<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. 20 [X]
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 20
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: January 9, 1998
---------------
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
------
on (date) pursuant to paragraph (b)
------
60 days after filing pursuant to paragraph (a)(1)
------
on (date) pursuant to paragraph (a)(1)
------
X 75 days after filing pursuant to paragraph (a)(2)
------
on (date) pursuant to paragraph (a)(2) of Rule 485
------
<PAGE>
Title of Securities Being Registered
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 Small/Mid-Cap Value Equity Portfolio
The International Fixed Income Portfolio
The Labor Select International Equity Portfolio
The High-Yield Bond Portfolio
REIT Fund A Class
REIT Fund B Class
REIT Fund C Class
REIT Fund Institutional Class
The Real Estate Investment Trust Portfolio II
The Global Equity Portfolio
The Emerging Markets Portfolio
The Aggregate Fixed Income Portfolio
The Diversified Core Fixed Income Portfolio
The International Mid-Cap Sub Portfolio
<PAGE>
--- C O N T E N T S ---
This Post-Effective Amendment No. 20 to Registration File No. 33-40991 includes
the following:
1. Facing Page
2. Contents Page
3. Cross-Reference Sheet
4. Part A - Prospectuses*
5. Part B - Statement of Additional Information*
6. Part C - Other Information
7. Signatures
* This Post-Effective Amendment relates to the Registrant's 17 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 Small/Mid-Cap Value Equity
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, The Aggregate Fixed
Income Portfolio, The Diversified Core Fixed Income Portfolio and The
International Mid-Cap Sub Portfolio (each a "Portfolio" and together, the
"Portfolios"). The Registrant's REIT Fund A Class, REIT Fund B Class, REIT Fund
C Class Prospectus and REIT Fund Institutional Class Prospectus, each dated
October 14, 1997, of The Real Estate Investment Trust Portfolio are incorporated
into this filing by reference to the electronic filing of the Prospectuses made
pursuant to Rule 497(c) on October 16, 1997.
<PAGE>
CROSS-REFERENCE SHEET
PART A**
<TABLE>
<CAPTION>
<S> <C> <C>
Item No. Description Location in Prospectus*
- -------- ----------- -----------------------
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>
* Relates to all Portfolios, except REIT Fund A Class, REIT Fund B Class, REIT
Fund C Class and REIT Fund Institutional Class of The Real Estate Investment
Trust Portfolio and The International Mid-Cap Sub Portfolio which are described
in separate prospectuses and are covered by separate cross-reference sheets,
which appear next in this filing.
<PAGE>
CROSS-REFERENCE SHEET
PART A*
<TABLE>
<CAPTION>
<S> <C> <C>
Item No. Description Location in Prospectus*
- -------- ----------- -----------------------
The Real Estate Investment
Trust Portfolio
REIT Fund A Class/ REIT Fund
REIT Fund B Class/ Institutional
REIT Fund C Class Class
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>
* The Registrant's REIT Fund A Class, REIT Fund B Class, REIT Fund C Class
Prospectus and REIT Fund Institutional Class Prospectus, each dated October 14,
1997, of The Real Estate Investment Trust Portfolio are incorporated into this
filing by reference to the electronic filing of the Prospectuses made pursuant
to Rule 497(c) on October 16, 1997.
<PAGE>
CROSS-REFERENCE SHEET
PART A
<TABLE>
<CAPTION>
Item No. Description Location in Prospectus
- ------- ------------ ----------------------
The International Mid-Cap
Sub Portfolio
<S> <C> <C>
1 Cover Page........................................................Cover
2 Fund Expenses.....................................................Fund Expenses
3 Condensed Financial Information...................................Financial Highlights
4 General Description of Registrant ................................Investment Objectives,
Policies and Risk
Considerations
5 Management of the Fund ...........................................Management of the Fund
6 Capital Stock and Other Securities ...............................Dividends and Capital Gains
Distributions; Taxes
7 Purchase of Securities Being Offered..............................Cover; Purchase of Shares;
Management of the Fund
8 Redemption or Repurchase..........................................Purchase of Shares;
Redemption of Shares
9 Legal Proceedings.................................................None
</TABLE>
<PAGE>
PART B*
<TABLE>
<CAPTION>
Location in Statement
Item No. Description of Additional Information
- -------- ----------- --------------------------
All Portfolios
<S> <C> <C>
10 Cover Page........................................................Cover
11 Table of Contents.................................................Table of Contents
12 General Information and History...................................General Information
13 Investment Objectives and Policies................................Investment Policies, Portfolio
Techniques and Risk
Considerations
14 Management of the Registrant......................................Officers and Directors
15 Control Persons and Principal Holders
of Securities.....................................................Officers and Directors
16 Investment Advisory and Other Services............................Investment Management
Agreements; Officers and
Directors; General
Information; Financial
Statements
17 Brokerage Allocation..............................................Trading Practices and
Brokerage
18 Capital Stock and Other Securities................................Capitalization and
Noncumulative Voting
(under General Information)
19 Purchase, Redemption and Pricing of
Securities Being Offered..........................................Purchasing Shares;
Determining Net Asset
Value; Redemption and
Repurchase
20 Tax Status........................................................Accounting and Tax Issues;
Taxes
21 Underwriters .....................................................Purchasing Shares
22 Calculation of Performance Data...................................Performance Information
23 Financial Statements..............................................Financial Statements
</TABLE>
<PAGE>
PART C
<TABLE>
<CAPTION>
<S> <C> <C>
Item No. Description Location in Part C
All Portfolios
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>
The Registrant's REIT Fund A Class, REIT Fund B Class, REIT Fund C Class
Prospectus and REIT Fund Institutional Class Prospectus, each dated October 14,
1997, of The Real Estate Investment Trust Portfolio are incorporated into this
filing by reference to the electronic filing of the Prospectuses made pursuant
to Rule 497(c) on October 16, 1997.
<PAGE>
SUBJECT TO COMPLETION
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
DELAWARE POOLED TRUST
Delaware Pooled Trust, Inc. ("Fund") is an open-end management investment
company. In this Prospectus, the Fund offers 16 portfolios (collectively, the
"Portfolios," or, individually, a "Portfolio") , which provide 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 Aggressive Growth Portfolio The Aggregate Fixed Income Portfolio
The Defensive Equity Portfolio The Diversified Core Fixed Income Portfolio
The Emerging Markets Portfolio The Fixed Income Portfolio
The Global Equity Portfolio The Global Fixed Income Portfolio
The International Equity Portfolio The High-Yield Bond Portfolio
The Labor Select International Equity Portfolio The International Fixed Income Portfolio
The Real Estate Investment Trust Portfolio The Limited-Term Maturity Portfolio
The Real Estate Investment Trust Portfolio II
The Small/Mid-Cap Value Equity 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 and The Diversified Core Fixed Income Portfolio
invests up to 100% and 30%, respectively, 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 and The Diversified Core Fixed Income 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 ___________, 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:
<PAGE>
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 ________. 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.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page Page
<S> <C> <C> <C>
Fund Expenses Additional Investment Information
Financial Highlights Investment Limitations
Delaware Pooled Trust Summary Management of the Fund
Fund Officers and Portfolio Managers Shareholder Services
Risk Factors Dividends and Capital Gains
Investment Objectives, Policies Distributions
and Risk Considerations Taxes
Purchase of Shares Valuation of Shares
Redemption of Shares Portfolio Transactions
Performance Information
General Information
Appendix A--Ratings
</TABLE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is:
---------------
2
<PAGE>
FUND EXPENSES
The following tables illustrate all expenses and fees that a shareholder of the
Fund can expect to incur. The purpose of the tables is to assist the investor in
understanding the various expenses that an investor in the Fund will bear
directly or indirectly.
With respect to The Aggregate Fixed Income Portfolio, The Diversified Core Fixed
Income Portfolio, The Fixed Income Portfolio, The Limited-Term Maturity
Portfolio, The International Fixed Income Portfolio, The Small/Mid-Cap Value
Equity 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-
Shareholder The The The Inter- The Limited- The national
Transaction Defensive Aggressive national Fixed Term Global Fixed
Expenses Equity Growth Equity Income Maturity Fixed Income
Portfolio Portfolio Portfolio Portfolio Portfolio Income Portfolio
Portfolio
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales Charge
Imposed on
Purchases None None None None None None None
- ---------------------------------------------------------------------------------------------------------------------------------
Sales Charge
Imposed on
Reinvested None None None None None None None
Dividends
- ---------------------------------------------------------------------------------------------------------------------------------
Redemption Fees None None None None None None None
- ---------------------------------------------------------------------------------------------------------------------------------
Exchange Fees None None None None None None None
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<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
Fees After Voluntary 0.52%* 0.69%* 0.75%* 0.00%* 0.22%* 0.43%* 0.02%*
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
Expenses After
Voluntary Waiver 0.67%* 0.90%* 0.89%* 0.53%* 0.43%* 0.60%* 0.60%*
and Payment
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* The above information for The Defensive Equity Portfolio, The
Aggressive Growth Portfolio, The International Equity Portfolio 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% and 0.30%, respectively, and
"Total Fund Operating Expenses" (as a percentage of average net assets)
would be 0.70%, 1.01%, 1.20% and 0.51%, respectively, for The Defensive
Equity, The Aggressive Growth, The Fixed Income and The Limited-Term
Maturity Portfolios.
Similarly, De laware 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, 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.
4
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
The The
Small/ The Labor The Real The Real The Diversified
Mid-Cap Select Estate Estate The Aggregate The Core Fixed
Shareholder Value International Investment Investment The High- Global Fixed Emerging Income
Transaction Equity Equity Trust Trust Yield Bond Equity Income Markets Portfolio
Expenses Portfolio Portfolio Portfolio Portfolio II Portfolio Portfolio Portfolio Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sales Charge
Imposed on None None None None None None None None None
Purchases
- ----------------------------------------------------------------------------------------------------------------------------------
Sales Charge
Imposed on None None None None None None None None None
Reinvested
Dividends
- ----------------------------------------------------------------------------------------------------------------------------------
Purchase
Reimbursement None None None None None 0.40% None 0.75% None
Fees*
- ----------------------------------------------------------------------------------------------------------------------------------
Redemption
Reimbursement None None None None None 0.30% None 0.75% None
Fees*
Exchange Fees None None None None None None None None None
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
The The
Annual Fund Small/ The Labor The Real The Real The Diversified
Operating Mid-Cap Select Estate Estate The Aggregate The Core Fixed
Expenses (as a Value International Investment Investment The High- Global Fixed Emerging Income
percentage of Equity Equity Trust Trust Yield Bond Equity Income Markets Portfolio
average net assets Portfolio Portfolio Portfolio Portfolio II Portfolio Portfolio Portfolio Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
Investment
Advisory Fees
After Voluntary 0.65%** 0.32%** 0.38%** 0.55%** 0.45%** 0.36%** 0.00%** 0.00%** 0.00%**
Waiver and
Payment
- ----------------------------------------------------------------------------------------------------------------------------------
12b-1 Fees None None None None None None None None None
- ----------------------------------------------------------------------------------------------------------------------------------
Other Expenses 0.14% 0.60% 0.48% 0.31% 0.14% 0.60% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------------------------------
Total Fund
Operating
Expenses After 0.79%** 0.92%** 0.86%** 0.86%** 0.59%** 0.96%** 0.00%** 0.00%** 0.00%**
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 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."
5
<PAGE>
** 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 Small/Mid-Cap Value Equity Portfolio, The
Global Equity Portfolio , The Real Estate Investment Trust Portfolio II, The
Aggregate Fixed Income Portfolio and The Diversified Core Fixed Income
Portfolio 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 Small/Mid-Cap Value Equity Portfolio , The High-Yield
Bond Portfolio, The Aggregate Fixed Income Portfolio and The Diversified
Core Fixed Income 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% , 0.59%, 0.00% and 0.00%,
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% ,
0.75%, 0.00% and 0.00% and "Total Fund Operating Expenses" (as a percentage
of average net assets) would be 0.79%, 0.59% , 1.02%,1.02%, 0.00% and 0.00%,
respectively, for The Small/Mid-Cap Value Equity Portfolio, The High-Yield
Bond Portfolio , The Real Estate Investment Trust Portfolio II; for The Real
Estate Investment Trust Portfolio, The Aggregate Fixed Income Portfolio and
The Diversified Core Fixed Income Portfolio, "Total Fund Operating Expenses"
would be 1.23%, based on the original class' data, adjusted to reflect an
anticipated increase in shareholder service and other expenses.
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, 0.96%, 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 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.
6
<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 Small/Mid-Cap Value Equity Portfolio* $ 8 $25
The High-Yield Bond Portfolio* 6 19
The Global Equity Portfolio* 17 37
The Real Estate Investment Trust Portfolio** 9 27
The Real Estate Investment Trust Portfolio II** 9 27
The Emerging Markets Portfolio* 31 64
The Aggregate Fixed Income Portfolio* 00 00
The Diversified Core Fixed Income Portfolio* 00 00
</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:
1 year 3 years
------ -------
The Emerging Markets Portfolio $23 $56
The Global Equity Portfolio 14 34
* 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.
7
<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 Small/Mid-Cap Value Equity Portfolio, The
Limited-Term Maturity Portfolio, The Real Estate Investment Trust Portfolio II,
The Global Equity Portfolio, The Aggregate Fixed Income Portfolio and The
Diversified Core Fixed Income Portfolio have sold no shares to public investors
and, thus, have not commenced operations.
8
<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.
9
<PAGE>
<TABLE>
<CAPTION>
The Aggressive
Growth Portfolio
-------------------------------------------------------------------
Unaudited Period
Period 2/27/92(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.......... $14.5700 $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.
10
<PAGE>
<TABLE>
<CAPTION>
The International
Equity Portfolio
-------------------------------------------------------------------
Unaudited Period
Period 2/27/92(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.
11
<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.
12
<PAGE>
<TABLE>
<CAPTION>
The Labor Select The Real Estate
International Equity Portfolio Investment Trust Portfolio(4
------------------------------ ------------------------------
Unaudited Period Unaudited Period
Period 12/19/95(1) Period 12/6/95(1)
11/1/96 through through 11/1/96 through through
4/30/97(3) 10/31/96 4/30/97(3) 10/31/96
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................. $11.6900 $10.0000 $12.4900 $10.0000
Income From Investment Operations
Net Investment Income................................ 0.6344 0.4785 0.3700 0.6515
Net Gains (Losses) on Securities
(both realized and unrealized).................... 0.4856 1.3115 1.8100 1.9385
------ ------ ------ ------
Total from Investment Operations............... 1.1200 1.7900 2.1800 2.5900
------ ------ ------ ------
Less Distributions
Dividends (from net investment income)............... (0.4600) (0.1000) (0.7200) (0.1000)
Distributions (from capital gains)................... none none (0.7900) none
---- ---- -------- ----
Total Distributions............................ (0.4600) (0.1000) (1.5100) (0.1000)
-------- -------- -------- --------
Net Asset Value, End of Period....................... $12.3500 $11.6900 $13.1600 $12.4900
Total Return......................................... 9.81%(2) 17.97%(2) 18.57%(2) 26.12%(2)
- ------------
Ratios/Supplemental Data
Net Assets, End of Period (000's omitted)............ $39,272 $23,154 $47,211 $26,468
Ratio of Expenses to Average Daily Net Assets........ 0.94% 0.92% 0.87% 0.89%
Ratio of Expenses to Average Daily Net Assets
Prior to Expense Limitations.................... 1.02% 1.30% 0.91% 1.02%
Ratio of Net Investment Income to Average Daily
Net Assets...................................... 5.03% 6.64% 5.43% 6.70%
Ratio of Net Investment Income to Average Daily
Net Assets
Prior to Expense Limitations.................... 4.95% 6.26% 5.39% 6.57%
Portfolio Turnover Rate.............................. 4% 7% 68% 109%
Average Commission Rate Paid......................... $0.0327 $0.0330 $0.0568 $0.0600
</TABLE>
[Broken Table]
<PAGE>
<TABLE>
<CAPTION>
The Fixed Income Portfolio
-------------------------
Unaudited Period
Period 3/12/96(1)
11/1/96 through through
4/30/97(3) 10/31/96
<S> <C> <C>
Net Asset Value, Beginning of Period................. $10.0100 $10.0000
Income From Investment Operations
Net Investment Income................................ 0.3024 0.3856
Net Gains (Losses) on Securities
(both realized and unrealized).................... (0.1400) 0.0100
-------- ------
Total from Investment Operations............... 0.1624 0.3956
-------- ------
Less Distributions
Dividends (from net investment income)............... (0.3024) (0.3856)
Distributions (from capital gains)................... none none
---- ----
Total Distributions............................ (0.3024) (0.3856)
-------- --------
Net Asset Value, End of Period....................... $9.8700 $10.0100
Total Return......................................... 1.64%(2) 4.08%(2)
- ------------
Ratios/Supplemental Data
Net Assets, End of Period (000's omitted)............ $20,959 $10,518
Ratio of Expenses to Average Daily Net Assets........ 0.52% 0.53%
Ratio of Expenses to Average Daily Net Assets
Prior to Expense Limitations.................... 0.84% 1.20%
Ratio of Net Investment Income to Average Daily
Net Assets...................................... 6.13% 6.14%
Ratio of Net Investment Income to Average Daily
Net Assets
Prior to Expense Limitations.................... 5.81% 5.47%
Portfolio Turnover Rate.............................. 314% 232%
Average Commission Rate Paid......................... 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.
(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 beginning October 14, 1997 and are designated in the
Fund's charter as "The Real Estate Investment Trust Portfolio class"; like
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.
13
<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 $20,443
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 $0.0041
</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.
14
<PAGE>
DELAWARE POOLED TRUST SUMMARY
THE FUND
The Fund is offering in this Prospectus 16 Portfolios providing 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 Aggressive Growth Portfolio--seeks to realize maximum long-term capital
growth. The Portfolio seeks to achieve this objective 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 Defensive Equity Portfolio--seeks to realize maximum long-term total return,
consistent with reasonable risk. The Portfolio seeks to achieve this objective
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 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 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 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.
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
15
<PAGE>
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 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 Small/Mid-Cap Value Equity 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, and,
generally represent the smallest 30% in terms of market capitalization of U.S.
equity securities listed on a national securities exchange or the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"), and
which, in Delaware Investment Advisers' opinion, offer capital gains potential.
The Aggregate Fixed Income Portfolio--seeks to realize maximum long-term total
return, consistent with reasonable risk. The Portfolio seeks to achieve this
objective by investing in a diversified portfolio of fixed-income obligations.
The portfolio will include U.S. government securities , mortgage-backed
securities, corporate bonds and other fixed-income securities. The benchmark
against which its performance will be measured is the Lehman Brothers Aggregate
Bond Index.
The Diversified Core Fixed Income Portfolio--seeks to realize maximum long-term
total return, consistent with reasonable risk. The Portfolio seeks to achieve
its objective by using a multi-sector investment approach, investing in these
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.
The Fixed Income Portfolio--seeks to realize maximum long-term total return,
consistent with reasonable risk. The Portfolio seeks to achieve this objective
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 benchmark against which its performance will be measured is the Lehman
Brothers Government/Corporate Intermediate Bond Index.
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.
16
<PAGE>
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").
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 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.
For further information, see "INVESTMENT OBJECTIVES, POLICIES AND RISK
CONSIDERATIONS" and "ADDITIONAL INVESTMENT INFORMATION."
INVESTMENT MANAGEMENT
Delaware Investment Advisers, a division of Delaware Management Company, Inc.
("Delaware"), acts as investment adviser to The Defensive Equity, The Aggressive
Growth, The Aggregate Fixed Income, The Diversified Core Fixed Income Portfolio,
The Fixed Income, The Limited-Term Maturity, The Small/Mid-Cap Value Equity
Portfolio, 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%, 0.00%, 0.00%, 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, acts as sub-adviser to Delaware with
respect to The Diversified Core Fixed Income Portfolio and receives
% of the management fees paid to Delaware.
Delaware International 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
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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."
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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.
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.
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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
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.
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
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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 , The International Fixed Income Portfolio and The
Diversified Core Fixed Income Portfolio) Mr. Sims is a graduate of the
University of Leicester and holds a postgraduate degree in statistics from the
University of Newcastle-Upon-Tyne. He joined Delaware International Advisers
Ltd. in 1990 as a senior international fixed-income and currency manager. Mr.
Sims began his investment career with the Standard Life Assurance Co., and
subsequently moved to the Royal Bank of Canada Investment Management
International Company, where he was an international fixed-income manager. Prior
to joining Delaware, he was a senior fixed-income and currency portfolio manager
with Hill Samuel Investment Advisers Ltd. Mr. Sims has managed The Global Fixed
Income Portfolio since its inception and will manage The International Fixed
Income Portfolio when it commences operations.
Paul A. Matlack
Vice President/Senior Portfolio Manager - The High-Yield Bond Portfolio and The
Diversified Core Fixed Income 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
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industries. He is a CFA charterholder. Mr. Nichols has served as a portfolio
manager of The High-Yield Bond Portfolio since its inception.
Roger A. Early
Vice President/Senior Portfolio Manager - The Diversified Core Fixed Income
Portfolio [Bio to be supplied]
Frank X. Morris
[Title] - The Small/Mid-Cap Value Equity Portfolio
Mr. Morris received a bachelor's degree at Providence College and an MBA degree
at Widener University. He joined Delaware in 1997. He previously served as vice
president and director of equity research at PNC Asset Management. He is
president of the Financial Analysis Society of Philadelphia and is a member of
the Association of Investment Management and Research and the National
Association of Petroleum Investment Analysts.
James F. Stanley
[Title] - The Small/Mid-Cap Value Equity Portfolio
Mr. Stanley, a chartered financial analyst, earned a bachelor's degree in
finance at the University of Rochester. He joined Delaware in 1997. He
previously served as a senior managing equity analyst covering the chemical,
building products, and housing industries at Dreyfus Corporation; initially he
was a research associate at the firm.
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."
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SPECIAL REPORTS AND OTHER SERVICES
The Fund provides client shareholders with annual audited financial reports and
unaudited semi-annual financial reports. In addition, the investment advisers'
dedicated service staff may also provide client shareholders detailed monthly
appraisals of the status of their account and complete reviews of portfolio
assets, performance results and other pertinent data. Finally, the investment
advisers' service staff expects to conduct personal reviews no less than
annually with each shareholder, with interim telephone updates and other
communications, as appropriate. The Fund's dedicated telephone number
(1-800-231-8002) is available for shareholder inquiries during normal business
hours. The net asset values for the Portfolios are also available by using the
above "800" telephone number. Written correspondence should be addressed to:
Delaware Pooled Trust, Inc.
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
Attn: Client Services
From time to time, certain institutional separate accounts advised by Delaware
Investment Advisers or Delaware International may invest in the Fund's
Portfolios. The Portfolios may experience relatively large investments or
redemptions as a result of the institutional separate accounts either purchasing
or redeeming the Portfolios' shares. These transactions will affect the
Portfolios, since Portfolios that experience redemptions may be required to sell
portfolio securities, and Portfolios that receive additional cash will need to
invest it. While it is impossible to predict the overall impact of these
transactions over time, there could be adverse effects on portfolio management
to the extent the Portfolios may be required to sell securities or invest cash
at times when they would not otherwise do so. Delaware Investment Advisers and
Delaware International, representing the interests of the Portfolios, is
committed to minimizing the impact of such transactions on the Portfolios. In
addition, Delaware Investment Advisers and Delaware International, as adviser to
the institutional separate accounts, is also committed to minimizing the impact
on the Portfolios to the extent it is consistent with pursuing the investment
objectives of the institutional separate accounts.
If permitted under applicable law, in cases where a shareholder of any of the
Portfolios has an investment counseling relationship with Delaware Investment
Advisers or Delaware International, Delaware Investment 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."
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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
International Mid-Cap Sub, The Labor Select International Equity, The Real
Estate Investment Trust, The High-Yield Bond, The International Fixed Income,
The Global Equity, The Aggregate Fixed Income, The Diversified Core Fixed
Income 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
Small/Mid-Cap Value Equity Portfolios.
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 contributions of 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
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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 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 Small/Mid-Cap Value Equity 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 and The Diversified Core Fixed Income
Portfolio may invest up to 20% of its 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, The Diversified Core Fixed Income 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
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<PAGE>
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, The Diversified Core Fixed Income 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 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, The Diversified Core Fixed Income 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 Small/Mid-Cap Value Equity, The Real Estate
Investment Trust, The Global Equity, The Diversified Core Fixed Income and The
Emerging Markets Portfolios also may, under certain circumstances, use certain
futures contracts and options on futures contracts, as well as options on
securities. The Portfolios will only enter into these transactions for hedging
purposes. See "FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS", "OPTIONS"
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 primarily 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. The
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Diversified Core Fixed Income Portfolio may invest up to 30% of its total assets
in such 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. The Diversified Core
Fixed Income Portfolio may invest up to 15% of its total assets these
securities. 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 Aggregate Fixed Income, The Limited-Term Maturity, The
Global Fixed Income , The International Fixed Income and The Diversified Core
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 , The Aggregate Fixed Income and The Diversified Core Fixed
Income Portfolios and 200% with respect to The Limited-Term Maturity, The Global
Fixed Income and The International Fixed Income Portfolios. Such relatively high
portfolio turnover rates involve correspondingly higher brokerage commissions,
for equity transactions, and other transaction costs and may affect the taxes
payable by the Portfolios' shareholders that are subject to federal income tax.
See "INVESTMENT OBJECTIVES, POLICIES AND RISK CONSIDERATIONS," "PORTFOLIO
TRANSACTIONS" and "TAXES."
The Aggregate Fixed Income, The Diversified Core Fixed Income, 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.
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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.
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.
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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 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
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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 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
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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 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."
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Currency considerations carry a special risk for a portfolio of international
securities, and the investment adviser employs a purchasing power parity
approach to evaluate currency risk. In this regard, the Portfolio will actively
carry on hedging activities, and may invest in forward foreign currency exchange
contracts to hedge currency risks associated with the purchase of individual
securities denominated in a particular currency. See "ADDITIONAL INVESTMENT
INFORMATION--FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS."
THE SMALL/MID-CAP VALUE EQUITY PORTFOLIO
The Small/Mid-Cap Value Equity 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,
generally represent the smallest 30% in terms of market capitalization of U.S.
equity securities listed on a national securities exchange or NASDAQ, 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 described above. 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 dividend paying 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
dividend paying, 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) generally represent the
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smallest 30% in terms of market capitalization of U.S. equity securities listed
on a national securities exchange or NASDAQ.
The Portfolio expects to invest in companies in the capitalization range
described above, and that have been in existence for at least three years
(including the operation of any predecessor company) but which have the
potential, in the investment adviser's judgment, for providing long-term total
return. Because the Portfolio seeks long-term total return by investing
primarily in small- to mid-cap companies, its investments are likely to involve
a higher degree of liquidity risk and price volatility than investments in
larger capitalization securities. The Portfolio may also invest in futures
contracts and options on futures contracts subject to certain limitation. See
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS" under "ADDITIONAL INVESTMENT
INFORMATION".
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
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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 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.
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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."
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.
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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 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
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securities and other money market instruments, at times when the Portfolio's
assets are not fully invested in equity securities. Such positions will
generally be eliminated when it becomes possible to invest in securities that
are appropriate for the Portfolio. See "ADDITIONAL INVESTMENT
INFORMATION--FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS" and "OPTIONS"
for a further discussion of these investment policies.
In connection with 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
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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, 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
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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 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
39
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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."
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 bonds. See "HIGH-YIELD, HIGH RISK
SECURITIES" and "ZERO COUPON AND PAY-IN-KIND BONDS" 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. The benchmark against which the Portfolio's performance
will be measured is the Lehman Brothers Government/Corporate Intermediate Bond
Index.
