Ernst
& Young LLP, independent auditors. The data should be read in conjunction with
the financial statements. Further information about the performance of these
Portfolios is contained in their Annual Report.
Unaudited financial highlights for the period ended April 30, 1997 are also
provided below for The Defensive Equity, The Aggressive Growth, The
International Equity, The Labor Select International Equity, The Real Estate
Investment Trust, The Fixed Income, The Global Fixed Income and The High-Yield
Bond Portfolios. The data should be read in conjunction with the financial
statements and related notes for the period ended April 30, 1997, all of which
are incorporated by reference into the Statement of Additional Information.
Further information about the performance of these Portfolios is contained in
their Semi-Annual Report. Unaudited financial highlights for the period ended
August 31, 1997 for The International Fixed Income Portfolio and The Emerging
Markets Portfolio are also provided below.
The Annual Report (which includes related notes and the report of Ernst & Young
LLP), the Semi-Annual Report (which included related notes) and the Statement of
Additional Information may be obtained from the Fund upon request at no charge.
As of the date of this Prospectus, The Defensive Equity Small/Mid-Cap Portfolio,
The Limited-Term Maturity Portfolio, The Real Estate Investment Trust Portfolio
II and The Global Equity Portfolio have sold no shares to public investors and,
thus, have not commenced operations.
10
<PAGE>
<TABLE>
<CAPTION>
The Defensive
Equity Portfolio
-----------------------------------------------------------------
Unaudited Period
Period 2/3/92(1)
11/1/96 through Year ended through
4/30/97(3) 10/31/96 10/31/95 10/31/94 10/31/93 10/31/92
--------------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.......... $16.4600 $14.6600 $13.0800 $12.7300 $10.6600 $10.0000
Income From Investment Operations
Net Investment Income......................... 0.1809 0.4404 0.4303 0.3203 0.2841 0.2291
Net Gains (Losses) on Securities
(both realized and unrealized)............. 1.4591 2.9596 1.9797 0.6527 2.3159 0.5109
------ ------ ------ ------ ------ ------
Total from Investment Operations........ 1.6400 3.4000 2.4100 0.9730 2.6000 0.7400
------ ------ ------ ------ ------ ------
Less Distributions
Dividends (from net investment income)........ (0.3300) (0.4400) (0.3400) (0.2800) (0.3200) (0.0800)
Distributions (from capital gains)............ (1.5000) (1.1600) (0.4900) (0.3430) (0.2100) none
-------- -------- -------- -------- -------- ---------
Total Distributions..................... (1.8300) (1.6000) (0.8300) (0.6230) (0.5300) (0.0800)
-------- -------- -------- -------- -------- ---------
Net Asset Value, End of Period................ $16.2700 $16.4600 $14.6600 $13.0800 $12.7300 $10.6600
Total Return.................................. 10.87%(2) 24.87%(2) 19.77%(2) 7.96%(2) 25.17%(2) 10.13%(2)
- ------------
Ratios/Supplemental Data
Net Assets, End of Period (000's omitted)..... $76,623 $67,179 $51,947 $37,323 $13,418 $4,473
Ratio of Expenses to Average Daily Net Assets. 0.64% 0.67% 0.68% 0.68% 0.68% 0.68%
Ratio of Expenses to Average Daily Net Assets
Prior to Expense Limitations............. 0.64% 0.70% 0.71% 0.82% 1.38% 2.38%
Ratio of Net Investment Income to Average
Daily Net Assets ........................ 2.30% 2.85% 3.33% 3.26% 2.90% 3.65%
Ratio of Net Investment Income to Average
Daily Net Assets.........................
Prior to Expense Limitations............. 2.30% 2.83% 3.30% 3.12% 2.20% 1.95%
Portfolio Turnover Rate....................... 72% 74% 88% 73% 37% 28%
Average Commission Rate Paid.................. $0.0600 $0.0600 N/A N/A N/A N/A
</TABLE>
- -----------
(1) Date of initial sale; ratios and total return have been annualized.
(2) Total return reflects the expense limitations referenced in Fund Expenses.
(3) Ratios have been annualized; but total return has not been annualized.
11
<PAGE>
<TABLE>
<CAPTION>
The Aggressive
Growth Portfolio
---------------------------------------------------------------------
Unaudited Period
Period Year ended 2/27/92(1)
11/1/96 through ---------------------------------------------------- through
4/30/97(3) 10/31/96 10/31/95 10/31/94 10/31/93 10/31/92
--------------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period...........$14.5700 $12.8600 $11.0100 $11.2000 $9.0400 $10.0000
Income From Investment Operations
Net Investment Income.......................... (0.0572) (0.0188) 0.0428 0.0075 0.0181 0.0167
Net Gains (Losses) on Securities
(both realized and unrealized).............. (0.9728) 2.3913 2.0552 0.0325 2.1589 (0.9767)
-------- ------ ------ ------ ------ --------
Total from Investment Operations......... (1.0300) 2.3725 2.0980 0.0400 2.1770 (0.9600)
-------- ------ ------ ------ ------ --------
Less Distributions
Dividends (from net investment income)........ none (0.0425) (0.0120) (0.0200) (0.0170) none
Distributions (from capital gains)............ (2.3800) (0.6200) (0.2360) (0.2100) none none
-------- -------- -------- -------- -------- ----
Total Distributions..................... (2.3800) (0.6625) (0.2480) (0.2300) (0.0170) none
-------- -------- -------- -------- -------- ----
Net Asset Value, End of Period................ $11.1600 $14.5700 $12.8600 $11.0100 $11.2000 $9.0400
======== ======== ======== ======== ======== =======
Total Return.................................. (8.60%)(2) 19.19%(2) 19.61%(2) 0.34%(2) 24.10%(2) (13.89%)(2)
- ------------
Ratios/Supplemental Data
Net Assets, End of Period (000's omitted)..... $12,092 $28,526 $29,092 $22,640 $20,478 $4,538
Ratio of Expenses to Average Daily Net Assets. 0.93% 0.90% 0.93% 0.93% 0.93% 0.93%
Ratio of Expenses to Average Daily Net Assets
Prior to Expense Limitations............. 1.25% 1.01% 1.08% 1.17% 1.40% 2.56%
Ratio of Net Investment Income to Average
Daily Net Assets ........................ (0.31%) (0.18%) 0.37% 0.07% 0.23% 0.28%
Ratio of Net Investment Income to Average
Daily Net Assets
Prior to Expense Limitations........... (0.63%) (0.29%) 0.22% (0.17%) (0.24%) (1.35%)
Portfolio Turnover Rate....................... 120% 95% 64% 43% 81% 34%
Average Commission Rate Paid.................. $0.0599 $0.0600 N/A N/A N/A N/A
</TABLE>
- ----------------
(1) Date of initial sale; ratios and total return have been annualized.
(2) Total return reflects the expense limitations referenced in Fund Expenses
(3) Ratios have been annualized; but total return has not been annualized.
12
<PAGE>
<TABLE>
<CAPTION>
The International
Equity Portfolio
------------------------------------------------------------------
Unaudited Period
Period 2/4/92(1)
11/1/96 through Year ended through
4/30/97(3) 10/31/96 10/31/95 10/31/94 10/31/93 10/31/92
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.......... $14.7800 $13.1200 $13.1100 $11.9900 $9.5000 $10.0000
Income From Investment Operations
Net Investment Income......................... 0.3466 0.5063 0.4749 0.1440 0.2414 0.2282
====== ====== ====== ====== ====== ======
Net Gains (Losses) on Securities
(both realized and unrealized)............. 0.9934 1.7937 0.0011 1.2360 2.5686 (0.6282)
------ ------ ------ ------ ------ --------
Total from Investment Operations........ 1.3400 2.3000 0.4760 1.3800 2.8100 (0.4000)
------ ------ ------ ------ ------ --------
Less Distributions
Dividends (from net investment income)........ (0.4600) (0.4900) (0.1700) (0.1600) (0.3200) 0.1000)
Distributions (from capital gains)............ none (0.1500) (0.2960) (0.1000) none none
-------- -------- -------- -------- ------ ------
Total Distributions................... (0.4600) (0.6400) (0.4660) (0.2600) (0.3200) (0.1000)
-------- -------- -------- -------- ------ ------
Net Asset Value, End of Period................ $15.6600 $14.7800 $13.1200 $13.1100 $11.9900 $9.5000
======== ======== ======== ======== ======== =======
Total Return.................................. 9.23% 18.12% 3.91% 11.66%(2) 30.28%(2) (5.44%)(2)
- ------------
Ratios/Supplemental Data
Net Assets, End of Period (000's omitted)..... $401,704 $299,950 $156,467 $70,820 $24,288 $5,966
Ratio of Expenses to Average Daily Net Assets. 0.93% 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......................... 4.92% 4.36% 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....................... 9% 8% 20% 22% 28% 2%
Average Commission Rate Paid.................. $0.0295 $0.0198 N/A N/A N/A N/A
</TABLE>
- -------------
(1) Date of initial sale; ratios and total return have been annualized.
(2) Total return reflects the expense limitations referenced in Fund Expenses.
(3) Ratios have been annualized; but total return has not been annualized.
13
<PAGE>
<TABLE>
<CAPTION>
The Global
Fixed Income Portfolio
------------------------------------------------------------
Unaudited Period
Period 11/30/92(1)
11/1/96 through Year ended through
4/30/97(3) 10/31/96 10/31/95 10/31/94 10/31/93
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.......... $11.6200 $11.0400 $9.7900 $11.0900 $10.0000
Income From Investment Operations
Net Investment Income......................... 0.5985 0.7774 0.7357 0.4189 0.9547
Net Gains (Losses) on Securities
(both realized and unrealized)............. (0.6435) 0.7246 0.9243 (0.1929) 0.7433
-------- ------ ------ -------- ------
Total from Investment Operations........ (0.0450) 1.5020 1.6600 0.2260 1.6980
-------- ------ ------ ------ ------
Less Distributions
Dividends (from net investment income)........ (0.6550) (0.7200) (0.4100) (0.9490) (0.6080)
Distributions (from capital gains)............ (0.1700) (0.2020) none (0.5770) none
-------- -------- ---- -------- ----
Total Distributions..................... (0.8250) (0.9220) (0.4100) (1.5260) (0.6080)
-------- -------- -------- -------- --------
Net Asset Value, End of Period................ $10.7500 $11.6200 $11.0400 $9.7900 $11.0900
======== ======== ======== ======= ========
Total Return.................................. (0.47%)(2) 16.40%(2) 17.38%(2) 2.07%(2) 18.96%(2)
- ------------
Ratios/Supplemental Data
Net Assets, End of Period (000's omitted)..... $326,591 $252,068 $99,161 $42,266 $29,313
Ratio of Expenses to Average Daily Net Assets. 0.60% 0.60% 0.60% 0.62% 0.62%
Ratio of Expenses to Average Daily Net Assets
Prior to Expense Limitations............. 0.67% 0.66% 0.68% 0.76% 0.88%
Ratio of Net Investment Income to Average
Daily Net Assets ........................ 10.94% 8.52% 6.73% 3.62% 10.68%
Ratio of Net Investment Income to Average
Daily Net Assets
Prior to Expense Limitations............. 10.87% 8.46% 6.65% 3.48% 10.42%
Portfolio Turnover Rate....................... 118% 63% 77% 205% 198%
</TABLE>
- ---------
(1) Date of initial sale; ratios and total return have been annualized.
(2) Total return reflects the expense limitations referenced in Fund Expenses.
(3) Ratios have been annualized; but total return has not been annualized.
14
<PAGE>
<TABLE>
<CAPTION>
The Labor Select The Real Estate
International Equity Portfolio Investment Trust Portfolio(4) The Fixed Income Portfolio
------------------------------ ----------------------------- --------------------------
Unaudited Period Unaudited Period Unaudited Period
Period 12/19/95(1) Period 12/6/95(1) Period 3/12/96(1)
11/1/96 through through 11/1/96 through through 11/1/96 through through
4/30/97(3) 10/31/96 4/30/97(3) 10/31/96 4/30/97(3) 10/31/96
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period...... $11.6900 $10.0000 $12.4900 $10.0000 $10.0100 $10.0000
======== ======== ======== ======== ======== ========
Income From Investment Operations
Net Investment Income..................... 0.6344 0.4785 0.3700 0.6515 0.3024 0.3856
Net Gains (Losses) on Securities
(both realized and unrealized)......... 0.4856 1.3115 1.8100 1.9385 (0.1400) 0.0100
------ ------ ------ ------ -------- ------
Total from Investment Operations.... 1.1200 1.7900 2.1800 2.5900 0.1624 0.3956
------ ------ ------ ------ ------ --------
Less Distributions
Dividends (from net investment income).... (0.4600) (0.1000) (0.7200) (0.1000) (0.3024) (0.3856)
Distributions (from capital gains)........ none none (0.7900) none none none
---- ---- -------- ---- ---- ----
--------- -------- -------- -------- -------- --------
Total Distributions................. (0.4600) (0.1000) (1.5100) (0.1000) (0.3024) (0.3856)
--------- -------- -------- -------- -------- --------
Net Asset Value, End of Period............ $12.3500 $11.6900 $13.1600 $12.4900 $9.8700 $10.0100
======== ========= ========= ========= ======= =======
Total Return.............................. 9.81%(2) 17.97%(2) 18.57%(2) 26.12%(2) 1.64%(2) 4.08%(2)
- ------------ ======== ========= ========= ========= ======= =======
Ratios/Supplemental Data
Net Assets, End of Period (000's omitted). $39,272 $23,154 $47,211 $26,468 $20,959 $10,518
Ratio of Expenses to Average Daily
Net Assets........................... 0.94% 0.92% 0.87% 0.89% 0.52% 0.53%
Ratio of Expenses to Average Daily
Net Assets Prior to Expense
Limitations......................... 1.02% 1.30% 0.91% 1.02% 0.84% 1.20%
Ratio of Net Investment Income to
Average Daily Net Assets ............ 5.03% 6.64% 5.43% 6.70% 6.13% 6.14%
Ratio of Net Investment Income to Average
Daily Net Assets
Prior to Expense Limitations......... 4.95% 6.26% 5.39% 6.57% 5.81% 5.47%
Portfolio Turnover Rate................... 4% 7% 68% 109% 314% 232%
Average Commission Rate Paid.............. $0.0327 $0.0330 $0.0568 $0.0600 N/A N/A
</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.
(3) Ratios have been annualized; but total return has not been annualized.
15
<PAGE>
(4) December 6, 1995 is the date of initial sale of the original (and then only)
class of shares offered by The Real Estate Investment Trust Portfolio. Data
presented above is for that class of shares which, as of October 14, 1997,
was redesignated the "REIT Fund A Class" and is offered in a separate
prospectus. The shares being offered in this Prospectus were offered for
sale beginnging October 14, 1997 and are designated in the Fund's charter as
"The Real Estate Investment Trust Portfolio class"; lik the original class,
prior to its redesignation, The Real Estate Investment Trust Portfolio class
carries no front-end or contingent deferred sales charges and is not subject
to Rule 12b-1 Distribution Plan fees.
16
<PAGE>
<TABLE>
<CAPTION>
The High-Yield Bond The International Fixed Income The Emerging Markets
Portfolio Portfolio Portfolio
Unaudited Unaudited Unaudited
Period Period Period
12/2/96(1) 4/11/97(1) 4/14/97(1)
through through through
4/30/97 8/31/97 8/31/97
<S> <C> <C> <C>
Net Asset Value, Beginning of Period............ $10.0000 $10.0000 $10.0000
Income From Investment Operations
Net Investment Income........................... 0.3300 0.1365 0.0241
Net Gains (Losses) on Securities
(both realized and unrealized)............... 0.1950 0.1335 0.2559
------ ------
Total from Investment Operations.......... 0.5250 0.2700 0.2800
------ ------
Less Distributions
Dividends (from net investment income).......... (0.2650) none none
Distributions (from capital gains).............. none none none
------ ------
Total Distributions....................... (0.2650) none none
------ ------
Net Asset Value, End of Period.................. $10.2600 $10.2700 $10.2800
Total Return.................................... 5.29%(2) 2.70%(2) 2.90%(2)
- ------------
Ratios/Supplemental Data
Net Assets, End of Period (000's omitted)....... $8,604 $31,600 $20,445
Ratio of Expenses to Average Daily Net Assets... 0.59% 0.60% 1.55%
Ratio of Expenses to Average Daily Net Assets
Prior to Expense Limitations............... 0.91% 0.84% 2.18%
Ratio of Net Investment Income to Average
Daily Net Assets........................... 8.86% 6.10% 1.18%
Ratio of Net Investment Income to Average
Daily Net Assets Prior to Expense
Limitations................................ 8.54% 5.86% 0.55%
Portfolio Turnover Rate......................... 125% 113% 14%
Average Commission Rate Paid.................... N/A N/A $-0-
</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.
17
<PAGE>
DELAWARE POOLED TRUST SUMMARY
THE FUND
The Fund consists of 14 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 Real Estate Investment Trust Portfolio, The Real Estate Investment Trust
Portfolio II, The Global Fixed Income Portfolio, The International Fixed
Income Portfolio and The Emerging Markets Portfolio, is a diversified fund as
defined by the Investment Company Act of 1940 ("1940 Act"). The Real Estate
Investment Trust Portfolio, The Real Estate Investment Trust Portfolio II, The
Global Fixed Income Portfolio, The International Fixed Income Portfolio and
The Emerging Markets Portfolio are nondiversified funds as defined by the 1940
Act. The investment objectives and principal policies of each of the 14
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 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.
The Real Estate Investment Trust Portfolio and The Real Estate Investment
Trust Portfolio II--seek to
18
<PAGE>
achieve maximum long-term total return. Capital appreciation is a secondary
objective. Each Portfolio seeks to achieve its objectives by investing at least
65% of its total assets in equity securities of real estate investment trusts.
The Real Estate Investment Trust Portfolio and The Real Estate Investment Trust
Portfolio II are sometimes referred to collectively as "The Real Estate
Investment Trust Portfolios" in this Prospectus.
The Global Equity Portfolio-- seeks to achieve long-term growth without undue
risk to principal. The Portfolio seeks to achieve this objective by investing in
global securities that provide the potential for capital appreciation and
income.
The Emerging Markets Portfolio--seeks to achieve long-term capital appreciation.
The Portfolio seeks to achieve its objective by investing primarily in equity
securities of issuers located or operating in emerging countries.
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, a Division of McGraw Hill ("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
19
<PAGE>
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 Real Estate Investment Trust and The High-Yield Bond
Portfolios. The investment management fees payable to Delaware Investment
Advisers by these Portfolios are, respectively, 0.55%, 0.80%, 0.40%, 0.30%,
0.65%, 0.75% (for each of The Real Estate Investment Trust Portfolios) and
0.45% 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 Portfolios and receives 30% of the management fees
paid to Delaware. Delaware International, an affiliate of Delaware, is the
investment adviser to The International Equity, The Global Fixed Income, The
International Fixed Income, The Labor Select International Equity, The Global
Equity and The Emerging Markets Portfolios. The investment management fees
payable to Delaware International by The International Equity, The Global
Fixed Income, The International Fixed Income, The Labor Select International
Equity, The Global Equity and The Emerging Markets Portfolios are,
respectively, 0.75%, 0.50%, 0.50%, 0.75%, 0.75% and 1.20% of the respective
Portfolio's average net assets. Delaware acts as sub-adviser to Delaware
International with respect to The Global Equity Portfolio managing the U.S.
securities portion of the Portfolio and receives 50% of the management fee
paid to Delaware International. 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 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, The Labor Select International Equity and The
Emerging Markets Portfolios. See "MANAGEMENT OF THE FUND."
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.
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.
20
<PAGE>
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.
Gerald S. Frey
Vice President/Senior Portfolio Manager - The Aggressive Growth Portfolio
Mr. Frey holds a BA in Economics from Bloomsburg University and attended Wilkes
College and New York University. 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.
Clive A. Gillmore
Director/Senior Portfolio Manager - Delaware International Advisers Ltd. (The
Labor Select International Equity Portfolio and The Emerging Markets
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 and The
Emerging Markets Portfolio since their respective dates of inception.
Robert Akester
Senior Portfolio Manager - Delaware International Advisers Ltd. (The Emerging
Markets Portfolio)
Prior to joining Delaware in 1996, Mr. Akester, who began his investment career
in 1969, was most recently a Director of Hill Samuel Investment Advisers Ltd.,
which he joined in 1985. His prior experience included working as a Senior
Analyst and head of the South-East Asian Research team at James Capel, and as a
Fund Manager at Prudential Assurance Co., Ltd. Mr. Akester holds a BS in
Statistics and Economics from University College, London and is an associate of
the Institute of Actuaries, with a certificate in Finance and Investment. Mr.
Akester has managed The Emerging Markets Portfolio since its inception.
Babak Zenouzi
Vice President/Portfolio Manager - The Real Estate Investment Trust Portfolios
21
<PAGE>
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 and
will serve as portfolio manager for The Real Estate Investment Trust
Portfolio II when it commences operations.</R
Steven R. Brody
Senior Vice President/Director of Real Estate Operations - Lincoln Investment
Management, Inc. Sub-adviser to The Real Estate Investment Trust Portfolios
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 and will serve as a sub-adviser for The Real
Estate Investment Trust Portfolio II when it commences operations.
John F. Robertson
Assistant Vice President/Real Estate Investments - Lincoln Investment
Management, Inc. Sub-adviser to The Real Estate Investment Trust Portfolios
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 is a CFA
charterholder and has completed numerous courses toward the MAI designation.
Mr. Robertson has served as a sub-adviser for The Real Estate Investment Trust
Portfolio since its inception and will serve as a sub-adviser for The Real
Estate Investment Trust Portfolio II when it commences operations.
Lawrence T. Kissko
Vice President/Real Estate Equity - Lincoln Investment Management, Inc.
Sub-adviser to The Real Estate Investment Trust Portfolios
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 CFA charterholder.
Mr. Kissko has served as a sub-adviser for The Real Estate Investment Trust
Portfolio since its inception and will serve as a sub-adviser for The Real
Estate Investment Trust Portfolio II when it commences operations.
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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.
Elizabeth Desmond
Senior Portfolio Manager - Delaware International Advisers Ltd. (The Global
Equity Portfolio)
Ms. Desmond is a graduate of Wellesley College and the masters program in East
Asian studies at Stanford University. After working for the Japanese government
for two years, she began her investment career as a Pacific Basin investment
manager with Shearson Lehman Global Asset Management. Prior to joining Delaware
International in the Spring of 1991, she was a Pacific Basin equity analyst and
senior portfolio manager at Hill Samuel Investment Advisers Ltd. Ms. Desmond is
a CFA charterholder. Ms. Desmond will manage The Global Equity Portfolio when it
commences operations.
Robert L. Arnold
Vice President/Portfolio Manager - The Global Equity Portfolio
Mr. Arnold holds a BS from Carnegie Mellon University and earned an MBA from
the University of Chicago. Before acting as a portfolio manager at Delaware,
he was a financial analyst focusing on the financial services industry,
including banks, thrifts, insurance companies and consumer finance companies.
Prior to joining Delaware in March 1992, he was a planning analyst with
Chemical Bank in New York. He began his investment career as a management
consultant with Arthur Young in Philadelphia. When The Global Equity Portfolio
commences operations, Delaware will act as sub-adviser, managing the U.S.
securities portion of the Portfolio. In that capacity, Mr. Arnold will furnish
investment recommendations, asset allocation advice, research and other
services with respect to U.S. securities.
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.
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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 CFA
charterholder. 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 CFA
charterholder. Mr. Nichols has served as a portfolio manager of The High-Yield
Bond Portfolio since its inception.
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
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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 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, The Global Equity and The Emerging
Markets 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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HOW TO INVEST
Shares of each Portfolio are offered directly to institutions and high net-worth
individual investors at net asset value with no sales commissions or 12b-1
charges. In the case of The Emerging Markets and The Global Equity Portfolios,
there is a purchase reimbursement fee that applies to all purchases, whether
pursuant to the exchange privilege or otherwise. That fee which is paid by
investors to the relevant Portfolio equals 0.75% of the dollar amount invested
for the Emerging Markets Portfolio and 0.40% of the dollar amount invested for
The Global Equity Portfolio. This purchase reimbursement fee is deducted
automatically from the amount invested; it cannot be paid separately. This
purchase reimbursement fee does not apply to investments in the Portfolios
that are made by securities in-kind or reinvestments of dividends or other
distributions. See "PURPOSE OF REIMBURSEMENT FEES --THE EMERGING MARKETS AND
THE GLOBAL EQUITY PORTFOLIOS" and "EXCHANGE PRIVILEGE" under "SHAREHOLDER
SERVICES." 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. Eligible investors in The Global Equity
Portfolio may elect to pay the purchase reimbursement fee or to invest by a
contribution in-kind in securities or by following another procedure that would
have the same economic effect as an in-kind purchase. 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, except The Emerging Markets and The Global Equity
Portfolios, may be redeemed at any time, without cost, at the net asset value
per share of the relevant Portfolio next determined after receipt of the
redemption request. For The Emerging Markets and The Global Equity
Portfolios, shares may be redeemed at any time at the net asset value per
share of the relevant Portfolio next determined after receipt of the
redemption request, less a redemption reimbursement fee equal to 0.75% of such
value in the case of The Emerging Markets Portfolio and 0.30% in the case of
The Global Equity Portfolio. The fee is deducted automatically from the
redemption proceeds. The fee also applies in the case of an exchange of shares
of The Emerging Markets Portfolio or The Global Equity Portfolio for shares of
another Portfolio. See "EXCHANGE PRIVILEGE" under "SHAREHOLDER SERVICES" and
"PURPOSE OF REIMBURSEMENT FEES -- THE EMERGING MARKETS AND THE GLOBAL EQUITY
PORTFOLIOS." 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, The International Fixed Income, The Global Equity and
The Emerging Markets 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
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<PAGE>
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. If a redemption of shares of The Emerging Markets Portfolio
or The Global Equity Portfolio is made in-kind, the redemption reimbursement fee
that is otherwise applicable will not be assessed. See "REDEMPTION OF SHARES."
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 International Equity, The Labor Select International Equity, The Global
Fixed Income, The International Fixed Income, The Global Equity and The
Emerging Markets Portfolios will invest in securities of foreign issuers which
normally are denominated in foreign currencies and may hold foreign currency
directly; in addition, The Real Estate Investment Trust and The High-Yield
Bond Portfolios may invest up to 10% of their total assets in foreign
securities. Investments in securities of non-United States issuers which are
generally denominated in foreign currencies involve certain risk and
opportunity considerations not typically associated with investing in United
States companies. 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 Real Estate Investment Trust, The
International Fixed Income, The Global Equity and The Emerging Markets
Portfolios may engage in foreign currency options and futures transactions.
For a discussion of the risks associated with foreign securities see "FOREIGN
INVESTMENT INFORMATION" and for those concerning these hedging instruments see
"RISKS OF TRANSACTIONS IN OPTIONS, FUTURES AND FORWARD CONTRACTS," both of
which references appear under the heading "ADDITIONAL INVESTMENT INFORMATION."
The International Equity, The Labor Select International Equity, The Global
Equity, The Global Fixed Income, The International Fixed Income, The Real Estate
Investment Trust and The High-Yield Bond Portfolios may commit their assets
eligible for foreign investment to securities of issuers located in emerging
markets. The Emerging Markets Portfolio will invest its assets primarily in
securities of companies that are located or operated in emerging markets.
Investments in securities of companies in emerging markets present a greater
degree of risk than tends to be the case for foreign investments in Western
Europe and other developed markets. Among other things, there is a greater
possibility of expropriation, nationalization, confiscatory taxation, income
earned or other special taxes, foreign exchange restrictions, limitations on the
repatriation of income and capital from investments, defaults in foreign
government debt, and economic, political or social instability. In addition, in
many emerging markets, there is substantially less publicly available
information about issuers and the information that is available tends to be of a
lesser quality. Economic markets and structures tend to be less mature and
diverse and the securities markets which are subject to less government
27
<PAGE>
regulation or supervision may also be smaller, less liquid and subject to
greater price volatility. See "ADDITIONAL INVESTMENT INFORMATION--FOREIGN
INVESTMENT INFORMATION" for a more extensive discussion of these and other
factors.
The foreign securities in which The International Equity, The Labor Select
International Equity, The Global Fixed Income, The International Fixed Income,
The Global Equity and The Emerging Markets Portfolios (and 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 Aggressive Growth, The Real Estate Investment Trust, The Global Equity and
The Emerging Markets Portfolios also may, under certain circumstances, use
certain futures contracts and options on futures contracts, as well as options
on stock. The Portfolios will only enter into these transactions for hedging
purposes. See "FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS" and "RISKS
OF TRANSACTIONS IN OPTIONS, FUTURES AND FORWARD CONTRACTS," both of which
references appear under the heading "ADDITIONAL INVESTMENT INFORMATION."
The Real Estate Investment Trust Portfolios concentrate their investments in
the real estate industry. As a consequence, the net asset value of each
Portfolio can be expected to fluctuate in light of the factors affecting that
industry, and may fluctuate more widely than a portfolio that invests in a
broader range of industries. Each Portfolio may be more susceptible to any
single economic, political or regulatory occurrence affecting the real estate
industry.
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."
The Emerging Markets Portfolio may invest up to 35% of its assets in high-yield,
high risk fixed-income securities, including Brady Bonds. Consequently, greater
investment risks may be involved with an investment in this Portfolio. See
"ADDITIONAL INVESTMENT INFORMATION--HIGH-YIELD, HIGH RISK SECURITIES."
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
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<PAGE>
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 Portfolios, may invest
in mortgage-backed securities. See "ADDITIONAL INVESTMENT
INFORMATION--MORTGAGE-BACKED SECURITIES."
The Real Estate Investment Trust Portfolios, by investing primarily in
securities of real estate investment trusts, are subject to interest rate risk,
in that as interest rates decline, the value of each Portfolio's investments in
real estate investment trusts can be expected to rise. Conversely, when interest
rates rise, the value of each 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 14 Portfolios may lend its portfolio securities, may invest in
repurchase agreements and may purchase securities on a when-issued basis.
While The Real Estate Investment Trust Portfolios, The Global Fixed Income
Portfolio, The International Fixed Income Portfolio and The Emerging Markets
Portfolio intend to seek to qualify as "diversified" investment companies 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.
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.
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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 Depositary Receipts actively
traded in the United States. See "ADDITIONAL INVESTMENT INFORMATION --
DEPOSITARY RECEIPTS" for a further description of American Depositary Receipts.
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. See "PORTFOLIO TRANSACTIONS." 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
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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.
Under normal market conditions, the Portfolio invests at least 65% of its
total assets in growth-oriented common stocks of domestic corporations. Such
companies, in the investment adviser's view, generally are those companies
that currently 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" for further
details concerning these and other investment policies.
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 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
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<PAGE>
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%. See "PORTFOLIO TRANSACTIONS."
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, under normal market conditions, 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 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. See "ADDITIONAL INFORMATION" for further details concerning these and
other investment policies.
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., AAA by S&P or Aaa by Moody's) or
of comparable quality as determined by the Portfolio's investment
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adviser. The Portfolio may also invest in sponsored and unsponsored American
Depositary Receipts, European Depositary Receipts or Global Depositary Receipts
("Depositary Receipts"). See "ADDITIONAL INVESTMENT INFORMATION--DEPOSITARY
RECEIPTS" for a further description of Depositary Receipts.
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 market 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."
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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.
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 Depositary 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 "DEPOSITARY 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
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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. See "PORTFOLIO TRANSACTIONS." 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 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, under normal market conditions, 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 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 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
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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%. See "PORTFOLIO TRANSACTIONS."
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 PORTFOLIOS
The investment objective of each of The Real Estate Investment Trust Portfolios
is to achieve maximum long-term total return. Capital appreciation is a
secondary objective. Each 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 each Portfolio's total assets will
be invested in equity securities of real estate investment trusts ("REITs").
Each Portfolio will operate as a nondiversified fund as defined by the 1940 Act.
The Portfolios invest in equity securities of REITs and other real estate
industry operating companies ("REOCs"). For purposes of the Portfolios'
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 Portfolios' investments in equity
securities of REITs and REOCs may include, from time to time, sponsored or
unsponsored American Depositary 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. Each Portfolio may also purchase
preferred stock. Each Portfolio may invest up to 10% of its assets in foreign
securities, and in convertible securities. See "ADDITIONAL INVESTMENT
INFORMATION--FOREIGN INVESTMENT INFORMATION," "DEPOSITARY RECEIPTS" and
"CONVERTIBLE, DEBT AND NON-TRADITIONAL EQUITY SECURITIES" for further discussion
of these investment policies. Each Portfolio may also invest in mortgage-backed
securities. See "MORTGAGE-BACKED SECURITIES" for more detailed information about
this investment policy.
Each 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, each
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
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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.
Although the Portfolios do not invest directly in real estate, the Portfolios do
invest primarily in REITs, and may purchase equity securities of REOCs. Thus,
because the Portfolio concentrate their investments in the real estate industry,
an investment in either 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 Portfolios 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
either 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 Portfolios do not intend to invest directly in real estate, either
Portfolio could, under certain circumstances, own real estate directly as a
result of a default on securities that it owns. In addition, if either 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.
Each 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.
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In connection with each 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 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%. See "PORTFOLIO TRANSACTIONS."
THE GLOBAL EQUITY PORTFOLIO
The objective of The Global Equity Portfolio is to achieve long-term growth
without undue risk to principal. The Portfolio seeks to achieve this objective
by investing in global equity securities that provide the potential for capital
appreciation and income. The Portfolio is a global fund. Under normal
circumstances, at least 65% of the Portfolio's assets will be invested in equity
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. The Portfolio will invest in a
broad range of equity securities including common stocks, preferred stocks,
convertible securities and warrants. The Portfolio may also invest in sponsored
or unsponsored Depositary Receipts. See "DEPOSITARY RECEIPTS" under "ADDITIONAL
INVESTMENT INFORMATION."
The Portfolio will attempt to achieve its objective by investing in securities
traded in equity markets and currencies that Delaware International and Delaware
Investment Advisers (with respect to U.S. securities) believe offer the best
relative value within the global investment universe. A dividend discount model
will be employed to assess value across country boundaries. When using a
dividend discount analysis to value individual equity markets, Delaware
International and Delaware Investment Advisers (with respect to U.S. securities)
will look at future anticipated dividends and discount the value of those
dividends back to what they would be worth if they were being paid today.
Delaware International and Delaware Investment Advisers (with respect to U.S.
securities) will use this technique to attempt to compare the value of different
investments.
In a global portfolio, currency return is also an integral component of an
investment's total return. Delaware International and Delaware Investment
Advisers (with respect to U.S. securities) will use a purchasing power parity
approach to access the value of individual currencies. Purchasing power parity
attempts to identify the amounts of goods and services that a dollar will buy in
the United States and compare that to the amount of a foreign currency required
to buy the same amount of goods and services in another country. Eventually,
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currencies should trade at levels that would make it possible for the dollar to
buy the same amount of goods and services overseas as in the United States. When
the dollar buys less, the foreign currency may be considered to be overvalued.
When the dollar buys more, the currency may be considered to be undervalued.
Simultaneous with identifying the most attractive equity markets and currencies,
Delaware International and Delaware Investment Advisers (with respect to U.S.
securities) will attempt to purchase undervalued securities. Individual equity
securities around the world will be selected on the basis of an analysis of the
issuing company's operations, financial statements and each company's current
valuation. In the selection process, Delaware International and Delaware
Investment Advisers (with respect to U.S. securities) will place special
emphasis on present dividend yield and expectations for dividend growth.
The Portfolio may purchase securities in any foreign country, developed and
underdeveloped, or emerging market countries. 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 such countries. See "ADDITIONAL INVESTMENT INFORMATION" for
further details concerning these and other investment policies.
The Portfolio may also seek to achieve growth through investment of up to 35% of
its assets in income producing debt securities such as U.S. or foreign
government or corporate bonds. In addition, for temporary defensive purposes,
the Portfolio may invest all or a substantial portion of its assets in high
quality debt instruments issued by foreign governments, their agencies,
instrumentalities or political subdivisions, the U.S. government, its agencies
or instrumentalities (and which are backed by the full faith and credit of the
U.S. government), or issued by foreign or U.S. companies and certain short-term
instruments. See "ADDITIONAL INVESTMENT INFORMATION" for further details
concerning these instruments. For example, the Portfolio may invest in U.S.
fixed-income markets when Delaware International believes that the global equity
markets are excessively volatile or overvalued so that the Fund's objective
cannot be achieved in such markets. Any corporate debt obligations will be rated
AA or better by Standard & Poor's Ratings Group ("S&P"), Aa or better by Moody's
Investors Service, Inc. ("Moody's"), or have an equivalent rating from another
nationally recognized statistical rating organization, or if unrated, will be
determined to be of comparable quality by Delaware International or Delaware
Investment Advisers, as relevant. The Portfolio may also invest in the
securities listed above pending investment of proceeds from new sales of
Portfolio shares and to maintain sufficient cash to meet redemption requests.
It is anticipated that the annual portfolio turnover rate, under normal
circumstances, will not exceed 100%. See "PORTFOLIO TRANSACTIONS."
THE EMERGING MARKETS PORTFOLIO
The objective of The Emerging Markets Portfolio is to achieve long-term capital
appreciation. The Portfolio seeks to achieve this objective by investing
primarily in equity securities of issuers located or operating in emerging
countries. The Portfolio is an international fund. Under normal circumstances,
at least 65% of the Portfolio's assets will be invested in equity securities of
issuers organized or having a majority of their assets or
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deriving a majority of their operating income in at least three different
emerging countries. The Portfolio will attempt to achieve its objective by
investing in a broad range of equity securities, including common stocks,
preferred stocks, convertible securities and warrants issued by companies
located or operating in emerging countries.
The Portfolio considers an "emerging country" to be any country which is
generally recognized to be an emerging or developing country by the
international financial community, including the World Bank and the
International Finance Corporation, as well as countries that are classified by
the United Nations or otherwise regarded by their authorities as developing. In
addition, any country that is included in the IFC Free Index or MSCI EMF Index
will be considered to be an "emerging country." As of the date of this
Prospectus, there are more than 130 countries which, in Delaware International's
judgment, are generally considered to be emerging or developing countries by the
international financial community, approximately 40 of which currently have
stock markets. Within this group of developing or emerging countries are
included almost every nation in the world, except the United States, Canada,
Japan, Australia, New Zealand and most nations located in Western and Northern
Europe.
Currently, investing in many emerging countries is not feasible, or may, in
Delaware International's opinion, involve unacceptable political risks. The
Portfolio will focus its investments in those emerging countries where Delaware
International considers the economies to be developing strongly and where the
markets are becoming more sophisticated. Delaware International believes that
investment opportunities may result from an evolving long-term international
trend favoring more market-oriented economies, a trend that may particularly
benefit certain countries having developing markets. This trend may be
facilitated by local or international political, economic or financial
developments that could benefit the capital markets in such countries.
In considering possible emerging countries in which the Portfolio may invest,
Delaware International will place particular emphasis on certain factors, such
as economic conditions (including growth trends, inflation rates and trade
balances), regulatory and currency controls, accounting standards and political
and social conditions. It is currently anticipated that the countries in which
the Portfolio may invest will include, but not be limited to, Argentina, Brazil,
Chile, China, Columbia, The Czech Republic, Egypt, Greece, Hong Kong, Hungary,
India, Indonesia, Israel, Jamaica, Jordan, Kenya, Korea, Malaysia, Mexico,
Nigeria, Pakistan, Peru, the Philippines, Poland, Portugal, Russia, South
Africa, Sri Lanka, Taiwan, Thailand, Turkey, Venezuela and Zimbabwe. As markets
in other emerging countries develop, Delaware International expects to expand
and further diversify the countries in which the Portfolio invests.
Although not an exclusive list of criteria to be considered by Delaware
International, an emerging country equity security is one issued by a company
that, in the opinion of Delaware International, exhibits one or more of the
following characteristics: (i) its principal securities trading market is an
emerging country, as defined above; (ii) while traded in any market, alone or on
a consolidated basis, the company derives 50% or more of its annual revenues
from either goods produced, sales made or services performed in emerging
countries; or (iii) it is organized under the laws of, and has a principal
office in, an emerging country. Determinations as to eligibility will be made by
Delaware International based on publicly available information and inquiries
made of the companies. See "ADDITIONAL INVESTMENT INFORMATION--FOREIGN
INVESTMENT INFORMATION." The Portfolio may invest in Depositary Receipts. See
"DEPOSITARY RECEIPTS" and "INVESTMENT COMPANY SECURITIES" under "ADDITIONAL
INVESTMENT INFORMATION."
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The Portfolio also may invest in convertible preferred stocks that offer
enhanced yield features, such as Preferred Equity Redemption Cumulative Stock,
and certain other non-traditional equity securities. See "ADDITIONAL INVESTMENT
INFORMATION--CONVERTIBLE, DEBT AND NON-TRADITIONAL EQUITY SECURITIES."
Up to 35% of the Portfolio's net assets may be invested in fixed-income
securities issued by emerging country companies, and foreign governments, their
agencies, instrumentalities or political subdivisions, all of which may be
high-yield, high risk fixed-income securities rated lower than BBB by S&P and
Baa by Moody's or, if unrated, are considered by Delaware International to be of
equivalent quality and which present special investment risks. The Portfolio may
also invest in Brady Bonds and zero coupon securities. See "HIGH-YIELD, HIGH
RISK SECURITIES" and "ZERO COUPON SECURITIES" under "ADDITIONAL INVESTMENT
INFORMATION." The Portfolio may invest in securities issued in any currency and
may hold foreign currency. Securities of issuers within a given country may be
dominated in the currency of another country or in multinational currency units,
including ECU. See "ADDITIONAL INVESTMENT INFORMATION--FORWARD FOREIGN CURRENCY
EXCHANGE CONTRACTS."
For temporary defensive purposes, the Portfolio may invest all or a substantial
portion of its assets in the high quality debt instruments in which The
International Equity Portfolio may invest. See "INVESTMENT OBJECTIVES, POLICIES
AND RISK CONSIDERATIONS--THE INTERNATIONAL EQUITY PORTFOLIO."
See "ADDITIONAL INVESTMENT INFORMATION" for a further discussion about the above
and other securities and investment practices.
It is anticipated that the annual portfolio turnover rate, under normal
circumstances, will not exceed 100%. See "PORTFOLIO TRANSACTIONS."
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 as when the
investment adviser believes they will enhance return without
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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.
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
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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."
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. 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
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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. See
"ADDITIONAL INVESTMENT INFORMATION" for further details concerning these and
other investment policies.
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 Depositary
Receipts or European Depositary 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 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 "DEPOSITARY 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
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<PAGE>
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."
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
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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. See "ADDITIONAL
INVESTMENT INFORMATION" for further details about these and other investment
policies.
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 Depositary
Receipts or European Depositary 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 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 "DEPOSITARY 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."
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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.
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.
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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%. See "PORTFOLIO TRANSACTIONS."
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 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
49
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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"). In addition, a purchase reimbursement fee
equal to 0.75% of the dollar amount invested is charged to investors in shares
of The Emerging Markets Portfolio and paid to the Portfolio; for The Global
Equity Portfolio, the reimbursement fee paid to the Portfolio is equal to 0.40%
of the dollar amount invested. See "HOW TO INVEST" and "PURPOSE OF REIMBURSEMENT
FEES -- THE EMERGING MARKETS AND THE GLOBAL EQUITY PORTFOLIOS.
Shares of The International Equity Portfolio may, under certain circumstances,
be required to be purchased in-kind, as noted below. Eligible investors in The
Global Equity Portfolio may elect to follow these procedures in lieu of paying a
purchase reimbursement fee. 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.
The minimum initial investment for a Portfolio is $1,000,000.
By Federal Funds Wire
Purchases of shares of a Portfolio may be made by having your bank wire Federal
Funds to CoreStates Bank, N.A. as described below. 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). 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
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By Mail
Purchases of shares of a Portfolio may also be made by mailing a check payable
to the specific Portfolio selected to the above address (be sure to complete
an Investment Application before sending your check).
Purchase Price
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-Kind Purchases or Similar Procedures (The International Equity and The
Global Equity Portfolios)
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. In lieu of paying the purchase reimbursement fee otherwise
payable by investors in The Global Equity Portfolio, such investors may follow
the same procedures required for The International Equity Portfolio. See
"VALUATION OF SHARES." Investors in The International Equity Portfolio
required to follow these procedures and those proposing to invest in The Global
Equity Portfolio electing to do so 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
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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.
REDEMPTION OF SHARES
You may withdraw all or any portion of the amount in your account by redeeming
shares at any time by submitting a request in accordance with the instructions
provided below. The Fund will redeem shares of each Portfolio, other than The
Emerging Markets and The Global Equity Portfolios, without cost at its net
asset value next determined after receipt of your redemption request. For
redemptions of shares of The Emerging Markets Portfolio, a redemption
reimbursement fee equal to 0.75% of the amount redeemed is deducted
automatically and paid to the Portfolio; for The Global Equity Portfolio, the
reimbursement fee paid to the Portfolio is equal to 0.30% of the amount
redeemed. See "HOW TO REDEEM" and "PURPOSE OF REIMBURSEMENT FEES -- THE EMERGING
MARKETS AND THE GLOBAL EQUITY PORTFOLIOS." 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, except the reimbursement fee assessed to
investors in The Emerging Markets Portfolio and The Global Equity Portfolio.
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, The
International Fixed Income Portfolio, The Global Equity Portfolio and The
Emerging Markets 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.
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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 Portfolio, The Labor Select International
Equity Portfolio, The Global Fixed Income Portfolio, The International Fixed
Income Portfolio, The Global Equity Portfolio or The Emerging Markets 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 priced 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, The International Fixed
Income, The Global Equity and the Emerging Markets 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, The
International Fixed Income Portfolio, The Global Equity Portfolio or The
Emerging Markets Portfolio will, under normal circumstances, and if applicable
law permits, be required to accept their redemption proceeds in-kind in
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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 will 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 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, The International Fixed Income, The Global Equity and
The Emerging Markets 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.
PURPOSE OF REIMBURSEMENT FEES -- THE EMERGING MARKETS AND THE GLOBAL EQUITY
PORTFOLIOS
The purchase and redemption transaction fees are designed to reflect an
approximation of the brokerage and related transaction costs associated with
the investment of an investor's purchase amount or the disposition of assets to
meet redemptions , and to limit the extent to which The Emerging Markets
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Portfolio or The Global Equity Portfolio (and, indirectly, the Portfolio's
existing shareholders ) would have to bear such costs. These costs include: (1)
brokerage costs; (2) market impact costs, i.e., the increase in markets prices
which may result when a Portfolio purchases or sells thinly traded stocks; and
(3) the effect of the "bid-asked" spread in = international markets.
The fees represent the manager's estimate of the brokerage and other
transaction costs incurred by a Portfolio in purchasing and selling portfolio
securities, especially international stocks. Without the fee, a Portfolio
would incur these costs directly, resulting in reduced investment performance
for all its shareholders . With the fee, the transaction costs of purchasing
and selling stocks are borne not by all existing shareholders, but only by
those investors making transactions. Also, when a portfolio acquires
securities of companies in emerging markets, transaction costs incurred when
purchasing or selling stocks are extremely high. There are three components of
transaction costs - brokerage fees, the difference between the bid/asked spread
and market impact. Each one of these factors is significantly more expensive in
emerging market countries than in the United States, because of less competition
among brokers, lower utilization of technology on the part of the exchanges and
brokers, the lack of derivative instruments and generally less liquid markets.
Consequently, brokerage commissions are high, bid/asked spreads are wide, and
the market impact is significant in those markets. In addition to these
customary costs, most foreign countries have exchange fees or stamp taxes.
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.
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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 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
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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.
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.
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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 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 Labor Select
International Equity, The Real Estate Investment Trust, The Global Fixed Income,
The International Fixed Income, The High-Yield Bond, The Global Equity and The
Emerging Markets 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
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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 Labor Select
International Equity, The Real Estate Investment Trust, The Global Equity, The
Emerging Markets 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;
(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.
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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 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.
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 Equity Portfolio, The Emerging Markets Portfolio, The
Global Fixed Income Portfolio and The International Fixed Income Portfolio (and
The Real Estate Investment Trust and The High-Yield Bond Portfolios, up to 10%
of
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their total assets) will invest in securities of foreign issuers and may hold
foreign currency. Each of these Portfolios has the right to purchase securities
in any developed, underdeveloped or emerging country. The Emerging Markets
Portfolio, under normal market conditions, will invest at least 65% of its total
assets in securities of issuers in emerging markets. Investors should consider
carefully the substantial risks involved in investing in securities issued by
companies and governments of foreign nations. These risks are in addition to the
usual risks inherent in domestic investments. There is the possibility of
expropriation, nationalization or confiscatory taxation, taxation of income
earned in foreign nations or other taxes imposed with respect to investments in
foreign nations, foreign exchange control (which may include suspension of the
ability to transfer currency from a given country), default in foreign
government securities, political or social instability or diplomatic
developments which could affect investments in securities of issuers in those
nations.
In addition, in many countries, there is substantially less publicly available
information about issuers than is available in reports about companies in the
United States and this information tends to be of a lesser quality. Foreign
companies are not subject to uniform accounting, auditing and financial
reporting standards, and auditing practices and requirements may not be
comparable to those applicable to United States companies. In particular, the
assets and profits appearing on the financial statements of a developing or
emerging country issuer may not reflect its financial position or results of
operations in the way they would be reflected had the financial statements been
prepared in accordance with United States generally accepted accounting
principles. Also, for an issuer that keeps accounting records in local currency,
inflation accounting rules may require for both tax and accounting purposes,
that certain assets and liabilities be restated on the issuer's balance sheet in
order to express items in terms of currency or constant purchasing power.
Inflation accounting may indirectly generate losses or profits. Consequently,
financial data may be materially affected by restatements for inflation and may
not accurately reflect the real condition of those issuers and securities
markets.
It is also expected that the expenses for custodial arrangements of The
International Equity, The Labor Select International Equity, The Real Estate
Investment Trust, The Global Fixed Income, The International Fixed Income, The
High-Yield Bond, The Global Equity and The Emerging Markets 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."
Further, a Portfolio may encounter difficulty or be unable to pursue legal
remedies and obtain judgments in foreign courts. Commission rates on securities
transactions in foreign countries, which are sometimes fixed rather than subject
to negotiation as in the United States, are likely to be higher. Further, the
settlement period of securities transactions in foreign markets may be longer
than in domestic markets, and may be subject to administrative uncertainties. In
many foreign countries, there is less government supervision and regulation of
business and industry practices, stock exchanges, brokers and listed companies
than in the United States, and capital requirements for brokerage firms are
generally lower. The foreign securities markets of many of the countries in
which a Portfolio may invest may also be smaller, less liquid and subject to
greater price volatility than those in the United States.
Compared to the United States and other developed countries, emerging countries
may have volatile social conditions, relatively unstable governments and
political systems, economies based on only a few industries and economic
structures that are less diverse and mature, and securities markets that trade a
small number of
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securities, which can result in a low or nonexistent volume of trading. Prices
in these securities markets 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. Until recently, there
has been an absence of a capital market structure or market-oriented economy in
certain emerging countries. Further, investments and opportunities for
investments by foreign investors are subject to a variety of national policies
and restrictions in many emerging countries. These restrictions may take the
form of prior governmental approval, limits on the amount or type of securities
held by foreigners, limits on the types of companies in which foreigners may
invest and prohibitions on foreign investments in issuers or industries deemed
sensitive to national interests. Additional restrictions may be imposed at any
time by these or other countries in which a Portfolio invests. Also, 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 governmental consents. Although these
restrictions may in the future make it undesirable to invest in emerging
countries, the investment managers for the Portfolios do not believe that any
current repatriation restrictions would affect their decision to invest in such
countries. Countries such as those in which a Portfolio may invest, and in which
The Emerging Markets Portfolio will primarily invest, have historically
experienced and may continue to experience, substantial, and in some periods
extremely high rates of inflation for many years, high interest rates, exchange
rate fluctuations or currency depreciation, large amounts of external debt,
balance of payments and trade difficulties and extreme poverty and unemployment.
Other factors which may influence the ability or willingness to service debt
include, but are not limited to, a country's cash flow situation, the
availability of sufficient foreign exchange on the date a payment is due, the
relative size of its debt service burden to the economy as a whole, its
government's policy towards the International Monetary Fund, the World Bank and
other international agencies and the political constraints to which a government
debtor may be subject.
With respect to investment in debt issues of foreign governments, the ability of
a foreign government or government-related issuer to make timely and ultimate
payments on its external debt obligations will also be strongly influenced by
the issuer's balance of payments, including export performance, its access to
international credits and investments, fluctuations in interest rates and the
extent of its foreign reserves. A country whose exports are concentrated in a
few commodities or whose economy depends on certain strategic imports could be
vulnerable to fluctuations in international prices of these commodities or
imports. To the extent that a country receives payment for its exports in
currencies other than dollars, its ability to make debt payments denominated in
dollars could be adversely affected. If a foreign government or
government-related issuer cannot generate sufficient earnings from foreign trade
to service its external debt, it may need to depend on continuing loans and aid
from foreign governments, commercial banks and multilateral organizations, and
inflows of foreign investment. The commitment on the part of these foreign
governments, multilateral organizations and others to make such disbursements
may be conditioned on the government's implementation of economic reforms and/or
economic performance and the timely service of its obligations. Failure to
implement such reforms, achieve such levels of economic performance or repay
principal or interest when due may curtail the willingness of such third parties
to lend funds, which may further impair the issuer's ability or willingness to
service its debts in a timely manner. The cost of servicing external debt will
also generally be adversely affected by rising international interest rates
because many external debt obligations bear interest at rates which are adjusted
based upon international interest rates. The ability to service external debt
will also depend on the level of the relevant government's international
currency reserves and its access to foreign exchange. Currency devaluations may
affect the ability of a government issuer to obtain sufficient foreign exchange
to service its external debt.
As a result of the foregoing, a foreign governmental issuer may default on its
obligations. If such a default
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occurs, a Portfolio may have limited effective legal recourse against the issuer
and/or guarantor. Remedies must, in some cases, be pursued in the courts of the
defaulting party itself, and the ability of the holder of foreign government and
government-related debt securities to obtain recourse may be subject to the
political climate in the relevant country. In addition, no assurance can be
given that the holders of commercial bank debt will not contest payments to the
holders of other foreign government and government-related debt obligations in
the event of default under their commercial bank loan agreements.
Among the foreign government and government related issuers in which The
Emerging Markets, The International Fixed Income and The Global Fixed Income
Portfolios may invest are certain high-yield securities, including so-called
Brady Bonds. 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 "BRADY BONDS" in the
Statement of Additional Information for further information.
The issuers of the foreign government and government-related high-yield
securities, including Brady Bonds, in which The Emerging Markets, The
International Fixed Income and The Global Fixed Income Portfolios expect to
invest have in the past experienced substantial difficulties in servicing their
external debt obligations, which have led to defaults on certain obligations and
the restructuring of certain indebtedness. Restructuring arrangements have
included, among other things, reducing and rescheduling interest and principal
payments by negotiating new or amended credit agreements or converting
outstanding principal and unpaid interest to Brady Bonds, and obtaining new
credit to finance interest payments. Holders of certain foreign government and
government-related high yield securities may be requested to participate in the
restructuring of such obligations and to extend further loans to their issuers.
There can be no assurance that the Brady Bonds and other foreign government and
government-related high yield securities in which The Emerging Markets, The
International Fixed Income and The Global Fixed Income Portfolios may invest
will not be subject to similar defaults or restructuring arrangements which may
adversely affect the value of such investments. Furthermore, certain
participants in the secondary market for such debt may be directly involved in
negotiating the terms of these arrangements and may therefore have access to
information not available to other market participants.
With respect to forward foreign currency exchange, 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. See
"FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS," below.
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FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
As noted above, the foreign investments made by The International Equity, The
Labor Select International Equity, The Real Estate Investment Trust, The Global
Fixed Income, The International Fixed Income, The Global Equity and The Emerging
Markets 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, The Labor Select International Equity, The
Real Estate Investment Trust, The Global Fixed Income, The International Fixed
Income, The Global Equity and The Emerging Markets Portfolios 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 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
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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. The Emerging
Markets Portfolio may invest up to 35% of its net assets in fixed-income
securities issued by emerging country companies, and foreign governments, their
agencies and instrumentalities or political sub-divisions, all of which may be
high-yield, high risk securities, including Brady Bonds. For a description of
Brady Bonds and their attendant risks, see "ADDITIONAL INVESTMENT INFORMATION
- -FOREIGN INVESTMENT INFORMATION." These high-yield, high risk 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.
In addition, The High-Yield Bond Portfolio invests primarily in securities 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. 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
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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.
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, The Real
Estate Investment Trust, The Global Equity and The Emerging Markets Portfolios
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, The Global Equity and The Emerging
Markets Portfolios 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 to hedge or "cross
hedge" the currency risks associated with its investments, as described under
"FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS," above.
The Aggressive Growth, The Real Estate Investment Trust, The Global Equity and
The Emerging Markets Portfolios 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.
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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, The Global Equity or
The Emerging Markets 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. In the case of an option that is
in-the-money at the time of purchase, the in-the-money amount may be excluded in
calculating the 5%.
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, The Real Estate Investment Trust, The Global Equity and
The Emerging Markets Portfolios 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, The Global Equity and The Emerging Markets Portfolios will only invest in
such options to the extent consistent with their 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.
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Options on Stock Indices
The Global Equity Portfolio and The Emerging Markets Portfolio also may acquire
options on stock indices. A stock index assigns relative values to the common
stocks included in the index with the index fluctuating with changes in the
market values of the underlying stock. Options on stock indices are similar to
options on stocks, but have different delivery requirements. See "OPTIONS ON
STOCK INDICES" in the Statement of Additional Information.
Options on Foreign Currencies
The International Fixed Income, The Global Equity and The Emerging Markets
Portfolios may purchase call options and write covered call options on foreign
currencies and enter into related closing transactions. A Portfolio may also
purchase put options and write secured put options on foreign currencies and
enter into related closing transactions. A Portfolio 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.
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 a Portfolio's position, a 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 a Portfolio could
be required to purchase or sell foreign currencies at disadvantageous exchange
rates, thereby incurring losses.
A Portfolio will write call options only if they are "covered" and put options
only if they are secured. A call written by a Portfolio will be considered
covered if a 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 a Portfolio will be considered
secured if, so long as a 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.
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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 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 Defensive Equity
Small/Mid-Cap, The Labor Select International Equity, The Real Estate Investment
Trust, The High-Yield Bond, The International Fixed Income, The Global Equity
and The Emerging Markets 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.
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CONVERTIBLE, DEBT AND NON-TRADITIONAL EQUITY SECURITIES
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 Portfolios' 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 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.
The Defensive Equity Small/Mid-Cap, The Real Estate Investment Trust, The
High-Yield Bond and The Emerging Markets 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 Real Estate Investment Trust, The
High-Yield Bond and The Emerging Markets 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,
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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 Portfolios' 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 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.
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DEPOSITARY RECEIPTS
The Defensive Equity, The International Equity, The Defensive Equity
Small/Mid-Cap, The Real Estate Investment Trust, The Global Fixed Income, The
International Fixed Income, The Global Equity and The Emerging Markets
Portfolios may invest in sponsored and unsponsored American Depositary Receipts
("ADRs") that are actively traded in the United States. The Global Fixed Income
and International Fixed Income Portfolios may also invest in sponsored and
unsponsored European Depositary Receipts ("EDRs") and The International Equity,
The Global Equity and The Emerging Markets Portfolios may also invest in
sponsored and unsponsored EDRs and Global Depositary Receipts ("GDRs"). ADRs are
receipts typically issued by a U.S. bank or trust company which evidence
ownership of underlying securities issued by a foreign corporation. EDRs and
GDRs are receipts issued by non-U.S. Banks or trust companies and foreign
branches of U.S. banks that evidence ownership of the underlying foreign or U.S.
securities. "Sponsored" ADRs, EDRs or GDRs are issued jointly by the issuer of
the underlying security and a Depositary, and "unsponsored" ADRs, EDRs or GDRs
are issued without the participation of the issuer of the deposited security.
Holders of unsponsored ADRs, EDRs or GDRs generally bear all the costs of such
facilities and the Depositary of an unsponsored ADR, EDR or GDR 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, EDR or GDR.
ADRs may be listed on a national securities exchange or may be traded in the
over-the-counter market. EDRs and GDRs traded in the over-the-counter market
which do not have an active or substantial secondary market will be considered
illiquid and therefore will be subject to a Portfolio's limitation with respect
to such securities. ADR prices are denominated in U.S. dollars although the
underlying securities are denominated in a foreign currency. Investments in
ADRs, EDRs and GDRs involve risks similar to those accompanying direct
investments in foreign securities.
INVESTMENT COMPANY SECURITIES
Any investments that The Emerging Markets Portfolio and The Global Equity
Portfolio make in either closed-end or open-end investment companies will be
limited by the 1940 Act, and would involve an indirect payment of a portion of
the expenses, including advisory fees, of such other investment companies. Under
the 1940 Act's limitations, The Emerging Markets Portfolio may not (1) own more
than 3% of the voting stock of another investment company; (2) invest more than
5% of the Portfolio's total assets in the shares of any one investment company;
nor (3) invest more than 10% of the Portfolio's total assets in shares of other
investment companies. These percentage limitations also apply to the Portfolio's
investments in unregistered investment companies.
ZERO COUPON SECURITIES
The market prices of zero coupon securities are generally more volatile than the
market prices of securities that pay interest periodically and are likely to
respond to changes in interest rates to a greater degree than do non-zero coupon
securities having similar maturities and credit quality. Current federal income
tax law requires that a holder of a taxable zero coupon security report as
income each year the portion of the original issue discount of such security
that accrues that year, even though the holder receives no cash payments of
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interest during the year. The Portfolio intends to qualify as a regulated
investment company under the Code. Accordingly, during periods when the
Portfolio receives no interest payments on its zero coupon securities, it will
be required, in order to maintain its desired tax treatment, to distribute cash
approximating the income attributable to such securities. Such distribution may
require the sale of portfolio securities to meet the distribution requirements
and such sales may be subject to the risk factor discussed above.
INVESTMENT LIMITATIONS
Each Portfolio's investment objectives, their designation as a diversified
portfolio or, in the case of The Real Estate Investment Trust, The Global Fixed
Income, The International Fixed Income and The Emerging Markets 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.
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" under "DELAWARE POOLED TRUST SUMMARY" in this Prospectus 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 Real Estate
Investment Trust, The Fixed Income, The Limited-Term Maturity and The High-Yield
Bond Portfolios and furnishes sub-investment advisory services to The Global
Equity Portfolio related to the U.S. securities portion of that Portfolio.
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 Trust Portfolios. 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 Portfolios may
invest.
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Delaware and its predecessors have been managing the funds in the Delaware Group
since 1938. On October 31, 1996, Delaware and its affiliates within the Delaware
Group, including Delaware International, were supervising in the aggregate more
than $30 billion in assets in various institutional or separately managed
(approximately $19,214,690,000) and investment company (approximately
$11,539,873,000) 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 October 31, 1996, Lincoln had over
$39 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, The Labor Select
International Equity, The Global Fixed Income, The International Fixed Income,
The Global Equity and The Emerging Markets Portfolios. 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 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 Portfolios. Delaware International has entered into
Investment Advisory Agreements with the Fund on behalf of The International
Equity, The Labor Select International Equity, The Global Fixed Income, The
International Fixed Income, The Global Equity and The Emerging Markets
Portfolios. Delaware acts as sub-adviser to Delaware International with respect
to The Global Equity Portfolio managing the U.S. securities portion of that
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.
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:
<TABLE>
<CAPTION>
Portfolio Rate
<S> <C>
The Defensive Equity Portfolio 0.55%
The Aggressive Growth Portfolio 0.80%
The International Equity Portfolio 0.75%
The Defensive Equity Small/Mid-Cap Portfolio 0.65%
The Labor Select International Equity Portfolio 0.75%
The Real Estate Investment Trust Portfolio 0.75%*
The Real Estate Investment Trust Portfolio II 0.75%*
The Global Equity Portfolio 0.75%**
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C>
The Emerging Markets Portfolio 1.20%***
The Fixed Income Portfolio 0.40%
The Limited-Term Maturity Portfolio 0.30%
The Global Fixed Income Portfolio 0.50%
The International Fixed Income Portfolio 0.50%
The High-Yield Bond Portfolio 0.45%
</TABLE>
* 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
Portfolios.