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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 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
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 AGGREGATE FIXED INCOME PORTFOLIO
The Aggregate 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. The benchmark against which the
Portfolio's performance will be measured is the Lehman Brothers Aggregate Bond
Index.
It seeks maximum long-term total return by investing in debt securities having a
broad range of maturities. However, the Portfolio typically will have 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
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<PAGE>
without significantly increasing risk. Average effective maturity may exceed the
above range when the investment adviser believes opportunities for enhanced
returns exceed risk.
Typically, approximately 50% of the Portfolio's assets will be invested in U.S.
government securities , mortgage-backed securities and asset-backed securities.
All securities purchased by the Portfolio will have an investment grade rating
at the time of purchase. Investment grade fixed-income obligations will be those
rated BBB or better by S&P or Baa or better by Moody's or those deemed to be of
comparable quality by the investment adviser. Obligations rated BBB and Baa have
speculative characteristics. To the extent that the rating of a debt obligation
held by the Portfolio falls below BBB or Baa, the Portfolio, as soon as
practicable, will dispose of the security, unless such disposal would be
detrimental to the Portfolio in light of market conditions. See "ADDITIONAL
INVESTMENT INFORMATION--U.S. GOVERNMENT SECURITIES" and "MORTGAGE-BACKED
SECURITIES" for more detailed information about these and other investment
policies.
The Portfolio will normally experience an annual portfolio turnover rate
exceeding 100%, but that rate is not expected to exceed 250%. A 100% turnover
rate would occur if all of the securities in the Portfolio were sold and
replaced within one year. The rate of portfolio turnover is not a limiting
factor when the investment adviser deems it desirable to purchase or sell
securities. High portfolio turnover (over 100%) involves correspondingly greater
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 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
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<PAGE>
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 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
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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 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
44
<PAGE>
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 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
45
<PAGE>
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."
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
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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.
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.
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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 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
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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.
THE DIVERSIFIED CORE FIXED INCOME PORTFOLIO
The objective of the Portfolio is to seek to provide investors with maximum
long-term total return, consistent with risk. The Portfolio will seek to achieve
its objective by allocating its investments principally among the following
three sectors of the fixed-income securities markets:
(1) a U.S. high-yield sector, consisting of high-yielding, lower-rated or
unrated fixed-income securities issued by U.S. companies;
(2) a U.S. investment grade sector, consisting of investment grade debt
obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities, or by U.S. companies; and
(3) an international sector, consisting of obligations of foreign governments,
their agencies and instrumentalities, and other fixed-income securities of
issuers in foreign countries and denominated in foreign currencies.
The investment adviser will determine the amount of assets of the Portfolio that
will be allocated to each of the three sectors in which the Portfolio will
invest, based on its analysis of economic and market conditions and its
assessment of the returns and potential for appreciation that can be achieved
from investment in each of the three sectors. The investment adviser will
periodically reallocate the Portfolio's assets as it deems necessary, and, the
relative proportion of the Portfolio's assets to be allocated among sectors is
described below.
Under normal circumstances, between 5% and 30% of the Portfolio's total assets
will be allocated to the U.S. high -yield sector. The investment adviser will
invest the Portfolios assets that are allocated to the domestic high-yield
sector primarily in those securities having a liberal and consistent yield and
those tending to reduce the risk of market fluctuations. The Portfolio may
invest in domestic corporate debt obligations, including, corporate notes
(including convertible notes), units consisting of bonds with stock or warrants
to buy stock attached, debentures, convertible debentures, zero coupon bonds and
pay-in- kind securities ("PIKs"). See "ZERO COUPON BONDS AND PAY-IN-KIND BONDS"
under "ADDITIONAL INVESTMENT INFORMATION.
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The Portfolio will invest in both rated and unrated bonds. The rated bonds that
the Portfolio may purchase in this sector will generally be rated BB or lower by
Standard & Poor's Rating Group ("S&P") or Fitch Investors Service, Inc.
("Fitch"), Ba or lower by Moody's Investors Service, Inc. ("Moody's"), or
similarly rated by another nationally recognized statistical rating
organization. See Appendix A-- Ratings in this Prospectus for more rating
information and "HIGH YIELD, HIGH RISK SECURITIES" under "ADDITIONAL INVESTMENT
INFORMATION" and "INVESTMENT OBJECTIVES, POLICIES AND RISK CONSIDERATIONS - THE
HIGH-YIELD BOND PORTFOLIO" for a description of the risks associated with
investing in lower-rated fixed-income securities. Unrated bonds may be more
speculative in nature than rated bonds.
Under normal circumstances, between 50% and 90% of the Portfolio's total assets
will be invested in the U.S. investment grade sector. In managing the
Portfolio's assets allocated to the investment grade sector, the investment
manager will invest primarily in debt obligations issued or guaranteed by the
U.S. government, its agencies or instrumentalities and by U.S. corporations. The
corporate debt obligations in which the Portfolio may invest include bonds,
notes, debentures and commercial paper of U.S.
companies.
The U.S. government securities in which the Portfolio may invest 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. See "U.S. GOVERNMENT SECURITIES" under "ADDITIONAL INVESTMENT
INFORMATION" for a discussion of these types of securities.
The investment grade sector of the Portfolio's assets may also be invested in
mortgage-backed securities issued or guaranteed by the U.S. government, its
agencies or instrumentalities or by government sponsored corporations. Other
mortgage-backed securities in which the Portfolio may invest are issued by
certain private, non-government entities. Two principal types of mortgage-backed
securities are collateralized mortgage obligations (CMOs) and real estate
mortgage investment conduits (REMICs).
See "MORTGAGE-BACKED SECURITIES" under "ADDITIONAL INVESTMENT
INFORMATION" for a discussion of these types of securities.
Subject to the quality limitations set forth in this Prospectus, the Portfolio
may also invest in securities which are backed by assets such as receivables on
home equity and credit card loans, and receivables regarding automobile, mobile
home, recreational vehicle and other loans, wholesale dealer floor plans and
leases. See "ASSET-BACKED SECURITIES" under "ADDITIONAL INVESTMENT INFORMATION".
The Portfolio may also invest in futures contracts and options on futures
contracts subject to certain limitations. See "FUTURES CONTRACTS AND OPTIONS ON
FUTURES CONTRACTS" under "ADDITIONAL INVESTMENT INFORMATION".
Securities purchased by the Portfolio within the investment grade sector will be
rated in one of the four highest rating categories or will be unrated securities
that are of comparable quality as determined by the investment manager. The four
highest rating categories are AAA, AA, A or BBB by S&P and Fitch, or Aaa, Aa, A
or Baa by Moody's. Debt securities within the top three categories comprise what
are known as high-grade bonds and are regarded as having a strong capacity to
pay principal and interest.
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Securities in the fourth category, known as medium-grade bonds, are regarded as
having an adequate capacity to pay principal and interest but with greater
vulnerability to adverse economic conditions and speculative characteristics.
See Appendix A - Ratings in this Prospectus for more rating information.
Under normal circumstances, between 5% and 20% of the Portfolio's total assets
will be invested in the international sector. Delaware International, the
sub-adviser will invest the assets of the Portfolio that are allocated to the
international sector primarily in fixed-income securities of issuers organized
or having a majority of their assets or deriving a majority of their operating
income in foreign countries. These fixed-income securities include foreign
government securities, debt obligations of foreign companies, and securities
issued by supranational entities.
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
International Bank for Reconstruction and Development (more commonly known as
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.
The Portfolio may invest in sponsored and unsponsored American Depositary
Receipts, European Depositary Receipts, or Global Depositary Receipts
("Depositary Receipts"). See "DEPOSITARY RECEIPTS" under "ADDITIONAL INVESTMENT
INFORMATION". The Portfolio may also invest in Brady Bonds, which are described
more fully under "FOREIGN INVESTMENT INFORMATION" in the "ADDITIONAL INVESTMENT
INFORMATION" section of this Prospectus. The Portfolio may also invest in zero
coupon bonds and may purchase shares of other investment companies. See "ZERO
COUPON AND PAY-IN-KIND BONDS" and "INVESTMENT COMPANY SECURITIES" under
"ADDITIONAL INVESTMENT INFORMATION".
The Portfolio may invest in securities issued in any currency and may hold
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 the European Currency Unit. The Portfolio will, 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. See "FORWARD FOREIGN CURRENCY
EXCHANGE CONTRACTS" under "ADDITIONAL INVESTMENT INFORMATION" for a further
description of the Portfolio's foreign currency transactions.
While the Portfolio may purchase securities of issuers in any foreign country,
developed and underdeveloped, no more than 15% of the Portfolio's assets may be
invested in direct obligations of issuers located in emerging market countries.
See "FOREIGN INVESTMENT INFORMATION" under "ADDITIONAL INVESTMENT INFORMATION".
The Portfolio will invest in both rated and unrated foreign securities. The
rated securities that the Portfolio may purchase in the international sector may
include those rated BBB or lower by S&P or Fitch, Baa or lower by Moody's, or
similarly rated by another nationally recognized statistical rating
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organization. See Appendix A -Ratings in this Prospectus for more rating
information and "FOREIGN INVESTMENT INFORMATION AND HIGH-YIELD, HIGH RISK
SECURITIES" under "ADDITIONAL INVESTMENT INFORMATION" for a description of the
risks associated with investing in foreign securities and lower-rated
fixed-income securities.
* * *
For a description of the Portfolio's other investment policies and for a further
description of some of the policies described above, see "ADDITIONAL INVESTMENT
INFORMATION" .
In unusual market conditions, in order to meet redemption requests, for
temporary defensive purposes, and pending investment, the Portfolio may hold a
substantial portion of its assets in cash or short-term fixed-income
obligations. The Portfolio may invest in repurchase agreements, but it normally
does so only to invest cash balances. The Portfolio is permitted to borrow
money.
Although the Portfolio will constantly strive to attain its objective, there can
be no assurance that it will be attained.
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
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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
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
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<PAGE>
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 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
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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:
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<PAGE>
Delaware Pooled Trust, Inc.
Attn: Client Services
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
FAX # 215-255-8864
"Good order" for purposes of mail or FAX message redemptions means that the
request to redeem must include the following documentation:
a. A letter of instruction specifying the number of shares or dollar amount to
be redeemed signed by the appropriate corporate or organizational officer(s)
exactly as it appears on the Account Registration Form.
b. If you wish to change the name of the commercial bank or account designation
to receive the redemption proceeds as provided in the Account Registration Form,
then a separate written request must be submitted to the Fund at the above
address and copies of this request sent to both the current commercial bank and
the new designee bank. Prior to redemption, the Fund will telephonically confirm
the change with both the current and the new designee banks. Further
clarification of these procedures can be obtained by calling the Fund.
By Telephone
If you have previously elected the Telephone Redemption Option on the Account
Registration Form, you can request a redemption of your shares by calling the
Fund and requesting the redemption proceeds be wired to the commercial bank or
account designation identified in the Account Registration Form. Shares cannot
be redeemed by telephone if stock certificates are held for those shares or, in
the case of The International Equity 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.
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<PAGE>
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
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.
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<PAGE>
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 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
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the full faith and credit of the United States. In the case of securities not
backed by the full faith and credit of the United States, investors in such
securities look principally to the agency or instrumentality issuing or
guaranteeing the obligation for ultimate repayment, and may not be able to
assert a claim against the United States itself in the event the agency or
instrumentality does not meet its commitment. Agencies which are backed by the
full faith and credit of the United States include the Export-Import Bank,
Farmers Home Administration, Federal Financing Bank, and others. Certain
agencies and instrumentalities, such as the Government National Mortgage
Association ("GNMA"), are, in effect, backed by the full faith and credit of the
United States through provisions in their charters that they may make
"indefinite and unlimited" drawings on the Treasury, if needed to service its
debt. Debt from certain other agencies and instrumentalities, including the
Federal Home Loan Bank and Federal National Mortgage Association, are not
guaranteed by the United States, but those institutions are protected by the
discretionary authority for the U.S. Treasury to purchase certain amounts of
their securities to assist the institutions in meeting their debt obligations.
Finally, other agencies and instrumentalities, such as the Farm Credit System
and the Federal Home Loan Mortgage Corporation, are federally chartered
institutions under U.S. government supervision, but their debt securities are
backed only by the creditworthiness of those institutions, not the U.S.
government.
Some of the U.S. government agencies that issue or guarantee securities include
the Export-Import Bank of the United States, Farmers Home Administration,
Federal Housing Administration, Maritime Administration, Small Business
Administration, and the Tennessee Valley Authority.
An instrumentality of a U.S. government agency is a government agency organized
under Federal charter with government supervision. Instrumentalities issuing or
guaranteeing securities include, among others, Federal Home Loan Banks, the
Federal Land Banks, Central Bank for Cooperatives, Federal Immediate Credit
Banks and the Federal National Mortgage Association.
MORTGAGE-BACKED SECURITIES
The Real Estate Investment Trust, The Aggregate Fixed Income, The Diversified
Core Fixed Income, 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
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financial institutions and other mortgage lenders and collateralized by a pool
of mortgages held under an indenture. CMOs are issued in a number of classes or
series with different maturities. The classes or series are retired in sequence
as the underlying mortgages are repaid. REMICs, which were authorized under the
Tax Reform Act of 1986, are private entities formed for the purpose of holding a
fixed pool of mortgages secured by an interest in real property. REMICs are
similar to CMOs in that they issue multiple classes of securities. To the extent
any privately-issued CMOs or REMICs in which the Portfolios may invest are
considered by the Commission to be investment companies, the Portfolios will
limit their investments in such securities in a manner consistent with the
provisions of the 1940 Act.
The mortgages backing these securities include conventional 30-year fixed rate
mortgages, graduated payment mortgages and adjustable rate mortgages. These
mortgages may be supported by various types of insurance, may be backed by GNMA
certificates or other mortgage pass-throughs issued or guaranteed by the U.S.
government, its agencies or instrumentalities. However, the guarantees do not
extend to the mortgage-backed securities' value, which is likely to vary
inversely with fluctuations in interest rates. These certificates are in most
cases "pass-through" instruments, through which the holder receives a share of
all interest and principal payments from the mortgages underlying the
certificate. Because the prepayment characteristics of the underlying mortgages
vary, it is not possible to predict accurately the average life or realized
yield of a particular issue of pass-through certificates. During periods of
declining interest rates, prepayment of mortgages underlying mortgage-backed
securities can be expected to accelerate. When the mortgage obligations are
prepaid, the Portfolio may reinvest the prepaid amounts in securities, the yield
of which reflects interest rates prevailing at the time. Moreover, prepayments
of mortgages which underlie securities purchased at a premium could result in
capital losses.
Certain CMOs and REMICs may have variable or floating interest rates and others
may be stripped. Stripped mortgage securities have greater market volatility
than other types of mortgage securities in which the Portfolios may invest.
Stripped mortgage securities are usually structured with two classes that
receive different proportions of the interest and principal distributions on a
pool of mortgage assets. A common type of stripped mortgage security will have
one class receiving some of the interest and most of the principal from the
mortgage assets, while the other class will receive most of the interest and the
remainder of the principal. In the most extreme case, one class will receive all
of the interest (the "interest-only" class), while the other class will receive
all of the principal (the "principal-only" class). The yield to maturity on an
interest-only class is extremely sensitive not only to changes in prevailing
interest rates but also to the rate of principal payments (including
prepayments) on the related underlying mortgage assets, and a rapid rate of
principal payments may have a material adverse effect on a Portfolio's yield to
maturity. If the underlying mortgage assets experience greater than anticipated
prepayments of principal, a Portfolio may fail to fully recoup its initial
investment in these securities even if the securities are rated in the highest
rating categories.
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. Each of the Portfolios may invest
in such private-backed securities but, the Portfolios, other than The Fixed
Income Portfolio and The Aggregate 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 and The Aggregate Fixed Income Portfolio each may
invest up to 20% of its total assets in CMOs and REMICs issued by private
entities which are not collateralized by securities issued or guaranteed by the
U.S. government, its agencies or instrumentalities, so-called non-agency
mortgage-backed securities. Investments in these securities may be made only if
the securities (i) are rated at the time of purchase in the four top rating
categories by a nationally-recognized statistical rating organization (e.g., BBB
or better by S&P or Baa or better by Moody's) and (ii) represent interests in
whole-loan mortgages, multi-family mortgages, commercial mortgages and other
mortgage collateral supported by a first mortgage lien on real estate.
Non-agency mortgage-backed securities are subject to the interest rate and
prepayment risks, described above, to which other CMOs and REMICs issued by
private issuers are subject. Non-agency mortgage-backed securities may also be
subject to a greater risk of loss of interest and principal because they are not
collateralized by securities issued or guaranteed by the U.S. government. In
addition, timely information concerning the loans underlying these securities
may not be as readily available and the market for these securities may be less
liquid than other CMOs and REMICs.
ASSET-BACKED SECURITIES
The Fixed Income, The Aggregate Fixed Income, The Diversified Core 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,
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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 Small/Mid-Cap Value Equity, The Diversified Core
Fixed Income, 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 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 Small/Mid-Cap Value Equity, The
Diversified Core Fixed Income, 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;
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(3) Short-term corporate obligations with the highest quality rating by a
nationally-recognized statistical rating organization (e.g., AAA by S&P or Aaa
by Moody's) or, if not so rated, of comparable quality as determined by a
Portfolio's investment adviser;
(4) U.S. government securities (see "U.S. GOVERNMENT SECURITIES"); and
(5) Repurchase agreements collateralized by securities listed above.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES
Each Portfolio of the Fund may purchase securities on a when-issued or delayed
delivery basis. In such transactions, instruments are purchased with payment and
delivery taking place in the future in order to secure what is considered to be
an advantageous yield or price at the time of the transaction. Delivery of and
payment for these securities may take as long as a month or more after the date
of the purchase commitment. Each Portfolio will maintain with its Custodian Bank
a separate account with a segregated portfolio of securities in an amount at
least equal to these commitments. The payment obligation and the interest rates
that will be received are each fixed at the time a Portfolio enters into the
commitment and no interest accrues to the Portfolio until settlement. Thus, it
is possible that the market value at the time of settlement could be higher or
lower than the purchase price if the general level of interest rates has
changed. It is a current policy of the Portfolios not to enter into when-issued
commitments exceeding in the aggregate 15% of the market value of the
Portfolio's total assets less liabilities other than the obligations created by
these commitments.
REPURCHASE AGREEMENTS
Each Portfolio may enter into repurchase agreements with brokers, dealers or
banks deemed to be creditworthy by a Portfolio's investment adviser under
guidelines of the Fund's directors. In a repurchase agreement, a Portfolio buys
securities from a seller that has agreed to repurchase it at a mutually agreed
upon date and price, reflecting the interest rate effective for the term of the
agreement. The term of these agreements is usually from overnight to one week
and never exceeds one year. Not more than 10% of a Portfolio's assets may be
invested in repurchase agreements having a maturity in excess of seven days in
the case of The Defensive Equity, The Aggressive Growth, The International
Equity, The Global Fixed Income and The International Fixed Income Portfolios,
and 15% of the total assets of a Portfolio, in the case of The Defensive Equity
Small/Mid-Cap, The 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.
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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 , The High-Yield Bond and The Diversified Core
Fixed Income Portfolios, up to 10%, 10% and 20%, respectively, of 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
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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 Diversified Core Fixed Income, 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 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
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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 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 , The Global Fixed Income and
The Diversified Core 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
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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 , The Global Fixed Income and The Diversified Core
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 , The Global Fixed Income and The Diversified Core
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.
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
Diversified Core Fixed Income, 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
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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 Diversified Core Fixed Income, 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 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
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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 , The Global Fixed Income and The
Diversified Core Fixed Income Portfolio may invest up to 5%, 5% and 20%,
respectively, 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.
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. In its U.S. high yield sector, The
Diversified Core Fixed Income Portfolio, under normal circumstances, invests
between 5% and 30% in U.S. Bonds generally rated BB or lower by S&P or Fitch or
Ba or lower by Moody's or similarly rated by another nationally recognized
statistical rating organization. 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
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more than compensated for their higher default rates. There can be no assurance,
however, that yields will continue to offset default rates on these bonds in the
future. The Portfolios' investment advisers intend to maintain an adequately
diversified portfolio of these bonds. While diversification can help to reduce
the effect of an individual default on the Portfolios, there can be no assurance
that diversification will protect the Portfolios from widespread bond defaults
brought about by a sustained economic downturn.
Medium and low-grade bonds held by the Portfolios may be issued as a consequence
of corporate restructurings, such as leveraged buy-outs, mergers, acquisitions,
debt recapitalizations or similar events. Also, these bonds are often issued by
smaller, less creditworthy companies or by highly leveraged (indebted) firms,
which are generally less able than more financially stable firms to make
scheduled payments of interest and principal. The risks posed by bonds issued
under such circumstances are substantial.
The economy and interest rates may affect these high-yield, high risk securities
differently from other securities. Prices have been found to be less sensitive
to interest rate changes than higher rated investments, but more sensitive to
adverse economic changes or individual corporate developments. Also, during an
economic downturn or substantial period of rising interest rates, highly
leveraged issuers may experience financial stress which would adversely affect
their ability to service principal and interest payment obligations, to meet
projected business goals and to obtain additional financing. Changes by
recognized rating agencies in their rating of any security and in the ability of
an issuer to make payments of interest and principal will also ordinarily have a
more dramatic effect on the values of these investments than on the values of
higher rated securities. Such changes in value will not affect cash income
derived from these securities, unless the issuers fail to pay interest or
dividends when due. Such changes will, however, affect the Portfolios' net asset
value per share.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
In order to remain fully invested, to facilitate investments in portfolio
securities and to reduce transaction costs, The Aggressive Growth, The
Small/Mid-Cap Value Equity, The Real Estate Investment Trust, The Diversified
Core Fixed Income, 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 , The Emerging
Markets and The Diversified Core Fixed Income 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.
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The Aggressive Growth, The Small/Mid-Cap Value Equity, The Real Estate
Investment Trust, The Diversified Core Fixed Income, 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. 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 ,
The Emerging Markets or The Diversified Core Fixed Income Portfolio sells a
futures contract on a foreign currency, it is obligated to deliver that foreign
currency at a specified future date. Similarly, a purchase by the Portfolio
gives it a contractual right to receive a foreign currency. This enables the
Portfolio to "lock in" exchange rates.
The Portfolios may also purchase and write options to buy or sell futures
contracts. Options on futures are similar to options except that options on
futures give the purchaser the right, in return for the premium paid, to assume
a position in a futures contract, rather than actually to purchase or sell the
futures contract, at a specified exercise price at any time during the period of
the option. The Portfolios will not enter into futures contracts and options
thereon to the extent that more than 5% of a Portfolio's assets are required as
futures contract margin deposits and premiums on options and only to the extent
that obligations under such futures contracts and options thereon would not
exceed 20% of the Portfolio's total assets. 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.
OPTIONS
Options on Securities
The Aggressive Growth, The Real Estate Investment Trust, The Diversified Core
Fixed Income, The Global Equity and The Emerging Markets Portfolios may write
covered call options on 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
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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 Diversified Core Fixed Income, 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.
Options on Stock Indices
The Global Equity Portfolio, The Diversified Core Fixed Income 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 , The Emerging Markets and The
Diversified Core Fixed Income 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
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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.
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.
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Each Portfolio, other than The Diversified Core Fixed Income, The Aggregate
Fixed Income, The Small/Mid-Cap Value Equity, 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 Diversified Core Fixed Income, The
Aggregate Fixed Income, The Small/Mid-Cap Value 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 may each invest no more than 15% of the value of its net assets in
illiquid securities. Illiquid securities, for purposes of this policy, include
repurchase agreements maturing in more than seven days.
While maintaining oversight, the Board of Directors has delegated to each
Portfolio's investment adviser the day-to-day functions of determining whether
or not individual Rule 144A Securities are liquid for purposes of a Portfolio's
limitation on investments in illiquid assets. The Board has instructed each
Portfolio's investment adviser to consider the following factors in determining
the liquidity of a Rule 144A Security: (i) the frequency of trades and trading
volume for the security; (ii) whether at least three dealers are willing to
purchase or sell the security and the number of potential purchasers; (iii)
whether at least two dealers are making a market in the security; and (iv) the
nature of the security and the nature of the marketplace trades (e.g., the time
needed to dispose of the security, the method of soliciting offers, and the
mechanics of transfer).
If an investment adviser determines that a Rule 144A Security which was
previously determined to be liquid is no longer liquid and, as a result, the
Portfolio's holdings of illiquid securities exceed the Portfolio's 10% or 15%
limit, as applicable, on investment in such securities, the investment adviser
will determine what action shall be taken to ensure that the Portfolio continues
to adhere to such limitation.
CONVERTIBLE, DEBT AND NON-TRADITIONAL EQUITY SECURITIES
A portion of The Small/Mid-Cap Value Equity 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 Small/Mid-Cap Value
Equity, 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
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CONSIDERATIONS--THE HIGH-YIELD BOND PORTFOLIO" and "HIGH-YIELD, HIGH RISK
SECURITIES" for a further discussion of these types of investments.
The Small/Mid-Cap Value Equity, 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 Small/Mid-Cap Value Equity, 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, 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.
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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 Defensive Equity, The International Equity, The Diversified Core Fixed
Income, The Small/Mid-Cap Value Equity, 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 , The Global Equity
Portfolio or The Diversified Core Fixed Income 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
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such other investment companies. Under the 1940 Act's limitations, The
Portfolios 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 AND PAY-IN-KIND BONDS
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. PIK bonds pay interest through
the issuance to holders of additional securities. 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's authorized to invest in them. For example, with zero coupon bonds,
the Portfolio accrues, and is required to distribute to shareholders, income on
such 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.
INVESTMENT LIMITATIONS
Each Portfolio's investment objectives, their designation as a diversified
portfolio or, in the case of The Global 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.
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MANAGEMENT OF THE FUND
Directors
The business and affairs of the Fund and its Portfolios are managed under the
direction of the Fund's Board of Directors. See "FUND OFFICERS AND PORTFOLIO
MANAGERS" 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 Small/Mid-Cap Value Equity, The Aggregate Fixed
Income, The Diversified Core Fixed Income, 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. 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 and furnishes sub-advisory
services to The Diversified Core Fixed Income Portfolio related to the foreign
securities portion of that Portfolio. Several of the principals of Delaware
International were previously associated with a registered investment adviser
which managed the assets of a registered investment company. Delaware
International commenced operations as a registered investment adviser in
December 1990.
Delaware has entered into Investment Advisory Agreements with the Fund on behalf
of The Defensive Equity, The Aggressive Growth, The Small/Mid-Cap Value Equity,
The Diversified Core Fixed Income, The Aggregate Fixed Income, 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 and with
Delaware International with respect to
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The Diversified Core Fixed Income Portfolio. 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 Small/Mid-Cap Value Equity 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%**
The Diversified Core Fixed Income Portfolio 0.00%***
The Aggregate Fixed Income Portfolio 0.00%
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 receives % of the advisory fee paid Delaware for
acting as sub-adviser to Delaware with respect to the foreign securities
portion of The Diversified Core Fixed Income Portfolio.
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**** 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 Small/Mid-Cap Value
Equity, The Aggregate Fixed Income, The Diversified Core Fixed Income, 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 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
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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) 38.31%
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.
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
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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
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.
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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, The Aggregate Fixed Income, The Diversified Core 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
Small/Mid-Cap Value Equity, 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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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.
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Exchange-traded options are valued at the last reported sales price or, if no
sales are reported, at the mean between the last reported bid and ask prices.
Non-exchange traded options are valued at fair value using a mathematical model.