** Delaware receives 50% of the advisory fee paid to Delaware International
for acting as sub-adviser to Delaware International with respect to the
U.S. securities portion of The Global Equity Portfolio.
*** Delaware International has elected voluntarily to limit its annual
Investment Advisory Fee to no more than 1.00% of The Emerging Markets
Portfolio's average daily net assets during the period from October 1, 1997
through October 31, 1998. The effect of the current fee waiver of 1.55%
with respect to "Total Operating Expenses" and the 1.00% fee limitation
with respect to The Emerging Markets Portfolio is that the annual
Investment Advisory Fee paid to Delaware International on behalf of that
Portfolio will be an amount equal to the lesser of 1.00% or the amount
necessary to limit "Total Operating Expenses" of the Portfolio (exclusive
of taxes, interest, brokerage commissions and extraordinary expenses) to no
more than 1.55% of average net assets, on an annualized basis. Delaware
International has also voluntarily agreed that the annual Investment
Advisory Fee payable to Delaware International on behalf of The Emerging
Markets Portfolio will not exceed 1.00% unless shareholders of the
Portfolio have been notified of the change to the 1.00% fee limitation at
least one year in advance of such increase.
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 pay 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, 1997. 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 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, The
International Fixed Income and The Emerging Markets Portfolios. With respect to
The Defensive Equity, The Aggressive Growth, The Global Fixed Income, The Fixed
Income, and The Labor Select International Equity Portfolios, the investment
management fees earned were 0.55%, 0.79%, 0.50%, 0.38% (annualized), 0.75%
(annualized), respectively, of average daily net assets for the fiscal year
ended October 31, 1996. After considering the waiver of fees by the respective
investment adviser, as described above, the fees paid by The Defensive Equity,
The Aggressive Growth, The Global Fixed Income, and The Labor Select
International Equity Portfolios amounted to 0.52%, 0.69%, 0.43%, and 0.32%
(annualized), respectively, of average daily net assets. No fees were paid by
The Fixed Income Portfolio. For the fiscal year ended October 31, 1996, the
investment management fee paid by The International Equity Portfolio amounted to
0.75% of average daily net assets. The advisory fees payable by The Aggressive
Growth, The International Equity, The Labor Select International Equity, The
Real Estate Investment Trust, The Global Equity and The
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Emerging Markets 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.
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 Portfolios 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.
The Real Estate Investment Trust Portfolio II - Past Performance of Previous
Fund
The investment objectives, policies and strategies of The Real Estate Investment
Trust Portfolio and The Real Estate Investment Trust Portfolio II are identical.
Mr. Zenouzi makes comparable selections of securities for each Portfolio. The
table below presents total return performance as of September 30, 1997 on an
annualized basis for The Real Estate Investment Trust Portfolio compared with
The NAREIT Equity REIT Index:
Since Inception
(12/6/95)
The Real Estate Investment Trust Portfolio (1) 00.00%
The NAREIT Equity REIT Index (2) 32.98%
(1) The historical performance presented above is that of the original (and,
prior to October 14, 1997, only) class of shares ("Original Class") offered
by The Real Estate Investment Trust Portfolio. The Original Class, like the
only class of shares offered by The Real Estate Investment Trust Portfolio
II, did not carry a front-end sales charge and was not subject to Rule
12b-1 distribution expenses. Total return reflects changes in share prices
and reinvestment of dividends and distributions and is net of all
expenses. The expense ratio of the Original Class of The Real Estate
Investment Trust Portfolio was capped at 0.89% since inception. The
Original Class has been redesignated "REIT Fund A Class" and is now being
offered in a separate prospectus.
(2) The NAREIT Equity REIT Index is an unmanaged index and a theoretical
measure of the performance of real estate investment trust stocks in
aggregate rather than an actual available investment.
Please note that this historical performance presented above is for The Real
Estate Investment Trust Portfolio, a separate Portfolio of the Fund, and its
performance is not indicative of the potential performance of The Real Estate
Investment Trust Portfolio II. Share prices and investment returns will
fluctuate reflecting market conditions.
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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
Fund Accounting 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.
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. For the fiscal
year ended October 31, 1996, the ratios of expenses to average daily net assets
for The Defensive Equity, The Aggressive Growth, The Global Fixed Income, The
Labor Select International Equity, The Real Estate Investment Trust Portfolio
and The International Equity Portfolios were 0.67%, 0.90%, 0.60%, 0.92%
(annualized), 0.89% (annualized) and 0.89%, respectively. The ratio of
expenses to average daily net assets for The Fixed Income Portfolio is expected
to equal 0.53% on an annual basis. For each Portfolio other than The
International Equity Portfolio, these ratios reflect the waiver and payment of
fees by the respective investment adviser, as described above.
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
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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 or the institutional class shares of the other funds in the Delaware
Group based on the respective net asset values of the shares involved and as
long as a Portfolio's minimum is satisfied. With respect to exchanges involving
The Emerging Markets Portfolio, however, an investor will be assessed a purchase
reimbursement fee by that Portfolio when exchanging from another Portfolio into
The Emerging Markets Portfolio and a shareholder of The Emerging Markets
Portfolio will be assessed a redemption reimbursement fee by that Portfolio when
exchanging out of The Emerging Markets Portfolio into another Portfolio. See
"HOW TO INVEST," "HOW TO REDEEM" and "PURPOSE OF REIMBURSEMENT FEES -- THE
EMERGING MARKETS PORTFOLIO." There are no minimum purchase requirements for the
institutional class shares of the other Delaware Group funds, but certain
eligibility requirements must be 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.
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The Fund maintains the following dividend and capital gains policies for its 14
Portfolios.
The Fixed Income and The Limited-Term Maturity Portfolios expect to declare
dividends daily and distribute them monthly. 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 , The Labor Select International Equity and The
International Fixed Income Portfolios expect to declare and distribute all of
their net investment income to shareholders as dividends quarterly. The
Aggressive Growth, The Real Estate Investment Trust, The Global Equity and The
Emerging Markets 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 of 1986, as amended (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, The Labor Select International Equity, The Global Equity and The
Emerging Markets 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 , The Aggressive Growth and The Real
Estate Investment Trust Portfolios for the fiscal year ended October 31, 1996,
55%, 44% and 5%, 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 by-product 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.
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<PAGE>
The International Equity Portfolio, The Labor Select International Equity
Portfolio, The Global Fixed Income Portfolio, The International Fixed Income
Portfolio, The Global Equity and The Emerging Markets Portfolio - Foreign Taxes
Each of The International Equity, The Labor Select International Equity, The
Global Fixed Income, The International Fixed Income, The Global Equity and The
Emerging Markets Portfolios may elect to "pass-through" to its shareholders 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
83
<PAGE>
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, The
Labor Select International Equity, The Global Fixed Income, The International
Fixed Income, The Global Equity and The Emerging Markets Portfolios (and, to a
limited extent, The Real Estate Investment Trust and The High-Yield Bond
Portfolios) 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, The Labor Select International Equity,
The Global Fixed Income, The International Fixed Income, The Global Equity and
The Emerging Markets Portfolios, 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, The Labor Select International Equity, The Global Fixed
Income, The International Fixed Income, The Global Equity and The Emerging
Markets Portfolios, 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.
84
<PAGE>
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.
85
<PAGE>
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 class of shares of a Portfolio 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.
Lincoln National Corporation Employees' Retirement Trust (the "Trust") made
investments in The Emerging Markets Portfolio and The Real Estate Investment
Trust Portfolio and will make an investment in The Real Estate Investment Trust
Portfolio II, which resulted in the Trust owning approximately 100% of the
outstanding shares of The Emerging Markets Portfolio and The Real Estate
Investment Trust Portfolio and could result in the Trust owning approximately
100% of the outstanding shares of The Real Estate Investment Trust Portfolio II.
Subject to certain limited exceptions, there would be no limitation on the
Trust's ability to redeem its shares of the Portfolios and it may elect to do so
at any time.
Lincoln National Life Insurance Company ("LNLIC") will make an investment in The
Global Equity Portfolio, which resulted in LNLIC owning approximately 100% of
the outstanding shares of the Portfolio. Subject to certain limited exceptions,
there would be no limitation on LNLIC's ability to redeem its shares of the
Portfolio and it may elect to do so at any time.
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, The Global Equity and The Emerging Markets
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.
Independent Auditors
Ernst & Young LLP, Two Commerce Square, 2001 Market Street, Suite 4000,
Philadelphia, PA 19103, serves as independent auditors for the Fund.
86
<PAGE>
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.
87
<PAGE>
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.
88
<PAGE>
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.
89
<PAGE>
^ REIT FUND PROSPECTUS
A CLASS SHARES October 14, 1997
B CLASS SHARES
C CLASS SHARES
^
-------------------------------------------------------------------------------
1818 Market Street, Philadelphia, PA 19103
For Prospectus and Performance: Nationwide 800^-523^-4640
Information on Existing Accounts: (SHAREHOLDERS ONLY)
Nationwide 800^-523^-1918
Dealer Services: (BROKER/DEALERS ONLY)
Nationwide 800^-362^-7500
Representatives of Financial Institutions: ^ Nationwide 800^-659^-2265
This Prospectus describes ^ REIT Fund A Class shares ("Class A
Shares"), ^ REIT Fund B Class shares ("Class B Shares") and ^ REIT Fund C
Class shares ("Class C Shares") of The Real Estate Investment Trust Portfolio
^(the "Fund") of Delaware Pooled Trust, Inc. ("Pooled Trust, Inc."), a
professionally-managed mutual fund. The Fund's objective is to seek to achieve
maximum long-term total return. Capital appreciation is a secondary objective.
It seeks to achieve its objectives by investing in securities of companies
primarily engaged in the real estate industry.
This Prospectus relates only to the classes listed above
(individually, a "Class" and collectively, the "Classes") and sets forth
information that you should read and consider before you invest. Please retain
it for future reference. The Fund's Statement of Additional Information ("Part
B" of ^ Pooled Trust, Inc.'s registration statement), dated ^ October 14,
1997, as it may be amended from time to time, contains additional information
about the Fund and has been filed with the Securities and Exchange Commission.
Part B is incorporated by reference into this Prospectus and is available,
without charge, by writing to Delaware Distributors, L.P. at the above address
or by calling the above telephone numbers.
The Fund also offers ^ REIT Fund Institutional Class and The Real
Estate Investment Trust Portfolio class, which are available for purchase only
by certain investors. ^ To obtain the Prospectus for The Real Estate
Investment Trust Portfolio class, please write to Delaware ^ Pooled Trust,
Inc. at One Commerce Square, 2005 Market Street, Philadelphia, PA 19103, Attn:
Client Services or call 800-231-8002. To obtain the Prospectus for REIT Fund
Institutional Class, please write to the Distributor at 1818 Market
Street, Philadelphia, PA 19103 or call 800-828-5052.
<PAGE>
TABLE OF CONTENTS
COVER PAGE
SYNOPSIS
SUMMARY OF EXPENSES
FINANCIAL HIGHLIGHTS
SUITABILITY
INVESTMENT OBJECTIVES, POLICIES AND RISK FACTORS
THE DELAWARE DIFFERENCE
Plans and Services
RETIREMENT PLANNING
CLASSES OF SHARES
HOW TO BUY SHARES
REDEMPTION AND EXCHANGE
DIVIDENDS AND DISTRIBUTIONS
TAXES
CALCULATION OF OFFERING PRICE
AND NET ASSET VALUE PER SHARE
MANAGEMENT OF THE FUND
ADDITIONAL INVESTMENT INFORMATION ON
POLICIES AND RISK CONSIDERATIONS
APPENDIX A - INVESTMENT ILLUSTRATIONS
APPENDIX B - CLASSES OFFERED
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.
BE SURE TO CONSULT YOUR FINANCIAL ADVISER WHEN MAKING INVESTMENTS. MUTUAL
FUNDS CAN BE A VALUABLE PART OF YOUR FINANCIAL PLAN; HOWEVER, SHARES OF THE
FUND ARE NOT FDIC OR NCUSIF INSURED, ARE NOT GUARANTEED BY ANY BANK OR ANY
CREDIT UNION, ARE NOT OBLIGATIONS OF ANY BANK OR ANY CREDIT UNION, AND INVOLVE
INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
SHARES OF THE FUND ARE NOT BANK OR CREDIT UNION DEPOSITS.
-3-
<PAGE>
SYNOPSIS
Investment Objective
The investment objective of the Fund is to seek to achieve maximum
long-term total return. Capital appreciation is a secondary objective. It
seeks to achieve its objectives by investing in securities of companies
primarily engaged in the real estate industry. Under normal circumstances, at
least 65% of the Fund's total assets will be invested in equity securities of
real estate investment trusts ("REITs"). For further details, see Investment ^
Objectives, Policies and Risk Factors and Additional Investment Information on
^ Policies and Risk Considerations.
Risk Factors and Special Considerations
^ The Fund concentrates its investments in the real estate industry,
so its net asset value can be expected to fluctuate in light of factors
affecting that industry and may fluctuate more widely than a portfolio that
invests in a broader range of industries. By investing primarily in securities
of REITs, the Fund is also subject to interest rate risk.
The Fund may invest up to 10% of its total assets in foreign
securities, including securities of issuers in emerging markets. Those new
securities pose special risks that do not typically arise in connection with
investments in U.S. securities.
The Fund may use futures contracts, options on futures contracts and
options on stock and may engage in foreign currency options and futures
transactions for hedging purposes. There are special risks that result from
the use of options and futures.
The Fund is considered a nondiversified investment company under the
Investment Company Act of 1940 (the "1940 Act") and may be subject to greater
risks than if the Fund were diversified. A nondiversified portfolio of
securities is believed to be subject to greater risk because adverse effects
on the portfolio's security holdings may affect a larger portion of its
overall assets.
See Investment Objectives, Policies^ and Risk ^ Factors concerning
these and other investment policies of the Fund.
Investment Manager, Distributor and Service Agent
^ Delaware Management Company, Inc. (the "Manager") furnishes investment
management services to the Fund, subject to the supervision and direction of
the Board of Directors. The Manager also provides investment management
services to certain of the other funds in the Delaware Group. Lincoln
Investment Management, Inc. ("Lincoln" ^ or "Sub-Adviser"), a wholly owned
subsidiary of Lincoln National Corporation, acts as sub-adviser to the Manager
with respect to the Fund. Delaware Distributors, L.P. (the "Distributor") is
the national distributor for the Fund and for all of the other mutual funds in
the Delaware Group. Delaware Service Company, Inc. (the "Transfer Agent") is
the shareholder servicing, dividend disbursing, accounting services and
transfer agent for the Fund and for all of the other mutual funds in the
Delaware Group. See Summary of Expenses and Management of the Fund for further
information regarding the Manager and the Sub-Adviser and the fees payable
under the Fund's Investment Management Agreement and Sub-Advisory Agreement.
-4-
<PAGE>
Sales Charges
The price of the Class A Shares includes a maximum front-end sales
charge of 4.75% of the offering price. The sales charge is reduced on certain
transactions of at least $100,000 but under $1,000,000. For purchases of
$1,000,000 or more, the front-end sales charge is eliminated (subject to a
CDSC of 1% if in connection with such purchase a dealer commission was paid
and shares are redeemed within 12 months of purchase). Class A Shares are
subject to annual 12b-1 Plan expenses for the life of the investment.
The price of the Class B Shares is equal to the net asset value per
share. Class B Shares are subject to a contingent deferred sales charge
("CDSC") of: (i) 4% if shares are redeemed within two years of purchase; (ii)
3% if shares are redeemed during the third or fourth year following purchase;
(iii) 2% if shares are redeemed during the fifth year following purchase; and
(iv) 1% if shares are redeemed during the sixth year following purchase. Class
B Shares are subject to annual 12b-1 Plan expenses which are assessed against
the Class B Shares for approximately eight years after purchase. See Deferred
Sales Charge Alternative--Class B Shares and Automatic Conversion of Class B
Shares under Classes of Shares.
The price of the Class C Shares is equal to the net asset value per
share. Class C Shares are subject to a CDSC of 1% if shares are redeemed
within 12 months of purchase. Class C Shares are subject to annual 12b-1 Plan
expenses for the life of the investment.
See Classes of Shares and Distribution (12b-1) and Service under
Management of the Fund.
Purchase Amounts
Generally, the minimum initial investment in any Class is $1,000.
Subsequent investments must generally be at least $100.
Each purchase of Class B Shares is subject to a maximum purchase
limitation of $250,000. For Class C Shares, each purchase must be in an amount
that is less than $1,000,000. An investor may exceed the maximum purchase
limitations for Class B Shares and Class C Shares by making cumulative
purchases over a period of time. An investor should keep in mind, however,
that reduced front-end sales charges apply to investments of $100,000 or more
of Class A Shares, ^ and that Class A Shares are subject to lower annual 12b-1
Plan expenses than Class B Shares and Class C Shares and generally are not
subject to a CDSC. The minimum and maximum purchase amounts for retirement
plans may vary. See How to Buy Shares.
Redemption and Exchange
Class A Shares of the Fund may be redeemed or exchanged at the net
asset value calculated after receipt of the redemption or exchange request.
Neither the Fund nor the Distributor assesses a charge for redemptions or
exchanges of Class A Shares, except for certain redemptions of shares
purchased at net asset value, which may be subject to a CDSC if a dealer's
commission was paid in connection with such purchases. See Front-End Sales
Charge Alternative - Class A Shares under Classes of Shares.
Class B Shares and Class C Shares may be redeemed or exchanged at the
net asset value calculated after receipt of the redemption or exchange request
subject, in the case of redemptions, to any applicable CDSC. Neither the Fund
nor the Distributor assesses any charges other than the CDSC for redemptions
or exchanges of Class B or Class C Shares. There are certain limitations on an
investor's ability to exchange shares between the various classes of shares
that are offered. See Redemption and Exchange.
Open-End Investment Company
-5-
<PAGE>
The Fund is a series of ^ Pooled Trust, Inc. ^ Pooled Trust, Inc. was
organized as a Maryland corporation on May 30, 1991, and is an open-end
management investment company. See Shares under Management of the Fund.
-6-
<PAGE>
SUMMARY OF EXPENSES
A general comparison of the sales arrangements and other expenses
applicable to Class A, Class B and Class C Shares follows:
<TABLE>
<CAPTION>
Class A Class B Class C
Shareholder Transaction Expenses Shares Shares Shares
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)..............................4.75% None None
Maximum Sales Charge Imposed on Reinvested
Dividends (as a percentage of offering price)....................None None None
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price or
redemption proceeds, as applicable)..............................None* 4.00%** 1.00%***
Redemption Fees..................................................None**** None**** None****
</TABLE>
*Class A purchases of $1 million or more may be made at net asset
value. However, if in connection with any such purchase a dealer commission is
paid to the financial adviser through whom such purchase is effected, a CDSC
of 1% will be imposed on certain redemptions within 12 months of purchase
("Limited CDSC"). See Contingent Deferred Sales Charge for Certain Redemptions
of Class A Shares Purchased at Net Asset Value under Redemption and Exchange.
**Class B Shares are subject to a CDSC of: (i) 4% if shares are
redeemed within two years of purchase; (ii) 3% if shares are redeemed during
the third or fourth year following purchase; (iii) 2% if shares are redeemed
during the fifth year following purchase; (iv) 1% if shares are redeemed
during the sixth year following purchase; and (v) 0% thereafter. See Deferred
Sales Charge Alternative - Class B Shares.
***Class C Shares are subject to a CDSC of 1% if the shares are
redeemed within 12 months of purchase. See ^ Level Sales Charge Alternative -
Class C Shares under Classes of Shares.
****CoreStates Bank, N.A. currently charges $7.50 per redemption
for redemptions payable by wire.
-7-
<PAGE>
The following example illustrates the expenses that an investor
would pay on a $1,000 investment over various time periods, assuming (1) a 5%
annual rate of return, (2) redemption and no redemption at the end of each
time period and (3) for Class B Shares and Class C Shares, payment of a CDSC
at the time of redemption, if applicable. The example is based on the expenses
incurred by the original (and then only) class of shares offered by the Fund
for the Fund's fiscal year ended October 31, 1996^, but consistent with the
presentation provided in the Summary of Expenses Table above, those expenses^
have been restated to reflect the applicable Rule 12b-1 fee ^, to which each
Class is subject^. See, Summary of Expenses for details concerning the waivers
and the differences in expenses borne by the Fund's original ^ share and those
to be borne by Classes A, B, and C. The example assumes the voluntary waiver
of the management fee and/or other expenses by the Manager.
<TABLE>
<CAPTION>
Assuming Redemption Assuming No Redemption
1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years
------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A Shares $[](1) $[] $[] $[] $[] $[] $[] $[]
Class B Shares(2) $[] $[] $[] $[] $[] $[] $[] $[]
Class C Shares $[] $[] $[] $[] $[] $[] $[] $[]
</TABLE>
(1) Generally, no redemption charge is assessed upon redemption of Class A
Shares. Under certain circumstances, however, a Limited CDSC, which has
not been reflected in this calculation, may be imposed in the event of
certain redemptions within 12 months of purchase. See Contingent
Deferred Sales Charge for Certain Redemptions of Class A Shares
Purchased at Net Asset Value under Redemption and Exchange.
(2) At the end of approximately eight years after purchase, Class B Shares
will be automatically converted into Class A Shares. The example above
does not assume conversion of Class B Shares since it reflects figures
only for one and three years. See Automatic Conversion of Class B
Shares under Classes of Shares for a description of the automatic
conversion feature.
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.
The purpose of the above tables is to assist the investor in
understanding the various costs and expenses that an investor in each Class
will bear directly or indirectly.
^
-8-
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights are derived from the financial
statements of the Fund included in, or incorporated by reference into ^ Part B
and, for periods ending on or before October 31, 1996 have been audited by
Ernst & Young LLP, independent auditors. The data should be read in
conjunction with the financial statements and related notes. Unaudited
financial highlights for the period ended April 30, 1997 are also provided
below for the Fund. The data should be read in conjunction with the financial
statements and related notes for the period ended April 30, 1997, all of which
are incorporated by reference into Part B.
Further information about the performance of the Fund is contained in
its Annual Report^ and SemiAnnual Report. The Annual Report (which includes
related notes and the report of Ernst & Young LLP) ^, the Semi-Annual Report
(which includes related notes) and Part B may be obtained from the Fund upon
request at no charge.
As of the date of this Prospectus the Fund has sold no Class B or
Class C Shares to public investors.
^
-9-
<PAGE>
<TABLE>
<CAPTION>
REIT FUND A CLASS
Unaudited Period
Period 12/6/95(1)(2)
11/1/96 through through
4/30/97(1)(3) 10/31/96
<S> <C> <C>
Net Asset Value, Beginning of Period............................... $12.4900 $10.0000
Income From Investment Operations
Net Investment Income.............................................. 0.3700 0.6515
Net Gains (Losses) on Securities
(both realized and unrealized).................................. 1.8100 1.9385
Total from Investment Operations............................. 2.1800 2.5900
Less Distributions
Dividends (from net investment income)............................. (0.7200) (0.1000)
Distributions (from capital gains)................................. (0.7900) none
Total Distributions.......................................... (1.5100) (0.1000)
Net Asset Value, End of Period..................................... $13.1600 $12.4900
- --------------------------
Total Return....................................................... 18.57%(4) 26.12%(4)
- --------------------------
Ratios/Supplemental Data
Net Assets, End of Period (000's omitted).......................... $47,211 $26,468
Ratio of Expenses to Average Daily Net Assets...................... 0.87% 0.89%
Ratio of Expenses to Average Daily Net Assets
Prior to Expense Limitations.................................. 0.91% 1.02%
Ratio of Net Investment Income to Average Daily Net Assets......... 5.43% 6.70%
Ratio of Net Investment Income to Average Daily Net Assets.........
Prior to Expense Limitations.................................. 5.39% 6.57%
Portfolio Turnover Rate............................................ 68% 109%
Average Commission Rate Paid....................................... $0.0568 $0.0600
</TABLE>
- ---------
(1) The financial highlights appearing above are derived from data concerning
the original (and then only) class of shares offered by the Fund. That
original class has been redesignated REIT Fund A Class and, prior to its
redesignation, did not carry a front-end sales charge and was not subject
to Rule 12b-1 distribution expenses. The financial highlights appearing
above do not reflect the Rule 12b-1 distribution expenses.
(2) Date of initial sale (now REIT Fund A Class); ratios have been
annualized, but total return has not been annualized.
(3) Ratios have been annualized; but total return has not been annualized.
(4) Does not reflect the maximum sales charge that is in effect nor the 1%
Limited CDSC that would apply in the event of certain redemptions within
12 months of purchase. Total return reflects the expense limitation of
0.89% applicable to the original class of shares offered by the Fund.
<PAGE>
^ SUITABILITY
The Fund may be suitable for the patient investor interested in
long-term capital appreciation with the potential for current income.
Investors should be willing to accept the risks associated with investments in
a portfolio of equity securities and convertible securities issued by domestic
and foreign issuers concentrated in the real estate industry. Because current
income is a secondary objective of the Fund, the Fund is not suitable as an
investment vehicle for investors whose primary investment goal is current
income.
The risks associated with an investment in the Fund are discussed
below under Investment Objectives, Policies and Risk Considerations.
INVESTMENT OBJECTIVES, POLICIES AND RISK CONSIDERATIONS
The investment objectives of the Fund is described below, together
with the policies the Fund employs in its efforts to achieve its objectives.
There is no assurance that the Fund will attain its objectives. The investment
objectives of the Fund is fundamental and may only be changed by a majority
approval of the Fund's shareholders. Unless otherwise noted, the investment
policies described below are not fundamental policies and may be changed
without shareholder approval.
Investment Objectives and Policies
The investment objective of the Fund is to achieve maximum long-term
total return. Capital appreciation is a secondary objective. The Fund 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 Fund's total assets will be invested in equity securities of real
estate investment trusts ("REITs"). The Fund will operate as a nondiversified
fund as defined by the 1940 Act.
The Fund invests in equity securities of REITs and other real estate
industry operating companies ("REOCs"). For purposes of the Fund'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 Fund's
investments in equity securities of REITs and REOCs may include, from time to
time, sponsored or unsponsored American Depositary 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
Fund may also purchase preferred stock. The Fund may invest up to 10% of its
assets in foreign securities, and in convertible securities. See ^ Foreign
Investment Information, Depositary Receipts and Convertible, Debt and
Non-Traditional Equity Securities under Additional Investment Information on
Policies and Risk Considerations for further discussion of these investment
policies. The Fund may also invest in mortgage-backed securities. See
Mortgage-Backed Securities under Additional Investment Information on Policies
and Risk Considerations for more detailed information about this investment
policy.
The Fund may hold cash or invest in short-term debt securities and
other money market instruments when, in the Manager's opinion, such holdings
are prudent given then prevailing market conditions. Except when the Manager
believes a temporary defensive approach is appropriate, the Fund 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 Manager. See
Additional Investment Information on Policies and Risk Considerations for
further details concerning these and other investment policies.
-10-
<PAGE>
Although the Fund does not invest directly in real estate, the Fund
does invest primarily in REITs, and may purchase equity securities of REOCs.
Thus, because the Fund concentrates its investments in the real estate
industry, an investment in the Fund 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 Fund 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 the Fund, a shareholder bears not only a
proportionate share of the expenses of the Fund, but also, indirectly, similar
expenses of the REITs. For a further discussion of the risks presented by
investing in REITs, see Additional Investment Information ^ on Policies and
Risk Considerations--REITs.
While the Fund does not intend to invest directly in real estate, the
Fund could, under certain circumstances, own real estate directly as a result
of a default on securities that it owns. In addition, if the Fund has rental
income or income from the direct disposition of real property, the receipt of
such income may adversely affect the Fund's ability to retain its tax status
as a regulated investment company.
The Fund 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 Fund's positions in cash, short-term debt securities
and other money market instruments, at times when the Fund'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 Fund. See Additional Investment Information ^ on Policies
and Risk Considerations--Futures Contracts and Options on Futures Contracts
and Options for a further discussion of these investment policies.
In connection with the Fund's ability to invest up to 10% of its total
assets in the securities of foreign issuers, currency considerations may
present risks if the Fund holds international securities. Currency
considerations carry a special risk for a portfolio of international
securities. In this regard, the Fund 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 ^
on Policies and Risk Considerations--Forward Foreign Currency Exchange
Contracts.
The Manager does not normally intend to respond to short-term market
fluctuations or to acquire securities for the purpose of short-term trading;
however, the Manager may take advantage of short-term
-11-
<PAGE>
opportunities that are consistent with the Fund's investment objectives. It is
anticipated that the annual turnover rate of the Fund, under normal
circumstances, will generally not exceed 100%. See Portfolio Transactions. ^
Risk Considerations
An investment in the Fund entails certain risks and considerations
about which an investor should be aware.
The Fund may invest up to 10% of its total assets in securities of
foreign issuers which normally are denominated in foreign currencies, and may
hold foreign currency directly. Investments in securities of non-United States
issuers which are generally denominated in foreign currencies involve certain
risk and opportunity considerations not typically associated with investing in
United States companies. Consequently, the Fund 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 Fund
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 Fund may engage in foreign currency options
and futures transactions. For a discussion of the risks associated with
foreign securities see Foreign Investment Information and for those concerning
these hedging instruments see Risks of Transactions in Options, Futures and
Forward Contracts, both of which references appear under the heading
Additional Investment Information^ on Policies and Risk Considerations.
The Fund may commit its assets eligible for foreign investment to
securities of issuers located in emerging markets. Investments in securities
of companies in emerging markets present a greater degree of risk than tends
to be the case for foreign investments in Western Europe and other developed
markets. Among other things, there is a greater possibility of expropriation,
nationalization, confiscatory taxation, income earned or other special taxes,
foreign exchange restrictions, limitations on the repatriation of income and
capital from investments, defaults in foreign government debt, and economic,
political or social instability. In addition, in many emerging markets, there
is substantially less publicly available information about issuers and the
information that is available tends to be of a lesser quality. Economic
markets and structures tend to be less mature and diverse and the securities
markets which are subject to less government regulation or supervision may
also be smaller, less liquid and subject to greater price volatility. See
Additional Investment Information ^ on Policies and Risk
Considerations--Foreign Investment Information for a more extensive discussion
of these and other factors.
The foreign securities in which the Fund 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 Fund may be significantly affected by such trading on days when
shareholders will have no access to the Fund. See Valuation of Shares.
The Fund also may, under certain circumstances, use certain futures
contracts and options on futures contracts, as well as options on stock. The
Fund will only enter into these transactions for hedging purposes. See Futures
Contracts and Options on Futures Contracts and Risks of Transactions in
Options, Futures and Forward Contracts, both of which references appear under
the heading Additional Investment Information on Policies and Risk
Considerations.
The Fund concentrates its investments in the real estate industry. As
a consequence, the net asset value of the Fund can be expected to fluctuate in
light of the factors affecting that industry, and may fluctuate more widely
than a portfolio that invests in a broader range of industries. The Fund may
be more susceptible to any single economic, political or regulatory occurrence
affecting the real estate industry.
-12-
<PAGE>
The Fund, 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 Fund's investments in REITs can be expected to rise.
Conversely, when interest rates rise, the value of the Fund's investments in
REITs holding fixed rate obligations can be expected to decline. See
Additional Investment Information ^ on Policies and Risk
Considerations--REITS.
The Fund may lend its portfolio securities, may invest in repurchase
agreements and may purchase securities on a when-issued basis.
While the Fund intends to seek to qualify as a "diversified"
investment company under provisions of Subchapter M of the Code, it will not
be diversified under the 1940 Act. Thus, while at least 50% of the Fund'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 Fund's total assets, it will not satisfy the
1940 Act requirement in this respect, which applies that test to 75% of the
Fund'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 Additional Investment Information on Policies
and Risk Considerations in this Prospectus and Investment Policies, Portfolio
Techniques and Risk Considerations in Part B.
* * *
Part B sets forth other more specific investment restrictions and
descriptions of Moody's and S&P ratings.
-13-
<PAGE>
THE DELAWARE DIFFERENCE
PLANS AND SERVICES
The Delaware Difference is our commitment to provide you with
superior information and quality service on your investments in the Delaware
Group of funds.
SHAREHOLDER PHONE DIRECTORY
Investor Information Center
800-523-4640
Fund Information; Literature; Price; Yield and Performance
Figures
Shareholder Service Center
800^-523^-1918
Information on Existing Regular Investment Accounts and
Retirement Plan Accounts; Wire Investments; Wire Liquidations;
^ Telephone Liquidations and Telephone Exchanges
Delaphone
800-362-FUND
(800-362-3863)
Performance Information
During business hours, you can call the Investor Information Center
for current performance information. Current performance information may also
be included in advertisements and information given to shareholders.^
Shareholder Services
During business hours, you can call the Delaware Group's Shareholder
Service Center. Our representatives can answer any questions about your
account, the Fund, the various service features and other funds in the
Delaware Group.
Delaphone Service
Delaphone is an account inquiry service for investors with
Touch-Tone(R) phone service. It enables you to get information on your account
faster than the mailed statements and confirmations. Delaphone also provides
current performance information on the Fund, as well as other funds in the
Delaware Group. Delaphone is available seven days a week, 24 hours a day.
Statements and Confirmations
You will receive quarterly statements of your account summarizing all
transactions during the period. A confirmation statement will be sent
following all transactions other than those involving a reinvestment of
dividends. You should examine statements and confirmations immediately and
promptly report any discrepancy by calling the Shareholder Service Center.
Duplicate Confirmations
If your financial adviser or investment dealer is noted on your
investment application, we will send a duplicate confirmation to him or her.
This makes it easier for your adviser to help you manage your investments.
-14-
<PAGE>
Dividend Payments
Dividends, capital gains and other distributions are automatically
reinvested in your account, unless you elect to receive them in cash. You may
also elect to have the dividends earned in one fund automatically invested in
another Delaware Group fund with a different investment objective, subject to
certain exceptions and limitations.
For more information, see Additional Methods of Adding to Your
Investment - Dividend Reinvestment Plan under How to Buy Shares or call the
Shareholder Service Center.
MoneyLine(SM) Services
Delaware Group offers the following services for fast and convenient
transfer of funds between your personal bank account and your Delaware Group
fund account.
1. MoneyLine(SM) Direct Deposit Service
If you elect to have your dividends and distributions paid
in cash and such dividends and distributions are in an amount of $25
or more, you may choose the MoneyLine(SM) Direct Deposit Service and
have such payments transferred from your Fund account to your
predesignated bank account. See Dividends and Distributions. In
addition, you may elect to have your Systematic Withdrawal Plan
payments transferred from your Fund account to your predesignated
bank account through this service. See Systematic Withdrawal Plans
under Redemption and Exchange. ^ This service is not available for
certain retirement plans.
2. MoneyLine(SM) On Demand
You or your investment dealer may request purchases and
redemptions of Fund shares by phone using MoneyLine(SM) On Demand.
When you authorize a Fund to accept such requests from you or your
investment dealer, funds will be withdrawn from (for share purchases)
or deposited to (for share redemptions) your predesignated bank
account. Your request will be processed the same day if you call
prior to 4 p.m., Eastern time. There is a $25 minimum and $50,000
maximum limit for MoneyLine(SM) On Demand transactions. With respect
to retirement plans, this service is only available for purchases
through an IRA.
For each MoneyLine(SM) Service, it may take up to four business days
for the transactions to be completed. You can initiate ^ either service by
completing an ^ Account Services form. If your name and address ^ are not
identical to the name and address on your Fund account, you must have your
signature guaranteed. The Fund does not charge a fee for MoneyLine(SM)
services; however, your bank may charge a fee. Please call the Shareholder
Service Center for additional information about these services.
Right of Accumulation
With respect to Class A Shares, the Right of Accumulation feature
allows you to combine the value of your current holdings of Class A Shares,
Class B Shares and Class C Shares of the Fund with the dollar amount of new
purchases of Class A Shares to qualify for a reduced front-end sales charge on
such purchases of Class A Shares. Under the Combined Purchases Privilege, you
may also include certain shares that you own in other funds in the Delaware
Group. See Classes of Shares.
Letter of Intention
The Letter of Intention feature permits you to obtain a reduced
front-end sales charge on purchases of Class A Shares by aggregating certain
of your purchases of Delaware Group fund shares over a 13-month period. See
Classes of Shares and Part B.
-15-
<PAGE>
12-Month Reinvestment Privilege
The 12-Month Reinvestment Privilege permits you to reinvest proceeds
from a redemption of Class A Shares, within one year of the date of the
redemption, without paying a front-end sales charge. See Part B.
Exchange Privilege
The Exchange Privilege permits you to exchange all or part of your
shares into shares of other mutual funds in the Delaware Group, subject to
certain exceptions and limitations. For additional information on exchanges,
see Investing by Exchange under How to Buy Shares and Redemption and Exchange.
Wealth Builder Option
You may elect to invest in the Fund through regular liquidations of
shares in your accounts in other funds in the Delaware Group. Investments
under this feature are exchanges and are therefore subject to the same
conditions and limitations as other exchanges of the Fund. See Additional
Methods of Adding to Your Investment -- Wealth Builder Option and Investing by
Exchange under How to Buy Shares and Redemption and Exchange.
^
Financial Information about the Fund
Each fiscal year, you will receive an audited annual report and an
unaudited semi-annual report. These reports provide detailed information about
the Fund's investments and performance. ^ Pooled Trust Inc.'s fiscal year ends
on ^ October 31.
-16-
<PAGE>
RETIREMENT PLANNING
^ An investment in the Fund may be suitable for tax-deferred
retirement plans. Among the retirement plans noted below, Class B Shares are
available for investment only by Individual Retirement Accounts, SIMPLE IRAs,
Simplified Employee Pension Plans, Salary Reduction Simplified Employee
Pension Plans, 457 Deferred Compensation Plans and 403(b)(7) Deferred
Compensation Plans.
Retirement plans may be subject to plan establishment fees, annual
maintenance fees and/or other administrative or trustee fees. Fees are based
upon the number of participants in the plan as well as the services selected.
Additional information about fees is included in retirement plan materials.
Fees are quoted upon request. Certain shareholder investment services
available to non-retirement plan shareholders may not be available to
retirement plan shareholders.
Certain retirement plans may qualify to purchase shares of REIT Fund
Institutional Class ^. For additional information on any of the plans and
Delaware's retirement services, call the Shareholder Service Center or see
Part B.
Individual Retirement Account ("IRA")
Individuals, even if they participate in an employer-sponsored
retirement plan, may establish their own retirement program for investments in
each of the Classes. Contributions to an IRA may be tax-deductible and
earnings are tax-deferred. The tax deductibility of IRA contributions is
restricted, and in some cases eliminated, for individuals who participate in
certain employer-sponsored retirement plans and whose annual income exceeds
certain limits. Existing IRAs and future contributions up to the IRA maximums,
whether deductible or not, still earn on a tax-deferred basis.
Simplified Employee Pension Plan ("SEP/IRA")
A SEP/IRA may be established by an employer who wishes to sponsor a
tax-sheltered retirement program by making contributions on behalf of all
eligible employees. Each of the Classes is available for investment by a
SEP/IRA.
Salary Reduction Simplified Employee Pension Plan ("SAR/SEP")
^ Although new SAR/SEP plans may not be established after December
31, 1996^, existing plans may be maintained by employers having 25 or fewer
employees ^. An employer may ^ elect to make additional contributions to ^
such existing plans.
403(b)(7) Deferred Compensation Plan
Permits employees of public school systems or of certain types of
non-profit organizations to enter into a deferred compensation arrangement for
the purchase of shares of each of the Classes.
457 Deferred Compensation Plan
Permits employees of state and local governments and certain other
entities to enter into a deferred compensation arrangement for the purchase of
shares of each of the Classes.
Prototype Profit Sharing or Money Purchase Pension Plan
Offers self-employed individuals, partnerships and corporations a
tax-qualified plan which provides for the investment of contributions in Class
A Shares or Class C Shares. Class B Shares are not available for purchase by
such plans.
-17-
<PAGE>
Prototype 401(k) Defined Contribution Plan
Permits employers to establish a tax-qualified plan based on salary
deferral contributions for investment in Class A Shares or Class C Shares.
Class B Shares are not available for purchase by such plans.
SIMPLE IRA
A SIMPLE IRA combines many of the features of an IRA and a 401(k)
Plan but is easier to administer than a typical 401(k) Plan. It requires
employers to make contributions on behalf of their employees and also has a
salary deferral feature that permits employees to defer a portion of their
salary into the plan on a pre-tax basis.
SIMPLE 401(k)
A SIMPLE 401(k) is like a regular 401(k) except that plan sponsors
are limited to 100 employees and, in exchange for mandatory plan sponsor
contributions, discrimination testing is no longer required.
Class B Shares are not available for purchase by such plans.
The Limited CDSC is applicable to any redemptions of net asset value
purchases made on behalf of any group retirement plan on which a dealer's
commission has been paid only if such redemption is made pursuant to a
withdrawal of the entire plan from Delaware Group funds. See Contingent
Deferred Sales Charge for Certain Redemptions of Class A Shares Purchased at
Net Asset Value under Redemption
and Exchange.
Allied Plans
Class A Shares are available for purchase by participants in certain
401(k) Defined Contribution Plans ("Allied Plans") which are made available
under a joint venture agreement between the Distributor and another
institution through which mutual funds are marketed and which allow
investments in Class A Shares of designated Delaware Group funds ("eligible
Delaware Group fund shares"), as well as shares of designated classes of
non-Delaware Group funds ("eligible non-Delaware Group fund shares"). Class B
Shares and Class C Shares are not eligible for purchase by Allied Plans.
With respect to purchases made in connection with an Allied Plan, the
value of eligible Delaware Group and eligible non-Delaware Group fund shares
held by the Allied Plan may be combined with the dollar amount of new
purchases by that Allied Plan to obtain a reduced front-end sales charge on
additional purchases of eligible Delaware Group fund shares. See Front-End
Sales Charge Alternative - Class A Shares under Classes of Shares.
Participants in Allied Plans may exchange all or part of their
eligible Delaware Group fund shares for other eligible Delaware Group fund
shares or for eligible non-Delaware Group fund shares at net asset value
without payment of a front-end sales charge. However, exchanges of eligible
fund shares, both Delaware Group and non-Delaware Group, which were not
subject to a front-end sales charge, will be subject to the applicable sales
charge if exchanged for eligible Delaware Group fund shares to which a sales
charge applies. No sales charge will apply if the eligible fund shares were
previously acquired through the exchange of eligible shares on which a sales
charge was already paid or through the reinvestment of dividends. See
Investing by Exchange.
A dealer's commission may be payable on purchases of eligible
Delaware Group fund shares under an Allied Plan. In determining a financial
adviser's eligibility for a dealer's commission on net asset value purchases
of eligible Delaware Group fund shares in connection with Allied Plans, all
participant holdings in the Allied Plan will be aggregated. See Front-End
Sales Charge Alternative - Class A Shares under Classes of Shares.
-18-
<PAGE>
The Limited CDSC is applicable to redemptions of net asset value
purchases from an Allied Plan on which a dealer's commission has been paid.
Waivers of the Limited CDSC, as described under Waiver of Limited Contingent
Deferred Sales Charge - Class A Shares under Redemption and Exchange, apply to
redemptions by participants in Allied Plans except in the case of exchanges
between eligible Delaware Group and non-Delaware Group fund shares. When
eligible Delaware Group fund shares are exchanged into eligible non-Delaware
Group fund shares, the Limited CDSC will be imposed at the time of the
exchange, unless the joint venture agreement specifies that the amount of the
Limited CDSC will be paid by the financial adviser or selling dealer. See
Contingent Deferred Sales Charge for Certain Redemptions of Class A Shares
Purchased at Net Asset Value under Redemption and Exchange.
-19-
<PAGE>
CLASSES OF SHARES
Alternative Purchase Arrangements
Shares may be purchased at a price equal to the next determined net
asset value per share, subject to a sales charge which may be imposed, at the
election of the purchaser, at the time of purchase for Class A Shares
("front-end sales charge alternative"), or on a contingent deferred basis for
Class B Shares ("deferred sales charge alternative") or Class C Shares ("level
sales charge alternative").
Class A Shares. An investor who elects the front-end sales charge
alternative acquires Class A Shares. Class A Shares, which incur a sales
charge when they are purchased, but generally are not subject to any sales
charge when they are redeemed. Class A Shares are subject to annual 12b-1 Plan
expenses of up to a maximum of 0.30% (currently, no more than 0.25% pursuant
to Board action) of average daily net assets of such shares. Certain purchases
of Class A Shares qualify for reduced front-end sales charges. See Front-End
Sales Charge Alternative - Class A Shares, below. See also Contingent Deferred
Sales Charge for Certain Redemptions of Class A Shares Purchased at Net Asset
Value and Distribution (12b-1) and Service under Management of the Fund.
Class B Shares. An investor who elects the deferred sales charge
alternative acquires Class B Shares, which do not incur a front-end sales
charge when are purchased, but are subject to a contingent deferred sales
charge if they are redeemed within six years of purchase. Class B Shares are
subject to annual 12b-1 Plan expenses of up to a maximum of 1% (0.25% of which
are service fees to be paid to the Distributor, dealers or others for
providing personal service and/or maintaining shareholder accounts) of average
daily net assets of such shares for approximately eight years after purchase.
Class B Shares permit all of the investor's dollars to work from the time the
investment is made. The higher 12b-1 Plan expenses paid by Class B Shares will
cause such shares to have a higher expense ratio and to pay lower dividends
than Class A Shares. At the end of approximately eight years after purchase,
Class B Shares are automatically converted into Class A Shares of the Fund
and, thereafter, for the remainder of the life of the investment, the annual
12b-1 Plan fee of up to 0.30% (currently, no more than 0.25% pursuant to Board
action) for the Class A Shares will apply. See Automatic Conversion of Class B
Shares, below.
Class C Shares. An investor who elects the level sales charge
alternative acquires Class C Shares, which do not incur a front-end sales
charge when they are purchased, but are subject to a contingent deferred sales
charge if they are redeemed within 12 months of purchase. Class C Shares are
subject to annual 12b-1 Plan expenses of up to a maximum of 1% (0.25% of which
are service fees to be paid to the Distributor, dealers or others for
providing personal service and/or maintaining shareholder accounts) of average
daily net assets of such shares for the life of the investment. The higher
12b-1 Plan expenses paid by Class C Shares will cause such shares to have a
higher expense ratio and to pay lower dividends than Class A Shares. Unlike
Class B Shares, Class C Shares do not convert to another class.
The alternative purchase arrangements described above permit
investors to choose the method of purchasing shares that is most suitable
given the amount of their purchase, the length of time they expect to hold
their shares and other relevant circumstances. Investors should determine
whether, given their particular circumstances, it is more advantageous to
purchase Class A Shares and incur a front-end sales charge, purchase Class B
Shares and have the entire initial purchase amount invested in the Fund with
their investment being subject to a CDSC if they redeem shares within six
years of purchase, or purchase Class C Shares and have the entire initial
purchase amount invested in the Fund with their investment being subject to a
CDSC if they redeem shares within 12 months of purchase. In addition,
investors should consider the level of annual 12b-1 Plan expenses applicable
to each Class. The higher 12b-1 Plan expenses on Class B Shares and Class C
Shares will be offset to the extent a return is realized on the additional
money initially invested upon the purchase of such shares. However, there can
be no assurance as to the return, if any, that will be realized on such
additional
-20-
<PAGE>
money and the effect of earning a return on such additional money will
diminish over time. In comparing Class B Shares to Class C Shares, investors
should also consider the desirability of an automatic conversion feature,
which is available only for Class B Shares.
Prospective investors should refer to Appendix A --Investment
Illustrations in this Prospectus for an illustration of the potential effect
that each of the purchase options may have on a long-term shareholder's
investment.
For the distribution and related services provided to, and the
expenses borne on behalf of, the Fund, the Distributor and others will be
paid, in the case of ^ Class A Shares, from the proceeds of the front-end
sales charge and 12b-1 Plan fees and, in the case of ^ Class B Shares and ^
Class C Shares, from the proceeds of the 12b-1 Plan fees and, if applicable,
the CDSC incurred upon redemption. Financial advisers may receive different
compensation for selling Class A, Class B and Class C Shares. Investors should
understand that the purpose and function of the respective 12b-1 Plans and the
CDSCs applicable to Class B Shares and Class C Shares are the same as those of
the 12b-1 Plan and the front-end sales charge applicable to Class A Shares in
that such fees and charges are used to finance the distribution of the
respective Classes. See ^ Distribution ^(12b-1) and Service under Management
of the Fund.
Dividends paid on Class A, Class B and Class C Shares, to the extent
any dividends are paid, will be calculated in the same manner, at the same
time, on the same day and will be in the same amount, except that the
additional amount of 12b-1 Plan expenses relating to Class B Shares and Class
C Shares will be borne exclusively by such shares. See Calculation of Offering
Price and Net Asset Value Per Share.
The NASD has adopted certain rules relating to investment company
sales charges. ^ Pooled Trust, Inc. and the Distributor intend to operate in
compliance with these rules.
Front-End Sales Charge Alternative - Class A Shares
Class A Shares may be purchased at the offering price which reflects
a maximum front-end sales charge of 4.75%. See Calculation of Offering Price
and Net Asset Value Per Share.
-21-
<PAGE>
Purchases of $100,000 or more carry a reduced front^-end sales charge
as shown in the following table.
<TABLE>
<CAPTION>
^ REIT Fund A Class
- --------------------------------------------------------------------------------------------------------------------------
Dealer's
Front-End Sales Charge as % of Commission***
Amount of Purchase Offering Amount as % of
^ Price Invested** Offering Price
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $100,000 4.75% ^ 0.00% 4.00%
$100,000 but under $250,000 3.75 ^ 0.00 3.00
$250,000 but under $500,000 2.50 ^ 0.00 2.00
$500,000 but under $1,000,000* 2.00 ^ 0.00 1.60
</TABLE>
* There is no front^-end sales charge on purchases of Class A Shares of ^
$1,000,000 or more but, under certain limited circumstances, a 1% Limited
CDSC may apply upon redemption of such shares.
** Based on the net asset value per share of the original class of shares
(now the Class A Shares) as of the end of the Fund's fiscal year ended
October 31, 1996.
*** Financial institutions or their affiliated brokers may receive an agency
transaction fee in the percentages set forth above.
- --------------------------------------------------------------------------------
The Fund must be notified when a sale takes place which would qualify
for the reduced front-end sales charge on the basis of previous or current
purchases. The reduced front-end sales charge will be granted upon
confirmation of the shareholder's holdings by the Fund. Such reduced front-end
sales charges are not retroactive.
From time to time, upon written notice to all of its dealers, the
Distributor may hold special promotions for specified periods during which the
Distributor may reallow to dealers up to the full amount of the front-end
sales charge shown above. In addition, certain dealers who enter into an
agreement to provide extra training and information on Delaware Group products
and services and who increase sales of Delaware Group funds may receive an
additional commission of up to 0.15% of the offering price. Dealers who
receive 90% or more of the sales charge may be deemed to be underwriters under
the Securities Act of 1933.
- --------------------------------------------------------------------------------
For initial purchases of Class A Shares of $1,000,000 or more, a
dealer's commission may be paid by the Distributor to financial advisers
through whom such purchases are made in accordance with the following
schedule:
Dealer's Commission
-------------------
(as a percentage of
Amount of Purchase amount purchased)
------------------
Up to $2 million 1.00%
Next $1 million up to $3 million 0.75
Next $2 million up to $5 million 0.50
Amount over $5 million 0.25
-22-
<PAGE>
In determining a financial adviser's eligibility for the dealer's
commission, purchases of Class A Shares of other Delaware Group funds as to
which a Limited CDSC applies may be aggregated with those of the Class A
Shares of the Fund. Financial advisers also may be eligible for a dealer's
commission in connection with certain purchases made under a Letter of
Intention or pursuant to an investor's Right of Accumulation. Financial
advisers should contact the Distributor concerning the applicability and
calculation of the dealer's commission in the case of combined purchases.
An exchange from other Delaware Group funds will not qualify for
payment of the dealer's commission, unless a dealer's commission or similar
payment has not been previously paid on the assets being exchanged. The
schedule and program for payment of the dealer's commission are subject to
change or termination at any time by the Distributor at its discretion.
Redemptions of Class A Shares purchased at net asset value may result
in the imposition of a Limited CDSC if the dealer's commission described above
was paid in connection with the purchase of those shares. See Contingent
Deferred Sales Charge for Certain Redemptions of Class A Shares Purchased at
Net Asset Value under Redemption and Exchange.
Combined Purchases Privilege
By combining your holdings of Class A Shares with your holdings of
Class B Shares and/or Class C Shares of the Fund and shares of ^ other funds
in the Delaware Group, except those noted below, you can reduce the front^-end
sales charges on any additional purchases of Class A Shares. Shares of
Delaware Group Premium Fund, Inc. beneficially owned in connection with
ownership of variable insurance products may be combined with other Delaware
Group fund holdings. Assets held by investment advisory clients of the Manager
or its affiliates in a stable value account may be combined with other
Delaware Group fund holdings. Shares of other funds that do not carry a
front^-end sales charge or CDSC may not be included unless they were acquired
through an exchange from a Delaware Group fund that does carry a front^-end
sales charge or CDSC.
This privilege permits you to combine your purchases and holdings with
those of your spouse, your children under 21 and any trust, fiduciary or
retirement account for the benefit of such family members.
It also permits you to use these combinations under a Letter of
Intention. A Letter of Intention allows you to make purchases over a 13-month
period and qualify the entire purchase for a reduction in front-end sales
charges on Class A Shares.
Combined purchases of $1,000,000 or more, including certain purchases
made at net asset value pursuant to a Right of Accumulation or under a Letter
of Intention, may result in the payment of a dealer's commission and the
applicability of a Limited CDSC. Investors should consult their financial
advisers or the Shareholder Service Center about the operation of these
features. See Front-End Sales Charge Alternative - Class A Shares, above.
Buying Class A Shares at Net Asset Value
Class A Shares of the Fund may be purchased at net asset value under
the Delaware Group Dividend Reinvestment Plan and, under certain
circumstances, the Exchange Privilege and the 12-Month Reinvestment Privilege.
See The Delaware Difference and Redemption and Exchange for additional
information.
Purchases of Class A Shares may be made at net asset value by current
and former officers, trustees and employees (and members of their families) of
the Manager, any affiliate, any of the funds in the Delaware Group, certain of
their agents and registered representatives and employees of authorized
investment dealers
-23-
<PAGE>
and by employee benefit plans for such entities. Individual purchases,
including those in retirement accounts, must be for accounts in the name of
the individual or a qualifying family member.
Purchases of Class A Shares may also be made by clients of registered
representatives of an authorized investment dealer at net asset value within
12 months after the registered representative changes employment, if the
purchase is funded by proceeds from an investment where a front-end sales
charge, contingent deferred sales charge or other sales charge has been
assessed. Purchases of Class A Shares may also be made at net asset value by
bank employees who provide services in connection with agreements between the
bank and unaffiliated brokers or dealers concerning sales of shares of
Delaware Group funds. Officers, directors and key employees of institutional
clients of the Manager or any of its affiliates may purchase Class A Shares at
net asset value. Moreover, purchases may be effected at net asset value for
the benefit of the clients of brokers, dealers and registered investment
advisers affiliated with a broker or dealer, if such broker, dealer or
investment adviser has entered into an agreement with the Distributor
providing specifically for the purchase of Class A Shares in connection with
special investment products, such as wrap accounts or similar fee based
programs.
Purchases of Class A Shares at net asset value may also be made by the
following: financial institutions investing for the account of their trust
customers if they are not eligible to purchase shares of the institutional
class of the Fund; any group retirement plan (excluding defined benefit
pension plans), or such plans of the same employer, for which plan participant
records are maintained on the Delaware Investment & Retirement Services, Inc.
("DIRSI") proprietary record keeping system that (i) has in excess of $500,000
of plan assets invested in Class A Shares of Delaware Group funds and any
stable value product available through the Delaware Group, or (ii) is
sponsored by an employer that has at any point after May 1, 1997 had more than
100 employees while such plan has held Class A Shares of a Delaware Group fund
and such employer has properly represented to DIRSI in writing that it has the
requisite number of employees and has received written confirmation back from
DIRSI.
Investors in Delaware-Voyageur Unit Investment Trusts may reinvest
monthly dividend checks and/or repayment of invested capital into Class A
Shares of any of the funds in the Delaware Group at net asset value.
Investments in Class A Shares made by plan level and/or participant
retirement accounts that are for the purpose of repaying a loan taken from
such accounts will be made at net asset value. Loan repayments made to a
Delaware Group account in connection with loans originated from accounts
previously maintained by another investment firm will also be invested at net
asset value.
The Fund must be notified in advance that an investment qualifies for
purchase at net asset value.
Group Investment Plans
Group Investment Plans (e.g., SEP/IRA, SAR/SEP, SIMPLE IRA, SIMPLE
401(k), Profit Sharing, Money Purchase Pension, 401(k) Defined Contribution
Plans, and 403(b)(7) and 457 Deferred Compensation Plans) may benefit from the
reduced front-end sales charges available on Class A Shares based on total
plan assets. If a company has more than one plan investing in the Delaware
Group of funds, then the total amount invested in all plans will be aggregated
to determine the applicable front-end sales charge reduction on each purchase,
both initial and subsequent, if, at the time of each such purchase, the
company notifies the Fund that it qualifies for the reduction. Employees
participating in such Group Investment Plans may also combine the investments
held in their plan account to determine the front-end sales charge applicable
to purchases in non-retirement Delaware Group investment accounts if, at the
time of each such purchase, they notify the Fund that they are eligible to
combine purchase amounts held in their plan account.
-24-
<PAGE>
For additional information on retirement plans, including plan forms,
applications, minimum investments and any applicable account maintenance fees,
contact your investment dealer or the Distributor.
For other retirement plans and special services, see Retirement Planning.
Deferred Sales Charge Alternative - Class B Shares
Class B Shares may be purchased at net asset value without a front-end
sales charge and, as a result, the full amount of the investor's purchase
payment will be invested in Fund shares. The Distributor currently anticipates
compensating dealers or brokers for selling Class B Shares at the time of
purchase from its own assets in an amount equal to no more than 4% of the
dollar amount purchased. In addition, from time to time, upon written notice
to all of its dealers, the Distributor may hold special promotions for
specified periods during which the Distributor may pay additional compensation
to dealers or brokers for selling Class B Shares at the time of purchase. As
discussed below, however, Class B Shares are subject to annual 12b-1 Plan
expenses and, if redeemed within six years of purchase, a CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to the
Distributor and others for providing distribution and related services, and
bearing related expenses, in connection with the sale of Class B Shares. These
payments support the compensation paid to dealers or brokers for selling Class
B Shares. Payments to the Distributor and others under the Class B 12b-1 Plan
may be in an amount equal to no more than 1% annually. The combination of the
CDSC and the proceeds of the 12b-1 Plan fees makes it possible for the Fund to
sell Class B Shares without deducting a front-end sales charge at the time of
purchase.
Holders of Class B Shares who exercise the exchange privilege described
below will continue to be subject to the CDSC schedule for the Class B Shares
described in this Prospectus, even after exchange. Such CDSC schedule may be
higher than the CDSC schedule relating to the Class B Shares acquired as a
result of the exchange. See Redemption and Exchange.
Automatic Conversion of Class B Shares
Class B Shares, other than shares acquired through reinvestment of
dividends, held for eight years after purchase are eligible for automatic
conversion into Class A Shares. Conversions of Class B Shares into Class A
Shares will occur only four times in any calendar year, on the last business
day of the second full week of March, June, September and December (each, a
"Conversion Date"). If the eighth anniversary after a purchase of Class B
Shares falls on a Conversion Date, an investor's Class B Shares will be
converted on that date. If the eighth anniversary occurs between Conversion
Dates, an investor's Class B Shares will be converted on the next Conversion
Date after such anniversary. Consequently, if a shareholder's eighth
anniversary falls on the day after a Conversion Date, that shareholder will
have to hold Class B Shares for as long as three additional months after the
eighth anniversary of purchase before the shares will automatically convert
into Class A Shares.
Class B Shares of a fund acquired through a reinvestment of dividends
will convert to the corresponding Class A Shares of that fund (or, in the case
of Delaware Group Cash Reserve, Inc., the Delaware Cash Reserve Consultant
Class) pro-rata with Class B Shares of that fund not acquired through dividend
reinvestment.
All such automatic conversions of Class B Shares will constitute
tax-free exchanges for federal income tax purposes. See Taxes.
Level Sales Charge Alternative - Class C Shares
Class C Shares may be purchased at net asset value without a front-end
sales charge and, as a result, the full amount of the investor's purchase
payment will be invested in Fund shares. The Distributor currently anticipates
compensating dealers or brokers for selling Class C Shares at the time of
purchase from its own
-25-
<PAGE>
assets in an amount equal to no more than 1% of the dollar amount purchased.
As discussed below, however, Class C Shares are subject to annual 12b-1 Plan
expenses and, if redeemed within 12 months of purchase, a CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to the
Distributor and others for providing distribution and related services, and
bearing related expenses, in connection with the sale of Class C Shares.
These payments support the compensation paid to dealers or brokers for
selling Class C Shares. Payments to the Distributor and others under the Class
C 12b-1 Plan may be in an amount equal to no more than 1% annually.
Holders of Class C Shares who exercise the exchange privilege described
below will continue to be subject to the CDSC schedule for the Class C Shares
as described in this Prospectus. See Redemption and Exchange.
Contingent Deferred Sales Charge - Class B Shares and Class C Shares
Class B Shares redeemed within six years of purchase may be subject to
a CDSC at the rates set forth below and Class C Shares redeemed within 12
months of purchase may be subject to a CDSC of 1%. CDSCs are charged as a
percentage of the dollar amount subject to the CDSC. The charge will be
assessed on an amount equal to the lesser of the net asset value at the time
of purchase of the shares being redeemed or the net asset value of those
shares at the time of redemption. No CDSC will be imposed on increases in net
asset value above the initial purchase price, nor will a CDSC be assessed on
redemptions of shares acquired through reinvestments of dividends or capital
gains distributions. For purposes of this formula, the "net asset value at the
time of purchase" will be the net asset value at purchase of ^ Class B Shares
or ^ Class C Shares of the Fund, even if those shares are later exchanged for
shares of another Delaware Group fund. In the event of an exchange of the
shares, the "net asset value of such shares at the time of redemption" will be
the net asset value of the shares that were acquired in the exchange.
The following table sets forth the rates of the CDSC for Class B Shares
of the Fund:
Contingent Deferred Sales
Charge (as a Percentage
of Dollar Amount
Year After Purchase Made Subject to Charge)
------------------------ --------------------------
0-2 4%
3-4 3%
5 2%
6 1%
7 and thereafter None
During the seventh year after purchase and, thereafter, until converted
automatically into Class A Shares, Class B Shares will still be subject to the
annual 12b-1 Plan expenses of up to 1% of average daily net assets of those
shares. See Automatic Conversion of Class B Shares, above. Investors are
reminded that the Class A Shares into which the Class B Shares will convert
are subject to ongoing annual 12b-1 Plan expenses of up to a maximum of 0.30%
(currently, no more than 0.25% pursuant to Board action) of average daily net
assets of such shares.
-26-
<PAGE>
In determining whether a CDSC applies to a redemption of Class B
Shares, it will be assumed that shares held for more than six years are
redeemed first, followed by shares acquired through the reinvestment of
dividends or distributions, and finally by shares held longest during the
six-year period. With respect to Class C Shares, it will be assumed that
shares held for more than 12 months are redeemed first followed by shares
acquired through the reinvestment of dividends or distributions, and finally
by shares held for 12 months or less.
All investments made during a calendar month, regardless of what day of
the month the investment occurred, will age one month on the last day of that
month and each subsequent month.
The CDSC is waived on certain redemptions of Class B Shares and Class C
Shares. See Waiver of Contingent Deferred Sales Charge - Class B Shares and
Class C Shares under Redemption and Exchange.
Other Payments to Dealers -- Class A, Class B and Class C Shares
From time to time at the discretion of the Distributor, all registered
broker/dealers whose aggregate sales of the Classes exceed certain limits, as
set by the Distributor, may receive from the Distributor an additional payment
of up to 0.25% of the dollar amount of such sales. The Distributor may also
provide additional promotional incentives or payments to dealers that sell
shares of the Delaware Group of funds. In some instances, these incentives or
payments may be offered only to certain dealers who maintain, have sold or may
sell certain amounts of shares.
Subject to pending amendments to the NASD's Conduct Rules, in
connection with the promotion of Delaware Group fund shares, the Distributor
may, from time to time, pay to participate in dealer-sponsored seminars and
conferences, reimburse dealers for expenses incurred in connection with
preapproved seminars, conferences and advertising and may, from time to time,
pay or allow additional promotional incentives to dealers, which shall include
non-cash concessions, such as certain luxury merchandise or a trip to or
attendance at a business or investment seminar at a luxury resort, as part of
preapproved sales contests. Payment of non-cash compensation to dealers is
currently under review by the NASD and the Securities and Exchange Commission.
It is likely that the NASD's Conduct Rules will be amended such that the
ability of the Distributor to pay non-cash compensation as described above
will be restricted in some fashion. The Distributor intends to comply with the
NASD's Conduct Rules as they may be amended.
REIT Fund Institutional Class and The Real Estate Investment Trust Portfolio
class
In addition to offering the Class A, Class B and Class C Shares, the
Fund also offers shares of REIT Fund Institutional Class, which are described
in separate prospectuses and are available for purchase only by certain
investors. Shares of this class are generally distributed directly by the
Distributor and do not have a front-end sales charge, a CDSC or a Limited
CDSC, and are not subject to 12b-1 Plan distribution expenses. To obtain a
prospectus relating to such class, contact the Distributor by writing to the
address or by calling the phone number listed on page 1 of this Prospectus.
The Fund also offers shares of The Real Estate Investment Trust
Portfolio class, which are available for purchase only by certain investors.
To obtain a prospectus relating to such class, contact Pooled Trust, Inc. by
writing to the address or by calling the phone number listed on page 1 of this
Prospectus.
-27-
<PAGE>
HOW TO BUY SHARES
Purchase Amounts
Generally, the minimum initial purchase is generally $1,000 for Class A
Shares, Class B Shares and Class C Shares. Subsequent purchases of shares of
any Class generally must be $100 or more. For purchases under a Uniform Gifts
to Minors Act or Uniform Transfers to Minors Act or through an Automatic
Investing Plan, there is a minimum initial purchase of $250 and a minimum
subsequent purchase of $25.
There is a maximum purchase limitation of $250,000 on each purchase of
Class B Shares. For Class C Shares, each purchase must be in an amount that is
less than $1,000,000. An investor may exceed these maximum purchase
limitations by making cumulative purchases over a period of time. In doing so,
an investor should keep in mind that reduced front-end sales charges are
available on investments of $100,000 or more in Class A Shares, and that Class
A Shares (i) are subject to lower annual 12b-1 Plan expenses than Class B
Shares and Class C Shares and (ii) generally are not subject to a CDSC.
Minimum purchase requirements do not apply to retirement plans other than
IRAs, for which there is a minimum initial purchase of $250, and a minimum
subsequent purchase of $25, regardless of which Class is selected. For
retirement plans, the maximum purchase limitations apply only to the initial
purchase of Class B Shares or Class C Shares by the plan.
Investing through Your Investment Dealer
You can make a purchase of shares of the Fund through most investment
dealers who, as part of the service they provide, must transmit orders
promptly. They may charge for this service. If you want a dealer but do not
have one, ^ the Delaware Group can refer you to one.
Investing by Mail
1. Initial Purchases--An Investment Application or, in the case of a
retirement account, an appropriate retirement plan application, must be
completed, signed and sent with a check payable to ^ REIT Fund A Class, ^ REIT
Fund B Class or ^ REIT Fund C Class to Delaware Group at 1818 Market Street,
Philadelphia, PA 19103.
2. Subsequent Purchases--Additional purchases may be made at any time by
mailing a check payable to ^ the specific Class selected. Your check should be
identified with your name(s) and account number. An investment slip (similar
to a deposit slip) is provided at the bottom of transaction confirmations and
dividend statements that you will receive from ^ Pooled Trust, Inc. Use of
this investment slip can help expedite processing of your check when making
additional purchases. Your investment may be delayed if you send additional
purchases by certified mail.
Investing by Wire
You may purchase shares by requesting your bank to transmit funds by
wire to CoreStates Bank, N.A., ABA #031000011, account number 1412893401
(include your name(s) and your Fund account number in the wire).
1. Initial Purchases--Before you invest, telephone the Shareholder Service
Center to get an account number. If you do not call first, processing of your
investment may be delayed. In addition, you must promptly send your Investment
Application ^ or, in the case of a retirement account, an appropriate
retirement plan application, to the specific Class selected, to Delaware Group
at 1818 Market Street, Philadelphia, PA 19103.
-28-
<PAGE>
2. Subsequent Purchases--You may make additional investments anytime by wiring
funds to CoreStates Bank, N.A., as described above. You should advise the
Shareholder Service Center by telephone of each wire you send.
If you want to wire investments to a retirement plan account, call the
Shareholder Service Center for special wiring instructions.
Investing by Exchange
If you have an investment in another mutual fund in the Delaware Group,
you may write and authorize an exchange of part or all of your investment into
shares of the Fund. If you wish to open an account by exchange, call the
Shareholder Service Center for more information. All exchanges are subject to
the eligibility and minimum purchase requirements set forth in each fund's
prospectus. See Redemption and Exchange for more complete information
concerning your exchange privileges.
Holders of Class A Shares of the Fund may exchange all or part of their
shares for certain of the shares of other funds in the Delaware Group,
including other Class A Shares, but may not exchange their Class A Shares for
Class B Shares or Class C Shares of the Fund or of any other fund in the
Delaware Group. Holders of Class B Shares of the Fund are permitted to
exchange all or part of their Class B Shares only into Class B Shares of other
Delaware Group funds. Similarly, holders of Class C Shares of the Fund are
permitted to exchange all or part of their Class C Shares only into Class C
Shares of other Delaware Group funds. See Appendix B-- Classes Offered for a
list of Delaware Group funds and the classes they offer. Class B Shares of the
Fund and Class C Shares of the Fund acquired by exchange will continue to
carry the CDSC and, in the case of Class B Shares, the automatic conversion
schedule of the fund from which the exchange is made. The holding period of
Class B Shares of the Fund acquired by exchange will be added to that of the
shares that were exchanged for purposes of determining the time of the
automatic conversion into Class A Shares of the Fund.
Permissible exchanges into Class A Shares of the Fund will be made
without a front-end sales charge, except for exchanges of shares that were not
previously subject to a front-end sales charge (unless such shares were
acquired through the reinvestment of dividends). Permissible exchanges into
Class B Shares or Class C Shares of the Fund will be made without the
imposition of a CDSC by the fund from which the exchange is being made at the
time of the exchange.
See Allied Plans under Retirement Planning for information on exchanges
by participants in an Allied Plan.
Additional Methods of Adding to Your Investment
Call the Shareholder Service Center for more information if you wish to
use the following services:
1. Automatic Investing Plan
The Automatic Investing Plan enables you to make regular monthly
investments without writing or mailing checks. You may authorize ^ Pooled
Trust, Inc. to transfer a designated amount monthly from your checking account
to your Fund account. Many shareholders use this as an automatic savings plan.
Shareholders should allow a reasonable amount of time for initial purchases
and changes to these plans to become effective.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money Purchase
Pension Plans, 401(k) Defined Contribution Plans, 403(b)(7) Deferred
Compensation Plans or 457 Deferred Compensation Plans.
2. Direct Deposit
-29-
<PAGE>
You may have your employer or bank make regular investments directly to
your account for you (for example: payroll deduction, pay by phone, annuity
payments). The Fund also accepts preauthorized recurring government and
private payments by Electronic Fund Transfer, which avoids mail time and check
clearing holds on payments such as social security, federal salaries, Railroad
Retirement benefits, etc.
* * *
Should investments through an automatic investing plan or by direct
deposit be reclaimed or returned for some reason, ^ Pooled Trust, Inc. has the
right to liquidate your shares to reimburse the government or transmitting
bank. If there are insufficient funds in your account, you are obligated to
reimburse the Fund.
3. MoneyLine (SM) On Demand
Through the MoneyLine (SM) On Demand service, you or your investment
dealer may call the Fund to request a transfer of funds from your
predesignated bank account to your Fund account. See MoneyLine (SM) Services
under The Delaware Difference for additional information about this service.
4. Wealth Builder Option
You can use the Wealth Builder Option to invest in the Fund through
regular liquidations of shares in your accounts in other funds in the Delaware
Group. You also may elect to invest in other mutual funds in the Delaware
Group through the Wealth Builder Option through exchanges from your Fund
account.
Under this automatic exchange program, you can authorize regular
monthly investments (minimum of $100 per fund) to be liquidated from your
account in one or more funds in the Delaware Group and invested automatically
into any other account in a Delaware Group mutual fund that you may specify.
If in connection with the election of the Wealth Builder Option, you wish to
open a new account to receive the automatic investment, such new account must
meet the minimum initial purchase requirements described in the prospectus of
the fund that you select. All investments under this option are exchanges and
are therefore subject to the same conditions and limitations as other
exchanges noted above. You can terminate your participation in Wealth Builder
at any time by giving written notice to the fund from which the exchanges are
made. See Redemption and Exchange.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money Purchase
Pension Plans, 401(k) Defined Contribution Plans, or 403(b)(7) or 457 Deferred
Compensation Plans.
5 ^. Dividend Reinvestment Plan
You can elect to have your distributions (capital gains and/or dividend
income) paid to you by check or reinvested in your account. Or, you may invest
your distributions in certain other funds in the Delaware Group, subject to
the exceptions noted below as well as the eligibility and minimum purchase
requirements set forth in each fund's prospectus.
Reinvestments of distributions into Class A Shares of the Fund or of
other Delaware Group funds are made without a front-end sales charge.
Reinvestments of distributions into Class B Shares of the Fund or of other
Delaware Group funds or into Class C Shares of the Fund or of other Delaware
Group funds are also made without any sales charge and will not be subject to
a CDSC if later redeemed. See Automatic Conversion of Class B Shares under
Classes of Shares for information concerning the automatic conversion of Class
B Shares acquired by reinvesting dividends.
Holders of Class A Shares of the Fund may not reinvest their
distributions into Class B Shares or Class C Shares of any fund in the
Delaware Group, including the Fund. Holders of Class B Shares of the Fund may
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reinvest their distributions only into Class B Shares of the funds in the
Delaware Group which offer that class of shares. Similarly, holders of Class C
Shares of the Fund may reinvest their distributions only into Class C Shares
of the funds in the Delaware Group which offer that class of shares. See
Appendix B ^-- Classes Offered for ^ the funds in the Delaware Group offering
those classes of shares. For more information about reinvestments, call the
Shareholder Service Center.
^ Capital gains and/or dividend distributions to participants in the
following retirement plans are automatically reinvested into the same Delaware
Group fund in which their investments are held: SAR/SEP, SEP/IRA, SIMPLE IRA,
SIMPLE 401(k), Profit Sharing and Money Purchase Pension Plans, 401(k) Defined
Contribution Plans or 403(b)(7) or 457 Deferred Compensation Plans.
Purchase Price and Effective Date
The offering price and net asset value of the Class A, Class B and
Class C Shares are determined as of the close of regular trading on the New
York Stock Exchange (ordinarily, 4 p.m., Eastern time) on days when the
Exchange is open.
The effective date of a purchase ^ is the date the order is received by
the Fund, its agent or designee. The effective date of a direct purchase is
the day your wire, electronic transfer or check is received, unless it is
received after the time the offering price of shares is determined, as noted
above. Purchase orders received after such time will be effective the next
business day.
The Conditions of Your Purchase
The Fund reserves the right to reject any purchase order. If a purchase
is canceled because your check is returned unpaid, you are responsible for any
loss incurred. The Fund can redeem shares from your account(s) to reimburse
itself for any loss, and you may be restricted from making future purchases in
any of the funds in the Delaware Group. The Fund reserves the right to reject
purchase orders paid by third-party checks or checks that are not drawn on a
domestic branch of a United States financial institution. If a check drawn on
a foreign financial institution is accepted, you may be subject to additional
bank charges for clearance and currency conversion.
The Fund also reserves the right, following shareholder notification,
to charge a service fee on accounts that, as a result of a redemption, have
remained below the minimum stated account balance for a period of three or
more consecutive months. Holders of such accounts may be notified of their
insufficient account balance and advised that they have until the end of the
current calendar quarter to raise their balance to the stated minimum. If the
account has not reached the minimum balance requirement by that time, the Fund
will charge a $9 fee for that quarter and each subsequent calendar quarter
until the account is brought up to the minimum balance. The service fee will
be deducted from the account during the first week of each calendar quarter
for the previous quarter, and will be used to help defray the cost of
maintaining low-balance accounts. No fees will be charged without proper
notice, and no CDSC will apply to such assessments.
The Fund also reserves the right, upon 60 days' written notice, to
involuntarily redeem accounts that remain under the minimum initial purchase
amount as a result of redemptions. An investor making the minimum initial
investment may be subject to involuntary redemption without the imposition of
a CDSC or Limited CDSC if he or she redeems any portion of his or her account.
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REDEMPTION AND EXCHANGE
You can redeem or exchange your shares in a number of different ways.
The exchange service is useful if your investment requirements change and you
want an easy way to invest in other tax-advantaged funds, equity funds, bond
funds or money market funds. This service is also useful if you are
anticipating a major expenditure and want to move a portion of your investment
into a fund that has the checkwriting feature. Exchanges are subject to the
requirements of each fund and all exchanges of shares constitute taxable
events. See Taxes. Further, in order for an exchange to be processed, shares
of the fund being acquired must be registered in the state where the acquiring
shareholder resides. You may want to consult your financial adviser or
investment dealer to discuss which funds in the Delaware Group will best meet
your changing objectives and the consequences of any exchange transaction. You
may also call the Delaware Group directly for fund information.
All exchanges involve a purchase of shares of the fund into which the
exchange is made. As with any purchase, an investor should obtain and
carefully read that fund's prospectus before buying shares in an exchange. The
prospectus contains more complete information about the fund, including
charges and expenses.
Your shares will be redeemed or exchanged at a price based on the net
asset value next determined after the Fund receives your request in good
order, subject, in the case of a redemption, to any applicable CDSC or Limited
CDSC. ^ For example, redemption or exchange requests received in good order
after the time the offering price of shares is determined, as noted above,
will be processed on the next business day. See Purchase Price and Effective
Date under How to Buy Shares. A shareholder submitting a redemption request
may indicate that he or she wishes to receive redemption proceeds of a
specific dollar amount. In the case of such a request, and in the case of
certain redemptions from retirement plan accounts, the Fund will redeem the
number of shares necessary to deduct the applicable CDSC in the case of Class
B and Class C Shares and, if applicable, the Limited CDSC in the case of Class
A Shares and tender to the shareholder the requested amount, assuming the
shareholder holds enough shares in his or her account for the redemption to be
processed in this manner. Otherwise, the amount tendered to the shareholder
upon redemption will be reduced by the amount of the applicable CDSC or
Limited CDSC. Redemption proceeds will be distributed promptly, as described
below, but not later than seven days after receipt of a redemption request.
Except as noted below, for a redemption request to be in "good order,"
you must provide your account number, account registration, and the total
number of shares or dollar amount of the transaction. For exchange requests,
you must also provide the name of the fund in which you want to ^ invest the
proceeds. Exchange instructions and redemption requests must be signed by the
record owner(s) exactly as the shares are registered. You may request a
redemption or an exchange by calling the Shareholder Service Center at
800-523-1918. The Fund may suspend, terminate, or amend the terms of the
exchange privilege upon 60 days' written notice to shareholders.
The Fund will process written and telephone redemption requests to the
extent that the purchase orders for the shares being redeemed have already
settled. The Fund will honor redemption requests as to shares for which a
check was tendered as payment, but the Fund will not mail or wire the proceeds
until it is reasonably satisfied that the purchase check has cleared, which
may take up to 15 days from the purchase date. You can avoid this potential
delay if you purchase shares by wiring Federal Funds. The Fund reserves the
right to reject a written or telephone redemption request or delay payment of
redemption proceeds if there has been a recent change to the shareholder's
address of record.
There is no front-end sales charge or fee for exchanges made between
shares of funds which both carry a front-end sales charge. Any applicable
front-end sales charge will apply to exchanges from shares of funds not
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subject to a front-end sales charge, except for exchanges involving assets
that were previously invested in a fund with a front-end sales charge and/or
exchanges involving the reinvestment of dividends.
Holders of Class B Shares or Class C Shares that exchange their shares
("Original Shares") for shares of other funds in the Delaware Group (in each
case, "New Shares") in a permitted exchange, will not be subject to a CDSC
that might otherwise be due upon redemption of the Original Shares. However,
such shareholders will continue to be subject to the CDSC and, in the case of
Class B Shares, the automatic conversion schedule of the Original Shares as
described in this Prospectus and any CDSC assessed upon redemption will be
charged by the fund from which the Original Shares were exchanged. In an
exchange of Class B Shares from the Fund, the Fund's CDSC schedule may be
higher than the CDSC schedule relating to the New Shares acquired as a result
of the exchange. For purposes of computing the CDSC that may be payable upon a
disposition of the New Shares, the period of time that an investor held the
Original Shares is added to the period of time that an investor held the New
Shares. With respect to Class B Shares, the automatic conversion schedule of
the Original Shares may be longer than that of the New Shares. Consequently,
an investment in New Shares by exchange may subject an investor to the higher
12b-1 fees applicable to Class B Shares of the Fund for a longer period of
time than if the investment in New Shares were made directly.
Various redemption and exchange methods are outlined below. Except for
the CDSC applicable to certain redemptions of Class B and Class C Shares and
the Limited CDSC applicable to certain redemptions of Class A Shares purchased
at net asset value, there is no fee charged by the Fund or the Distributor for
redeeming or exchanging your shares, but such fees could be charged in the
future. You may have your investment dealer arrange to have your shares
redeemed or exchanged. Your investment dealer may charge for this service.
All authorizations given by shareholders, including selection of any of
the features described below, shall continue in effect until such time as a
written revocation or modification has been received by the Fund or its agent.
Written Redemption
You can write to the Fund at 1818 Market Street, Philadelphia, PA 19103
to redeem some or all of your shares. The request must be signed by all owners
of the account or your investment dealer of record. For redemptions of more
than $50,000, or when the proceeds are not sent to the shareholder(s) at the
address of record, the Fund requires a signature by all owners of the account
and a signature guarantee for each owner. Each signature guarantee must be
supplied by an eligible guarantor institution. The Fund reserves the right to
reject a signature guarantee supplied by an eligible institution based on its
creditworthiness. The Fund may require further documentation from
corporations, executors, retirement plans, administrators, trustees or
guardians.
Payment is normally mailed the next business day after receipt of your
redemption request. If your Class A Shares are in certificate form, the
certificate(s) must accompany your request and also be in good order.
Certificates are issued for Class A Shares only if a shareholder submits a
specific request. Certificates are not issued for Class B Shares or Class C
Shares.
Written Exchange
You may also write to the Fund (at 1818 Market Street, Philadelphia, PA
19103) to request an exchange of any or all of your shares into another mutual
fund in the Delaware Group subject to the same conditions and limitations as
other exchanges noted above.
Telephone Redemption and Exchange
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To get the added convenience of the telephone redemption and exchange
methods, you must have the Transfer Agent hold your shares (without charge)
for you. If you choose to have your Class A Shares in certificate form, you
may redeem or exchange only by written request and you must return your
certificates.
The Telephone Redemption--Check to Your Address of Record service and
the Telephone Exchange service, both of which are described below, are
automatically provided unless you notify the Fund in writing that you do not
wish to have such services available with respect to your account. The Fund
reserves the right to modify, terminate or suspend these procedures upon 60
days' written notice to shareholders. It may be difficult to reach the Fund by
telephone during periods when market or economic conditions lead to an
unusually large volume of telephone requests.
Neither the Fund nor its Transfer Agent is responsible for any
shareholder loss incurred in acting upon written or telephone instructions for
redemption or exchange of Fund shares which are reasonably believed to be
genuine. With respect to such telephone transactions, the Fund will follow
reasonable procedures 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 the Transfer Agent may be liable for any losses
due to unauthorized or fraudulent transactions. Instructions received by
telephone are generally tape recorded, and a written confirmation will be
provided for all purchase, exchange and redemption transactions initiated by
telephone. By exchanging shares by telephone, you are acknowledging prior
receipt of a prospectus for the fund into which your shares are being
exchanged.
Telephone Redemption--Check to Your Address of Record
The Telephone Redemption feature is a quick and easy method to redeem
shares. You or your investment dealer of record can have redemption proceeds
of $50,000 or less mailed to you at your address of record. Checks will be
payable to the shareholder(s) of record. Payment is normally mailed the next
business day after receipt of the redemption request. This service is only
available to individual, joint and individual fiduciary-type accounts.
Telephone Redemption--Proceeds to Your Bank
Redemption proceeds of $1,000 or more can be transferred to your
predesignated bank account by wire or by check. You should authorize this
service when you open your account. If you change your predesignated bank
account, you must complete an Authorization Form and have your signature
guaranteed. For your protection, your authorization must be on file. If you
request a wire, your funds will normally be sent the next business day.
CoreStates Bank, N.A.'s fee (currently $7.50) will be deducted from your
redemption proceeds. If you ask for a check, it will normally be mailed the
next business day after receipt of your redemption request to your
predesignated bank account. There are no separate fees for this redemption
method, but the mail time may delay getting funds into your bank account.
Simply call the Shareholder Service Center prior to the time the offering
price and net asset value are determined, as noted above.
MoneyLine (SM) On Demand
Through the MoneyLine (SM) On Demand service, you or your investment
dealer may call the Fund to request a transfer of funds from your Fund account
to your predesignated bank account. See MoneyLine (SM) Services under The
Delaware Difference for additional information about this service.
Telephone Exchange
The Telephone Exchange feature is a convenient and efficient way to
adjust your investment holdings as your liquidity requirements and investment
objectives change. You or your investment dealer of record can exchange your
shares into other funds in the Delaware Group under the same registration,
subject to the same conditions and limitations as other exchanges noted above.
As with the written exchange service, telephone
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exchanges are subject to the requirements of each fund, as described above.
Telephone exchanges may be subject to limitations as to amounts or frequency.
Systematic Withdrawal Plans
1. Regular Plans
This plan provides shareholders with a consistent monthly (or
quarterly) payment. This is particularly useful to shareholders living on
fixed incomes, since it ^ can provide them with a stable supplemental amount.
With accounts of at least $5,000, you may elect monthly withdrawals of $25
(quarterly $75) or more. The Fund does not recommend any particular monthly
amount, as each shareholder's situation and needs vary. Payments are normally
made by check. In the alternative, you may elect to have your payments
transferred from your Fund account to your predesignated bank account through
the MoneyLine (SM) Direct Deposit Service. Your funds will normally be
credited to your bank account ^ up to four business days after the payment
date. There are no separate fees for this redemption method. See MoneyLine
^(SM) Services under The Delaware Difference for more information about this
service.
2. Retirement Plans
For shareholders eligible under the applicable retirement plan to
receive benefits in periodic payments, the Systematic Withdrawal Plan provides
you with maximum flexibility. A number of formulas are available for
calculating your withdrawals depending upon whether the distributions are
required or optional. Withdrawals must be for $25 or more; however, no minimum
account balance is required. The MoneyLine (SM) Direct Deposit Service
described above is not available for certain retirement plans.
* * *
Shareholders should not purchase additional shares while participating
in a Systematic Withdrawal Plan.
Redemptions of Class A Shares via a Systematic Withdrawal Plan may be
subject to a Limited CDSC if the original purchase was made at net asset value
within the 12 months prior to the withdrawal and a dealer's commission has
been paid on that purchase. See Contingent Deferred Sales Charge for Certain
Redemptions of Class A Shares Purchased at Net Asset Value, below.
The applicable CDSC for Class B Shares and Class C Shares redeemed via
a Systematic Withdrawal Plan will be waived if, on the date that the Plan is
established, the annual amount selected to be withdrawn is less than 12% of
the account balance. If the annual amount selected to be withdrawn exceeds 12%
of the account balance on the date that the Systematic Withdrawal Plan is
established, all redemptions under the Plan will be subject to the applicable
CDSC. Whether a waiver of the CDSC is available or not, the first shares to be
redeemed for each Systematic Withdrawal Plan payment will be those not subject
to a CDSC because they have either satisfied the required holding period or
were acquired through the reinvestment of distributions. The 12% annual limit
will be reset on the date that any Systematic Withdrawal Plan is modified (for
example, a change in the amount selected to be withdrawn or the frequency or
date of withdrawals), based on the balance in the account on that date. See
Waiver of Contingent Deferred Sales Charge - Class B Shares and Class C
Shares, below.
For more information on Systematic Withdrawal Plans, call the
Shareholder Service Center.
Contingent Deferred Sales Charge for Certain Redemptions of Class A Shares
Purchased at Net Asset Value
A Limited CDSC will be imposed on certain redemptions of Class A Shares
(or shares into which such Class A Shares are exchanged) made within 12 months
of purchase, if such purchases were made at net asset
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value and triggered the payment by the Distributor of the dealer's commission
previously described. See Classes of Shares.
The Limited CDSC will be paid to the Distributor and will be equal to
the lesser of 1% of: (1) the net asset value at the time of purchase of the
Class A Shares being redeemed; or (2) the net asset value of such Class A
Shares at the time of redemption. For purposes of this formula, the "net asset
value at the time of purchase" will be the net asset value at purchase of the
Class A Shares even if those shares are later exchanged for shares of another
Delaware Group fund and, in the event of an exchange of Class A Shares, the
"net asset value of such shares at the time of redemption" will be the net
asset value of the shares acquired in the exchange.
Redemptions of such Class A Shares held for more than 12 months will
not be subjected to the Limited CDSC and an exchange of such Class A Shares
into another Delaware Group fund will not trigger the imposition of the
Limited CDSC at the time of such exchange. The period a shareholder owns
shares into which Class A Shares are exchanged will count towards satisfying
the 12-month holding period. The Limited CDSC is assessed if such 12-month
period is not satisfied irrespective of whether the redemption triggering its
payment is of Class A Shares of the Fund or Class A Shares acquired in the
exchange.
In determining whether a Limited CDSC is payable, it will be assumed
that shares not subject to the Limited CDSC are the first redeemed followed by
other shares held for the longest period of time. The Limited CDSC will not be
imposed upon shares representing reinvested dividends or capital gains
distributions, or upon amounts representing share appreciation. All
investments made during a calendar month, regardless of what day of the month
the investment occurred, will age one month on the last day of that month and
each subsequent month.
Waiver of Limited Contingent Deferred Sales Charge ^- Class A Shares
The Limited CDSC for Class A Shares on which a dealer's commission has
been paid will be waived in the following instances: (i) redemptions that
result from the Fund's right to liquidate a shareholder's account if the
aggregate net asset value of the shares held in the account is less than the
then^-effective minimum account size; ^(ii) distributions to participants from
a retirement plan qualified under section 401(a) or 401(k) of the Internal
Revenue Code of 1986, as amended (the "Code"), or due to death of a
participant in such a plan; (iii) redemptions pursuant to the direction of a
participant or beneficiary of a retirement plan qualified under section 401(a)
or 401(k) of the Code with respect to that retirement plan; (iv) periodic
distributions from an IRA, SIMPLE IRA, or 403(b)(7) or 457 Deferred
Compensation Plan due to death, disability, or attainment of age 59 1/2, and
IRA distributions qualifying under Section 72(t) of the Internal Revenue Code;
(v) returns of excess contributions to an IRA; (vi) distributions by other
employee benefit plans to pay benefits; (vii) distributions described in (ii),
(iv), and (vi) above pursuant to a systematic withdrawal plan; and (viii)
redemptions by the classes of shareholders who are permitted to purchase
shares at net asset value, regardless of the size of the purchase (see Buying
Class A Shares at Net Asset Value under Classes of Shares).
Waiver of Contingent Deferred Sales Charge ^- Class B ^ and Class C Shares
The CDSC is waived on certain redemptions of Class B Shares in
connection with the following redemptions: (i) redemptions that result from
the Fund's right to liquidate a shareholder's account if the aggregate net
asset value of the shares held in the account is less than the then^-effective
minimum account size; ^(ii) returns of excess contributions to an IRA, SIMPLE
IRA, SEP/IRA or 403(b)(7) or 457 Deferred Compensation Plans; (iii) periodic
distributions from an IRA, SIMPLE IRA, SEP/IRA, 403(b)(7) or 457 Deferred
Compensation Plan, and IRA distributions qualifying under Section 72(t) of the
Internal Revenue Code; and (iv) distributions from an account if the
redemption results from the death of all registered owners of the account (in
the case of accounts established under the Uniform Gifts to Minors or Uniform
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Transfers to Minors Acts or trust accounts, the waiver applies upon the death
of all beneficial owners) or a total and permanent disability (as defined in
Section 72 of the Code) of all registered owners occurring after the purchase
of the shares being redeemed.
The CDSC ^ on Class C Shares is waived in connection with the following
redemptions: (i) redemptions that result from the Fund's right to liquidate a
shareholder's account if the aggregate net asset value of the shares held in
the account is less than the then^-effective minimum account size; ^(ii)
returns of excess contributions to an IRA, SIMPLE IRA, 403(b)(7) or 457
Deferred Compensation Plan, Profit Sharing Plan, Money Purchase Pension Plan
or 401(k) Defined Contribution Plan; (iii) periodic distributions from a
403(b)(7) or 457 Deferred Compensation Plan upon attainment of age 59 1/2,
Profit Sharing Plan, Money Purchase Pension Plan, 401(k) Defined Contribution
Plans upon attainment of age 70 1/2, and IRA distributions qualifying under
Section 72(t) of the Internal Revenue Service; (iv) distributions from a
403(b)(7) Deferred Compensation Plan, 457 Deferred Compensation Plan, Profit
Sharing Plan, or 401(k) Defined Contribution Plan, under hardship provisions
of the plan; (v) distributions from a 403(b)(7) Deferred Compensation Plan,
457 Deferred Compensation Plan, Profit Sharing Plan, Money Purchase Pension
Plan or a 401(k) Defined Contribution Plan upon attainment of normal
retirement age under the plan or upon separation from service; (vi) periodic
distributions from an IRA or SIMPLE IRA on or after attainment of age 59; and
(vii) distributions from an account if the redemption results from the death
of all registered owners of the account (in the case of accounts established
under the Uniform Gifts to Minors or Uniform Transfers to Minors Acts or trust
accounts, the waiver applies upon the death of all beneficial owners) or a
total and permanent disability (as defined in Section 72 of the Code) of all
registered owners occurring after the purchase of the shares being redeemed.
In addition, the CDSC will be waived on Class B and Class C Shares
redeemed in accordance with a Systematic Withdrawal Plan if the annual amount
selected to be withdrawn under the Plan does not exceed 12% of the value of
the account on the date that the Systematic Withdrawal Plan was established or
modified.
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DIVIDENDS AND DISTRIBUTIONS
The Fund expects to declare and distribute all of its net investment
income to shareholders as dividends annually. Net capital gains, if any, will
be distributed annually.
In addition, in order to satisfy certain distribution requirements of
the Tax Reform Act of 1986, the Fund 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 the Fund and
received by shareholders on the earlier of the date paid or December 31 of the
prior year.
Each Class of the Fund will share proportionately in the investment
income and expenses of the Fund, except that the per share dividends from net
investment income on the Class A Shares, the Class B Shares and the Class C
Shares will vary due to the expenses under the 12b-1 Plan applicable to each
Class. Generally, the dividends per share on Class B Shares and Class C Shares
can be expected to be lower than the dividends per share on Class A Shares
because the expenses under the 12b-1 Plans relating to Class B and Class C
Shares will be higher than the expenses under the 12b-1 Plan relating to Class
A Shares. See Distribution (12b-1) and Service under Management of the Fund.
Both dividends and distributions, if any, are automatically reinvested
in your account at net asset value unless you elect otherwise. Any check in
payment of dividends or other distributions which cannot be delivered by the
United States Post Office or which remains uncashed for a period of more than
one year may be reinvested in your account at the then-current net asset value
and the dividend option may be changed from cash to reinvest. If you elect to
take your dividends and distributions in cash and such dividends and
distributions are in an amount of $25 or more, you may choose the MoneyLine(SM)
Direct Deposit Service and have such payments transferred from your Fund
account to your predesignated bank account. This service is not available for
certain retirement plans. See MoneyLine ^(SM) Services under The Delaware
Difference for more information about this service.
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TAXES
The tax discussion set forth below is included for general information
only. Investors should consult their own tax advisers concerning the federal,
state, local or foreign tax consequences of an investment in the Fund.
The Fund has qualified, and 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, or to any excise tax, to the extent
its earnings are distributed as provided in the Code. The Fund intends to
distribute substantially all of its net investment income and net capital
gains, if any. 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.
Distributions paid by the Fund 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 the Fund. The Fund does not
seek to realize any particular amount of capital gains during a year; rather,
realized gains are a by-product of Fund 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 the
Fund are made shortly before the record date for a capital gains distribution,
a portion of the investment will be returned as taxable distribution.
Dividends or capital gains which are declared in October, November or
December to shareholders of record in such a month but which, for operational
reasons, may not be paid to the shareholder until the following January, will
be treated for tax purposes as if paid by the Fund and received by the
shareholder on December 31 of the calendar year in which they are declared.
The sale of shares of the Fund 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 the Fund and any other fund in the Delaware Group. Any loss incurred
on a sale or exchange of Fund shares that had been 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 and will be disallowed to the
extent of exempt-interest dividends paid with respect to such shares. All or a
portion of the sales charge incurred in acquiring the Fund's shares will be
excluded from the federal tax basis of any of such shares sold or exchanged
within 90 days of their purchase (for purposes of determining gain or loss
upon sale of such shares) if the sale proceeds are reinvested in the Fund or
in another fund in the Delaware Group of funds and a sales charge that would
otherwise apply to the reinvestment is reduced or eliminated. Any portion of
such sales charge excluded from the tax basis of the shares sold will be added
to the tax basis of the shares acquired in the reinvestment.
The automatic conversion of Class B Shares into Class A Shares at the
end of approximately eight years after purchase will be tax-free for federal
tax purposes. See Automatic Conversion of Class B Shares under Classes of
Shares.
Each year, ^ Pooled Trust, Inc. will mail to you information on the tax
status of the Fund's dividends and distributions.
^ Pooled Trust, Inc. 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 Investment Application your
proper Taxpayer Identification Number and by certifying that you are not
subject to backup withholding.
See Taxes in Part B for additional information on tax matters relating
to the Fund and its shareholders.
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CALCULATION OF OFFERING PRICE AND NET ASSET VALUE PER SHARE
The net asset value ("NAV") per share is determined by dividing the
total market value of the Fund's investments and other assets, less any
liabilities, by the total outstanding shares of the Fund. NAV per share is
determined as of the close of regular trading on the ^ New York Stock Exchange
on each day the ^ Exchange is open for business.
Class A Shares are purchased at the offering price per share, while
Class B Shares and Class C Shares are purchased at the NAV per share. The
offering price per share of Class A Shares consists of the NAV per share next
computed after the order is received, plus any applicable front-end sales
charges.
The offering price and NAV are computed as of the close of regular
trading on the Exchange (ordinarily, 4 p.m., Eastern time) on days when the
Exchange is open.
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.
The securities in which the Fund may invest from time to time may be listed
primarily on foreign exchanges which trade on days when the ^ Exchange is
closed (such as Saturday). As a result, the net asset value of the Fund may be
significantly affected by such trading on days when shareholders have no
access to the Fund.
For purposes of calculating NAV, 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 Bank. 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.
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^ The net asset values of all outstanding shares of each ^ class of the
Fund will be computed on a pro-rata basis for each outstanding share based on
the proportionate participation in the Fund represented by the value of shares
of that ^ class. All income earned and expenses incurred by the Fund will be
borne on a pro-rata basis by each outstanding share of a ^ class, based on
each ^ class' percentage in the Fund represented by the value of shares of
such ^ class, except that ^ REIT Fund Institutional Class and The Real Estate
Investment Trust Portfolio class will not incur any of the expenses under
Pooled Trust Inc.'s 12b-1 Plans and Class A, Class B and Class C Shares alone
will bear ^ the 12b^-1 Plan expenses payable under their respective 12b-1
Plans. Due to the specific distribution expenses and other costs that will be
allocable to each ^ class, the ^ NAV of each ^ class of the Fund ^ will vary.
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MANAGEMENT OF THE FUND
Directors
The business and affairs of the Fund are managed under the direction of
the ^ Pooled Trust, Inc.'s Board of Directors. Part B contains additional
information regarding ^ Pooled Trust, Inc.'s directors and officers.
Investment Manager and Sub-Adviser
Delaware Investment Advisers, a division of Delaware Management
Company, Inc. (the "Manager"), furnishes investment advisory services to the
Fund. Lincoln Investment Management, Inc. ("Lincoln"), a wholly owned
subsidiary of Lincoln National Corporation, acts as sub-adviser to the Manager
with respect to Fund. In its capacity as sub-adviser, Lincoln furnishes the
Manager with investment recommendations, asset allocation advice, research,
economic analysis and other investment services with respect to the securities
in which the Fund may invest.
The Manager and its predecessors have been managing the funds in the
Delaware Group since 1938. On ^ July 31, ^ 1997, the Manager and its
affiliates within the Delaware Group^ including, Delaware International
Advisers^ Ltd., were ^ managing in the aggregate more than ^ $39 billion in
assets in the various institutional or separately managed (approximately ^
$23,844,101,000) and investment company (approximately ^ $15,869,009,000)
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 ^ July 31, ^ 1997, Lincoln had over ^ $00
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.
The Manager 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 and the Manager are now indirect, wholly owned
subsidiaries, and subject to the ultimate control, of Lincoln National.
Lincoln, the sub-adviser to the Manager with respect to the Fund, is a wholly
owned subsidiary of Lincoln National. The Manager and Lincoln may be deemed to
be affiliated persons under the 1940 Act, as the two 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. The Manager's address is One Commerce Square, 2005 Market Street,
Philadelphia, PA 19103. Lincoln's address is 200 E. Berry Street, Fort Wayne,
IN 46802.
The Manager has entered into an Investment Advisory Agreement with ^
Pooled Trust, Inc. on behalf of the Fund. The Manager has also entered into a
Sub-Advisory Agreement with Lincoln with respect to the Fund. Under that
Agreement, the Manager, subject to the control and supervision of ^ Pooled
Trust, Inc.'s Board of Directors and in conformance with the stated investment
objectives and policies of the Fund, ^ manages the investment and reinvestment
of the assets of the Fund. In this regard, it is their responsibility to make
investment decisions for the Fund.
As compensation for the services to be rendered under the advisory
agreement, the Manager is entitled to an annual advisory fee ^ equal to 0.75%
of the Fund's average daily net assets ^. Lincoln receives 30% of the advisory
fee paid to the Manager for acting as sub-adviser to the Manager with respect
to the Fund. The directors of Pooled Trust, Inc. annually review fees paid to
the Manager and the Sub-Adviser. The Manager has elected voluntarily to waive
that portion, if any, of the annual management fees payable by the
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Fund and to pay expenses of the Fund to the extent necessary to ensure that
the Total Operating Expenses (exclusive of taxes, interest, brokerage
commissions and extraordinary expenses) of Class A Shares, Class B Shares and
Class C Shares do not exceed ^ 1.11%, 1.86% and 1.86%, respectively through
April 30, 1998.
Babak Zenouzi has primary responsibility for making day-to-day
investment decisions for the Fund and has had such responsibility since its
inception. 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 the Manager 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. Steven R. Brody, John F. Robertson and
Lawrence T. Kissko have served as sub-advisers to the Fund since its
inception. 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. 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 is a CFA
charterholder and has completed numerous courses toward the MAI designation.
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 CFA charterholder.
^
Portfolio Trading Practices
The Fund normally will not invest for short-term trading purposes.
However, the Fund may sell securities without regard to the length of time
they have been held. The degree of portfolio activity will affect brokerage
costs of the Fund and may affect taxes payable by the Fund's shareholders to
the extent that net capital gains are realized. Given the Fund's investment
objective, it is anticipated that the portfolio turnover rate of the Fund will
not exceed 100%.
The Manager and the Sub-Adviser use their best efforts to obtain the
best available price and most favorable execution for portfolio transactions.
Orders may be placed with brokers or dealers who provide brokerage and
research services to the Manager or the Sub-Adviser or their advisory clients.
These services may be used by the Manager and the Sub-Adviser in servicing any
of their respective accounts. Subject to best price and execution, the Manager
and the Sub-Adviser may consider a broker/dealer's sales of ^ shares of the
funds in the Delaware Group of funds in placing portfolio orders and may place
orders with broker/dealers that have agreed to defray certain ^ expenses of
such funds, such as custodian fees.
Performance Information
From time to time, the Fund may quote total return performance of its
Classes in advertising and other types of literature.
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Total return will be based on a hypothetical $1,000 investment,
reflecting the reinvestment of all distributions at net asset value and: (i)
in the case of Class A Shares, the impact of the maximum front-end sales
charge at the beginning of each specified period; and (ii) in the case of
Class B Shares and Class C Shares, the deduction of any applicable CDSC at the
end of the relevant period. Each presentation will include the average annual
total return for one-, five- and ten-year or life-of-fund periods, as
relevant. The Fund may also advertise aggregate and average total return
information concerning a Class over additional periods of time. In addition,
the Fund may present total return information that does not reflect the
deduction of the maximum front-end sales charge or any applicable CDSC. In
this case, such total return information would be more favorable than total
return information that includes deductions of the maximum front-end sales
charge or any applicable CDSC.
Because securities prices fluctuate, investment results of the Classes
will fluctuate over time. Past performance is not a guarantee of future
results.
Distribution (12b-1) and Service
The ^ Distributor, Delaware Distributors, L.P., serves as the national
distributor for the Fund's shares under a Distribution Agreement with Pooled
Trust, Inc. dated October 14, 1997.
Pooled Trust, Inc. has adopted a separate distribution plan under Rule
12b-1 for each of the Class A Shares, the Class B Shares and the Class C
Shares of the Fund (the "Plans"). Each Plan permits the Fund to pay the
Distributor from the assets of the respective Classes a monthly fee for the
Distributor's services and expenses in distributing and promoting sales of
shares.
These expenses include, among other things, preparing and distributing
advertisements, sales literature, and prospectuses and reports used for sales
purposes, compensating sales and marketing personnel, holding special
promotions for specified periods of time, and paying distribution and
maintenance fees to brokers, dealers and others. In connection with the
promotion of shares of the Classes, the Distributor may, from time to time,
pay to participate in dealer-sponsored seminars and conferences, and reimburse
dealers for expenses incurred in connection with preapproved seminars,
conferences and advertising. The Distributor may pay or allow additional
promotional incentives to dealers as part of preapproved sales contests and/or
to dealers who provide extra training and information concerning a Class and
increase sales of the Class. In addition, the Fund may make payments from the
12b-1 Plan fees of its respective Classes directly to others, such as banks,
who aid in the distribution of Class shares or provide services in respect of
a Class, pursuant to service agreements with the Fund.
The 12b-1 Plan expenses relating to each of the Class B Shares and the
Class C Shares of the Fund are also used to pay the Distributor for advancing
the commission costs to dealers with respect to the initial sale of such
shares.
The aggregate fees paid by the Fund from the assets of the respective
Classes to the Distributor and others under the Plans may not exceed (i) ^
0.30% of the Class A Shares' average daily net assets in any year, and (ii) ^
1% (0.25% of which are service fees to be paid by the Fund to the Distributor,
dealers and others, for providing personal service and/or maintaining
shareholder accounts) of the Fund's Class B Shares' and the Class C Shares'
average daily net assets in any year. The Class A, Class B and Class C Shares
will not incur any distribution expenses beyond these limits, which may not be
increased without shareholder approval.
Although the maximum fee payable under the Plan relating to Class A
Shares is 0.30% of average daily net assets, the Board of Directors has
currently set the annual fee for the Class at 0.25% of the average daily net
assets. The Board of Directors may increase the fee to the full 0.30% on all
Class A Shares' assets at any time. See Shares.
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<PAGE>
While payments pursuant to the Plans may not exceed 0.30% annually with
respect to the Class A Shares and 1% annually with respect to each of the
Class B Shares and the Class C Shares, the Plans do not limit fees to amounts
actually expended by the Distributor. It is therefore possible that the
Distributor may realize a profit in any particular year. However, the
Distributor currently expects that its distribution expenses will likely equal
or exceed payments to it under the Plans. The Distributor may, however, incur
additional expenses and make additional payments to dealers from its own
resources to promote the distribution of shares of the Classes. The monthly
fees paid to the Distributor are subject to the review and approval of the ^
Pooled Trust, Inc.'s unaffiliated directors, who may reduce the fees or
terminate the Plans at any time
^ The Transfer Agent, Delaware Service Company, Inc., serves as the
shareholder servicing, dividend disbursing and transfer agent for the Fund
under a Shareholders Services Agreement. The Transfer Agent also provides
accounting services to the Fund pursuant to the terms of a separate Fund
Accounting Agreement.
The directors annually review fees paid to the Distributor and the
Transfer Agent. The Distributor and the Transfer Agent are also indirect,
wholly owned subsidiaries of DMH.
Expenses
The Fund is responsible for all of its own expenses other than those
borne by the Manager under the Investment Management Agreement and those borne
by the Distributor under its Distribution Agreement. The expense ratio of each
Class ^ will reflect the impact of its 12b-1 Plan and the voluntary waiver of
fees by the Manager.
Shares
^ Pooled Trust, Inc. is an open-end management investment company. The
Fund's portfolio of assets is nondiversified as defined by the 1940 Act.
Commonly known as a mutual fund, ^ Pooled Trust, Inc. was organized as a
Maryland corporation on May 30, 1991. In addition to the Fund, ^ Pooled Trust,
Inc. presently offers 13 other series of shares. 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 series. 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 series, 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 series 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 series entitled
to vote on a matter will vote in the aggregate and not by series, except when
the matter to be voted upon affects only the interests of shareholders of a
particular Portfolio or class or when otherwise expressly required by law. ^
Under Maryland law, ^ Pooled Trust, Inc. 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.
^ In addition to Class A Shares, Class B Shares and Class C Shares, the
Fund also offers REIT Fund Institutional Class and The Real Estate Investment
Trust Portfolio class. Shares of each class represent proportionate interests
in the assets of the Fund and have the same voting and other rights and
preferences as the other classes of the Fund, except that shares of REIT Fund
Institutional Class and The Real Estate Investment Trust Portfolio class are
not subject to, and may not vote on matters affecting, the Distribution Plans
under Rule 12b-1 relating to Class A, Class B and Class C Shares. Similarly,
as a general matter, the shareholders of Class A Shares, Class B Shares and
Class C Shares may vote only on matters affecting the 12b-1 Plan that relates
to the class of shares that they hold. However, Class B
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<PAGE>
Shares may vote on any proposal to increase materially the fees to be paid by
the Fund under the Rule 12b-1 Plan relating to Class A Shares.
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Litigation
The Fund is not involved in any litigation.
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ADDITIONAL INVESTMENT INFORMATION ON POLICIES AND RISK CONSIDERATIONS
U.S. Government Securities
The U.S. government securities in which the Fund 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 Fund 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 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 Fund 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
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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 Fund may invest
are considered by the U.S. Securities and Exchange Commission (the
"Commission") to be investment companies, the Fund will limit its 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 Fund 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 the Fund's
yield to maturity. If the underlying mortgage assets experience greater than
anticipated prepayments of principal, the Fund may fail to fully recoup its
initial investment in these securities even if the securities are rated in the
highest rating categories.
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. The Fund may
invest in such private-backed securities but, the Fund 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
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<PAGE>
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.
Short-Term Investments
The short-term investments in which the Fund may invest consistent with
the limits recited above (see Investment Objectives, Policies and Risk ^
Factors) 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
the Fund, and time deposits maturing from two business days through seven
calendar days will not exceed 15% of the total assets of the Fund.
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).
The Fund 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 the Manager;
(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
the Manager;
(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
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. The Fund 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 the Fund enters into
the commitment and no interest accrues to the Fund 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 Fund not to enter into when-issued
commitments exceeding in the aggregate 15% of the market value of the Fund's
total assets less liabilities other than the obligations created by these
commitments.
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Repurchase Agreements
The Fund may enter into repurchase agreements with brokers, dealers or
banks deemed to be creditworthy by the Manager under guidelines of ^ Pooled
Trust, Inc.'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 15% of the Fund's assets may be
invested in repurchase agreements having a maturity in excess of seven days.
Repurchase agreements may be viewed as a fully collateralized loan of money by
the Fund to the seller. The Fund 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, the Fund might incur a loss. If bankruptcy
proceedings are commenced with respect to the seller, the Fund's realization
upon the collateral may be delayed or limited. The Fund 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
The Fund 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.
The major risk to which the Fund 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, the Fund will only enter into loan
arrangements after a review of all pertinent facts by the Manager, 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
The Fund may borrow money as a temporary measure or to facilitate
redemptions. The Fund has no 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%, the Fund 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 the Fund has an outstanding
borrowing.
Foreign Investment Information
Up to 10% of the total assets of the Fund may be invested in securities
of foreign issuers and foreign currency. The Fund has the right to purchase
securities in any developed, underdeveloped or emerging country. Investors
should consider carefully the substantial risks involved in investing in
securities issued by companies and governments of foreign nations. These risks
are in addition to the usual risks inherent in domestic investments. There is
the possibility of expropriation, nationalization or confiscatory taxation,
taxation of income earned in foreign nations or other taxes imposed with
respect to investments in foreign nations, foreign exchange control (which may
include suspension of the ability to transfer currency from a given country),
default in foreign government securities, political or social instability or
diplomatic developments which could affect investments in securities of
issuers in those nations.
In addition, in many countries, there is substantially less publicly
available information about issuers than is available in reports about
companies in the United States and this information tends to be of a lesser
quality. Foreign companies are not subject to uniform accounting, auditing and
financial reporting standards, and auditing practices and requirements may not
be comparable to those applicable to United States companies. In particular,
the assets and profits appearing on the financial statements of a developing
or emerging country issuer may not reflect its financial position or results
of operations in the way they would be reflected had the
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<PAGE>
financial statements been prepared in accordance with United States generally
accepted accounting principles. Also, for an issuer that keeps accounting
records in local currency, inflation accounting rules may require for both tax
and accounting purposes, that certain assets and liabilities be restated on
the issuer's balance sheet in order to express items in terms of currency or
constant purchasing power. Inflation accounting may indirectly generate losses
or profits. Consequently, financial data may be materially affected by
restatements for inflation and may not accurately reflect the real condition
of those issuers and securities markets.
It is also expected that the expenses for custodial arrangements of the
Fund's 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 the Fund receives from the companies comprising the Fund's
investments.
Further, the Fund may encounter difficulty or be unable to pursue legal
remedies and obtain judgments in foreign courts. Commission rates on
securities transactions in foreign countries, which are sometimes fixed rather
than subject to negotiation as in the United States, are likely to be higher.
Further, the settlement period of securities transactions in foreign markets
may be longer than in domestic markets, and may be subject to administrative
uncertainties. In many foreign countries, there is less government supervision
and regulation of business and industry practices, stock exchanges, brokers
and listed companies than in the United States, and capital requirements for
brokerage firms are generally lower. The foreign securities markets of many of
the countries in which the Fund may invest may also be smaller, less liquid
and subject to greater price volatility than those in the United States.
Compared to the United States and other developed countries, emerging
countries may have volatile social conditions, relatively unstable governments
and political systems, economies based on only a few industries and economic
structures that are less diverse and mature, and securities markets that trade
a small number of securities, which can result in a low or nonexistent volume
of trading. Prices in these securities markets 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.
Until recently, there has been an absence of a capital market structure or
market-oriented economy in certain emerging countries. Further, investments
and opportunities for investments by foreign investors are subject to a
variety of national policies and restrictions in many emerging countries.
These restrictions may take the form of prior governmental approval, limits on
the amount or type of securities held by foreigners, limits on the types of
companies in which foreigners may invest and prohibitions on foreign
investments in issuers or industries deemed sensitive to national interests.
Additional restrictions may be imposed at any time by these or other countries
in which the Fund invests. Also, 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
governmental consents. Although these restrictions may in the future make it
undesirable to invest in emerging countries, the Manager does not believe that
any current repatriation restrictions would affect their decision to invest in
such countries. Countries such as those in which the Fund may invest have
historically experienced and may continue to experience, substantial, and in
some periods extremely high rates of inflation for many years, high interest
rates, exchange rate fluctuations or currency depreciation, large amounts of
external debt, balance of payments and trade difficulties and extreme poverty
and unemployment. Other factors which may influence the ability or willingness
to service debt include, but are not limited to, a country's cash flow
situation, the availability of sufficient foreign exchange on the date a
payment is due, the relative size of its debt service burden to the economy as
a whole, its government's policy towards the International Monetary Fund, the
World Bank and other international agencies and the political constraints to
which a government debtor may be subject.
With respect to investment in debt issues of foreign governments, the
ability of a foreign government or government-related issuer to make timely
and ultimate payments on its external debt obligations will also be
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<PAGE>
strongly influenced by the issuer's balance of payments, including export
performance, its access to international credits and investments, fluctuations
in interest rates and the extent of its foreign reserves. A country whose
exports are concentrated in a few commodities or whose economy depends on
certain strategic imports could be vulnerable to fluctuations in international
prices of these commodities or imports. To the extent that a country receives
payment for its exports in currencies other than dollars, its ability to make
debt payments denominated in dollars could be adversely affected. If a foreign
government or government-related issuer cannot generate sufficient earnings
from foreign trade to service its external debt, it may need to depend on
continuing loans and aid from foreign governments, commercial banks and
multilateral organizations, and inflows of foreign investment. The commitment
on the part of these foreign governments, multilateral organizations and
others to make such disbursements may be conditioned on the government's
implementation of economic reforms and/or economic performance and the timely
service of its obligations. Failure to implement such reforms, achieve such
levels of economic performance or repay principal or interest when due may
curtail the willingness of such third parties to lend funds, which may further
impair the issuer's ability or willingness to service its debts in a timely
manner. The cost of servicing external debt will also generally be adversely
affected by rising international interest rates because many external debt
obligations bear interest at rates which are adjusted based upon international
interest rates. The ability to service external debt will also depend on the
level of the relevant government's international currency reserves and its
access to foreign exchange. Currency devaluations may affect the ability of a
government issuer to obtain sufficient foreign exchange to service its
external debt.
As a result of the foregoing, a foreign governmental issuer may default
on its obligations. If such a default occurs, the Fund may have limited
effective legal recourse against the issuer and/or guarantor. Remedies must,
in some cases, be pursued in the courts of the defaulting party itself, and
the ability of the holder of foreign government and government-related debt
securities to obtain recourse may be subject to the political climate in the
relevant country. In addition, no assurance can be given that the holders of
commercial bank debt will not contest payments to the holders of other foreign
government and government-related debt obligations in the event of default
under their commercial bank loan agreements.
With respect to forward foreign currency exchange, 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. See Forward Foreign Currency Exchange Contracts, below.
Forward Foreign Currency Exchange Contracts
As noted above, the foreign investments made by the Fund present
currency considerations which pose special risks. The Manager uses 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 Fund values its assets daily in terms of U.S. dollars, it
does not intend to convert its holdings of foreign currencies into U.S.
dollars on a daily basis. The Fund 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 transactions and to minimize
currency value fluctuations. The Fund 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
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currency" contract or "forward" contract). The Fund 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.
The Fund 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 amount of foreign currency involved in the
underlying security transaction, the Fund 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 Manager believes that the currency of a
particular foreign country may suffer a significant decline against the U.S.
dollar or against another currency, the Fund 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
Fund's securities denominated in such foreign currency. The Fund 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 Fund's
securities or other assets denominated in that currency.
The Fund 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 Fund may also engage in
currency "cross hedging" when, in the opinion of the Manager, as appropriate,
the historical relationship among foreign currencies suggests that the Fund
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, the Fund 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 Fund 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 the Fund securities at
the expiration of the contract. Accordingly, it may be necessary for the Fund
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 Fund 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 security if its market value exceeds the
amount of foreign currency the Fund is obligated to deliver.
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<PAGE>
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 Fund 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 Fund will only
enter into these transactions for hedging purposes if it is consistent with
the Fund's investment objectives and policies and the Fund 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 Fund's assets.
The Fund may enter into contracts for the purchase or sale for future
delivery of securities. When a futures contract is sold, the Fund 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 Fund 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 Fund would then be able to
keep a cash reserve applicable to meet potential redemptions while at the same
time being effectively fully invested.
The Fund 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 Fund will not enter into futures contracts and
options thereon to the extent that 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 futures contracts and options thereon would
not exceed 20% of the Fund's total assets. In the case of an option that is
in-the-money at the time of purchase, the in-the-money amount may be excluded
in calculating the 5%.
To the extent that interest or exchange rates move in an unexpected
direction, the Fund may not achieve the anticipated benefits of investing in
futures contracts and options thereon, or may realize a loss. To the extent
that the Fund 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 Fund
from closing out its positions relating to futures.
Options
Options on Securities
The Fund may write covered call options on U.S. securities, purchase
call options on such securities and enter into closing transactions related
thereto. The Fund 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. The Fund will only purchase call
options to the extent that premiums paid on all outstanding call options do
not exceed 2% of the Fund'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. The Fund 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
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not less than the exercise price of the option at all times during the option
period. The Fund 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
Fund'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 Fund offset put options or
call options prior to exercise or expiration. If the Fund 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 Fund may use both exchange-traded and over-the-counter options.
Certain over-the-counter options may be illiquid. The Fund will only invest in
such options to the extent consistent with their 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 Manager'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 the Fund plus any transaction costs will reduce
any benefit realized by the Fund upon exercise of the option. When writing put
options, the Fund may be required, when the put is exercised, to purchase
securities at higher prices than current market prices.
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 the Fund'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 the Fund 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 Fund 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, the Fund 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
The Fund 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 Fund.
The Fund may 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
the Manager the day-to-day functions of determining whether or not individual
Rule 144A Securities are liquid for purposes of the Fund's limitation on
investments in illiquid assets. The Board has instructed the Manager to
consider the following
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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 the Manager determines that a Rule 144A Security which was
previously determined to be liquid is no longer liquid and, as a result, the
Fund's holdings of illiquid securities exceed the Fund's 15% limit on
investment in such securities, the investment adviser will determine what
action shall be taken to ensure that the Fund continues to adhere to such
limitation.
Convertible, Debt and Non-Traditional Equity Securities
A portion of the Fund'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 Fund 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."
The Fund 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 the Fund, 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 Fund 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
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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 Fund'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 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.
Depositary Receipts
The Fund may invest in sponsored and unsponsored American Depositary
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 Depositary, 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 Depositary 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. ADRs may be listed on a national securities exchange or may
be traded in the over-the-counter market. ADR prices are denominated in U.S.
dollars although the underlying securities are denominated in a foreign
currency. Investments in ADRs involve risks similar to those accompanying
direct investments in foreign securities.
Zero Coupon Securities
The market prices of zero coupon securities are generally more volatile
than the market prices of securities that pay interest periodically and are
likely to respond to changes in interest rates to a greater degree than do
non-zero coupon securities having similar maturities and credit quality.
Current federal income tax law requires that a holder of a taxable zero coupon
security report as income each year the portion of the original issue discount
of such security that accrues that year, even though the holder receives no
cash payments of interest during the year. The Fund intends to qualify as a
regulated investment company under the Code. Accordingly, during periods when
the Fund receives no interest payments on its zero coupon securities, it will
be required, in order to maintain its desired tax treatment, to distribute
cash approximating the income
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attributable to such securities. Such distribution may require the sale of
portfolio securities to meet the distribution requirements and such sales may
be subject to the risk factor discussed above.
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<TABLE>
<CAPTION>
APPENDIX A
Illustrations of Hypothetical Returns on Investments Based on Purchase Option
$10,000 Purchase
Scenario 1 Scenario 2
No Redemption Redeem 1st Year
-------------------------------------- -------------------------------------
Year Class A Class B Class C Class A Class B Class C
---- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
0 9,525 10,000 10,000 9,525 10,000 10,000
1 10,478 10,930 10,930 10,478 10,530 10,830+
2 11,525 11,946 11,946
3 12,678 13,058 13,058
4 13,946 14,272 14,272
5 15,340 15,599 15,599
6 16,874 17,050 17,050
7 18,562 18,636 18,636
8 20,418+ 20,369 20,369
9 22,459 22,405* 22,263
10 24,705 24,646* 24,333
*This assumes that Class B Shares were converted to Class A Shares at the end of the eighth year.
$250,000 Purchase
Scenario 1 Scenario 2
No Redemption Redeem 1st Year
-------------------------------------- -------------------------------------
Year Class A Class B Class C Class A Class B Class C
---- ------- ------- ------- ------- ------- -------
0 243,750 250,000 250,000 243,750 250,000 250,000
1 268,125 273,250 273,250 268,125 263,250 270,750+
2 294,938 298,662 298,662
3 324,431 326,438 326,438
4 356,874+ 356,797 356,797
5 392,562 389,979 389,979
6 431,818 426,247 426,247
7 475,000 465,888 465,888
8 522,500 509,215 509,215
9 574,750 560,137* 556,572
10 632,225 616,150* 608,333
*This assumes that Class B Shares were converted to Class A Shares at the end of the eighth year.
</TABLE>
<PAGE>
RESTUBBED TABLE
<TABLE>
<CAPTION>
APPENDIX A
Illustrations of Hypothetical Returns on Investments Based on Purchase Option
$10,000 Purchase
Scenario 3 Scenario 4
Redeem 3rd Year Redeem 5th Year
------------------------------------- ------------------------------------
Year Class A Class B Class C Class A Class B Class C
---- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
0 9,525 10,000 10,000 9,525 10,000 10,000
1 10,478 10,930 10,930 10,478 10,930 10,930
2 11,525 11,946 11,946 11,525 11,946 11,946
3 12,678 12,758 13,058+ 12,678 13,058 13,058
4 13,946 14,272 14,272
5 15,340 15,399 15,599+
6
7
8
9
10
*This assumes that Class B Shares were converted to Class A Shares at the end of the eighth year.
$250,000 Purchase
Scenario 3 Scenario 4
Redeem 3rd Year Redeem 5th Year
------------------------------------- ------------------------------------
Year Class A Class B Class C Class A Class B Class C
---- ------- ------- ------- ------- ------- -------
0 243,750 250,000 250,000 243,750 250,000 250,000
1 268,125 273,250 273,250 268,125 273,250 273,250
2 294,938 298,662 298,662 294,938 298,662 298,662
3 324,431 318,938 326,438+ 324,431 326,438 326,438
4 356,874+ 356,797 356,797
5 392,562 384,979 389,979
6
7
8
9
10
*This assumes that Class B Shares were converted to Class A Shares at the end of the eighth year.
</TABLE>
Assumes a hypothetical return for Class A of 10% per year, a hypothetical
return for Class B of 9.3% for years 1-8 and 10% for years 9-10, and a
hypothetical return for Class C of 9.3% per year. Hypothetical returns vary
due to the different expense structure for each Class and do not represent
actual performance.
Class A purchase subject to appropriate sales charge breakpoint (4.75% @
$10,000; 3.75% @ $100,000; 2.50% @ $250,000).
Class B purchase assessed appropriate CDSC upon redemption (4%-4%-3%-3%-2%-1%
in years 1-2-3-4-5-6).
Class C purchase assessed 1% CDSC upon redemption in year 1.
Figures marked "+" identify which Class offers the greater return potential
based on the investment amount, the holding period and the expense structure
of each Class.