Futures contracts are valued at their daily quoted settlement price. The value
of other assets and securities for which no quotations are readily available
(including restricted securities) are determined in good faith at fair value
using methods determined by the Fund's Board of Directors. The securities in
which The International Equity, 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.
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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.
PERFORMANCE INFORMATION
From time to time, the Portfolios may quote yield in advertising and other types
of sales literature. The current yield for each of these Portfolios will be
calculated by dividing the annualized net investment income earned by each of
the Portfolios during a recent 30-day period by the offering price per share
(net asset value) on the last day of the period. The yield information provides
for semi-annual compounding which assumes that net investment income is earned
and reinvested at a constant rate and annualized at the end of a six-month
period. Each Portfolio also may quote total return performance in advertising
and other types of literature. Total return will be based on a hypothetical
$1,000 investment, reflecting the reinvestment of all distributions at net asset
value at the beginning of the specific period. Each presentation will include,
as relevant, the average annual total return for one-, five- and ten-year
periods. Each Portfolio may also advertise aggregate and average total return
information over additional periods of time.
Yield and net asset value fluctuate and are not guaranteed. Past performance is
not an indication of future results.
GENERAL INFORMATION
Description of Common Stock
The Fund was organized as a Maryland corporation on May 30, 1991. The Articles
of Incorporation permit the Fund to issue one billion shares of common stock
with $.01 par value and fifty million shares have been allocated to each
Portfolio. The Board of Directors has the power to designate one or more classes
of shares of common stock and to classify and reclassify any unissued shares
with respect to such classes.
The shares of each Portfolio, when issued, will be fully paid, non-assessable,
fully transferable and redeemable at the option of the holder. The shares have
no preference as to the conversion, exchange, dividends, retirement or other
features and have no preemptive rights. The shares of each Portfolio have
noncumulative voting rights, which means that the holders of more than 50% of
the shares voting for the election of directors can elect 100% of the directors
if they choose to do so. Shares of each Portfolio entitled to vote on a matter
will vote in the aggregate and not by Portfolio, except when the matter to be
voted upon affects only the interests of shareholders of a particular Portfolio
or 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.
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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 could result 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 could result 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, The Diversified Core Fixed Income, The Aggregate Fixed Income
Portfolios and The Real Estate Investment Trust Portfolio II. 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 Small/Mid-Cap Value Equity Portfolios.
Independent Auditors
Ernst & Young LLP, Two Commerce Square, 2001 Market Street, Suite 4000,
Philadelphia, PA 19103, serves as independent auditors for the Fund.
Expenses
Each Portfolio is responsible for all its own expenses other than those borne by
its investment adviser under the relevant Investment Advisory Agreement and the
distributor under the Distribution Agreement.
Litigation
The Fund is not involved in any litigation.
88
<PAGE>
APPENDIX A--RATINGS
General Rating Information
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.
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.
Excerpts from Fitch's description of its bond ratings: AAA--Bonds considered to
be investment grade and of the highest credit quality. The obligor has an
exceptionally strong ability to pay interest and repay principal, which is
unlikely to be affected by reasonably foreseeable events; AA--Bonds considered
to be investment grade and of very high credit quality. The obligor's ability to
pay interest and repay principal is very strong, although not quite as strong as
bonds rated AAA. Because bonds rated in the AAA and AA categories are not
significantly vulnerable to foreseeable future developments, short-term debt of
these issuers is generally rated F-1+; A--Bonds considered to be investment
grade and of high credit quality. The obligor's ability to pay interest and
repay principal is considered to be strong, but may be more vulnerable to
adverse changes in economic conditions and circumstances that bonds with higher
ratings; BBB--Bonds considered to be investment grade and of satisfactory credit
quality. The
89
<PAGE>
obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds, and therefore impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings; BB--Bonds are
considered speculative. The obligor's ability to pay interest and repay
principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements; B--Bonds are considered
highly speculative. While bonds in this class are currently meeting debt service
requirements, the probability of continued timely payment of principal and
interest reflects the obligor's limited margin of safety and the need for
reasonable business and economic activity throughout the life of the issue;
CCC--Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment; CC--Bonds are minimally protected. Default in
payment of interest and/or principal seems probable over time; C--Bonds are in
imminent default in payment of interest or principal; and DDD, DD and D--Bonds
are in default on interest and/or principal payments. Such bonds are extremely
speculative and should be valued on the basis of their ultimate recovery value
in liquidation or reorganization of the obligor. "DDD" represents the highest
potential for recovery on these bonds, and "D" represents the lowest potential
for recovery.
Plus and minus signs are used with a rating symbol to indicate the relative
position of a credit within the rating category. Plus and minus signs, however,
are not used in the "AAA" category.
Commercial Paper
Excerpts from Moody's description of its two highest commercial paper ratings:
P-1--the highest grade possessing greatest relative strength; P-2--second
highest grade possessing less relative strength than the highest grade.
Excerpts from S&P's description of its two highest commercial paper ratings:
A-1--judged to be the highest investment grade category possessing the highest
relative strength; A-2--investment grade category possessing less relative
strength than the highest rating.
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<PAGE>
SUBJECT TO COMPLETION
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
DELAWARE POOLED TRUST
---------------------
Delaware Pooled Trust, Inc. ("Fund") is a no-load, open-end management
investment company. The Fund consists of 17 portfolios offering investment
alternatives for institutional clients and high net-worth individuals. This
Prospectus describes The International Mid-Cap Sub Portfolio ("The Portfolio"),
which is available only to investors who have or are concurrently establishing
an investment advisory relationship with Delaware International Advisers Limited
("DIA Ltd.") with respect to equity securities and who have authorized DIA Ltd.
to allocate a portion of those assets to The Portfolio.
The objective of The Portfolio is to achieve long-term total return. The
Portfolio seeks to achieve its objective primarily by investing in equity
securities of mid-sized non-U.S. companies, which may include companies located
or operating in established or emerging countries.
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 _______ __, 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
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C> <C>
Page Page
Fund Expenses Investment Limitations
Financial Highlights Management of the Fund
Delaware Pooled Trust Summary Shareholder Services
Fund Officers and Portfolio Managers Dividends and Capital Gains
Risk Factors Distributions
Investment Objectives, Policies Taxes
and Risk Considerations Valuation of Shares
Purchase of Shares Portfolio Transactions
Redemption of Shares Performance Information
Additional Investment Information General Information
Appendix A--Ratings
</TABLE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is:
______ __, 1997
2
<PAGE>
FUND EXPENSES
The following tables illustrate all expenses and fees that a shareholder of The
Portfolio can expect to incur. The purpose of the tables is to assist the
investor in understanding the various expenses that an investor in The Portfolio
will bear directly or indirectly. The amount set forth below corresponding to
the caption "Other Expenses" is based on estimates for the initial fiscal year
in which The Portfolio conducts operations.
================================================================================
Shareholder The International
Transaction Expenses Mid-Cap Sub Portfolio
Sales Charge Imposed on Purchases None
Sales Charge Imposed on Reinvested
Dividends None
Purchase Reimbursement Fees1 [ 0.60%]
Redemption Reimbursement Fees1 [0.50%]
Exchange Fees None
================================================================================
================================================================================
Annual Fund
Operating Expenses The International
(as a percentage of Mid-Cap Sub Portfolio
average net assets)
Management Fee2 [ %]
12b-1 Fees None
Other Expenses3 None
Total Operating Expenses [ %]
================================================================================
3
<PAGE>
1 A purchase reimbursement fee and a redemption reimbursement fee equal
to [ 0.60%] for purchases and [0.50%] for redemptions (as a percentage
of the dollar amount purchased or redeemed, as the case may be) are
assessed against investors in shares of The Portfolio and paid to The
Portfolio. 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
an investor's redemption request, and to limit the extent to which The
Portfolio (and, indirectly, The Portfolio's existing shareholders)
would have to bear such costs. In lieu of the purchase and redemption
reimbursement fees, The Portfolio may, in its sole discretion, permit
alternative purchase and redemption methods designed to accomplish the
same purposes as the reimbursement fees, such as purchases or
redemptions in-kind. See "HOW TO INVEST," "PURCHASE OF SHARES," "HOW TO
REDEEM," "REDEMPTION OF SHARES" and "PURPOSE OF REIMBURSEMENT FEES."
2 The Portfolio is charged a comprehensive management fee of [ ]% per
annum of its average net assets for both advisory and ordinary
operating expenses. However, The Portfolio may be charged for certain
non-recurring extraordinary expenses. See "MANAGEMENT OF THE FUND."
3 "Other Expenses" are based on the estimated amount for the current
fiscal year, assuming that The Portfolio has average net assets of
$[75] million.
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 expenses include the purchase reimbursement and
redemption reimbursement fees payable to The Portfolio.
1 year* 3 years*
------- --------
[ $ ] [ $ ]
You would pay the following expenses on the same investment, assuming no
redemption:
1 year* 3 years*
------- --------
[ $ ] [ $ ]
*Assumes net assets equal to[ $75] million.
This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be greater or less than those
shown.
4
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The Fund's Annual Report (which includes related notes and the report of Ernst &
Young LLP) 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 Portfolio had sold no shares to public
investors and, thus, had not commenced operations. Therefore, no financial
highlights have been included.
- --------------------------------------------------------------------------------
5
<PAGE>
DELAWARE POOLED TRUST SUMMARY
THE FUND
This Prospectus describes the Fund's International Mid-Cap Sub Portfolio ("The
Portfolio"), which is available only to investors who have or are concurrently
establishing an investment advisory relationship with Delaware International
Advisers Limited ("DIA Ltd.") with respect to equity securities and who have
authorized DIA Ltd.
to allocate a portion of those assets to The Portfolio.
The objective of the Portfolio is to achieve long-term total return. The
Portfolio seeks to achieve its objective primarily by investing in equity
securities of mid-sized non-U.S. companies, which may include companies located
in established or emerging countries. The Portfolio is a non-diversified fund as
defined by the Investment Company Act of 1940 (the "1940 Act").
For further information, see "INVESTMENT OBJECTIVES, POLICIES AND RISK
CONSIDERATIONS" and "ADDITIONAL INVESTMENT INFORMATION."
The Fund also has available 16 additional portfolios offering eligible investors
a broad range of investment choices. Those other portfolios are described in a
separate prospectus, which is available from the Fund without charge. To obtain
such prospectus, call the Fund at 1-800-231-8002.
INVESTMENT MANAGEMENT
DIA Ltd., acts as investment adviser to The Portfolio. The Portfolio pays DIA
Ltd. a comprehensive management fee in an amount equal to [ ]% of The
Portfolio's average net assets. Under the terms of the Investment Management
Agreement with respect to The Portfolio, DIA Ltd. pays all ordinary operating
expenses of The Portfolio. Excluded from the definition of ordinary operating
expenses are interest, taxes, dues, brokerage fees, extraordinary legal and
accounting fees and expenses, and fees or other charges of governments and their
agencies, including the cost of registering The Portfolio's shares with the
Securities and Exchange Commission (the "Commission") and qualifying The
Portfolio's shares for sale in any other jurisdiction.
DIA Ltd. may make such advertising and promotional expenditures, using its own
resources, as it from time to time deems appropriate.
See "MANAGEMENT OF THE FUND."
6
<PAGE>
FUND OFFICERS AND PORTFOLIO MANAGERS
Wayne A. Stork
Chairman
A graduate of Brown University, Mr. Stork also attended the NYU Graduate School
of Business Administration while a senior transportation analyst at the Irving
Trust Company. He joined the Delaware organization 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 the Delaware organization in 1990 as Managing
Principal and Chief Investment Officer of DIA 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.
[Timothy W. Sanderson
Director/Senior Portfolio Manager - Delaware International Advisers Ltd.
A graduate of University College, Oxford, Mr. Sanderson began his investment
career in 1979 with Hill Samuel Investment Management Group. Prior to joining
DIA 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 Portfolio since its
inception.]
[Clive A. Gillmore
Director/Senior Portfolio Manager - Delaware International Advisers Ltd.
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 DIA Ltd. 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 Portfolio since its date of inception.]
[Elizabeth Desmond
Senior Portfolio Manager - Delaware International Advisers Ltd. 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 DIA Ltd. 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 has managed The Portfolio since its inception.]
7
<PAGE>
ADMINISTRATIVE SERVICES
Delaware Service Company, Inc., an affiliate of DIA 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, DIA Ltd.'s 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, DIA Ltd.'s service staff
expects to conduct personal reviews no less frequently 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.
See "SHAREHOLDER SERVICES."
CUSTODIAL SERVICES
[_______________________________________] serves as custodian for The Portfolio.
HOW TO INVEST
Shares of The Portfolio are offered only to investors who currently have or
concurrently with their investment establish an investment advisory relationship
with DIA Ltd. with respect to equity securities and who have authorized DIA Ltd.
to allocate a portion of those assets to The Portfolio. Shares are sold at net
asset value with no sales commissions or 12b-1 charges. There is a purchase
reimbursement fee that applies to all purchases. That fee, which is paid by
investors to The Portfolio, equals [0.60%] of the dollar amount invested. The
purchase reimbursement fee is deducted automatically from the amount invested;
it cannot be paid separately. The purchase reimbursement fee does not apply to
investments in The Portfolio that are made by securities in-kind or by an
alternative method agreed to by The Portfolio or to reinvestments of dividends
or other distributions. See "PURPOSE OF REIMBURSEMENT FEES" and "EXCHANGE
PRIVILEGE" under "SHAREHOLDER SERVICES", and "PURCHASE OF SHARES."
HOW TO REDEEM
Shares of The Portfolio may be redeemed at any time, at the net asset value per
share of The Portfolio next determined after receipt of the redemption request,
less a redemption reimbursement fee equal to [0.50%] of such value. The fee is
deducted automatically from the redemption proceeds. See "PURPOSE OF
REIMBURSEMENT FEES." The redemption price may be more or less than the purchase
price and the
8
<PAGE>
redemption may be in cash or, under certain circumstances, in-kind. If a
redemption of shares is made in-kind, the redemption reimbursement fee that is
otherwise applicable will not be assessed. See "REDEMPTION OF SHARES."
9
<PAGE>
RISK FACTORS
An investment in The Portfolio entails certain risks and considerations about
which an investor should be aware.
The Portfolio will invest 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 Portfolio 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, The Portfolio may invest
in forward foreign currency contracts. Such activities pose special risks which
do not typically arise in connection with investments in U.S. securities. For a
discussion of the risks associated with foreign securities see "FOREIGN
INVESTMENT INFORMATION" and for those concerning these hedging instruments see
"FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS," both of which references appear
under the heading "ADDITIONAL INVESTMENT INFORMATION."
The Portfolio invests primarily in medium-sized companies, based on market
capitalization. Therefore, The Portfolio's investments are likely to involve a
higher degree of liquidity risk and price volatility than if investments were
made in larger capitalization securities. Investors in The Portfolio should be
willing to accept the risks, associated with mid-sized companies, some of the
securities of which may subject The Portfolio to additional risk.
The Portfolio may commit a portion of its assets 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--FOREIGN INVESTMENT INFORMATION" for a more extensive discussion of
these and other factors.
The foreign securities in which The Portfolio 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 certain holidays and Saturday). As a result,
the net asset value of The Portfolio may be significantly affected by such
trading on days when shareholders will have no access to The Portfolio. See
"VALUATION OF SHARES."
The Portfolio may lend its portfolio securities, may invest in repurchase
agreements and may purchase securities on a when-issued basis.
10
<PAGE>
The Portfolio intends to seek to qualify as a "diversified" investment company
under provisions of Subchapter M of the Internal Revenue Code. Thus, at least
50% of The 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 as of
the end of each calendar quarter. In contrast, The Portfolio may not satisfy the
1940 Act provisions relating to diversification and will be designated as
"non-diversified" as defined in the 1940 Act. A "non-diversified" investment
company is not required to satisfy the 1940 Act's provisions relating to
diversification, which provide that at least 75% of a diversified company's
total assets must be represented by cash items, U.S. Government securities,
certain qualifying securities and other securities limited in value with respect
to any one issuer to not more than 5% of the value of the total assets of such
investment company. A "non-diversified" 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.
11
<PAGE>
INVESTMENT OBJECTIVES, POLICIES
AND RISK CONSIDERATIONS
The investment objective of The Portfolio is described below, together with the
policies that The Portfolio employs in its efforts to achieve its objective.
There is no assurance that The Portfolio will attain its objective. The
investment objective of The Portfolio is fundamental and may only be changed by
a majority approval of The Portfolio's shareholders. Unless otherwise noted, the
investment policies described below are not fundamental policies and may be
changed without shareholder approval.
The investment objective of The Portfolio is to achieve long-term total return.
The Portfolio seeks to achieve its objective by investing primarily in equity
securities of mid-sized non-U.S. companies, which may include companies located
or operating in established or emerging countries. The Portfolio is an
international fund. Under normal market conditions, at least 65% of The
Portfolio's total assets will be invested in equity securities of companies
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. The current market capitalization of companies in which The
Portfolio primarily intends to invest can generally be expected to range from
$500 million to $4 billion.
The equity securities in which The Portfolio may invest include common stocks,
preferred stocks, rights or warrants to purchase common stocks and securities
convertible into common stock. The Portfolio may also invest in foreign
companies through sponsored or unsponsored American Depositary Receipts,
European Depositary Receipts or Global Depositary Receipts ("Depositary
Receipts"), which are receipts typically issued by a bank or trust company
evidencing ownership of underlying securities issued by a foreign company. In
making investment decisions, DIA Ltd. will consider the financial strength of
the company, the nature of its management, and any developments affecting the
company or its industry. DIA Ltd. may invest in mid- and small-capitalization
companies that may be temporarily out of favor or overlooked by securities
analysts and whose value, therefore, may not yet be fully recognized by the
market. Up to 20% of The Portfolio's assets may be invested in
small-capitalization companies, which may be more speculative than
mid-capitalization companies. See ADDITIONAL INVESTMENT INFORMATION."
While The Portfolio may purchase securities in any foreign country, developed
and underdeveloped, or emerging market countries, it is currently anticipated
that the countries in which The Portfolio may invest will include, but not be
limited to, Australia, Belgium, Canada, France, Germany, Hong Kong, Indonesia,
Italy, Japan, Korea, Malaysia, the Netherlands, New Zealand, Philippines,
Singapore, Spain, Sweden, Switzerland, Taiwan, Thailand, and the United Kingdom.
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 "INVESTMENT
COMPANY SECURITIES."
In selecting investments for The Portfolio, DIA Ltd. will employ a dividend
discount analysis across country boundaries and will also use a purchasing
power parity approach to identify currencies and markets that are overvalued or
undervalued relative to the U.S. dollar. DIA Ltd. uses the dividend discount
analysis to compare the value of different investments. Using this technique,
12
<PAGE>
DIA Ltd. looks at future anticipated dividends and discounts the value of those
dividends back to what they would be worth if they were being paid today. With a
purchasing parity approach, DIA Ltd. attempts to identify the amount 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, 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. 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.
The Portfolio may invest in both open-end and listed or unlisted closed-end
investment companies as well as unregistered investment companies. See
"INVESTMENT COMPANY SECURITIES." The Portfolio may also 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 "CONVERTIBLE, DEBT AND NON-TRADITIONAL EQUITY SECURITIES."
The Portfolio may invest in fixed-income securities issued by foreign companies,
foreign governments, their agencies, instrumentalities or political
sub-divisions, or by supranational organizations. Such investments will
generally be limited to 5% of The Portfolio's assets and will typically be rated
AA or higher by Standard & Poor's Ratings Group ("S&P") or Aa or higher by
Moody's Investors Service, Inc. ("Moody's") or, if unrated, are considered by
DIA Ltd. to be of equivalent quality.
For temporary defensive purposes, The Portfolio may invest all or a substantial
portion of its assets in such fixed income securities as well as high quality
debt instruments issued by the U.S. government, its agencies or
instrumentalities, or by U.S. companies. For example, The Portfolio may invest
in U.S. fixed-income markets when DIA Ltd. believes that the international
equity markets are excessively volatile or overvalued so that The Portfolio's
objective cannot be achieved in such markets. Any corporate debt obligations
will be rated AA or better by S&P, or Aa or better by Moody's, or if unrated,
will be determined to be of comparable quality by DIA Ltd. The Portfolio may
also invest in the securities listed above pending investment of proceeds from
new sales of shares of the Portfolio and to maintain sufficient cash to meet
redemption requests. In addition, The Portfolio may invest in certain short-term
instruments. See "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
denominated in the currency of another country or in multinational currency
units such as the European Currency Unit ("ECU"). For purposes of the 1940 Act,
The Portfolio will operate as a non-diversified fund. The Portfolio will not
concentrate its investments in any particular industry, which means that The
Portfolio will invest less than 25% of its total assets in any one industry.
The 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 (the "1933 Act"). Rule 144A permits many
privately placed and legally restricted securities to be freely traded among
certain institutional buyers, such as The Portfolio. See "RESTRICTED/ILLIQUID
SECURITIES." The Portfolio may invest up to 15% of the value of its net assets
in illiquid securities, meaning securities which may not be disposed of within
seven days at the price at which they are carried on The Portfolio's books. In
the event this percentage limitation is exceeded, whether due to changes in the
market value of The Portfolio's illiquid holdings or because a particular
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security is deemed to have become illiquid, DIA Ltd. will take steps to remedy
the circumstances in an orderly fashion.
It is anticipated that the annual portfolio turnover rate, under normal
circumstances, will not exceed [ ]%.
The Portfolio's investment objective, designation as an open-investment company
and policies concerning portfolio lending, borrowing and concentration are
"fundamental" and may not be changed unless authorized by the vote of a majority
of The Portfolio's outstanding voting securities. A vote of a "majority of the
outstanding voting securities" is the vote by the holders of the lesser of a)
67% or more of The Portfolio's voting securities present in person or
represented by proxy if the holders of more than 50% of the outstanding voting
securities of The Portfolio are present or represented by proxy; or b) more than
50% of the outstanding voting securities of The Portfolio. The Statement of
Additional Information lists other more specific investment restrictions of The
Portfolio which may not be changed without a majority shareholder vote. A brief
discussion of those factors that materially affect The Portfolio's performance
will appear each year in The Fund's Annual Report.
The investment policies of The Portfolio not identified above as "fundamental"
may be changed by the Board of Directors of the Fund without a shareholder vote.
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PURCHASE OF SHARES
Shares of The Portfolio may be purchased only by investors who currently have or
are concurrently with their investment establishing an investment advisory
relationship with DIA Ltd. with respect to equity securities and who have
authorized DIA Ltd. to allocate a portion of those assets to The Portfolio.
Shares of The 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 [_____________________ ("Custodian
Bank"). In addition, a purchase reimbursement fee equal to [0.60%] of the dollar
amount invested is charged to investors and paid to The Portfolio. See "HOW TO
INVEST" and "PURPOSE OF REIMBURSEMENT FEES."
By Federal Funds Wire
Purchases of shares of The Portfolio may be made by wiring Federal Funds to
CoreStates Bank, N.A. as described below. In order to ensure prompt receipt of
Federal Funds Wires and prompt processing of your purchase orders, it is
important that the following steps be taken:
1. Telephone the Fund (Toll Free: 1-800-231-8002) to provide the account name,
address, telephone number, Tax Identification Number, the amount being wired and
by which bank and which specific branch, if applicable. We will provide new
investors with a Fund account number.
2. The investor's bank should be Instructed 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 the bank include the
name of The Portfolio, the account number assigned to the investor and the
investor's account name). Federal Funds purchase orders will be accepted only on
a day on which the Fund, the NYSE and the Custodian Bank is 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
By Mail
Purchases of shares of The Portfolio may also be made by mailing a check payable
to The Portfolio selected to the above address (be sure to complete an
Investment Application before sending a check).
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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 NYSE 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 Fund may agree, on behalf of The Portfolio, to accept as payment for a
purchase of shares securities in which The Portfolio otherwise would invest, or
to follow another procedure that would have the same economic effect as an
in-kind purchase. In either case, an investor purchasing shares pursuant to
those procedures will be required to pay the brokerage or other transaction
costs of acquiring the subject securities. The purchase price per share for such
investors shall be the net asset value next determined after, as the case may
be, (1) delivery of cash or securities to the Custodian Banks and/or (2) the
assignment to The Portfolio by a prospective purchaser on trade date of the
investor's right to delivery of securities as to which brokerage orders have
been placed (but, as to which settlement is yet to occur) and delivery of cash
in an amount necessary to pay for those securities on settlement date. The
assets provided to The Portfolio pursuant to these procedures shall be valued
consistent with the same valuation procedures used to calculate The Portfolio's
net asset value. See "VALUATION OF SHARES." Such investors should contact the
Fund at (1-800-231-8002) for further information. The purchase reimbursement fee
does not apply to in-kind purchases.
ADDITIONAL INVESTMENTS
- ----------------------
Shareholders may add to their accounts 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 each impending purchase by first calling the
Fund (1-800-231-8002). Then the shareholder's bank should be instructed to
follow the same procedures as described above with respect to the wiring of
Federal Funds to CoreStates Bank, N.A. Additional investments are subject to the
same procedures and requirements (including the in-kind or similar procedures)
set forth above.
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REDEMPTION OF SHARES
You may withdraw all or any portion of the amount in your account by redeeming
shares at any time by submitting a request in accordance with the instructions
provided below. The Fund will redeem shares of The Portfolio at its net asset
value next determined after receipt of your redemption request. A redemption
reimbursement fee equal to 0.50% of the amount redeemed is deducted
automatically and paid to The Portfolio. See "HOW TO REDEEM" and "PURPOSE OF
REIMBURSEMENT FEES." On days that the Fund, the NYSE and the Custodian Bank are
open for business, the net asset value of The Portfolio is determined as of the
close of regular trading of the NYSE (ordinarily, 4 p.m., Eastern time). See
"VALUATION OF SHARES."
Shares of The Portfolio may be redeemed by mail, FAX message, or telephone. No
charge is made for redemption, except the reimbursement fee noted in the
previous paragraph. 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.
By Mail or FAX Message
The 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 or by another authorized
person.
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.
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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. 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 Portfolio 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 shares of
The Portfolio 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
Payment for shares redeemed may be made either in cash or in-kind, or partly in
cash and partly in-kind, or pursuant to another procedure which will have the
same economic effect as an in-kind redemption. An investor that receives payment
in-kind 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 The Portfolio should contact the Fund at
(1-800-231-8002) for further information. The reimbursement redemption fee does
not apply to in-kind redemptions.
IMPORTANT REDEMPTION INFORMATION
Because The Portfolio's shares are sold to institutions and high net-worth
individuals investors, shareholders likely will hold a significant number of
shares of The Portfolio. For this reason, the Fund requests that shareholders
proposing to make a large redemption order from The Portfolio 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
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
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<PAGE>
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 Commission .
As noted above, or if the Fund otherwise determines that it would be detrimental
to the best interests of the remaining shareholders of The 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 The Portfolio
in lieu of cash in conformity with applicable rules of the Commission.
PURPOSE OF REIMBURSEMENT FEES
The purchase and redemption reimbursement 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
an investor's redemption request, and to limit the extent to which The 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 market prices which may result when The Portfolio purchases or
sells thinly traded stocks; and (3) the effect of the "bid-asked" spread in
international markets.
The fees represent DIA Ltd.'s estimate of the brokerage and other transaction
costs incurred by The Portfolio in purchasing and selling international stocks.
Without the fee, The Portfolio would incur these costs directly, resulting in
reduced investment performance for all shareholders of The Portfolio. With the
fee, the extent to which the transaction costs of purchasing and selling
international stocks will be borne by existing shareholders is limited, and the
approximate amount of such costs is paid by those investors triggering the
transactions. Transaction costs incurred when purchasing or selling stocks of
companies in emerging market countries 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 addition to these
customary costs, most foreign countries have exchange fees or stamp taxes.
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ADDITIONAL INVESTMENT INFORMATION
FOREIGN INVESTMENT INFORMATION
The Portfolio will invest in securities of foreign issuers and may hold foreign
currency. The Portfolio has the right to purchase securities in any developed,
underdeveloped or emerging country. Investors should consider carefully the
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.
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 Portfolio receives from the companies comprising The Portfolio's
investments. See "TAXES."
Further, The 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 The Portfolio may invest may also be smaller, less liquid and subject to
greater price volatility than those in the United States.
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<PAGE>
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
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, DIA Ltd. does not believe that any current
repatriation restrictions would affect its decision to invest in such countries.
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 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. 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. 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 Portfolio may have limited effective
legal recourse against the issuer and/or guarantor.
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 Portfolio present currency
considerations which pose special risks. DIA Ltd. 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 Portfolio 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 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. The 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). The 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.
The 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, The 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, The 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. The
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.
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The Portfolio 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 Portfolio may also engage in currency "cross
hedging" when, in the opinion of DIA Ltd. the historical relationship among
foreign currencies suggests that The Portfolio 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 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 The 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.
SMALL COMPANY INVESTMENTS
Investments in common stocks in general are subject to market, economic and
business risks that will cause their price to fluctuate over time. The
securities of companies with smaller revenues and capitalizations in which The
Portfolio may invest may offer greater opportunity for capital appreciation than
larger companies, but investment in such companies presents greater risks than
securities of larger, more established companies. Historically, smaller
capitalization stocks have been more volatile in price than larger
capitalization stocks. Among the reasons for the greater price volatility of
these securities are the lower degree of liquidity in the markets for such
stocks, and the potentially greater sensitivity of such small companies to
changes in or failure of management, and in many other changes in competitive,
business, industry and economic conditions, including risks associated with
limited production, markets, management depth, or financial resources. Investors
should therefore expect that the value of The Portfolio's shares may be more
volatile than the shares of a fund that invests in larger capitalization stocks.
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SHORT-TERM INVESTMENTS
The short-term investments in which The Portfolio 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 The
Portfolio, and time deposits maturing from two business days through seven
calendar days will not exceed 15% of the total assets of The Portfolio.
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 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 DIA Ltd.;
(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 DIA
Ltd.;
(4) Securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities;
(5) Repurchase agreements collateralized by securities listed above; and
(6) Bank deposits held by or at The Portfolio's Custodian Bank or one of its
sub-custodians.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES
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The Portfolio 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 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 The 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 Portfolio not to enter into when-issued
commitments exceeding in the aggregate 15% of the market value of The
Portfolio's total assets less liabilities other than the obligations created by
these commitments.
REPURCHASE AGREEMENTS
The Portfolio may enter into repurchase agreements with brokers, dealers or
banks deemed to be creditworthy by DIA Ltd. under guidelines of the Fund's
directors. In a repurchase agreement, The Portfolio buys securities from a
seller who, at the time of the purchase, agrees to repurchase the securities 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 total
assets of The Portfolio 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 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, The
Portfolio might incur a loss. If bankruptcy proceedings are commenced with
respect to the seller, The Portfolio's realization upon the collateral may be
delayed or limited. The 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
The 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 The 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, The Portfolio will only enter into loan
arrangements after a review of all pertinent facts by DIA Ltd., 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 DIA Ltd.
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BORROWING FROM BANKS
The Portfolio may borrow money as a temporary measure or to facilitate
redemptions. The Portfolio does not intend to increase 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 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 The Portfolio has an outstanding
borrowing.
RESTRICTED/ILLIQUID SECURITIES
The 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 Portfolio.
The Portfolio 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 DIA Ltd.
the day-to-day function of determining whether or not individual Rule 144A
Securities are liquid for purposes of The Portfolio's limitation on investments
in illiquid assets. The Board has instructed DIA Ltd. 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 DIA Ltd. 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 15% limit on investment in such securities, DIA
Ltd. will determine what action shall be taken to ensure that The Portfolio
continues to adhere to such limitation.
CONVERTIBLE, DEBT AND NON-TRADITIONAL EQUITY SECURITIES
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A portion of The Portfolio's assets may be invested in convertible and debt
securities. 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.
The 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. 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 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 (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.
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DEPOSITARY RECEIPTS
The Portfolio may invest in sponsored and unsponsored American Depositary
Receipts ("ADRs") that are actively traded in the United States. The Portfolio
may also invest in sponsored and unsponsored European Depositary Receipts
("EDRs") and Global Depository 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 The 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 Portfolio and 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. The 1940 Act places limits on the extent to which
one investment company may invest in the shares of another investment company.
These limitations also apply to The Portfolio's investments in unregistered
investment companies.
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MANAGEMENT OF THE FUND
Directors
The business and affairs of the Fund and The Portfolio 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 Adviser
DIA Ltd. furnishes investment advisory services to The Portfolio. DIA Ltd.
commenced operations as a registered investment adviser in December 1990.
Delaware Management Company, Inc. ("DMC"), an affiliate of DIA Ltd., and its
predecessors have been managing the funds in the Delaware Group since 1938. On
_______________, 1997, DIA Ltd. and its affiliates within the Delaware Group,
including DMC, were supervising in the aggregate more than $____ billion in
assets in various institutional or separately managed (approximately
$________________) and investment company (approximately $_____________)
accounts.
DIA Ltd. has entered into an Investment Management Agreement with the Fund on
behalf of The Portfolio. Under the Investment Management Agreement, DIA Ltd.,
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 Portfolio,
manages the investment and reinvestment of the assets of The Portfolio. In this
regard, it is DIA Ltd.'s responsibility to make investment decisions for The
Portfolio.
As compensation for the services to be rendered under the Investment Management
Agreement, DIA Ltd. is entitled to a comprehensive management fee of [______%]
per annum of The Portfolio's average daily net assets, calculated and payable
quarterly. Under the terms of the Investment Management Agreement, DIA Ltd. pays
all employee and ordinary operating costs of The Portfolio. Such costs include,
for example, investment advisory fees, rent, shareholder services, transfer
agency and accounting services, custody fees, and ordinary fees of independent
accountants and legal counsel. Excluded from the definition of ordinary
operating costs are interest, taxes, dues, brokerage fees, extraordinary legal
and accounting fees and expenses, and fees or other charges of governments and
their agencies, including the cost of registering The Portfolio's shares with
the Commission and qualifying The Portfolio's shares for sale in any
jurisdiction.
DIA Ltd. is an indirect, wholly owned subsidiary of Delaware Management
Holdings, Inc. ("DMH"). DMH and DIA Ltd. are indirect, wholly owned
subsidiaries, and subject to the ultimate control of Lincoln National
Corporation ("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.
DIA Ltd.'s address is Third Floor, 80 Cheapside, London, England EC2V 6EE.
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Administrator
Delaware Service Company, Inc., an affiliate of DIA Ltd. 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 Portfolio, and DIA Ltd. 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 Portfolio's arrangements
with its Custodian Bank, 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 Portfolio with dividend disbursing and transfer agent
services. Delaware Service Company, Inc. is located at 1818 Market Street,
Philadelphia, PA 19103. For its services to The Portfolio under the Amended and
Restated Shareholders Services Agreement, an annual fixed fee is to allocated
The Portfolio based on the percentage of assets of The Portfolio relative to the
other portfolios of the Fund. The fee, which is allocated and payable monthly,
is paid by DIA Ltd. to Delaware Service Company, Inc. Delaware Service Company,
Inc. also provides accounting services to The Portfolio 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 Portfolio. Under
its Distribution Agreement with the Fund on behalf of The Portfolio, DDLP sells
shares of The Portfolio 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 Portfolio. DDLP is an indirect, wholly owned subsidiary of DMH.
Expenses
The Portfolio is responsible for payment of certain other fees and expenses
(including interest, taxes, dues, brokerage fees, and extraordinary legal and
accounting fees, and fees or other charges of governments and their agencies)
specified in the Investment Management Agreement. For the fiscal year ending
October 31, 1998, the ratio of expenses to average daily net assets for The
Portfolio is expected to be [_____]% annualized.
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SHAREHOLDER SERVICES
Special Reports and Other Services
The Fund provides client shareholders with annual audited financial reports and
unaudited semi-annual financial reports. In addition, DIA Ltd.'s dedicated
service staff may also provide client shareholders with a detailed monthly
appraisal of the status of their account and a complete review of portfolio
assets, performance results and other pertinent data. Finally, DIA Ltd. expects
to conduct personal reviews no less frequently 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 value of
The Portfolio is also available by using the above "800" telephone number.
Written correspondence may be directed to The Portfolio at the following
address:
Delaware Pooled Trust, Inc.
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
Attn: Client Services
Exchange Privilege
Shares of The Portfolio 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, subject
to minimum investment and other eligibility requirements. However, shareholders
will be assessed a purchase reimbursement fee by The Portfolio when exchanging
into The Portfolio from another portfolio and will be assessed a redemption
reimbursement fee by The Portfolio when exchanging out of The Portfolio into
another portfolio. See "HOW TO INVEST," "HOW TO REDEEM" and "PURPOSE OF
REIMBURSEMENT FEES." 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.
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DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The Portfolio expects to declare and distribute all of its net investment income
to shareholders as dividends quarterly. 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 the net asset
value of The Portfolio.
In addition, in order to satisfy certain distribution requirements of the Tax
Reform Act of 1986, The 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 The 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
The Portfolio intends to qualify, and intends to continue to qualify, as a
regulated investment company under the Internal Revenue Code (the "Code"). As
such, The 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.
The 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 Portfolio from net investment income are not expected to qualify for
the intercorporate dividends-received deduction.
Distributions paid by The 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 The Portfolio. The Portfolio does 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 The 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 The 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 shares of The 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
The Portfolio's dividends and distributions. Shareholders should consult their
own tax advisers regarding specific questions as to federal, state, local or
foreign taxes.
The Fund is required to withhold 31% of taxable dividends capital gains
distributions, and redemptions paid to shareholders who have not complied with
IRS taxpayer identification regulations. You may avoid this withholding
requirement by certifying on your Account Registration Form your proper Taxpayer
Identification Number and by certifying that you are not subject to backup
withholding.
The Portfolio may elect to "pass-through" to its shareholders the amount of
foreign income taxes paid by The Portfolio. The 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 The Portfolio will be required to include
in their gross income their pro-rata share of foreign taxes paid by The
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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.
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VALUATION OF SHARES
The net asset value per share of The 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 foreign exchange are
valued at the last quoted sale price available before the time when net assets
are valued. 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. 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.
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.
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 Portfolio may invest from time to time may be listed
primarily on foreign exchanges which trade on days when the NYSE is closed (such
as U.S. holidays or Saturdays). As a result, the net asset value of The
Portfolio may be significantly affected by such trading on days when
shareholders have no access to The Portfolio.
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 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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PORTFOLIO TRANSACTIONS
In purchasing and selling securities for The Portfolio, DIA Ltd. 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 DIA Ltd. are necessary and in the best interest of the
Fund's shareholders. In selecting broker/dealers to execute the securities
transactions for The Portfolio, 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 Portfolio. These services may be
used by DIA Ltd. in servicing any of its other accounts. Some securities
considered for investment by The Portfolio may also be appropriate for other
clients served by DIA Ltd. If a purchase or sale of securities consistent with
the investment policies of The Portfolio and one or more of these other clients
served by DIA Ltd. is considered at or about the same time, transactions in such
securities will be allocated among The Portfolio and such other 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 Portfolio or who act as agents in the
purchase of shares of The Portfolio for their clients.
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PERFORMANCE INFORMATION
The Portfolio 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. The
Portfolio may also advertise aggregate and average total return information over
additional periods of time.
Net asset value and total returns fluctuate and are not guaranteed. Past
performance is not an indication of future results.
GENERAL INFORMATION
Description of Common Stock
The Fund was organized as a Maryland corporation on May 30, 1991. The Articles
of Incorporation permit the Fund to issue one billion shares of common stock
with $.01 par value and [_____________] shares have been allocated to The
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 The 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. Shares of the Fund have noncumulative
voting rights, which means that the holders of more than 50% of the Fund's
shares voting for the election of directors can elect 100% of the directors if
they choose to do so. Shares of each of the Fund's 17 portfolios entitled to
vote on a matter will vote in the aggregate and not by portfolio, except when
the matter to be voted upon affects only the interests of shareholders of a
particular portfolio or when otherwise expressly required by law. The Fund does
not issue certificates for shares of The Portfolio. Under Maryland law, the Fund
is not required, and does not intend, to hold annual meetings of its
shareholders unless, under certain circumstances, it is required to do so under
the 1940 Act.
Custodian Banks
[__________________________ ] serves as custodian for The Portfolio.
Independent Auditors
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Ernst & Young LLP, Two Commerce Square, 2001 Market Street, Suite 4000,
Philadelphia, PA 19103, serves as independent auditors for the Fund.
Expenses
The Portfolio is responsible for all its own expenses other than those borne by
DIA Ltd. under the Investment Management Agreement. See "MANAGEMENT OF THE
FUND."
Litigation
The Fund is not involved in any litigation.
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APPENDIX A--RATINGS
Bonds
Excerpts from Moody's description of its bond ratings: Aaa--judged to be the
best quality. They carry the smallest degree of investment risk; Aa--judged to
be of high quality by all standards; A--possess favorable attributes and are
considered "upper medium" grade obligations; Baa--considered as medium grade
obligations. Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time; Ba--judged to have
speculative elements; their future cannot be considered as well assured. Often
the protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class; B--generally lack
characteristics of the desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over any long period
of time may be small; Caa--are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest; Ca--represent obligations which are speculative in a high degree. Such
issues are often in default or have other marked shortcomings; C--the lowest
rated class of bonds and issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.
Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa to B. The modifier 1 indicates that company ranks in the
higher end of its generic category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the company ranks in the lower end of
its generic rating category.
Excerpts from S&P's description of its bond ratings: AAA--highest grade
obligations. They possess the ultimate degree of protection as to principal and
interest; AA--also qualify as high grade obligations, and in the majority of
instances differ from AAA issues only in a small degree; A--strong ability to
pay interest and repay principal although more susceptible to changes in
circumstances; BBB--regarded as having an adequate capacity to pay interest and
repay principal; BB, B, CCC, CC--regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the lowest degree of
speculation and CC the highest degree of speculation. While such debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions; C--reserved
for income bonds on which no interest is being paid; D--in default, and payment
of interest and/or repayment of principal is in arrears.
Plus (+) or minus (-) Ratings may be modified by a plus or minus sign,
reflecting the relative standing within the major rating categories.
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Commercial Paper
Excerpts from Moody's description of its two highest commercial paper ratings:
P-1--the highest grade possessing greatest relative strength; P-2--second
highest grade possessing less relative strength than the highest grade.
Excerpts from S&P's description of its two highest commercial paper ratings:
A-1--judged to be the highest investment grade category possessing the highest
relative strength; A-2--investment grade category possessing less relative
strength than the highest rating.
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PART B
DELAWARE POOLED TRUST, INC.
STATEMENT OF ADDITIONAL INFORMATION
DECEMBER [---], 1997
-----------------------------------
Delaware Pooled Trust, Inc. ("Pooled Trust, Inc.") is an open-end
management investment company. Pooled Trust, Inc. consists of 17 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 17 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 proper 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 for the Class A, B 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
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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 International Mid-Cap Sub Portfolio, The
Small/Mid-Cap Value Equity Portfolio, The Global Equity Portfolio, The Emerging
Markets Portfolio, The Aggregate Fixed Income Portfolio and The Diversified Core
Fixed Income 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.
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7. Make short sales of securities, or purchase securities on margin, except
that The Aggressive Growth Portfolio, The Real Estate Investment Trust
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 International Mid-Cap Sub Portfolio, The Small/Mid-Cap
Value Equity Portfolio, The Labor Select International Equity Portfolio, The
Real Estate Investment Trust Portfolios, The International Fixed Income
Portfolio, The High-Yield Bond Portfolio, The Emerging Markets Portfolio, The
Aggregate Fixed Income Portfolio and The Diversified Core Fixed Income
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 (other than The International Mid-Cap Sub Portfolio, The
Small/Mid-Cap Value Equity Portfolio, The Labor Select International Equity
Portfolio, The Real Estate Investment Trust Portfolios, The International Fixed
Income Portfolio, The High-Yield Bond Portfolio, The Emerging Markets Portfolio,
The Aggregate Fixed Income Portfolio and The Diversified Core Fixed Income
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 Labor Select
International Equity Portfolio and The High-Yield Bond Portfolio. This
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restriction shall apply to only 50% of the total assets of The Global Fixed
Income Portfolio.
2. Invest in securities of other investment companies, except by purchase in
the open market involving only customary brokers' commissions or in connection
with a merger, consolidation or other acquisition or as may otherwise be
permitted by the 1940 Act.
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 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 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 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).
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2. Invest in securities of other investment companies, except by purchase in
the open market involving only customary brokers' commissions or in connection
with a merger, consolidation or other acquisition or as may otherwise be
permitted by the 1940 Act.
3. Invest more than 5% of the value of its respective total assets in
securities of companies less than three years old. Such three-year old period
shall include the operation of any predecessor company or companies. This
restriction shall not apply to The Real Estate Investment Trust 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 International Mid-Cap Sub Portfolio, The Small/Mid-Cap Value Equity
Portfolio, The Global Equity Portfolio, The Emerging Markets Portfolio, The
Aggregate Fixed Income Portfolio and The Diversified Core Fixed Income Portfolio
Pooled Trust, Inc. has adopted the following restrictions for The
International Mid-Cap Sub Portfolio, The Small/Mid-Cap Value Equity Portfolio,
The Global Equity Portfolio, The Emerging Markets Portfolio, The Aggregate Fixed
Income Portfolio and The Diversified Core Fixed Income Portfolio (except where
otherwise noted) which, along with each such Portfolio's 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 a Portfolio purchases
securities.
Except as noted below, each of The International Mid-Cap Sub Portfolio, The
Small/Mid-Cap Value Equity Portfolio, The Global Equity Portfolio, The Emerging
Markets Portfolio, The Aggregate Fixed Income Portfolio and The Diversified Core
Fixed Income 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). This restriction
shall not apply to The International Mid-Cap Sub Portfolio and The Emerging
Markets Portfolio.
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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 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.
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 interests therein or issued by companies
which invest in real estate or interests therein.
Foreign Investment Information (The International Mid-Cap Sub 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 High-Yield Bond Portfolio, The
Diversified Core Fixed Income Portfolio, The Emerging Markets Portfolio and The
Global Equity Portfolio)
Investors in The International Mid-Cap Sub 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 in The Real Estate
Investment Trust Portfolios, The Diversified Core Fixed Income Portfolio and The
High-Yield Bond Portfolio, each of which possesses a limited ability to invest
in foreign securities) should recognize that investing in securities issued by
foreign corporations and foreign governments involves certain considerations,
including those set forth in the 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 Diversified Core 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
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currency rates. See Foreign Currency Transactions (The International Equity
Portfolio, The International Mid-Cap Sub Portfolio, The Labor Select
International Equity Portfolio, The Real Estate Investment Trust Portfolios, The
Global Fixed Income Portfolio, The Diversified Core 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.
As disclosed in the related Prospectus, there are a number of risks involved
in investing in foreign securities, including securities of issuers in emerging
market countries in which The Emerging Markets, The International Mid-Cap Sub,
The International Equity, The Labor Select International Equity, The Global
Equity, The International Fixed Income, The Global Fixed Income, The Diversified
Core Fixed Income (and with respect to 10% of their assets, The Real Estate
Investment Trust and High Yield Bond) Portfolios may invest. For example, 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 a local
currency, inflation accounting rules may require 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 on
profits.
With reference to the Portfolios' investments in foreign government
securities, there is the risk that a foreign governmental issuer may default on
its obligations. If such a default occurs, a Portfolio may have limited
effective legal recourse against the issuer and/or guarantor. Remedies must, in
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some cases, be limited effective legal recourse against the issuer and/or
guarantor. Remedies mus, 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.
The issuers of foreign government and government-related debt securities
have in the past experienced substantial difficulties in servicing their
external debt obligations, which have let 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 Brady Bonds and other foreign government and
government-related securities 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.
Investments and opportunities for investments by foreign investors in
emerging market countries are subject to a variety of national policies and
restrictions. 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 Portfolios' invest. Although these restrictions may in
the future make it undesirable to invest in emerging countries, a Portfolio's
adviser or sub-adviser, as relevant, does not believe that any current
registration restrictions would affect its decision to invest in such countries.
As disclosed in the Prospectus for The International Mid-Cap Sub Portfolio, the
foreign fixed-income securities in which the Portfolio may invest may be U.S.
dollar or foreign currency denominated, including ECU. Such securities 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 Work Bank,
European Investment Bank, Asian Development Bank, European Economic Community
and the Inter-American Development Bank. Such fixed-income securities will be
typically rated, at the time of purchase, AA or higher by Standard & Poors, Inc.
or Aa or higher by Moodys Investor Services or of comparable quality as
determined by the Portfolio's investment adviser.
Foreign Currency Transactions (The International Equity Portfolio, The
International Mid-Cap Sub 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 , The Global Equity Portfolio and The Diversified Core Portfolio)
The International Equity Portfolio, The International Mid-Cap Sub 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
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Trust Portfolios and The Diversified Core Fixed Income Portfolio, consistent
with their limited ability to invest in foreign securities) may purchase or sell
currencies and/or engage in forward foreign currency transactions in order to
expedite settlement of portfolio transactions and to minimize currency value
fluctuations.
Forward foreign currency contracts are traded in the interbank market
conducted directly between currency traders (usually large commercial banks) and
their customers. A forward contract generally has no deposit requirement, and no
commissions are charged at any stage for trades. A Portfolio will account for
forward contracts by marking to market each day at daily exchange rates.
When a Portfolio enters into a forward contract to sell, for a fixed amount
of U.S. dollars or other appropriate currency, the amount of foreign currency
approximating the value of some or all of its assets denominated in such foreign
currency, its Custodian Bank will place or will cause to be placed cash or
liquid equity or debt securities in a separate account of that Portfolio in an
amount not less than the value of that Portfolio's total assets committed to the
consummation of such forward contracts. If the additional cash or securities
placed in the separate account declines, additional cash or securities will be
placed in the account on a daily basis so that the value of the account will
equal the amount of that Portfolio's commitments with respect to such contracts.
As noted in the related Prospectus, The International Fixed Income
Portfolio, The Emerging Markets Portfolio, The Global Equity Portfolio and the
Diversified Core Fixed Income Portfolio may also enter into transactions
involving foreign currency options, futures contracts and options on futures
contracts, in order to minimize the currency risk in its investment portfolio.
Foreign currency options are traded in a manner substantially similar to
options on securities. In particular, an option on foreign currency provides the
holder with the right to purchase, in the case of a call option, or to sell, in
the case of a put option, a stated quantity of a particular currency for a fixed
price up to a stated expiration date. The writer of the option undertakes the
obligation to deliver, in the case of a call option, or to purchase, in the case
of a put option, the quantity of the currency called for in the option, upon
exercise of the option by the holder.
As in the case of other types of options, the holder of an option on foreign
currency is required to pay a one-time, non-refundable premium, which represents
the cost of purchasing the option. The holder can lose the entire amount of this
premium, as well as related transaction costs, but not more than this amount.
The writer of the option, in contrast, generally is required to make initial and
variation margin payments, similar to margin deposits required in the trading of
futures contacts and the writing of other types of options. The writer is
therefore subject to risk of loss beyond the amount originally invested and
above the value of the option at the time it is entered into.
Certain options on foreign currencies, like forward contracts, are traded
over-the-counter through financial institutions acting as market-makers in such
options and the underlying currencies. Such transactions therefore involve risks
not generally associated with exchange-traded instruments. Options on foreign
currencies may also be traded on national securities exchanges regulated by the
Commission or commodities exchanges regulated by the Commodity Futures Trading
Commission.
A foreign currency futures contract is a bilateral agreement providing for
the purchase and sale of a specified type and amount of a foreign currency. By
its terms, a futures contract provides for a specified settlement date on which,
in the case of the majority of foreign currency futures contracts, the currency
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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 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
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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, The Diversified Core Fixed Income Portfolio and The Emerging Markets
Portfolio)
The Global Fixed Income Portfolio, The International Fixed Income Portfolio,
The Diversified Core 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 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
Diversified Core Fixed Income Portfolio, The Emerging Markets Portfolio and The
Global Equity Portfolio)
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In order to remain fully invested, and to reduce transaction costs, The
Aggressive Growth Portfolio, The Real Estate Investment Trust Portfolios, The
Diversified Core Fixed Income Portfolio, 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, The Real Estate
Investment Trust Portfolios and The Diversified Core Fixed Income Portfolio 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
Diversified Core Fixed Income Portfolio, 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, 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.
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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.
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
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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, The Real Estate Investment Trust and The
Diversified Core Fixed Income 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.
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.
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Options on Stock Indices
The Emerging Markets Portfolio, The Global Equity Portfolio and The
Diversified Core Fixed Income 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 protect appreciation attained and to take
advantage of the liquidity available in the option markets.
Futures and Options on Futures
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Consistent with the limited circumstances under which The Aggressive Growth
Portfolio, The Real Estate Investment Trust Portfolios, The Diversified Core
Fixed Income Portfolio, 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 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
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with the limited purposes for which the Portfolios will engage in these
activities, a Portfolio will purchase a put option on a futures contract to
hedge the Portfolio's securities against the risk of rising interest rates.
To the extent that interest rates move in an unexpected direction, the
Portfolios may not achieve the anticipated benefits of futures contracts or
options on futures contracts or may realize a loss. For example, if a Portfolio
is hedged against the possibility of an increase in interest rates which would
adversely affect the price of securities held in its portfolio and interest
rates decrease instead, the Portfolio will lose part or all of the benefit of
the increased value of its securities which it has because it will have
offsetting losses in its futures position. In addition, in such situations, if
the Portfolio had insufficient cash, it may be required to sell securities from
its portfolio to meet daily variation margin requirements. Such sales of
securities may, but will not necessarily, be at increased prices which reflect
the rising market. The Portfolios may be required to sell securities at a time
when it may be disadvantageous to do so.
Further, with respect to options on futures contracts, the Portfolios may
seek to close out an option position by writing or buying an offsetting position
covering the same securities or contracts and have the same exercise price and
expiration date. The ability to establish and close out positions on options
will be subject to the maintenance of a liquid secondary market, which cannot be
assured.
* * *
From time to time, the Portfolios may also, as noted below, engage in the
following investment techniques:
Asset-Backed Securities (The Fixed Income Portfolio, The Limited-Term Maturity
Portfolio, The Aggregate Fixed Income Portfolio and The Diversified Core Fixed
Income Portfolio)
The Fixed Income Portfolio, The Limited-Term Maturity Portfolio, The
Aggregate Fixed Income Portfolio and The Diversified Core Fixed Income Portfolio
may each 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.
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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.
High-Yield Securities (The High Yield Bond Portfolio and The Diversified Core
Fixed Income Portfolio)
The High Yield Bond Portfolio and The Diversified Core Fixed Income
Portfolio may invest their assets in high-yielding, lower rated or unrated
fixed-income securities (commonly known as "junk bonds") issued by U.S.
companies or, in the case of The Diversified Core Fixed Income Portfolio, also
in foreign companies. Among the possible risks of investing in
high-yield securities are the possibility of legislative and regulatory action
and proposals. 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 securities. For example,
Congressional legislation limited the deductibility of interest paid on certain
high-yield securities 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 purchases
of high-yield securities 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 Portfolios to attain their investment objective.