-60-
<PAGE>
<TABLE>
<CAPTION>
APPENDIX B^--CLASSES OFFERED
<S> <C> <C> <C> <C>
Growth of Capital A Class B Class C Class Consultant Class
Aggressive Growth Fund x x x -
Trend Fund x x x ^-
Enterprise Fund x x x ^-
DelCap Fund x x x ^-
Small Cap Value Fund x x x ^-
U.S. Growth Fund x x x ^-
^ Growth Stock Fund x x x ^-
Tax-Efficient Equity Fund x x x -
Total Return
Blue Chip Fund x x x -
Quantum Fund x x x -
Devon Fund x x x ^-
Decatur Total Return Fund x x x ^-
Decatur Income Fund x x x ^-
Delaware Fund x x x -^
=
International Diversification
Emerging Markets Fund x x x ^-
New Pacific Fund x x x ^-
World Growth Fund x x x -
International Equity Fund x x x -^
Global Assets Fund x x x ^-
Global Bond Fund x x x ^-
Current Income
Delchester Fund x x x ^-
Strategic Income Fund x x x ^-
Corporate Income Fund x x x ^-
Federal Bond Fund x x x ^-
U.S. Government Fund x x x ^-
Delaware-Voyageur US Government
Securities Fund x x x -
Limited^-Term Government Fund x x x ^-
</TABLE>
-61-
<PAGE>
<TABLE>
<CAPTION>
^ APPENDIX B--CLASSES OFFERED - (CON'T)
<S> <C> <C> <C> <C>
^ Tax Preferred Income A Class B Class C Class Consultant Class
National High Yield Municipal Bond Fund x x x ^-
Tax^-Free USA Fund x x x ^-
Tax^-Free Insured Fund x x x ^-
Tax^-Free USA Intermediate Fund x x x ^-
Delaware-Voyageur Tax-Free ^ Arizona Insured Fund x x x ^-
Delaware-Voyageur Tax-Free ^ Arizona Fund x x x ^-
Delaware-Voyageur Tax-Free California Insured Fund x x x -
Delaware-Voyageur Tax-Free California Fund x x x -
Delaware-Voyageur Tax-Free Colorado Fund x x x -
Delaware-Voyageur Tax-Free Florida Insured Fund x x x -
Delaware-Voyageur Tax-Free Florida Intermediate Fund x x x -
Delaware-Voyageur Tax-Free Florida Fund x x x -
Delaware-Voyageur Tax-Free Idaho Fund x x x -
Delaware-Voyageur Tax-Free Iowa Fund x x x -
Delaware-Voyageur Tax-Free Kansas Fund x x x -
Delaware-Voyageur Minnesota High Yield Municipal Bond Fund x x x -
Delaware-Voyageur Minnesota Insured Fund x x x -
Delaware-Voyageur Tax-Free Minnesota Intermediate Fund x x x -
Delaware-Voyageur Tax-Free Minnesota Fund x x x -
Delaware-Voyageur Tax-Free Missouri Insured Fund x x x -
Delaware-Voyageur Tax-Free New Mexico Fund x x x -
Delaware-Voyageur Tax-Free New York Fund x x x -
Delaware-Voyageur Tax-Free North Dakota Fund x x x -
Delaware-Voyageur Tax-Free Oregon Insured Fund x x x -
Tax-Free Pennsylvania Fund x x x -
Delaware-Voyageur Tax-Free Utah Fund x x x -
Delaware-Voyageur Tax-Free Washington Insured Fund x x x -
Delaware-Voyageur Tax-Free Wisconsin Fund x x x -
Money Market Funds
Delaware Cash Reserve x x x x
U.S. Government Money Fund x ^- - x
Tax^-Free Money Fund x ^- - x
</TABLE>
-62-
<PAGE>
The Delaware Group includes funds with a wide range of investment objectives.
Stock funds, income funds, ^ national and state specific tax-exempt funds,
money market funds, global and international funds and closed-end equity funds
give investors the ability to create a portfolio that fits their personal
financial goals. For more information, contact your financial adviser or call
Delaware Group at 800-523-4640.
INVESTMENT MANAGER
Delaware Management Company, Inc.
One Commerce Square
Philadelphia, PA 19103
SUB-ADVISER
Lincoln Investment Management, Inc.
200 E. Berry Street
Fort Wayne, IN 46802
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING,
ACCOUNTING SERVICES
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
One Commerce Square
Philadelphia, PA 19103
INDEPENDENT AUDITORS
Ernst & Young LLP
Two Commerce Square
Philadelphia, PA 19103
CUSTODIAN
The Chase Manhattan Bank
4 Chase Metrotech Center
Brooklyn, NY 11245
THE REAL ESTATE INVESTMENT TRUST PORTFOLIO
A CLASS
B CLASS
C CLASS
P R O S P E C T U S
OCTOBER 14, 1997
DELAWARE
GROUP
-----
<PAGE>
^ REIT FUND PROSPECTUS
INSTITUTIONAL CLASS OCTOBER 14 ^, 1997
- -------------------------------------------------------------------------------
1818 Market Street, Philadelphia, PA 19103
For ^ more information about REIT Fund Institutional Class
^ call Delaware Group at 800-828-5052
This Prospectus describes ^ REIT Fund Institutional Class (the
"Class") of The Real Estate Investment Trust Portfolio series (the "Fund") of
Delaware Pooled Trust, Inc. ("Pooled Trust, Inc."), a professionally-managed
mutual fund. The Fund's objective is to seek to achieve maximum long-term
total return. Capital appreciation is a secondary objective. It seeks to
achieve its objectives by investing in securities of companies primarily
engaged in the real estate industry.
This Prospectus relates only to the Class and sets forth information
that you should read and consider before you invest. Please retain it for
future reference. The Fund's Statement of Additional Information ("Part B" of
^ Pooled Trust, Inc.'s registration statement), dated ^ October 14, 1997, as
it may be amended from time to time, contains additional information about the
Fund and has been filed with the Securities and Exchange Commission. Part B is
incorporated by reference into this Prospectus and is available, without
charge, by writing to Delaware Distributors, L.P. at the above address or by
calling the above telephone ^ number.
The Fund also offers ^ REIT Fund A Class ^ REIT Fund B Class and ^
REIT Fund C Class, which are subject to sales charges and other expenses that
may affect their performance, and The Real Estate Investment Trust Portfolio
class, which is available for purchase only by certain investors. ^ To obtain
the Prospectus for the REIT Fund A, B and C Classes, please write to the
Distributor at 1818 Market Street, Philadelphia, PA 19103 or call
800-523-4640. To obtain the Prospectus for The Real Estate Investment Trust
Portfolio class, please write to Delaware Pooled Trust, Inc. at One Commerce
Square, 2005 Market Street, Philadelphia, PA 19103, Attn: Client Services or
call 800-231-8002.
-1-
<PAGE>
TABLE OF CONTENTS
COVER PAGE
SYNOPSIS
SUMMARY OF EXPENSES
SUITABILITY
INVESTMENT OBJECTIVES, POLICIES AND RISK FACTORS
CLASSES OF SHARES
HOW TO BUY SHARES
REDEMPTION AND EXCHANGE
DIVIDENDS AND DISTRIBUTIONS
TAXES
CALCULATION OF NET ASSET VALUE PER SHARE
MANAGEMENT OF THE FUND
ADDITIONAL INVESTMENT INFORMATION ON
POLICIES AND RISK CONSIDERATIONS
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.
BE SURE TO CONSULT YOUR FINANCIAL ADVISER WHEN MAKING INVESTMENTS. MUTUAL
FUNDS CAN BE A VALUABLE PART OF YOUR FINANCIAL PLAN; HOWEVER, SHARES OF THE
FUND ARE NOT FDIC OR NCUSIF INSURED, ARE NOT GUARANTEED BY ANY BANK OR ANY
CREDIT UNION, ARE NOT OBLIGATIONS OF ANY BANK OR ANY CREDIT UNION, AND INVOLVE
INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
SHARES OF THE FUND ARE NOT BANK OR CREDIT UNION DEPOSITS.
-2-
<PAGE>
SYNOPSIS
Investment Objective
The investment objective of the Fund is to seek to achieve maximum
long-term total return. Capital appreciation is a secondary objective. It
seeks to achieve its objectives by investing in securities of companies
primarily engaged in the real estate industry. Under normal circumstances, at
least 65% of the Fund's total assets will be invested in equity securities of
real estate investment trusts ("REITs"). For further details, see Investment ^
Objectives, Policies and Risk Factors and Additional Investment Information on
^ Policies and Risk Considerations.
Risk Factors and Special Considerations
^ The Fund concentrates its investments in the real estate industry,
so its net asset value can be expected to fluctuate in light of factors
affecting that industry and may fluctuate more widely than a portfolio that
invests in a broader range of industries. By investing primarily in securities
of REITs, the Fund is also subject to interest rate risk.
The Fund may invest up to 10% of its total assets in foreign
securities, including securities of issuers in emerging markets. Those new
securities pose special risks that do not typically arise in connection with
investments in U.S. securities.
The Fund may use futures contracts, options on futures contracts and
options on stock and may engage in foreign currency options and futures
transactions for hedging purposes. There are special risks that result from
the use of options and futures.
The Fund is considered a nondiversified investment company under the
Investment Company Act of 1940 (the "1940 Act") and may be subject to greater
risks than if the Fund were diversified. A nondiversified portfolio of
securities is believed to be subject to greater risk because adverse effects
on the portfolio's security holdings may affect a larger portion of its
overall assets.
See Investment Objectives, Policies^ and Risk ^ Factors concerning
these and other investment policies of the Fund.
Investment Manager, Distributor and Service Agent ^ Delaware
Management Company, Inc. (the "Manager") furnishes investment management
services to the Fund, subject to the supervision and direction of the Board of
Directors. The Manager also provides investment management services to certain
of the other funds in the Delaware Group. Lincoln Investment Management, Inc.
("Lincoln" ^ or "Sub-Adviser"), a wholly owned subsidiary of Lincoln National
Corporation, acts as sub-adviser to the Manager with respect to the Fund.
Delaware Distributors, L.P. (the "Distributor") is the national distributor
for the Fund and for all of the other mutual funds in the Delaware Group.
Delaware Service Company, Inc. (the "Transfer Agent") is the shareholder
servicing, dividend disbursing, accounting services and transfer agent for the
Fund and for all of the other mutual funds in the Delaware Group. See Summary
of Expenses and Management of the Fund for further information regarding the
Manager and the Sub-Adviser and the fees payable under the Fund's Investment
Management Agreement and Sub-Advisory Agreement.
Purchase Price
Shares of the Class may be purchased at net asset value, without a
front-end or contingent deferred sales charge and are not subject to
distribution fees under a Rule 12b-1 distribution plan.
-3-
<PAGE>
Redemption and Exchange
Shares of the Class may be redeemed or exchanged at the net asset
value calculated after receipt of the redemption or exchange request. See
Redemption and Exchange.
Open-End Investment Company
The Fund is a series of ^ Pooled Trust, Inc. ^ Pooled Trust, Inc. was
organized as a Maryland corporation on May 30, 1991, and is an open-end
management investment company. See Shares under Management of the Fund.
SUMMARY OF EXPENSES
A general comparison of the sales arrangements and other expenses
applicable to shares of the Class follows:
Shareholder Transaction Expenses
- --------------------------------------------------------------------------------
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)...............................None
Maximum Sales Charge Imposed on Reinvested
Dividends (as a percentage of offering price).....................None
^ Exchange Fees...................................................None*
*Exchanges are subject to the requirements of each Fund a front-end
sales charge may apply.
Annual Operating Expenses
(as a percentage of average daily net assets)
- -------------------------------------------------------------------------------
Management Fees (after voluntary waivers).........................[ ]%
12b-1 Expenses ...................................................None
Other Operating Expenses (after
expense limitations)+........................................[ ]%
Total Operating Expenses (after voluntary
waivers and expense limitations)+.....................^ 0.86%
+"Other Operating Expenses" and "Total Operating Expenses" for the
Class are estimated amounts for the first full fiscal year of the Class and
are based on the actual results for the original (and then only) class of
shares of the Fund as of the Fund's fiscal year ended October 31, 1996.
Effective October 14, 1997, such original class has been redesignated ^ REIT
Fund A Class. Like the REIT Fund Institutional Class, such original class,
prior to its redesignation, carried no front-end sales charge and was not
subject to Rule 12b-1 distribution expenses. The Manager has elected
voluntarily to waive that portion, if any, of the annual management fees
payable by the Fund and to pay certain expenses of the Fund to the extent
necessary to ensure
-4-
<PAGE>
that the Total Operating Expenses (after voluntary waivers and payments) of
the REIT Fund Institutional Class does not exceed ^ 0.86% during the
commencement of the public offering of the Class through ^ April 30, 1998. If
the voluntary fee waivers or payments were not in effect, the Management Fees
(as a percentage of average net assets) would be 0.75% and the Total Operating
Expenses (as a percentage of average daily net assets) would be [ ]%; this
ratio is based on data for the original class, adjusted to reflect an
anticipated increase in shareholder service and other expenses. .^
For expense information about ^ REIT Fund A Class, ^ REIT Fund B
Class, ^ REIT Fund C Class and The Real Estate Investment Trust Portfolio
class, see the separate prospectuses relating to those classes.
The following example illustrates the expenses that an investor
would pay on a $1,000 investment over various time periods, assuming (1) a 5%
annual rate of return and (2) redemption at the end of each time period. As
noted in the above table, the Fund does not charge any redemption fee. The
following example is based on expenses incurred by the original (and then
only) class of shares offered by the Fund for the Fund's fiscal year ended
October 31, 1996. It assumes the voluntary waiver of the management fee and/or
other payments of expenses as described in this Prospectus. See Summary of
Expenses for details concerning waivers and the differences in the expenses
borne by the Fund's original class and those to be borne by REIT Fund
Institutional Class.
Assuming Redemption
1 year 3 years 5 years 10 years
------ ------- ------- --------
$[] $[] ^ $[] $[]
$[] $[] $[] $[]
$[] $[] $[] $[]
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.
The purpose of the above tables is to assist the investor in understanding the
various costs and expenses that an investor in the Class will bear directly or
indirectly.
-5-
<PAGE>
^ SUITABILITY
The Fund may be suitable for the patient investor interested in
long-term capital appreciation with the potential for current income.
Investors should be willing to accept the risks associated with investments in
a portfolio of equity securities and convertible securities issued by domestic
and foreign issuers concentrated in the real estate industry. Because current
income is a secondary objective of the Fund, the Fund is not suitable as an
investment vehicle for investors whose primary investment goal is current
income.
The risks associated with an investment in the Fund are discussed below
under Investment Objectives, Policies and Risk Considerations.
INVESTMENT OBJECTIVES, POLICIES AND RISK CONSIDERATIONS
The investment objectives of the Fund is described below, together with
the policies the Fund employs in its efforts to achieve its objectives. There
is no assurance that the Fund will attain its objectives. The investment
objectives of the Fund is fundamental and may only be changed by a majority
approval of the Fund's shareholders. Unless otherwise noted, the investment
policies described below are not fundamental policies and may be changed
without shareholder approval.
Investment Objectives and Policies
The investment objective of the Fund is to achieve maximum long-term
total return. Capital appreciation is a secondary objective. The Fund 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 Fund's total assets will be invested in equity securities of real
estate investment trusts ("REITs"). The Fund will operate as a nondiversified
fund as defined by the 1940 Act.
The Fund invests in equity securities of REITs and other real estate
industry operating companies ("REOCs"). For purposes of the Fund'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 Fund's
investments in equity securities of REITs and REOCs may include, from time to
time, sponsored or unsponsored American Depositary 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
Fund may also purchase preferred stock. The Fund may invest up to 10% of its
assets in foreign securities, and in convertible securities. See ^ Foreign
Investment Information, Depositary Receipts and Convertible, Debt and
Non-Traditional Equity Securities under Additional Investment Information on
Policies and Risk Considerations for further discussion of these investment
policies. The Fund may also invest in mortgage-backed securities. See
Mortgage-Backed Securities under Additional Investment Information on Policies
and Risk Considerations for more detailed information about this investment
policy.
The Fund may hold cash or invest in short-term debt securities and
other money market instruments when, in the Manager's opinion, such holdings
are prudent given then prevailing market conditions. Except when the Manager
believes a temporary defensive approach is appropriate, the Fund 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
-6-
<PAGE>
Moody's) or be of comparable quality as determined by the Manager. See
Additional Investment Information on Policies and Risk Considerations for
further details concerning these and other investment policies.
Although the Fund does not invest directly in real estate, the Fund
does invest primarily in REITs, and may purchase equity securities of REOCs.
Thus, because the Fund concentrates its investments in the real estate
industry, an investment in the Fund 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 Fund 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 the Fund, a shareholder bears not only a
proportionate share of the expenses of the Fund, but also, indirectly, similar
expenses of the REITs. For a further discussion of the risks presented by
investing in REITs, see Additional Investment Information ^ on Policies and
Risk Considerations--REITs.
While the Fund does not intend to invest directly in real estate, the
Fund could, under certain circumstances, own real estate directly as a result
of a default on securities that it owns. In addition, if the Fund has rental
income or income from the direct disposition of real property, the receipt of
such income may adversely affect the Fund's ability to retain its tax status
as a regulated investment company.
The Fund 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 Fund's positions in cash, short-term debt securities
and other money market instruments, at times when the ^ Fund'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 Fund. See Additional Investment Information ^ on Policies
and Risk Considerations--Futures Contracts and Options on Futures Contracts
and Options for a further discussion of these investment policies.
In connection with the Fund's ability to invest up to 10% of its total
assets in the securities of foreign issuers, currency considerations may
present risks if the Fund holds international securities. Currency
considerations carry a special risk for a portfolio of international
securities. In this regard, the Fund 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
-7-
<PAGE>
Additional Investment Information ^ on Policies and Risk Considerations--Forward
Foreign Currency Exchange Contracts.
The Manager does not normally intend to respond to short-term market
fluctuations or to acquire securities for the purpose of short-term trading;
however, the Manager may take advantage of short-term opportunities that are
consistent with the Fund's investment objectives. It is anticipated that the
annual turnover rate of the Fund, under normal circumstances, will generally
not exceed 100%. See Portfolio Transactions. ^
Risk Considerations
An investment in the Fund entails certain risks and considerations
about which an investor should be aware.
The Fund may invest up to 10% of its total assets in securities of
foreign issuers which normally are denominated in foreign currencies, and may
hold foreign currency directly. Investments in securities of non-United States
issuers which are generally denominated in foreign currencies involve certain
risk and opportunity considerations not typically associated with investing in
United States companies. Consequently, the Fund 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 Fund
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 Fund may engage in foreign currency options
and futures transactions. For a discussion of the risks associated with
foreign securities see Foreign Investment Information and for those concerning
these hedging instruments see Risks of Transactions in Options, Futures and
Forward Contracts, both of which references appear under the heading
Additional Investment Information^ on Policies and Risk Considerations.
The Fund may commit its assets eligible for foreign investment to
securities of issuers located in emerging markets. Investments in securities
of companies in emerging markets present a greater degree of risk than tends
to be the case for foreign investments in Western Europe and other developed
markets. Among other things, there is a greater possibility of expropriation,
nationalization, confiscatory taxation, income earned or other special taxes,
foreign exchange restrictions, limitations on the repatriation of income and
capital from investments, defaults in foreign government debt, and economic,
political or social instability. In addition, in many emerging markets, there
is substantially less publicly available information about issuers and the
information that is available tends to be of a lesser quality. Economic
markets and structures tend to be less mature and diverse and the securities
markets which are subject to less government regulation or supervision may
also be smaller, less liquid and subject to greater price volatility. See
Additional Investment Information ^ on Policies and Risk
Considerations--Foreign Investment Information for a more extensive discussion
of these and other factors.
The foreign securities in which the Fund 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 Fund may be significantly affected by such trading on days when
shareholders will have no access to the Fund. See Valuation of Shares.
The Fund also may, under certain circumstances, use certain futures
contracts and options on futures contracts, as well as options on stock. The
Fund will only enter into these transactions for hedging purposes. See Futures
Contracts and Options on Futures Contracts and Risks of Transactions in
Options, Futures and
-8-
<PAGE>
Forward Contracts, both of which references appear under the heading Additional
Investment Information on Policies and Risk Considerations.
The Fund concentrates its investments in the real estate industry. As
a consequence, the net asset value of the Fund can be expected to fluctuate in
light of the factors affecting that industry, and may fluctuate more widely
than a portfolio that invests in a broader range of industries. The Fund may
be more susceptible to any single economic, political or regulatory occurrence
affecting the real estate industry.
The Fund, 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 Fund's investments in REITs can be expected to rise.
Conversely, when interest rates rise, the value of the Fund's investments in
REITs holding fixed rate obligations can be expected to decline. See
Additional Investment Information ^ on Policies and Risk
Considerations--REITs.
The Fund may lend its portfolio securities, may invest in repurchase
agreements and may purchase securities on a when-issued basis.
While the Fund intends to seek to qualify as a "diversified"
investment company under provisions of Subchapter M of the Code, it will not
be diversified under the 1940 Act. Thus, while at least 50% of the Fund'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 Fund's total assets, it will not satisfy the
1940 Act requirement in this respect, which applies that test to 75% of the
Fund'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 Additional Investment Information on Policies
and Risk Considerations in this Prospectus and Investment Policies, Portfolio
Techniques and Risk Considerations in ^ Part B.
* * *
Part B sets forth other more specific investment restrictions and
descriptions of Moody's and S&P ratings.
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CLASSES OF SHARES
The Distributor serves as the national distributor for the Fund.
Shares of the Class may be purchased directly by contacting a Fund or its
agent or through authorized investment dealers. All purchases of shares of the
Class are made at net asset value. There is no front-end or contingent
deferred sales charge.
Investment instructions given on behalf of participants in an
employer-sponsored retirement plan are made in accordance with directions
provided by the employer. Employees considering purchasing shares of the Class
as part of their retirement program should contact their employer for details.
Shares of the Class are available for purchase only by: (a)
retirement plans introduced by persons not associated with brokers or dealers
that are primarily engaged in the retail securities business and rollover
individual retirement accounts from such plans; (b) tax-exempt employee
benefit plans of the Manager or its affiliates and securities dealer firms
with a selling agreement with the Distributor; (c) institutional advisory
accounts of the Manager or its affiliates and those having client
relationships with Delaware Investment Advisers, a division of the Manager or
its affiliates and their corporate sponsors, as well as subsidiaries and
related employee benefit plans and rollover individual retirement accounts
from such institutional advisory accounts; (d) a bank, trust company and
similar financial institution investing for its own account or for the account
of its trust customers for whom such financial institution is exercising
investment discretion in purchasing shares of the Class, except where the
investment is part of a program that requires payment to the financial
institution of a Rule 12b-1 Plan fee; and (e) registered investment advisers
investing on behalf of clients that consist solely of institutions and high
net-worth individuals having at least $1,000,000 entrusted to the adviser for
investment purposes, but only if the adviser is not affiliated or associated
with a broker or dealer and derives compensation for its services exclusively
from its clients for such advisory services.
^ REIT Fund A Class, REIT Fund B Class, REIT Fund C Class and The Real Estate
Investment Trust Portfolio Class
In addition to offering shares of the Class, the Fund also offers
shares of The REIT Class A Class, ^ REIT Fund B Class and ^ REIT Fund C Class
which are described in a separate prospectus. Shares of such classes may be
purchased through authorized investment dealers or directly by contacting the
Fund or its Distributor. Class A Shares carry a front-end sales charge and
have annual 12b-1 expenses equal to a maximum of 0.30%. The maximum front-end
sales charge as a percentage of the offering price of Class A Shares is 4.75%
and is reduced on certain transactions of $100,000 or more. Class B Shares and
Class C Shares have no front-end sales charge but are subject to annual 12b-1
expenses equal to a maximum of 1%. Class B Shares and Class C Shares and
certain Class A Shares may be subject to a contingent deferred sales charge
upon redemption. To obtain a prospectus relating to such classes, contact the
Distributor by writing to the address or by calling the phone number listed on
^ page 1 of this Prospectus.
The Fund also offers shares of The Real Estate Investment Trust
Portfolio class, which are available for purchase only by certain investors.
To obtain a prospectus relating to such class, contact ^ Pooled Trust, Inc. by
writing to the address or by calling the phone number listed on ^ page 1 of
this Prospectus.
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<PAGE>
HOW TO BUY SHARES
The Fund makes it easy to invest by mail, by wire, by exchange and by
arrangement with your investment dealer. In all instances, investors must
qualify to purchase shares of the Class.
Investing by Mail
1. Initial Purchases--An Investment Application or, in the case of a
retirement account, an appropriate retirement plan application must be
completed, signed and sent with a check, payable to the Class, to Delaware
Group at 1818 Market Street, Philadelphia, PA 19103.
2. Subsequent Purchases--Additional purchases may be made at any time by
mailing a check payable to the Class. Your check should be identified with
your name(s) and account number.
Investing by Wire
You may purchase shares by requesting your bank to transmit funds by
wire to CoreStates Bank, N.A., ABA #031000011, account number 1412893401
(include your name(s) and your Fund account number in the wire).
1. Initial Purchases--Before you invest, telephone the Client Services Center
at 800-828-5052 to get an account number. If you do not call first, processing
of your investment may be delayed. In addition, you must promptly send your
Investment Application or, in the case of a retirement account, an appropriate
retirement plan application, to the Class, to Delaware Group at 1818 Market
Street, Philadelphia, PA 19103.
2. Subsequent Purchases--You may make additional investments anytime by wiring
funds to CoreStates Bank, N.A., as described above. You should advise your
Client Services Representative by telephone at 800- 828-5052 prior to sending
your wire.
Investing by Exchange
If you have an investment in another mutual fund in the Delaware
Group and you qualify to purchase shares of the Class, you may write and
authorize an exchange of part or all of your investment into the Fund.
However, Class B Shares and Class C Shares of the Fund and Class B Shares and
Class C Shares of the other funds in the Delaware Group offering such a class
of shares may not be exchanged into the Class. If you wish to open an account
by exchange, call your Client Services Representative at 800-828-5052 for more
information. See Redemption and Exchange for more complete information
concerning your exchange privileges.
Investing through Your Investment Dealer
You can make a purchase of shares of the Class through most
investment dealers who, as part of the service they provide, must transmit
orders promptly to the Fund. They may charge for this service.
Purchase Price and Effective Date
The purchase price (net asset value) of the Class is determined as of
the close of regular trading on the New York Stock Exchange (ordinarily, 4
p.m., Eastern time) on days when the Exchange is open.
The effective date of a purchase made through an investment dealer is
the date the order is received by the Fund ^, its agent or designee. The
effective date of a direct purchase is the day your wire, electronic transfer
or check is received, unless it is received after the time the share price is
determined, as noted above. Purchase orders received after such time will be
effective the next business day.
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<PAGE>
The Conditions of Your Purchase
The Fund reserves the right to reject any purchase order. If a
purchase is canceled because your check is returned unpaid, you are
responsible for any loss incurred. The Fund can redeem shares from your
account(s) to reimburse itself for any loss, and you may be restricted from
making future purchases in any of the funds in the Delaware Group. The Fund
reserves the right to reject purchases by third-party checks or checks that
are not drawn on a domestic branch of a United States financial institution.
If a check drawn on a foreign financial institution is accepted, you may be
subject to additional bank charges for clearance and currency conversion.
The Fund also reserves the right, upon 60 days' written notice, to
involuntarily redeem accounts that remain under $250 as a result of
redemptions.
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<PAGE>
REDEMPTION AND EXCHANGE
Redemption and exchange requests made on behalf of participants in an
employer-sponsored retirement plan are made in accordance with directions
provided by the employer. Employees should therefore contact their employer
for details.
Your shares will be redeemed or exchanged at a price based on the net
asset value next determined after the Fund receives your request in good
order. For example, redemption or exchange requests received in good order
after the time the net asset value of shares is determined, will be processed
on the next business day. See Purchase Price and Effective Date under How to
Buy Shares. Except as otherwise noted below, for a redemption request to be in
"good order," you must provide your account number, account registration, and
the total number of shares or dollar amount of the transaction. With regard to
exchanges, you must also provide the name of the fund in which you want to ^
invest the proceeds. Exchange instructions and redemption requests must be
signed by the record owner(s) exactly as the shares are registered. You may
request a redemption or an exchange by calling a Fund at 800-828-5052.
Redemption proceeds will be distributed promptly, as described below, but not
later than seven days after receipt of a redemption request.
All exchanges involve a purchase of shares of the fund into which the
exchange is made. As with any purchase, an investor should obtain and
carefully read that fund's prospectus before buying shares in an exchange. The
prospectus contains more complete information about the fund, including
charges and expenses.
The Fund will process written and telephone redemption requests to
the extent that the purchase orders for the shares being redeemed have already
settled. The Fund will not honor redemption requests as to shares for which a
check was tendered as payment until the Fund is reasonably satisfied that the
check has cleared, which may take up to 15 days from the purchase date. You
can avoid this potential delay if you purchase shares by wiring Federal Funds.
The Fund reserves the right to reject a written or telephone redemption
request or delay payment of redemption proceeds if there has been a recent
change to the shareholder's address of record.
Shares of the Class may be exchanged into any other Delaware Group
mutual fund provided (1) the investment satisfies the eligibility and other
requirements set forth in the prospectus of the fund being acquired, including
the payment of any applicable front-end sales charge and (2) the shares of the
fund being acquired are in a state where that fund is registered. If exchanges
are made into other shares that are eligible for purchase only by those
permitted to purchase shares of the Class, such shares will be exchanged at
net asset value. Shares of the Class may not be exchanged into the Class B
Shares or Class C Shares of the funds in the Delaware Group. Each Fund may
suspend, terminate or amend the terms of the exchange privilege upon 60 days'
written notice to shareholders.
Various redemption and exchange methods are outlined below. No fee is
charged by the Fund or the Distributor for redeeming or exchanging your
shares, although in the case of an exchange, a sales charge may apply. You may
also have your investment dealer arrange to have your shares redeemed or
exchanged.
Your investment dealer may charge for this service.
All authorizations given by shareholders, including selection of any
of the features described below, shall continue in effect until such time as a
written revocation or modification has been received by the Fund or its agent.
Written Redemption and Exchange
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<PAGE>
You can write to a Fund at 1818 Market Street, Philadelphia, PA 19103
to redeem some or all of your shares or to request an exchange of any or all
your shares into another mutual fund in the Delaware Group, subject to the
same conditions and limitations as other exchanges noted above. The request
must be signed by all owners of the account or your investment dealer of
record.
For redemptions of more than $50,000, or when the proceeds are not
sent to the shareholder(s) at the address of record, the Fund requires a
signature by all owners of the account and may require a signature guarantee.
Each signature guarantee must be supplied by an eligible guarantor
institution. The Fund reserves the right to reject a signature guarantee
supplied by an eligible institution based on its creditworthiness. The Fund
may require further documentation from corporations, executors, retirement
plans, administrators, trustees or guardians.
Payment is normally mailed the next business day after receipt of
your redemption request. Certificates are issued for shares only if you submit
a specific request. If your shares are in certificate form, the certificate(s)
must accompany your request and also be in good order.
You also may submit your written request for redemption or exchange by
facsimile transmission at the following number: 215-255-8864.
Telephone Redemption and Exchange
To get the added convenience of the telephone redemption and exchange
methods, you must have the Transfer Agent hold your shares (without charge)
for you. If you choose to have your shares in certificate form, you may redeem
or exchange only by written request and you must return your certificates.
The Telephone Redemption - Check to Your Address of Record service
and the Telephone Exchange service, both of which are described below, are
automatically provided unless you notify the Fund in writing that you do not
wish to have such services available with respect to your account. The Fund
reserves the right to modify, terminate or suspend these procedures upon 60
days' written notice to shareholders. It may be difficult to reach the Fund by
telephone during periods when market or economic conditions lead to an
unusually large volume of telephone requests.
Neither the Fund nor its Transfer Agent is responsible for any
shareholder loss incurred in acting upon written or telephone instructions for
redemption or exchange of Fund shares which are reasonably believed to be
genuine. With respect to such telephone transactions, the Fund will follow
reasonable procedures 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 the Transfer Agent 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. By exchanging shares by telephone, you are acknowledging prior
receipt of a prospectus for the fund into which your shares are being
exchanged.
Telephone Redemption-Check to Your Address of Record
You or your investment dealer of record can have redemption proceeds
of $50,000 or less mailed to you at your address of record. Checks will be
payable to the shareholder(s) of record. Payment is normally mailed the next
business day after receipt of the redemption request.
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<PAGE>
Telephone Redemption-Proceeds to Your Bank
Redemption proceeds of $1,000 or more can be transferred to your
predesignated bank account by wire or by check. You should authorize this
service when you open your account. If you change your predesignated bank
account, you must submit a written authorization and you may need to have your
signature guaranteed. For your protection, your authorization must be on file.
If you request a wire, your funds will normally be sent the next business day.
If you ask for a check, it will normally be mailed the next business day after
receipt of your redemption request to your predesignated bank account. There
are no fees for this redemption method, but the mail time may delay getting
funds into your bank account. Simply call your Client Services Representative
prior to the time the net asset value is determined, as noted above.
Telephone Exchange
You or your investment dealer of record can exchange shares into any
fund in the Delaware Group under the same registration. As with the written
exchange service, telephone exchanges are subject to the same conditions and
limitations as other exchanges noted above. Telephone exchanges may be subject
to limitations as to amounts or frequency.
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<PAGE>
DIVIDENDS AND DISTRIBUTIONS
The Fund expects to declare and distribute all of its net investment
income to shareholders as dividends annually. Net capital gains, if any, will
be distributed annually. Both dividends and distributions, if any, are
automatically reinvested in your account at net asset value.
In addition, in order to satisfy certain distribution requirements of
the Tax Reform Act of 1986, Fund 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 the Fund and
received by shareholders on the earlier of the date paid or December 31 of the
prior year.
Each class of the Fund will share proportionately in the investment
income and expenses of the Fund, except that the Class will not incur any
distribution fee under the Fund's 12-1 Plans, which apply ^ REIT Fund A Class,
^ REIT Fund B Class and ^ REIT Fund C Class.
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<PAGE>
TAXES
The tax discussion set forth below is included for general
information only. Investors should consult their own tax advisers concerning
the federal, state, local or foreign tax consequences of an investment in the
Fund.
The Fund has qualified, and intends to continue to qualify, as a
regulated investment company under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"). As such, the Fund will not be subject to
federal income tax, or to any excise tax, to the extent its earnings are
distributed as provided in the Code. The Fund intends to distribute
substantially all of its net investment income and net capital gains, if any.
Dividends from net investment income or net short-term capital gains will be
taxable to those investors who are subject to income taxes as ordinary income,
whether received in cash or in additional shares.
Distributions paid by the Fund 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 the Fund. The Fund does not
seek to realize any particular amount of capital gains during a year; rather,
realized gains are a by-product of Fund 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 the
Fund are made shortly before the record date for a capital gains distribution,
a portion of the investment will be returned as taxable distribution.
Although dividends generally will be treated as distributed when
paid, dividends which are declared in October, November or December to
shareholders of record in such a month but which, for operational reasons, may
not be paid to the shareholder until the following January, will be treated
for tax purposes as if paid by the Fund and received by the shareholder on
December 31 of the calendar year in which they are declared.
The sale of shares of the Fund 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 the Fund and any other fund in the Delaware Group. Any loss incurred
on a sale or exchange of Fund shares that had been 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 and will be disallowed to the
extent of exempt-interest dividends paid with respect to such shares.
Each year, ^ Pooled Trust, Inc. will mail to you information on the tax
status of the Fund's dividends and distributions.
^ Pooled Trust, Inc. 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 Investment
Application your proper Taxpayer Identification Number and by certifying that
you are not subject to backup withholding.
See Taxes in Part B for additional information on tax matters
relating to the Fund and its shareholders.
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<PAGE>
CALCULATION OF NET ASSET VALUE PER SHARE
The net asset value ("NAV") per share is determined by dividing the
total market value of the Fund's investments and other assets, less any
liabilities, by the total outstanding shares of the Fund. NAV per share is
determined as of the close of regular trading on the ^ New York Stock Exchange
(ordinarily, 4 p.m., Eastern time) on each day the ^ Exchange 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.
The securities in which the Fund may invest from time to time may be listed
primarily on foreign exchanges which trade on days when the ^ Exchange is
closed (such as Saturday). As a result, the net asset value of the Fund may be
significantly affected by such trading on days when shareholders have no
access to the Fund.
For purposes of calculating NAV, 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 Bank. 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.
^
The net asset values of all outstanding shares of each class of the
Fund will be computed on a pro-rata basis for each outstanding share based on
the proportionate participation in the Fund represented by the value of
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<PAGE>
shares of that class. All income earned and expenses incurred by the Fund will
be borne on a pro-rata basis by each outstanding share of a class, based on
each ^ class' percentage in the Fund represented by the value of shares of
such Classes, except that shares of the Class will not incur any of the
expenses under the Fund's 12b-1 Plans and Class A, B and C shares alone bear
only those 12b-1 Plan expenses payable under their respective Plans. Due to
the specific distribution expenses and other costs that will be allocable to
each class, the dividends paid to each class ^ and the NAV per share of each
class ^ of the Fund will vary.
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<PAGE>
MANAGEMENT OF THE FUND
Directors
The business and affairs of the Fund are managed under the direction
of ^ Pooled Trust, Inc.'s Board of Directors. Part B contains additional
information regarding ^ Pooled Trust, Inc.'s directors and officers.
Investment Advisers
Delaware Investment Advisers, a division of Delaware Management
Company, Inc. (the "Manager"), furnishes investment advisory services to the
Fund. Lincoln Investment Management, Inc. ("Lincoln"), a wholly owned
subsidiary of Lincoln National Corporation, acts as sub-adviser to the Manager
with respect to Fund. In its capacity as sub-adviser, Lincoln furnishes the
Manager with investment recommendations, asset allocation advice, research,
economic analysis and other investment services with respect to the securities
in which the Fund may invest.
The Manager and its predecessors have been managing the funds in the
Delaware Group since 1938. On ^ July 31, ^ 1997, the Manager and its
affiliates within the Delaware Group^ including, Delaware International
Advisers^ Ltd., were ^ managing in the aggregate more than ^ $39 billion in
assets in the various institutional or separately managed (approximately ^
$23,844,101,000) and investment company (approximately ^ $15,869,009,000)
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 ^ September 30, 1997, Lincoln had over ^ $38
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.
The Manager 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 and the Manager are now indirect, wholly owned
subsidiaries, and subject to the ultimate control, of Lincoln National.
Lincoln, the sub-adviser to the Manager with respect to the Fund, is a wholly
owned subsidiary of Lincoln National. The Manager and Lincoln may be deemed to
be affiliated persons under the 1940 Act, as the two 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. The Manager's address is One Commerce Square, 2005 Market Street,
Philadelphia, PA 19103. Lincoln's address is 200 E. Berry Street, Fort Wayne,
IN 46802.
The Manager has entered into an Investment Advisory Agreement with ^
Pooled Trust, Inc. on behalf of the Fund. The Manager has also entered into a
Sub-Advisory Agreement with Lincoln with respect to the Fund. Under that
Agreement, the Manager, subject to the control and supervision of ^ Pooled
Trust, Inc.'s Board of Directors and in conformance with the stated investment
objectives and policies of the Fund, ^ manages the investment and reinvestment
of the assets of the Fund. In this regard, it is their responsibility to make
investment decisions for the Fund.
As compensation for the services to be rendered under the advisory
agreement, the Manager is entitled to an annual advisory fee ^ equal to 0.75%
of the Fund's average daily net assets ^. Lincoln receives 30% of the advisory
fee paid to the Manager for acting as sub-adviser to the Manager with respect
to the Fund. The
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<PAGE>
directors of Pooled Trust, Inc. annually review fees paid to the Manager and
the Sub-Adviser. The Manager has elected voluntarily to waive that portion, if
any, of the annual management fees payable by the Fund and to pay expenses of
the Fund to the extent necessary to ensure that the Total Operating Expenses
(exclusive of taxes, interest, brokerage commissions and extraordinary
expenses) of the Class do not exceed 0.86%.
Babak Zenouzi has primary responsibility for making day-to-day
investment decisions for the Fund and has had such responsibility since its
inception. 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 the Manager 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. Steven R. Brody, John F. Robertson and
Lawrence T. Kissko have served as sub-advisers to the Fund since its
inception. 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. 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 is a CFA
charterholder and has completed numerous courses toward the MAI designation.
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 CFA charterholder.
^
Portfolio Trading Practices
The Fund normally will not invest for short-term trading purposes.
However, the Fund may sell securities without regard to the length of time
they have been held. The degree of portfolio activity will affect brokerage
costs of the Fund and may affect taxes payable by the Fund's shareholders to
the extent that net capital gains are realized. Given the Fund's investment
objective, it is anticipated that the portfolio turnover rate of the Fund will
not exceed 100%.
The Manager and the Sub-Adviser use their best efforts to obtain the
best available price and most favorable execution for portfolio transactions.
Orders may be placed with brokers or dealers who provide brokerage and
research services to the Manager or the Sub-Adviser or their advisory clients.
These services may be used by the Manager and the Sub-Adviser in servicing any
of their respective accounts. Subject to best price and execution, the Manager
and the Sub-Adviser may consider a broker/dealer's sales of ^ shares of the
funds in the Delaware Group of funds in placing portfolio orders and may place
orders with broker/dealers that have agreed to defray certain ^ expenses of
such funds, such as custodian fees.
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<PAGE>
Performance Information
From time to time, the Fund may quote total return performance of the
Class in advertising and other types of literature.
Total return will be based on a hypothetical $1,000 investment,
reflecting the reinvestment of all distributions. Each presentation will
include the average annual total return for one-, five- and ten-year or
life-of-fund periods, as relevant. The Fund may also advertise aggregate and
average total return information concerning the Class over additional periods
of time.
Because securities prices fluctuate, investment results of the Class
will fluctuate over time. Past performance is not a guarantee of future
results.
Statements and Confirmations
You will receive quarterly statements of your account summarizing all
transactions during the period. A confirmation statement will be sent
following all transactions other than those involving a reinvestment of
dividends. You should examine statements and confirmations immediately and
promptly report any discrepancy by calling your Client Services
Representative.
Financial Information about the Fund
Each fiscal year, you will receive an audited annual report and an
unaudited semi-annual report. These reports provide detailed information about
the Fund's investments and performance. ^ Pooled Trust Inc.'s fiscal year ends
on October 31.
Distribution and Service
The Distributor, Delaware Distributors, L.P., serves as the national
distributor for the Fund's shares under a Distribution Agreement dated ^
October 14, 1997.
The Transfer Agent, Delaware Service Company, Inc., serves as the
shareholder servicing, dividend disbursing and transfer agent for the Fund
under a Shareholders Services Agreement. The Transfer Agent also provides
accounting services to the Fund pursuant to the terms of a separate Fund
Accounting Agreement. The directors annually review service fees paid to the
Transfer Agent. Certain recordkeeping services and other shareholder services
that otherwise would be performed by the Transfer Agent may be performed by
certain other entities and the Transfer Agent may elect to enter into an
agreement to pay such other entities for those services. In addition,
participant account maintenance fees may be assessed for certain recordkeeping
services provided as part of retirement plan and administration service
packages. These fees are based on the number of participants in the plan and
the various services selected by the employer. Fees will be quoted upon
request and are subject to change.
The directors annually review fees paid to the Distributor and the
Transfer Agent. The Distributor and the Transfer Agent are indirect, wholly
owned subsidiaries of DMH.
Expenses
The Fund is responsible for all of its own expenses other than those
borne by the Manager under the Investment Management Agreements and those
borne by the Distributor under the Distribution Agreement.
Shares
^ Pooled Trust, Inc. is an open-end management investment company. The
Fund's portfolio of assets is nondiversified as defined by the 1940 Act.
Commonly known as a mutual fund, ^ Pooled Trust, Inc. was
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organized as a Maryland corporation on May 30, 1991. In addition to the Fund,
^ Pooled Trust, Inc. presently offers 13 other series of shares. 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
series. 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 series, 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
series 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 series entitled to vote
on a matter will vote in the aggregate and not by series, except when the
matter to be voted upon affects only the interests of shareholders of a
particular Portfolio or class or when otherwise expressly required by law. ^
Under Maryland law, ^ Pooled Trust, Inc. 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.
In addition to the Class, the Fund also offers REIT Fund A Class, REIT
Fund B Class, REIT Fund C Class and The Real Estate Investment Trust Portfolio
class. Shares of each class represent proportionate interests in the assets of
the Fund and have the same voting and other rights and preferences as the
other classes of the Fund, except that shares of the Class are not subject to,
and may not vote on matters affecting, the Fund's Distribution Plans under
Rule 12b-1 relating to REIT Fund A Class, REIT Fund B Class and REIT Fund C
Class.
Litigation
The Fund is not involved in any litigation.
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ADDITIONAL INVESTMENT INFORMATION ON POLICIES AND RISK CONSIDERATIONS
U.S. Government Securities
The U.S. government securities in which the Fund 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 Fund 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 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.
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The Fund 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 Fund may invest
are considered by the U.S. Securities and Exchange Commission (the
"Commission") to be investment companies, the Fund will limit its 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 Fund 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 the Fund's
yield to maturity. If the underlying mortgage assets experience greater than
anticipated prepayments of principal, the Fund may fail to fully recoup its
initial investment in these securities even if the securities are rated in the
highest rating categories.
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.
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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. The Fund may
invest in such private-backed securities but, the Fund 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.
Short-Term Investments
The short-term investments in which the Fund may invest consistent
with the limits recited above (see Investment Objectives, Policies and Risk ^
Factors) 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
the Fund, and time deposits maturing from two business days through seven
calendar days will not exceed 15% of the total assets of the Fund.
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).
The Fund 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 the Manager;
(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
the Manager;
(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
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. The Fund 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
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fixed at the time the Fund enters into the commitment and no interest accrues
to the Fund 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
Fund not to enter into when-issued commitments exceeding in the aggregate 15%
of the market value of the Fund's total assets less liabilities other than the
obligations created by these commitments.
Repurchase Agreements
The Fund may enter into repurchase agreements with brokers, dealers or
banks deemed to be creditworthy by the Manager under guidelines of ^ Pooled
Trust, Inc.'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 15% of the Fund's assets may be
invested in repurchase agreements having a maturity in excess of seven days.
Repurchase agreements may be viewed as a fully collateralized loan of money by
the Fund to the seller. The Fund 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, the Fund might incur a loss. If bankruptcy
proceedings are commenced with respect to the seller, the Fund's realization
upon the collateral may be delayed or limited. The Fund 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
The Fund 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.
The major risk to which the Fund 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, the Fund will only enter into loan
arrangements after a review of all pertinent facts by the Manager, 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
The Fund may borrow money as a temporary measure or to facilitate
redemptions. The Fund has no 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%, the Fund 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 the Fund has an outstanding
borrowing.
Foreign Investment Information
Up to 10% of the total assets of the Fund may be invested in
securities of foreign issuers and foreign currency. The Fund has the right to
purchase securities in any developed, underdeveloped or emerging country.
Investors should consider carefully the substantial risks involved in
investing in securities issued by companies and governments of foreign
nations. These risks are in addition to the usual risks inherent in domestic
investments. There is the possibility of expropriation, nationalization or
confiscatory taxation, taxation of income earned in foreign nations or other
taxes imposed with respect to investments in foreign nations, foreign exchange
control (which may include suspension of the ability to transfer currency from
a given country),
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<PAGE>
default in foreign government securities, political or social instability or
diplomatic developments which could affect investments in securities of
issuers in those nations.
In addition, in many countries, there is substantially less publicly
available information about issuers than is available in reports about
companies in the United States and this information tends to be of a lesser
quality. Foreign companies are not subject to uniform accounting, auditing and
financial reporting standards, and auditing practices and requirements may not
be comparable to those applicable to United States companies. In particular,
the assets and profits appearing on the financial statements of a developing
or emerging country issuer may not reflect its financial position or results
of operations in the way they would be reflected had the financial statements
been prepared in accordance with United States generally accepted accounting
principles. Also, for an issuer that keeps accounting records in local
currency, inflation accounting rules may require for both tax and accounting
purposes, that certain assets and liabilities be restated on the issuer's
balance sheet in order to express items in terms of currency or constant
purchasing power. Inflation accounting may indirectly generate losses or
profits. Consequently, financial data may be materially affected by
restatements for inflation and may not accurately reflect the real condition
of those issuers and securities markets.
It is also expected that the expenses for custodial arrangements of
the Fund's 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 the Fund receives from the companies comprising the Fund's
investments.
Further, the Fund may encounter difficulty or be unable to pursue
legal remedies and obtain judgments in foreign courts. Commission rates on
securities transactions in foreign countries, which are sometimes fixed rather
than subject to negotiation as in the United States, are likely to be higher.
Further, the settlement period of securities transactions in foreign markets
may be longer than in domestic markets, and may be subject to administrative
uncertainties. In many foreign countries, there is less government supervision
and regulation of business and industry practices, stock exchanges, brokers
and listed companies than in the United States, and capital requirements for
brokerage firms are generally lower. The foreign securities markets of many of
the countries in which the Fund may invest may also be smaller, less liquid
and subject to greater price volatility than those in the United States.
Compared to the United States and other developed countries, emerging
countries may have volatile social conditions, relatively unstable governments
and political systems, economies based on only a few industries and economic
structures that are less diverse and mature, and securities markets that trade
a small number of securities, which can result in a low or nonexistent volume
of trading. Prices in these securities markets 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.
Until recently, there has been an absence of a capital market structure or
market-oriented economy in certain emerging countries. Further, investments
and opportunities for investments by foreign investors are subject to a
variety of national policies and restrictions in many emerging countries.
These restrictions may take the form of prior governmental approval, limits on
the amount or type of securities held by foreigners, limits on the types of
companies in which foreigners may invest and prohibitions on foreign
investments in issuers or industries deemed sensitive to national interests.
Additional restrictions may be imposed at any time by these or other countries
in which the Fund invests. Also, 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
governmental consents. Although these restrictions may in the future make it
undesirable to invest in emerging countries, the Manager does not believe that
any current repatriation restrictions would affect their decision to invest in
such
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<PAGE>
countries. Countries such as those in which the Fund may invest have
historically experienced and may continue to experience, substantial, and in
some periods extremely high rates of inflation for many years, high interest
rates, exchange rate fluctuations or currency depreciation, large amounts of
external debt, balance of payments and trade difficulties and extreme poverty
and unemployment. Other factors which may influence the ability or willingness
to service debt include, but are not limited to, a country's cash flow
situation, the availability of sufficient foreign exchange on the date a
payment is due, the relative size of its debt service burden to the economy as
a whole, its government's policy towards the International Monetary Fund, the
World Bank and other international agencies and the political constraints to
which a government debtor may be subject.
With respect to investment in debt issues of foreign governments, the
ability of a foreign government or government-related issuer to make timely
and ultimate payments on its external debt obligations will also be strongly
influenced by the issuer's balance of payments, including export performance,
its access to international credits and investments, fluctuations in interest
rates and the extent of its foreign reserves. A country whose exports are
concentrated in a few commodities or whose economy depends on certain
strategic imports could be vulnerable to fluctuations in international prices
of these commodities or imports. To the extent that a country receives payment
for its exports in currencies other than dollars, its ability to make debt
payments denominated in dollars could be adversely affected. If a foreign
government or government-related issuer cannot generate sufficient earnings
from foreign trade to service its external debt, it may need to depend on
continuing loans and aid from foreign governments, commercial banks and
multilateral organizations, and inflows of foreign investment. The commitment
on the part of these foreign governments, multilateral organizations and
others to make such disbursements may be conditioned on the government's
implementation of economic reforms and/or economic performance and the timely
service of its obligations. Failure to implement such reforms, achieve such
levels of economic performance or repay principal or interest when due may
curtail the willingness of such third parties to lend funds, which may further
impair the issuer's ability or willingness to service its debts in a timely
manner. The cost of servicing external debt will also generally be adversely
affected by rising international interest rates because many external debt
obligations bear interest at rates which are adjusted based upon international
interest rates. The ability to service external debt will also depend on the
level of the relevant government's international currency reserves and its
access to foreign exchange. Currency devaluations may affect the ability of a
government issuer to obtain sufficient foreign exchange to service its
external debt.
As a result of the foregoing, a foreign governmental issuer may
default on its obligations. If such a default occurs, the Fund may have
limited effective legal recourse against the issuer and/or guarantor. Remedies
must, in some cases, be pursued in the courts of the defaulting party itself,
and the ability of the holder of foreign government and government-related
debt securities to obtain recourse may be subject to the political climate in
the relevant country. In addition, no assurance can be given that the holders
of commercial bank debt will not contest payments to the holders of other
foreign government and government-related debt obligations in the event of
default under their commercial bank loan agreements.
With respect to forward foreign currency exchange, 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. See Forward Foreign Currency Exchange Contracts, below.
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<PAGE>
Forward Foreign Currency Exchange Contracts
As noted above, the foreign investments made by the Fund present
currency considerations which pose special risks. The Manager uses 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 Fund values its assets daily in terms of U.S. dollars, it
does not intend to convert its holdings of foreign currencies into U.S.
dollars on a daily basis. The Fund 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 transactions and to minimize
currency value fluctuations. The Fund 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). The Fund 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.
The Fund 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 amount of foreign currency involved in the
underlying security transaction, the Fund 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 Manager believes that the currency of a
particular foreign country may suffer a significant decline against the U.S.
dollar or against another currency, the Fund 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
Fund's securities denominated in such foreign currency. The Fund 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 Fund's
securities or other assets denominated in that currency.
The Fund 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 Fund may also engage in
currency "cross hedging" when, in the opinion of the Manager, as appropriate,
the historical relationship among foreign currencies suggests that the Fund
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, the Fund 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,
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<PAGE>
on the same maturity date, the same amount of the foreign currency. The Fund
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 the Fund securities
at the expiration of the contract. Accordingly, it may be necessary for the
Fund 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 Fund 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 security if its market value exceeds the
amount of foreign currency the Fund is obligated to deliver.
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 Fund 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 Fund will only
enter into these transactions for hedging purposes if it is consistent with
the Fund's investment objectives and policies and the Fund 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 Fund's assets.
The Fund may enter into contracts for the purchase or sale for future
delivery of securities. When a futures contract is sold, the Fund 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 Fund 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 Fund would then be able to
keep a cash reserve applicable to meet potential redemptions while at the same
time being effectively fully invested.
The Fund 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 Fund will not enter into futures contracts and
options thereon to the extent that 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 futures contracts and options thereon would
not exceed 20% of the Fund's total assets. In the case of an option that is
in-the-money at the time of purchase, the in-the-money amount may be excluded
in calculating the 5%.
To the extent that interest or exchange rates move in an unexpected
direction, the Fund may not achieve the anticipated benefits of investing in
futures contracts and options thereon, or may realize a loss. To the extent
that the Fund purchases an option on a futures contract and fails to exercise
the option prior to the
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exercise date, it will suffer a loss of the premium paid. Further, the
possible lack of a secondary market would prevent the Fund from closing out
its positions relating to futures.
Options
Options on Securities
The Fund may write covered call options on U.S. securities, purchase
call options on such securities and enter into closing transactions related
thereto. The Fund 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. The Fund will only purchase call
options to the extent that premiums paid on all outstanding call options do
not exceed 2% of the Fund'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. The Fund 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. The Fund 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
Fund'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 Fund offset put options or
call options prior to exercise or expiration. If the Fund 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 Fund may use both exchange-traded and over-the-counter options.
Certain over-the-counter options may be illiquid. The Fund will only invest in
such options to the extent consistent with their 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 Manager'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 the Fund plus any transaction costs will reduce
any benefit realized by the Fund upon exercise of the option. When writing put
options, the Fund may be required, when the put is exercised, to purchase
securities at higher prices than current market prices.
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 the Fund'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 the Fund is
using a hedging instrument denominated in one foreign currency to protect the
value of a security denominated in a
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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 Fund 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, the Fund 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
The Fund 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 Fund.
The Fund may 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
the Manager the day-to-day functions of determining whether or not individual
Rule 144A Securities are liquid for purposes of the Fund's limitation on
investments in illiquid assets. The Board has instructed the Manager 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 the Manager determines that a Rule 144A Security which was
previously determined to be liquid is no longer liquid and, as a result, the
Fund's holdings of illiquid securities exceed the Fund's 15% limit on
investment in such securities, the investment adviser will determine what
action shall be taken to ensure that the Fund continues to adhere to such
limitation.
Convertible, Debt and Non-Traditional Equity Securities
A portion of the Fund'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 Fund 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."
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<PAGE>
The Fund 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 the Fund, 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 Fund 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 Fund'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 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.
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<PAGE>
Depositary Receipts
The Fund may invest in sponsored and unsponsored American Depositary
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 Depositary, 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 Depositary 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. ADRs may be listed on a national securities exchange or may
be traded in the over-the-counter market. ADR prices are denominated in U.S.
dollars although the underlying securities are denominated in a foreign
currency. Investments in ADRs involve risks similar to those accompanying
direct investments in foreign securities.
Zero Coupon Securities
The market prices of zero coupon securities are generally more
volatile than the market prices of securities that pay interest periodically
and are likely to respond to changes in interest rates to a greater degree
than do non-zero coupon securities having similar maturities and credit
quality. Current federal income tax law requires that a holder of a taxable
zero coupon security report as income each year the portion of the original
issue discount of such security that accrues that year, even though the holder
receives no cash payments of interest during the year. The Fund intends to
qualify as a regulated investment company under the Code. Accordingly, during
periods when the Fund receives no interest payments on its zero coupon
securities, it will be required, in order to maintain its desired tax
treatment, to distribute cash approximating the income attributable to such
securities. Such distribution may require the sale of portfolio securities to
meet the distribution requirements and such sales may be subject to the risk
factor discussed above.
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<PAGE>
^ For more information, contact ^ Delaware Group
at 800^-828-5052.
INVESTMENT MANAGER
Delaware Management Company, Inc.
One Commerce Square
Philadelphia, PA 19103
SUB-ADVISER
Lincoln Investment Management, Inc.
200 E. Berry Street
Fort Wayne, IN 46802
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING,
ACCOUNTING SERVICES
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
One Commerce Square
Philadelphia, PA 19103
INDEPENDENT AUDITORS
Ernst & Young LLP
Two Commerce Square
Philadelphia, PA 19103
CUSTODIAN
The Chase Manhattan Bank
4 Chase Metrotech Center
Brooklyn, NY 11245
<PAGE>
THE REAL ESTATE INVESTMENT TRUST
PORTFOLIO
INSTITUTIONAL CLASS
P R O S P E C T U S
^ OCTOBER 14, 1997
DELAWARE
GROUP
<PAGE>
PART B
DELAWARE POOLED TRUST, INC.
STATEMENT OF ADDITIONAL INFORMATION
^ OCTOBER 14, 1997
-----------------------------------
Delaware Pooled Trust, Inc. ^("Pooled Trust, Inc.") is an open-end
management investment company. ^ Pooled Trust, Inc. consists of 14 series
("Portfolios") offering a broad range of investment choices. ^ Pooled Trust,
Inc. is designed to provide clients with attractive alternatives for meeting
their investment needs. This Statement of Additional Information (Part B of ^
Pooled Trust, Inc.'s registration statement) addresses information of ^ Pooled
Trust, Inc. applicable to each of the 14 Portfolios.
This Statement of Additional Information is not a prospectus but should be
read in conjunction with the related Prospectus of ^ Pooled Trust, Inc. for
each Portfolio. To obtain ^ the Prospectus for the Portfolios, please write to
the Delaware Pooled Trust, Inc. at One Commerce Square, 2005 Market Street,
Philadelphia, PA 19103, Attn: Client Services or call ^ Pooled Trust, Inc. at
1-800-231-8002. To obtain the Prospectus the Class A, and C Shares or the
Institutional Class of The Real Estate Investment Trust Portfolio write to the
Distributor at 1818 Market Street, Philadelphia, PA 19103 or call
1-800-523-4640 for the Class A, B and C Shares or 1-800-828-5052 for the
Institutional Class.
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
Exchange Privilege
General Information
Appendix A--IRA Information
Financial Statements
1
<PAGE>
INVESTMENT POLICIES, PORTFOLIO TECHNIQUES AND RISK CONSIDERATIONS
Investment Restrictions
^ Pooled Trust, Inc. 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 (other than The Emerging Markets Portfolio and The Global
Equity 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 and The Real Estate Investment Trust Portfolio II
(collectively, "The Real Estate Investment Trust Portfolios") may each 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 each of The Real Estate Investment Trust
Portfolios 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 Portfolios and
The International Fixed Income Portfolio may enter into futures contracts and
may purchase and sell options on futures contracts in accordance with the
related 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 Portfolios 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.
2
<PAGE>
7. Make short sales of securities, or purchase securities on margin,
except that The Aggressive Growth Portfolio, The Real Estate Investment Trust
Portfolios 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 ^ Pooled Trust,
Inc. or of either of the investment advisers if or so long as the directors
and officers of ^ Pooled Trust, Inc. 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 Labor
Select International Equity Portfolio, The Real Estate Investment Trust
Portfolios, The International Fixed Income Portfolio, The High-Yield Bond
Portfolio and The Emerging Markets 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.
3
<PAGE>
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. 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 ^ Pooled Trust, Inc.'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 Labor Select International
Equity Portfolio, The Real Estate Investment Trust Portfolios, 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 Labor Select International Equity
Portfolio, The Real Estate Investment Trust Portfolios, 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 ^ Pooled Trust, Inc.'s Board of Directors
without shareholder approval.
Except as noted below, each of The Defensive Equity Small/Mid-Cap
Portfolio, The Labor Select International Equity Portfolio, The Real Estate
Investment Trust Portfolios, The International Fixed Income Portfolio and The
High-Yield Bond Portfolio shall not:
1. As to 50% of the respective total assets of The Real Estate Investment
Trust Portfolios 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.
4
<PAGE>
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 Portfolios and
their investments in the securities of real estate investment trusts.
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 each of The Real Estate Investment
Trust Portfolios 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. Each 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 ^ Pooled Trust, Inc.'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 Emerging Markets Portfolio
^ Pooled Trust, Inc. has adopted the following restrictions for The
Emerging Markets Portfolio which, along with its investment objective, cannot
be changed without approval by a "majority" of the Portfolio's outstanding
shares, as described above. The percentage limitations contained in these
restrictions and policies apply at the time the Portfolio purchases
securities.
The Emerging Markets Portfolio shall not:
1. Invest 25% or more of its total assets in any one industry provided
that there is no limitation with respect to investments in obligations issued
or guaranteed as to principal or interest by the U.S. Government, its agencies
or instrumentalities.
2. Make loans other than by the purchase of all or a portion of a publicly
or privately distributed issue of bonds, debentures or other debt securities
of the types commonly offered publicly or privately and purchased by financial
institutions (including repurchase agreements), whether or not the purchase
was made upon the original issuance of the securities, and except that the
Portfolio may loan its assets to qualified broker/dealers or institutional
investors.
3. Engage in underwriting of securities of other issuers, except that
portfolio securities, including securities purchased in private placements,
may be acquired under circumstances where, if sold, the Portfolio might be
deemed to be an underwriter under the Securities Act of 1933. No limit is
placed on the proportion of the Portfolio's assets which may be invested in
such securities.
5
<PAGE>
4. Borrow money or issue senior securities, except to the extent permitted
by the 1940 Act or any rule or order thereunder or interpretation thereof.
Subject to the foregoing, the Portfolio may engage in short sales, purchase
securities on margin, and write put and call options.
5. Purchase or sell physical commodities or physical commodity contracts,
including physical commodity options or futures contracts in a contract market
or other futures market.
6. Purchase or sell real estate; provided that the Portfolio may invest in
securities secured by real estate or interests therein or issued by companies
which invest in real estate or interests therein.
The Global Equity Portfolio
^ Pooled Trust, Inc. has adopted the following restrictions for The Global
Equity Portfolio which along with its investment objective, cannot be changed
without approval by a "majority" of its Portfolio's outstanding shares, as
described above. The percentage limitations contained in these restrictions
and policies apply at the time the Portfolio purchases securities.
The Global Equity Portfolio shall not:
1. As to 75% of its total assets, invest more than 5% of its 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 25% or more of its total assets in any one industry provided
that there is no limitation with respect to investments in obligations issued
or guaranteed as to principal or interest by the U.S. Government, its agencies
or instrumentalities.