Repurchase Agreements
While each Portfolio is permitted to do so, it normally does not invest in
repurchase agreements, except to invest cash balances or for temporary defensive
purposes.
The funds in the Delaware Group, including 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.
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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.
Restricted and Rule 144A Securities
Each Portfolio may invest in restricted securities, including securities
eligible for resale without registration pursuant to Rule 144A ("Rule 144A
Securities") under the Securities Act of 1933. Rule 144A Securities are traded
among qualified institutional investors. While maintaining oversight, the Board
of Directors has delegated to the respective investment adviser the day-to-day
function of determining whether or not individual Rule 144A Securities are
liquid for purposes of each Portfolio's limitation (whether 15% or 10% of total
assets) on investments in illiquid assets. The Board has instructed the
respective investment adviser to consider the following factors in determining
the liquidity of a Rule 144A Security: (i) the frequency of trades and trading
volume for the security; (ii) whether at least three dealers are willing to
purchase or sell the security and the number of other potential purchasers;
(iii) whether at least two dealers are making a market in the security; and (iv)
the nature of the security and the nature of the marketplace trades (e.g., the
time needed to dispose of the security, the method of soliciting offers, and the
mechanics of transfer).
Investing in Rule 144A Securities could have the effect of increasing the
level of a Portfolio's illiquidity to the extent that qualified institutional
buyers become, for a time, uninterested in purchasing these securities. After
the purchase of a Rule 144A Security, however, the Board of Directors and the
respective investment adviser will continue to monitor the liquidity of that
security to ensure that a Portfolio has no more than 10% or 15%, as appropriate,
of its total assets in illiquid securities.
The International Mid-Cap Sub Portfolio and The Diversified Core Fixed
Income Portfolio may purchase privately-placed securities whose resale is
restricted under applicable securities laws. Such restricted securities
generally offer a higher return potential than comparable registered securities
but involve some additional risk since they can be resold only in
-19-
<PAGE>
privately-negotiated transactions or after registration under applicable
securities laws. The registration process may involve delays which would result
in the Portfolio obtaining a less favorable price on a resale. The International
Mid-Cap Sub Portfolio and Diversified Core Fixed Income Portfolio will not
purchase illiquid assets if more than 15% of its net assets would then consist
of such illiquid securities.
Non-Traditional Equity Securities (The International Mid-Cap Sub Portfolio, The
Emerging Markets Portfolio and the Diversified Core Fixed Income Portfolio)
The International Mid-Cap Sub Portfolio, The Emerging Markets Portfolio and
the Diversified Core Fixed Income 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 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. 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 International Mid-Cap Sub Portfolio, The Emerging Markets Portfolio and
The Diversified Core Fixed Income 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.
U.S. GOVERNMENT SECURITIES
As disclosed in the Prospectus for The International Mid-Cap Sub Portfolio,
the Portfolio may invest in U.S. government securities for temporary purposes
and otherwise (see "INVESTMENT OBJECTIVES, POLICIES AND RISK CONSIDERATIONS")
Such securities may 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.
-20-
<PAGE>
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.
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 , The Global Equity Portfolio or The Diversified Core Fixed Income
Portfolio writes a call, or purchases a put option, an amount equal to the
premium received or paid by it is included in the section of the Portfolio's
assets and liabilities as an asset and as an equivalent liability.
In writing a call, the amount of the liability is subsequently "marked to
market" to reflect the current market value of the option written. The current
market value of a written option is the last sale price on the principal
exchange on which such option is traded or, in the absence of a sale, the mean
between the last bid and ask prices. If an option which a Portfolio has written
expires on its stipulated expiration date, the Portfolio recognizes a short-term
capital gain. If a Portfolio enters into a closing purchase transaction with
respect to an option which the Portfolio has written, the Portfolio realizes a
short-term gain (or loss if the cost of the closing transaction exceeds the
premium received when the option was sold) without regard to any unrealized gain
or loss on the underlying security, and the liability related to such option is
extinguished. If a call option which a Portfolio has written is exercised, the
Portfolio realizes a capital gain or loss from the sale of the underlying
security on foreign currency and the proceeds from such sale are increased by
the premium originally received.
-21-
<PAGE>
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 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.
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.
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.
-22-
<PAGE>
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.
-23-
<PAGE>
Average Annual Total Return(1)
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.
-24-
<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 WP-1 distribution expenses.
-25-
<PAGE>
(3) Date of initial sale of the original class (now REIT Fund A Class).
-26-
<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.
Pooled Trust, Inc. may also quote each Portfolio's current yield,
calculated as described below, in advertisements and investor communications.
-27-
<PAGE>
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 a 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 , The International Fixed Income Portfolio, The High-Yield Bond
Portfolio, The Aggregate Fixed Income Portfolio and The Diversified Core Fixed
Income Portfolio will also vary depending upon fluctuation in interest rates and
performance of each Portfolio.
The net asset value of these seven 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.
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<PAGE>
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 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.
-29-
<PAGE>
Compustat Industrial Databases, a service of Standard & Poor's Ratings Group,
may also be used in preparing performance and historical stock and bond market
exhibits. This firm maintains fundamental databases that provide financial,
statistical and market information covering more than 7,000 industrial and
non-industrial companies.
Russell Indexes is an investment analysis service that provides both current and
historical stock performance information, focusing on the business fundamentals
of those firms issuing the security.
Morgan Stanley Capital International is a research firm that maintains a
statistical database of international securities. It also compiles and maintains
a number of unmanaged indices of international securities. These indices are
designed to measure the performance of the stock markets outside of the USA.
Primary coverage of Europe, Canada, Mexico, Australia and the Far Eastern
markets, and that of international industry groups are included.
Lehman Brothers is a statistical research firm that maintains databases of U.S.
and international bond markets and corporate and government-backed securities of
various maturities. This information, as well as unmanaged indices compiled and
maintained by Lehman Brothers, will be used in preparing comparative
illustrations. 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
-30-
<PAGE>
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.
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.
<TABLE>
<CAPTION>
Cumulative Total Return(1)
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>
-31-
<PAGE>
(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.
-32-
<PAGE>
<TABLE>
<CAPTION>
Cumulative Total Return(1)
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.
-33-
<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.
-34-
<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).
-35-
<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
-36-
<PAGE>
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 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.
-37-
<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.
-38-
<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 Small/Mid-Cap Value Equity, The Real Estate
Investment Trust, The Fixed Income, The Aggregate Fixed Income, The Limited-Term
Maturity, The High-Yield Bond and The Diversified Core Fixed Income Portfolios,
and Delaware International
-39-
<PAGE>
Advisers Ltd. ("Delaware International"), an affiliate of Delaware and the
investment adviser to The International Equity, The International Mid-Cap Sub,
The Labor Select International Equity, The Global Fixed Income, The
International Fixed Income, The Emerging Markets and The Global Equity
Portfolios and the sub-adviser to The Diversified Core Fixed Income Portfolio
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.
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.
-40-
<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.
-41-
<PAGE>
TRADING PRACTICES AND BROKERAGE
Pooled Trust, Inc. (and, in the case of The International Equity, The
International Mid-Cap Sub, The Labor Select International Equity, The Global
Fixed Income, The International Fixed Income, The Emerging Markets, The Global
Equity and The Diversified Core Fixed Income Portfolios, their investment
adviser or sub-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
International Mid-Cap Sub, The Labor Select International Equity, The Global
Fixed Income, The International Fixed Income, The Emerging Markets, The Global
Equity and The Diversified Core Fixed Income 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.
Securities transactions for The International Equity, The International
Mid-Cap Sub, The Labor Select International Equity, The Global Equity, The
Emerging Markets, The Global Fixed Income, The International Fixed Income, The
High Yield Bond, The Real Estate Investment Trust and The Diversified Core Fixed
Income Portfolios may be effected in foreign markets which may not allow
negotiation of commissions or where it is customary to pay fixed rates.
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 or sub-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
-42-
<PAGE>
connection with their investment decision-making process with respect to one or
more funds and accounts they manage, and may not be used, or used exclusively,
with respect to the fund or account generating the brokerage.
During the fiscal year ended October 31, 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:
Portfolio Brokerage
Transactions Commissions
Amounts Amounts
------- -------
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
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.
-43-
<PAGE>
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.
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, The Global
Equity Portfolio and The Diversified Core Fixed Income 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 Small/Mid-Cap Value Equity
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%; (4)
the annual portfolio turnover rate of The Fixed Income Portfolio and The
Aggregate Fixed Income Portfolio is not expected to exceed 250%; (5) the annual
portfolio turnover rate of The International Mid-Cap Sub Portfolio is not
expected to exceed ___%; and (6) the annual portfolio turnover rate of the
Diversified Core Fixed Income Portfolio is not expected to exceed ___%. 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.
-44-
<PAGE>
The portfolio turnover rates of the following Portfolios 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
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, Class C Shares or The International Mid-Cap Sub
Portfolio 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 except The
International Mid-Cap Sub Portfolio)
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
-45-
<PAGE>
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 (The International Mid-Cap Sub Portfolio)
Shares of The International Mid-Cap Sub Portfolio are offered and sold on
a continuous basis to investors who currently have, or concurrently with their
investment establish, an investment advisory relationship with Delaware
International with respect to equity securities and who have authorized Delaware
International to allocate a portion of those assets to the Portfolio. Shares are
sold at the net asset value next determined after the receipt of a purchase
order as described more fully in the related Prospectus. In addition, a purchase
reimbursement fee of 0.60% of the dollar amount invested is charged to investors
and paid to the Portfolio to help defray expenses of investing purchase
proceeds. The purchase reimbursement fee does not apply to investments that are
made by securities in-kind or by an alternative method agreed to by the
Portfolio that will have the same economic effect as an in-kind purchase or to
reinvestments of dividends or other distributions. See "DETERMINING OFFERING
PRICE AND NET ASSET VALUE." There are no minimum initial or subsequent
investment amounts for The International Mid-Cap Sub Portfolio.
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 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.
-46-
<PAGE>
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 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.
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<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.
Class A Shares
<TABLE>
<CAPTION>
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
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<PAGE>
circumstances upon which 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.
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<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
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<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
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<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.
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<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
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<PAGE>
of the Manager or its affiliates in a stable value account may be combined with
other Delaware Group fund holdings.
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
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<PAGE>
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
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 Delaware, Delaware International or their affiliates and securities
dealer firms with a selling agreement with the Distributor; (c) institutional
advisory accounts of Delaware, Delaware International or their affiliates and
those having client relationships with the DMC, DIA, Ltd. 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.
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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 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
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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.
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
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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.
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
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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 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.
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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 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.
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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.
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 International Mid-Cap Sub Portfolio, The Emerging
Markets Portfolio and the Global Equity Portfolio, any applicable purchase
reimbursement fee equal to 0.60%, 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.
* * *
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The net asset value per share of each Portfolio is determined by dividing
the total market value of the Portfolio's investments and other assets, less any
liabilities, by the total outstanding shares of the Portfolio. Securities listed
on a U.S. securities exchange for which market quotations are available are
valued at the last quoted sale price on the day the valuation is made. Price
information on listed securities is taken from the exchange where the security
is primarily traded. Securities listed on a foreign exchange are valued at the
last quoted sale price available before the time when net assets are valued.
Unlisted securities and listed securities not traded on the valuation date for
which market quotations are readily available are valued at a price that is
considered to best represent fair value within a range not in excess of the
current ask prices nor less than the current bid prices. Domestic
over-the-counter equities, domestic equity securities that are not traded and
U.S. government securities (and those of its agencies and instrumentalities) are
priced at the mean of the bid and ask price.
Bonds and other fixed-income securities are valued according to the
broadest and most representative market, which will ordinarily be the
over-the-counter market. Net asset value includes interest on fixed-income
securities, which is accrued daily. In addition, bonds and other fixed-income
securities may be valued on the basis of prices provided by a pricing service
when such prices are believed to reflect the fair market value of such
securities. The prices provided by a pricing service are determined without
regard to bid or last sale prices but take into account institutional size
trading in similar groups of securities and any developments related to the
specific securities. Securities not priced in this manner are valued at the most
recent quoted mean price or, when stock exchange valuations are used, at the
latest quoted sale price on the day of valuation. If there is no such reported
sale, the latest quoted mean price will be used. Securities with remaining
maturities of 60 days or less are valued at amortized cost, if it approximates
market value. In the event that amortized cost does not approximate market
value, market prices as determined above will be used.
Exchange-traded options are valued at the last reported sales price or,
if no sales are reported, at the mean between the last reported bid and ask
prices. Non-exchange traded options are valued at fair value using a
mathematical model. Futures contracts are valued at their daily quoted
settlement price. The value of other assets and securities for which no
quotations are readily available (including restricted securities) are
determined in good faith at fair value using methods determined by Pooled Trust,
Inc.'s Board of Directors.
The securities in which The International Equity Portfolio, The
International Mid-Cap Sub 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, The High-Yield Bond
Portfolio and The Diversified Core Fixed Income 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 holidays or 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 International Mid-Cap Sub-Portfolio, The
Emerging Markets Portfolio and The Global Equity Portfolio are assessed by the
relevant Portfolio a redemption reimbursement fee of 0.50%, 0.75% and 0.40%,
respectively. Payment for shares redeemed or repurchased may be made either in
cash or in-kind, or partly in cash and partly in-kind. If a redemption of shares
is made in-kind, the redemption reimbursement fee that is otherwise applicable
will not be assessed. 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 International Mid-Cap Sub Portfolio, The Labor Select International Equity
Portfolio, The Global Fixed Income Portfolio, The International Fixed Income
Portfolio and The Global Equity Portfolio. Under certain circumstances, 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
For all Portfolios except The International Mid-Cap Sub Portfolio, 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
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the required minimum. Any redemption in an inactive account established with a
minimum investment may trigger mandatory redemption.
* * *
Pooled Trust, Inc. has available certain redemption privileges, as
described below. They are unavailable to shareholders of The International
Equity Portfolio, The International Mid-Cap Sub Portfolio, The Labor Select
International Equity Portfolio, The Global Fixed Income Portfolio, The
International Fixed Income 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.
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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 the special purchase and redemption reimbursement fees for
exchanges involving shares of The International Mid-Cap Sub Portfolio, The
Emerging Markets Portfolio and The Global Equity 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 authorized for
sale in the state in which the investor is domiciled. Before making an exchange,
a shareholder should consider the investment objectives of the Portfolio to be
purchased.
Exchange requests may be made either by mail, FAX message or by
telephone. Telephone exchanges will be accepted only if the certificates for the
shares to be exchanged are held by 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 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
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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
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
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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 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.
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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 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.
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.
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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 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.
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
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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 information to investors 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.
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, The Global Equity Portfolio and The Diversified
Core Fixed Income Portfolio)
The Aggressive Growth Portfolio's, The Real Estate Investment Trust
Portfolios', The Emerging Markets Portfolio's, The Global Equity Portfolio's
and The Diversified Core Fixed Income 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
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activities in options and futures contracts to the extent necessary to meet the
requirements of Subchapter M of the Code.
Forward Currency Contracts
(The International Equity Portfolio, The International Mid-Cap Sub 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, The Global Equity
Portfolio and The Diversified Core Fixed Income Portfolio)
The International Equity Portfolio, The International Mid-Cap Sub
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, The
Global Equity Portfolio and The Diversified Core Fixed Income Portfolio will be
required for federal income tax purposes to recognize any gains and losses on
forward currency contracts as of the end of each taxable year as well as those
actually realized during the year. In most cases, any such gain or loss
recognized with respect to a forward currency contract is considered to be
ordinary income or loss. Furthermore, forward currency futures contracts which
are intended to hedge against a change in the value of securities held by these
Portfolios may affect the holding period of such securities and, consequently,
the nature of the gain or loss on such securities upon disposition.
Special tax considerations also apply with respect to foreign investments
of these Portfolios. For example, certain foreign exchange gains and losses
(including exchange gains and losses on forward currency contracts) realized by
the Portfolio will be treated as ordinary income or losses.
State and Local Taxes
Shares of Pooled Trust, Inc. are exempt from Pennsylvania county personal
property tax.
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 Aggregate Fixed Income, The Limited-Term Maturity, The
Small/Mid-Cap Value Equity, The Real Estate Investment Trust, The High-Yield
Bond , and The Diversified Core Fixed Income Portfolios, subject to the
supervision and direction of Pooled Trust, Inc.'s Board of Directors. Delaware
International Advisers Ltd. ("Delaware International"), Third Floor, 80
Cheapside, London, England EC2V 6EE, furnishes similar services to The
International Equity, The International Mid-Cap Portfolio, The Labor Select
International Equity, The Global Fixed Income, The International Fixed Income,
The Emerging Markets and The Global Equity Portfolios, and provides sub-advisory
services to The Diversified Core Fixed Income Portfolio 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 __________, 1997, the Manager and its affiliates
within the Delaware Group, including Delaware International Advisers Ltd., were
managing in the aggregate more than $__ billion in assets in the various
institutional or separately managed (approximately $______________) and
investment company ($______________) accounts.
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Lincoln (formerly Lincoln National Investment Management Company) was
incorporated in 1930. As of September 30, 1997, Lincoln had over $38 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 Small/Mid-Cap Value
Equity, 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. The Investment Management
Agreements for the International Mid-Cap Sub Portfolio, The Aggregate Fixed
Income Portfolio and The Diversified Core Fixed Income Portfolio are each dated
[_____, 1997] and were approved by the initial shareholders on that date. The
Sub-Advisory Agreement between Delaware and Delaware International relating to
the Diversified Core Fixed Income Portfolio is dated [_______, 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.
As compensation for the services to be rendered under their advisory
agreements, Delaware or, as relevant, Delaware International is entitled to an
advisory fee (or, in the case of The International Mid-Cap Sub Portfolio, a
comprehensive management 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 International Mid-Cap Sub Portfolio [_.__%]*
The Small/Mid-Cap Value Equity 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%
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The Aggregate Fixed Income Portfolio [-.--%]
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%****
The Diversified Core Fixed Income Portfolio [_.__%]*****
* Under The Investment Management Agreement between Pooled Trust, Inc. on
behalf of The International Mid-Cap Sub Portfolio and Delaware
International, Delaware International provides both investment advisory
services and pays for all of the ordinary operating expenses of the
Portfolio; and the Portfolio pays Delaware International a comprehensive
management fee to cover all such services and expenses as described below.
** 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
designed to limit the "Total Operating Expenses" to 1.55% and this
separate 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.
**** Delaware has entered into sub-advisory agreements with Delaware
International with respect to The Global Equity Portfolio and The
Diversified Core Fixed Income Portfolio. As compensation for its services
as sub-adviser to Delaware, Delaware International is entitled to receive
sub-advisory fees equal to 50% and _____%, respectively, of the investment
management fees under Delaware's Investment Management Agreement with
Pooled Trust, Inc. on behalf of The Global Equity Portfolio and The
Diversified Core Fixed Income Portfolio.
Under the terms of the Investment Management Agreement for The
International Mid-Cap Sub Portfolio, Delaware International pays the Portfolio's
proportionate share of the fees paid to unaffiliated directors by Pooled Trust,
Inc. 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., 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
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Select International Equity and The Global Equity Portfolios, and Delaware will
make no such payments out of the fees it receives from managing The
Small/Mid-Cap Value Equity, The Real Estate Investment Trust, The High-Yield
Bond and The Diversified Core Fixed Income 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) through October 31,
1997:
Portfolio
The Defensive Equity Portfolio 0.68%
The Aggressive Growth Portfolio 0.93%
The International Equity Portfolio 0.96%
The Small/Mid-Cap Value Equity 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 Aggregate Fixed Income Portfolio] [_.__%]
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%
[The Diversified Core Fixed Income Portfolio] [_.__%]
* 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%.
-75-
<PAGE>
*** 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 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>
-76-
<PAGE>
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
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, except for The International Mid-Cap
Sub Portfolio as described below, is responsible for all of its own expenses.
Among others, these expenses 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. Under the terms of The
International Mid-Cap Sub Portfolio's Investment Management Agreement, Delaware
International pays all employee and ordinary operating costs of the Portfolio
including, for example, investment advisory fees, rent, shareholder services,
transfer agency and accounting services, custody fees, and ordinary fees of
independent accountants and legal counsel. Excluded from the definition of
ordinary operating costs are interest, taxes, dues, brokerage fees,
extraordinary legal and accounting fees and expenses, and fees or other charges
of governments and their agencies, including the cost of registering the
Portfolio's shares with the Commission and qualifying the Portfolio's shares for
sale in any jurisdiction, all of which are borne by the Portfolio.
Distribution and Service
Delaware Distributors, L.P., 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 Small/Mid-Cap Value Equity, 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. [It is the national distributor for The International
Mid-Cap Sub Portfolio, The Aggregate Fixed Income Portfolio and The Diversified
Core Fixed Income Portfolio under separate Distribution Agreements dated _____,
1997.] Delaware Distributors, L.P. is an affiliate of the investment advisers
and bears all of the costs of promotion and distribution.
-77-
<PAGE>
Delaware Service Company, Inc., an affiliate of Delaware, is Pooled Trust,
Inc.'s shareholder servicing, dividend disbursing and transfer agent for each
Portfolio pursuant to an Amended and Restated Shareholders Services Agreement
dated ____________, 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,
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.
-78-
<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>
-79-
<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>
-80-
<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>
-81-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Portfolio Name and Address of Account Share Amount Percentage
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%
</TABLE>
-82-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
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%
Portfolio Name and Address of Account Share Amount Percentage
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>
-83-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Portfolio Name and Address of Account Share Amount Percentage
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%
The Emerging
Markets
Portfolio Father Flanagan's Trust Fund
14100 Crawford St.
Boys Town, NE 68010 887,311 43.95%
Burlington Northern Santa Fe
Retirement Plan
1700 E. Golf Rd.
Schaumburg, IL 60173 548,947 27.19%
Chicago Trust Company
FBO Lincoln National Corp.
Employees Retirement Trust
1000 N. Water St. TR 4
Milwaukee, WI 53202 538,808 26.69%
</TABLE>
-84-
<PAGE>
DMH Corp., Delvoy, 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 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.
-85-
<PAGE>
*Wayne A. Stork (60)
Chairman of Pooled Trust, Inc., each of the other 32 investment
companies in the Delaware Group and Delaware Distributors, L.P.
Chairman, President, Chief Executive Officer, Director and/or Trustee of
DMH Corp., Delaware International Holdings Ltd., Delaware
Distributors, Inc. and Founders Holdings, Inc.
Chairman and Director of 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. and Delaware Management Holdings, Inc.
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.
-86-
<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.
-87-
<PAGE>
* Jeffrey J. Nick (44)
President, Chief Executive Officer and Director and/or Trustee of Pooled
Trust, Inc. and 32 other investment companies in the Delaware Group.
President, hief Executive Officer and Director of Lincoln National
Investment Companies, Inc.
President and Director of Delaware Management Holdings, Inc.
President of Lincoln Funds Corporation.
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.
Vice President of Lincoln Funds Corporation.
Director of Delaware International Advisers Ltd. and Delaware Voyageur
Holding, Inc. 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.
-88-
<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. and Delaware Voyageur
Holding, Inc.
Secretary of Lincoln Funds Corporation.
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.
Treasurer of Lincoln Funds 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 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.
-89-
<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/Senior Portfolio Manager of Pooled Trust, Inc., of nine
other investment companies in the Delaware Group and of Delaware
Management Company, Inc.
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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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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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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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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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 stable net asset value.
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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.
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. Overseas Equity
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.
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. 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
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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.
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
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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 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.
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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).
GENERAL INFORMATION
Delaware Investment Advisers, a division of Delaware, furnishes
investment management services to The Defensive Equity, The Aggressive Growth,
The Fixed Income, The Aggregate Fixed Income, The Limited-Term Maturity, The
Small/Mid-Cap Value Equity, The Real Estate Investment Trust, The High-Yield
Bond and The Diversified Core Fixed Income Portfolios. Delaware International
furnishes similar services to The International Equity, The International
Mid-Cap Sub, The Labor Select International Equity, The Global Fixed Income, The
International Fixed Income, The Emerging Markets and The Global Equity
Portfolios and also serves as sub-adviser to The Diversified Core Fixed Income
Portfolio. 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.
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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 the Portfolios'
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 or, in the case of The
International Mid-Cap Sub Portfolio, by Delaware International 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 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
International Mid-Cap Sub, The Labor Select International Equity, The Real
Estate Investment Trust, The High-Yield Bond, The Emerging Markets, The
International Fixed Income, The Aggregate Fixed Income, The Diversified Core
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 Small/Mid-Cap Value Equity 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.
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Effective __________, 1997, the name of The Defensive Equity
Small/Mid-Cap Portfolio was changed to The Small/Mid-Cap Value Equity Portfolio.
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.
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.
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<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>
-101-
<PAGE>
[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%]
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%]
-102-
<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.
-103-
<PAGE>
<TABLE>
<CAPTION>
$2,000 SINGLE INVESTMENT AT A RETURN OF 10% COMPOUNDED ANNUALLY
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
$2,000 INVESTED ANNUALLY AT A RETURN OF 10% COMPOUNDED ANNUALLY
TAXABLE - TAXABLE - TAXABLE - TAXABLE - TAXABLE - TAX
YEARS 39.6%* 36%* 31% 28% 15% DEFERRED
- -----------------------------------------------------------------------------------------------------------------
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.
-104-
<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>
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 for the
Registrant's fiscal year ended October 31, 1997 to be filed by
Post-Effective Amendment.
(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.
(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 (October 9, 1997) attached
as Exhibit.
(e) Articles of Amendment to Articles of
Incorporation (October 9, 1997) attached as
Exhibit.
(f) 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.
<PAGE>
Part C - Other Information
(continued)
(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 Fourth of Articles Supplementary
(October 9, 1997) attached in Exhibit
24(b)(1)(d).
(5) Article Fourth of Articles of Amendment
(October 9, 1997) attached in Exhibit
24(b)(1)(e).
(6) Article __ of Articles Supplementary
(1997) attached in Exhibit
24(b)(1)(e) 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.
(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.
<PAGE>
Part C - Other Information
(continued)
(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 (to be renamed Small/Mid-Cap Value
Equity), 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) Form of Investment Management Agreement (1997) between
Delaware International Advisers Ltd. and the Registrant on behalf
of The Global Equity Portfolio attached as Exhibit.
(a)(7) Form of Investment Management Agreement (1997) between
Delaware Management Company, Inc. and the Registrant on behalf
of The Real Estate Investment Trust Portfolio II attached as
Exhibit.
(a)(8) Proposed Investment Management Agreement (1997) between
Delaware Management Company, Inc. and the Registrant on behalf
of The Aggregate Fixed Income Portfolio to be filed by
Amendment.
<PAGE>
Part C - Other Information
(continued)
(a)(9) Proposed Investment Management Agreement (1997) between
Delaware Management Company, Inc. and the Registrant on behalf
of The Diversified Core Fixed Income Portfolio to be filed by
Amendment.
(a)(10) Proposed Investment Management Agreement (1997) between
Delaware International Advisers, Ltd. and the Registrant on behalf
of The International Mid-Cap Sub Portfolio 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) Form of Sub-Advisory Agreement (1997) between Delaware
International Advisers Ltd. and Delaware Investment Advisers on
behalf of The Global Equity Portfolio attached as Exhibit.
(b)(3) Form of Sub-Advisory Agreement (1997) between Delaware
Management Company, Inc. and Lincoln Investment Management,
Inc. on behalf of The Real Estate Investment Trust Portfolio II
attached as Exhibit.
(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 (to be
renamed Small/Mid-Cap Value Equity), The High-Yield
Bond, The Labor Select International Equity and The Real
<PAGE>
Part C - Other Information
(continued)
Estate Investment Trust Portfolios incorporated into this
filing by reference to Post-Effective Amendment No. 9 filed
November 24, 1995.
(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) Form of Distribution Agreement (1997) between Delaware
Distributors, L.P. and the Registrant on behalf of The Global
Equity Portfolio attached as Exhibit.
(v) Form of Distribution Agreement (1997) between Delaware
Distributors, L.P. and the Registrant on behalf of The Real
Estate Investment Trust Portfolio II attached as Exhibit.
(vi) Form of Amended and Restated Distribution Agreement
(1997) for The Real Estate Investment Trust Portfolio
attached as Exhibit.
(vii) Proposed Distribution Agreement (1997) between Delaware
Distributors, L.P. and the Registrant on behalf of The
Aggregate Fixed Income Portfolio, The Diversified Core Fixed
Income Portfolio and The International Mid- Cap Sub 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.
<PAGE>
Part C - Other Information
(continued)
(7) Bonus, Profit Sharing, Pension Contracts.
(a)(1) Amended and Restated Profit Sharing Plan (November
17, 1994) incorporated into this filing by
reference to Post- Effective Amendment No. 8 filed
September 15, 1995.
(a)(2) Amendment to Profit Sharing Plan (December 21,
1995) incorporated into this filing by reference to
Post-Effective Amendment No. 10 filed February 23,
1996.
(8) Custodian Agreements.
(a) Form of Custodian Agreement (1996) between the Registrant
and Bankers Trust Company on behalf of The Defensive Equity,
The Aggressive Growth, The Fixed Income, The Limited-Term
Maturity and The Small/Mid-Cap Value Equity 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 Small/Mid- Cap Value
Equity 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
<PAGE>
Part C - Other Information
(continued)
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.
(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) Form of 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) Form of 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.
(i) Proposed Custodian Agreement (1997) between the Registrant and
The Chase Manhattan Bank on behalf of The Aggregate Fixed
Income Portfolio, The Diversified Core Fixed Income Portfolio
and The International Mid- Cap Sub Portfolio included as
Module.
(j) Proposed Securities Lending Agreement (1997) between
Registrant and The Chase Manhattan Bank on behalf of The
Aggregate Fixed Income Portfolio, The Diversified Core Fixed
Income Portfolio and The International Mid- Cap Sub Portfolio
attached as Exhibit.
<PAGE>
Part C - Other Information
(continued)
(9) Other Material Contracts.
(a) 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.
(b) Form of Fifth Amended and Restated Shareholders
Services Agreement (July 1997) between Delaware Service
Company, Inc. and the Registrant on behalf of each
Portfolio attached as Exhibit.
(c) Form of Sixth Amended and Restated Shareholders
Services Agreement (1997) between Delaware Service
Company, Inc. and the Registrant on behalf of each
Portfolio to be filed by Amendment.
(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) Form of Amendment No. 7 (1997) to Schedule
A to Delaware Group of Funds Fund
Accounting Agreement attached as Exhibit.
(10) Opinion of Counsel. To be filed by Amendment.
(11) Consent of Auditors. To be filed by Amendment.
(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) Plan Under Rule 12b-1. Form of 12b-1 Plans for REIT Fund Class A, REIT
Fund Class B and REIT Fund Class C of The Real Estate Investment Trust
Portfolio attached as Exhibit.
<PAGE>
Part C - Other Information
(continued)
(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, Post-Effective Amendment
No. 16 filed May 23, 1997 and Post-Effective
Amendment No. 19 filed October 10, 1997.
(17) Financial Data Schedules.
(a) Financial Data Schedules for the fiscal year
ended October 31, 1997 to be filed by
Amendment.
(18) Plan under Rule 18f-3.
(a) Form of Rule 18f-3 Plan attached as Exhibit
(b) Amended Appendix A to Rule 18f-3 Plan attached as
Exhibit.
(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
<PAGE>
Part C - Other Information
(continued)
Number of
Title of Class Record Holders
The Aggressive Growth Portfolio:
Common Stock Par Value 13 Accounts as of
$.01 Per Share September 30, 1997
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
<PAGE>
Part C - Other Information
(continued)
Number of
Title of Class Record Holders
The Emerging Markets Portfolio:
Common Stock Par Value 7 Accounts as of
$.01 Per Share September 30, 1997
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
The Aggregate Fixed Income Portfolio:
Common Stock Par Value 0 Accounts as of
$.01 Per Share September 30, 1997
<PAGE>
Part C - Other Information
(continued)
Number of
Title of Class Record Holders
The Diversified Core Fixed Income Portfolio
Common Stock Par Value 0 Accounts as of
$.01 Per Share September 30, 1997
The International Mid-Cap Sub Portfolio
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.
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 Small/Mid-Cap
Value Equity Portfolio, The High-Yield Bond Portfolio, The Real Estate
Investment Trust Portfolio, The Real Estate Investment Trust Portfolio II, The
Aggregate Fixed Income Portfolio and The Diversified Core Fixed Income
Portfolio. 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 Equity Funds III,
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 Fund, 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:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------ ---------------------------------------------------
<S> <C>
Wayne A. Stork Chairman of the Board, President, Chief Executive Officer, Chief
Investment Officer and Director of Delaware Management Company,
Inc.; Chairman of the Board, President, Chief Executive Officer and
Director of DMH Corp., Delaware International Holdings Ltd.,
Delaware Distributors, Inc. and Founders Holdings, Inc.; Chairman,
Chief Executive Officer and Director of Delaware Management
Holdings, Inc. and Delaware International Advisers Ltd.; Chairman of
the Board and Director of the Registrant, each of the other funds in the
Delaware Group and Delaware Capital Management, Inc.; Chairman of
Delaware Distributors, L.P.; President and Chief Executive Officer of
Delvoy, Inc.; and Director of Delaware Service Company, Inc. and
Delaware Investment & Retirement Services, Inc.
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.
</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 with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------- -----------------------------------------------
<S> <C>
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., Delaware
International Holdings Ltd. and Delvoy, Inc.; 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, Secretary and Director of
Chamberlain, Jr. Delaware Management Company, Inc., DMH Corp.,
Delaware Distributors, Inc., Delaware Service Company, Inc., Founders
Holdings, Inc., Delaware Capital Management, Inc., Delaware Investment
& Retirement Services, Inc. and Delvoy, 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.
</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 with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------- -----------------------------------------------
<S> <C>
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., Delaware International Holdings Ltd and Delvoy, Inc.;
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.
</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 with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------- -----------------------------------------------
<S> <C>
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., Delaware International Holdings Ltd. and
Delvoy, Inc.; 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.; and Vice President and Assistant Secretary of Delvoy,
Inc.
</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 with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------- -----------------------------------------------
<S> <C>
Richelle S. Maestro Vice President and Assistant Secretary of Delaware Management
Company, Inc., the Registrant, each of the other funds in the
Delaware Group, Delaware Management Holdings, Inc., Delaware
Distributors, L.P., Delaware Distributors, Inc., Delaware Service
Company, Inc., DMH Corp., Delaware Management Trust Company,
Delaware Capital Management, Inc., Delaware Investment &
Retirement Services, Inc., Founders Holdings, Inc. and Delvoy, 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.; and Vice President/Director of Internal
Audit of Delvoy, 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., Delaware Investment & Retirement Services, Inc.
and Delvoy, 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.
</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 with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------- -----------------------------------------------
<S> <C>
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.; and Vice President of
Delvoy, 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.
</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 with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------- -----------------------------------------------
<S> <C>
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 Wisconsin Funds.
</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 with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------- -----------------------------------------------
<S> <C>
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
</TABLE>
(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, The
Global Equity Portfolio and The International Mid-Cap Sub 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:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Delaware International Advisers Ltd.
Business Address and its Affiliates and Other Positions and Offices Held
- ------------------ ---------------------------------------------------------------
<S> <C>
*Wayne A. Stork Chairman, Chief Executive Officer and Director of Delaware
International Advisers Ltd. and Delaware Management Holdings, Inc.;
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 DMH Corp., Delaware International Holdings Ltd.,
Delaware Distributors, Inc. and Founders Holdings, Inc.; Chairman of
the Board and Director of the Registrant, each of the other funds in the
Delaware Group and Delaware Capital Management, Inc.; Chairman of
Delaware Distributors, L.P.; President and Chief Executive Officer of
Delvoy, 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.
</TABLE>
* Business address is 1818 Market Street, Philadelphia, PA 19103.
**Business address is Third Floor, 80 Cheapside, London, England EC2V 6EE.
<PAGE>
Part C - Other Information
(continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Delaware International Advisers Ltd.
Business Address and its Affiliates and Other Positions and Offices Held
- ------------------ ---------------------------------------------------------------
<S> <C>
**David 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., Delaware International
Holdings Ltd. and Delvoy, Inc.; 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
</TABLE>
* Business address is 1818 Market Street, Philadelphia, PA 19103.
**Business address is Third Floor, 80 Cheapside, London, England EC2V 6EE.
<PAGE>
Part C - Other Information
(continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Delaware International Advisers Ltd.
Business Address and its Affiliates and Other Positions and Offices Held
- ------------------ ---------------------------------------------------------------
<S> <C>
*Richard 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., Delaware International Holdings Ltd. and
Delvoy, Inc.; 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.
</TABLE>
* Business address is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
Part C - Other Information
(continued)
**Business address is Third Floor, 80 Cheapside, London, England EC2V 6EE.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Delaware International Advisers Ltd.
Business Address and its Affiliates and Other Positions and Offices Held
- ------------------- ---------------------------------------------------------------
<S> <C>
*George M. Director of Delaware International Advisers Ltd.; Senior Vice President,
Chamberlain, Jr. 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.,
Delaware Investment & Retirement Services, Inc. and Delvoy, 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, Director Equity
Sanderson 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 Advisers Ltd.
Desmond
**Gavin A. Hall Senior Portfolio Manager of Delaware International Advisers Ltd.
</TABLE>
* Business address is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
Part C - Other Information
(continued)
**Business address is Third Floor, 80 Cheapside, London, England EC2V 6EE.
(c) Lincoln Investment Management Company, Inc. serves as sub-adviser
to The Real Estate Investment Trust Portfolio and The Real Estate Investment
Trust Portfolio II. Lincoln Investment Management Company, Inc. also serves as
sub-adviser to Delaware Group Adviser Funds, Inc. and investment manager to
Lincoln National Convertible Securities Fund, Inc., Lincoln National Income
Fund, Inc., Lincoln National Aggressive Growth Fund, Inc., Lincoln National Bond
Fund, Inc., Lincoln National Capital Appreciation Fund, Inc., Lincoln National
Equity-Income Fund, Inc., Lincoln National Global Asset Allocation Fund, Inc.,
Lincoln National Growth and Income Fund, Inc., Lincoln National International
Fund, Inc., Lincoln National Managed Fund, Inc., Lincoln National Money Market
Fund, Inc., Lincoln National Social Awareness Fund, Inc., Lincoln National
Special Opportunities Fund, Inc. and to other clients. Lincoln Investment
Management Company, Inc. is registered with the Securities and Exchange
Commission as an investment adviser and has acted as an investment adviser to
investment companies for over 40 years.
Information regarding the officers and directors of Lincoln Investment
Management Company, Inc. and the positions they held during the past two years
follows:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Lincoln Investment Management Company,
Business Address Inc. and its Affiliates and Other Positions and Offices Held
- -------------------- -------------------------------------------------------------------
<S> <C>
*H. Thomas McMeekin President and Director of Lincoln Investment Management, Inc.,
Lincoln National Convertible Securities Fund, Inc. and Lincoln
National Income Fund, Inc.; President, Chief Executive Officer and
Director of Lincoln National Mezzanine Corporation; Executive Vice
President (previously Senior Vice President) and Chief Investment
Officer of Lincoln National Corporation; and Director of 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.
</TABLE>
*Business address is 200 East Berry Street, Fort Wayne, IN 46802.
<PAGE>
Part C - Other Information
(continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Lincoln Investment Management Company,
Business Address Inc. and its Affiliates and Other Positions and Offices Held
- ------------------- ------------------------------------------------------------------
<S> <C>
*Steven R. Brody Director, Senior Vice President 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
</TABLE>
*Business address is 200 East Berry Street, Fort Wayne, IN 46802.
<PAGE>
Part C - Other Information
(continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Lincoln Investment Management Company,
Business Address Inc. and its Affiliates and Other Positions and Offices Held
- ------------------- -----------------------------------------------------------------
<S> <C>
*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
</TABLE>
*Business address is 200 East Berry Street, Fort Wayne, IN 46802.
<PAGE>
Part C - Other Information
(continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Lincoln Investment Management Company,
Business Address Inc. and its Affiliates and Other Positions and Offices Held
- ------------------ -------------------------------------------------------------------
<S> <C>
*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.
</TABLE>
* 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)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Lincoln Investment Management Company,
Business Address Inc. and its Affiliates and Other Positions and Offices Held
- ------------------- ------------------------------------------------------------------
<S> <C>
*Janet C. Whitney Vice President and Treasurer of Lincoln Investment Management, Inc.,
The Financial Alternative, Inc., Financial Alternative Resources, Inc.,
Financial Choices, Inc., Financial Investments, Inc., Financial
Investment Services, Inc., The Financial Resources Department, Inc.,
Investment Alternatives, Inc., The Investment Center, Inc., The
Investment Group, Inc., LNC Administrative Services Corporation,
LNC Equity Sales Corporation, The Richard Leahy Corporation,
Lincoln National Aggressive Growth Fund, Inc., Lincoln National
Bond Fund, Inc., Lincoln National Capital Appreciation Fund, Inc.,
Lincoln National Equity-Income Fund, Inc., Lincoln National Global
Assets Allocation Fund, Inc., Lincoln National Growth and Income
Fund, Inc., Lincoln National Health & Casualty Insurance Company,
Lincoln National Intermediaries, Inc., Lincoln National International
Fund, Inc., Lincoln National Managed Fund, Inc., Lincoln National
Management Services, Inc., Lincoln National Mezzanine Corporation,
Lincoln National Money Market Fund, Inc. Lincoln National Realty
Corporation, Lincoln National Risk Management, Inc., Lincoln
National Social Awareness Fund, Inc., Lincoln National Special
Opportunities Fund, Inc., Lincoln National Structured Settlement, Inc.,
Personal Financial Resources, Inc., Personal Investment Services, Inc.,
Special Pooled Risk Administrators, Inc., Underwriters &
Management Services, Inc.; Vice President and Treasurer (previously
Vice President and General Auditor) of Lincoln National Corporation;
and Assistant Treasurer of First Penn-Pacific Life Insurance Company
</TABLE>
*Business address is 200 Berry Street, Fort Wayne, IN 46802.
<PAGE>
Part C - Other Information
(continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Lincoln Investment Management Company,
Business Address Inc. and its Affiliates and Other Positions and Offices Held
- ------------------ ------------------------------------------------------------------
<S> <C>
*C. Suzanne Womack Secretary of Lincoln Investment Management, Inc., Corporate Benefit
Systems Services Corporation, The Financial Alternative, Inc.,
Financial Alternative Resources, Inc., Financial Choices, Inc., The
Financial Resources Department, Inc., Financial Investment Services,
Inc., Financial Investments, Inc., Insurance Services, Inc., Investment
Alternatives, Inc., The Investment Center, Inc. (TN), The Investment
Group, Inc., LNC Administrative Services Corporation, LNC Equity
Sales Corporation, The Richard Leahy Corporation, Lincoln 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
</TABLE>
*Business address is 200 East Berry Street, Fort Wayne, IN 46802.
<PAGE>
Part C - Other Information
(continued)
<TABLE>
<CAPTION>
<S> <C>
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>
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ------------------ ---------------------- ----------------------
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,
The Real Estate Investment
Trust Portfolios, The
Aggregate Fixed Income
Portfolio and The Diversified
Core Fixed Income Portfolio
Delaware Capital Limited Partner None
Management, Inc.
Wayne A. Stork Chairman Chairman/ President/
Chief Executive Officer/
Chief Investment Officer
Bruce D. Barton President and Chief Executive None
Officer
</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>
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
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/ None
Key Accounts
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
</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>
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
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
</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>
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
Joanne A. Mettenheimer Vice President/New Business None
Development
Scott Metzger Vice President/Business None
Development
Stephen C. Hall Vice President/Institutional Sales None
Gregory J. McMillan Vice President/ National Accounts None
Christopher H. Price Vice President/Manager, None
Insurance
Stephen J. DeAngelis Vice President/Product None
Development
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
</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>
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
Dale L. Kurtz Vice President/Marketing Support None
Holly W. Reimel Vice President/Manager, Key None
Accounts
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
</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>
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
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
</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>
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
Frank C. Tonnemaker Vice President None
</TABLE>
(c) Not Applicable.
Item 30. Location of Accounts and Records.
All accounts and records are maintained in the Philadelphia
office - 1818 Market Street, Philadelphia, PA 19103 or One
Commerce Square, Philadelphia, PA 19103.
Item 31. Management Services. None.
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
Part C - Other Information
(continued)
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
Small/Mid-Cap Value Equity Portfolio, The Global
Equity Portfolio, The Real Estate Investment Trust
Portfolio II, The Aggregate Fixed Income Portfolio,
The Diversified Core Fixed Income Portfolio and The
International Mid-Cap Sub Portfolio.
(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 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 24th day of
October, 1997.
DELAWARE POOLED TRUST, INC.
By /s/ Wayne A. Stork
----------------------------------
Wayne A. Stork
Chairman
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 and Director October 24, 1997
- ------------------------------
Wayne A. Stork
Executive Vice President/Chief
Operating Officer/Chief Financial
Officer (Principal Financial Officer
/s/David K. Downes and Principal Accounting Officer) October 24, 1997
- ------------------------------
David K. Downes
/s/ W. Thacher Longstreth Director October 24, 1997
- ------------------------------
W. Thacher Longstreth
/s/ Thomas F. Madison Director October 24, 1997
- ------------------------------
Thomas F. Madison
/s/ Walter P. Babich Director October 24, 1997
- ------------------------------
Walter P. Babich
/s/ Ann R. Leven Director October 24, 1997
- ------------------------------
Ann R. Leven
/s/ Anthony D. Knerr Director October 24, 1997
- ------------------------------
Anthony D. Knerr
/s/ Charles E. Peck Director October 24, 1997
- ------------------------------
Charles E. Peck
/s/ Jeffrey J. Nick Director October 24, 1997
- ------------------------------
Jeffrey J. Nick
</TABLE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Exhibits
to
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Exhibit
- ----------- -------
<S> <C>
EX-99.B1D Articles Supplementary (October 9, 1997)
EX-99.B1E Articles of Amendment (October 9, 1997)
EX-99.B5AVI Form of Investment Management Agreement (1997) between Delaware
International Advisers, Ltd. and the Registrant on behalf of The Global
Equity Portfolio
EX-99.B5AVII Form of Investment Management Agreement (1997) between Delaware
Management Company, Inc. and the Registrant on behalf of The Real
Estate Investment Trust Portfolio II
EX-99.B5BII Form of Sub-Advisory Agreement (1997) between Delaware International
Advisers, Ltd. and Delaware Investment Advisers on behalf of The Global
Equity Portfolio
EX-99.B5BIII Form of Sub-Advisory Agreement (1997) between Delaware Management
Company, Inc. and Lincoln Investment Management, Inc. on behalf of The
Real Estate Investment Trust Portfolio II
EX-99.B6AIV Form of Distribution Agreement (1997) between Delaware Distributors,
L.P. and the Registrant on behalf of The Global Equity Portfolio
EX-99.B6AV Form of Distribution Agreement (1997) between Delaware Distributors,
L.P. and the Registrant on behalf of The Real Estate Investment Trust
Portfolio II
EX-99.B6AVI Amended and Restated Distribution Agreement for The Real Estate
Investment Trust Portfolio
EX-99.B8I (Module Proposed Custodian Agreement (1997) between the Registrant and The
Name CHASE_ Chase Manhattan Bank on behalf of The Aggregate Fixed Income Portfolio,
CUST_AGR) The Diversified Core Fixed Income Portfolio and The International Mid-
Cap Sub Portfolio attached as Exhibit.
EX-99.B8J Proposed Securities Lending Agreement (1997) between Registrant and
The Chase Manhattan Bank on behalf of The Aggregate Fixed Income
Portfolio, The Diversified Core Fixed Income Portfolio and The
International Mid-Cap Sub Portfolio
EX-99.B9B Form of Fifth Amended and Restated Shareholders Services Agreement
(July 1997) between Delaware Service Company, Inc. and the Registrant on
behalf of each Portfolio
EX-99.B9DI Form of Amendment No.7 (1997) to Schedule A to Delaware Group of Funds
Fund Accounting Agreement.
EX-99.B15 12b-1 Plan for REIT Fund Class A, REIT Fund Class B and REIT Fund Class C
of the Real Estate Investment Trust Portfolio
EX-99.B18A Form of Rule 18f-3 Plan
EX-99.B18B Amended Appendix A to Rule 18f-3 Plan
</TABLE>
<PAGE>
DELAWARE POOLED TRUST, INC.
ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
Delaware Pooled Trust, Inc., a Maryland corporation having its
principal office in Baltimore, Maryland (the "Corporation"), hereby certifies,
in accordance with Section 2-208 and Section 2-208.1 of the Maryland General
Corporation Law, to the State Department of Assessments and Taxation of
Maryland, that:
FIRST: The Corporation has authority to issue a total of One
Billion (1,000,000,000) shares of common stock with a par value of One Cent
($0.01) per share (the "Common Stock") of the Corporation, having an aggregate
par value of Ten Million Dollars ($10,000,000). Of such One Billion
(1,000,000,000) shares of the Common Stock, Six Hundred Million (600,000,000)
shares have been allocated to the Corporation's existing series of Common Stock
as follows: Fifty Million (50,000,000) shares have been allocated to each of The
Defensive Equity Portfolio, The Aggressive Growth Portfolio, The International
Equity Portfolio, The Fixed Income Portfolio, The Limited-Term Maturity
Portfolio, The Global Fixed Income Portfolio, The International Fixed Income
Portfolio, The Defensive Equity Small/Mid-Cap Portfolio, The High-Yield Bond
Portfolio, The Labor Select International Equity Portfolio, REIT Fund A Class of
The Real Estate Investment Trust Portfolio and The Emerging Markets Portfolio.
SECOND: The Board of Directors of the Corporation, at a
meeting held on September 18, 1997, adopted resolutions increasing the aggregate
number of shares of Common Stock that the Corporation has authority to issue
from One Billion (1,000,000,000) shares to Two Billion (2,000,000,000) shares,
designating two additional series of the Corporation's Common Stock as The
Global Equity Portfolio and The Real Estate Investment Trust Portfolio II,
classifying and allocating Fifty Million (50,000,000) shares of authorized,
unissued and unclassified Common Stock to each of The Global Equity Portfolio
and The Real Estate Investment Trust Portfolio II, and classifying and
allocating an additional Two Hundred Million (200,000,000) shares of authorized,
unissued and unclassified Common Stock to The Real Estate Investment Trust
Portfolio. The Two Hundred Million (200,000,000) additional shares of the Common
Stock so allocated to The Real Estate Investment Trust Portfolio
<PAGE>
have been further allocated as follows: Fifty Million (50,000,000) shares have
been allocated to each of REIT Fund B Class, REIT Fund C Class, REIT Fund
Institutional Class and The Real Estate Investment Trust Portfolio class. One
Billion One Hundred Million (1,100,000,000) shares of the Corporation's Common
Stock remain authorized but unissued and unallocated shares.
THIRD: As a result of the aforesaid increase in the authorized
Common Stock and classifications, the Corporation has authority to issue Two
Billion (2,000,000,000) shares of Common Stock with a par value of One Cent
($0.01) per share, having an aggregate par value of Twenty Million Dollars
($20,000,000). Of such Two Billion (2,000,000,000) shares of Common Stock, Nine
Hundred Million (900,000,000) shares of the Common Stock have been allocated as
follows: (i) Fifty Million (50,000,000) shares have been allocated to each of
The Defensive Equity Portfolio, The Aggressive Growth Portfolio, The
International Equity Portfolio, The Fixed Income Portfolio, The Limited-Term
Maturity Portfolio, The Global Fixed Income Portfolio, The International Fixed
Income Portfolio, The Defensive Equity Small/Mid-Cap Portfolio, The High-Yield
Bond Portfolio, The Labor Select International Equity Portfolio, The Global
Equity Portfolio, The Emerging Markets Portfolio and The Real Estate Investment
Trust Portfolio II and (ii) Two Hundred Fifty Million (250,000,000) shares have
been allocated to The Real Estate Investment Trust Portfolio. The Two Hundred
Fifty Million (250,000,000) shares of the Corporation's Common Stock which have
been allocated to The Real Estate Investment Trust Portfolio have been further
classified and allocated as follows: Fifty Million (50,000,000) shares of The
Real Estate Investment Trust Portfolio series of the Common Stock have been
allocated to each of REIT Fund A Class, REIT Fund B Class, REIT Fund C Class,
REIT Fund Institutional Class and The Real Estate Investment Trust Portfolio
class.
FOURTH: The shares of REIT Fund A Class, REIT Fund B Class,
REIT Fund C Class, REIT Fund Institutional Class and The Real Estate Investment
Trust Portfolio class of The Real Estate Investment Trust Portfolio series shall
represent proportionate interests in the same portfolio of investments. The
shares of REIT Fund A Class, REIT Fund B Class, REIT Fund C Class, REIT Fund
Institutional Class and The Real Estate Investment Trust Portfolio class of The
Real Estate Investment Trust Portfolio series shall have the same preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications, or terms or conditions of redemption, all as set
forth in the Articles of Incorporation of the Corporation, except for the
differences hereinafter set forth:
1. The dividends and distributions of investment income and capital
gains with respect to shares of REIT
-2-
<PAGE>
Fund A Class, REIT Fund B Class, REIT Fund C Class, REIT Fund
Institutional Class and The Real Estate Investment Trust Portfolio
class of The Real Estate Investment Trust Portfolio series of the
Common Stock shall be in such amounts as may be declared from time to
time by the Board of Directors, and such dividends and distributions
may vary with respect to each such class from the dividends and
distributions of investment income and capital gains with respect to
the other classes of The Real Estate Investment Trust Portfolio series
of the Common Stock, to reflect differing allocations of the expenses
of the Corporation among the classes and any resultant difference
among the net asset values per share of the classes, to such extent
and for such purposes as the Board of Directors may deem appropriate.
The allocation of investment income and capital gains and expenses and
liabilities of The Real Estate Investment Trust Portfolio series among
its five classes of Common Stock shall be determined by the Board of
Directors in a manner that is consistent with the orders, as
applicable, dated April 10, 1987 and September 6, 1994 (Investment
Company Act of 1940 Release Nos. 15675 and 20529) issued by the
Securities and Exchange Commission, and any amendments to such orders,
any existing or future order or any Multiple Class Plan adopted by the
Corporation in accordance with Rule 18f-3 under the Investment
Company Act of 1940, as amended, that modifies or supersedes such
orders.
2. Except as may otherwise be required by law, pursuant to any
applicable order, rule or interpretation issued by the Securities and
Exchange Commission, or otherwise, the holders of shares of REIT Fund
A Class, REIT Fund B Class, REIT Fund C Class, REIT Fund Institutional
Class and The Real Estate Investment Trust Portfolio class of The Real
Estate Investment Trust Portfolio series of the Common Stock shall
have (i) exclusive voting rights with respect to any matter submitted
to a vote of stockholders that affects only holders of shares of REIT
Fund A Class, REIT Fund B Class, REIT Fund C Class, REIT Fund
Institutional Class and The Real Estate Investment Trust Portfolio
class of The Real Estate Investment Trust Portfolio series,
respectively, including, without limitation, the provisions of any
Distribution Plan adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended (a "Distribution Plan"), applicable to
shares of REIT Fund A Class, REIT Fund B Class and REIT Fund C Class,
and (ii) no voting rights with respect to the provisions of any
Distribution Plan applicable to any other class of
-3-
<PAGE>
The Real Estate Investment Trust Portfolio series of the Common Stock
or with regard to any other matter submitted to a vote of stockholders
which does not affect holders of shares of REIT Fund A Class, REIT
Fund B Class and REIT Fund C Class.