3. Make loans other than by the purchase of all or a portion of a publicly
or privately distributed issue of bonds, debentures or other debt securities
of the types commonly offered publicly or privately and purchased by financial
institutions (including repurchase agreements), whether or not the purchase
was made upon the original issuance of the securities, and except that the
Portfolio may loan its assets to qualified broker/dealers or institutional
investors.
4. Engage in underwriting of securities of other issuers, except that
portfolio securities, including securities purchased in private placements,
may be acquired under circumstances where, if sold, the Portfolio might be
deemed to be an underwriter under the Securities Act of 1933. No limit is
placed on the proportion of the Portfolio's assets which may be invested in
such securities.
5. Borrow money or issue senior securities, except tot the extent
permitted by the 1940 Act or any rule or order thereunder or interpretation
thereof. Subject to the foregoing, the Portfolio may engage in short sales,
purchase securities on margin, and write put and call options.
6. Purchase or sell physical commodities or physical commodity contracts,
including physical commodity options or futures contracts in a contract market
or other futures market.
7. Purchase or sell real estate; provided that the Portfolio may invest in
securities secured by real estate or interest therein or issued by companies
which invest in real estate or interests therein.
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Foreign Investment Information (The International Equity Portfolio, The Labor
Select International Equity Portfolio, The Real Estate Investment Trust
Portfolios, The Global Fixed Income Portfolio, The International Fixed Income
Portfolio, The High-Yield Bond Portfolio, The Emerging Markets Portfolio and
The Global Equity Portfolio)
Investors in The International Equity Portfolio, The Labor Select
International Equity Portfolio, The Global Fixed Income Portfolio, The
International Fixed Income Portfolio, The Emerging Markets Portfolio and The
Global Equity Portfolio (as well as in The Real Estate Investment Trust
Portfolios 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 related
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, The Emerging Markets Portfolio and The Global Equity
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 Labor Select International Equity Portfolio, the Real Estate
Investment Trust Portfolios, the Global Fixed Income Portfolio, the
International Fixed Income Portfolio, the Emerging Markets Portfolio and the
Global Equity 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 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.
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Foreign Currency Transactions (The International Equity Portfolio, The Labor
Select International Equity Portfolio, The Real Estate Investment Trust
Portfolios, The Global Fixed Income Portfolio, The International Fixed Income
Portfolio, The Emerging Markets Portfolio and The Global Equity Portfolio)
The International Equity Portfolio, The Labor Select International Equity
Portfolio, The Global Fixed Income Portfolio, The International Fixed Income
Portfolio, The Emerging Markets Portfolio and The Global Equity Portfolio (as
well as The Real Estate Investment Trust Portfolios, 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 related Prospectus, The International Fixed Income
Portfolio, The Emerging Markets Portfolio and The Global Equity 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.
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
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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 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
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<PAGE>
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, The International Fixed Income
Portfolio and The Emerging Markets Portfolio)
The Global Fixed Income Portfolio, The International Fixed Income
Portfolio and The Emerging Markets Portfolio may invest, within the limits
specified in the related 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 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
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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, The Real Estate Investment Trust Portfolios, The
Emerging Markets Portfolio and The Global Equity Portfolio)
In order to remain fully invested, and to reduce transaction costs, The
Aggressive Growth Portfolio, The Real Estate Investment Trust Portfolios, The
Emerging Markets Portfolio and The Global Equity Portfolio may, to the limited
extent identified in the related 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, The Real Estate Investment Trust
Portfolios, The Emerging Markets Portfolio and The Global Equity Portfolio may
purchase call options, write call options on a covered basis, write secured
put options, which put options for The Aggressive Growth Portfolio and The
Real Estate Investment Trust Portfolios will be 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
Portfolios, The Emerging Markets Portfolio and The Global Equity Portfolio
will not invest more than 15% of their respective 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.
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,
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<PAGE>
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 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.
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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 Aggressive Growth and The Real Estate Investment Trust
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 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.
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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.
Options on Stock Indices
The Emerging Markets Portfolio and The Global Equity Portfolio may acquire
option on stock indices. A stock index assigns relative values to the common
stocks included in the index with the index fluctuating with changes in the
market values of the underlying common stock.
Options on stock indices are similar to options on stocks but have
different delivery requirements. Stock options provide the right to take or
make delivery of the underlying stock at a specified price. A stock index
option gives the holder the right to receive a cash "exercise settlement
amount" equal to (i) the amount by which the fixed exercise price of the
option exceeds (in the case of a put) or is less than (in the case of a call)
the closing value of the underlying index on the date of exercise, multiplied
by (ii) a fixed "index multiplier." Receipt of this cash amount will depend
upon the closing level of the stock index upon which the option is based being
greater than (in the case of a call) or less than (in the case of a put) the
exercise price of the option. The amount of cash received will be equal to
such difference between the closing price of the index and exercise price of
the option expressed in dollars times a specified multiple. The writer of the
option is obligated, in return for the premium received to make delivery of
this amount. Gain or loss to a Portfolio on transactions in stock index
options will depend on price movements in the stock market generally (or in a
particular industry or segment of the market) rather than price movements of
individual securities. As with stock options, a Portfolio may offset its
position in stock index options prior to expiration by entering into a closing
transaction on an Exchange or it may let the option expire unexercised.
A stock index fluctuates with changes in the market values of the stock so
included. Some stock index options are based on a broad market index such as
the Standard & Poor's 500 or the New York Stock Exchange Composite Index, or a
narrower market index such as the Standard & Poor's 100. Indices are also
based on an industry or market segment such as the AMEX Oil and Gas Index or
the Computer and Business Equipment Index. Options on stock indices are
currently traded on domestic exchanges such as: The Chicago Board Options
Exchange, the New York Stock Exchange and American Stock Exchange as well as
on foreign exchanges.
A Portfolio's ability to hedge effectively all or a portion of its
securities through transactions in options on stock indices depends on the
degree to which price movements in the Portfolio's securities. Since a
Portfolio will not duplicate the components of an index, the correlation will
not be exact. Consequently, a Portfolio bears the risk that the prices of the
securities being hedged will not move in the same amount as the hedging
instrument. It is also possible that there may be a negative correlation
between the index or other securities which would result in a loss on both
such securities and the hedging instrument.
Positions in stock index options may be closed out only on an Exchange
which provides a secondary market. There can be no assurance that a liquid
secondary market will exist for any particular stock index option. Thus, it
may not be possible to close such an option. The inability to close options
positions could have an adverse impact on a Portfolio's ability effectively to
hedge its securities. A Portfolio will enter into an option position only if
there appears to be a liquid secondary market for such options.
A Portfolio will not engage in transactions in options on stock indices
for speculative purposes but only to
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protect appreciation attained and to take advantage of the liquidity available
in the option markets.
Futures and Options on Futures
Consistent with the limited circumstances under which The Aggressive
Growth Portfolio, The Real Estate Investment Trust Portfolios, The Emerging
Markets Portfolio and The Global Equity 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.
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
15
<PAGE>
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.
16
<PAGE>
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.
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.
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<PAGE>
The funds in the Delaware Group, including ^ Pooled Trust, Inc., 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 ^ Pooled Trust, Inc. 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
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 ^ Pooled Trust, Inc. 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 ^ Pooled Trust,
Inc. 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. Creditworthiness 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
18
<PAGE>
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.
Non-Traditional Equity Securities ^(The Emerging Markets Portfolio)
The Emerging Markets Portfolio 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 the 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. 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 Emerging Markets Portfolio 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 (Stocks 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.
19
<PAGE>
ACCOUNTING AND TAX ISSUES
When The Aggressive Growth Portfolio, either of The Real Estate Investment
Trust Portfolios, The International Fixed Income Portfolio, The Emerging
Markets Portfolio or The Global Equity 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.
Options on Certain Stock Indices
Accounting for options on certain stock indices will be in accordance with
generally accepted accounting principles. The amount of any realized gain or
loss on closing out such a position will result in a realized gain or loss for
tax purposes. Such options held by a Portfolio at the end of each fiscal year
on a broad-based stock index will be required to be "marked to market" for
federal income tax purposes. Generally, 60% of any net gain or loss recognized
on such deemed sales or on any actual sales will be treated as long-term
capital gain or loss, and the remainder will be treated as short-term capital
gain or loss.
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
20
<PAGE>
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.
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, The Real Estate
Investment Trust Portfolios, The Emerging Markets Portfolios and The Global
Equity 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, ^ Pooled Trust, Inc. may state each Portfolio's total
return and each Portfolio class' 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 or the Portfolio class' average
annual total rate of return over the most recent one-, five-, and ten-year
periods, as relevant. ^ Pooled Trust, Inc. may also advertise aggregate and
average total return information of each Portfolio and Portfolio class over
additional periods of time.
Average annual total rate of return for each Portfolio and Portfolio class
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, after deduction of the maximum
front-end sales charge in the case of ^ REIT
Fund A Class of The Real Estate Investment
Trust Portfolio;
T = average annual total return;
n = number of years;
ERV = redeemable value of the hypothetical $1,000
purchase at the end of the period, after
deduction of the applicable CDSC, if any, in
the case of ^ REIT Fund B Class and ^ REIT
Fund C Class of The Real Estate Investment
Trust Portfolio.
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 total return for ^ REIT Fund A Class of The Real Estate Investment
Trust Portfolio at offer reflects the maximum front-end sales charge of 4.75%
paid on the purchase of shares. The total return for ^ REIT Fund A Class at
net asset value (NAV) does not reflect the payment of any front-end sales
charge. The Limited CDSC, applicable only to certain redemptions of those
shares, will not be deducted from any computation of total return. See the
Prospectus for ^ REIT Fund A Class for a description of the Limited CDSC and
the limited instances in which it applies. The Fund may also present total
return ^ information for The Real Estate Investment Trust Portfolio ^ that
does not reflect the deduction of ^ the maximum front-end sales charge with
respect to ^ REIT Fund A Class ^.
The performance, as shown below, is the average annual total return
quotations for The Defensive Equity Portfolio, The Aggressive Growth
Portfolio, The International Equity Portfolio, The Global Fixed Income
Portfolio, The Labor Select International Equity Portfolio, The Fixed Income
Portfolio and The Real Estate Investment Trust Portfolio through April 30,
1997. Securities prices fluctuated during the period covered and the past
results should not be considered as representative of future performance.
Average Annual Total Return(1)
22
<PAGE>
The The
Defensive Aggressive
Equity Growth
Portfolio Portfolio
1 year ended 1 year ended
4/30/97 ^ 20.44% 4/30/97 ^(9.04%)
3 years ended 3 years ended
4/30/97 ^ 20.83% 4/30/97 ^ 9.26%
5 years ended 5 years ended
4/30/97 ^ 17.86% 4/30/97 ^ 10.16%
Period 2/3/92(2) Period 2/27/92(2)
through 4/30/97 ^ 18.24% through 4/30/97 ^ 7.68%
The
The Global
International Fixed
Equity Income
Portfolio Portfolio
1 year ended 1 year ended
4/30/97 ^ 13.93% 4/30/97 ^ 9.34%
3 years ended 3 years ended
4/30/97 ^ 11.38% 4/30/97 ^ 10.76%
5 years ended Period 11/30/92(2)
4/30/97 ^ 12.97% through 4/30/97 ^ 11.68%
Period 2/4/92(2)
through 4/30/97 ^ 12.71%
(1) Certain expenses of the Portfolios have been waived and paid by the
respective investment adviser. In the absence of such waiver and payment,
performance would have been affected negatively.
(2) Date of initial sale.
23
<PAGE>
Average Annual Total Return(1)
The
Labor
Select The
International Fixed
Equity Income
Portfolio Portfolio
1 year ended 1 year ended
4/30/97 ^ 17.11% 4/30/97 ^ 6.23%
Period Period
12/19/95(2) 3/12/96(2)
through through
4/30/97 ^ 20.86% 4/30/97 ^ 5.07%
(1) Certain expenses of the Portfolios have been waived and paid by the
respective investment adviser. In the absence of such waiver and payment,
performance would have been affected negatively.
(2) Date of initial sale.
Average Annual Total Return(1)
The Real Estate Investment Trust Portfolio
The Real Estate
Investment Trust
Portfolio Class (2)
1 year ended
4/30/97 ^ 40.24%
Period
^ 12/6/95(3)
through
4/30/97 ^ 33.25%
(1) Certain expenses of the Portfolios have been waived and paid by the
investment adviser. In the absence of such waiver and payment,
performance would have been affected negatively.
(2) Shares of The Real Estate Investment Trust Portfolio class were made
available for sale beginning October ^ 14, 1997. Pursuant to applicable
regulation, total return shown for the class is that of the original (and
then only) class of shares offered by The Real Estate Investment Trust
Portfolio. That original class has been redesignated ^ REIT Fund A Class.
Like The Real Estate Investment Trust Portfolio class, the original
class, prior to its redesignation, did not carry a front-end sales charge
and was not subject to Rule 12b-1 distribution expenses.
(3) Date of initial sale of the original class (now ^ REIT Fund A Class).
24
<PAGE>
Average Annual Total Return(1)
The Real Estate Investment Trust Portfolio
^ REIT Fund ^ REIT Fund ^ REIT Fund
A Class A Class Institutional Class(3)
(at Offer)(2) (at NAV)
1 year ended
4/30/97 ^ 33.54% 40.24% 40.24%
Period
^ 12/6/95(4)
through
4/30/97 ^ 28.69% 33.25% 33.25%
(1) Certain expenses of the Portfolios have been waived and paid by the
investment adviser. In the absence of such waiver and payment,
performance would have been affected negatively.
(2) The total return presented above is based upon the performance of the
original (and then only) class of shares offered by The Real Estate
Investment Trust Portfolio, which did not carry a front-end sales charge
and was not subject to Rule 12b-1 distribution expenses. That original
class has been redesignated ^ REIT Fund A Class. Effective ^ October 14,
1997, a front-end sales charge of 4.75% is imposed on sales of those
shares and the class is subject to annual 12b-1 distribution expenses of
up to ^ 0.30% of average daily net assets of the class. These performance
numbers are calculated giving effect to the sales charge. No adjustment
has been made to reflect the effect of 12b-1 payments, but future
performance will be affected by 12b-1 payments. REIT Fund A Class is also
subject to other expenses (at a higher rate than applicable to the
original Class) which may affect performance of the Class.
(3) Shares of ^ REIT Fund Institutional Class were made available for sale
beginning October ^ 14, 1997. Pursuant to applicable regulation, total
return shown for the class is that of the original (and then only) class
of shares offered by The Real Estate Investment Trust Portfolio. That
original class has been redesignated ^ REIT Fund A Class. Like ^ REIT
Fund Institutional Class, the original class, prior to its redesignation,
did not carry a front-end sales charge and was not subject to Rule 12b-1
distribution expenses. REIT Fund Institutional Class is also subject to
other expenses (at a higher rate than applicable to the original Class)
which may affect performance of the Class.
(4) Date of initial sale of the original class (now ^ REIT Fund A Class).
^ Information regarding performance of REIT Fund ^ B Class and ^ REIT
Fund C Class is ^ not shown because such shares were not offered prior to the
date of this Part B.
25
<PAGE>
^ Pooled Trust, Inc. 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.
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, The Fixed Income Portfolio and The High-Yield
Bond Portfolio as of April 30, 1997 were ^ 5.52% and ^ 6.35% and 9.82%,
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^ 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 ^ four 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, except for ^ REIT Fund A
Class, ^ REIT Fund B Class and ^ REIT Fund C Class of The Real Estate
Investment Trust Portfolio. 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 ^ Pooled Trust, Inc.
may be compared to various industry indices. For example, ^ Pooled Trust, Inc.
may quote actual total return performance, dividend results and other
performance information of The Defensive Equity Portfolio, that invests
primarily in domestic
26
<PAGE>
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, ^ Pooled Trust, Inc. 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 ^ Solomon Brothers, Inc. These indices are not managed for any
investment goal.
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. Any indices used are not managed for any investment
goal, and a direct investment in an index is not possible.^
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.
27
<PAGE>
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. In addition, the
performance of multiple indices compiled and maintained by this firm may
be combined to create a blended performance result for comparative
purposes. Generally, the indices selected will be representative of the
types of securities in which the Portfolios may invest and the
assumptions that were used in calculating the blended performance will be
described.
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 ^ Pooled Trust,
Inc., peer group comparison composites for each Portfolio of ^ Pooled
Trust, Inc. 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 ^ Pooled Trust, Inc.
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.
Salomon Brothers is a statistical research firm that maintains databases
of international markets and bond markets (corporate and
government-issued securities). This information, as well as unmanaged
indices compiled and maintained by Salomon, will be used in preparing
comparative illustrations. In addition, the performance of multiple
indices compiled and maintained by this firm may be combined to create a
blended performance result for comparative performances. Generally, the
indices selected will be representative of the types of securities in
which the ^ Portfolios may invest and the assumptions that were used in
calculating the blended performance will be described.
^ Pooled Trust, Inc. 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. In addition, ^ Pooled
Trust, Inc. may also promote the total return performance of The Real Estate
Investment Trust Portfolio II by comparison to the original class (prior to
its redesignation as ^ REIT Fund A Class) of The Real Estate Investment Trust
Portfolio.
28
<PAGE>
The following tables are an example, for purposes of illustration only,
of cumulative total return performance through April 30, 1997 for The
Defensive Equity Portfolio, The Aggressive Growth Portfolio, The International
Equity Portfolio, The Global Fixed Income Portfolio, The Labor Select
International Equity Portfolio, The Fixed Income Portfolio, The High-Yield
Bond Portfolio and The Real Estate Investment Trust Portfolio. Cumulative
total return performance through ^ August 31, 1997 is also shown below for The
International Fixed Income and The Emerging Markets Portfolios. 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.
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
4/30/97 ^ 2.01% 3.38% 2.42% 4/30/97 ^(11.48%) (6.77%)
6 months 6 months
ended ended
4/30/97 ^ 10.87% 17.42% 14.71% 4/30/97 ^(8.60%) 1.61%
9 months 9 months
ended ended
4/30/97 ^ 22.13% 28.79% 27.13% 4/30/97 ^(1.06%) 9.99%
1 year 1 year
ended ended
4/30/97 ^ 20.44% 28.61% 25.12% 4/30/97 ^(9.04%) 0.05%
3 years 3 years
ended ended
4/30/97 ^ 76.43% 104.96% 91.29% 4/30/97 ^ 30.42% 42.68%
5 years 5 years
ended ended
4/30/97 ^ 127.46% 138.08% 120.02% 4/30/97 ^ 62.25% 89.59%
Period Period
2/3/92(2) 2/27/92(2)
through through
4/30/97 ^ 140.66% 149.91% 124.95% 4/30/97 ^ 46.67% 81.91%
</TABLE>
(1) Certain expenses of the Portfolios have been waived and paid by the
respective investment adviser. In the absence of such waiver and payment,
performance would have been affected negatively.
(2) Date of initial sale.
29
<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
4/30/97 ^ 3.70% 2.62% 2.42% 4/30/97 ^(0.46%) (2.37%)
6 months 6 months
ended ended
4/30/97 ^ 9.23% 1.72% 14.71% 4/30/97 ^(0.47%) (4.50%)
9 months 9 months
ended ended
4/30/97 ^ 17.83% 3.66% 27.31% 4/30/97 ^ 6.17% 1.94%
1 year 1 year
ended ended
4/30/97 ^ 13.93% (0.60%) 25.12% 4/30/97 ^ 9.34% 0.75%
3 years 3 years
ended ended
4/30/97 ^ 38.19% 17.61% 91.29% 4/30/97 ^ 35.87% 19.81%
5 years ^ Period
ended ^ 11/30/92(2)
4/30/97 ^ 84.03% 67.88% 120.02% through
4/30/97 ^ 62.85% 45.98%
Period ^
2/4/92(2)
^ through
^ 4/30/97 87.16% 52.03% 124.95%
</TABLE>
(1) Certain expenses of the Portfolios have been waived and paid by the
respective investment adviser. In the absence of such waiver and payment,
performance would have been affected negatively.
(2) Date of initial sale.
30
<PAGE>
Cumulative Total Return(1)
<TABLE>
<CAPTION>
Lehman
Brothers
The Government/ Salmon
Fixed Corporate The High- Brothers
Income Intermediate Yield Bond High-Yield
Portfolio Bond Portfolio Cash Pay Index
<S> <C> <C> <C> <C> <C>
3 months 3 months
ended ended
4/30/97 ^ 0.50% 0.67% 4/30/97 1.96% ^ 1.62%
Period
6 months 12/2/96(3)
ended through
4/30/97 ^ 1.64% 1.74% 4/30/97 5.29% ^ 3.17%
9 months
ended
4/30/97 ^ 5.02% 5.06%
1 year
ended
4/30/97 ^ 6.23% 6.41%
Period
3/12/96(2)
through
4/30/97 ^ 5.78% 5.49%
</TABLE>
(1) Certain expenses of the Portfolios have been waived and paid by the
respective investment adviser. In the absence of such waiver and payment,
performance would have been affected negatively.
(2) Date of initial sale.
(3) Date of initial sale; total return for this short of a time period may
not be representative of longer term results.
31
<PAGE>
Cumulative Total Return(1)
The Real Estate Investment Trust Portfolio
The Real Estate
Investment Trust
Portfolio Class (2)
3 months
ended
4/30/97 ^(0.53%)
6 months
ended
4/30/97 ^ 18.57%
9 months
ended
4/30/97 ^ 32.94%
1 year
ended
4/30/97 ^ 40.24%
Period
^ 12/6/95(3)
through
4/30/97 ^ 49.54%
(1) Certain expenses of the ^ Portfolio have been waived and paid by the
investment adviser. In the absence of such waiver and payment,
performance would have been affected negatively.
(2) Shares of The Real Estate Investment Trust Portfolio class were made
available for sale beginning October ^ 14, 1997. Pursuant to applicable
regulation, total return shown for the class is that of the original (and
then only) class of shares offered by The Real Estate Investment Trust
Portfolio. That original class has been redesignated ^ REIT Fund A Class.
Like The Real Estate Investment Trust Portfolio class, the original
class, prior to its redesignation, did not carry a front-end sales charge
and was not subject to Rule 12b-1 distribution expenses.
(3) Date of initial sale of the original class (now ^ REIT Fund A Class).
32
<PAGE>
Cumulative Total Return(1)
The Real Estate Investment Trust Portfolio
^ REIT Fund ^ REIT Fund
A Class Institutional Class (3)
(at Offer)(2)
3 months
ended
4/30/97 ^(5.26%) (0.53%)
6 months
ended
4/30/97 ^ 12.96%(5) 18.57%
9 months
ended
4/30/97 ^ 26.57% 32.94%
1 year
ended
4/30/97 ^ 33.54% 40.24%
Period
^ 12/6/95(4)
through
4/30/97 ^ 42.42% 49.54%
(1) Certain expenses of the ^ Portfolio have been waived and paid by the
investment adviser. In the absence of such waiver and payment,
performance would have been affected negatively.
(2) The total return presented above is based upon the performance of the
original (and then only) class of shares offered by The Real Estate
Investment Trust Portfolio, which did not carry a front-end sales charge
and was not subject to Rule 12b-1 distribution expenses. That original
class has been redesignated ^ REIT Fund A Class. Effective ^ October 14,
1997, a front-end sales charge of 4.75% is imposed on sales of those
shares and the class is subject to annual 12b-1 distribution expenses of
up to ^ 0.30% of average daily net assets of the class. These performance
numbers are calculated giving effect to the sales charge. No adjustment
has been made to reflect the effect of 12b-1 payments, but future
performance will be affected by 12b-1 payments. REIT Fund A Class is also
subject to other expenses (at a higher rate than applicable to the original
Class) which may affect performance of the Class.
(3) Shares of ^ REIT Fund Institutional Class were made available for sale
beginning October ^ 14, 1997. Pursuant to applicable regulation, total
return shown for the class is that of the original (and then only) class
of shares offered by The Real Estate Investment Trust Portfolio. That
original class has been redesignated ^ REIT Fund A Class. Like ^ REIT
Fund Institutional Class, the original class, prior to its redesignation,
did not carry a front-end sales charge and was not subject to Rule 12b-1
distribution expenses. REIT Fund Institutional Class is also subject to
other expenses at a higher rate than applicable to the original Class)
which may affect performance of the Class.
(4) Date of initial sale of the original class (now ^ REIT Fund A Class).
^(5) Cumulative total return at net asset value was 18.57% for the six months
ended April 30, 1997.
33
<PAGE>
Cumulative Total Return(1)
The
Labor
Select
International
Equity
Portfolio EAFE
3 months
ended
4/30/97 ^ 4.83% 2.62%
6 months
ended
4/30/97 ^ 9.81% 1.72%
9 months
ended
4/30/97 ^ 18.29% 3.66%
1 year
ended
4/30/97 ^ 17.11% (0.60%)
Period
12/19/95(2)
through
4/30/97 ^ 29.54% 5.35%
(1) Certain expenses of the Portfolio have been waived and paid by the
investment adviser. In the absence of such waiver and payment,
performance would have been affected negatively.
(2) Date of initial sale.
34
<PAGE>
Cumulative Total Return(1)
Salomon
The Brothers
International Non-U.S. World
Fixed Government
Income Bond
Portfolio Index
3 months
ended
^ 8/31/97 0.20% (0.97%)
Period
4/11/97(3)
through
^ 8/31/97 2.70% 0.59%
Morgan Stanley
Capital
International
The Emerging Emerging
Markets Markets Free
Portfolio Equity Index
3 months
ended
^ 8/31/97 (2.65%) (6.68%)
Period
4/14/97(3)
through
^ 8/31/97 2.90% (3.84%)
(1) Certain expenses of the Portfolios have been waived and paid by the
respective investment adviser. In the absence of such waiver and payment,
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
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 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, The International Fixed Income, The Emerging Markets
and The Global Equity Portfolios and how those philosophies impact each
Portfolio in the strategies ^ Pooled Trust, Inc. employs in seeking Portfolio
objectives. Since the investment disciplines being employed for each Portfolio
in ^ Pooled Trust, Inc. 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.
35
<PAGE>
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.
36
<PAGE>
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
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.
37
<PAGE>
TRADING PRACTICES AND BROKERAGE
^ Pooled Trust, Inc. (and, in the case of The International Equity, The
Labor Select International Equity, The Global Fixed Income, The International
Fixed Income, The Emerging Markets and The Global Equity 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, ^ Pooled Trust, Inc. 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, The International
Fixed Income, The Emerging Markets and The Global Equity Portfolios, their
investment adviser) as to rates paid and charged for similar transactions
throughout the securities industry. In some instances, ^ Pooled Trust, Inc.
pays a minimal share transaction cost when the transaction presents no
difficulty.
During the fiscal years ended October 31, 1994, 1995 and 1996, the
aggregate dollar amounts of brokerage commissions paid by the Portfolios
listed below amounted to the following:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
The Defensive Equity Portfolio $117,326 $108,104 $59,381
The Aggressive Growth Portfolio 46,384 26,361 19,391
The International Equity Portfolio 398,781 280,594 94,890
The Global Fixed Income Portfolio --- 1,545 12,391
The Labor Select International Equity Portfolio 78,514 N/A N/A
The Real Estate Investment Trust Portfolio 122,865 N/A N/A
The Fixed Income Portfolio --- N/A N/A
</TABLE>
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.
38
<PAGE>
During the fiscal year ended October 31, 1996, portfolio transactions of
the following Portfolios in the amounts listed below, resulting in brokerage
commissions in the amounts listed below were directed to brokers for brokerage
and research services provided:
<TABLE>
<CAPTION>
Portfolio Brokerage
Transactions Commissions
Amounts Amounts
------------ -----------
<S> <C> <C>
The Defensive Equity Portfolio $23,219,760 $25,793
The Aggressive Growth Portfolio 11,283,920 26,434
The International Equity Portfolio 21,783,280 75,791
The Labor Select International Equity Portfolio 773,162 4,289
The Real Estate Investment Trust Portfolio 29,418,630 70,854
</TABLE>
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 directed to broker/dealers who
provide such brokerage and research services, ^ Pooled Trust, Inc. 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 ^ Pooled Trust, Inc. 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 ^ Pooled Trust, Inc.'s Board of Directors that the
advantages of combined orders outweigh the possible disadvantages of separate
transactions.
Consistent with the Conduct Rules ^ 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.
39
<PAGE>
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, either of The Real Estate Investment Trust
Portfolios, The International Equity Portfolio, The Emerging Markets Portfolio
and The Global Equity 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.
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 Labor Select International Equity
Portfolio, The Real Estate Investment Trust Portfolios, The Emerging Markets
Portfolio, The Global Equity 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 past two fiscal years were as
follows:
<TABLE>
<CAPTION>
October 31, 1996 October 31, 1995
---------------- ----------------
<S> <C> <C>
The Defensive Equity Portfolio 74% 88%
The Aggressive Growth Portfolio 95% 64%
The International Equity Portfolio 8% 20%
The Global Fixed Income Portfolio 63% 77%
The Labor Select International Equity Portfolio 7%* N/A
The Real Estate Investment Trust Portfolio 109%* N/A
The Fixed Income Portfolio 232%* N/A
</TABLE>
*Annualized
40
<PAGE>
PURCHASING SHARES
The following supplements the disclosure provided in ^ Pooled Trust,
Inc.'s Prospectuses.
Delaware Distributors, L.P. serves as the national distributor for each
Portfolio's shares. See the related Prospectus for information on how to
invest. ^ Pooled Trust, Inc. 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
unless a shareholder submits a specific request. Certificates are not issued
in the case of Class B Shares or Class C Shares or in the case of any
retirement plan account including self-directed IRAs. However, ^ purchases not
involving the issuance of certificates are confirmed to the investor and
credited to the shareholder's account on the books maintained on behalf of ^
Pooled Trust, Inc. The investor will have the same rights of ownership with
respect to such shares as if certificates had been issued. An investor that is
permitted to obtain a certificate may receive a certificate representing ^
full share denominations purchased by sending a letter ^ signed by each owner
of the account to the Transfer Agent requesting the certificate. No charge is
assessed by ^ Pooled Trust, Inc. for any certificate issued. A shareholder may
be subject to fees for replacement of a lost or stolen certificate, under
certain conditions, including the cost of obtaining a bond covering the lost
or stolen certificate. Please contact the Portfolios for further information.
Investors who hold certificates representing any of their shares may only
redeem ^ those shares by written request. The investor's certificate(s) must
accompany such request.
Purchasing Shares (The Real Estate Investment Trust Portfolio class of The
Real Estate Investment Trust Portfolio and all other Portfolios)
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 related Prospectus. In addition, for purchases of
shares in The Emerging Markets Portfolio, a purchase reimbursement fee of
0.75% of the dollar amount invested is charged to investors and paid to the
Portfolio to help defray expenses of investing purchase proceeds. For The
Global Equity Portfolio, the purchase reimbursement fee is equal to 0.40% of
the dollar amount invested. In lieu of paying that fee, an investor in The
Global Equity Portfolio may elect to invest by a contribution in-kind of
securities or may follow another procedure that has the same economic impact
on the Portfolio and its shareholders. See "DETERMINING OFFERING PRICE AND NET
ASSET VALUE." The minimum for initial investments is $1,000,000 for each
Portfolio. There are no minimums for subsequent investments. See the related
Prospectus for special purchase procedures and requirements that may be
applicable to prospective investors in The International Equity Portfolio and
^ The Global Equity Portfolio. At such time as ^ Pooled Trust, Inc. receives
appropriate regulatory approvals to do so in the future, under certain
circumstances, ^ Pooled Trust, Inc. 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.
Purchasing Shares ^(REIT Fund A, B, C and Institutional Classes of The Real
Estate Investment Trust Portfolio)
The minimum initial purchase is generally $1,000 for ^ REIT Fund A Class
("Class A Shares"), ^ REIT Fund B Class ("Class B Shares") and ^ REIT Fund C
Class ("Class C Shares"). Subsequent purchases must generally be at least
$100. The initial and subsequent investment minimums for Class A Shares will
be waived
41
<PAGE>
for purchases by officers, directors and employees of any Delaware Group fund,
the Manager or any of the Manager's affiliates if the purchases are made
pursuant to a payroll deduction program. Shares purchased pursuant to the
Uniform Gifts to Minors Act or the Uniform Transfers to Minors Act and shares
purchased in connection with an Automatic Investing Plan are subject to a
minimum initial purchase of $250 and a minimum subsequent purchase of $25.
Accounts opened under a Delaware Group Asset Planner Service are subject to a
minimum initial investment of $2,000 per Asset Planner strategy selected.
There are no minimum purchase requirements for ^ REIT Fund Institutional Class
("Institutional Class Shares").
Each purchase of Class B Shares is subject to a maximum purchase
limitation of $250,000. For Class C Shares, each purchase must be in an amount
that does not exceed $1,000,000. See Investment Plans for purchase limitations
applicable to retirement plans. ^ Pooled Trust, Inc. will reject any purchase
order for more than $250,000 of Class B Shares and $1,000,000 or more of Class
C Shares. An investor may exceed these limitations by making cumulative
purchases over a period of time. In doing so, an investor should keep in mind,
however, that reduced front-end sales charges apply to investments of $100,000
or more in Class A Shares, and that Class A Shares are subject to lower annual
12b-1 Plan expenses than Class B Shares and Class C Shares and generally are
not subject to a CDSC.
The NASD has adopted Conduct Rules, as amended, relating to investment
company sales charges. ^ Pooled Trust, Inc. and the Distributor intend to
operate in compliance with these rules.
Class A Shares are purchased at the offering price, which reflects a
maximum front-end sales charge of 4.75%; however, lower front-end sales
charges apply for larger purchases. See the table below. Class A Shares are
also subject to annual 12b-1 Plan expenses for the life of the investment.
Class B Shares are purchased at net asset value and are subject to a
CDSC of: (i) 4% if shares are redeemed within two years of purchase; (ii) 3%
if shares are redeemed during the third or fourth year following purchase;
(iii) 2% if shares are redeemed during the fifth year following purchase; and
(iv) 1% if shares are redeemed during the sixth year following purchase. Class
B Shares are also subject to annual 12b-1 Plan expenses which are higher than
those to which Class A Shares are subject and are assessed against the Class B
Shares for approximately eight years after purchase. See Automatic Conversion
of Class B Shares under Classes of Shares in the related Prospectus.
Class C Shares are purchased at net asset value and are subject to a
CDSC of 1% if shares are redeemed within 12 months following purchase. Class C
Shares are also subject to annual 12b-1 Plan expenses for the life of the
investment which are equal to those to which Class B Shares are subject.
Institutional Class Shares are purchased at net asset value per share
without the imposition of a front-end or contingent deferred sales charge or
12b-1 Plan expenses.
Class A Shares, Class B Shares, Class C Shares and Institutional Class
Shares represent a proportionate interest in the Portfolio's assets and will
receive a proportionate interest in the Portfolio's income, before
application, as to the Class A, Class B and Class C Shares, of any expenses
under ^ Pooled Trust, Inc.'s 12b-1 Plans.
Alternative Purchase Arrangements
The alternative purchase arrangements of Class A, Class B and Class C
Shares permit investors to choose the method of purchasing shares that is most
suitable for their needs given the amount of their purchase, the
42
<PAGE>
length of time they expect to hold their shares and other relevant
circumstances. Investors should determine whether, given their particular
circumstances, it is more advantageous to purchase Class A Shares and incur a
front-end sales charge and annual 12b-1 Plan expenses of up to a maximum of ^
0.30% of average daily net assets of Class A Shares (currently, no more than
0.25% of the average daily net assets of Class A Shares, pursuant to Board
action) or to purchase either Class B or Class C Shares and have the entire
initial purchase amount invested in the Portfolio with the investment
thereafter subject to a CDSC and annual 12b-1 Plan expenses. Class B Shares
are subject to a CDSC if the shares are redeemed within six years of purchase,
and Class C Shares are subject to a CDSC if the shares are redeemed within 12
months of purchase. Class B and Class C Shares are each subject to annual
12b-1 Plan expenses of up to a maximum of 1% (0.25% of which are service fees
to be paid to the Distributor, dealers or others for providing personal
service and/or maintaining shareholder accounts) of average daily net assets
of the respective Class. Class B Shares will automatically convert to Class A
Shares at the end of approximately eight years after purchase and, thereafter,
be subject to annual 12b-1 Plan expenses of up to a maximum of ^ 0.30% of
average daily net assets of such shares (currently, no more than 0.25% of the
average daily net assets of Class A Shares, pursuant to Board action). Unlike
Class B Shares, Class C Shares do not convert into another class.
43
<PAGE>
Class A Shares
Purchases of $100,000 or more of Class A Shares at the offering price
carry reduced front-end sales charges as shown in the accompanying table, and
may include a series of purchases over a 13-month period under a Letter of
Intention signed by the purchaser. See Special Purchase Features - Class A
Shares, below, for more information on ways in which investors can avail
themselves of reduced front-end sales charges and other purchase features.
<TABLE>
<CAPTION>
Class A Shares
- -------------------------------------------------------------------------------------------------------------------------------
^
Dealer's
Front-End Sales Charge as a % of Commission***
Amount of Purchase Offering Amount as a % of
Price Invested** Offering Price
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $100,000 4.75% 4.98% 4.00%
$100,000 but under $250,000 3.75 3.90 3.00
$250,000 but under $500,000 2.50 2.55 2.00
$500,000 but under $1,000,000* 2.00 2.07 1.60
</TABLE>
* There is no front-end sales charge on purchases of $1 million or more of
Class A Shares but, under certain limited circumstances, a 1% contingent
deferred sales charge may apply upon redemption of such shares. The
contingent deferred sales charge ("Limited CDSC") that may be applicable
arises only in the case of certain shares that were purchased at net
asset value and triggered the payment of a dealer's commission.
** Based upon the net asset value per share of Class A Shares as of the end
of ^ Pooled Trust, Inc.'s most recent fiscal year.
*** Financial institutions or their affiliated brokers may receive an agency
transaction fee in the percentages set forth above.
- --------------------------------------------------------------------------------
The ^ Portfolio must be notified when a sale takes place which would qualify
for the reduced front-end sales charge on the basis of previous or current
purchases. The reduced front-end sales charge will be granted upon
confirmation of the shareholder's holdings by the ^ Portfolio. Such reduced
front-end sales charges are not retroactive.
From time to time, upon written notice to all of its dealers, the Distributor
may hold special promotions for specified periods during which the Distributor
may reallow to dealers up to the full amount of the front-end sales charge
shown above. Dealers who receive 90% or more of the sales charge may be deemed
to be underwriters under the 1933 Act.
- --------------------------------------------------------------------------------
Certain dealers who enter into an agreement to provide extra training
and information on Delaware Group products and services and who increase sales
of Delaware Group funds may receive an additional commission of up to 0.15% of
the offering price in connection with sales of Class A Shares. Such dealers
must meet certain requirements in terms of organization and distribution
capabilities and their ability to increase sales. The Distributor should be
contacted for further information on these requirements as well as the basis
and circumstances upon which
44
<PAGE>
the additional commission will be paid. Participating dealers may be deemed to
have additional responsibilities under the securities laws.
Dealer's Commission
For initial purchases of Class A Shares of $1,000,000 or more, a
dealer's commission may be paid by the Distributor to financial advisers
through whom such purchases are effected in accordance with the following
schedule:
Dealer's Commission
-------------------
(as a percentage of
Amount of Purchase amount purchased)
------------------
Up to $2 million 1.00%
Next $1 million up to $3 million 0.75
Next $2 million up to $5 million 0.50
Amount over $5 million 0.25
In determining a financial adviser's eligibility for the dealer's
commission, purchases of Class A Shares of other Delaware Group funds, as to
which a Limited CDSC applies (see Contingent Deferred Sales Charge for Certain
Redemptions of Class A Shares Purchased at Net Asset Value under Redemption
and Exchange in the related Prospectus) may be aggregated with those of the
Class A Shares of ^ The Real Estate Investment Trust Portfolio. Financial
advisers also may be eligible for a dealer's commission in connection with
certain purchases made under a Letter of Intention or pursuant to an
investor's Right of Accumulation. Financial advisers should contact the
Distributor concerning the applicability and calculation of the dealer's
commission in the case of combined purchases.
An exchange from other Delaware Group funds will not qualify for
payment of the dealer's commission, unless a dealer's commission or similar
payment has not been previously paid on the assets being exchanged. The
schedule and program for payment of the dealer's commission are subject to
change or termination at any time by the Distributor at its discretion.
Contingent Deferred Sales Charge - Class B Shares and Class C Shares
Class B and Class C Shares are purchased without a front-end sales
charge. Class B Shares redeemed within six years of purchase may be subject to
a CDSC at the rates set forth below and Class C Shares redeemed within 12
months of purchase may be subject to a CDSC of 1%. CDSCs are charged as a
percentage of the dollar amount subject to the CDSC. The charge will be
assessed on an amount equal to the lesser of the net asset value at the time
of purchase of the shares being redeemed or the net asset value of those
shares at the time of redemption. No CDSC will be imposed on increases in net
asset value above the initial purchase price, nor will a CDSC be assessed on
redemptions of shares acquired through reinvestment of dividends or capital
gains distributions. See Waiver of Contingent Deferred Sales Charge - Class B
Shares and Class C Shares under Redemption and Exchange in the related
Prospectus for a list of the instances in which the CDSC is waived.
45
<PAGE>
The following table sets forth the rates of the CDSC for Class B Shares
of ^ The Real Estate Investment Trust Portfolio:
Contingent Deferred Sales Charge
(as a Percentage of Dollar
Year After Purchase Made Amount Subject to Charge)
------------------------ --------------------------------
0-2 4%
3-4 3%
5 2%
6 1%
7 and thereafter None
During the seventh year after purchase, and thereafter, until converted
automatically into Class A Shares, Class B Shares will still be subject to the
annual 12b-1 Plan expenses of up to 1% of average daily net assets of those
shares. At the end of approximately eight years after purchase, the investor's
Class B Shares will be automatically converted into Class A Shares of the ^
Portfolio. See Automatic Conversion of Class B Shares under Classes of Shares
in the related Prospectus. Such conversion will constitute a tax-free exchange
for federal income tax purposes. See Taxes in the related Prospectus.
Plans Under Rule 12b-1
Pursuant to Rule 12b-1 under the 1940 Act, ^ Pooled Trust, Inc. has
adopted a separate plan for each of Class A Shares, the Class B Shares and the
Class C Shares of ^ The Real Estate Investment Trust Portfolio (the "Plans").
Each Plan permits the ^ Portfolio to pay for certain distribution, promotional
and related expenses involved in the marketing of only the Class to which the
Plan applies.
The Plans permit the ^ Portfolio, pursuant to the Distribution
Agreement, to pay out of the assets of Class A Shares, Class B Shares and
Class C Shares monthly fees to the Distributor for its services and expenses
in distributing and promoting sales of shares of such classes. These expenses
include, among other things, preparing and distributing advertisements, sales
literature and prospectuses and reports used for sales purposes, compensating
sales and marketing personnel, and paying distribution and maintenance fees to
securities brokers and dealers who enter into agreements with the Distributor.
The Plan expenses relating to Class B and Class C Shares are also used to pay
the Distributor for advancing the commission costs to dealers with respect to
the initial sale of such shares.
In addition, the ^ Portfolio may make payments out of the assets of
Class A, Class B and Class C Shares directly to other unaffiliated parties,
such as banks, who either aid in the distribution of shares of, or provide
services to, such classes.
The maximum aggregate fee payable by the ^ Portfolio under the Plans,
and the ^ Portfolio's Distribution Agreement, is on an annual basis up to
0.30% of Class A Shares' average daily net assets for the year, and up to 1%
(0.25% of which are service fees to be paid to the Distributor, dealers and
others for providing personal service and/or maintaining shareholder accounts)
of each of Class B Shares' and Class C Shares' average daily net assets for
the year. ^ Pooled Trust, Inc.'s Board of Directors may reduce these amounts
at any time. Pursuant to Board action, the maximum aggregate fee payable by
Class A Shares is 0.25%.
All of the distribution expenses incurred by the Distributor and
others, such as broker/dealers, in excess of the amount paid on behalf of
Class A, Class B and Class C Shares would be borne by such persons without any
46
<PAGE>
reimbursement from ^ such Classes. Subject to seeking best price and
execution, the Classes may, from time to time, buy or sell portfolio
securities from or to firms which receive payments under the Plans.
From time to time, the Distributor may pay additional amounts from its
own resources to dealers for aid in distribution or for aid in providing
administrative services to shareholders.
The Plans and the Distribution Agreement, as amended, have been
approved by the Board of Directors of ^ Pooled Trust, Inc., including a
majority of the directors who are not "interested persons" (as defined in the
1940 Act) of ^ Pooled Trust, Inc. and who have no direct or indirect financial
interest in the Plans by vote cast in person at a meeting duly called for the
purpose of voting on the Plans and such Agreement. Continuation of the Plans
and the Distribution Agreement, as amended, must be approved annually by the
Board of Directors in the same manner, as specified above.
Each year, the directors must determine whether continuation of the
Plans is in the best interest of shareholders of, respectively, the Class A
Shares, Class B Shares and Class C Shares and that there is a reasonable
likelihood of the Plan relating to a Class providing a benefit to that Class.
The Plans and the Distribution Agreement, as amended, may be terminated at any
time without penalty by a majority of those directors who are not "interested
persons" or by a majority vote of the outstanding voting securities of the
relevant Class. Any amendment materially increasing the maximum percentage
payable under the Plans must likewise be approved by a majority vote of the
outstanding voting securities of the relevant Class, as well as by a majority
vote of those directors who are not "interested persons." With respect to the
Class A Share Plan, any material increase in the maximum percentage payable
thereunder must also be approved by a majority of the outstanding voting
securities of the Class B Shares. Also, any other material amendment to the
Plans must be approved by a majority vote of the directors including a
majority of the noninterested directors of ^ Pooled Trust, Inc. having no
interest in the Plans. In addition, in order for the Plans to remain
effective, the selection and nomination of directors who are not "interested
persons" of ^ Pooled Trust, Inc. must be effected by the directors who
themselves are not "interested persons" and who have no direct or indirect
financial interest in the Plans. Persons authorized to make payments under the
Plans must provide written reports at least quarterly to the Board of
Directors for their review.
Other Payments to Dealers - Class A, Class B and Class C Shares
From time to time, at the discretion of the Distributor, all registered
broker/dealers whose aggregate sales of the Class A, B and C Shares exceed
certain limits as set by the Distributor, may receive from the Distributor an
additional payment of up to 0.25% of the dollar amount of such sales. The
Distributor may also provide additional promotional incentives or payments to
dealers that sell shares of the Delaware Group of funds. In some instances,
these incentives or payments may be offered only to certain dealers who
maintain, have sold or may sell certain amounts of shares. The Distributor may
also pay a portion of the expense of preapproved dealer advertisements
promoting the sale of Delaware Group fund shares.
Special Purchase Features - Class A Shares
Buying Class A Shares at Net Asset Value
Class A Shares may be purchased without a front-end sales charge under
the Dividend Reinvestment Plan and, under certain circumstances, the Exchange
Privilege and the 12-Month Reinvestment Privilege.
Current and former officers, trustees and employees of ^ Pooled Trust,
Inc., any other fund in the Delaware Group, the Manager, the Manager's
affiliates or any of the Manager's affiliates that may in the future be
created, legal counsel to the funds and registered representatives and
employees of broker/dealers who have entered into
47
<PAGE>
Dealer's Agreements with the Distributor may purchase Class A Shares of the
Portfolio and any of the funds in the Delaware Group, including any fund that
may be created, at net asset value per share. Family members of such persons
at their direction, and any employee benefit plan established by any of the
foregoing funds, corporations, counsel or broker/dealers may also purchase
Class A Shares at net asset value. Class A Shares may also be purchased at net
asset value by current and former officers, directors and employees (and
members of their families) of the Dougherty Financial Group LLC. Purchases of
Class A Shares may also be made by clients of registered representatives of an
authorized investment dealer at net asset value within 12 months after the
registered representative changes employment, if the purchase is funded by
proceeds from an investment where a front-end sales charge, contingent
deferred sales charge or other sales charge has been assessed.
Purchases of Class A Shares may also be made at net asset value by bank
employees who provide services in connection with agreements between the bank
and unaffiliated brokers or dealers concerning sales of shares of Delaware
Group funds. Officers, directors and key employees of institutional clients of
the Manager, or any of its affiliates, may purchase Class A Shares at net
asset value. Moreover, purchases may be effected at net asset value for the
benefit of the clients of brokers, dealers and registered investment advisers
affiliated with a broker or dealer, if such broker, dealer or investment
adviser has entered into an agreement with the Distributor providing
specifically for the purchase of Class A Shares in connection with special
investment products, such as wrap accounts or similar fee based programs. Such
purchasers are required to sign a letter stating that the purchase is for
investment only and that the securities may not be resold except to the
issuer. Such purchasers may also be required to sign or deliver such other
documents as ^ The Real Estate Investment Trust Portfolio may reasonably
require to establish eligibility ^ for purchase at net asset value.
Investors in Delaware-Voyageur Unit Investment Trusts may reinvest
monthly dividend checks and/or repayment of invested capital into Class A
Shares of any of the Funds in the Delaware Group at net asset value.
Purchases of Class A Shares at net asset value may also be made by the
following: financial institutions investing for the account of their trust
customers if they are not eligible to purchase shares of the Institutional
Class; any group retirement plan (excluding defined benefit pension plans), or
such plans of the same employer, for which plan participant records are
maintained on the Delaware Investment & Retirement Services, Inc. ("DIRSI")
proprietary record keeping system that (i) has in excess of $500,000 of plan
assets invested in Class A Shares of Delaware Group funds and any stable value
product available through the Delaware Group, or (ii) is sponsored by an
employer that has at any point after May 1, 1997 had more than 100 employees
while such plan has held Class A Shares of a Delaware Group fund and such
employer has properly represented to DIRSI in writing that it has the
requisite number of employees and has received written confirmation back from
DIRSI.
Investments in Class A Shares made by plan level and/or participant
retirement accounts that are for the purpose of repaying a loan taken from
such accounts will be made at net asset value. Loan repayments made to a
Delaware Group account in connection with loans originated from accounts
previously maintained by another investment firm will also be invested at net
asset value.
The Portfolio ^ must be notified in advance that the trade qualifies
for purchase at net asset value.
48
<PAGE>
Letter of Intention
The reduced front-end sales charges described above with respect to the
Class A Shares are also applicable to the aggregate amount of purchases made
by any such purchaser previously enumerated within a 13-month period pursuant
to a written Letter of Intention provided by the Distributor and signed by the
purchaser, and not legally binding on the signer or ^ Pooled Trust, Inc.,
which provides for the holding in escrow by the Transfer Agent of 5% of the
total amount of Class A Shares intended to be purchased until such purchase is
completed within the 13-month period. A Letter of Intention may be dated to
include shares purchased up to 90 days prior to the date the Letter is signed.
The 13-month period begins on the date of the earliest purchase. If the
intended investment is not completed, except as noted below, the purchaser
will be asked to pay an amount equal to the difference between the front-end
sales charge on the Class A Shares purchased at the reduced rate and the
front-end sales charge otherwise applicable to the total shares purchased. If
such payment is not made within 20 days following the expiration of the
13-month period, the Transfer Agent will surrender an appropriate number of
the escrowed shares for redemption in order to realize the difference. Such
purchasers may include the value (at offering price at the level designated in
their Letter of Intention) of all their shares of the ^ Portfolio and of any
class of any of the other mutual funds in the Delaware Group (except shares of
any Delaware Group fund which do not carry a front-end sales charge, CDSC or
Limited CDSC, other than shares of Delaware Group Premium Fund, Inc.
beneficially owned in connection with the ownership of variable insurance
products, unless they were acquired through an exchange from a Delaware Group
fund which carried a front-end sales charge, CDSC or Limited CDSC) previously
purchased and still held as of the date of their Letter of Intention toward
the completion of such Letter.
Employers offering a Delaware Group retirement plan may also complete a
Letter of Intention to obtain a reduced front-end sales charge on investments
of Class A Shares made by the plan. The aggregate investment level of the
Letter of Intention will be determined and accepted by the Transfer Agent at
the point of plan establishment. The level and any reduction in front-end
sales charge will be based on actual plan participation and the projected
investments in Delaware Group funds that are offered with a front-end sales
charge, CDSC or Limited CDSC for a 13-month period. The Transfer Agent
reserves the right to adjust the signed Letter of Intention based on this
acceptance criteria. The 13-month period will begin on the date this Letter of
Intention is accepted by the Transfer Agent. If actual investments exceed the
anticipated level and equal an amount that would qualify the plan for further
discounts, any front-end sales charges will be automatically adjusted. In the
event this Letter of Intention is not fulfilled within the 13-month period,
the plan level will be adjusted (without completing another Letter of
Intention) and the employer will be billed for the difference in front-end
sales charges due, based on the plan's assets under management at that time.
Employers may also include the value (at offering price at the level
designated in their Letter of Intention) of all their shares intended for
purchase that are offered with a front-end sales charge, CDSC or Limited CDSC
of any class. Class B Shares and Class C Shares of the Portfolio and other
Delaware Group funds which offer corresponding classes of shares may also be
aggregated for this purpose.
Combined Purchases Privilege
In determining the availability of the reduced front-end sales charge
previously set forth with respect to Class A Shares, purchasers may combine
the total amount of any combination of Class A Shares, Class B Shares and/or
Class C Shares of the Portfolio, as well as shares of any other class of any
of the other Delaware Group funds (except shares of any Delaware Group fund
which do not carry a front-end sales charge, CDSC or Limited CDSC, other than
shares of Delaware Group Premium Fund, Inc. beneficially owned in connection
with the ownership of variable insurance products, unless they were acquired
through an exchange from a Delaware Group fund which carried a front-end sales
charge, CDSC or Limited CDSC). In addition, assets held by investment advisory
clients of the Manager or its affiliates in a stable value account may be
combined with other Delaware Group fund holdings.
49
<PAGE>
The privilege also extends to all purchases made at one time by an
individual; or an individual, his or her spouse and their children under 21;
or a trustee or other fiduciary of trust estates or fiduciary accounts for the
benefit of such family members (including certain employee benefit programs).
Right of Accumulation
In determining the availability of the reduced front-end sales charge
with respect to Class A Shares, purchasers may also combine any subsequent
purchases of Class A Shares, Class B Shares and Class C Shares of the
Portfolio, as well as shares of any other class of any of the other Delaware
Group funds which offer such classes (except shares of any Delaware Group fund
which do not carry a front-end sales charge, CDSC or Limited CDSC, other than
shares of Delaware Group Premium Fund, Inc. beneficially owned in connection
with the ownership of variable insurance products, unless they were acquired
through an exchange from shares from a Delaware Group fund which carried a
front-end sales charge, CDSC or Limited CDSC). If, for example, any such
purchaser has previously purchased and still holds Class A Shares and/or
shares of any other of the classes described in the previous sentence with a
value of $40,000 and subsequently purchases $60,000 at offering price of
additional shares of Class A Shares, the charge applicable to the $60,000
purchase would be 3.75%. For the purpose of this calculation, the shares
presently held shall be valued at the public offering price that would have
been in effect were the shares purchased simultaneously with the current
purchase. Investors should refer to the table of sales charges for Class A
Shares to determine the applicability of the Right of Accumulation to their
particular circumstances.
12-Month Reinvestment Privilege
Holders of Class A Shares ^(and of the Institutional Class holding
shares which were acquired through an exchange from one of the other mutual
funds in the Delaware Group offered with a front-end sales charge) who redeem
such shares of the Portfolio have one year from the date of redemption to
reinvest all or part of their redemption proceeds in Class A Shares of the
Portfolio or in Class A Shares of any of the other funds in the Delaware
Group, subject to applicable eligibility and minimum purchase requirements, in
states where shares of such other funds may be sold, at net asset value
without the payment of a front^-end sales charge. This privilege does not
extend to Class A Shares where the redemption of the shares triggered the
payment of a Limited CDSC. Persons investing redemption proceeds from direct
investments in mutual funds in the Delaware Group offered without a front-end
sales charge will be required to pay the applicable sales charge when
purchasing Class A Shares. The reinvestment privilege does not extend to a
redemption of either Class B Shares or Class C Shares.
Any such reinvestment cannot exceed the redemption proceeds (plus any
amount necessary to purchase a full share). The reinvestment will be made at
the net asset value next determined after receipt of remittance. A redemption
and reinvestment could have income tax consequences. It is recommended that a
tax adviser be consulted with respect to such transactions. Any reinvestment
directed to a fund in which the investor does not then have an account will be
treated like all other initial purchases of a fund's shares. Consequently, an
investor should obtain and read carefully the prospectus for the fund in which
the investment is intended to be made before investing or sending money. The
prospectus contains more complete information about the fund, including
charges and expenses.
Investors should consult their financial advisers or the Transfer
Agent, which also serves as the ^ Portfolio's shareholder servicing agent,
about the applicability of the Limited CDSC (see Contingent Deferred Sales
Charge for Certain Redemptions of Class A Shares Purchased at Net Asset Value
under Redemption and Exchange in the related Prospectus) in connection with
the features described above
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Group Investment Plans
Group Investment Plans which are not eligible to purchase shares of the
Institutional Class may also benefit from the reduced front-end sales charges
for investments in Class A Shares set forth in the table on page 00, based on
total plan assets. If a company has more than one plan investing in the
Delaware Group of funds, then the total amount invested in all plans would be
used in determining the applicable front-end sales charge reduction upon each
purchase, both initial and subsequent, upon notification to the Portfolio at
the time of each such purchase. Employees participating in such Group
Investment Plans may also combine the investments made in their plan account
when determining the applicable front-end sales charge on purchases to
non-retirement Delaware Group investment accounts if they so notify the
Portfolio in connection with each purchase. For other retirement plans and
special services, see Retirement Plans for Class A Shares, Class B Shares and
Class C Shares under Investment Plans.
Institutional Class Shares
^ Institutional Class Shares are available for purchase only by: (a)
retirement plans introduced by persons not associated with brokers or dealers
that are primarily engaged in the retail securities business and rollover
individual retirement accounts from such plans; (b) tax-exempt employee
benefit plans of the Manager, the Sub-Adviser or their affiliates and
securities dealer firms with a selling agreement with the Distributor; (c)
institutional advisory accounts of the Manager, the Sub-Adviser or their
affiliates and those having client relationships with the Manager, the
Sub-Adviser, or their affiliates and their corporate sponsors, as well as
subsidiaries and related employee benefit plans and rollover individual
retirement accounts from such institutional advisory accounts; (d) a bank,
trust company and similar financial institution investing for its own account
or for the account of its trust customers for whom such financial institution
is exercising investment discretion in purchasing Institutional Class Shares,
except where the investment is part of a program that requires payment to the
financial institution of a Rule 12b-1 Plan fee; and (e) registered investment
advisers investing on behalf of clients that consist solely of institutions
and high net-worth individuals having at least $1,000,000 entrusted to the
adviser for investment purposes, but only if the adviser is not affiliated or
associated with a broker or dealer and derives compensation for its services
exclusively from its clients for such advisory services.
Institutional Class Shares are available for purchase at net asset
value, without the imposition of a front-end or contingent deferred sales
charge and are not subject to Rule 12b-1 expenses.
Investment Plans
Reinvestment Plan/Open Account
Unless otherwise designated by shareholders in writing, dividends from
net investment income and distributions from realized securities profits, if
any, will be automatically reinvested in additional shares of the respective
Class (based on the net asset value in effect on the payable date) and will be
credited to the shareholder's account on that date. All dividends and
distributions of the Institutional Class Shares are reinvested in the accounts
of the holders of such shares (based on the net asset value in effect on the
reinvestment date). A confirmation of each dividend payment from net
investment income will be mailed to shareholders quarterly. A confirmation of
any distributions from realized securities profits will be mailed to
shareholders in the first quarter of the fiscal year.
Under the Reinvestment Plan/Open Account, shareholders may purchase and
add full and fractional shares to their plan accounts at any time either
through their investment dealers or by sending a check or money order to ^ The
Portfolio. Such purchases, which must meet the minimum subsequent purchase
requirements stated in the related Prospectus and this Statement of Additional
Information, are made for Class A Shares at the public offering price and
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for Class B Shares ^, Class C Shares and Institutional Class Shares at the net
asset value, at the end of the day of receipt. A reinvestment plan may be
terminated at any time. This plan does not assure a profit nor protect against
depreciation in a declining market.
Reinvestment of Dividends in Other Delaware Group Funds
Subject to applicable eligibility and minimum initial purchase
requirements of each fund and the limitations set forth below, holders of
Class A, Class B and Class C Shares may automatically reinvest their dividends
and/or distributions in any of the mutual funds in the Delaware Group,
including the ^ Portfolio, in states where their shares may be sold. Such
investments will be at net asset value at the close of business on the
reinvestment date without any front-end sales charge or service fee. The
shareholder must notify the Transfer Agent in writing and must have
established an account in the fund into which the dividends and/or
distributions are to be invested. Any reinvestment directed to a fund in which
the investor does not then have an account, will be treated like all other
initial purchases of a fund's shares. Consequently, an investor should obtain
and read carefully the prospectus for the fund in which the investment is
intended to be made before investing or sending money. The prospectus contains
more complete information about the fund, including charges and expenses. See
also Additional Methods of Adding to Your Investment - Dividend Reinvestment
Plan under How to Buy Shares in the related Prospectus.
Subject to the following limitations, dividends and/or distributions
from other funds in the Delaware Group may be invested in shares of the ^
Portfolio, provided an account has been established. Dividends from Class A
Shares may not be directed to Class B Shares or Class C Shares. Dividends from
Class B Shares may only be directed to other Class B Shares and dividends from
Class C Shares may only be directed to other Class C Shares. See Appendix
B-Classes Offered in the related Prospectus for the funds in the Delaware
Group that are eligible for investment by holders of ^ Portfolio shares.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money Purchase
Pension Plans, 401(k) Defined Contribution Plans, 403(b)(7) Deferred
Compensation Plans or 457 Deferred Compensation Plans.
Investing by Electronic Fund Transfer
Direct Deposit Purchase Plan--Investors may arrange for the ^ Portfolio
to accept for investment in Class A, Class B or Class C Shares, through an
agent bank, preauthorized government or private recurring payments. This
method of investment assures the timely credit to the shareholder's account of
payments such as social security, veterans' pension or compensation benefits,
federal salaries, Railroad Retirement benefits, private payroll checks,
dividends, and disability or pension fund benefits. It also eliminates lost,
stolen and delayed checks.
Automatic Investing Plan--Shareholders of Class A, Class B and Class C
Shares may make automatic investments by authorizing, in advance, monthly
payments directly from their checking account for deposit into their ^
Portfolio account. This type of investment will be handled in either of the
following ways. (1) If the shareholder's bank is a member of the National
Automated Clearing House Association ("NACHA"), the amount of the investment
will be electronically deducted from his or her account by Electronic Fund
Transfer ("EFT"). The shareholder's checking account will reflect a debit each
month at a specified date although no check is required to initiate the
transaction. (2) If the shareholder's bank is not a member of NACHA,
deductions will be made by preauthorized checks, known as Depository Transfer
Checks. Should the shareholder's bank become a member of NACHA in the future,
his or her investments would be handled electronically through EFT.
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This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money Purchase
Pension Plans, 401(k) Defined Contribution Plans, 403(b)(7) Deferred
Compensation Plans or 457 Deferred Compensation Plans.
* * *
Initial investments under the Direct Deposit Purchase Plan and the
Automatic Investing Plan must be for $250 or more and subsequent investments
under such plans must be for $25 or more. An investor wishing to take
advantage of either service must complete an authorization form. Either
service can be discontinued by the shareholder at any time without penalty by
giving written notice.
Payments to the ^ Portfolio from the federal government or its agencies
on behalf of a shareholder may be credited to the shareholder's account after
such payments should have been terminated by reason of death or otherwise. Any
such payments are subject to reclamation by the federal government or its
agencies. Similarly, under certain circumstances, investments from private
sources may be subject to reclamation by the transmitting bank. In the event
of a reclamation, the ^ Portfolio may liquidate sufficient shares from a
shareholder's account to reimburse the government or the private source. In
the event there are insufficient shares in the shareholder's account, the
shareholder is expected to reimburse the ^ Portfolio.