3. (a) Other than shares described in paragraph (3)(b) herein, each
share of REIT Fund B Class shall be converted automatically, and
without any action or choice on the part of the holder thereof, into
shares of REIT Fund A Class on the Conversion Date. The term
"Conversion Date" when used herein shall mean a date set forth in the
prospectus of REIT Fund B Class, as such prospectus may be amended
from time to time, that is no later than three months after either (i)
the date on which the eighth anniversary of the date of issuance of
the share occurs, or (ii) any such other anniversary date as may be
determined by the Board of Directors and set forth in the prospectus
of REIT Fund B Class, as such prospectus may be amended from time to
time; provided that any such other anniversary date determined by the
Board of Directors shall be a date that will occur prior to the
anniversary date set forth in clause (i) and any such other date
theretofore determined by the Board of Directors pursuant to this
clause (ii); but further provided that, subject to the provisions of
the next sentence, for any shares of REIT Fund B Class acquired
through an exchange, or through a series of exchanges, as permitted by
the Corporation as provided in the prospectus of REIT Fund B Class, as
such prospectus may be amended from time to time, from another
investment company or another series of the Corporation (an "eligible
investment company"), the Conversion Date shall be the conversion date
applicable to the shares of stock of the eligible investment company
originally subscribed for in lieu of the Conversion Date of any stock
acquired through exchange if such eligible investment company issuing
the stock originally subscribed for had a conversion feature, but not
later than the Conversion Date determined under (i) above. For the
purpose of calculating the holding period required for conversion, the
date of issuance of a share of REIT Fund B Class shall mean (i) in the
case of a share of REIT Fund B Class obtained by the holder thereof
through an original subscription to the Corporation, the date of the
issuance of such share of REIT Fund B Class, or (ii) in the case of a
share of REIT Fund B Class obtained by the holder thereof through an
exchange, or through a series of exchanges, from an eligible
investment company, the date of issuance of the share of the eligible
investment company to which the holder originally subscribed.
-4-
<PAGE>
(b) Each share of REIT Fund B Class (i) purchased through the
automatic reinvestment of a dividend or distribution with respect to
REIT Fund B Class or the corresponding class of any other investment
company or of any other series of the Corporation issuing such class
of shares or (ii) issued pursuant to an exchange privilege granted by
the Corporation in an exchange or series of exchanges for shares
originally purchased through the automatic reinvestment of a dividend
or distribution with respect to shares of capital stock of an eligible
investment company, shall be segregated in a separate sub-account on
the stock records of the Corporation for each of the holders of record
thereof. On any Conversion Date, a number of the shares held in the
separate sub-account of the holder of record of the share or shares
being converted, calculated in accordance with the next following
sentence, shall be converted automatically, and without any action or
choice on the part of the holder, into shares of REIT Fund A Class.
The number of shares in the holder's separate sub-account so converted
shall (i) bear the same ratio to the total number of shares maintained
in the separate sub-account on the Conversion Date (immediately prior
to conversion) as the number of shares of the holder converted on the
Conversion Date pursuant to paragraph (3)(a) hereof bears to the total
number of REIT Fund B Class shares of the holder on the Conversion
Date (immediately prior to conversion) after subtracting the shares
then maintained in the holder's separate sub-account, or (ii) be such
other number as may be calculated in such other manner as may be
determined by the Board of Directors and set forth in the prospectus
of REIT Fund B Class, as such prospectus may be amended from time to
time.
(c) The number of shares of REIT Fund A Class into which a share of
REIT Fund B Class is converted pursuant to paragraphs 3(a) and 3(b)
hereof shall equal the number (including for this purpose fractions of
a share) obtained by dividing the net asset value per share of REIT
Fund B Class for purposes of sales and redemption thereof on the
Conversion Date by the net asset value per share of REIT Fund A Class
for purposes of sales and redemption thereof on the Conversion Date.
(d) On the Conversion Date, the shares of REIT Fund B Class converted
into shares of REIT Fund A Class will no longer be deemed outstanding
and the rights of the holders thereof (except the right to receive (i)
the number of shares of REIT Fund A Class into which the shares of
REIT Fund B Class have been converted and (ii) declared but unpaid
dividends to the Conversion
-5-
<PAGE>
Date or such other date set forth in the prospectus of REIT Fund B
Class, as such prospectus may be amended from time to time and (iii)
the right to vote converting shares of REIT Fund B Class held as of
any record date occurring on or before the Conversion Date and
theretofore set with respect to any meeting held after the Conversion
Date) will cease. Certificates representing shares of REIT Fund A
Class resulting from the conversion need not be issued until
certificates representing shares of REIT Fund B Class converted, if
issued, have been received by the Corporation or its agent duly
endorsed for transfer.
(e) The automatic conversion of REIT Fund B Class into REIT Fund A
Class, as set forth in paragraphs 3(a) and 3(b) of this Article FOURTH
shall be suspended at any time that the Board of Directors determines
(i) that there is not available a reasonably satisfactory opinion of
counsel to the effect that (x) the assessment of the higher fee under
the Distribution Plan with respect to REIT Fund B Class does not
result in the Corporation's dividends or distributions constituting a
"preferential dividend" under the Internal Revenue Code of 1986, as
amended, and (y) the conversion of REIT Fund B Class does not
constitute a taxable event under federal income tax law, or (ii) any
other condition to conversion set forth in the prospectus of REIT Fund
B Class, as such prospectus may be amended from time to time, is not
satisfied.
(f) The automatic conversion of REIT Fund B Class into REIT Fund A
Class, as set forth in paragraphs 3(a) and 3(b) hereof, may also be
suspended by action of the Board of Directors at any time that the
Board of Directors determines such suspension to be appropriate in
order to comply with, or satisfy the requirements of the Investment
Company Act of 1940, as amended, and in effect from time to time, or
any rule, regulation or order issued thereunder relating to voting by
the holders of REIT Fund B Class on any Distribution Plan with respect
to, as relevant, REIT Fund A Class and in effect from time to time,
and in connection with, or in lieu of, any such suspension, the Board
of Directors may provide holders of REIT Fund B Class with alternative
conversion or exchange rights into other classes of stock of the
Corporation in a manner consistent with the law, rule, regulation or
order giving rise to the possible suspension of the conversion right.
4. The shares of REIT Fund C Class, REIT Fund Institutional Class and
The Real Estate Investment
-6-
<PAGE>
Trust Portfolio class shall not automatically convert into shares of
REIT Fund A Class of The Real Estate Investment Trust Portfolio series
of the Common Stock as do the shares of REIT Fund B Class of The Real
Estate Investment Trust Portfolio series of the Common Stock.
FIFTH: The shares of REIT Fund A Class, REIT Fund B Class,
REIT Fund C Class, REIT Fund Institutional Class and The Real Estate Investment
Trust Portfolio class of The Real Estate Investment Trust Portfolio series have
been classified by the Board of Directors pursuant to authority contained in the
Articles of Incorporation of the Corporation.
SIXTH: The Corporation is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended.
SEVENTH: The total number of shares of Common Stock that the
Corporation has authority to issue has been increased by the Board of Directors
in accordance with Section 2-105(c) of the Maryland General Corporation Law.
EIGHTH: These Articles Supplementary shall become effective at
5:01 p.m. (Eastern time) on October 13, 1997.
IN WITNESS WHEREOF, Delaware Pooled Trust, Inc. has caused
these Articles Supplementary to be signed in its name and on its behalf by its
Senior Vice President and attested by its Assistant Secretary on this 9th day of
October, 1997.
DELAWARE POOLED TRUST, INC.
By: /s/ Eric E. Miller
------------------------------
Eric E. Miller
Vice President
ATTEST:
/s/ Michael D. Mabry
------------------------------
Michael D. Mabry
Assistant Secretary
-7-
<PAGE>
THE UNDERSIGNED, Vice President of DELAWARE POOLED TRUST,
INC., who executed on behalf of the said Corporation the foregoing Articles
Supplementary, of which this instrument is made a part, hereby acknowledges, in
the name of and on behalf of said Corporation, said Articles Supplementary to be
the corporate act of said Corporation and further certifies that, to the best of
his knowledge, information and belief, the matters and facts set forth therein
with respect to the authorization and approval thereof are true in all material
respects, under the penalties of perjury.
/s/ Eric E. Miller
-------------------------
Eric E. Miller
Vice President
-8-
<PAGE>
DELAWARE POOLED TRUST, INC.
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
DELAWARE POOLED TRUST, INC., a Maryland corporation having its
principal office in Baltimore, Maryland (hereinafter called the "Corporation"),
hereby certifies to the State Department of Assessments and Taxation of Maryland
that:
FIRST: The Corporation is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended.
SECOND: The Articles of Incorporation of the Corporation, as
amended and supplemented, are further amended by designating the existing class
of shares of The Real Estate Investment Trust Portfolio series of the Common
Stock as the "REIT Fund A Class" of shares of The Real Estate Investment Trust
Portfolio series.
THIRD: The amendment to the Articles of Incorporation of the
Corporation as set forth above has been duly approved by a majority of the
entire Board of Directors of the Corporation as required by law and is limited
to a change permitted by Section 2-605(a)(4) of the Maryland General Corporation
Law to be made without action by the stockholders of the Corporation.
FOURTH: The amendment to the Articles of Incorporation of the
Corporation as set forth above does not change the preferences, conversion or
other rights, voting powers, restrictions, limitations as to dividends,
qualifications, or terms or conditions of redemption of the shares that are the
subject of the amendment.
<PAGE>
FIFTH: The Articles of Amendment shall become effective at
5:00 p.m. (Eastern time) on October 13, 1997.
IN WITNESS WHEREOF, DELAWARE POOLED TRUST, INC. has caused
these Articles of Amendment to be signed in its name and on its behalf by its
Vice President and attested by its Assistant Secretary on this 9th day of
October, 1997.
DELAWARE POOLED TRUST, INC.
By: /s/ Eric E. Miller
--------------------------------
Eric E. Miller
Vice President
ATTEST:
/s/ Michael D. Mabry
-----------------------------------
Michael D. Mabry
Assistant Secretary
<PAGE>
THE UNDERSIGNED, Vice President of DELAWARE POOLED TRUST,
INC., who executed on behalf of said Corporation the foregoing Articles of
Amendment, of which this certificate is made a part, hereby acknowledges, in the
name and on behalf of said Corporation, the foregoing Articles of Amendment to
be the corporate act of said Corporation and further certifies that, to the best
of his knowledge, information and belief, the matters and facts set forth
therein with respect to the approval thereof are true in all material respects,
under the penalties of perjury.
/s/ Eric E. Miller
----------------------------
Eric E. Miller
Vice President
<PAGE>
FORM OF AGREEMENT
DELAWARE POOLED TRUST, INC.
THE GLOBAL EQUITY PORTFOLIO
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, made by and between DELAWARE POOLED TRUST , INC., a Maryland
corporation (the "Fund"), for THE GLOBAL EQUITY PORTFOLIO (the "Portfolio") and
DELAWARE INTERNATIONAL ADVISERS LTD., a U.K. company (the "Investment Manager").
W I T N E S S E T H:
WHEREAS, the Fund has been organized and operates as an investment
company registered under the Investment Company Act of 1940 and engages in the
business of investing and reinvesting its assets in securities; and
WHEREAS, the Investment Manager is a registered Investment Adviser
under the Investment Advisers Act of 1940 and engages in the business of
providing investment management services.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound, it is
agreed as follows:
1. The Fund hereby employs the Investment Manager to manage the
investment and reinvestment of the Portfolio's assets and to administer its
affairs, subject to the direction of the Board and officers of the Fund for the
period and on the terms hereinafter set forth. The Investment Manager hereby
accepts such employment and agrees during such period to render the services and
assume the obligations herein set forth for the compensation herein provided.
The Investment Manager shall for all purposes herein, be deemed to be an
independent contractor, and shall, unless otherwise expressly provided and
authorized, have no authority to act for or represent the Fund in any way, or in
any way be deemed an agent of the Fund. The Investment Manager shall regularly
make decisions as to what securities to
<PAGE>
purchase and sell on behalf of the Portfolio, shall effect the purchase and sale
of investments in furtherance of the Portfolio's objectives and policies and
shall furnish the Board of Directors of the Fund with such information and
reports regarding the Portfolio's investments as the Investment Manager deems
appropriate or as the Directors of the Fund may reasonably request.
2. The Fund shall conduct its own business and affairs and shall bear
the expenses and salaries necessary and incidental thereto including, but not in
limitation of the foregoing, the costs incurred in: the maintenance of its
corporate existence; the maintenance of its own books, records and procedures;
dealing with its own shareholders; the payment of dividends; transfer of stock,
including issuance, redemption and repurchase of shares; preparation of share
certificates; reports and notices to shareholders; calling and holding of
shareholders' meetings; miscellaneous office expenses; brokerage commissions;
custodian fees; legal and accounting fees; taxes; and federal and state
registration fees.
3. (a) Subject to the primary objective of obtaining the best available
prices and execution, the Investment Manager will place orders for the purchase
and sale of portfolio securities with such broker/dealers who provide
statistical, factual and financial information and services to the Fund, to the
Investment Manager or to any other fund for which the Investment Manager
provides investment advisory services and/or with broker/dealers who sell shares
of the Fund or who sell shares of any other Fund for which the Investment
Manager provides investment advisory services. Broker/dealers who sell shares of
the Funds of which Delaware International Advisers Ltd. is Investment Manager,
shall only receive orders for the purchase or sale of portfolio securities to
the extent that the placing of such orders is in compliance with the Rules of
the Securities and Exchange Commission and the National Association of
Securities Dealers, Inc.
(b) Notwithstanding the provisions of subparagraph (a) above
and subject to such policies and procedures as may be adopted by the Board of
Directors and officers of the Fund, the Investment Manager may ask the Fund and
the Fund may agree to pay a member of an exchange, broker
-2-
<PAGE>
or dealer an amount of commission for effecting a securities transaction in
excess of the amount of commission another member of an exchange, broker or
dealer would have charged for effecting that transaction, in such instances
where it and the Investment Manager have determined in good faith that such
amount of commission was reasonable in relation to the value of the brokerage
and research services provided by such member, broker or dealer, viewed in terms
of either that particular transaction or the Investment Manager's overall
responsibilities with respect to the Fund and to other funds and other advisory
accounts for which the Investment Manager exercises investment discretion.
4. As compensation for the services to be rendered to the Fund by the
Investment Manager under the provisions of this Agreement, the Fund shall pay to
the Investment Manager monthly from the Portfolio's assets a fee (at an annual
rate) equal to 0.75% of the daily average net assets of the Portfolio during the
month.
If this Agreement is terminated prior to the end of any
calendar month, the management fee shall be prorated for the portion of any
month in which this Agreement is in effect according to the proportion which the
number of calendar days, during which the Agreement is in effect, bears to the
number of calendar days in the month, and shall be payable within 10 days after
the date of termination.
5. The Investment Manager may, at its expense, select and contract with
one or more registered investment advisers (the "Sub-Adviser") for the Fund to
perform some or all of the services for the Fund for which it is responsible
under this Agreement. Notwithstanding Paragraph 3 hereof, such Sub-Adviser may
be responsible for executing orders for the purchase and sale of portfolio
securities it selects. The Investment Manager will compensate any Sub-Adviser
for its services to the Fund. The Investment Manager may terminate the services
of any Sub-Adviser at any time in its sole discretion, and shall at such time
assume the responsibilities of such Sub-Adviser unless and until a successor
Sub-Adviser is selected.
-3-
<PAGE>
6. The services to be rendered by the Investment Manager to the Fund
under the provisions of this Agreement are not to be deemed to be exclusive, and
the Investment Manager shall be free to render similar or different services to
others so long as its ability to render the services provided for in this
Agreement shall not be impaired thereby.
7. The Investment Manager, its directors, officers, employees, agents
and shareholders may engage in other businesses, may render investment advisory
services to other investment companies, or to any other corporation,
association, firm or individual, and may render underwriting services to the
Fund or to any other investment company, corporation, association, firm or
individual.
8. In the absence of willful misfeasance, bad faith, gross negligence,
or a reckless disregard of the performance of duties of the Investment Manager
to the Fund, the Investment Manager shall not be subject to liabilities to the
Fund or to any shareholder of the Fund for any action or omission in the course
of, or connected with, rendering services hereunder or for any losses that may
be sustained in the purchase, holding or sale of any security, or otherwise.
9. This Agreement shall be executed and become effective as of the date
written below if approved by the vote of a majority of the outstanding voting
securities of the Portfolio. It shall continue in effect for a period of two
years and may be renewed thereafter only so long as such renewal and continuance
is 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 and the renewal hereof have been approved by the vote of a majority of
the Directors of the Fund, who are not parties hereto or interested persons of
any such party, cast in person at a meeting called for the purpose of voting on
such approval. Notwithstanding the foregoing, this Agreement may be terminated
by the Fund at any time, without the payment of a penalty, on sixty days'
written notice to the Investment Manager of the Fund's intention to do so,
pursuant to action by the Board of Directors of the Fund or pursuant to vote of
a majority of the outstanding voting securities of the Portfolio. The Investment
Manager may terminate this
-4-
<PAGE>
Agreement at any time, without the payment of a penalty on sixty days' written
notice to the Fund of its intention to do so. Upon termination of this
Agreement, the obligations of all the parties hereunder shall cease and
terminate as of the date of such termination, except for any obligation to
respond for a breach of this Agreement committed prior to such termination, and
except for the obligation of the Fund to pay to the Investment Manager the fee
provided in Paragraph 4 hereof, prorated to the date of termination. This
Agreement shall automatically terminate in the event of its assignment.
10. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.
11. For the purposes of this Agreement, the terms "vote of a majority
of the outstanding voting securities"; "interested persons;" and "assignment"
shall have the meanings defined in the Investment Company Act of 1940.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement by having it signed by their duly authorized officers as of the 14th
day of October, 1997.
DELAWARE POOLED TRUST, INC.
for THE GLOBAL EQUITY PORTFOLIO
Attest: ___________________________________
By:________________________________________
DELAWARE INTERNATIONAL ADVISERS LTD.
Attest: ___________________________________
By:________________________________________
-5-
<PAGE>
FORM OF AGREEMENT
DELAWARE POOLED TRUST, INC.
THE REAL ESTATE INVESTMENT TRUST PORTFOLIO II
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, made by and between DELAWARE POOLED TRUST, INC. (the
"Fund"), a Maryland corporation, for THE REAL ESTATE INVESTMENT TRUST PORTFOLIO
II (the "Portfolio"), and DELAWARE MANAGEMENT COMPANY, INC. (the "Investment
Manager"), a Delaware corporation.
W I T N E S S E T H:
WHEREAS, the Fund has been organized and operates as an investment
company registered under the Investment Company Act of 1940 and engages in the
business of investing and reinvesting its assets in securities; and
WHEREAS, the Investment Manager is a registered Investment Adviser
under the Investment Advisers Act of 1940 and engages in the business of
providing investment management services; and
WHEREAS, the Investment Manager serves as the investment manager for
other portfolios of the Fund, and the Fund desires to retain the Investment
Manager to serve as the investment manager for this Portfolio effective as of
the date of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound, it is
agreed as follows:
1. The Fund hereby employs the Investment Manager to manage the
investment and reinvestment of the Portfolio's assets and to administer its
affairs, subject to the direction of the Board and officers of the Fund for the
period and on the terms hereinafter set forth. The Investment Manager
<PAGE>
hereby accepts such employment and agrees during such period to render the
services and assume the obligations herein set forth for the compensation herein
provided. The Investment Manager shall, for all purposes herein, be deemed to be
an independent contractor, and shall, unless otherwise expressly provided and
authorized, have no authority to act for or represent the Fund in any way, or in
any way be deemed an agent of the Fund. The Investment Manager shall regularly
make decisions as to what securities to purchase and sell on behalf of the
Portfolio, shall effect the purchase and sale of investments in furtherance of
the Portfolio's objectives and policies, and shall furnish the Board of
Directors of the Fund with such information and reports regarding the
Portfolio's investments as the Investment Manager deems appropriate or as the
Directors of the Fund may reasonably request.
2. The Fund shall conduct its own business and affairs and shall bear
the expenses and salaries necessary and incidental thereto including, but not in
limitation of the foregoing, the costs incurred in: the maintenance of its
corporate existence; the maintenance of its own books, records and procedures;
dealing with its own shareholders; the payment of dividends; transfer of stock,
including issuance, redemption and repurchase of shares; preparation of share
certificates; reports and notices to shareholders; calling and holding of
shareholders' meetings; miscellaneous office expenses; brokerage commissions;
custodian fees; legal and accounting fees; taxes; and federal and state
registration fees. The Portfolio shall bear all of its own organizational costs.
Directors, officers and employees of the Investment Manager
may be directors, officers and employees of the funds of which Delaware
Management Company, Inc. is Investment Manager. Directors, officers and
employees of the Investment Manager who are directors, officers and/or employees
of the funds shall not receive any compensation from the funds for acting in
such dual capacity.
-2-
<PAGE>
In the conduct of the respective businesses of the parties
hereto and in the performance of this Agreement, the Fund and Investment Manager
may share facilities common to each, with appropriate proration of expenses
between them.
3. (a) The Fund shall place and execute its own orders for the purchase
and sale of domestic portfolio securities with broker/dealers. Subject to the
primary objective of obtaining the best available prices and execution, the Fund
will place orders for the purchase and sale of portfolio securities with such
broker/dealers selected from among those designated from time to time by the
Investment Manager, who provide statistical, factual and financial information
and services to the Fund, to the Investment Manager, or to any other fund for
which the Investment Manager provides investment advisory services and/or with
broker/dealers who sell shares of the Fund or who sell shares of any other fund
for which the Investment Manager provides investment advisory services.
Broker/dealers who sell shares of the funds of which Delaware Management
Company, Inc. or Delaware International Advisers Ltd. is investment manager,
shall only receive orders for the purchase or sale of portfolio securities to
the extent that the placing of such orders is in compliance with the Rules of
the Securities and Exchange Commission and the National Association of
Securities Dealers, Inc.
(b) Notwithstanding the provisions of subparagraph (a) above
and subject to such policies and procedures as may be adopted by the Board of
Directors and officers of the Fund, the Investment Manager may ask the Fund, and
the Fund may agree, to pay a member of an exchange, broker or dealer an amount
of commission for effecting a securities transaction in excess of the amount of
commission another member of an exchange, broker or dealer would have charged
for effecting that transaction, in such instances where it, and the Investment
Manager, have determined in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such member, broker or dealer, viewed in terms of either that
particular transaction or the
-3-
<PAGE>
Investment Manager's overall responsibilities with respect to the Fund and to
other funds or other advisory accounts for which the Investment Manager
exercises investment discretion.
4. As compensation for the services to be rendered to the Fund by the
Investment Manager under the provisions of this Agreement, the Fund shall pay to
the Investment Manager monthly from the Portfolio's assets a fee (at an annual
rate) equal to 0.75% of the average daily net assets of the Portfolio during the
month.
If this Agreement is terminated prior to the end of any
calendar month, the management fee shall be prorated for the portion of any
month in which this Agreement is in effect according to the proportion which the
number of calendar days during which the Agreement is in effect bears to the
number of calendar days in the month, and shall be payable within 10 days after
the date of termination.
5. The Investment Manager may, at its expense, select and contract with
one or more registered investment advisers (the "Sub-Adviser") for the Fund to
perform some or all of the services for the Portfolio for which it is
responsible under this Agreement. Notwithstanding Paragraph 3 hereof, such
Sub-Adviser may be responsible for executing orders for the purchase and sale of
portfolio securities. The Investment Manager will compensate any Sub-Adviser for
its services to the Fund. The Investment Manager may terminate the services of
any Sub-Adviser at any time in its sole discretion, and shall at such time
assume the responsibilities of such Sub-Adviser unless and until a successor
Sub-Adviser is selected.
6. The services to be rendered by the Investment Manager to the Fund
under the provisions of this Agreement are not to be deemed to be exclusive, and
the Investment Manager shall be free to render similar or different services to
others so long as its ability to render the services provided for in this
Agreement shall not be impaired thereby.
7. The Investment Manager, its directors, officers, employees, agents
and shareholders may engage in other businesses, may render investment advisory
services to other investment companies, or to
-4-
<PAGE>
any other corporation, association, firm or individual, and may render
underwriting services to the Fund or to any other investment company,
corporation, association, firm or individual.
8. In the absence of willful misfeasance, bad faith, gross negligence,
or a reckless disregard of the performance of duties of the Investment Manager
to the Fund, the Investment Manager shall not be subject to liabilities to the
Fund or to any shareholder of the Fund for any action or omission in the course
of, or connected with, rendering services hereunder or for any losses that may
be sustained in the purchase, holding or sale of any security, or otherwise.
9. This Agreement shall be executed and become effective as of the date
written below. It shall continue in effect for a period of two years from such
date and may be renewed thereafter only so long as such renewal and continuance
is specifically approved at least annually by the Board of Directors of the Fund
or by vote of a majority of the outstanding voting securities of the Portfolio
and only if the terms and the renewal hereof have been approved by the vote of a
majority of the Directors of the Fund who are not parties hereto or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval. Notwithstanding the foregoing, this Agreement may be
terminated by the Fund at any time, without the payment of a penalty, on sixty
days' written notice to the Investment Manager of the Fund's intention to do so,
pursuant to action by the Board of Directors of the Fund or pursuant to vote of
a majority of the outstanding voting securities of the Portfolio. The Investment
Manager may terminate this Agreement at any time, without the payment of
penalty, on sixty days' written notice to the Fund of its intention to do so.
Upon termination of this Agreement, the obligations of all the parties hereunder
shall cease and terminate as of the date of such termination, except for any
obligation to respond for a breach of this Agreement committed prior to such
termination, and except for the obligation of the Fund to pay to the Investment
Manager the fee provided in paragraph 4 hereof, prorated to the date of
termination. This Agreement shall automatically terminate in the event of its
assignment.
-5-
<PAGE>
10. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.
11. For the purposes of this Agreement, the terms "vote of a majority
of the outstanding voting securities;" "interested persons;" and "assignment"
shall have the meanings defined in the Investment Company Act of 1940.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement by having it signed by their duly authorized officers as of the 14th
day of October, 1997.
DELAWARE POOLED TRUST, INC.
for The REAL ESTATE INVESTMENT TRUST PORTFOLIO II
By:
Name: ___________________
Title: ___________________
Attest: ____________________________
Name: ___________________
Title: ___________________
DELAWARE MANAGEMENT COMPANY, INC.
By:
Name: ____________________
Title: ____________________
Attest: _____________________________
Name: ____________________
Title: ____________________
-7-
<PAGE>
FORM OF AGREEMENT
DELAWARE POOLED TRUST, INC.
THE GLOBAL EQUITY PORTFOLIO
SUB-ADVISORY AGREEMENT
AGREEMENT, made by and between DELAWARE INTERNATIONAL ADVISERS LTD., a
U.K. company (the "Investment Manager") and DELAWARE MANAGEMENT COMPANY, INC., a
Delaware corporation (the "Sub-Adviser").