Direct Deposit Purchases by Mail
Shareholders may authorize a third party, such as a bank or employer,
to make investments directly to their ^ Portfolio accounts. The ^ Portfolio
will accept these investments, such as bank-by-phone, annuity payments and
payroll allotments, by mail directly from the third party. Investors should
contact their employers or financial institutions who in turn should contact
the ^ Portfolio for proper instructions.
Wealth Builder Option
Shareholders can use the Wealth Builder Option to invest in ^ Class A
Shares, Class B Shares or Class C Shares through regular liquidations of
shares in their accounts in other mutual funds in the Delaware Group.
Shareholders of the Classes may elect to invest in one or more of the other
mutual funds in the Delaware Group through the Wealth Builder Option. See
Wealth Builder Option and Redemption and Exchange in the related Prospectus.
Under this automatic exchange program, shareholders can authorize
regular monthly investments (minimum of $100 per fund) to be liquidated from
their account and invested automatically into other mutual funds in the
Delaware Group, subject to the conditions and limitations set forth in the
related Prospectus. The investment will be made on the 20th day of each month
(or, if the fund selected is not open that day, the next business day) at the
public offering price or net asset value, as applicable, of the fund selected
on the date of investment. No investment will be made for any month if the
value of the shareholder's account is less than the amount specified for
investment.
Periodic investment through the Wealth Builder Option does not insure
profits or protect against losses in a declining market. The price of the fund
into which investments are made could fluctuate. Since this program involves
continuous investment regardless of such fluctuating value, investors
selecting this option should consider their financial ability to continue to
participate in the program through periods of low fund share prices. This
program involves automatic exchanges between two or more fund accounts and is
treated as a purchase of shares of the fund into which investments are made
through the program. See Exchange Privilege for a brief summary of the tax
consequences of exchanges. Shareholders can terminate their participation at
any time by giving written notice to ^ the fund from which exchanges are made.
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This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money Purchase
Pension Plans, 401(k) Defined Contribution Plans, 403(b)(7) Deferred
Compensation Plans or 457 Deferred Compensation Plans. This option also is not
available to shareholders of the Institutional ^ Class.
Delaware Group Asset Planner
To invest in Delaware Group funds using the Delaware Group Asset
Planner asset allocation service, you should complete a Delaware Group Asset
Planner Account Registration Form, which is available only from a financial
adviser or investment dealer. Effective as of September 1, 1997, the Delaware
Group Asset Planner Service is only available to financial advisers or
investment dealers who have previously used this service.
The Delaware Group Asset Planner service offers a choice of four
predesigned asset allocation strategies (each with a different risk/reward
profile) in predetermined percentages in Delaware Group funds. With the help
of a financial adviser, you may also design a customized asset allocation
strategy.
The sales charge on an investment through the Asset Planner service is
determined by the individual sales charges of the underlying funds and their
percentage allocation in the selected Strategy. Exchanges from existing
Delaware Group accounts into the Asset Planner service may be made at net
asset value under the circumstances described under Investing by Exchange in
the Prospectus. The minimum initial investment per Strategy is $2,000;
subsequent investments must be at least $100. Individual fund minimums do not
apply to investments made using the Asset Planner service. Generally, only
shares within the same class may be used within the same Strategy. However,
Class A Shares of The Real Estate Investment Trust Portfolio and of other
funds in the Delaware Group may be used in the same Strategy with consultant
class shares that are offered by certain other Delaware Group funds. See
Appendix B--Classes Offered in the Prospectus for the funds in the Delaware
Group that offer consultant class shares.
An annual maintenance fee, currently $35 per Strategy, is due at the
time of initial investment and by September 30th of each subsequent year. The
fee, payable to Delaware Service Company, Inc. to defray extra costs
associated with administering the Asset Planner service, will be deducted
automatically from one of the funds within your Asset Planner account if not
paid by September 30th. However, effective November 1, 1996, the annual
maintenance fee is waived until further notice. Investors who utilize the
Asset Planner for an IRA will continue to pay an annual IRA fee of $15 per
Social Security number.
Investors will receive a customized quarterly Strategy Report
summarizing all Delaware Group Asset Planner investment performance and
account activity during the prior period. Confirmation statements will be sent
following all transactions other than those involving a reinvestment of
distributions.
Certain shareholder services are not available to investors using the
Asset Planner service, due to its special design. These include Delaphone,
Checkwriting, Wealth Builder Option and Letter of Intention. Systematic
Withdrawal Plans are available after the account has been open for two years.
Retirement Plans for ^ Class A Shares, Class B Shares and Class C Shares
An investment in a Portfolio may be suitable for tax-deferred
retirement plans. Among the retirement plans noted below, Class B Shares are
available for investment only by Individual Retirement Accounts, SIMPLE IRAs,
Simplified Employee Pension Plans, Salary Reduction Simplified Employee
Pension Plans, 457 Deferred Compensation Plans and 403(b)(7) Deferred
Compensation Plans. The CDSC may be waived on certain redemptions of Class B
Shares and Class C Shares. See Waiver of Contingent Deferred Sales Charge -
Class B and Class C
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Shares under Redemption and Exchange in the related Prospectus for a list of
the instances in which the CDSC is waived.
Purchases of Class B Shares are subject to a maximum purchase
limitation of $250,000 for retirement plans. Purchases of Class C Shares must
be in an amount that is less than $1,000,000 for such plans. The maximum
purchase limitations apply only to the initial purchase of shares by the
retirement plan.
Minimum investment limitations generally applicable to other investors
do not apply to retirement plans other than Individual Retirement Accounts,
for which there is a minimum initial purchase of $250 and a minimum subsequent
purchase of $25 regardless of which Class is selected. Retirement plans may be
subject to plan establishment fees, annual maintenance fees and/or other
administrative or trustee fees. Fees are based upon the number of participants
in the plan as well as the services selected. Additional information about
fees is included in retirement plan materials. Fees are quoted upon request.
Annual maintenance fees may be shared by Delaware Management Trust Company,
the Transfer Agent, other affiliates of the Manager and others that provide
services to such plans.
Certain shareholder investment services available to non-retirement
plan shareholders may not be available to retirement plan shareholders.
Certain retirement plans may qualify to purchase Institutional Class Shares.
See Institutional Class Shares above. For additional information on any of the
plans and Delaware's retirement services, call the Shareholder Service Center
telephone number.
It is advisable for an investor considering any one of the retirement
plans described below to consult with an attorney, accountant or a qualified
retirement plan consultant. For further details, including applications for
any of these plans, contact your investment dealer or the Distributor.
Taxable distributions from the retirement plans described below may be
subject to withholding.
Please contact your investment dealer or the Distributor for the
special application forms required for the plans described below.
Prototype Profit Sharing or Money Purchase Pension Plans
Prototype Plans are available for self-employed individuals,
partnerships and corporations. These plans can be maintained as Section
401(k), profit sharing or money purchase pension plans. Contributions may be
invested only in Class A and Class C Shares.
Individual Retirement Account ("IRA")
A document is available for an individual who wants to establish an IRA
and make contributions which may be tax-deductible, even if the individual is
already participating in an employer-sponsored retirement plan. Even if
contributions are not deductible for tax purposes, as indicated below,
earnings will be tax-deferred. In addition, an individual may make
contributions on behalf of a spouse who has no compensation for the year or,
for years prior to 1997, elects to be treated as having no compensation for
the year. Investments in each of the Classes are permissible.
An individual can contribute up to $2,000 to his or her IRA each year.
Contributions may or may not be deductible depending upon the taxpayers
adjusted gross income and whether the taxpayer or his or her spouse is an
active participant in an employer-sponsored retirement plan. Even if a
taxpayer (or his or her spouse) is an active participant in an
employer-sponsored retirement plan, the full $2,000 deduction is still
available if the taxpayer's adjusted gross income is below $25,000 ($40,000
for taxpayers filing joint returns). A partial deduction is allowed
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for married couples with incomes between $40,000 and $50,000, and for single
individuals with incomes between $25,000 and $35,000. No deductions are
available for contributions to IRAs by taxpayers whose adjusted gross income
before IRA deductions exceeds $50,000 ($35,000 for singles) and who are active
participants in an employer-sponsored retirement plan. Taxpayers who are not
allowed deductions on IRA contributions still can make nondeductible IRA
contributions of as much as $2,000 for each working spouse ($2,250 for
one-income couples for years prior to 1997), and defer taxes on interest or
other earnings from the IRAs. Special rules apply for determining the
deductibility of contributions made by married individuals filing separate
returns.
Effective for tax years beginning after 1996, one-income couples can
contribute up to $2,000 to each spouse's IRA provided the combined
compensation of both spouses is at least equal to the total contributions for
both spouses. If the working spouse is an active participant in an
employer-sponsored retirement plan and earns over $40,000, the maximum
deduction limit is reduced in the same way that the limit is reduced for
contributions to a non-spousal IRA.
A company or association may establish a Group IRA for employees or
members who want to purchase shares of a Fund. Purchases of $1 million or more
of Class A Shares qualify for purchase at net asset value but may, under
certain circumstances, be subject to a Limited CDSC.
Investments generally must be held in the IRA until age 59 1/2 in order
to avoid premature distribution penalties, but distributions generally must
commence no later than April 1 of the calendar year following the year in
which the participant reaches age 70 1/2. Individuals are entitled to revoke
the account, for any reason and without penalty, by mailing written notice of
revocation to Delaware Management Trust Company within seven days after the
receipt of the IRA Disclosure Statement or within seven days after the
establishment of the IRA, except, if the IRA is established more than seven
days after receipt of the IRA Disclosure Statement, the account may not be
revoked. Distributions from the account (except for the pro-rata portion of
any nondeductible contributions) are fully taxable as ordinary income in the
year received. Excess contributions removed after the tax filing deadline,
plus extensions, for the year in which the excess contributions were made are
subject to a 6% excise tax on the amount of excess. Premature distributions
(distributions made before age 59 1/2, except for death, disability and
certain other limited circumstances) will be subject to a 10% excise tax on
the amount prematurely distributed, in addition to the income tax resulting
from the distribution. See Alternative Purchase Arrangements - Class B Shares
and Class C Shares under Classes of Shares, Contingent Deferred Sales Charge -
Class B Shares and Class C Shares under Classes of Shares, and Waiver of
Contingent Deferred Sales Charge - Class B and Class C Shares under Redemption
and Exchange in the related Prospectus concerning the applicability of a CDSC
upon redemption.
Effective January 1, 1997, the 10% premature distribution penalty will
not apply to distributions from an IRA that are used to pay medical expenses
in excess of 7.5% of adjusted gross income or to pay health insurance premiums
by an individual who has received unemployment compensation for 12 consecutive
weeks.
See Appendix A--IRA Information for additional IRA information.
Simplified Employee Pension Plan ("SEP/IRA")
A SEP/IRA may be established by an employer who wishes to sponsor a
tax-sheltered retirement program by making contributions on behalf of all
eligible employees. ^ Class A Shares, Class B Shares and Class C Shares are
available for investment by a SEP/IRA.
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Salary Reduction Simplified Employee Pension Plan ("SAR/SEP")
^ Although new SAR/SEP plans may not be established after December 31,
1996^, existing plans may be maintained by employers ^ having 25 or fewer
employees ^. An employer may elect to make additional contributions^ to such
existing plans.
Prototype 401(k) Defined Contribution Plan
Section 401(k) of the Code permits employers to establish qualified
plans based on salary deferral contributions. Plan documents are available to
enable employers to establish a plan. An employer may also elect to make
profit sharing contributions and/or matching contributions with investments in
only Class A Shares and Class C Shares or certain other funds in the Delaware
Group. Purchases under the plan may be combined for purposes of computing the
reduced front-end sales charge applicable to Class A Shares.
Deferred Compensation Plan for Public Schools and Non-Profit
Organizations ("403(b)(7)")
Section 403(b)(7) of the Code permits public school systems and certain
non-profit organizations to use mutual fund shares held in a custodial account
to fund deferred compensation arrangements for their employees. A custodial
account agreement is available for those employers who wish to purchase ^
Class A, B or C Shares in conjunction with such an arrangement.
Deferred Compensation Plan for State and Local Government Employees
("457")
Section 457 of the Code permits state and local governments, their
agencies and certain other entities to establish a deferred compensation plan
for their employees who wish to participate. This enables employees to defer a
portion of their salaries and any federal (and possibly state) taxes thereon.
Such plans may invest in shares ^ Class A, B and C Shares. Although investors
may use their own plan, there is available a Delaware Group 457 Deferred
Compensation Plan. Interested investors should contact the Distributor or
their investment dealers to obtain further information.
SIMPLE IRA
A SIMPLE IRA combines many of the features of an Individual Retirement
Account (IRA) and a 401(k) Plan but is easier to administer than a typical
401(k) Plan. It requires employers to make contributions on behalf of their
employees and also has a salary deferral feature that permits employees to
defer a portion of their salary into the plan on a pre-tax basis.
SIMPLE 401(k)
A SIMPLE 401(k) is like a regular 401(k) except that plan sponsors are
limited to 100 employees and, in exchange for mandatory plan sponsor
contributions, discrimination testing is no longer required. Class B Shares
are not available for purchase by such plans.
The Limited CDSC is applicable to any redemptions of net asset value
purchases made on behalf of any group retirement plan on which a dealer's
commission has been paid if such redemption is made pursuant to a withdrawal
of the entire plan from Delaware Group funds.
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DETERMINING OFFERING PRICE AND NET ASSET VALUE
^ The Real Estate Investment Trust Portfolio Class of The Real Estate
Investment Trust Portfolio and all other Portfolios^
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 ^
Pooled Trust, Inc. and Federal Funds wire by the Portfolio's Custodian Bank,
plus in the case of The Emerging Markets Portfolio and the Global Equity
Portfolio, a purchase reimbursement fee equal to 0.75% and 0.40%,
respectively, of the dollar amount invested.
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,
Martin Luther King, Jr.'s Birthday, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving and Christmas. When the New
York Stock Exchange is closed, ^ Pooled Trust, Inc. will generally be closed,
pricing calculations will not be made and purchase and redemption orders will
not be processed.
^ Class A, B and C Shares and Institutional Class Shares of The Real Estate
Investment Trust Portfolio^
Orders for purchases of Class A Shares are effected at the offering
price next calculated after receipt of the order by ^ Pooled Trust, Inc., its
agent or designee. Orders for purchases of Class B Shares, Class C Shares and
Institutional Class Shares are effected at the net asset value per share next
calculated by ^ Pooled Trust, Inc. after receipt of the order by ^ Pooled
Trust, Inc., its agent or designee. Selling dealers ^ are responsible for
transmitting orders promptly.
The offering price for Class A Shares consists of the net asset value
per share plus any applicable front-end sales charges. Offering price and net
asset value are computed as of the close of regular trading on the New York
Stock Exchange (ordinarily, 4 p.m., Eastern time) on days when the Exchange is
open. The New York Stock Exchange is scheduled to be open Monday through
Friday throughout the year except for New Year's Day, Martin Luther King,
Jr.'s Birthday, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving and Christmas. When the New York Stock Exchange is
closed, ^ Pooled Trust, Inc. will generally be closed, pricing calculations
will not be made and purchase and redemption orders will not be processed.
Each Class will bear, pro-rata, all of the common expenses of the
Portfolio. The net asset values of all outstanding shares of each Class will
be computed on a pro-rata basis for each outstanding share based on the
proportionate participation in the Portfolio represented by the value of
shares of that Class. All income earned and expenses incurred by the Portfolio
will be borne on a pro-rata basis by each outstanding share of a Class, based
on each Class' percentage in the Portfolio represented by the value of shares
of such Classes, except that the Class A, Class B and Class C Shares alone
will bear the 12b-1 Plan expenses payable under their respective Plans. Due to
the specific distribution expenses and other costs that would be allocable to
each Class, the dividends paid to each Class of ^ The Real Estate Investment
Trust Portfolio may vary. However, the net asset value per share of each Class
is expected to be equivalent.
* * *
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
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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 ^ Pooled
Trust, Inc.'s Board of Directors.
The securities in which The International Equity Portfolio, The Labor
Select International Equity Portfolio, The Global Fixed Income Portfolio, The
International Fixed Income Portfolio, The Emerging Markets Portfolio and The
Global Equity Portfolio (as well as The Real Estate Investment Trust
Portfolios and The High-Yield Bond Portfolio, to the limited extent described
in the Prospectus) 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 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. Foreign currencies and the prices of
foreign securities denominated in foreign currencies are translated to U.S.
dollars based on rates in effect as of 12 p.m., Eastern time.
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REDEMPTION AND REPURCHASE
The following supplements the disclosure provided in ^ Pooled Trust,
Inc.'s Prospectuses.
^ The Real Estate Investment Trust Portfolio Class of The Real Estate
Investment Trust Portfolio and all other Portfolios^
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, except that
shareholders that redeem shares of The Emerging Markets Portfolio and The
Global Equity Portfolio are assessed by the relevant Portfolio a 0.75% and
0.30%, respectively, redemption reimbursement fee. 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 OFFERING PRICE AND 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 related 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, The International Fixed Income
Portfolio, The Emerging Markets Portfolio and The Global Equity Portfolio.
Eligible investors who have an existing investment counseling relationship
with Delaware Investment Advisers or Delaware International will not be
subject to ^ Pooled Trust, Inc.'s in-kind redemption requirements until such
time as ^ Pooled Trust, Inc. receives appropriate regulatory approvals to
permit such redemptions for the account of such investors.
^ Pooled Trust, Inc. has elected to be governed by Rule 18f-1 under the
1940 Act pursuant to which ^ Pooled Trust, Inc. 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.
Small Accounts
Due to the relatively higher cost of maintaining small accounts, ^
Pooled Trust, Inc. 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 ^ Pooled Trust, Inc. 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.
* * *
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^ Pooled Trust, Inc. 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, The International Fixed Income Portfolio, The Emerging
Markets Portfolio and The Global Equity Portfolio whose redemptions trigger
the special in-kind redemption procedures. See the related Prospectus. The ^
Portfolios reserve the right to suspend or terminate these expedited payment
procedures at any time in the future.
Expedited Telephone Redemptions
Shareholders wishing to redeem shares for which certificates have not
been issued may call ^ Pooled Trust, Inc. 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 ^ Pooled Trust,
Inc., as described above. The Telephone Redemption Option on the Account
Registration Form must have been elected by the shareholder and filed with ^
Pooled Trust, Inc. 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, ^ Pooled Trust, Inc. 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 ^ Pooled Trust, Inc. may be exchanged for
shares of any other Portfolio or for the institutional classes of the other
funds in the Delaware Group. 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 calculated on the basis of 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, except for exchanges involving shares of The Emerging Markets
Portfolio. See ^ Exchange Privilege under Shareholder Services in the related
Prospectus. The shares of a Portfolio into which an 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.
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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 ^ Pooled Trust, Inc. 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 International Equity Portfolio, The Labor Select
International Equity Portfolio, The Global Fixed Income Portfolio, The
International Fixed Income Portfolio, The Emerging Markets Portfolio and The
Global Equity Portfolio shall be subject to the special purchase and
redemption procedures identified in sections of the related 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. ^ Pooled Trust, Inc. reserves the
right to suspend or terminate or amend the terms of the exchange privilege
upon 60 days' written notice to client shareholders.
* * *
Neither Pooled Trust, Inc., the Portfolios nor the Portfolios' 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, Pooled Trust, Inc. 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, Pooled Trust, Inc. 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.
^
Class A, B and C Shares and Institutional Class Shares of The Real Estate
Investment Trust Portfolio^
Any shareholder may require ^ The Real Estate Investment Trust
Portfolio to redeem shares by sending a written request, signed by the record
owner or owners exactly as the shares are registered, to the ^ Portfolio, at
1818 Market Street, Philadelphia, PA 19103. In addition, certain expedited
redemption methods described below are available when stock certificates have
not been issued. Certificates are issued for the Class A Shares and
Institutional Class Shares only if a shareholder specifically requests them.
Certificates are not issued for Class B Shares or Class C Shares. If stock
certificates have been issued for shares being redeemed, they must accompany
the written request. For redemptions of $50,000 or less paid to the
shareholder at the address of record, the request must be signed by all owners
of the shares or the investment dealer of record, but a signature guarantee is
not required. When the redemption is for more than $50,000, or if payment is
made to someone else or to another address, signatures of all record owners
are required and a signature guarantee is required. Each signature guarantee
must be supplied by an eligible guarantor institution. The ^ Portfolio
reserves the right to reject a signature guarantee supplied by an eligible
institution based on its creditworthiness. The ^ Portfolio may request further
documentation from corporations, retirement plans, executors, administrators,
trustees or guardians.
In addition to redemption of Portfolio shares, the Distributor, acting
as agent of ^ The Real Estate Investment Trust Portfolio, offers to repurchase
Portfolio shares from broker/dealers acting on behalf of shareholders. The
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redemption or repurchase price, which may be more or less than the
shareholder's cost, is the net asset value per share next determined after
receipt of the request in good order by the ^ Portfolio or its agent, subject
to any applicable CDSC or Limited CDSC. This is computed and effective at the
time the offering price and net asset value are determined. See Determining
Offering Price and Net Asset Value. The ^ Portfolio and the Distributor end
their business days at 5 p.m., Eastern time. This offer is discretionary and
may be completely withdrawn without further notice by the Distributor.
Orders for the repurchase of ^ Portfolio shares which are submitted to
the Distributor prior to the close of its business day will be executed at the
net asset value per share computed that day (subject to any applicable CDSC or
Limited CDSC), if the repurchase order was received by the broker/dealer from
the shareholder prior to the time the offering price and net asset value are
determined on such day. The selling dealer has the responsibility of
transmitting orders to the Distributor promptly. Such repurchase is then
settled as an ordinary transaction with the broker/dealer (who may make a
charge to the shareholder for this service) delivering the shares repurchased.
Certain redemptions of Class A Shares purchased at net asset value may
result in the imposition of a Limited CDSC. See Contingent Deferred Sales
Charge for Certain Redemptions of Class A Shares Purchased at Net Asset Value
under Redemption and Exchange in the related Prospectus. Redemptions of Class
B Shares are subject to the following CDSC: (i) 4% if shares are redeemed
within two years of purchase; (ii) 3% if shares are redeemed during the third
or fourth year following purchase; (iii) 2% if shares are redeemed during the
fifth year following purchase; and (iv) 1% if shares are redeemed during the
sixth year following purchase. Class C Shares are subject to a CDSC of 1% if
shares are redeemed within 12 months following purchase. See Contingent
Deferred Sales Charge under Classes of Shares in the related Prospectus.
Except for the applicable CDSC or Limited CDSC, and with respect to the
expedited payment by wire described below, for which there is currently a
$7.50 bank wiring cost, neither ^ The Portfolio nor its Distributor charges a
fee for redemptions or repurchases, but such fees could be charged at any time
in the future.
Payment for shares redeemed will ordinarily be mailed the next business
day, but in no case later than seven days, after receipt of a redemption
request in good order; provided, however, that each commitment to mail or wire
redemption proceeds by a certain time, as described below, is modified by the
qualifications described in the next paragraph.
The ^ Portfolio will process written or telephone redemption requests
to the extent that the purchase orders for the shares being redeemed have
already been settled. The ^ Portfolio will honor the redemption requests as to
shares for which a check was tendered as payment, but the ^ Portfolio will not
mail or wire the proceeds until it is reasonably satisfied that the check has
cleared. This potential delay can be avoided by making investments by wiring
Federal Funds.
If a shareholder has been credited with a purchase by a check which is
subsequently returned unpaid for insufficient funds or for any other reason,
the ^ Portfolio will automatically redeem from the shareholder's account the
shares purchased by the check plus any dividends earned thereon. Shareholders
may be responsible for any losses to the ^ Portfolio or to the Distributor.
In case of a suspension of the determination of the net asset value
because the New York Stock Exchange is closed for other than weekends or
holidays, or trading thereon is restricted or an emergency exists as a result
of which disposal by the ^ Portfolio of securities owned by it is not
reasonably practical, or it is not reasonably practical for the ^ Portfolio
fairly to value its assets, or in the event that the Securities and Exchange
Commission has provided for such suspension for the protection of
shareholders, the ^ Portfolio may postpone payment or suspend
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<PAGE>
the right of redemption or repurchase. In such case, the shareholder may
withdraw the request for redemption or leave it standing as a request for
redemption at the net asset value next determined after the suspension has
been terminated.
Payment for shares redeemed or repurchased may be made either in cash
or kind, or partly in cash and partly in kind. Any portfolio securities paid
or distributed in kind would be valued as described in Determining Offering
Price and Net Asset Value. Subsequent sale by an investor receiving a
distribution in kind could result in the payment of brokerage commissions.
However, ^ Pooled Trust, Inc. has elected to be governed by Rule 18f-1 under
the 1940 Act pursuant to which the ^ Portfolio is obligated to redeem shares
solely in cash up to the lesser of $250,000 or 1% of the net asset value of
the ^ Portfolio during any 90-day period for any one shareholder.
The value of the ^ Portfolio's investments is subject to changing
market prices. Thus, a shareholder reselling shares to the ^ Portfolio may
sustain either a gain or loss, depending upon the price paid and the price
received for such shares.
Small Accounts
Before the ^ Portfolio involuntarily redeems shares from an account
that, under the circumstances listed in the related Prospectus, has remained
below the minimum amounts required by the ^ Portfolio's Prospectus 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 $1,000 and will be
allowed 60 days from that date of notice to make an additional investment to
meet the required minimum of $1,000. See The Conditions of Your Purchase under
How to Buy Shares in the related Prospectus. Any redemption in an inactive
account established with a minimum investment may trigger mandatory
redemption. No CDSC or Limited CDSC will apply to the redemptions described in
this paragraph.
* * *
The ^ Portfolio has made available certain redemption privileges, as
described below. The ^ Portfolio reserves the right to suspend or terminate
these expedited payment procedures upon 60 days' written notice to
shareholders.
Expedited Telephone Redemptions
^ Holders of Class A Shares, Class B Shares and Class C Shares or their
investment dealers of record wishing to redeem any amount of shares of $50,000
or less for which certificates have not been issued may call the Shareholder
Service Center at 800^-523-1918 or, in the case of shareholders of the
Institutional Class, their Client Services Representative at 800-828-5052
prior to the time the offering price and net asset value are determined, as
noted above, and have the proceeds mailed to them at the record address ^.
Checks payable to the shareholder(s) of record will normally be mailed the
next business day, but no later than seven days, after the receipt of the
redemption request. This option is only available to individual, joint and
individual fiduciary-type accounts.
In addition, redemption proceeds of $1,000 or more can be transferred
to your predesignated bank account by wire or by check by calling the phone
number listed above. An authorization form must have been completed by the
shareholder and filed with the ^ Portfolio 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 authorization form. Redemption proceeds will
normally be wired on the next business day following receipt of the redemption
request. There is a $7.50 wiring fee (subject to change) charged by CoreStates
Bank, N.A. which will be
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<PAGE>
deducted from the withdrawal proceeds each time the shareholder requests a
redemption from Class A Shares, Class B Shares or Class C Shares. 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.
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<PAGE>
2. Payment by Check: Request a check be mailed to the bank account
designated on the authorization form. Redemption proceeds will normally be
mailed the next business day, 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.
Redemption Requirements: In order to change the name of the bank and
the account number it will be necessary to send a written request to the ^
Portfolio and a signature guarantee may be required. Each signature guarantee
must be supplied by an eligible guarantor institution. The ^ Portfolio
reserves the right to reject a signature guarantee supplied by an eligible
institution based on its creditworthiness.
To reduce the shareholder's risk of attempted fraudulent use of the
telephone redemption procedure, payment will be made only to the bank account
designated on the authorization form.
If expedited payment under these procedures could adversely affect the
^ Portfolio, the ^ Portfolio may take up to seven days to pay the shareholder.
Neither the ^ Portfolio nor its Transfer Agent is responsible for any
shareholder loss 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 ^ Portfolio will
follow reasonable procedures to confirm that instructions communicated by
telephone are genuine (including verification of a form of personal
identification) as, if it does not, the ^ Portfolio or the Transfer Agent may
be liable for any losses due to unauthorized or fraudulent transactions.
Telephone instructions received by ^ Class A, B and C shareholders are
generally tape recorded. A written confirmation will be provided for all
purchase, exchange and redemption transactions initiated by telephone.
Systematic Withdrawal Plans
Shareholders of Class A Shares, Class B Shares and Class C Shares who
own or purchase $5,000 or more of shares at the offering price or net asset
value, as applicable for which certificates have not been issued may establish
a Systematic Withdrawal Plan for monthly withdrawals of $25 or more, or
quarterly withdrawals of $75 or more, although the Fund does not recommend any
specific amount of withdrawal. This $5,000 minimum does not apply for the ^
Portfolio's prototype retirement plans. Shares purchased with the initial
investment and through reinvestment of cash dividends and realized securities
profits distributions will be credited to the shareholder's account and
sufficient full and fractional shares will be redeemed at the net asset value
calculated on the third business day preceding the mailing date.
Checks are dated either the 1st or the 15th of the month, as selected
by the shareholder (unless such date falls on a holiday or a weekend), and are
normally mailed within two business days. Both ordinary income dividends and
realized securities profits distributions will be automatically reinvested in
additional shares of the Class at net asset value. This plan is not
recommended for all investors and should be started only after careful
consideration of its operation and effect upon the investor's savings and
investment program. To the extent that withdrawal payments from the plan
exceed any dividends and/or realized securities profits distributions paid on
shares held under the plan, the withdrawal payments will represent a return of
capital and the share balance may in time be depleted, particularly in a
declining market.
The sale of shares for withdrawal payments constitutes a taxable event
and a shareholder may incur a capital gain or loss for federal income tax
purposes. This gain or loss may be long-term or short-term depending on the
holding period for the specific shares liquidated. Premature withdrawals from
retirement plans may have
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adverse tax consequences.
Withdrawals under this plan made concurrently with the purchases of
additional shares may be disadvantageous to the shareholder. Purchases of
Class A Shares through a periodic investment program in a fund managed by the
Manager must be terminated before a Systematic Withdrawal Plan with respect to
such shares can take effect, except if the shareholder is a participant in one
of our retirement plans or is investing in Delaware Group funds which do not
carry a sales charge. Redemptions of Class A Shares pursuant to a Systematic
Withdrawal Plan may be subject to a Limited CDSC if the purchase was made at
net asset value and a dealer's commission has been paid on that purchase.
Redemptions of Class B Shares or Class C Shares pursuant to a Systematic
Withdrawal Plan may be subject to a CDSC, unless the annual amount selected to
be withdrawn is less than 12% of the account balance on the date that the
Systematic Withdrawal Plan was established. See Waiver of Contingent Deferred
Sales Charge - Class B ^ and Class C Shares and Waiver of Limited Contingent
Deferred Sales Charge - Class A Shares under Redemption and Exchange in the
related Prospectus. Shareholders should consult their financial adviser to
determine whether a Systematic Withdrawal Plan would be suitable for them.
An investor wishing to start a Systematic Withdrawal Plan must complete
an authorization form. If the recipient of Systematic Withdrawal Plan payments
is other than the registered shareholder, the shareholder's signature on this
authorization must be guaranteed. Each signature guarantee must be supplied by
an eligible guarantor institution. The Fund reserves the right to reject a
signature guarantee supplied by an eligible institution based on its
creditworthiness. This plan may be terminated by the shareholder or the
Transfer Agent at any time by giving written notice.
The Systematic Withdrawal Plan is not available for the Institutional
Class Shares.
^
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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, ^ Pooled Trust, Inc. will not be
subject to federal income tax on net investment income and net realized
capital gains which are distributed to shareholders.
^ Pooled Trust, Inc.'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 ^ Pooled Trust, Inc. 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 Portfolio, The Aggressive Growth Portfolio and The Real Estate
Investment Trust Portfolio for the fiscal year ended October 31, 1996, 55%, 5%
and 44%, 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 ^ Pooled Trust, Inc. 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, ^ Pooled Trust, Inc. 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.
Each class of shares of The Real Estate Investment Trust Portfolio will
share proportionately in the investment income and expenses of the Portfolio,
except that Class A Shares, Class B Shares and Class C Shares alone will incur
distribution fees under their respective 12b-1 plans.
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<PAGE>
TAXES
The following supplements the tax disclosure provided in ^ Pooled
Trust, Inc.'s Prospectuses.
Futures Contracts and Stock Options
(The Aggressive Growth Portfolio, The Real Estate Investment Trust Portfolios,
The Emerging Markets Portfolio and The Global Equity Portfolio)
The Aggressive Growth Portfolio's, The Real Estate Investment Trust
Portfolios', The Emerging Markets Portfolio's and The Global Equity
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.
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<PAGE>
Forward Currency Contracts
(The International Equity Portfolio, The Labor Select International Equity
Portfolio, The Real Estate Investment Trust Portfolios, The Global Fixed
Income Portfolio, The Emerging Markets Portfolio, The International Fixed
Income Portfolio and The Global Equity Portfolio)
The International Equity Portfolio, The Labor Select International
Equity Portfolio, The Real Estate Investment Trust Portfolios, The Global
Fixed Income Portfolio, The International Fixed Income Portfolio, The Emerging
Markets Portfolio and The Global Equity 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 ^ Pooled Trust, Inc. are exempt from Pennsylvania county
personal property tax.
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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 Real Estate Investment Trust and The High-Yield Bond
Portfolios and The Real Estate Investment Trust Portfolio II, subject to the
supervision and direction of ^ Pooled Trust, Inc.'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, The International Fixed Income, The Emerging Markets
and The Global Equity Portfolios, subject to the supervision and direction of
^ Pooled Trust, Inc.'s Board of Directors. Lincoln Investment Management, Inc.
("Lincoln") serves as sub-adviser to Delaware with respect to The Real Estate
Investment Trust ^ Portfolios. 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 ^ July 31, ^ 1997, the Manager and its
affiliates within the Delaware Group, including Delaware International
Advisers Ltd., were managing in the aggregate more than ^ $39 billion in
assets in the various institutional or separately managed (approximately ^
$23,844,101,000) and investment company ^($15,869,009,000) accounts.
Lincoln (formerly Lincoln National Investment Management Company) was
incorporated in 1930. As of ^ September 30, 1997, Lincoln had over $39 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 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. The Investment Management Agreement for The
Emerging Markets Portfolio is dated April 14, 1997 and was approved by the
initial shareholder on that date. The Investment Management ^ Agreements for
The Global Equity Portfolio ^ and The Real Estate Investment Trust Portfolio
II, are both dated October 14, 1997 and ^ were approved by the initial
shareholder ^ as of October 14, 1997; the Sub-Advisory Agreement between
Delaware and Lincoln is dated as of October 14, 1997 and was approved by the
initial shareholder on that date.
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 ^ Pooled Trust, Inc. 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 ^ Pooled Trust, Inc. or
by the investment adviser. Each Agreement will terminate automatically in the
event of its assignment.
71
<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 0.55%
The Aggressive Growth Portfolio 0.80%
The International Equity Portfolio 0.75%
The Defensive Equity Small/Mid-Cap Portfolio 0.65%
The Labor Select International Equity Portfolio 0.75%
The Real Estate Investment Trust Portfolio 0.75%*
The Real Estate Investment Trust Portfolio II 0.75%*
The Fixed Income Portfolio 0.40%
The Limited-Term Maturity Portfolio 0.30%
The Global Fixed Income Portfolio 0.50%
The International Fixed Income Portfolio 0.50%
The High-Yield Bond Portfolio 0.45%
The Emerging Markets Portfolio 1.20%**
The Global Equity Portfolio ^ 0.75%***
* Delaware has entered into a sub-advisory agreement with Lincoln with
respect to The Real Estate Investment Trust Portfolios. 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 ^ Pooled Trust,
Inc. on behalf of the Portfolio.
** Delaware International has elected voluntarily to limit its annual
Investment Advisory Fee to no more than 1.00% of The Emerging Markets
Portfolio's average daily net assets during the period from October 1,
1997 through October 31, 1998. The effect of the current fee waiver of
1.55% with respect to "Total Operating Expenses" and the 1.00% fee
limitation with respect to The Emerging Markets Portfolio is that the
annual Investment Advisory Fee paid to Delaware International on behalf
of that Portfolio will be an amount equal to the lesser of 1.00% or the
amount necessary to limit "Total Operating Expenses" of the Portfolio
(exclusive of taxes, interest, brokerage commissions and extraordinary
expenses) to no more than 1.55% of average net assets, on an annualized
basis. Delaware International has also voluntarily agreed that the annual
Investment Advisory Fee payable to Delaware International on behalf of
The Emerging Markets Portfolio will not exceed 1.00% unless shareholders
of the Portfolio have been notified of the change to the 1.00% fees
limitation at least one year in advance of such increase.
** Delaware has entered into a sub-advisory agreement with Delaware
International with respect to The Global Equity Portfolio. As
compensation for its services as sub-adviser to Delaware, Delaware
International is entitled to receive a sub-advisory fee equal to 50% of
the investment management fee under Delaware's Investment Management
Agreement with Pooled Trust, Inc. 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 ^ Pooled Trust, Inc.,
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<PAGE>
except that Delaware International will make no such payments out of the fees
it receives from managing The International Fixed Income, The Emerging
Markets, The Labor Select International Equity and The Global Equity
Portfolios and Delaware will make no such payments out of the fees it receives
from managing The Defensive Equity Small/Mid-Cap, The Real Estate Investment
Trust and The High-Yield Bond Portfolios.
^ Delaware, or as applicable Delaware ^ International, has elected
voluntarily to waive that portion, if any^ of the annual investment advisory
fees payable by a particular Portfolio and to ^ pay 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, ^ the following percentages
of average daily net assets ^ from the commencement of ^ operations (unless
otherwise noted) though October 31, ^ 1997:
Portfolio
---------
The Defensive Equity Portfolio 0.68%
The Aggressive Growth Portfolio 0.93%
The International Equity Portfolio 0.96%
The Defensive Equity Small/Mid-Cap Portfolio^ 0.79%
The Labor Select International Equity Portfolio 0.96%
The Real Estate Investment Trust Portfolio ^ 0.86%*
The Real Estate Investment Trust Portfolio^ II 0.86%
The Fixed Income Portfolio ^ 0.53%
The Limited-Term Maturity Portfolio 0.43%
The Global Fixed Income Portfolio 0.60%**
The International Fixed Income Portfolio 0.60%***
The High-Yield Bond Portfolio^ 0.59%
The Emerging Markets Portfolio ^ 1.55%
The Global Equity Portfolio ^ 0.96%
* With respect to ^ REIT Fund A Class, ^ REIT Fund B Class, ^ REIT Fund C
Class and ^ REIT Fund Institutional Class of The Real Estate Investment
Trust Portfolio, Delaware has elected voluntarily to waive that portion,
if any, of the annual Investment Advisory Fee payable by such classes and
to reimburse each class for its expenses to the extent necessary to
ensure that the expenses of each class (exclusive of taxes, interest,
brokerage commissions, extraordinary expenses ^) do not exceed, as a
percentage of average net assets, on an annualized basis, ^ 1.11% for
Class A Shares, 1.86% for each of the Class B and C Shares and 0.86% of
each of the Institutional Class shares and The Real Estate Investment
Trust class during the period from the commencement of the public
offering of such ^ classes through ^ April 30, 1998. The expense cap for
The Real Estate Investment Trust ^ Portfolio that was in effect from the
commencement of operations through October 14, 1997 was 0.89%.
** Delaware International voluntarily elected to waive that portion, if any,
of its annual investment advisory fees and to ^ pay The Global Fixed
Income 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, ^ 0.62% as a percentage of average net assets^ for the
period from the commencement of the public offering for the Portfolio
through October 31, ^ 1994. Such waiver ^ was modified effective November
1, 1994 to provide that such expenses of the Portfolio do not exceed, on
an annualized basis, 0.60%.
*** Delaware International voluntarily elected to waive that portion, if any,
of its annual investment advisory fees and to pay The International Fixed
Income Portfolio ^ for its respective 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, 0.62% as a percentage of average net assets for the
period from the commencement of the public offering ^
73
<PAGE>
for the Portfolio through ^ April 30, 1994. Such waiver ^ for The
International Fixed Income Portfolio was modified^ effective ^ May 1,
1994 ^ to provide that such expenses of the Portfolio do not exceed,
on an ^ annual basis, 0.60%. ^
Investment management fees incurred for the last three fiscal years
with respect to each Portfolio follows:
<TABLE>
<CAPTION>
Portfolio October 31, 1996 October 31, 1995 October 31, 1994
- --------- ---------------- ---------------- ----------------
<S> <C> <C> <C>
The Defensive Equity Portfolio $343,114 earned $255,586 earned $121,537 earned
$328,126 paid $237,776 paid $88,345 paid
$14,988 waived $17,810 waived $33,192 waived
The Aggressive Growth Portfolio $214,315 earned $202,809 earned $171,517 earned
$185,753 paid $163,397 paid $118,977 paid
$28,562 waived $39,412 waived $52,540 waived
The International Equity Portfolio $1,632,036 paid $792,936 paid $390,070 earned
$374,822 paid
$15,248 waived
The Global Fixed Income Portfolio $762,870 earned $349,107 earned $175,663 earned
$661,220 paid $293,883 paid $124,905 paid
$101,650 waived $55,224 waived $50,758 waived
The Labor Select International $100,144 earned N/A N/A
Equity Portfolio $50,055 paid
$50,089 waived
The Real Estate Investment $153,313 earned N/A N/A
Trust Portfolio $127,250 paid
$26,063 waived
The Fixed Income Portfolio $19,389 earned N/A N/A
$-0- paid
$19,389 waived
</TABLE>
On October 31, 1996, the total net assets of ^ Pooled Trust, Inc. were
$707,861,340, broken down as follows:
The Defensive Equity Portfolio $67,178,884
The Aggressive Growth Portfolio $28,525,544
The International Equity Portfolio $299,949,843
The Global Fixed Income Portfolio $252,068,251
The Labor Select International Equity Portfolio $23,153,615
The Real Estate Investment Trust Portfolio $26,467,638
The Fixed Income Portfolio $10,517,565
74
<PAGE>
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 fiscal year ended October 31,
1996 were as follows:
The Defensive Equity Portfolio 0.67%*
The Aggressive Growth Portfolio 0.90%*
The International Equity Portfolio 0.89%
The Global Fixed Income Portfolio 0.60%*
The Labor Select International Equity Portfolio 0.92%*/**
The Real Estate Investment Trust Portfolio 0.89%*/**
*Reflects the voluntary waiver of fees by the respective investment manager.
**Annualized.
The ratio of expenses to average daily net assets for The Fixed Income
Portfolio is expected to equal 0.53% on an annual basis.
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.
Delaware Distributors, L.P. is the national distributor for The Real Estate
Investment Trust Portfolio and The Defensive Equity Small/Mid-Cap, The Labor
Select International Equity and The High-Yield Bond Portfolios under separate
Distribution Agreements dated November 29, 1995. It is the national
distributor for The Emerging Markets Portfolio under a Distribution Agreement
dated April 14, 1997. It is the national distributor for The Global Equity
Portfolio ^ and The Real Estate Investment Trust Portfolio II under ^ separate
Distribution ^ Agreements dated October 14, 1997. 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 ^ Portfolio'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 ^
Portfolio's shareholder servicing, dividend disbursing and transfer agent for
each Portfolio pursuant to an Amended and Restated Shareholders Services
Agreement dated ^ October 14,1997. Delaware Service Company, Inc. also
provides accounting services to the ^ Portfolio pursuant to the terms of a
separate Fund Accounting Agreement. Delaware Service Company, Inc.'s principal
business address is 1818 Market Street, Philadelphia, PA 19103. It is also an
indirect,
75
<PAGE>
wholly owned subsidiary of DMH.
OFFICERS AND DIRECTORS
The business and affairs of ^ Pooled Trust, Inc. are managed under the
direction of its Board of Directors.
As ^ of September 30, 1997, no one account held 25% or more of the outstanding
shares of any of ^ Pooled Trust, Inc.'s Portfolios. As ^ of September 30,
1997, the directors and officers, as a group, owned less than 1% of the
outstanding shares of The Real Estate Investment Trust Portfolio; they did not
hold shares of any of the other Portfolios.
76
<PAGE>
As ^ of September 30, 1997, management believes the following accounts
held 5% or more of the outstanding shares of a Portfolio:
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
- --------- --------------------------- ------------ ----------
<S> <C> <C> <C>
The Defensive
Equity Portfolio Northern Trust
TRST PHH Group
P.O. Box 92956
Chicago, IL 60675 ^ 570,144 12.84%
Strafe & Co.
For Consolidated Products
Profit Sharing Plan
P.O. Box 160
Westerville, OH 43086 416,992 9.39% ^
Commerce Bank of Kansas City
Trust Burns & McDonnell
Employee Stock Ownership Plan
P.O. Box 419248
Kansas City, MO 64141 ^ 309,293 6.96%
Lasalle National Bank Trustee
FBO Metz Baking Company
^ P.O. Box 1443
^ Chicago, IL 60690 300,470 6.77%
Cherrytrust & Co.
FBO Colorado Open Shop
Employers Pension Trust
C/O The Bank of Cherry Creek NA
3033 E. First Ave
Denver, CO 80206 ^ 290,155 6.53%
^ The Northern Trust Company
TRST Children's Memorial
Pension Trust ^
P.O. Box ^ 92956
^ Chicago, IL 60675 281,372 6.34%
Mac & Co.
A/C LNFF5033902
Mutual Funds Operations
P.O. Box 3198
Pittsburgh, PA 15230 ^ 251,661 5.67%
</TABLE>
77
<PAGE>
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
- --------- --------------------------- ------------ ----------
<S> <C> <C> <C>
The Aggressive
Growth Portfolio St. Elizabeth Hospital Medical Center
1044 Belmont Ave.
Youngstown, OH 44504 394,130 52.27% ^
Crestar Bank
Cust the College of William and Mary
P.O. Box 8795
Blow Memorial Hall
Williamsburg, VA 23187 ^ 112,336 14.90%
The City of Groton
295 Meridian Street
Groton, CT 06340 ^ 67,993 9.01%
^ NCSC Staff Pension Plan
Defined Benefit
8403 Colesville Rd. Ste 1200
Silver Spring, MD 20910 61,145 8.11%
Philadelphia Association of Zeta Psi
Fraternity U/T/A E W Weil
613 Kirsch Avenue
Wayne, PA 19087 56,419 7.48%
The International
Equity Portfolio Father Flanagan's Foundation Fund
14100 Crawford St.
Boys Town, NE 68010 2,923,130 9.74%
The Salvation Army
Eastern Territory
440 West Nyack Road
West Nyack, NY 10994 2,706,549 9.02% ^
The Salvation Army
Central Territory
10 West Algonquin Road
Des Plaines, IL 60016 ^ 2,085,188 6.95%
Mac & Co.
A/C LCPF0763222
Mutual Fund Operations
P.O. Box 3198
Pittsburgh, PA 15230 ^ 1,500,352 5.00%
</TABLE>
78
<PAGE>
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
- --------- --------------------------- ------------ ----------
<S> <C> <C> <C>
The Fixed Income
Portfolio Northumberland City
Employees Retirement Fund
Cust. Northern Central Bank
c/o Keystone Financial ^ Trust Operation
P.O. Box 2450
Altoona, PA 16603 ^ 628,439 21.05%
Patterson & Co.
c/o CoreStates Bank
P.O. Box 7829
Philadelphia, PA 19101 422,184 14.14% ^
Crestar Bank
Cust The College of William and Mary
Room 224 Private Funds Office
Blow Memorial Hall
P.O. Box 8795
Williamsburg, VA 23187 ^ 339,768 11.38%
Delaware Management Company
Attn. Joe Hastings
1818 Market Street
Philadelphia ^, PA 19103 330,389 11.06%
^ The City of Groton
^ 295 Meridian Street
^ Groton, CT 06340 323,356 10.83%
NCSC Staff Pension Plan
Defined Benefit
8403 Colesville Rd. Ste 1200
Silver Spring, MD 20910 299,273 10.02%
Our Sunday Visitor Inc.
200 Noll Plaza
Huntington, IN 46750 193,676 6.48%
The Global
Fixed ^ Income
Portfolio ^ Saxon & Co.
FBO Western Pennsylvania Teamsters
& Employers Pension Fund
P.O. Box 7780-1888
Philadelphia, PA 19183 ^ 4,053,384 11.49%
</TABLE>
79
<PAGE>
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
- --------- --------------------------- ------------ ----------
<S> <C> <C> <C>
^ The Global
^ Fixed Income
Portfolio Bost & Co.
Mutual Funds Operations
P.O. Box 3198
Pittsburgh, PA 15230 3,747,988 10.62%
Bankers Trust Co
FBO SLU Delaware Fund
Attn: Tom DeAngelo
34 Exchange Place MS 3029
Jersey City, NJ 07302 3,293,630 ^ 9.33%
Washington Suburban Sanitary Commission
Employees Retirement Plan
14501 Sweitzer Ln.
Laurel, MD 20707 ^ 2,985,235 8.46%
Wachovia Bank Trustee
BFI Employee Benefit Plan
301 N. Main St.
P.O. Box 3073
Winston Salem, NC 27150 1,999,995 5.67%
The Labor Select
International Equity
Portfolio Operating Engineers
LCL 101 Pension
301 E. Armour Blvd. Suite 203
Kansas City, MO 64111 ^ 1,0664,741 27.31%
Operating Engineers Pension Trust Fund
8401 Corporate Drive Suite 200
Landover, MD 20785 ^ 416,543 10.66%
Keystone District Council of Carpenters
Pension Fund
524 S. 22nd Street
Harrisburg, PA 17104 407,112 10.42%
First of America Trust Company
Cust Plumbers and Steamfitters
Local 137 Pension Trust
International Portfolio
P.O. Box 4042
Kalamazoo, MI 49002 ^ 368,873 9.44%
</TABLE>
80
<PAGE>
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
- --------- --------------------------- ------------ ----------
<S> <C> <C> <C>
The Labor Select
International Equity
Portfolio Inland Boatmen's Union of the
Pacific National Pension Plan
1220 SW Morrison St., Ste 300
Portland, OR 97205 226,757 5.80%
Carpenters 626 Pension Fund
P.O. Box 740
Davis Road and Oakwood Lane
Valley Forge, PA 19482 ^ 226,173 5.79%
^ Bot Hudson County Carpenters
Pension Fund
^ c/o I.E. Shaffer & Co.
P.O. Box 1025
West Trenton, NJ 08628 212,141 5.43% ^
The Real Estate
Investment
Trust ^ Portfolio ^ Lincoln Investment Management Inc.
^ Attn: Securities Adm. - 3RO3
^ 200 East Berry St.
Fort Wayne, IN 46802 2,709,252 73.57% ^
American States Insurance Company
500 N. Meridian St.
Indianapolis, IN 46204 568,155 ^ 15.43%
The High-Yield
Bond Portfolio Schwartz 1996 Charitable Remainder Unitrust
c/o TCS Group, L.L.C.
1200 Shermer Road Suite 212
Northbrook, IL 60062 ^ 314,407 31.26%
Chicago Trust Co.
FBO Lincoln National Corp.
Employees Retirement Plan
c/o Marshall & Ilsley Trust Co.
P.O. Box 2977
Milwaukee, WI 53201 ^ 313,616 31.18%
Mac & Co LCWF
Mutual Funds Operations
P.O. Box 3198
Pittsburgh PA 15320 126,239 12.55%
</TABLE>
81
<PAGE>
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
- --------- --------------------------- ------------ ----------
<S> <C> <C> <C>
The High-Yield
Bond Portfolio Trust Seven Hundred Thirty
U/A/D 4/2/94
c/o TCS Group, L.L.C.
1200 Shermer Road Suite 212
Northbrook, IL 60062 ^ 112,990 11.23%
Trust Four Hundred Thirty
U/A/D 4/2/94
c/o TCS Group, L.L.C.
1200 Shermer Road Suite 212
Northbrook, IL 60062 112,990 11.23% ^
The International
Fixed Income
Portfolio Montgomery County Public Schools
Employee's Pension & Retirement System
850 Hungerford Dr. Rm 154
Rockville, MD 20850 1,743,614 55.34%
Adventist Health System Sunbelt
Healthcare Corp.- Core
111 N. Orlando Ave.
Winter Park, FL 32789 1,182,585 37.53% ^
</TABLE>
DMH Corp., Delaware Voyageur Holdings, Inc., 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 ^ Pooled Trust,
Inc. 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 ^ Pooled Trust,
Inc. 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 ^ Pooled Trust, Inc. hold identical
positions in each of the other funds in the Delaware Group. Directors and
principal officers of ^ Pooled Trust, Inc. are noted below along with their
82
<PAGE>
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.
83
<PAGE>
*Wayne A. Stork (60)
Chairman, President, Chief Executive Officer, Director and/or Trustee of
^ Pooled Trust, Inc., each of the other 32 investment companies in the
Delaware Group, Delaware Management Holdings, Inc., DMH Corp., Delaware
International Holdings Ltd. and Founders Holdings, Inc.
Chairman and Director of Delaware Distributors, Inc. and Delaware
Capital Management, 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. and Delaware Investment &
Retirement Services, Inc. During the past five years, Mr. Stork
has served in various executive capacities at different times
within the Delaware organization.
Richard G. Unruh, Jr. ^(58)
Executive Vice President of ^ Pooled Trust, Inc. and each of the other
32 investment companies in the Delaware Group.
Executive Vice President and Director of Delaware Management Company,
Inc.
Senior Vice President of Delaware Management Holdings, Inc. and Delaware
Capital Management, 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 (50)
Executive Vice President/Chief Investment Officer, Fixed Income of ^
Pooled Trust, Inc., each of the other 32 investment companies in the
Delaware Group and Delaware Management Company, Inc.
Executive Vice President/Chief Investment Officer, Fixed Income and
Director of Founders Holdings, Inc. Senior Vice President/Chief
Investment Officer, Fixed Income of Delaware Management Holdings, Inc.
Senior Vice President of Delaware Capital Management, Inc.
Director of Founders CBO Corporation.
Director of HYPPCO Finance Company Ltd.
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.
- ----------------------
*Director affiliated with the ^ Portfolio's investment manager and considered
an "interested person" as defined in the 1940 Act.
84
<PAGE>
Walter P. Babich (70)
Director and/or Trustee of ^ Pooled Trust, Inc. and each of the other 32
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.
Anthony D. Knerr (58)
Director and/or Trustee of ^ Pooled Trust, Inc. and each of the other 32
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 (56)
Director and/or Trustee of ^ Pooled Trust, Inc. and each of the other 32
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 (76)
Director and/or Trustee of ^ Pooled Trust, Inc. and each of the other 32
investment companies in the Delaware Group.
City Hall, Philadelphia, PA 19107.
Philadelphia City Councilman.
Thomas F. Madison (61)
Director and/or Trustee of ^ Pooled Trust, Inc. and each of the other 32
investment companies in the Delaware Group.
President and Chief Executive Officer, MLM Partners, Inc. 200 South
Fifth Street, Suite 2100, Minneapolis, Minnesota 55402.
Mr. Madison has also been Chairman of the Board of Communications
Holdings, Inc. since 1996. From February to September 1994, Mr. Madison
served as Vice Chairman--Office of the CEO of The Minnesota Mutual Life
Insurance Company and from 1988 to 1993, he was President of U.S. WEST
Communications--Markets.
85
<PAGE>
* Jeffrey J. Nick (44)
Director and/or Trustee of ^ Pooled Trust, Inc. and 32 other investment
companies in the Delaware Group.
President, Chief Executive Officer and Director of Lincoln National
Investment Companies, Inc. From 1992 to 1996, Mr. Nick was
Managing Director of Lincoln National UK plc and from 1989 to
1992, he was Senior Vice President responsible for corporate
planning and development for Lincoln National Corporation.
Charles E. Peck (71)
Director and/or Trustee of ^ Pooled Trust, Inc. and each of the other 32
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.
David K. Downes (57)
Executive Vice President/Chief Operating Officer/Chief Financial
Officer of ^ Pooled Trust, Inc., each of the other 32
investment companies in the Delaware Group, Delaware Management
Holdings, Inc. and Delaware Capital Management, Inc.
Executive Vice President, Chief Operating Officer, Chief Financial
Officer and Director of Delaware Management Company, Inc., DMH Corp.,
Delaware Distributors, Inc. and Founders Holdings, Inc., Delaware
International Holdings Ltd.
Chairman and Director of Delaware Management Trust Company.
Chairman and Director of Delaware Investment & Retirement Services, Inc.
President/Chief Executive Officer/Chief Financial Officer and Director
of Delaware Service Company, Inc.
Senior Vice President/Chief Administrative Officer/ Chief Financial
Officer of Delaware Distributors, L.P.
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.
- ----------------------
*Director affiliated with the ^ Portfolio's investment manager and considered
an "interested person" as defined in the 1940 Act.
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<PAGE>
George M. Chamberlain, Jr. (50)
Senior Vice President and Secretary of ^ Pooled Trust, Inc., each of the
other 32 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.
Joseph H. Hastings (47)
Senior Vice President/Corporate Controller of Pooled Trust, Inc., each
of the other 32 investment companies in the Delaware Group and Founders
Holdings, Inc.
Senior Vice President/Corporate Controller and Treasurer of 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. 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. Senior Vice President/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 (35)
Senior Vice President/Treasurer of Pooled Trust, Inc., each of the other
32 investment companies in the Delaware Group, Delaware Distributors,
Inc. and Founders Holdings, Inc.
Senior Vice President/Investment Accounting of Delaware Management
Company, Inc. and Delaware Service Company, Inc.
Senior Vice President and Treasurer/Manager of Investment Accounting of
Delaware Distributors, L.P.
Senior Vice President and 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.
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<PAGE>
George E. Deming (55)
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.
Gerald S. Frey (51)
Vice President/Senior Portfolio Manager of ^ Pooled Trust, Inc., 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 (42)
Vice President/Senior Portfolio Manager of ^ Pooled Trust, Inc., 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 (39)
Vice President/Senior Portfolio Manager of ^ Pooled Trust, Inc., 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 (37)
Vice President/Senior Portfolio Manager of ^ Pooled Trust, Inc., 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.
Babak Zenouzi (34)
Vice President/Portfolio Manager of ^ Pooled Trust, Inc. 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.
^
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<PAGE>
The following is a compensation table listing for each director entitled
to receive compensation, the aggregate compensation received from ^ Pooled
Trust, Inc. and the total compensation received from all Delaware Group funds
for the fiscal year ended October 31, 1996 and an estimate of annual benefits
to be received upon retirement under the Delaware Group Retirement Plan for
Directors/Trustees as of October 31, 1996.
<TABLE>
<CAPTION>
Pension or Total
Retirement Estimated Compensation
Aggregate Benefits Annual from all 18
^ Compensation Accrued Benefits Delaware Group
^ from Pooled as Part of Upon Investment
Name ^ Trust, Inc. Fund Expenses Retirement* Companies
<S> <C> <C> <C> <C>
W. Thacher Longstreth $2,088 None $30,000 $44,102
Ann R. Leven $2,446 None $30,000 $52,238
Walter P. Babich $2,249 None $30,000 $48,102
Anthony D. Knerr $2,407 None $30,000 $51,238
Charles E. Peck $2,252 None $30,000 $47,238
Thomas F. Madison** ^ N/A None $30,000 ^ N/A
</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 ^ September 30, 1997, he or she
would be entitled to annual payments totaling ^ $38,000, 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.
** Mr. Madison joined ^ Pooled Trust, Inc.'s Board of Directors on April 30,
1997.
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<PAGE>
EXCHANGE PRIVILEGE
The Real Estate Investment Trust Portfolio
(Class A Shares, Class B Shares, Class C Shares and Institutional Class Shares)
The exchange privileges available for shareholders of the Class A
Shares, Class B Shares, Class C Shares and Institutional Class Shares of The
Real Estate Investment Trust Portfolio and for shareholders of the classes of
the other funds in the Delaware Group are set forth in the relevant
prospectuses for such classes. The following supplements that information. The
Portfolio may modify, terminate or suspend the exchange privilege upon 60
days' notice to shareholders.
All exchanges involve a purchase of shares of the fund into which the
exchange is made. As with any purchase, an investor should obtain and
carefully read that fund's prospectus before buying shares in an exchange. The
prospectus contains more complete information about the fund, including
charges and expenses. A shareholder requesting such an exchange will be sent a
current prospectus and an authorization form for any of the other mutual funds
in the Delaware Group. Exchange instructions must be signed by the record
owner(s) exactly as the shares are registered.
An exchange constitutes, for tax purposes, the sale of one fund or
series and the purchase of another. The sale may involve either a capital gain
or loss to the shareholder for federal income tax purposes.
In addition, investment advisers and dealers may make exchanges
between funds in the Delaware Group on behalf of their clients by telephone or
other expedited means. This service may be discontinued or revised at any time
by the Transfer Agent. Such exchange requests may be rejected if it is
determined that a particular request or the total requests at any time could
have an adverse effect on any of the funds. Requests for expedited exchanges
may be submitted with a properly completed exchange authorization form, as
described above.
Telephone Exchange Privilege
Shareholders owning shares for which certificates have not been
issued or their investment dealers of record may exchange shares by telephone
for shares in other mutual funds in the Delaware Group. This service is
automatically provided unless the Portfolio receives written notice from the
shareholder to the contrary.
Shareholders or their investment dealers of record may contact the
Shareholder Service Center at 800-523-1918 or, in the case of shareholders of
the Institutional Class, their Client Services Representative at 800-828-5052
to effect an exchange. The shareholder's current Fund account number must be
identified, as well as the registration of the account, the share or dollar
amount to be exchanged and the fund into which the exchange is to be made.
Requests received on any day after the time the offering price and net asset
value are determined will be processed the following day. See Determining
Offering Price and Net Asset Value. Any new account established through the
exchange will automatically carry the same registration, shareholder
information and dividend option as the account from which the shares were
exchanged. The exchange requirements of the fund into which the exchange is
being made, such as sales charges, eligibility and investment minimums, must
be met. (See the prospectus of the fund desired or inquire by calling the
Transfer Agent or, as relevant, your Client Services Representative.)
Certain funds are not available for retirement plans.
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<PAGE>
The telephone exchange privilege is intended as a convenience to
shareholders and is not intended to be a vehicle to speculate on short-term
swings in the securities market through frequent transactions in and out of
the funds in the Delaware Group. Telephone exchanges may be subject to
limitations as to amounts or frequency. The Transfer Agent and the Portfolio
reserve the right to record exchange instructions received by telephone and to
reject exchange requests at any time in the future.
As described in the Portfolio's Prospectuses, neither the Portfolio
nor the Transfer Agent is responsible for any shareholder loss incurred in
acting upon written or telephone instructions for redemption or exchange of
Portfolio shares which are reasonably believed to be genuine.
Right to Refuse Timing Accounts
With regard to accounts that are administered by market timing
services ("Timing Firms") to purchase or redeem shares based on changing
economic and market conditions ("Timing Accounts"), the Portfolio will refuse
any new timing arrangements, as well as any new purchases (as opposed to
exchanges) in Delaware Group funds from Timing Firms. The Portfolio reserves
the right to temporarily or permanently terminate the exchange privilege or
reject any specific purchase order for any person whose transactions seem to
follow a timing pattern who: (i) makes an exchange request out of the
Portfolio within two weeks of an earlier exchange request out of the
Portfolio, or (ii) makes more than two exchanges out of the Portfolio per
calendar quarter, or (iii) exchanges shares equal in value to at least $5
million, or more than 1/4 of 1% of the Portfolio's net assets. Accounts under
common ownership or control, including accounts administered so as to redeem
or purchase shares based upon certain predetermined market indicators, will be
aggregated for purposes of the exchange limits.
Restrictions on Timed Exchanges
Timing Accounts operating under existing timing agreements may only
execute exchanges between the following eight Delaware Group funds: (1)
Decatur Income Fund, (2) Decatur Total Return Fund, (3) Delaware Fund, (4)
Limited-Term Government Fund, (5) Tax-Free USA Fund, (6) Delaware Cash
Reserve, (7) Delchester Fund and (8) Tax-Free Pennsylvania Fund. No other
Delaware Group funds are available for timed exchanges. Assets redeemed or
exchanged out of Timing Accounts in Delaware Group funds not listed above may
not be reinvested back into that Timing Account. The Portfolio reserves the
right to apply these same restrictions to the account(s) of any person whose
transactions seem to follow a timing pattern (as described above).
The Portfolio also reserves the right to refuse the purchase side of
an exchange request by any Timing Account, person, or group if, in the
Manager's judgment, the Portfolio would be unable to invest effectively in
accordance with its investment objectives and policies, or would otherwise
potentially be adversely affected. A shareholder's purchase exchanges may be
restricted or refused if the Portfolio receives or anticipates simultaneous
orders affecting significant portions of the Portfolio's assets. In
particular, a pattern of exchanges that coincide with a "market timing"
strategy may be disruptive to the Portfolio and therefore may be refused.
Except as noted above, only shareholders and their authorized brokers
of record will be permitted to make exchanges or redemptions.
* * *
Following is a summary of the investment objectives of the other
Delaware Group funds:
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<PAGE>
Delaware Fund seeks long-term growth by a balance of capital
appreciation, income and preservation of capital. It uses a dividend-oriented
valuation strategy to select securities issued by established companies that
are believed to demonstrate potential for income and capital growth. Devon
Fund seeks current income and capital appreciation by investing primarily in
income-producing common stocks, with a focus on common stocks the Manager
believes have the potential for above average dividend increases over time.
Trend Fund seeks long-term growth by investing in common stocks
issued by emerging growth companies exhibiting strong capital appreciation
potential.
Small Cap Value Fund seeks capital appreciation by investing
primarily in common stocks whose market values appear low relative to their
underlying value or future potential.
DelCap Fund seeks long-term capital growth by investing in common
stocks and securities convertible into common stocks of companies that have a
demonstrated history of growth and have the potential to support continued
growth.
Decatur Income Fund seeks the highest possible current income by
investing primarily in common stocks that provide the potential for income and
capital appreciation without undue risk to principal. Decatur Total Return
Fund seeks long-term growth by investing primarily in securities that provide
the potential for income and capital appreciation without undue risk to
principal. Blue Chip Fund seeks to achieve long-term capital appreciation.
Current income is a secondary objective. It seeks to achieve these objectives
by investing primarily in equity securities and any securities that are
convertible into equity securities. Quantum Fund seeks to achieve long-term
capital appreciation. It seeks to achieve this objective by investing
primarily in equity securities of medium- to large-sized companies expected to
grow over time that meet the Fund's "Social Criteria" strategy.
Delchester Fund seeks as high a current income as possible by
investing principally in high yield, high risk corporate bonds, and also in
U.S. government securities and commercial paper. Strategic Income Fund seeks
to provide investors with high current income and total return by using a
multi-sector investment approach, investing principally in three sectors of
the fixed-income securities markets: high yield, higher risk securities,
investment grade fixed-income securities and foreign government and other
foreign fixed-income securities.
U.S. Government Fund seeks high current income by investing primarily
in long-term U.S. government debt obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
Limited-Term Government Fund seeks high, stable income by investing
primarily in a portfolio of short- and intermediate-term securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities and
instruments secured by such securities. U.S. Government Money Fund seeks
maximum current income with preservation of principal and maintenance of
liquidity by investing only in short-term securities issued or guaranteed as
to principal and interest by the U.S. government, its agencies or
instrumentalities, and repurchase agreements collateralized by such
securities, while maintaining a stable net asset value.
Delaware Cash Reserve seeks the highest level of income consistent
with the preservation of capital and liquidity through investments in
short-term money market instruments, while maintaining a
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<PAGE>
stable net asset value.
Tax-Free USA Fund seeks high current income exempt from federal
income tax by investing in municipal bonds of geographically-diverse issuers.
Tax-Free Insured Fund invests in these same types of securities but with an
emphasis on municipal bonds protected by insurance guaranteeing principal and
interest are paid when due. Tax-Free USA Intermediate Fund seeks a high level
of current interest income exempt from federal income tax, consistent with the
preservation of capital by investing primarily in municipal bonds.
Tax-Free Money Fund seeks high current income, exempt from federal
income tax, by investing in short-term municipal obligations, while
maintaining a stable net asset value.
Tax-Free New Jersey Fund seeks a high level of current interest
income exempt from federal income tax and New Jersey state and local taxes,
consistent with preservation of capital. Tax-Free Ohio Fund seeks a high level
of current interest income exempt from federal income tax and Ohio state and
local taxes, consistent with preservation of capital. Tax-Free Pennsylvania
Fund seeks a high level of current interest income exempt from federal income
tax and Pennsylvania state and local taxes, consistent with the preservation
of capital.
International Equity Fund seeks to achieve long-term growth without
undue risk to principal by investing primarily in international securities
that provide the potential for capital appreciation and income. Global Bond
Fund seeks to achieve current income consistent with the preservation of
principal by investing primarily in global fixed-income securities that may
also provide the potential for capital appreciation. Global Assets Fund seeks
to achieve long-term total return by investing in global securities which will
provide higher current income than a portfolio comprised exclusively of equity
securities, along with the potential for capital growth. Emerging Markets Fund
seeks long-term capital appreciation by investing primarily in equity
securities of issuers located or operating in emerging countries.
Enterprise Fund seeks to provide maximum appreciation of capital by
investing in medium-sized companies which have a dominant position within
their industry, are undervalued, or have potential for growth in earnings.
U.S. Growth Fund seeks to maximize capital appreciation by investing in
companies of all sizes which have low dividend yields, strong balance sheets
and high expected earnings growth rates relative to their industry. World
Growth Fund seeks to maximize total return (capital appreciation and income),
principally through investments in an internationally diversified portfolio of
equity securities. New Pacific Fund seeks long-term capital appreciation by
investing primarily in companies which are domiciled in or have their
principal business activities in the Pacific Basin. Federal Bond Fund seeks to
maximize current income consistent with preservation of capital. The fund
attempts to achieve this objective by investing primarily in securities issued
by the U.S. government, its agencies and instrumentalities. Corporate Income
Fund seeks to provide high current income consistent with preservation of
capital. The fund attempts to achieve this objective primarily by investing in
a diversified portfolio of investment grade fixed-income securities issued by
U.S. corporations.
Delaware Group Premium Fund, Inc. offers 15 funds available
exclusively as funding vehicles for certain insurance company separate
accounts. Decatur Total Return Series seeks the highest possible total rate of
return by selecting issues that exhibit the potential for capital appreciation
while providing higher than average dividend income. Delchester Series seeks
as high a current income as possible by investing in rated and unrated
corporate bonds, U.S. government securities and commercial paper.
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<PAGE>
Capital Reserves Series seeks a high stable level of current income while
minimizing fluctuations in principal by investing in a diversified portfolio
of short- and intermediate-term securities. Cash Reserve Series seeks the
highest level of income consistent with preservation of capital and liquidity
through investments in short-term money market instruments. DelCap Series
seeks long-term capital appreciation by investing its assets in a diversified
portfolio of securities exhibiting the potential for significant growth.
Delaware Series seeks a balance of capital appreciation, income and
preservation of capital. It uses a dividend-oriented valuation strategy to
select securities issued by established companies that are believed to
demonstrate potential for income and capital growth. International Equity
Series seeks long-term growth without undue risk to principal by investing
primarily in equity securities of foreign issuers that provide the potential
for capital appreciation and income. Value Series seeks capital appreciation
by investing in small- to mid-cap common stocks whose market values appear low
relative to their underlying value or future earnings and growth potential.
Emphasis will also be placed on securities of companies that may be
temporarily out of favor or whose value is not yet recognized by the market.
Trend Series seeks long-term capital appreciation by investing primarily in
small-cap common stocks and convertible securities of emerging and other
growth-oriented companies. These securities will have been judged to be
responsive to changes in the market place and to have fundamental
characteristics to support growth. Income is not an objective. Global Bond
Series seeks to achieve current income consistent with the preservation of
principal by investing primarily in global fixed-income securities that may
also provide the potential for capital appreciation. Strategic Income Series
seeks high current income and total return by using a multi-sector investment
approach, investing primarily in three sectors of the fixed-income securities
markets: high-yield, higher risk securities; investment grade fixed-income
securities; and foreign government and other foreign fixed-income securities.
Devon Series seeks current income and capital appreciation by investing
primarily in income-producing common stocks, with a focus on common stocks
that the investment manager believes have the potential for above-average
dividend increases over time. Emerging Markets Series seeks to achieve
long-term capital appreciation by investing primarily in equity securities of
issuers located or operating in emerging countries. Convertible Securities
Series seeks a high level of total return on its assets through a combination
of capital appreciation and current income by investing primarily in
convertible securities. Quantum Series seeks to achieve long-term capital
appreciation by investing primarily in equity securities of medium to
large-sized companies expected to grow over time that meet the Series' "Social
Criteria" strategy.
Delaware-Voyageur US Government Securities Fund seeks to provide a
high level of current income consistent with the prudent investment risk by
investing in U.S. Treasury bills, notes, bonds, and other obligations issued
or unconditionally guaranteed by the full faith and credit of the U.S.
Treasury, and repurchase agreements fully secured by such obligations.
Delaware-Voyageur Tax-Free Arizona Insured Fund seeks to provide a
high level of current income exempt from federal income tax and the Arizona
personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Minnesota Insured Fund seeks to provide a high level of
current income exempt from federal income tax and the Minnesota personal
income tax, consistent with
the preservation of capital.
Delaware-Voyageur Tax-Free Minnesota Intermediate Fund seeks to
provide a high level of current income exempt from federal income tax and the
Minnesota personal income tax, consistent with preservation of capital. The
Fund seeks to reduce market risk by maintaining an average weighted
maturity from five to ten years.
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<PAGE>
Delaware-Voyageur Tax-Free California Insured Fund seeks to provide a
high level of current income exempt from federal income tax and the California
personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Florida Insured Fund seeks to provide a high level
of current income exempt from federal income tax, consistent with the
preservation of capital. The Fund will seek to select investments that will
enable its shares to be exempt from the Florida intangible personal property
tax. Delaware-Voyageur Tax-Free Florida Fund seeks to provide a high level of
current income exempt from federal income tax, consistent with the
preservation of capital. The Fund will seek to select investments that will
enable its shares to be exempt from the Florida intangible personal property
tax. Delaware-Voyageur Tax-Free Kansas Fund seeks to provide a high level of
current income exempt from federal income tax, the Kansas personal income tax
and the Kansas Intangible personal property tax, consistent with the
preservation of capital. Delaware-Voyageur Tax-Free Missouri Insured Fund
seeks to provide a high level of current income exempt from federal income tax
and the Missouri personal income tax, consistent with the preservation of
capital. Delaware-Voyageur Tax-Free New Mexico Fund seeks to provide a high
level of current income exempt from federal income tax and the New Mexico
personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Oregon Insured Fund seeks to provide a high level
of current income exempt from federal income tax and the Oregon personal
income tax, consistent with the preservation of capital. Delaware-Voyageur
Tax-Free Utah Fund seeks to provide a high level of current income exempt from
federal income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Washington Insured Fund seeks to provide a high
level of current income exempt from federal income tax, consistent with the
preservation of capital.
Delaware-Voyageur Tax-Free Florida Intermediate Fund seeks to provide
a high level of current income exempt from federal income tax, consistent with
the preservation of capital. The Fund will seek to select investments that
will enable its shares to be exempt from the Florida intangible personal
property tax. The Fund seeks to reduce market risk by maintaining an average
weighted maturity from five to ten years.
Delaware-Voyageur Tax-Free Arizona Fund seeks to provide a high level
of current income exempt from federal income tax and the Arizona personal
income tax, consistent with the preservation of capital. Delaware-Voyageur
Tax-Free California Fund seeks to provide a high level of current income
exempt from federal income tax and the California personal income tax,
consistent with the preservation of capital. Delaware-Voyageur Tax-Free Iowa
Fund seeks to provide a high level of current income exempt from federal
income tax and the Iowa personal income tax, consistent with the preservation
of capital. Delaware-Voyageur Tax-Free Idaho Fund seeks to provide a high
level of current income exempt from federal income tax and the Idaho personal
income tax, consistent with the preservation of capital. Delaware-Voyageur
Minnesota High Yield Municipal Bond Fund seeks to provide a high level of
current income exempt from federal income tax and the Minnesota personal
income tax primarily through investment in medium and lower grade municipal
obligations. National High Yield Municipal Fund seeks to provide a high level
of income exempt from federal income tax, primarily through investment in
medium and lower grade municipal obligations. Delaware-Voyageur Tax-Free New
York Fund seeks to provide a high level of current income exempt from federal
income tax and the personal income tax of the state of New York and the city
of New York, consistent with the preservation of capital. Delaware-Voyageur
Tax-Free Wisconsin Fund seeks to provide a high level of current income exempt
from federal income tax and the Wisconsin personal income tax, consistent with
the preservation of capital.
Delaware-Voyageur Tax-Free Colorado Fund seeks to provide a high
level of current income
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<PAGE>
exempt from federal income tax and the Colorado personal income tax,
consistent with the preservation of capital.
Aggressive Growth Fund seeks long-term capital appreciation, which
the Fund attempts to achieve by investing primarily in equity securities
believed to have the potential for high earnings growth. Although the Fund, in
seeking its objective, may receive current income from dividends and interest,
income is only an incidental consideration in the selection of the Fund's
investments. Growth Stock Fund has an objective of long-term capital
appreciation. The Fund seeks to achieve its objective from equity securities
diversified among individual companies and industries. Tax-Efficient Equity
Fund seeks to obtain for taxable investors a high total return on an after-tax
basis. The Fund will attempt to achieve this objective by seeking to provide a
high long-term after-tax total return through managing its portfolio in a
manner that will defer the realization of accrued capital gains and minimize
dividend income.
Delaware-Voyageur Tax-Free Minnesota Fund seeks to provide a high
level of current income exempt from federal income tax and the Minnesota
personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free North Dakota Fund seeks to provide a high level of
current income exempt from federal income tax and the North Dakota personal
income tax, consistent with the preservation of capital.
For more complete information about any of the Delaware Group funds,
including charges and expenses, you can obtain a prospectus from the
Distributor. Read it carefully before you invest or forward funds.
Each of the summaries above is qualified in its entirety by the
information contained in each fund's prospectus(es).
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<PAGE>
GENERAL INFORMATION
Delaware Investment Advisers, a division of Delaware, 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 Real Estate Investment Trust and The High-Yield Bond
Portfolios. Delaware International furnishes similar services to The
International Equity, The Labor Select International Equity, The Global Fixed
Income, The International Fixed Income, The Emerging Markets and The Global
Equity Portfolios. Delaware and Delaware International also provide investment
management services to certain of the other funds in the Delaware Group.
Delaware Investment Advisers also manages private investment accounts. While
investment decisions of the Portfolios are made independently from those of
the other funds and accounts, investment decisions for such other funds and
accounts may be made at the same time as investment decisions for the
Portfolios.
Delaware or Delaware International also manages the investment
options for Delaware Medallion (sm) III Variable Annuity. Medallion is issued
by Allmerica Financial Life Insurance and Annuity Company (First Allmerica
Financial Life Insurance Company in New York and Hawaii). Delaware Medallion
offers 15 different investment series ranging from domestic equity funds,
international equity and bond funds and domestic fixed income funds. Each
investment series available through Medallion utilizes an investment strategy
and discipline the same as or similar to one of the Delaware Group mutual
funds available outside the annuity. See Delaware Group Premium Fund, Inc.,
above.
Access persons and advisory persons of the Delaware Group of funds,
as those terms are defined in SEC Rule 17j-1 under the 1940 Act, who provide
services to Delaware, Delaware Investment Advisers, Delaware International or
their affiliates, are permitted to engage in personal securities transactions
subject to the exceptions set forth in Rule 17j-1 and the following general
restrictions and procedures: (1) certain blackout periods apply to personal
securities transactions of those persons; (2) transactions must receive
advance clearance and must be completed on the same day as the clearance is
received; (3) certain persons are prohibited from investing in initial public
offerings of securities and other restrictions apply to investments in private
placements of securities; (4) opening positions may only be closed-out at a
profit after a 60-day holding period has elapsed; and (5) the Compliance
Officer must be informed periodically of all securities transactions and
duplicate copies of brokerage confirmations and account statements must be
supplied to the Compliance Officer.
The Distributor acts as national distributor for each Portfolio and
for the other mutual funds in the Delaware Group. As previously described,
prior to January 3, 1995, DDI served as the national distributor for Portfolio
shares.
The Transfer Agent, an affiliate of Delaware and Delaware
International, acts as shareholder servicing, dividend disbursing and transfer
agent for the Portfolios and for the other mutual funds in the Delaware Group.
The Transfer Agent is paid a fee by the Portfolios for providing these
services consisting of an annual per account charge, in each case, of $______
plus, in each case, transaction charges for particular services according to a
schedule. Compensation is fixed each year and approved by the Board of
Directors, including a majority of the disinterested directors. The Transfer
Agent also provides accounting services to the Portfolios. Those services
include performing all functions related to calculating each Portfolio's net
asset value and providing all financial reporting services, regulatory
compliance testing and other related accounting services. For its services,
the Transfer Agent is paid a fee based on total assets of all funds in the
Delaware Group for which it provides such accounting
-97-
<PAGE>
services. Such fee is equal to 0.25% multiplied by the total amount of assets
in the complex for which the Transfer Agent furnishes accounting services,
where such aggregate complex assets are $10 billion or less, and 0.20% of
assets if such aggregate complex assets exceed $10 billion. The fees are
charged to each fund, including the Portfolios, on an aggregate pro-rata
basis. The asset-based fee payable to the Transfer Agent is subject to a
minimum fee calculated by determining the total number of investment
portfolios and associated classes.
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 Emerging Markets, The International Fixed
Income and The Global Equity 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 ^ Pooled
Trust, Inc. 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 ^ Portfolios, and the reputation of the
institutions in the particular country or region.
Capitalization
^ Pooled Trust, Inc. 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 ^
Pooled Trust, Inc. by 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 ^ Pooled Trust, Inc. 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.
-98-
<PAGE>
APPENDIX A--IRA INFORMATION
The Real Estate Investment Trust Portfolio
(Class A Shares, Class B Shares, Class C Shares)
An individual can contribute up to $2,000 to his or her IRA each
year. Contributions may or may not be deductible depending upon the taxpayers
adjusted gross income and whether the taxpayer or his or her spouse is an
active participant in an employer-sponsored retirement plan. Even if a
taxpayer (or his or her spouse) is an active participant in an
employer-sponsored retirement plan, the full $2,000 deduction is still
available if the taxpayer's adjusted gross income is below $25,000 ($40,000
for taxpayers filing joint returns). A partial deduction is allowed for
married couples with incomes between $40,000 and $50,000, and for single
individuals with incomes between $25,000 and $35,000. No deductions are
available for contributions to IRAs by taxpayers whose adjusted gross income
before IRA deductions exceeds $50,000 ($35,000 for singles) and who are active
participants in an employer-sponsored retirement plan. Taxpayers who were not
allowed deductions on IRA contributions still can make nondeductible IRA
contributions of as much as $2,000 for each working spouse ($2,250 for
one-income couples for years prior to 1997), and defer taxes on interest or
other earnings from the IRAs. Special rules apply for determining the
deductibility of contributions made by married individuals filing separate
returns.
Effective for tax years beginning after 1996, one-income couples can
contribute up to $2,000 to each spouse's IRA provided the combined
compensation of both spouses is at least equal to the total contributions for
both spouses. If the working spouse is an active participant in an
employer-sponsored retirement plan and earns over $40,000, the maximum
deduction limit is reduced in the same way that the limit is reduced for
contributions to a non-spousal IRA.
As illustrated in the following tables, maintaining an IRA remains a
valuable opportunity.
For many, an IRA will continue to offer both an up-front tax break
with its tax deduction each year and the real benefit that comes with
tax-deferred compounding. For others, losing the tax deduction will impact
their taxable income status each year. Over the long term, however, being able
to defer taxes on earnings still provides an impressive investment
opportunity--a way to have money grow faster due to tax-deferred compounding.
-99-
<PAGE>
Even if your IRA contribution is no longer deductible, the benefits
of saving on a tax-deferred basis can be substantial. The following tables
illustrate the benefits of tax-deferred versus taxable compounding. Each
reflects a constant 10% rate of return, compounded annually, with the
reinvestment of all proceeds. The tables do not take into account any sales
charges or fees. Of course, earnings accumulated in your IRA will be subject
to tax upon withdrawal. If you choose a mutual fund with a fluctuating net
asset value, like either Fund, your bottom line at retirement could be
lower--it could also be much higher.
$2,000 Invested Annually Assuming a 10% Annualized Return
15% Tax Bracket Single - $0 - $24,650
Joint - $0 - $41,200
<TABLE>
<CAPTION>
How Much You
End of Cumulative How Much You Have With Full
Year Investment Amount Have Without IRA IRA Deduction
---- ----------------- ---------------- -------------
<S> <C> <C> <C>
1 $ 2,000 $ 1,844 $ 2,200
5 10,000 10,929 13,431
10 20,000 27,363 35,062
15 30,000 52,074 69,899
20 40,000 89,231 126,005
25 50,000 145,103 216,364
30 60,000 229,114 361,887
35 70,000 355,438 596,254
40 80,000 545,386 973,704
</TABLE>
[Without IRA--investment of $1,700 ($2,000 less 15%) earning 8.5% (10%
less 15%)]
28% Tax Bracket Single - $24,651 - $59,750
Joint - $41,201 - $99,600
<TABLE>
<CAPTION>
End of Cumulative How Much You How Much You Have with Full IRA
Year Investment Amount Have Without IRA No Deduction Deduction
---- ----------------- ---------------- ------------ ---------
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,544 $ 1,584 $ 2,200
5 10,000 8,913 9,670 13,431
10 20,000 21,531 25,245 35,062
15 30,000 39,394 50,328 69,899
20 40,000 64,683 90,724 126,005
25 50,000 100,485 155,782 216,364
30 60,000 151,171 260,559 361,887
35 70,000 222,927 429,303 596,254
40 80,000 324,512 701,067 973,704
</TABLE>
[Without IRA--investment of $1,440 ($2,000 less 28%) earning 7.2% (10% less
28%)]
[With IRA--No Deduction--investment of $1,440 ($2,000 less 28%) earning 10%]
-100-
<PAGE>
31% Tax Bracket Single - $59,751 - $124,650
Joint - $99,601 - $151,750
<TABLE>
<CAPTION>
End of Cumulative How Much You How Much You Have with Full IRA
Year Investment Amount Have Without IRA No Deduction Deduction
---- ----------------- ---------------- ------------ ---------
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,475 $ 1,518 $ 2,200
5 10,000 8,467 9,268 13,431
10 20,000 20,286 24,193 35,062
15 30,000 36,787 48,231 69,899
20 40,000 59,821 86,943 126,005
25 50,000 91,978 149,291 216,364
30 60,000 136,868 249,702 361,887
35 70,000 199,536 411,415 596,254
40 80,000 287,021 671,855 973,704
</TABLE>
[Without IRA--investment of $1,380 ($2,000 less 31%) earning 6.9% (10% less
31%)]
[With IRA--No Deduction--investment of $1,380 ($2,000 less 31%) earning 10%]
36% Tax Bracket* Single - $124,651 - $271,050
Joint - $151,751 - $271,050
<TABLE>
<CAPTION>
End of Cumulative How Much You How Much You Have with Full IRA
Year Investment Amount Have Without IRA No Deduction Deduction
---- ----------------- ---------------- ------------ ---------
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,362 $ 1,408 $ 2,200
5 10,000 7,739 8,596 13,431
10 20,000 18,292 22,440 35,062
15 30,000 32,683 44,736 69,899
20 40,000 52,308 80,643 126,005
25 50,000 79,069 138,473 216,364
30 60,000 115,562 231,608 361,887
35 70,000 165,327 381,602 596,254
40 80,000 233,190 623,170 973,704
</TABLE>
[Without IRA--investment of $1,280 ($2,000 less 36%) earning 6.4% (10% less
36%)]
[With IRA--No Deduction--investment of $1,280 ($2,000 less 36%) earning 10%]
-101-
<PAGE>
39.6% Tax Bracket* Single - over $271,050
Joint - over $271,050
<TABLE>
<CAPTION>
End of Cumulative How Much You How Much You Have with Full IRA
Year Investment Amount Have Without IRA No Deduction Deduction
---- ----------------- ---------------- ------------ ---------
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,281 $ 1,329 $ 2,200
5 10,000 7,227 8,112 13,431
10 20,000 16,916 21,178 35,062
15 30,000 29,907 42,219 69,899
20 40,000 47,324 76,107 126,005
25 50,000 70,677 130,684 216,364
30 60,000 101,986 218,580 361,887
35 70,000 143,965 360,137 596,254
40 80,000 200,249 588,117 973,704
</TABLE>
[Without IRA--investment of $1,208 ($2,000 less 39.6%) earning 6.04% (10% less
39.6%)]
[With IRA--No Deduction--investment of $1,208 ($2,000 less 39.6%) earning 10%]
* For tax years beginning after 1992, a 36% tax rate applies to all
taxable income in excess of the maximum dollar amounts subject to the
31% tax rate. In addition, a 10% surtax (not applicable to capital
gains) applies to certain high-income taxpayers. It is computed by
applying a 39.6% rate to taxable income in excess of $271,050. The
above tables do not reflect the personal exemption phaseout nor the
limitations of itemized deductions that may apply.
-102-
<PAGE>
$2,000 SINGLE INVESTMENT AT A RETURN OF 10% COMPOUNDED ANNUALLY
<TABLE>
<CAPTION>
TAXABLE - TAXABLE - TAXABLE - TAXABLE - TAXABLE - TAX
YEARS 39.6%* 36%* 31% 28% 15% DEFERRED
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10 $ 3,595 $ 3,719 $ 3,898 $ 4,008 $ 4,522 $ 5,187
15 4,820 5,072 5,441 5,675 6,799 8,354
20 6,463 6,916 7,596 8,034 10,224 13,455
30 11,618 12,861 14,803 16,102 23,117 34,899
40 20,884 23,916 28,849 32,272 52,266 90,519
</TABLE>
$2,000 INVESTED ANNUALLY AT A RETURN OF 10% COMPOUNDED ANNUALLY
<TABLE>
<CAPTION>
TAXABLE - TAXABLE - TAXABLE - TAXABLE - TAXABLE - TAX
YEARS 39.6%* 36%* 31% 28% 15% DEFERRED
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10 $ 28,006 $ 28,581 $ 29,400 $ 29,904 $ 32,192 $ 35,062
15 49,514 51,067 53,314 54,714 61,264 69,899
20 78,351 81,731 86,697 89,838 104,978 126,005
30 168,852 180,566 198,360 209,960 269,546 361,887
40 331,537 364,360 415,973 450,711 641,631 973,704
</TABLE>
* For tax years beginning after 1992, a 36% tax rate applies to all taxable
income in excess of the maximum dollar amounts subject to the 31% tax
rate. In addition, a 10% surtax (not applicable to capital gains) applies
to certain high-income taxpayers. It is computed by applying a 39.6% rate
to taxable income in excess of $271,050. The above tables do not reflect
the personal exemption phaseout nor the limitations of itemized
deductions that may apply.
-103-
<PAGE>
THE VALUE OF STARTING YOUR IRA EARLY
The following illustrates how much more you would have contributing
$2,000 each January--the earliest opportunity--compared to contributing on
April 15th of the following year--the latest, for each tax year.
After 5 years $3,528 more
10 years $6,113
20 years $17,228
30 years $47,295
Compounded returns for the longest period of time is the key. The
above illustration assumes a 10% rate of return and the reinvestment of all
proceeds.
And it pays to shop around. If you get just 2% more per year, it can
make a big difference when you retire. A constant 8% versus 10% return, both
compounded annually, illustrates the point. This chart is based on a yearly
investment of $2,000 on January 1. After 30 years the difference can mean as
much as 50% more!
8% Return 10% Return
--------- ----------
10 years $31,291 $35,062
20 years $98,846 $126,005
30 years $244,692 $361,887
The statistical exhibits above are for illustration purposes only and
do not reflect the actual Fund performance either in the past or in the
future.
-105-
<PAGE>
FINANCIAL STATEMENTS
Ernst & Young LLP serves as independent auditors for Delaware Pooled
Trust, Inc. ^("Pooled Trust, Inc.") and, in its capacity as such, audits the
financial statements contained in ^ Pooled Trust, Inc.'s Annual Reports. The
Real Estate Investment Trust Portfolio's and The Defensive Equity, The
Aggressive Growth, The International Equity, The Global Fixed Income, The
Labor Select International Equity and The Fixed Income Portfolios' Statements
of Net Assets, Statements of Operations, Statements of Changes in Net Assets
and Notes to Financial Statements, and The Limited-Term Maturity Portfolio's
and The International Fixed Income Portfolio's Statements of Assets and
Liabilities and Notes to Financial Statements as well as the reports of Ernst
& Young LLP for the fiscal year ended October 31, 1996 are included in ^
Pooled Trust, Inc.'s Annual Reports to shareholders. The financial statements,
the notes relating thereto and the reports of Ernst & Young LLP, listed above
are incorporated by reference from the Annual Reports into this Statement of
Additional Information. Unaudited financial information for each of the
Portfolios listed above and The High-Yield Bond and The Emerging Markets
Portfolios for the period ended April 30, 1997 is incorporated by reference
from the Semi-Annual Reports into this Statement of Additional Information.
Unaudited financial information for the period ended ^ August 31, 1997 for The
International Fixed Income Portfolio and The Emerging Markets Portfolio
follows.
-106-
<PAGE>
Delaware Pooled Trust, Inc. - Emerging Markets Portfolio
Statement of Net Assets
August 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Market
Number Value
of Shares (U.S. $)
------------------ -------------------
<S> <C> <C>
COMMON STOCK - 94.62%
Argentina - 3.83%
Central Puerto S.A.-Class B . . . . . . . . . 72,900 $ 215,225
Transportadora de Gas del sur,S.A.-Class B . . . . . . . . . 63,400 151,011
YPF Sociedad Anonima . . . . . . . . . 2,800 91,352
YPF Sociedad Anonima - ADR . . . . . . . . . 10,000 325,625
-------------------
783,213
-------------------
Brazil - 12.14%
Aracruz Celulose SA -ADR . . . . . . . . . 20,400 415,650
Centrais Electricas de Santa Catarina SA - GDR . . . . . . . . . 620 83,080
* Centrais Electricas de Santa Catarina SA - GDR 144A . . . . . . . . . 250 31,594
Companhia Energetica de Minas Gerais SA - GDR 4,800 233,136
Companhia Paranaense de Energia-Copel SP - ADR . . . . . . . . . 20,000 310,000
Gerdau Metalurgica S/A . . . . . . . . . 8,600,000 366,226
* Rossi Residencial S.A. - GDR . . . . . . . . . 22,000 278,850
* Telecommunicacoes Brasileiras SA - ADR . . . . . . . . . 3,800 448,400
Usinas Siderurgicas de Minas Gerais SA - ADR . . . . . . . . . 29,000 316,970
-------------------
2,483,906
-------------------
Chile - 4.98%
Administradora de Fondos de Pensiones Provida S.A. - ADR . . . . . . . . . 14,560 270,270
Banco BHIF-ADR . . . . . . . . . 9,410 204,668
Cia de Telecomunicaciones de Chile S.A. - ADR . . . . . . . . . 8,300 249,519
Empresa Nacional Electricidade S.A. - ADR . . . . . . . . . 13,200 293,700
-------------------
1,018,157
-------------------
Czech Republic - 0.81%
* SPT Telecom . . . . . . . . . 1,080 135,317
Telekomunikacni Montaze Praha . . . . . . . . . 440 30,864
-------------------
166,181
-------------------
Egypt - 2.71%
Commercial International Bank - GDR . . . . . . . . . 11,400 285,000
* Suez Cement - GDR . . . . . . . . . 5,500 111,513
* Suez Cement - GDR 144A . . . . . . . . . 7,800 158,145
-------------------
554,658
-------------------
Greece - 3.25%
Attica Enterprises S.A. . . . . . . . . . 23,000 243,271
Ergo Bank S.A. . . . . . . . . . 2,620 152,368
Helenic Bottling Company S.A. . . . . . . . . . 7,450 268,465
-------------------
664,104
-------------------
Hong Kong - 6.84%
* First Tractor . . . . . . . . . 450,000 342,603
Guangdong Kelon Electric Holding . . . . . . . . . 282,000 351,158
Guangshen Railway . . . . . . . . . 766,000 318,775
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Market
Number Value
of Shares (U.S. $)
------------------ -------------------
<S> <C> <C>
Shenzhen Expressway - H . . . . . . . . . 1,286,000 385,825
-------------------
1,398,361
-------------------
Hungary - 1.98%
MOL Magyar Olaj-es Gazipari Rt - GDR . . . . . . . . . 4,250 84,894
MOL Magyar Olaj-es Gazipari Rt - GDR 144A . . . . . . . . . 4,200 86,371
Richter Gedeon Rt - GDR . . . . . . . . . 2,450 233,730
-------------------
404,995
-------------------
India - 3.56%
* BSES Ltd - GDR . . . . . . . . . 6,900 119,025
Gujarat Ambuja Cement - GDR . . . . . . . . . 13,100 108,403
India Fund, (The) . . . . . . . . . 19,900 165,419
Larsen & Toubro - GDR . . . . . . . . . 14,600 180,675
Tata Engineering & Locomotive Ltd. - GDR . . . . . . . . . 16,600 154,380
-------------------
727,902
-------------------
Indonesia - 1.78%
PT Bank Dagang Nasional . . . . . . . . . 570,000 121,382
PT Semen Gresik . . . . . . . . . 122,000 124,704
PT United Tractors . . . . . . . . . 69,000 117,548
-------------------
363,634
-------------------
Israel - 2.82%
Bank Hapoalim . . . . . . . . . 109,600 237,040
Israel Chemicals Ltd. . . . . . . . . . 274,400 338,789
-------------------
575,829
-------------------
Luxemburg - 2.95%
* Banque Libanaise - GDR . . . . . . . . . 10,860 256,296
* Banque Libanaise - GDR 144A . . . . . . . . . 4,640 109,504
Quilmes Industrial SA-ADR . . . . . . . . . 17,700 236,738
-------------------
602,538
-------------------
Malaysia - 3.58%
Leader Universal Holdings . . . . . . . . . 154,000 147,756
Nestle Berhad . . . . . . . . . 21,000 132,650
Petronas Dagangan Berhad . . . . . . . . . 103,000 144,191
Public Finance Berhad . . . . . . . . . 95,000 64,874
Resorts World Berhad . . . . . . . . . 82,000 156,790
Sime Darby Berhad . . . . . . . . . 36,000 84,814
-------------------
731,075
-------------------
Mexico - 9.54%
ALFA, S.A. de C.V. - Class A . . . . . . . . . 50,300 386,279
Cemex S.A. de C.V. - Class B . . . . . . . . . 74,400 407,567
Grupo Minsa S.A.-Class C . . . . . . . . . 163,750 220,066
Grupo Minsa - ADR . . . . . . . . . 5,900 74,104
Telefonos De Mexico SA . . . . . . . . . 8,800 403,700
Vitro SA - ADR . . . . . . . . . 35,700 459,638
-------------------
1,951,354
-------------------
Peru - 4.17%
Banco de Credito del Peru . . . . . . . . . 103,798 134,563
Cementos Lima S.A. . . . . . . . . . 8,000 162,804
Credicorp Limited . . . . . . . . . 10,600 223,263
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Market
Number Value
of Shares (U.S. $)
------------------ -------------------
<S> <C> <C>
Telefonica del Peru, S.A. - ADR . . . . . . . . . 14,170 331,224
-------------------
851,854
-------------------
Philippines - 1.65%
Philippine Long Distance Telephone Company ADR . . . . . . . . . 13,600 338,300
-------------------
338,300
-------------------
Portugal - 3.08%
Electricidade De Portugual S.A. . . . . . . . . . 18,300 284,720
Portugal Telecom SA . . . . . . . . . 9,300 344,388
-------------------
629,108
-------------------
Poland - 1.80%
Elektrim Spolka Akcyjna S.A. . . . . . . . . . 39,960 368,003
-------------------
368,003
-------------------
Russia - 3.14%
* Gazprom - ADR Reg. S . . . . . . . . . 8,200 155,144
* Gazprom - ADR 144A . . . . . . . . . 5,300 103,019
Lukoil Holding-ADR . . . . . . . . . 1,820 164,837
Mosenergo - ADR Reg. S . . . . . . . . . 3,400 156,183
Mosenergo - ADR 144A . . . . . . . . . 1,350 62,006
-------------------
641,189
-------------------
Slovenia - 0.60%
* Blagovno Trgovinski Cent - -GDR . . . . . . . . . 3,460 33,216
SKB Banka GDR . . . . . . . . . 3,600 88,830
-------------------
122,046
-------------------
South Africa - 5.81%
Amalgamated Banks of South Africa . . . . . . . . . 30,400 197,268
Anglo American Corporation of South Africa Ltd. . . . . . . . . . 4,750 243,700
Sappi Ltd. . . . . . . . . . 37,600 347,755
Sasol Ltd. . . . . . . . . . 30,000 399,574
-------------------
1,188,297
-------------------
South Korea - 2.57%
Cho Hung Bank - GDR . . . . . . . . . 18,700 79,008
Korea Electric Power - ADR . . . . . . . . . 11,600 187,572
Pohang Iron & Steel - ADR . . . . . . . . . 10,000 258,750
-------------------
525,330
-------------------
Taiwan - 3.42%
* Asia Cement - Sponsored GDR 144A . . . . . . . . . 20,000 262,500
* Yageo - GDR . . . . . . . . . 18,900 437,063
-------------------
699,563
-------------------
Turkey - 1.41%
* Haci Omer Sabanci Holding AS - ADR . . . . . . . . . 35,120 287,633
-------------------
287,633
-------------------
Thailand - 2.88%
Ayudhya Jardine CMG Life Assurance . . . . . . . . . 30,000 12,263
Hana MicroElectronics Public Co Ltd. . . . . . . . . . 41,800 205,034
K. R. Precision Public Ltd. . . . . . . . . . 16,700 120,923
Ruang Khao 2 Fund . . . . . . . . . 715,600 125,361
Thai Reinsurance Public Co. Ltd. . . . . . . . . . 49,500 124,292
-------------------
587,873
-------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Market
Number Value
of Shares (U.S. $)
------------------ -------------------
<S> <C> <C>
Turkey - 1.52%
Anadolu Isuzu Otomotiv Sanayi Ve Ticaret A.S. . . . . . . . . . 75,000 59,327
Netas-Northern Eleckrik Telekomunikayson A.S. . . . . . . . . . 950,000 252,382
-------------------
311,709
-------------------
Venezuela - 1.80%
Compania Anonima Nacional Telefonos de Venezuela ADR . . . . . . . . . 8,900 367,125
-------------------
367,125
-------------------
Total Common Stock (cost $20,621,625) 19,343,937
-------------------
RIGHTS - 0.00%
* Ayudhya Jardine CMG Life Assurance Rights . . . . . . . . . 75,000 0
-------------------
Total Rights (cost $0) 0
-------------------
WARRANTS - 0.03%
* Guangdong Investments Warrants . . . . . . . . . 9,200 5,342
-------------------
Total Warrants (cost $0) 5,342
-------------------
REPURCHASE AGREEMENT - 12.30%
With Chase Manhattan Bank 5.54% 9/2/97 (dated 8/29/97,
collateralized by $749,000 U.S. Treasury Notes
5.625% due 10/31/97 market value $763,351) . . . . . . . . . 748,000 748,000
With JP Morgan Securities 5.54% 9/2/97 (dated 8/29/97,
collateralized by $473,000 U.S. Treasury Notes
6.875% due 7/31/99 market value $483,497 and
$408,000 U.S. Treasury Notes 6.75% due
4/30/00 market value $898,116) . . . . . . . . . 889,000 889,000
With PaineWebber 5.54% 9/2/97 (dated 8/29/97,
collateralized by $889,000 U.S. Treasury Notes
7.25% due 2/15/98 market value $898,116) . . . . . . . . . 880,000 880,000
-------------------
Total Repurchase Agreement (cost $2,517,000) . . . . . . . . . 2,517,000
-------------------
TOTAL MARKET VALUE OF SECURITIES - 106.95%
(cost $23,138,625) . . . . . . . . 21,866,279
LIABILITIES NET OF RECEIVABLES AND OTHER ASSETS - (6.95%) . . . . . . . . (1,421,505)
-------------------
NET ASSETS APPLICABLE TO 1,988,366 SHARES ($.01 PAR VALUE)
OUTSTANDING; EQUIVALENT TO $10.28 PER SHARE - 100.00% . . . . . . . . $ 20,444,774
===================
COMPONENTS OF NET ASSETS AT AUGUST 31, 1997:
Common stock, $.01 par value, 500,000,000 shares
authorized to the Fund with 50,000,000 shares
allocated to this Portfolio . . . . . . . . . $ 21,581,197
Accumulated undistributed income:
Net investment income . . . . . . . . . 42,430
Net realized gain on investments . . . . . . . . . 102,857
Net unrealized depreciation on investments and foreign currencies . . . (1,281,710)
-------------------
Total net assets . . . . . . . . . $ 20,444,774
===================
</TABLE>
--------------------------------------------------------------
* Non-income producing security for the period ended August 31, 1997
ADR = American Depository Receipt
GDR = Global Depository Receipt
See accompanying notes
<PAGE>
Delaware Pooled Trust, Inc. - Emerging Markets Portfolio
Statement of Assets & Liabilities
August 31, 1997
(Unaudited)
ASSETS:
Investments at market (cost $23,138,625) ................... $ 21,866,279
Receivable for securities sold ............................. -
Interest receivable ........................................ 13,088
Cash and foreign currencies ................................ 308,251
------------
Total assets ............................................ 22,187,618
------------
LIABILITIES:
Payable for securities purchased ........................... 1,274,397
Other accounts payable and accrued expenses ................ 468,447
------------
Total liabilities ....................................... 1,742,844
------------
TOTAL NET ASSETS ........................................... $ 20,444,774
============
See accompanying notes
<PAGE>
Delaware Pooled Trust, Inc. - Emerging Markets Portfolio
Statement of Operations
For the period April 14, 1997* to August 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Dividends ...................................................................... $ 80,433
Interest ....................................................................... 34,706
Foreign tax withheld ........................................................... (5,924) $ 109,215
-------- ----------
EXPENSES:
Management fees ................................................................ 43,364
Registration fees .............................................................. 15,041
Custodian fees ................................................................. 13,450
Professional fees .............................................................. 4,842
Accounting fees and salaries ................................................... 2,111
Dividend disbursing and transfer agent fees and expenses ....................... 1,280
Taxes (other than taxes on income) ............................................. 542
Reports and statements to shareholders ......................................... 435
Directors' fees ................................................................ 206
Other .......................................................................... 1,161
--------
82,432
Less expenses absorbed by Delaware International
Advisers Ltd. ................................................................. (23,144) 59,288
-------- ----------
NET INVESTMENT INCOME .......................................................... 49,927
----------
NET REALIZED AND UNREALIZED GAIN(LOSS)
ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on:
Investment transactions .................................................... 102,857
Foreign currencies .......................................................... (7,496)
----------
Net realized gain ......................................................... 95,361
Net unrealized depreciation during the period
on investments and foreign currencies ......................................... (1,281,711)
----------
NET REALIZED AND UNREALIZED LOSS
ON INVESTMENTS AND FOREIGN CURRENCIES ....................................... (1,186,350)
----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ............................................................. $(1,136,423)
==========
</TABLE>
- -----------------------------
Date of commencement of operations.
See accompanying notes
<PAGE>
Delaware Pooled Trust, Inc. - Emerging Markets Portfolio
Statement of Changes in Net Assets
For the period April 14, 1997* to August 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
<S> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income .......................................................... $ 49,927
Net realized gain on investments
and foreign currencies ...................................................... 95,361
Net unrealized depreciation during the period
on investments and foreign currencies ........................................ (1,281,711)
-----------
Net decrease in net assets resulting
from operations .............................................................. (1,136,423)
-----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold: ..................................................... 21,581,197
Net asset value of shares issued upon reinvestment
of dividends from net investment income: .................................... -
-----------
21,581,197
Cost of shares repurchased: -
-----------
Increase in net assets derived from capital
share transactions .......................................................... 21,581,197
-----------
NET INCREASE IN NET ASSETS .................................................... 20,444,774
NET ASSETS:
Beginning of period ............................................................ -
-----------
End of period .................................................................. $20,444,774
============
</TABLE>
- --------------------------
Date of commencement of operations.
See accompanying notes
<PAGE>
Financial Highlights
Selected data for each share of the Fund outstanding throughout the period was
as follows:
<TABLE>
<CAPTION>
Emerging
Markets Portfolio
4/14/97 (1)
to
8/31/97
-----------------
<S> <C>
Net asset value, beginning of period ........................................... $ 10.0000
Income from investment operations:
Net investment income ....................................................... 0.0251
Net realized and unrealized gain from investments & foreign currencies ...... 0.2549
-----------
Total from investment operations ............................................ 0.2800
-----------
Net asset value, end of period ................................................. $ 10.2800
===========
Total return ................................................................... 2.90%
Ratios and supplemental data:
Net assets, end of period (000 omitted) .................................... $20,445
Ratio of expenses to average net assets .................................... 1.50%
Ratio of expenses to average net assets prior to expense
limitation ................................................................ 2.08%
Ratio of net investment income to average net assets ....................... 1.23%
Ratio of net investment income to average net assets prior
to expense limitation ..................................................... 0.65%
Portfolio turnover ......................................................... 14%
</TABLE>
- -------------------------
(1) Date of commencement of trading; ratios and portfolio turnover have been
annualized and total return has not been annualized.
<PAGE>
DELAWARE GROUP POOLED TRUST FUND, INC. - EMERGING MARKETS PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1997
(UNAUDITED)
Delaware Pooled Trust, Inc. - Emerging Markets Portfolio (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) ,including The
International Fixed Income Portfolio: The Defensive Equity Portfolio, The
Aggressive Growth Portfolio, The Real Estate Investment Trust Portfolio, The
Fixed Income Portfolio, The High-Yield Bond Portfolio, The International
Equity Portfolio, The Labor Select International Equity Portfolio, The
International Fixed Income Portfolio, The Global Fixed Income Portfolio had
commenced operations as of August 31, 1997. The Defensive Equity Small/Mid-Cap
Portfolio and The Limited-term Maturity Portfolio had not commenced operations
as of August 31, 1997.
The objective of the Fund is to achieve long-term capital appreciation by
investing primarily in stocks of issuers located or operating in emerging
countries.
1. Significant Accounting Policies
The following accounting policies are in accordance with generally accepted
accounting principles and are consistently followed by the Fund.
Security Valuation - Securities listed on an exchange are valued at the lasted
quoted sales price as of the close of the NYSE on the valuation date.
Securities not traded or securities not listed on an exchange are valued at
the mean of the last quoted bid and asked prices. Securities listed on a
foreign exchange are valued at the last quoted sales price before the Fund is
valued. 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. Other securities and assets
for which market quotations are not readily available are valued at fair value
as determined in good faith by or under the direction of the Fund's Board of
Directors.
Federal Income Taxes - The Fund intends to qualify as a regulated investment
company and make the requisite distributions to shareholders. Accordingly, no
provision for federal income taxes has been made in the financial statements.
Income and capital gain distributions are determined in accordance with
federal income tax regulations which may differ from generally accepted
accounting principles.
Repurchase Agreements - The Fund may invest in a pooled cash account along with
other members of the Delaware Group of Funds. The aggregate daily balance of the
<PAGE>
pooled cash account is invested in repurchase agreements secured by
obligations of the U.S. Government. The respective collateral is held by the
Fund's custodian bank until the maturity of the respective repurchase
agreements. Each repurchase agreement is at least 100% collateralized.
However, in the event of default or bankruptcy by the counterparty to the
agreement, realization of the collateral may be subject to legal proceedings.
Foreign Currency Transactions - Transactions denominated in foreign currencies
are recorded in the Fund's records at the current prevailing exchange rates.
The value of all assets and liabilities denominated in foreign currencies are
translated into U.S. dollars at the exchange rate of such currencies against
the U.S. dollar as of 3:00 PM EST. Transaction gains or losses resulting from
changes in exchange rates during the reporting period or upon settlement of
the foreign currency transaction are reported in operations for the current
period. It is not practical to isolate that portion of both realized and
unrealized gains and losses on investments in equity securities in the
statement of operations that result from fluctuations in foreign currency
exchange rates. The Fund does isolate that portion of gains and losses on
investments in debt securities which are due to changes in the foreign
exchange rate from that which are due to changes in market prices of debt
securities. The Fund reports certain foreign currency related transactions as
components of realized gains for financial reporting purposes, whereas such
components are treated as ordinary income (loss) for federal income tax
purposes.
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
the accrual basis. Foreign dividends are also recorded on the ex-dividend date
or as soon after the ex-dividend date that the Fund is aware of such
dividends, net of all non-rebatable tax withholdings. Original issue discounts
are accreted to interest income over the lives of the respective securities.
Withholding taxes on foreign dividends have been provided for in accordance
with the Fund's understanding of the applicable country's tax rules and rates.
The Fund declares and pays dividends from net investment income and capital
gains, if any, annually.
Certain Fund expenses are paid through "soft dollar" arrangements with
brokers. The amount of these expenses is less than 0.01% of the Fund's average
daily net assets.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
2. Investment Management and Other Transactions with Affiliates
<PAGE>
In accordance with the terms of the Investment Management Agreement, the Fund
pays Delaware Management Company, Inc. the Investment Manager of the Fund, an
annual fee which is calculated daily at the rate of 1.10% on the average daily
net assets. At August 31, 1997 the Fund had a liability of $22,022 payable to
DIAL for management fees and other expenses.
DMC has elected to waive that portion if any of the management fee and
reimburse the Fund to the extent that annual operating expenses exclusive of
taxes, interest, brokerage commissions and extraordinary expenses, exceed
1.50% of average daily net assets of the Fund through October 31, 1997. Total
expenses absorbed by DMC for the year ended August 31, 1997 were $23,144.
The Fund has engaged Delaware Service Company, Inc. (DSC), an affiliate of
DMC, to serve as dividend disbursing, transfer agent and accounting services
agent for the Fund. For the period ended August 31, 1997, the Fund expensed
$1,280 for dividend disbursing and transfer agent services and $1,570 for
accounting services. At August 31, 1997, the Fund had a liability for such
fees and other expenses payable to DSC for $2,098.
Certain officers of DMC, DSC and DDLP are officers, directors and/or employees
of the Fund. These officers, directors and employees are paid no compensation
by the Fund.
3. Investments
During the period ended August 31, 1997, the Fund made purchases of $21,075,638
and sales of $564,089 of investment securities other than U.S. government
securities and temporary cash investments.
At August 31, 1997, the aggregate cost of securities for federal income tax
purposes was $20,623,537.
At August 31, 1997, unrealized appreciation for federal income tax purposes
aggregated ($1,274,258) which $810,226 related to unrealized appreciation of
securities and $2,084,484 related to unrealized depreciation of securities.
4. Capital Stock
Transactions in capital stock shares were as follows:
4/14/97*
to
8/31/97
---------
Shares sold: 1,988,366
Shares issued upon reinvestment of dividends
from net investment income and distributions
of realized gains from security transactions: -0-
---------
1,988,366
Shares repurchased: -0-
---------
Net Increase . . . . . . . . . . 1,988,366
---------
<PAGE>
5. Foreign Exchange Contracts
The Fund will generally enter into forward foreign currency contracts as a way
of managing foreign exchange rate risk. A fund may enter into these contracts
to fix the U.S. dollar value of a security that it has agreed to buy or sell
for the period between the date the trade was entered into and the date the
security is delivered and paid for. A fund may also use these contracts to
hedge the U.S. dollar value of securities it already owns denominated in
foreign currencies.
Forward foreign currency contracts are valued at the mean between the bid and
asked prices of the contracts and are marked-to-market daily. Interpolated
values are derived when the settlement date of the contract is an interim date
for which quotations are not available. The change in market value is recorded
by the Fund as an unrealized gain or loss. When the contract is closed, the
Fund records a realized gain or loss equal to the difference between the value
of the contract at the time it was opened and the value at the time it was
closed.
The use of forward foreign currency contracts does not eliminate fluctuations
in the underlying prices of the Fund's securities, but it does establish a
rate of exchange that can be achieved in the future. Although forward foreign
currency contracts limit the risk of loss due to a decline in the value of the
hedged currency, they also limit any potential gain that might result should
the value of the currency increase. In addition, the Fund could be exposed to
risks if the counterparties to the contracts are unable to meet the terms of
their contracts.
The following forward foreign currency contracts were outstanding at August
31, 19XX:
<TABLE>
<CAPTION>
Unrealized
In Settlement Appreciation
Contracts to Receive Exchange For Date (Depreciation)
- -------------------- ------------ ---------- --------------
<S> <C> <C> <C>
283,119 Peruvian Njevo Sol $106,757 9/1/97 ($60)
37,810,313 Indonesian Rupah 13,129 9/2/97 (247)
1,981,381 South African Rand 428,954 9/2/97 (6,971)
245,957,898 Indonesian Rupah 82,398 9/3/97 1,401
562,554 Malaysian Riggit 198,159 9/4/97 (6,187)
--------
($12,064)
--------
</TABLE>
6. Concentrations of Credit Risk
Some countries in which the Fund may invest require governmental approval for
the repatriation of investment income, capital or the proceeds of sales of
securities by foreign
<PAGE>
investors. In addition, if there is a deterioration in a country's balance of
payments or for other reasons, a country may impose temporary restrictions on
foreign capital remittances abroad.
The securities exchanges of certain foreign markets are substantially smaller,
less liquid and more volatile than the major securities markets in the United
States. Consequently, acquisition and disposition of securities by the Fund
may be inhibited. In addition, a significant proportion of the aggregate
market value of equity securities listed on the major securities exchanges in
emerging markets are held by a smaller number of investors. This may limit the
number of shares available for acquisition or disposition of the Fund.
The Fund may invest in high-yield fixed income securities which carry ratings
of BB or lower by S&P and/or Ba or lower by Moody's. Investments in these
higher yielding securities may be accompanied by a greater degree of credit
risk than higher rated securities. Additionally, lower rated securities may be
more susceptible to adverse economic and competitive industry conditions than
investment grade securities.
The Fund may invest 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.
The Fund may invest up to 15% of its total assets in illiquid securities which
may include securities with contractual restrictions on resale, securities
exempt from registration under Rule 144A of the Securities Act of 1933, as
amended, and other securities which may not be readily marketable. The
relative illiquidity of some of these securities may adversely affect the
Fund's ability to dispose of such securities in a timely manner and at a fair
price when it is necessary to liquidate such securities. These securities, if
any, have been denoted in the Statement of Net Assets.
<PAGE>
Delaware Pooled Trust, Inc. - International Fixed Income Portfolio
Statement of Net Assets
August 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Market
Principal Value
Amount* (U.S. $)
----------------- ----------------
<S> <C> <C> <C>
BONDS - 92.70%
Australia - 4.59%
Banque National De Paris 9.00% 08/.3.0. . . . . A$ 350,000 $ 282,844
Queensland Treasury-Global 8.00% 05/.4.0. . . . . . 1,000,000 792,888
State Bank New South Wales 7.00% 02/.6.0. . . . . . 500,000 375,937
----------------
1,451,669
----------------
Canada - 9.31%
Abbey National Treasury Serivces 6.75% 02/.5.0. . . . . C$ 500,000 380,792
Chubu Electric Power 7.38% 03/.0.0. . . . . . 500,000 232,674
Government of Canada 7.50% 12/.1.0. . . . . . 1,450,000 811,170
Government of Canada 8.75% 12/.1.0. . . . . . 950,000 1,144,833
Toyota Credit of Canada 8.00% 12/.9.0. . . . . . 300,000 372,019
----------------
2,941,488
----------------
Germany - 24.82%
Baden Wurt L-Finance NV 5.25% 09/.6.0. . . . .Dem 2,000,000 1,123,999
Baden Wurt L-Finance NV 6.625% 08/.0.0. . . . . . 900,000 530,903
Bayerische Vereinsbank 6.50% 06/.6.0. . . . . . 800,000 466,611
Bundesrepblik Deutscheland 8.375% 05/.1.0. . . . . . 2,000,000 1,245,733
Bundesrepblik Deutschland 6.50% 07/.5.0. . . . . . 4,000,000 2,363,546
Bundesrepublik Deutschland 6.50% 10/.4.0. . . . . . 700,000 411,146
DSL Finance 6.00% 02/.1.0. . . . . . 700,000 395,139
Republic of Finland 5.50% 02/.9.0. . . . . . 2,300,000 1,306,446
----------------
7,843,523
----------------
Italy - 7.73%
Deutsche Bank Finance NV 8.25% 01/.7.0. . . . .Itl 1,800,000,000 1,107,200
Italian Government 12.00% 01/.1.0. . . . . . 1,900,000,000 1,336,222
----------------
2,443,422
----------------
Japan - 20.03%
FNMA - Global Bond EMTN 2.00% 12/.0.9. . . . .Jpy 40,000,000 340,250
International Bank of Reconstruction & Development 4.50% 06/.0.0. . . . . . 140,000,000 1,276,086
Italian Government 3.50% 06/.0.0. . . . . . 165,000,000 1,480,046
Japan Development Bank 5.00% 10/.1.9. . . . . . 120,000,000 1,081,366
Japan Development Bank 6.50% 09/.0.0. . . . . . 50,000,000 500,207
Kingdom of Belgium 5.00% 12/.7.9. . . . . . 30,000,000 272,050
Kingdom of Spain 5.75% 03/.3.0. . . . . . 140,000,000 1,379,710
----------------
6,329,715
----------------
New Zealand - 9.26%
Government of New Zealand 6.50% 02/.5.0. . . . .NZ$ 700,000 439,593
Government of New Zealand 8.00% 02/.5.0. . . . . . 650,000 425,094
Government of New Zealand 10.00% 03/.5.0. . . . . . 1,250,000 883,609
Government of New Zealand 8.00% 04/.5.0. . . . . . 500,000 332,809
Government of New Zealand 8.00% 11/.5.0. . . . . . 1,250,000 844,160
----------------
2,925,265
----------------
Sweden - 9.51%
Swedish Government 13.00% 06/.5.0. . . . . Sk 9,500,000 1,494,354
Swedish Government 5.50% 04/.2.0. . . . . . 1,500,000 187,026
Swedish Government 8.00% 08/.5.0. . . . . . 9,500,000 1,322,735
----------------
3,004,115
----------------
United Kingdom - 7.45%
Midland Bank 9.00% 11/.3.0. . . . .Gbp 400,000 690,930
SmithKline Beecham Notes 8.375% 12/.9.0. . . . . . 150,000 248,619
Thames Water Utilities 10.50% 11/.1.0. . . . . . 400,000 711,180
UK Treasury 8.50% 12/.7.0. . . . . . 400,000 703,080
----------------
2,353,809
----------------
Total Bonds (cost $29,515,422) 29,293,006
----------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
REPURCHASE AGREEMENT - 5.05%
With Chase Manhattan Bank 5.54% 9/2/97 (dated 8/29/97,
collateralized by $475,000 U.S. Treasury Notes
5.625% due 10/31/97 market value $484,032) ............................................. 474,000 474,000
With JP Morgan Securities 5.54% 9/2/97 (dated 8/29/97,
collateralized by $300,000 U.S. Treasury Notes
6.875% due 7/31/99 market value $306,580 and
$259,000 U.S. Treasury Notes 6.75% due
4/30/00 market value $269,098) ......................................................... 564,000 564,000
With PaineWebber 5.54% 9/2/97 (dated 8/29/97,
collateralized by $564,000 U.S. Treasury Notes
7.25% due 2/15/98 market value $569,485) ............................................... 558,000 558,000
----------------
Total Repurchase Agreement (cost $1,596,000) ............................................. 1,596,000
----------------
TOTAL MARKET VALUE OF SECURITIES - 97.75%
(Cost $31,111,422) ..................................................................... 30,889,006
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 2.25% .................................. 710,883
----------------
NET ASSETS APPLICABLE TO 3,076,850 SHARES ($.01 PAR VALUE)
OUTSTANDING; EQUIVALENT TO $10.27 PER SHARE - 100.00% .................................. $ 31,599,889
================
COMPONENTS OF NET ASSETS AT AUGUST 31, 1997:
Common stock, $.01 par value, 500,000,000 shares
authorized to the Fund with 50,000,000 shares
allocated to this Portfolio ............................................................ $ 31,082,798
Accumulated net investment income ........................................................ 600,938
Accumulated net realized gain on investments ............................................. 121,535
Net unrealized depreciation on investments and foreign currencies ........................ (205,382)
----------------
Total net assets ......................................................................... $ 31,599,889
================
</TABLE>
- ------------------------------------------------------
* Principal amount is stated in the currency in which each security is
denominated.
A$ = Australian Dollars Jpy = Japanese Yen
Gbp = British Pounds NZ+B28$ = New Zealand Dollars
C$ = Canadian Dollars Sk = Swedish Kroner
Dem = German Deutsche Marks $ = U.S. Dollars
Itl = Italian Lire
See accompanying notes
<PAGE>
Delaware Pooled Trust, Inc. - International Fixed Income Portfolio
Statement of Assets & Liabilities
August 31, 1997
(Unaudited)
ASSETS:
Investments at market (cost $31,111,422) .................. $ 30,889,006
Receivable for securities sold ............................ 2,223,218
Interest receivable ....................................... 726,720
Cash and foreign currencies ............................... 38,374
------------
Total assets ........................................... 33,877,318
------------
LIABILITIES:
Payable for securities purchased .......................... 2,239,810
Other accounts payable and accrued expenses ............... 37,619
------------
Total liabilities ...................................... 2,277,429
------------
TOTAL NET ASSETS .......................................... $ 31,599,889
============
See accompanying notes
<PAGE>
Delaware Pooled Trust, Inc. - International Fixed Income Portfolio
Statement of Operations
For the period April 11, 1997* to August 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Interest $459,927 $459,927
----------------
EXPENSES:
Management fees ........................................................... 33,817
Registration fees ......................................................... 10,555
Custodian fees ............................................................ 3,520
Professional fees ......................................................... 3,344
Accounting fees and salaries .............................................. 2,656
Dividend disbursing and transfer agent fees and expenses .................. 490
Reports and statements to shareholders .................................... 425
Taxes (other than taxes on income) ........................................ 425
Directors' fees ........................................................... 188
Other ..................................................................... 641
----------------
56,061
Less expenses absorbed by Delaware International
Advisers Ltd. ............................................................ (16,205) 39,856
---------------- -----------------
NET INVESTMENT INCOME ..................................................... 420,071
-----------------
NET REALIZED AND UNREALIZED GAIN(LOSS)
ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain on:
Investment transactions ............................................... 121,535
Foreign currencies ..................................................... 180,867
-----------------
Net realized gain .................................................... 302,402
Net unrealized depreciation during the period
on investments and foreign currencies .................................... (205,382)
-----------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS AND FOREIGN CURRENCIES .................................. 97,020
-----------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ........................................................ $ 517,091
=================
</TABLE>
- ------------------------
Date of commencement of operations.
See accompanying notes
<PAGE>
Delaware Pooled Trust, Inc. - International Fixed Income Portfolio
Statement of Changes in Net Assets
For the period April 11, 1997* to August 31, 1997
(Unaudited)
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income ....................................... $ 420,071
Net realized gain on investments
and foreign currencies ................................... 302,402
Net unrealized depreciation during the period
on investments and foreign currencies ..................... (205,382)
------------
Net increase in net assets resulting
from operations ........................................... 517,091
------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold: .................................. 31,082,798
Net asset value of shares issued upon reinvestment
of dividends from net investment income: ................. -
------------
............................................................ 31,082,798
Cost of shares repurchased: ................................. -
------------
Increase in net assets derived from capital
share transactions ....................................... 31,082,798
------------
NET INCREASE IN NET ASSETS ................................. 31,599,889
NET ASSETS:
Beginning of period ......................................... -
------------
End of period ............................................... $ 31,599,889
============
- --------------
Date of commencement of operations.
See accompanying notes
<PAGE>
Financial Highlights
Selected data for each share of the Fund outstanding throughout the period was
as follows:
<TABLE>
<CAPTION>
International Fixed
Income Portfolio
4/11/97 (1)
to
8/31/97
-------------------
<S> <C>
Net asset value, beginning of period .......................................... $ 10.0000
Income from investment operations:
Net investment income ...................................................... 0.1365
Net realized and unrealized gain from investments & foreign currencies ..... 0.1335
----------
Total from investment operations ........................................... 0.2700
----------
Net asset value, end of period ................................................ $ 10.2700
==========
Total return .................................................................. 2.70%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................................... $31,600
Ratio of expenses to average net assets ................................... 0.60%
Ratio of expenses to average net assets prior to expense
limitation ............................................................... 0.84%
Ratio of net investment income to average net assets ...................... 6.10%
Ratio of net investment income to average net assets prior
to expense limitation .................................................... 5.86%
Portfolio turnover ........................................................ 113%
</TABLE>
- -------------------------
(1) Date of commencement of trading; ratios and portfolio turnover have been
annualized and total return has not been annualized.
<PAGE>
DELAWARE POOLED TRUST, INC. - INTERNATIONAL FIXED INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1997
(Unaudited)
Delaware Pooled Trust, Inc. - International Fixed Income Portfolio (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), including The International
Fixed Income Portfolio: The Defensive Equity Portfolio, The Aggressive Growth
Portfolio, The Real Estate Investment Trust Portfolio, The Fixed Income
Portfolio, The High-Yield Bond Portfolio, The International Equity Portfolio,
The Labor Select International Equity Portfolio, The Emerging Markets Portfolio,
The Global Fixed Income Portfolio had commenced operations as of August 31,
1997. The Defensive Equity Small/Mid-Cap Portfolio and The Limited-term Maturity
Portfolio had not commenced operations as of August 31, 1997.
The objective of the Fund is to achieve current income and the potential for
capital appreciation, consistent with the preservation of investors' principal,
by investing primarily in fixed-income securities of international (non-U.S.)
markets.
Significant Accounting Policies
The following accounting policies are in accordance with generally accepted
accounting principles and are consistently followed by the Fund.
Security Valuation - Securities listed on an exchange are valued at the last
quoted sales price as of the close of the NYSE on the valuation date.
Securities not traded or securities not listed on an exchange are valued at
the mean of the last quoted bid and asked prices. Securities listed on a
foreign exchange are valued at the last quoted sales price before the Fund is
valued. 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. Other securities and assets
for which market quotations are not readily available are valued at fair value
as determined in good faith by or under the direction of the Fund's Board of
Directors.
Federal Income Taxes - The Fund intends to qualify as a regulated investment
company and make the requisite distributions to shareholders. Accordingly, no
provision for federal income taxes has been made in the financial statements.
Income and capital gain distributions are determined in accordance with
federal income tax regulations which may differ from generally accepted
accounting principles.
<PAGE>
Repurchase Agreements - The Fund 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 Fund's
custodian bank until the maturity of the respective repurchase agreements. Each
repurchase agreement is at least 100% collateralized. However, in the event of
default or bankruptcy by the counterparty to the agreement, realization of the
collateral may be subject to legal proceedings.
Foreign Currency Transactions - Transactions denominated in foreign currencies
are recorded in the Fund's records at the current prevailing exchange rates. The
value of all assets and liabilities denominated in foreign currencies are
translated into U.S. dollars at the exchange rate of such currencies against the
U.S. dollar as of 3:00 PM EST. Transaction gains or losses resulting from
changes in exchange rates during the reporting period or upon settlement of the
foreign currency transaction are reported in operations for the current period.
It is not practical to isolate that portion of both realized and unrealized
gains and losses on investments in equity securities in the statement of
operations that result from fluctuations in foreign currency exchange rates. The
Fund does isolate that portion of gains and losses on investments in debt
securities which are due to changes in the foreign exchange rate from that which
are due to changes in market prices of debt securities. The Fund reports certain
foreign currency related transactions as components of realized gains for
financial reporting purposes, whereas such components are treated as ordinary
income (loss) for federal income tax purposes.
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 the
accrual basis. Foreign dividends are also recorded on the ex-dividend date or as
soon after the ex-dividend date that the Fund is aware of such dividends, net of
all non-rebatable tax withholdings. Original issue discounts are accreted to
interest income over the lives of the respective securities. Withholding taxes
on foreign interest have been provided for in accordance with the Fund's
understanding of the applicable country's tax rules and rates. The Fund declares
and pays dividends for net investment income quarterly and pay distributions
from net realized gain on investment transactions, if any, annually.
Certain Fund expenses are paid through "soft dollar" arrangements with brokers.
The amount of these expenses is less than 0.01% of the Fund's average daily net
assets.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
<PAGE>
2. Investment Management and Other Transactions with Affiliates
In accordance with the terms of the Investment Management Agreement, the Fund
pays Delaware International Advisers Ltd. (DIAL) the Investment Manager of the
Fund, an annual fee which is calculated daily at the rate of 0.50% on the
average daily net assets less any fees paid to the independent directors. At
August 31, 1997 the Fund had a liability to DIAL for management fees and other
expenses of $19,929.
DIAL has elected to waive that portion if any of the management fee and
reimburse the Fund to the extent that annual operating expenses exclusive of
taxes, interest, brokerage commissions and extraordinary expenses, exceed 0.75%
of average daily net assets of the Fund through October 31, 1997. Total expenses
absorbed by DIAL for the period ended August 31, 1997 were $16,205.
The Fund has engaged Delaware Service Company, Inc. (DSC), an affiliate of DMC,
to serve as dividend disbursing, transfer agent and accounting service agent for
the Fund. For the period ended August 31, 1997, the Fund expensed $490 for
dividend disbursing and transfer agent services and $1,860 for accounting
services. At August 31, 1997, the Fund had a liability for such fees and other
expenses payable to DSC of $3,343.
Certain officers of DMC, DSC and DDLP are officers, directors and/or employees
of the Fund. These officers, directors and employees are paid no compensation
by the Fund.
3. Investments
During the period ended August 31, 1997, the Fund made purchases of $38,245,881
and sales of $8,852,180 of investment securities other than U.S. government
securities and temporary cash investments.
At August 31, 1997, the aggregate cost of securities for federal income tax
purposes was $31,116,209.
At August 31, 1997, unrealized depreciation for federal income tax purposes
aggregated $227,203 of which $180,879 related to unrealized appreciation of
securities and $408,082 related to unrealized depreciation of securities.
4. Capital Stock
Transactions in capital stock shares were as follows:
4/11/97*
to
8/31/97
--------
Share sold: 3,076,850
<PAGE>
Shares issued upon reinvestment of dividends
from net investment income and distributions
of realized gains from security transactions: -0-
---------
3,076,850
Shares repurchased: -0-
---------
Net Increase . . . . . . . . . . . . . . 3,076,850
---------
5. Foreign Exchange Contracts
The Fund will generally enter into forward foreign currency contracts as a way
of managing foreign exchange rate risk. A fund may enter into these contracts to
fix the U.S. dollar value of a security that it has agreed to buy or sell for
the period between the date the trade was entered into and the date the security
is delivered and paid for. A fund may also use these contracts to hedge the U.S.
dollar value of securities it already owns denominated in foreign currencies.
Forward foreign currency contracts are valued at the mean between the bid and
asked prices of the contracts and are marked-to-market daily. Interpolated
values are derived when the settlement date of the contract is an interim date
for which quotations are not available. The change in market value is recorded
by the Fund as an unrealized gain or loss. When the contract is closed, the Fund
records a realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
The use of forward foreign currency contracts does not eliminate fluctuations in
the underlying prices of the Fund's securities, but it does establish a rate of
exchange that can be achieved in the future. Although forward foreign currency
contracts limit the risk of loss due to a decline in the value of the hedged
currency, they also limit any potential gain that might result should the value
of the currency increase. In addition, the Fund could be exposed to risks if the
counterparties to the contracts are unable to meet the terms of their contracts.
<TABLE>
<CAPTION>
Unrealized
In Settlement Appreciation
Contracts to Receive Exchange For Date Depreciation)
- -------------------- ------------ ---------- --------------
<S> <C> <C> <C>
1,166,740 DeutscheMarks $ 644,430 9/9/97 $ 421
--------
Unrealized
In Settlement Appreciation
Contracts to Receive Exchange For Date Depreciation)
- -------------------- ------------ ---------- --------------
885,000 Australian Dollars $ 644,430 9/9/97 ($ 3,302)
2,063,976 Canadian Dollars 1,501,128 10/31/97 8,659
4,575,271 New Zealand Dollars 2,938,683 10/31/97 28,069
---------
$ 33,426
</TABLE>
<PAGE>
6. Concentrations of Credit Risk
Some countries in which the Fund may invest require governmental approval for
the repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if there is a deterioration in a
country's balance of payments or for other reasons, a country may impose
temporary restrictions on foreign capital remittances abroad.
The securities exchanges of certain foreign markets are substantially smaller,
less liquid and more volatile than the major securities markets in the United
States. Consequently, acquisition and disposition of securities by the Fund may
be inhibited. In addition, a significant proportion of the aggregate market
value of equity securities listed on the major securities exchanges in emerging
markets are held by a smaller number of investors. This may limit the number of
shares available for acquisition or disposition of the Fund.
The Fund may invest in high-yield fixed income securities which carry ratings of
BB or lower by S&P and/or Ba or lower by Moody's. Investments in these higher
yielding securities may be accompanied by a greater degree of credit risk than
higher rated securities. Additionally, lower rated securities may be more
susceptible to adverse economic and competitive industry conditions than
investment grade securities.
The Fund may invest 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.
The Fund may invest up to 15 % of its total assets in illiquid securities which
may include securities with contractual restrictions on resale, securities
exempt from registration under Rule 144A of the Securities Act of 1933, as
amended, and other securities which may not be readily marketable. The relative
illiquidity of some of these securities may adversely affect the Fund's ability
to dispose of such securities in a timely manner and at a fair price when it is
necessary to liquidate such securities.
<PAGE>
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, 1996 for The Defensive Equity, The
Aggressive Growth, The Global Fixed Income, The Fixed Income, The Real
Estate Investment Trust, The International Equity and The Labor Select
International Equity Portfolios. The Statements of Assets and
Liabilities, Notes to Financial Statements and Accountant's Reports for
The Limited-Term Maturity Portfolio and The International Fixed Income
Portfolio are incorporated into Part B by reference to the Registrant's
Annual Reports for these Portfolios for the fiscal year ended October 31,
1996. Unaudited financial statements for each Portfolio, except the
Defensive Equity Small/Mid-Cap Portfolio, are incorporated by reference
into Part B from the Registrant's Semi-Annual Reports for the period
ended April 30, 1997. Unaudited financial statements for The Emerging
Markets Portfolio for the period April 1, 1997 through August 31, 1997
and for The International Fixed Income Portfolio for the period April 11,
1997 through August 31, 1997 are 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.
(b) Executed Articles Supplementary (January
14, 1997) incorporated into this filing by
reference to Post-Effective Amendment No.
14 filed January 16, 1997.
<PAGE>
Part C - Other Information
(continued)
(c) Articles Supplementary (April 14, 1997)
incorporated into this filing by reference
to Post-Effective Amendment No. 16 filed
May 23, 1997.
(d) Articles Supplementary ( ______, 1997) to be filed by
Amendment.
(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.
(3) Article Second of Articles
Supplementary (April 14, 1997)
incorporated into this filing by
reference to Post-Effective
Amendment No. 16 filed May 23,
1997.
(4) Article __ of Articles
Supplementary (1997) attached in
Exhibit 24(b)(1)(d) to be filed by
Amendment.
(b) By-Laws. Articles II, III and XIV of the
By-Laws incorporated into this filing by
reference to Post-Effective Amendment No.
8 filed September 15, 1995.
(5) Investment Management Agreements.
<PAGE>
Part C - Other Information
(continued)
(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.
(a)(3) Executed Investment Management Agreements between Delaware
Management Company, Inc. and the Registrant on behalf of The
Defensive Equity Small/Mid-Cap, 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.
(a)(5) Executed Investment Management Agreement (April 14, 1997)
between Delaware International Advisers Ltd. and the Registrant
on behalf of The Emerging Markets Portfolio incorporated into this
filing by reference to Post-Effective Amendment No. 17 filed
August 1, 1997.
(a)(6) Proposed Investment Management Agreement (1997) between
Delaware International Advisers Ltd. and the Registrant on behalf
of The Global Equity Portfolio to be filed by Amendment.
<PAGE>
Part C - Other Information
(continued)
(a)(7) Proposed Investment Management Agreement (1997) between
Delaware Management Company, Inc. and the Registrant on behalf
of The Real Estate Investment Trust Portfolio II to be filed by
Amendment.
(b)(1) 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.
(b)(2) Proposed Sub-Advisory Agreement (1997) between Delaware
International Adviser Ltd. and Delaware Investment Advisers on
behalf of the Registrant for The Global Equity Portfolio to be
filed by Amendment.
(b)(3) Proposed Sub-Advisory Agreement (1997) between Delaware
Management Company, Inc. and Lincoln Investment Management,
Inc. on behalf of The Real Estate Investment Trust Portfolio II
to be filed by Amendment.
(6) (a) Distribution Agreements.
(i) Form of Distribution Agreements (April 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 incorporated into this filing by
reference to Post-Effective Amendment No. 9 filed
November 24, 1995.
(ii) Form of Distribution Agreements
(November 1995) between Delaware
Distributors, L.P. and the
Registrant on behalf of The
Defensive Equity Small/Mid-Cap,
The High-Yield Bond, The Labor
Select International Equity and
The Real Estate Investment Trust
Portfolios incorporated into this
filing by reference to
Post-Effective Amendment No. 9
filed November 24, 1995.
<PAGE>
Part C - Other Information
(continued)
(iii) Executed Distribution Agreement
(April 14, 1997) between Delaware
Distributors, L.P. and the
Registrant on behalf of The
Emerging Markets Portfolio
incorporated into this filing by
reference to Post-Effective
Amendment No. 17
filed August 1, 1997.
(iv) Proposed Distribution Agreement
(1997) between Delaware
Distributors, L.P. and the
Registrant on behalf of The Global
Equity Portfolio to be filed by
Amendment.
(v) Proposed Distribution Agreement (1997) between
Delaware Distributors, L.P. and the Registrant on
behalf of The Real Estate Investment Trust
Portfolio II to be filed by Amendment.
(vi) Amended and Restated Distribution Agreement
for the Real Estate Investment Trust Portfolio
to be filed by Amendment.
(b) Administration and Service Agreement. Form
of Administration and Service Agreement
(as amended November 1995) (Module)
incorporated into this filing by reference
to Post-Effective Amendment No. 17 filed
August 1, 1997.
(c) Dealer's Agreement. Dealer's Agreement (as
amended November 1995) (Module)
incorporated into this filing by reference
to Post-Effective Amendment No. 17 filed
August 1, 1997.
(d) Mutual Fund Agreement for the Delaware
Group of Funds (as amended November 1995)
(Module) incorporated into this filing by
reference to Post-Effective Amendment No.
17 filed August 1, 1997.
(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.
<PAGE>
Part C - Other Information
(continued)
(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
incorporated into this filing by reference to
Post-Effective Amendment No. 12 filed August 23,
1996.
(b) 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 incorporated into this filing by
reference to Post-Effective Amendment No. 12
filed August 23, 1996.
(c) 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 and The International Fixed Income
Portfolios incorporated into this filing by
reference to Post-Effective Amendment No. 12
filed August 23, 1996.
(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 and The International
Fixed Income Portfolios incorporated into this
filing by reference to Post-Effective Amendment
No. 12 filed August 23, 1996.
(e) Form of Custodian Agreement (1997) between the
Registrant and The Chase Manhattan Bank on behalf
of The Emerging Markets Portfolio incorporated
into this filing by reference to Post-Effective
Amendment No. 14 filed January 16, 1997.
<PAGE>
Part C - Other Information
(continued)
(f) Form of Securities Lending
Agreement (1997) between the
Registrant and The Chase Manhattan
Bank on behalf of The Emerging
Markets Portfolio incorporated
into this filing by reference to
Post-Effective Amendment No. 14
filed January 16, 1997.
(g) Proposed Custodian Agreement
(1997) between the Registrant and
The Chase Manhattan Bank on behalf
of The Global Equity Portfolio and
The Real Estate Investment Trust
Portfolio II incorporated into
this filing by reference to
Post-Effective Amendment No. 17
filed August 1, 1997.
(h) Proposed Securities Lending
Agreement (1997) between
Registrant and The Chase Manhattan
Bank on behalf of The Global
Equity Portfolio and The Real
Estate Investment Trust Portfolio
II incorporated into this filing
by reference to Post-Effective
Amendment No. 17 filed
August 1, 1997.
(9) Other Material Contracts.
(a) 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.
(b) Executed Fourth Amended and
Restated Shareholders Services
Agreement (April 1997) between
Delaware Service Company, Inc. and
the Registrant on behalf of each
Portfolio incorporated into this
filing by reference to
Post-Effective Amendment No. 17
filed August 1, 1997.
(c) Form of Fifth Amended and Restated
Shareholders Services Agreement
(July 1997) between Delaware
Service Company, Inc. and the
Registrant on behalf of each
Portfolio to be filed by
Amendment.
<PAGE>
Part C - Other Information
(continued)
(d) Executed Delaware Group of Funds
Fund Accounting Agreement (August
19, 1996) between Delaware Service
Company, Inc. and the Registrant
on behalf of each Fund
incorporated into this filing by
reference to Post-Effective
Amendment No. 16 filed May 23,
1997.
(i) Executed Amendment No. 6 (July 21, 1997) to
Schedule A to Delaware Group of Funds Fund
Accounting Agreement attached as Exhibit.
(10) Opinion of Counsel. Filed with letter relating to
Rule 24f-2 on December 27, 1996.
(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) Inapplicable
(15) 12b-1 Plan for REIT Fund Class A, REIT Fund Class B
and REIT Fund Class C of The Real Estate Investment
Trust Portfolio to be filed by Amendment.
(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, Post-Effective
Amendment No. 11 filed May 24, 1996,
Post-Effective Amendment No. 12 filed
August 23, 1996, Post-Effective Amendment
No. 13 filed January 15, 1997 and
Post-Effective Amendment No. 16 filed
May 23, 1997.
(b) Schedules of Computation for each
Performance Quotation for periods not
previously electronically filed attached
as Exhibit.
<PAGE>
Part C - Other Information
(continued)
(17) Financial Data Schedules.
(a) Financial Data Schedules for the fiscal year
ended October 31, 1996 are incorporated into
this filing by reference to Post-Effective
Amendment No. 13 filed on January 15, 1997.
Financial Data Schedules for the period
ended April 30, 1997 for The High-Yield Bond
Portfolio incorporated into this filing by
reference to Post-Effective Amendment No.
16 filed May 23, 1997. Financial Data
Schedules for the Semi-Annual period ended
April 30, 1997 for each Portfolio
incorporated into this filing by reference
to Post-Effective Amendment No. 17 filed
August 1, 1997.
(b) Financial Data Schedules for the period
ended August 31, 1997 for The Emerging
Markets Portfolio and The International
Fixed Income Portfolio attached as
Exhibit.
(18) Plan under Rule 18f-3 to be filed by Amendment.
(19) Other: Directors' Power of Attorney.
(a) Incorporated into this filing by reference to
Post-Effective Amendment No. 8 filed
September 15, 1995.
(b) Power of Attorney for Thomas F.
Madison and Jeffrey J. Nick
incorporated into this filing by
reference to Post-Effective
Amendment No. 16 filed May 23,
1997.
Item 25. Persons Controlled by or under Common Control with
Registrant. None.
Item 26. Number of Holders of Securities.
(1) (2)
Number of
Title of Class Record Holders
-------------- ---------------
The Defensive Equity Portfolio:
Common Stock Par Value 36 Accounts as of
$.01 Per Share September 30, 1997
The Aggressive Growth Portfolio:
Common Stock Par Value 13 Accounts as of
$.01 Per Share September 30, 1997
<PAGE>
Part C - Other Information
(continued)
Number of
Title of Class Record Holders
-------------- --------------
The International Equity Portfolio:
Common Stock Par Value 114 Accounts as of
$.01 Per Share September 30, 1997
The Global Fixed Income Portfolio:
Common Stock Par Value 61 Accounts as of
$.01 Per Share September 30, 1997
The Fixed Income Portfolio:
Common Stock Par Value 16 Accounts as of
$.01 Per Share September 30, 1997
The Limited-Term
Maturity Portfolio:
Common Stock Par Value 4 Accounts as of
$.01 Per Share September 30, 1997
The International Fixed
Income Portfolio:
Common Stock Par Value 7 Accounts as of
$.01 Per Share September 30, 1997
The Defensive Equity Small/
Mid-Cap Portfolio:
Common Stock Par Value 0 Accounts as of
$.01 Per Share September 30, 1997
The High-Yield Bond Portfolio:
Common Stock Par Value 8 Accounts as of
$.01 Per Share September 30, 1997
The Labor Select International
Equity Portfolio:
Common Stock Par Value 18 Accounts as of
$.01 Per Share September 30, 1997
The Emerging Markets Portfolio:
Common Stock Par Value 7 Accounts as of
$.01 Per Share September 30, 1997
<PAGE>
Part C - Other Information
(continued)
Number of
Title of Class Record Holders
-------------- --------------
The Global Equity Portfolio:
Common Stock Par Value 0 Accounts as of
$.01 Per Share September 30, 1997
The Real Estate Investment
Trust Portfolio class:
Common Stock Par Value 0 Accounts as of
$.01 Per Share September 30, 1997
REIT Fund A Class:
Common Stock Par Value 16 Accounts as of
$.01 Per Share September 30, 1997
REIT Fund B Class:
Common Stock Par Value 0 Accounts as of
$.01 Per Share September 30, 1997
REIT Fund C Class:
Common Stock Par Value 0 Accounts as of
$.01 Per Share September 30, 1997
REIT Fund Institutional Class:
Common Stock Par Value 0 Accounts as of
$.01 Per Share September 30, 1997
The Real Estate Investment Trust Portfolio II:
Common Stock Par Value 0 Accounts as of
$.01 Per Share September 30, 1997
Item 27. Indemnification. Incorporated into this filing by reference to initial
Registration Statement filed May 31, 1991.
<PAGE>
Part C - Other Information
(continued)
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 High-Yield Bond Portfolio, The Real Estate
Investment Trust Portfolio and The Real Estate Investment Trust Portfolio II.
In addition, DMC also serves as investment manager or sub-adviser to certain
of the other funds in the Delaware Group (Delaware Group Equity Funds I, Inc.,
Delaware Group Equity Funds II, Inc., Delaware Group Trend Fund, Inc.,
Delaware Group Equity Funds IV, Inc., Delaware Group Equity Funds V, Inc.,
Delaware Group Income Funds, 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., Delaware Group Global Dividend and Income Fund, Inc., Voyageur Funds,
Inc., Voyageur Insured Funds, Inc., Voyageur Intermediate Tax Free Funds,
Inc., Voyageur Investment Trust, Voyageur Investment Trust II, Voyageur Mutual
Funds, Inc., Voyageur Mutual Funds II, Inc., Voyageur Mutual Funds III, Inc.,
Voyageur Tax Free Funds, Inc., Voyageur Arizona Municipal Income Fund, Inc.,
Voyageur Colorado Insured Municipal Income Fund, Inc., Voyageur Florida
Insured Municipal Income Funds, Voyageur Minnesota Municipal Income Fund,
Inc., Voyageur Minnesota Municipal Income Fund II, Inc. and Voyageur Minnesota
Municipal Income Fund III, Inc.) and provides investment advisory services to
institutional accounts, primarily retirement plans and endowment funds, and to
certain other investment companies. 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, accounting services and transfer
agent for all of the mutual funds in the Delaware Group.
<PAGE>
Part C - Other Information
(continued)
The following persons serving as directors or officers of the Manager
have held the following positions during the past two years:
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------- ------------------------------------------------
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, President, Chief Executive Officer and
Director of the Registrant, 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 and Director of Delaware
Distributors, Inc. and Delaware Capital
Management, Inc.; Director of Delaware Service
Company, Inc. and Delaware Investment & Retirement
Services, Inc.; and Chairman, Chief Executive
Officer and Director of Delaware International
Advisers Ltd.
Richard G. Unruh, Jr. Executive Vice President and Director of Delaware
Management Company, Inc.; Executive Vice President
of the Registrant, each of the other funds in the
Delaware Group, Delaware Management Holdings, Inc.
and Delaware Capital Management, 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, AAA Mid Atlantic, Inc. since 1989,
2040 Market Street, Philadelphia, PA; Board of
Directors, Metron, Inc. since 1995, 11911
Freedom Drive, Reston, VA
Paul E. Suckow Executive Vice President/Chief Investment Officer,
Fixed Income of Delaware Management Company, Inc.,
the Registrant, each of the other funds in the
Delaware Group and Delaware Management Holdings,
Inc.; Executive Vice President and Director of
Founders Holdings, Inc.; Executive Vice President
of Delaware Capital Management, Inc.; and Director
of Founders CBO Corporation
Director, HYPPCO Finance Company Ltd.
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
Part C - Other Information
(continued)
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------ ------------------------------------------------
David K. Downes Executive Vice President, Chief Operating Officer,
Chief Financial Officer and Director of Delaware
Management Company, Inc., DMH Corp, Delaware
Distributors, Inc., Founders Holdings, Inc. and
Delaware International Holdings Ltd.; Executive
Vice President, Chief Operating Officer and Chief
Financial Officer of the Registrant and each of
the other funds in the Delaware Group, Delaware
Management Holdings, Inc., Founders CBO
Corporation, Delaware Capital Management, Inc. and
Delaware Distributors, L.P.; President, Chief
Executive Officer, Chief Financial Officer and
Director of Delaware Service Company, Inc.;
Chairman, Chief Executive Officer and Director of
Delaware Investment & Retirement Services, Inc.;
Chairman and Director of Delaware Management Trust
Company; and Director of Delaware International
Advisers Ltd.
Chief Executive Officer and Director of Forewarn,
Inc. since 1993, 8 Clayton Place, Newtown Square,
PA
George M. Senior Vice President, General Counsel,
Chamberlain, Jr. 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, Secretary
and General Counsel 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, General Counsel and Director of
Delaware Management Trust Company; Secretary and
Director of Delaware International Holdings
Ltd.; and Director of Delaware International
Advisers Ltd.
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
Part C - Other Information
(continued)
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------- -----------------------------------------------
Richard J. Flannery Senior Vice President/Corporate and International
Affairs of the Registrant, each of the other funds
in the Delaware Group, Delaware Management
Holdings, Inc., DMH Corp., Delaware Management
Company, Inc., Delaware Distributors, Inc.,
Delaware Distributors, L.P., Delaware Management
Trust Company, Delaware Capital Management, Inc.,
Delaware Service Company, Inc. and Delaware
Investment & Retirement Services, Inc.; Senior
Vice President/Corporate and International
Affairs and Director of Founders Holdings, Inc.
and Delaware International Holdings Ltd.; Senior
Vice President of Founders CBO Corporation; and
Director of Delaware International Advisers Ltd.
Director, HYPPCO Finance Company 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 Senior Vice President and Treasurer of the
Registrant, each of the other funds in the
Delaware Group, Delaware Distributors, Inc. and
Founders Holdings, Inc.; Senior Vice
President/Investment Accounting of Delaware
Management Company, Inc. and Delaware Service
Company, Inc.; Senior Vice President and
Treasurer/Manager, Investment Accounting of
Delaware Distributors, L.P.; Assistant Treasurer
of Founders CBO Corporation; and Senior Vice
President and Manager of Investment Accounting of
Delaware International Holdings Ltd.
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
Part C - Other Information
(continued)
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------- -----------------------------------------------
Joseph H. Hastings Senior Vice President/Corporate Controller and
Treasurer of Delaware Management Holdings, Inc.,
DMH Corp., Delaware Management Company, Inc.,
Delaware Distributors, Inc., Delaware Capital
Management, Inc., Delaware Distributors, L.P.,
Delaware Service Company, Inc. and Delaware
International Holdings Ltd.; Senior Vice
President/Corporate Controller of the Registrant,
each of the other funds in the Delaware Group and
Founders Holdings, Inc.; 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 Senior Vice
President/Assistant Treasurer of Founders CBO
Corporation
Michael T. Taggart Senior Vice President/Facilities Management and
Administrative Services of Delaware Management
Company, Inc.
Douglas L. Anderson Senior Vice President/Operations of Delaware
Management Company, Inc., Delaware Investment and
Retirement Services, Inc. and Delaware Service
Company, Inc.; Senior Vice President/ Operations
and Director of Delaware Management Trust Company
James L. Shields Senior Vice President/Chief Information Officer of
Delaware Management Company, Inc., Delaware
Service Company, Inc. and Delaware Investment &
Retirement Services, Inc.
Eric E. Miller Vice President, Assistant Secretary and Deputy
General Counsel of the Registrant and each of the
other funds in the Delaware Group, 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 Holdings, Inc., Delaware Capital
Management, Inc. and Delaware Investment &
Retirement Services, Inc.
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
Part C - Other Information
(continued)
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
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., Delaware Investment & Retirement
Services, Inc. and Founders Holdings, Inc.;
Secretary of Founders CBO Corporation; and
Assistant Secretary of Delaware International
Holdings Ltd.
Partner of Tri-R Associates since 1989, 10001
Sandmeyer Lane, Philadelphia, PA
Richard Salus(1) Vice President/Assistant Controller of Delaware
Management Company, Inc. and Delaware Management
Trust Company
Bruce A. Ulmer Vice President/Director of LNC Internal
Audit of Delaware Management Company, Inc., the
Registrant, each of the other funds in the
Delaware Group, Delaware Management Holdings,
Inc., DMH Corp., Delaware Management Trust Company
and Delaware Investment & Retirement Services,
Inc.
Steven T. Lampe(2) 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 Capital Management, Inc. and
Delaware Investment & Retirement Services, Inc.
Christopher Adams(3) Vice President/Strategic Planning of Delaware
Management Company, Inc. and Delaware Service
Company, Inc.
Susan L. Hanson Vice President/Strategic Planning of Delaware
Management Company, Inc. and Delaware Service
Company, Inc.
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
Part C - Other Information
(continued)
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------- -----------------------------------------------
Dennis J. Mara(4) Vice President/Acquisitions of Delaware Management
Company, Inc.
Scott Metzger Vice President/Business Development of Delaware
Management Company, Inc. and Delaware Service
Company, 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 Registrations of Delaware
Management Company, Inc., the Registrant, each of
the other funds in the Delaware Group, Delaware
Distributors, L.P. and Delaware Distributors, Inc.
Gerald T. Nichols Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., 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
Paul A. Matlack Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., 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.
Gary A. Reed Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., each of the
tax-exempt funds and the fixed income funds in
the Delaware Group and Delaware Capital
Management, Inc.
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
Part C - Other Information
(continued)
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------- -----------------------------------------------
Patrick P. Coyne Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., each of the
tax-exempt funds and the fixed income funds in
the Delaware Group and Delaware Capital
Management, Inc.
Roger A. Early Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., each of the
tax-exempt funds and the fixed income funds in
the Delaware Group
Mitchell L. Conery(5) Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., and each of
the tax-exempt and fixed income funds in the
Delaware Group
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 and each of the equity funds in the
Delaware Group and Delaware Capital
Management, Inc.
Gerald S. Frey(6) Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., the
Registrant and each of the equity funds in the
Delaware Group
Christopher Beck(7) Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., the
Registrant and each of the equity funds in the
Delaware Group
Elizabeth H. Howell(8) Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc. and the
Delaware-Voyageur Tax-Free Minnesota
Intermediate, Delaware-Voyageur Minnesota
Insured, Delaware-Voyageur Tax-Free Minnesota,
Delaware-Voyageur Tax-Free Idaho,
Delaware-Voyageur Tax-Free Kansas,
Delaware-Voyageur Tax-Free Missouri,
Delaware-Voyageur Tax-Free Oregon,
Delaware-Voyageur Tax-Free Washington,
Delaware-Voyageur Tax-Free Iowa and
Delaware-Voyageur Tax-Free Wisconin Funds.
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
Part C - Other Information
(continued)
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
Andrew M. McCullagh(9) Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc. and the
Delaware-Voyageur Tax-Free Arizona Insured,
Delaware-Voyageur Tax-Free Arizona,
Delaware-Voyageur Tax-Free California Insured,
Delaware-Voyageur Tax-Free Colorado,
Delaware-Voyageur Tax-Free New Mexico,
Delaware-Voyageur Tax-Free North Dakota and
Delaware-Voyageur Tax-Free Utah Funds.
Paul Grillo Vice President/Portfolio Manager of Delaware
Management Company, Inc., and each of the
tax-exempt and fixed income funds in the
Delaware Group
William H. Miller Vice President/Assistant Portfolio Manager of
Delaware Management Company, Inc.
(1) SENIOR MANAGER, Ernst & Young LLP prior to December 1996.
(2) TAX MANAGER, Price Waterhouse LLP prior to October 1995.
(3) SENIOR ASSOCIATE, FAS, Coopers & Lybrand LLP prior to October 1995.
(4) CORPORATE CONTROLLER, IIS prior to July 1997 and DIRECTOR, FINANCIAL
PLANNING, Decision One prior to March 1996.
(5) INVESTMENT OFFICER, Travelers Insurance prior to January 1997.
(6) SENIOR DIRECTOR, Morgan Grenfell Capital Management prior to June 1996.
(7) SENIOR PORTFOLIO MANAGER, Pitcairn Trust Company prior to May 1997.
(8) SENIOR PORTFOLIO MANAGER, Voyageur Fund Managers, Inc. prior to
May 1997.
(9) SENIOR VICE PRESIDENT, SENIOR PORTFOLIO MANAGER, Voyageur Asset
Management LLC prior to May 1997.
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
Part C - Other Information
(continued)
(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, The Labor
Select International Equity Portfolio, The Emerging Markets Portfolio and The
Global 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 Income Funds, Inc., 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:
Positions and Offices with Delaware International
Name and Principal Advisers Ltd. and its Affiliates and Other Positions
Business Address and Offices Held
- ----------------- ----------------------------------------------------
*Wayne A. Stork Chairman, Chief Executive Officer and Director of
Delaware International Advisers Ltd.; Chairman of
the Board, President, Chief Executive Officer,
Chief Investment Officer and Director of Delaware
Management Company, Inc.; President, Chief
Executive Officer, Chairman of the Board and
Director of the Registrant, 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 and Director of Delaware Distributors,
Inc. and Delaware Capital Management, Inc.; and
Director of Delaware Service Company, Inc. and
Delaware Investment & Retirement Services, Inc.
** G. Roger H. Kitson Vice Chairman and Director of Delaware International
Advisers Ltd.
* Business address is 1818 Market Street, Philadelphia, PA 19103.
** Business address if Veritas House, 125 Finsbury Pavement, London,
England EC2A 1NQ.
<PAGE>
Part C - Other Information
(continued)
Positions and Offices with Delaware International
Name and Principal Advisers Ltd. and its Affiliates and Other Positions
Business Address and Offices Held
- ----------------- ----------------------------------------------------
**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.
*David K. Downes Director of Delaware International Advisers Ltd.;
Executive Vice President, Chief Operating Officer,
Chief Financial Officer and Director of Delaware
Management Company,Inc., DMH Corp, Delaware
Distributors, Inc., Founders Holdings, Inc.and
Delaware International Holdings Ltd.; Executive Vice
President, Chief Operating Officer and Chief Financial
Officer of the Registrant and each of the other funds
in the Delaware Group, Delaware Management Holdings,
Inc., Founders CBO Corporation and Delaware Capital
Management, Inc.; Chairman and Director of Delaware
Management Trust Company; President, Chief Executive
Officer, Chief Financial Officer and Director of
Delaware Service Company, Inc.; Chairman and Director
of Delaware Investment & Retirement Services, Inc.;
and Senior Vice President, Chief Administrative
Officer and Chief Financial Officer of Delaware
Distributors, L.P.
Chief Executive Officer and Director of Forewarn, Inc.
since 1993, 8 Clayton Place, Newtown Square, PA
* Business address is 1818 Market Street, Philadelphia, PA 19103.
** Business address is Veritas House, 125 Finsbury Pavement, London,
England EC2A 1NQ.
<PAGE>
Part C - Other Information
(continued)
Positions and Offices with Delaware International
Name and Principal Advisers Ltd. and its Affiliates and Other Positions
Business Address and Offices Held
- ----------------- ----------------------------------------------------
*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. and Delaware Capital
Management, 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, AAA Mid Atlantic, Inc. since
1989, 2040 Market Street, Philadelphia, PA; Board of
Directors, Metron, Inc. since 1995, 11911 Freedom
Drive, Reston, VA
*Richard J. Flannery Director of Delaware International Advisers Ltd.;
Senior Vice President/Corporate and International
Affairs of the Registrant, each of the other funds in
the Delaware Group, Delaware Management Holdings,
Inc., DMH Corp., Delaware Management Company, Inc.,
Delaware Distributors, Inc., Delaware Distributors,
L.P., Delaware Management Trust Company and Delaware
Capital Management, Inc.; Managing Director/Corporate
& Tax Affairs of Delaware Service Company, Inc. and
Delaware Investment & Retirement Services, Inc.;
Senior Vice President/Corporate and International
Affairs and Director of Founders Holdings, Inc. and
Delaware International Holdings Ltd.; and Senior Vice
President of Founders CBO Corporation
Director, HYPPCO Finance Company 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.
* Business address is 1818 Market Street, Philadelphia, PA 19103.
** Business address is Veritas House, 125 Finsbury Pavement, London,
England EC2A 1NQ.
<PAGE>
Part C - Other Information
(continued)
Positions and Offices with Delaware International
Name and Principal Advisers Ltd. and its Affiliates and Other Positions
Business Address and Offices Held
- ----------------- ----------------------------------------------------
*George M. Director of Delaware International Advisers Ltd.;
Chamberlain, Jr. Senior Vice President, Secretary, General Counsel
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, Secretary and General Counsel 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, General Counsel and Director of Delaware
Management Trust Company; and Secretary and Director
of Delaware International Holdings Ltd.
*George E. Deming Director of Delaware International Advisers Ltd.
**Timothy W. Senior Portfolio Manager, Deputy Compliance Officer,
Sanderson 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.
**Robert Akester Senior Portfolio Manager of Delaware International
Advisers Ltd.
**Elizabeth A. Senior Portfolio Manager of Delaware International
Desmond Advisers Ltd.
**Gavin A. Hall Senior Portfolio Manager of Delaware International
Advisers Ltd.
* Business address is 1818 Market Street, Philadelphia, PA 19103.
** Business address is Veritas House, 125 Finsbury Pavement, London,
England EC2A 1NQ.
<PAGE>
Part C - Other Information
(continued)
(c) Lincoln Investment Management Company, Inc. serves as sub-adviser
to The Real Estate Investment Trust Portfolio and The REIT 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:
Positions and Offices with Delaware International
Name and Principal Advisers Ltd. and its Affiliates and Other Positions
Business Address and Offices Held
- ----------------- ----------------------------------------------------
*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 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; and Director of Lynch & Mayer,
Inc. and Vantage Global Advisors, Inc.
*Business address is 200 East Berry Street, Fort Wayne, IN 46802.
<PAGE>
Part C - Other Information
(continued)
Positions and Offices with Delaware International
Name and Principal Advisers Ltd. and its Affiliates and Other Positions
Business Address and Offices Held
- ----------------- ----------------------------------------------------
*Steven R. Brody Director, Senior Vice President of Lincoln Investment
Management, 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.; Second Vice
President of Lincoln Life & Annuity Company of New
York; Director of Lincoln National Convertible
Securities Fund, Inc.; and Director and Vice
President of Lincoln National Income Fund, Inc.
*JoAnn E. Becker Vice President of Lincoln Investment Management, 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 National Convertible Securities Fund, Inc. and
Lincoln National Income Fund, Inc.; and Second Vice
President of Lincoln Life & Annuity Company of New
York
*Business address is 200 East Berry Street, Fort Wayne, IN 46802.
<PAGE>
Part C - Other Information
(continued)
Positions and Offices with Delaware International
Name and Principal Advisers Ltd. and its Affiliates and Other Positions
Business Address and Offices Held
- ----------------- ----------------------------------------------------
*Anne E. Bookwalter Vice President (previously Second Vice President) of
Lincoln Investment Management, Inc.; and Director of
Professional Financial Planning, Inc.
*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
*Business address is 200 East Berry Street, Fort Wayne, IN 46802.
<PAGE>
Part C - Other Information
(continued)
Positions and Offices with Delaware International
Name and Principal Advisers Ltd. and its Affiliates and Other Positions
Business Address and Offices Held
- ----------------- ----------------------------------------------------
*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
*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
*Milton W. Shuey 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., Lincoln Life & Annuity Company of
New York and First Penn-Pacific Life Insurance
Company; President, Chief Executive Officer and
Director of The Lincoln National Life Insurance
Company; and President of Lincoln Financial Group,
Inc.
* Business address is 200 East Berry Street, Fort Wayne, IN 46802.
** Business address is 1300 S. Clinton Street, Fort Wayne, IN 46802.
<PAGE>
Part C - Other Information
(continued)
Positions and Offices with Delaware International
Name and Principal Advisers Ltd. and its Affiliates and Other Positions
Business Address and Offices Held
- ----------------- ----------------------------------------------------
*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
*Business address is 200 Berry Street, Fort Wayne, IN 46802.
<PAGE>
Part C - Other Information
(continued)
Positions and Offices with Delaware International
Name and Principal Advisers Ltd. and its Affiliates and Other Positions
Business Address and Offices Held
- ----------------- ----------------------------------------------------
*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 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., Lincoln
National Variable Annuity Funds A & B and Lincoln Life
& Annuity Company of New York
*Business address is 200 East Berry Street, Fort Wayne, IN 46802.
<PAGE>
Part C - Other Information
(continued)
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
Company, Inc. Limited Partner Investment Manager to The
Defensive Equity, The
Aggressive Growth, The Fixed
Income, The Limited-Term
Maturity, The Defensive Equity
Small/Mid-Cap, The High-Yield
Bond and The Real Estate
Investment Trust Portfolios
Delaware Capital Limited Partner None
Management, Inc.
Bruce D. Barton President and Chief Executive None
Officer
David K. Downes Senior Vice President, Executive Vice
Chief Administrative Officer President/Chief
and Chief Financial Officer Operating Officer/
Chief Financial Officer
George M. Chamberlain, Jr. Senior Vice President/Secretary/ Senior Vice
President/General Counsel Secretary/General Counsel
</TABLE>
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
Part C - Other Information
(continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------- ---------------------- ----------------------
<S> <C> <C>
Terrence P. Cunningham Senior Vice President/ Financial None
Institutions
Thomas E. Sawyer Senior Vice President/ None
National Sales Director
Dana B. Hall Senior Vice President/Key Accounts None
Mac McAuliffe Senior Vice President/Sales None
Manager, Western Division
William F. Hostler Senior Vice President/ None
Marketing Services
J. Chris Meyer Senior Vice President/ None
Director Product Management
Stephen H. Slack Senior Vice President/Wholesaler None
William M. Kimbrough Senior Vice President/Wholesaler None
Daniel J. Brooks Senior Vice President/Wholesaler None
Richard J. Flannery Senior Vice President/Corporate Senior Vice President/
and International Affairs Corporate and
International Affairs
Bradley L. Kolstoe Senior Vice President/Western None
Division Sales Manager
Henry W. Orvin Senior Vice President/Eastern None
Division Sales Manager - Wire/
Regional Channel
Michael P. Bishof Senior Vice President and Treasurer/ Senior Vice
Manager, Investment Accounting President/Treasurer
</TABLE>
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
Part C - Other Information
(continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------- --------------------- ----------------------
<S> <C> <C>
Eric E. Miller Vice President/Assistant Secretary/ Vice President/
Deputy General Counsel Assistant Secretary/
Deputy General Counsel
Richelle S. Maestro Vice President/ Vice President/
Assistant Secretary Assistant Secretary
Steven T. Lampe Vice President/Taxation Vice President/Taxation
Joseph H. Hastings Vice President/Corporate Senior Vice President/
Controller &
Treasurer Corporate Controller
Lisa O. Brinkley Vice President/Compliance Vice President/
Compliance
Rosemary E. Milner Vice President/Legal Registrations Vice President/Legal
Registrations
Daniel H. Carlson Vice President/Strategic Marketing None
Diane M. Anderson Vice President/Plan Record Keeping None
and Administration
Anthony J. Scalia Vice President/Defined Contribution None
Sales, SW Territory
Courtney S. West Vice President/Defined Contribution None
Sales, NE Territory
Denise F. Guerriere Vice President/Client Services None
Gordon E. Searles Vice President/Client Services None
Julia R. Vander Els Vice President/Participant Services None
Jerome J. Alrutz Vice President/Retail Sales None
</TABLE>
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
Part C - Other Information
(continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------- ---------------------- ----------------------
<S> <C> <C>
Joanne A. Mettenheimer Vice President/New Business None
Development
Scott Metzger Vice President/Business Development Vice President/Business
Development
Stephen C. Hall Vice President/Institutional Sales None
Gregory J. McMillan Vice President/ National Accounts None
Christopher H. Price Vice President/Manager, Insurance None
Stephen J. DeAngelis Vice President/Product Development None
Zina DeVassal Vice President/Financial Institutions None
Andrew W. Whitaker Vice President/Financial Institutions None
Jesse Emery Vice President/ Marketing None
Communications
Darryl S. Grayson Vice President, Broker/Dealer None
Internal Sales
Susan T. Friestedt Vice President/Client Service None
Dinah J. Huntoon Vice President/Product None
Manager Equity
Soohee Lee Vice President/Fixed Income None
Product Management
Michael J. Woods Vice President/ UIT Product None
Management
Ellen M. Krott Vice President/Marketing None
</TABLE>
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
Part C - Other Information
(continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------- ---------------------- ----------------------
<S> <C> <C>
Dale L. Kurtz Vice President/Marketing Support None
Holly W. Reimel Vice President/Manager, Key Accounts None
David P. Anderson Vice President/Wholesaler None
Lee D. Beck Vice President/Wholesaler None
Gabriella Bercze Vice President/Wholesaler None
Terrence L. Bussard Vice President/Wholesaler None
William S. Carroll Vice President/Wholesaler None
William L. Castetter Vice President/Wholesaler None
Thomas J. Chadie Vice President/Wholesaler None
Thomas C. Gallagher Vice President/Wholesaler None
Douglas R. Glennon Vice President/Wholesaler None
Ronald A. Haimowitz Vice President/Wholesaler None
Christopher L. Johnston Vice President/Wholesaler None
Michael P. Jordan Vice President/Wholesaler None
Jeffrey A. Keinert Vice President/Wholesaler None
Thomas P. Kennett Vice President/ Wholesaler None
Debbie A. Marler Vice President/Wholesaler None
Nathan W. Medin Vice President/Wholesaler None
Roger J. Miller Vice President/Wholesaler None
</TABLE>
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
Part C - Other Information
(continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------- --------------------- ----------------------
<S> <C> <C>
Patrick L. Murphy Vice President/Wholesaler None
Stephen C. Nell Vice President/Wholesaler None
Julia A. Nye Vice President/Wholesaler None
Joseph T. Owczarek Vice President/Wholesaler None
Mary Ellen Pernice-Fadden Vice President/Wholesaler None
Mark A. Pletts Vice President/Wholesaler None
Philip G. Rickards Vice President/Wholesaler None
Laura E. Roman Vice President/Wholesaler None
Linda Schulz Vice President/Wholesaler None
Edward B. Sheridan Vice President/Wholesaler None
Robert E. Stansbury Vice President/Wholesaler None
Julia A. Stanton Vice President/Wholesaler None
Larry D. Stone Vice President/Wholesaler None
Edward J. Wagner Vice President/Wholesaler None
Wayne W. Wagner Vice President/Wholesaler None
John A. Wells Vice President/Marketing Technology None
Scott Whitehouse Vice President/Wholesaler None
(c) Not Applicable.
</TABLE>
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
Part C - Other Information
(continued)
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 Portfolio, The
International Fixed Income Portfolio, The Defensive
Equity Small/Mid-Cap Portfolio, The Global Equity
Portfolio and The Real Estate Investment Trust
Portfolio II.
(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.
<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 10th day of October, 1997.
DELAWARE POOLED TRUST, INC.
By /s/ Wayne A. Stork
----------------------------------------
Wayne A. Stork
Chairman of the Board, President,
Chief Executive Officer 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, President, October 10, 1997
- -------------------------------------- Chief Executive Officer and Director
Wayne A. Stork
/s/David K. Downes Executive Vice President/Chief October 10, 1997
- -------------------------------------- Operating Officer/Chief Financial
David K. Downes Officer (Principal Financial Officer
and Principal Accounting Officer)
/s/Walter P. Babich * Director October 10, 1997
- --------------------------------------
Walter P. Babich
/s/Anthony D. Knerr * Director October 10, 1997
- --------------------------------------
Anthony D. Knerr
/s/Ann R. Leven * Director October 10, 1997
- --------------------------------------
Ann R. Leven
/s/W. Thacher Longstreth * Director October 10, 1997
- --------------------------------------
W. Thacher Longstreth
/s/Thomas F. Madison * Director October 10, 1997
- --------------------------------------
Thomas F. Madison
/s/Jeffrey J. Nick * Director October 10, 1997
- --------------------------------------
Jeffrey J. Nick
/s/Charles E. Peck * Director October 10, 1997
- --------------------------------------
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
Exhibit No. Exhibit
- ----------- -------
EX-99.B9DI Executed Amendment No. 6 (July 21, 1997) to Schedule A
to Delaware Group of Funds Fund Accounting Agreement
EX-99.B11 Consent of Independent Auditors
EX-99.B16B Schedules of Computation for periods not previously filed
EX-27 Financial Data Schedules
<PAGE>
AMENDMENT NO. 6
to
SCHEDULE A
of
DELAWARE GROUP OF FUNDS*
FUND ACCOUNTING AGREEMENT
Delaware Group Adviser Funds, Inc.
Corporate Income Fund
Enterprise Fund
Federal Bond Fund
New Pacific Fund
U.S. Growth Fund
World Growth Fund
Delaware Group Cash Reserve, Inc.
Delaware Group Equity Funds I, Inc. (formerly Delaware)
Delaware Fund
Devon Fund
Delaware Group Equity Funds II, Inc. (formerly Decatur)
Blue Chip Fund (New)
Decatur Income Fund
Decatur Total Return Fund
Quantum Fund (New)
Delaware Group Equity Funds IV, Inc. (formerly DelCap)
Capital Appreciation Fund (New)
DelCap Fund
Delaware Group Equity Funds V, Inc. (formerly Value)
Value Fund
Retirement Income Fund (New)
Delaware Group Government Fund, Inc.
Government Income Series (U.S. Government Fund)
- ------------------
*Except as otherwise noted, all Portfolios included on this Schedule A
are Existing Portfolios for purposes of the compensation described on Schedule B
to that Fund Accounting Agreement between Delaware Service Company, Inc. and the
Delaware Group of Funds dated as of August 19, 1996 ("Agreement"). All
portfolios added to this Schedule A by amendment executed by a Company on behalf
of such Portfolio hereof shall be a New Portfolio for purposes of Schedule B to
the Agreement.
1
<PAGE>
Delaware Group Global & International Funds, Inc.
Emerging Markets Fund (New)
Global Assets Fund
Global Bond Fund
International Equity Fund
Global Equity Fund (New)
International Small Cap Fund (New)
Delaware Group Income Funds, Inc. (formerly Delchester)
Delchester Fund
High-Yield Opportunities Fund (New)
Strategic Income Fund (New)
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund
U. S. Government Money Fund
Delaware Pooled Trust, Inc.
The Aggressive Growth Portfolio
The Defensive Equity Portfolio
The Defensive Equity Small/Mid-Cap Portfolio (New)
The Defensive Equity Utility Portfolio (New)
The Emerging Markets Portfolio (New)
The Fixed Income Portfolio
The Global Fixed Income Portfolio
The High-Yield Bond Portfolio (New)
The International Equity Portfolio
The International Fixed Income Portfolio (New)
The Labor Select International Equity Portfolio
The Limited-Term Maturity Portfolio (New)
The Real Estate Investment Trust Portfolio
Delaware Group Premium Fund, Inc.
Capital Reserves Series
Cash Reserve Series
Convertible Securities Series (New)
Decatur Total Return Series
Delaware Series
Delchester Series
Devon Series (New)
Emerging Markets Series (New)
DelCap Series
Global Bond Series (New)
International Equity Series
Quantum Series (New)
Strategic Income Series (New)
2
<PAGE>
Trend Series
Value Series
Delaware Group State Tax-Free Income Trust
Tax-Free New Jersey Fund (New)
Tax-Free Ohio Fund (New)
Tax-Free Pennsylvania Fund
Delaware Group Tax-Free Fund, Inc.
Tax-Free Insured Fund
Tax-Free USA Fund
Tax-Free USA Intermediate Fund
Delaware Group Tax-Free Money Fund, Inc.
Delaware Group Trend Fund, Inc.
Voyageur Funds, Inc.
Voyageur U.S. Government Securities Fund (New)
Voyageur Insured Funds, Inc.
Arizona Insured Tax Free Fund (New)
Colorado Insured Fund (New)
Minnesota Insured Fund (New)
National Insured Tax Free Fund (New)
Voyageur Intermediate Tax Free Funds, Inc.
Arizona Limited Term Tax Free Fund (New)
California Limited Term Tax Free Fund (New)
Colorado Limited Term Tax Free Fund (New)
Minnesota Limited Term Tax Free Fund (New)
National Limited Term Tax Free Fund (New)
Voyageur Investment Trust
California Insured Tax Free Fund (New)
Florida Insured Tax Free Fund (New)
Florida Tax Free Fund (New)
Kansas Tax Free Fund (New)
Missouri Insured Tax Free Fund (New)
New Mexico Tax Free Fund (New)
Oregon Insured Tax Free Fund (New)
Utah Tax Free Fund (New)
Washington Insured Tax Free Fund (New)
3
<PAGE>
Voyageur Investment Trust II
Florida Limited Term Tax Free Fund (New)
Voyageur Mutual Funds, Inc.
Arizona Tax Free Fund (New)
California Tax Free Fund (New)
Iowa Tax Free Fund (New)
Idaho Tax Free Fund (New)
Minnesota High Yield Municipal Bond Fund (New)
National High Yield Municipal Bond Fund (New)
National Tax Free Fund (New)
New York Tax Free Fund (New)
Wisconsin Tax Free Fund (New)
Voyageur Mutual Funds II, Inc.
Colorado Tax Free Fund (New)
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund (New)
Growth Stock Fund (New)
International Equity Fund (New)
Tax Efficient Equity Fund (New)
Voyageur Tax Free Funds, Inc.
Minnesota Tax Free Fund (New)
North Dakota Tax Free Fund (New)
Dated as of July 21, 1997
4
<PAGE>
DELAWARE SERVICE COMPANY, INC.
By: /s/ David K. Downes
----------------------------------------
David K. Downes
President, Chief Executive Officer and Chief Financial Officer
DELAWARE GROUP ADVISER FUNDS, INC.
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE GROUP EQUITY FUNDS II, INC.
DELAWARE GROUP EQUITY FUNDS IV, INC.
DELAWARE GROUP EQUITY FUNDS V, INC.
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
DELAWARE GROUP INCOME FUNDS, INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT FUNDS, INC.
DELAWARE POOLED TRUST, INC.
DELAWARE GROUP PREMIUM FUND, INC.
DELAWARE GROUP TAX-FREE FUND, INC.
DELAWARE GROUP TAX FREE MONEY FUND, INC.
DELAWARE GROUP TREND FUND, INC.
DMC TAX-FREE INCOME TRUST-PENNSYLVANIA
VOYAGEUR FUNDS, INC.
VOYAGEUR INSURED FUNDS, INC.
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
VOYAGEUR INVESTMENT TRUST
VOYAGEUR INVESTMENT TRUST II
VOYAGEUR MUTUAL FUNDS, INC.
VOYAGEUR MUTUAL FUNDS II, INC.
VOYAGEUR MUTUAL FUNDS III, INC.
By: /s/ Wayne A. Stork
------------------------------------------
Wayne A. Stork
Chairman, President and
Chief Executive Officer
5
<PAGE>
Consent of Ernst & Young LLP, Independent Auditors
We consent to the references to our firm under the captions "Financial
Highlights" in the Prospectuses and "Financial Statements" in the Statement of
Additional Information and to the incorporation by reference in this
Post-Effective Amendment No. 19 to the Registration Statement (Form N-1A)
(No. 33-40991) of Delaware Pooled Trust, Inc. of our report dated December 12,
1996, included in the 1996 Annual Report to shareholders.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
October 8, 1997
<PAGE>
Delaware Pooled Trust - International Equity Fund
Total Return Performance
Cumulative Total Return
FIVE YEARS ENDED APRIL 30, 1997
- -------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning NAV $10.17
Initial Shares 98.328
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ----------------------------------------------------------------------------
1997 98.328 $2.246 19.188 117.516
- ----------------------------------------------------------------------------
Ending Shares 117.516
Ending NAV x $15.66
----------
Investment Return $1,840.30
Total Return Performance
- ------------------------
Investment Return $1,840.30
Less Initial Investment $1,000.00
---------
$840.30 / $1,000.00 x 100
Total Return: 84.03%
<PAGE>
Delaware Pooled Trust - International Equity Fund
Total Return Performance
Average Annual Compounded Rate of Return
FIVE YEARS ENDED APRIL 30, 1997
- --------------------------------------------------------------------------------
n
P(1 + T) = ERV
FIVE
YEARS
------------
5
$1000(1 + T) = $1,840.30
T = 12.97%
<PAGE>
Delaware Group Pooled Trust - Defensive Equity Portfolio
Total Return Performance
Average Annual Compounded Rate of Return:
FIVE YEARS Ended 4/30/97
- -------------------------------------------------------------------------------
n
P(1 + T) = ERV
FIVE
YEARS
------------
5
$1000(1 + T) = $2,274.63
T = 17.86%
<PAGE>
Delaware Group Pooled Trust - Defensive Equity Portfolio
Total Return Performance
Cumulative Total Return
FIVE YEARS Ended 4/30/97
- -------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning NAV $10.58
Initial Shares 94.518
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1992 94.518 $0.040 0.360 94.878
- ------------------------------------------------------------------------------------------------------------
1993 94.878 $0.490 4.289 99.167
- ------------------------------------------------------------------------------------------------------------
1994 99.167 $0.623 5.057 104.224
- ------------------------------------------------------------------------------------------------------------
1995 104.224 $0.830 7.239 111.463
- ------------------------------------------------------------------------------------------------------------
1996 111.463 $1.600 12.546 124.009
- ------------------------------------------------------------------------------------------------------------
1997 124.009 $1.910 15.710 139.719
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Ending Shares 139.719
Ending NAV x $16.28
----------
Investment Return $2,274.63
Total Return Performance
- ------------------------
Investment Return $2,274.63
Less Initial Investment $1,000.00
---------
$1,274.63 / $1,000.00 x 100
Total Return: 127.46%
<PAGE>
Delaware Group Pooled Trust - Aggressive Growth Portfolio
Total Return Performance
Average Annual Compounded Rate of Return:
FIVE YEARS Ended 4/30/97
- -------------------------------------------------------------------------------
n
P(1 + T) = ERV
FIVE
YEARS
-----------
5
$1000(1 + T) = $1,622.46
T = 10.16%
<PAGE>
Delaware Group Pooled Trust - Aggressive Growth Portfolio
Total Return Performance
Cumulative Total Return
FIVE YEARS Ended 4/30/97
- -------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning NAV $9.04
Initial Shares 110.619
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1992 110.619 $0.000 0.000 110.619
- --------------------------------------------------------------------------------------------------------------
1993 110.619 $0.017 0.186 110.805
- --------------------------------------------------------------------------------------------------------------
1994 110.805 $0.230 2.290 113.095
- --------------------------------------------------------------------------------------------------------------
1995 113.095 $0.248 2.715 115.810
- --------------------------------------------------------------------------------------------------------------
1996 115.810 $0.663 6.022 121.832
- --------------------------------------------------------------------------------------------------------------
1997 121.832 $2.380 23.290 145.122
- --------------------------------------------------------------------------------------------------------------
</TABLE>
Ending Shares 145.122
Ending NAV x $11.18
---------
Investment Return $1,622.46
Total Return Performance
- ------------------------
Investment Return $1,622.46
Less Initial Investment $1,000.00
---------
$622.46 / $1,000.00 x 100
Total Return: 62.25%
<PAGE>
Delaware Group Pooled Trust - Fixed Income Portfolio
Total Return Performance
Average Annual Compounded Rate of Return:
ONE YEAR Ended 4/30/97
- --------------------------------------------------------------------------------
n
P(1 + T) = ERV
ONE
YEAR
-----------
1
$1000(1 + T) = $1,062.27
T = 6.23%
<PAGE>
Delaware Group Pooled Trust- Fixed Income Portfolio
Total Return Performance
Cumulative Total Return
ONE YEAR Ended 4/30/97
- -------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning NAV $9.88
Initial Shares 101.215
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ------------------------------------------------------------------------------
1997 101.215 $0.457 6.411 107.626
- ------------------------------------------------------------------------------
Ending Shares 107.626
Ending NAV x $9.87
---------
Investment Return $1,062.27
Total Return Performance
- ------------------------
Investment Return $1,062.27
Less Initial Investment $1,000.00
---------
$62.27 / $1,000.00 x 100
Total Return: 6.23%
<PAGE>
Delaware Group Pooled Trust - Fixed Income Portfolio
Total Return Performance
Cumulative Total Return
NINE MONTHS Ended 4/30/97
- --------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning NAV $9.84
Initial Shares 101.626
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ---------------------------------------------------------------------------
1997 101.626 $0.457 4.774 106.400
- ---------------------------------------------------------------------------
Ending Shares 106.400
Ending NAV x $9.87
---------
Investment Return $1,050.17
Total Return Performance
- ------------------------
Investment Return $1,050.17
Less Initial Investment $1,000.00
---------
$50.17 / $1,000.00 x 100
Total Return: 5.02%
<PAGE>
Delaware Group Pooled Trust - Real Estate Investment Trust
Total Return Performance
Average Annual Compounded Rate of Return:
ONE YEAR Ended 4/30/97
- -------------------------------------------------------------------------------
n
P(1 + T) = ERV
ONE
YEAR
-----------
1
$1000(1 + T) = $1,402.38
T = 40.24%
<PAGE>
Delaware Group Pooled Trust - Real Estate Investment Trust
Total Return Performance
Cumulative Total Return
One Year Ended 4/30/97
- -------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning NAV $10.56
Initial Shares 94.697
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ------------------------------------------------------------------------------
1997 94.697 $1.510 11.867 106.564
- ------------------------------------------------------------------------------
Ending Shares 106.564
Ending NAV x $13.16
---------
Investment Return $1,402.38
Total Return Performance
- ------------------------
Investment Return $1,402.38
Less Initial Investment $1,000.00
---------
$402.38 / $1,000.00 x 100
Total Return: 40.24%
<PAGE>
Delaware Group Pooled Trust - Labor Select International Equity
Total Return Performance
Average Annual Compounded Rate of Return:
ONE YEAR Ended 4/30/97
- -------------------------------------------------------------------------------
n
P(1 + T) = ERV
ONE
YEAR
-----------
1
$1000(1 + T) = $1,171.11
T = 17.11%
<PAGE>
Delaware Group Pooled Trust - Labor Select International Equity
Total Return Performance
Cumulative Total Return
One Year Ended 4/30/97
- --------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning NAV $11.02
Initial Shares 90.744
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ------------------------------------------------------------------------------
1996 90.744 $0.060 0.487 91.231
- ------------------------------------------------------------------------------
1997 91.231 $0.460 3.596 94.827
- ------------------------------------------------------------------------------
Ending Shares 94.827
Ending NAV x $12.35
---------
Investment Return $1,171.11
Total Return Performance
- ------------------------
Investment Return $1,171.11
Less Initial Investment $1,000.00
---------
$171.11 / $1,000.00 x 100
Total Return: 17.11%
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