W I T N E S S E T H:
WHEREAS, DELAWARE POOLED TRUST, INC. a Maryland corporation (the
"Fund"), has been organized and operates as an investment company registered
under the Investment Company Act of 1940 and engages in the business of
investing and reinvesting its assets in securities; and
WHEREAS, the Investment Manager and the Fund on behalf of The Global
Equity Portfolio ("Portfolio"), have entered into an agreement of even date
herewith ("Investment Management Agreement") whereby the Investment Manager will
provide investment advisory services to the Fund on behalf of the Portfolio; and
WHEREAS, the Investment Management Agreement permits the Investment
Manager to hire one or more sub-advisers to assist the Investment Manager in
providing investment advisory services to the Fund on behalf of the Portfolio;
and
WHEREAS, the Investment Manager and the Sub-Adviser are registered
Investment Advisers under the Investment Advisers Act of 1940 and engage in the
business of providing investment management services.
<PAGE>
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound, it is
agreed as follows:
1. The Investment Manager hereby employs the Sub-Adviser, subject
always to the Investment Manager's control and supervision, to manage the U.S.
securities portion of the Portfolio's assets and to furnish the Investment
Manager with investment recommendations, asset allocation advice, research and
other investment services with respect to U.S. securities, subject to the
direction of the Board and officers of the Fund for the period and on the terms
hereinafter set forth. The Sub-Adviser hereby accepts such employment and agrees
during such period to render the services and assume the obligations herein set
forth for the compensation herein provided. The Sub-Adviser shall for all
purposes herein be deemed to be an independent contractor, and shall, unless
otherwise expressly provided and authorized, have no authority to act for or
represent the Fund in any way, or in any way be deemed an agent of the Fund. The
Sub-Adviser shall regularly make decisions as to what securities to purchase and
sell on behalf of the Portfolio, shall effect the purchase and sale of
investments in furtherance of the Portfolio's objectives and policies, and shall
furnish the Board of Directors of the Fund with such information and reports
regarding the Portfolio's investments as the Investment Manager deems
appropriate or as the Directors of the Fund may reasonably request.
2. Under the terms of the Investment Management Agreement, the Fund
shall conduct its own business and affairs and shall bear the expenses and
salaries necessary and incidental thereto including, but not in limitation of
the foregoing, the costs incurred in: the maintenance of its corporate
existence; the maintenance of its own books, records and procedures; dealing
with its own shareholders; the payment of dividends; transfer of stock,
including issuance and repurchase of shares; preparation of share certificates;
reports and notices to shareholders; calling and holding of shareholders'
meetings; miscellaneous office expenses; brokerage commissions; custodian fees;
legal and accounting fees; taxes; and federal and state registration fees.
-2-
<PAGE>
Directors, officers and employees of the Sub-Adviser may be
directors, officers and employees of other funds which have employed the
Sub-Adviser as sub-adviser or investment manager. Directors, officers and
employees of the Sub-Adviser who are Directors, officers and/or employees of the
Fund shall not receive any compensation from the Fund for acting in such dual
capacity.
In the conduct of the respective business of the parties
hereto and in the performance of this Agreement, the Fund and the Sub-Adviser
may share facilities common to each, with appropriate proration of expenses
between and among them.
3. (a) Subject to the primary objective of obtaining the best available
prices and execution, and otherwise consistent with applicable law, the
Sub-Adviser will place orders for the purchase and sale of portfolio securities
with such broker/dealers who provide statistical, factual and financial
information and services to the Portfolio, to the Investment Manager, to the
Sub-Adviser or to any other fund for which the Investment Manager or Sub-Adviser
provides investment advisory services and/or with broker/dealers who sell shares
of the Portfolio or who sell shares of any other fund for which the Investment
Manager or Sub-Adviser provides investment advisory services. Broker/dealers who
sell shares of the funds for which the Investment Manager or Sub-Adviser
provides advisory services shall only receive orders for the purchase or sale of
portfolio securities to the extent that the placing of such orders is in
compliance with the Rules of the Securities and Exchange Commission and the
National Association of Securities Dealers, Inc.
(b) Notwithstanding the provisions of subparagraph (a) above
and subject to such policies and procedures as may be adopted by the Board of
Directors and officers of the Fund, the Sub-Adviser may ask the Fund and the
Portfolio may agree to pay a member of an exchange, broker or dealer an amount
of commission for effecting a securities transaction in excess of the amount of
commission another member of an exchange, broker or dealer would have charged
for effecting that transaction, in such instances where it and the Sub-Adviser
have determined in good faith that such amount of
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<PAGE>
commission was reasonable in relation to the value of the brokerage and research
services provided by such member, broker or dealer, viewed in terms of either
that particular transaction or the Sub-Adviser's overall responsibilities with
respect to the Portfolio and to other funds and other advisory accounts for
which the Investment Manager or the Sub-Adviser exercises investment discretion.
4. As compensation for the services to be rendered to the Fund on
behalf of the Portfolio by the Sub-Adviser under the provisions of this
Agreement, the Investment Manager shall pay to the Sub-Adviser a monthly fee
equal to 50% of the fee paid to the Investment Manager under the terms of the
Investment Management Agreement.
If this Agreement is terminated prior to the end of any calendar month,
the Sub-Advisory fee shall be prorated for the portion of any month in which
this Agreement is in effect according to the proportion which the number of
calendar days, during which the Agreement is in effect, bears to the number of
calendar days in the month, and shall be payable within 10 days after the date
of termination.
5. The services to be rendered by the Sub-Adviser to the Fund on behalf
of the Portfolio under the provisions of this Agreement are not to be deemed to
be exclusive, and the Sub-Adviser shall be free to render similar or different
services to others so long as its ability to render the services provided for in
this Agreement shall not be impaired thereby.
6. The Sub-Adviser, its directors, officers, employees, agents and
shareholders may engage in other businesses, may render investment advisory
services to other investment companies, or to any other corporation,
association, firm or individual, and may render underwriting services to the
Fund or to any other investment company, corporation, association, firm or
individual.
7. In the absence of willful misfeasance, bad faith, gross negligence,
or a reckless disregard of the performance of duties of the Sub-Adviser to the
Fund, the Sub-Adviser shall not be subject to liabilities to the Fund or to any
shareholder of the Fund for any action or omission in the course of, or
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<PAGE>
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security, or otherwise.
8. This Agreement shall be executed and become effective as of the date
written below if approved by the vote of a majority of the outstanding voting
securities of the Portfolio. It shall continue in effect for a period of two
years and may be renewed thereafter only so long as such renewal and continuance
is 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 and the renewal hereof have been approved by the vote of a majority of
the Directors of the Fund who are not parties hereto or interested persons of
any such party, cast in person at a meeting called for the purpose of voting on
such approval. Notwithstanding the foregoing, this Agreement may be terminated
by the Investment Manager or the Fund at any time, without the payment of a
penalty, on sixty days' written notice to the Sub-Adviser, of the Investment
Manager's or the Fund's intention to do so, in the case of the Fund pursuant to
action by the Board of Directors of the Fund or pursuant to vote of a majority
of the outstanding voting securities of the Portfolio. The Sub-Adviser may
terminate this Agreement at any time, without the payment of a penalty on sixty
days' written notice to the Investment Manager and Fund of its intention to do
so. Upon termination of this Agreement, the obligations of all the parties
hereunder shall cease and terminate as of the date of such termination, except
for any obligation to respond for a breach of this Agreement committed prior to
such termination, and except for the obligation of the Investment Manager to pay
to the Sub-Adviser the fee provided in Paragraph 4 hereof, prorated to the date
of termination. This Agreement shall automatically terminate in the event of its
assignment. This Agreement shall automatically terminate upon the termination of
the Investment Management Agreement.
9. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.
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<PAGE>
10. For the purposes of this Agreement, the terms "vote of a majority
of the outstanding voting securities"; "interested person"; and "assignment"
shall have the meanings defined in the Investment Company Act of 1940.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement by having it signed by their duly authorized officers as of the 14th
day of October, 1997.
DELAWARE MANAGEMENT COMPANY, INC.
By: _______________________________
Attest: ___________________________
DELAWARE INTERNATIONAL ADVISERS LTD.
By: _______________________________
Attest: ___________________________
Agreed to and accepted as of the
day and year first above written:
DELAWARE POOLED TRUST, INC.
on behalf of THE GLOBAL EQUITY PORTFOLIO
By: ____________________________________
Attest: ________________________________
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<PAGE>
FORM OF AGREEMENT
DELAWARE POOLED TRUST, INC.
THE REAL ESTATE INVESTMENT TRUST PORTFOLIO II
SUB-ADVISORY AGREEMENT
AGREEMENT, made by and between DELAWARE MANAGEMENT COMPANY, INC., a
Delaware corporation ("Investment Manager"), and LINCOLN INVESTMENT MANAGEMENT,
INC., an Illinois corporation ("Sub-Adviser").
W I T N E S S E T H:
WHEREAS, DELAWARE POOLED TRUST, INC., a Maryland corporation ("Fund"),
has been organized and operates as an investment company registered under the
Investment Company Act of 1940 and engages in the business of investing and
reinvesting its assets in securities, and
WHEREAS, the Investment Manager and the Fund on behalf of The Real
Estate Investment Trust Portfolio II ("Portfolio"), have entered into an
agreement of even date herewith ("Investment Management Agreement") whereby the
Investment Manager will provide investment advisory services to the Fund on
behalf of the Portfolio; and
WHEREAS, the Investment Management Agreement permits the Investment
Manager to hire one or more sub-advisers to assist the Investment Manager in
providing investment advisory services to the Fund on behalf of the Portfolio;
and
WHEREAS, the Investment Manager and the Sub-Adviser are registered
Investment Advisers under the Investment Advisers Act of 1940 and engage in the
business of providing investment management services.
<PAGE>
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound, it is
agreed as follows:
1. The Investment Manager hereby employs the Sub-Adviser to furnish the
Investment Manager with investment recommendations, asset allocation advice,
research, economic analysis and other investment services with respect to
securities in which the Portfolio may invest, subject to the direction of the
Board and officers of the Fund for the period and on the terms hereinafter set
forth. The Sub-Adviser hereby accepts such employment and agrees during such
period to render the services and assume the obligations herein set forth for
the compensation herein provided. The Sub-Adviser shall for all purposes herein
be deemed to be an independent contractor, and shall, unless otherwise expressly
provided and authorized, have no authority to act for or represent the Fund in
any way, or in any way be deemed an agent of the Fund. The Sub-Adviser shall
furnish the Board of Directors of the Fund with such information and reports
regarding its activities as the Investment Manager deems appropriate or as the
Directors of the Fund may reasonably request consistent with the provisions of
Section 15(c) of the Investment Company Act of 1940.
2. Under the terms of the Investment Management Agreement, the Fund
shall conduct its own business and affairs and shall bear the expenses and
salaries necessary and incidental thereto including, but not in limitation of
the foregoing, the costs incurred in: the maintenance of its corporate
existence; the maintenance of its own books, records and procedures; dealing
with its own shareholders; the payment of dividends; transfer of stock,
including issuance and repurchase of shares; preparation of share certificates;
reports and notices to shareholders; calling and holding of shareholders'
meetings; miscellaneous office expenses; brokerage commissions; custodian fees;
legal and accounting fees; taxes; and federal and state registration fees.
Without limiting the foregoing, except as the Investment Manager and the
Sub-Adviser may agree in writing from time to time, the Sub-Adviser shall have
no responsibility for record maintenance
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<PAGE>
and preservation obligations under Section 31 of the Investment Company Act of
1940. Directors, officers and employees of the Sub-Adviser may be directors,
officers and employees of other funds which have employed the Sub-Adviser as
sub-adviser or investment manager.
In the conduct of the respective business of the parties hereto and in
the performance of this Agreement, the Fund, the Investment Manager and the
Sub-Adviser may share facilities common to each, with appropriate proration of
expenses between and among them.
3. As compensation for the services to be rendered to the Fund for the
benefit of the Portfolio by the Sub-Adviser under the provisions of this
Agreement, the Investment Manager shall pay to the Sub-Adviser a monthly fee
equal to 30% of the fee paid to the Investment Manager under the terms of the
Investment Management Agreement.
If this Agreement is terminated prior to the end of any calendar month,
the Sub-Advisory fee shall be prorated for the portion of any month in which
this Agreement is in effect according to the proportion which the number of
calendar days, during which the Agreement is in effect, bears to the number of
calendar days in the month, and shall be payable within 10 days after the date
of termination.
4. The services to be rendered by the Sub-Adviser to the Fund for the
benefit of the Portfolio under the provisions of this Agreement are not to be
deemed to be exclusive, and the Sub-Adviser shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
5. The Sub-Adviser, its directors, officers, employees, agents and
shareholders may engage in other businesses, may render investment advisory
services to other investment companies, or to any other corporation,
association, firm or individual, and
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<PAGE>
may render underwriting services to the Fund or to any other investment company,
corporation, association, firm or individual.
The Investment Manager agrees that it shall not use the Sub-Adviser's
name or otherwise refer to the Sub-Adviser in any materials distributed to third
parties, including the Portfolio's shareholders, without the prior written
consent of the Sub-Adviser.
6. In the absence of willful misfeasance, bad faith, gross negligence,
or a reckless disregard of the performance of its duties as Sub-Adviser to the
Fund, the Sub-Adviser shall not be subject to liability to the Fund, to the
Investment Manager or to any shareholder of the Fund for any action or omission
in the course of, or connected with, rendering services hereunder or for any
losses that may be sustained in the purchase, holding or sale of any security,
or otherwise.
7. This Agreement shall be executed and become effective as of the date
written below if approved by the vote of a majority of the outstanding voting
securities of the Portfolio. It shall continue in effect for a period of two
years and may be renewed thereafter only so long as such renewal and continuance
is specifically approved at least annually by the Board of Directors or by the
vote of a majority of the outstanding voting securities of the Portfolio and
only if the terms and the renewal hereof have been approved by the vote of a
majority of the Directors of the Fund who are not parties hereto or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval. Notwithstanding the foregoing, this Agreement may be
terminated by the Investment Manager or the Fund at any time, without the
payment of a penalty, on sixty days' written notice to the Sub-Adviser, of the
Investment Manager's or the Fund's intention to do so, in the case of the Fund
pursuant to action by the Board of Directors of the Fund or pursuant to the vote
of a majority of the outstanding voting securities of the Portfolio. The
Sub-Adviser may terminate this Agreement at any time, without the payment of a
penalty on sixty days' written notice to the Investment Manager and the Fund of
its intention to do so. Upon termination of this Agreement, the
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<PAGE>
obligations of all the parties hereunder shall cease and terminate as of the
date of such termination, except for any obligation to respond for a breach of
this Agreement committed prior to such termination, and except for the
obligation of the Investment Manager to pay to the Sub-Adviser the fee provided
in Paragraph 4 hereof, prorated to the date of termination. This Agreement shall
automatically terminate in the event of its assignment. This Agreement shall
automatically terminate upon the termination of the Investment Management
Agreement.
8. This Agreement shall extend to and bind the successors of the
parties hereto.
9. For the purposes of this Agreement, the terms "vote of a majority of
the outstanding voting securities"; "interested person"; and "assignment" shall
have the meaning defined in the Investment Company Act of 1940.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their corporate
seals to be affixed and duly attested and their presents to be signed by their
duly authorized officers as of the 14th day of October, 1997.
DELAWARE MANAGEMENT COMPANY, INC.
By: ________________________________
Name:__________________________
Title: ________________________
Attest: ________________________
LINCOLN INVESTMENT MANAGEMENT, INC.
By: ________________________________
Name:__________________________
Title: ________________________
Attest: ________________________
Agreed to and accepted as of the
day and year first above written:
DELAWARE POOLED TRUST, INC.
on behalf of The Real Estate Investment
Trust Portfolio II
By: ____________________________________
Wayne A. Stork
Chairman
Attest: ________________________________
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<PAGE>
FORM OF AGREEMENT
DELAWARE POOLED TRUST, INC.
THE GLOBAL EQUITY PORTFOLIO
DISTRIBUTION AGREEMENT
Agreement made as of this 14th day of October, 1997 by and between
DELAWARE POOLED TRUST, INC., a Maryland corporation (the "Fund") for THE GLOBAL
EQUITY PORTFOLIO (the "Portfolio"), and DELAWARE DISTRIBUTORS, L.P. (the
"Distributor"), a Delaware limited partnership.
WITNESSETH
WHEREAS, the Fund is a series investment company regulated by Federal
and State regulatory bodies, and
WHEREAS, the Distributor is engaged in the business of promoting the
distribution of the securities of investment companies and, in connection
therewith and acting solely as agent for such investment companies and not as
principal, advertising, promoting, offering and selling their securities to the
public, and
WHEREAS, the Fund desires to distribute its Portfolio securities
(collectively, the "shares") with the assistance of the Distributor as
underwriter,
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. The Fund hereby engages the Distributor to promote the
distribution of Portfolio shares and, in connection therewith and
as agent for the Fund and not as principal, to advertise,
<PAGE>
promote, offer and sell Portfolio shares to the classes of
investors described in the Portfolio's Prospectus, as such may
be amended from time to time.
2. The Distributor agrees to serve as distributor of Portfolio
shares and, as agent for the Fund and not as principal, to
advertise, promote and use its best efforts to sell Portfolio
shares wherever their sale is legal, either through dealers or
otherwise, in such manner, not inconsistent with the law and the
provisions of this Agreement and the Fund's Registration
Statement under the Securities Act of 1933 and the Prospectus
contained therein as may be determined by the Fund from time to
time. The Distributor will bear all costs of financing any
activity which is primarily intended to result in the sale of
Portfolio shares, including, but not necessarily limited to,
advertising, compensation of underwriters, dealers and sales
personnel, the printing and mailing of sales literature and
distribution of Portfolio shares.
3. (a) The Fund agrees to make available for sale by the Fund
through the Distributor all or such part of the authorized
but unissued Portfolio shares as the Distributor shall
require from time to time, all subject to the further
provisions of this Agreement, and except with the
Distributor's written consent or as provided in Paragraph
3(b) hereof, it will not sell Portfolio shares other than
through the efforts of the Distributor.
(b) The Fund reserves the right from time to time (1) to sell
and issue shares other than for cash; (2) to issue shares in
exchange for substantially all of the assets of any
corporation or trust, or in exchange for shares of any
corporation or trust; (3) to pay stock dividends to its
shareholders, or to pay dividends in cash or stock at the
option of its shareholders, or to sell stock to existing
shareholders to the extent of dividends payable from time to
time in cash, or to split up or combine
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<PAGE>
its outstanding shares of common stock; (4) to offer
shares for cash to its shareholders as a whole, by
the use of transferable rights or otherwise, and to
sell and issue shares pursuant to such offers; and
(5) to act as its own distributor in any jurisdiction
where the Distributor is not registered as a
broker-dealer.
4. The Fund warrants the following:
(a) The Fund is, or will be, a properly registered investment
company, and any and all Portfolio shares which it will sell
through the Distributor are, or will be, properly registered
with the Securities and Exchange Commission ("SEC").
(b) The provisions of this Agreement do not violate the terms of
any instrument by which the Fund is bound, nor do they
violate any law or regulation of any body having
jurisdiction over the Fund or its property.
5. (a) The Fund will supply to the Distributor a conformed copy
of the Registration Statement, all amendments thereto, all
exhibits, and each Prospectus.
(b) The Fund will register or qualify Portfolio shares for sales
in such states as is deemed desirable.
(c) The Fund, without expense to the Distributor,
(1) will give and continue to give such financial
statements and other information as may be
required by the SEC or the proper public bodies of
the states in which the shares may be qualified;
(2) from time to time, will furnish the Distributor as
soon as reasonably practicable the following
information: (a) true copies of its periodic
reports to shareholders, and unaudited quarterly
balance sheets and income statements for the
period from the beginning of the then current
fiscal year to such balance sheet dates; and (b) a
profit and loss statement
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<PAGE>
and a balance sheet at the end of each fiscal half
year accompanied by a copy of the certificate or
report thereon of an independent public accountant
(who may be the regular accountant for the Fund),
provided that in lieu of furnishing at the end of
any fiscal half year a statement of profit and
loss and a balance sheet certified by an
independent public accountant as above required,
the Fund may furnish a true copy of its detailed
semi-annual report to its shareholders;
(3) will promptly advise the Distributor in person or
by telephone or telegraph, and promptly confirm
such advice in writing, (a) when any amendment or
supplement to the Registration Statement becomes
effective, (b) of any request by the SEC for
amendments or supplements to the Registration
Statement or the Prospectus or for additional
information, and (c) of the issuance by the SEC of
any Stop Order suspending the effectiveness of the
Registration Statement, or the initiation of any
proceedings for that purpose;
(4) if at any time the SEC shall issue any Stop Order
suspending the effectiveness of the Registration
Statement, will make every reasonable effort to
obtain the lifting of such order at the earliest
possible moment;
(5) will from time to time, use its best efforts to
keep a sufficient supply of Portfolio shares
authorized, any increases being subject to the
approval of shareholders, as may be required;
(6) before filing any further amendment to the
Registration Statement or to the Prospectus, will
furnish the Distributor copies of the proposed
amendment and will not, at any time, whether
before or after the
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<PAGE>
effective date of the Registration Statement, file
any amendment to the Registration Statement or
supplement to the Prospectus of which the
Distributor shall not previously have been advised
or to which the Distributor shall reasonably
object (based upon the accuracy or completeness
thereof) in writing;
(7) will continue to make available to its
shareholders (and forward copies to the
Distributor) such periodic, interim and any other
reports as are now, or as hereafter may be,
required by the provisions of the Investment
Company Act of 1940; and
(8) will, for the purpose of computing the offering
price of Portfolio shares, advise the Distributor
within one hour after the close of the New York
Stock Exchange (or as soon as practicable
thereafter) on each business day upon which the
New York Stock Exchange may be open of the net
asset value per share of Portfolio shares of
common stock outstanding, determined in accordance
with any applicable provisions of law and the
provisions of the Articles of Incorporation, as
amended, of the Fund as of the close of business
on such business day. In the event that prices are
to be calculated more than once daily, the Fund
will promptly advise the Distributor of the time
of each calculation and the price computed at each
such time.
6. The Distributor agrees to submit to the Fund, prior to its use,
the form of all sales literature proposed to be generally
disseminated by or for the Distributor on behalf of the Fund, all
advertisements proposed to be used by the Distributor, and all
sales literature or advertisements prepared by or for the
Distributor for such dissemination or for use by
-5-
<PAGE>
others in connection with the sale of Portfolio shares. The
Distributor also agrees that the Distributor will submit such
sales literature and advertisements to the NASD, SEC or other
regulatory agency as from time to time may be appropriate,
considering practices then current in the industry. The
Distributor agrees not to use or to permit others to use such
sales literature or advertisements without the written consent of
the Fund if any regulatory agency expresses objection thereto or
if the Fund delivers to the Distributor a written objection
thereto.
7. The purchase price of each share sold hereunder shall be the net
asset value per share of Portfolio shares outstanding, determined
by the Fund in accordance with any applicable provision of law,
the provisions of its Articles of Incorporation and the Conduct
Rules of the National Association of Securities Dealers, Inc.
8. The responsibility of the Distributor hereunder shall be limited
to the promotion of sales of Portfolio shares. The Distributor
shall undertake to promote such sales solely as agent of the
Fund, and shall not purchase or sell such shares as principal.
Orders for Portfolio shares and payment for such orders shall be
directed to the Fund for acceptance or to the Fund's agent,
Delaware Service Company, Inc. ("DSC") for acceptance on behalf
of the Fund. The Distributor is not empowered to approve orders
for sales of Portfolio shares or accept payment for such orders.
Sales of Portfolio shares shall be deemed to be made when and
where accepted by the Fund or by DSC on behalf of the Fund.
9. With respect to the apportionment of costs between the Fund and
the Distributor of activities with which both are concerned, the
following will apply:
(a) The Fund and the Distributor will cooperate in preparing the
Registration Statements, the Prospectus, and all amendments,
supplements and replacements thereto. The Fund will pay all
costs incurred in the preparation of the Fund's
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<PAGE>
registration statement, including typesetting, the costs
incurred in printing and mailing prospectuses to its own
shareholders and fees and expenses of counsel and
accountants.
(b) The Distributor will pay the costs incurred in printing and
mailing copies of prospectuses to prospective investors.
(c) The Distributor will pay advertising and promotional
expenses, including the costs of literature sent to
prospective investors.
(d) The Fund will pay the costs and fees incurred in registering
Portfolio shares with the various states and with the SEC.
(e) The Distributor will pay the costs of any additional copies
of the Fund reports and other Fund literature supplied to
the Distributor by the Fund for sales promotion purposes.
10. The Distributor may engage in other business, provided such other
business does not interfere with the performance by the
Distributor of its obligations under this Agreement. The
Distributor may serve as distributor for and promote the
distribution of and sell and offer for sale the securities of
other investment companies.
11. The Fund agrees to indemnify, defend and hold harmless from the
assets of the Portfolio, the Distributor and each person, if any,
who controls the Distributor within the meaning of Section 15 of
the Securities Act of 1933, from and against any and all losses,
damages, or liabilities to which, jointly or severally, the
Distributor or such controlling person may become subject,
insofar as the losses, damages or liabilities arise out of the
performance of its duties hereunder, except that the Fund shall
not be liable for indemnification of the Distributor or any
controlling person thereof for any liability to the Fund or its
security holders to which they would otherwise be subject by
reason of willful misfeasance, bad
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<PAGE>
faith, or gross negligence in the performance of their duties
hereunder or by reason of their reckless disregard of their
obligations and duties under this Agreement.
12. Copies of financial reports, registration statements and
prospectuses, as well as demands, notices, requests, consents,
waivers, and other communications in writing which it may be
necessary or desirable for either party to deliver or furnish to
the other will be duly delivered or furnished, if delivered to
such party at its address shown below during regular business
hours, or if sent to that party by registered mail or by prepaid
telegram filed with an office or with an agent of Western Union,
in all cases within the time or times herein prescribed,
addressed to the recipient at 1818 Market Street, Philadelphia,
Pennsylvania 19103, or at such other address as the Fund or the
Distributor may designate in writing and furnish to the other.
13. This Agreement shall not be assigned, as that term is defined in
the Investment Company Act of 1940, by the Distributor and shall
terminate automatically in the event of its attempted assignment
by the Distributor. This Agreement shall not be assigned by the
Fund without the written consent of the Distributor signed by its
duly authorized officers and delivered to the Fund. Except as
specifically provided in the indemnification provisions contained
in Paragraph 11 hereof, this Agreement and all conditions and
provisions hereof are for the sole and exclusive benefit of the
parties hereto and their legal successors and no express or
implied provision of this Agreement is intended or shall be
construed to give any person other than the parties hereto and
their legal successors, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provisions
herein contained. The Distributor shall look only to the assets
of the Portfolio to meet the obligations of, or claims against,
the Fund under this Agreement and not to the holder of any share
of the Fund.
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<PAGE>
14. (a) This Agreement shall remain in force for a period of two
years from the date of this Agreement and from year to year
thereafter, but only so long as such continuance is
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 and the
renewal thereof have been approved by the vote of a majority
of the Directors of the Fund, who are not parties hereto or
interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval.
(b) The Distributor may terminate this Agreement on written
notice to the Fund at any time in case the effectiveness of
the Registration Statement shall be suspended, or in case
Stop Order proceedings are initiated by the SEC in respect
of the Registration Statement and such proceedings are not
withdrawn or terminated within thirty days. The Distributor
may also terminate this Agreement at any time by giving the
Fund written notice of its intention to terminate it at the
expiration of three months from the date of delivery of such
written notice of intention to the Fund.
(c) The Fund may terminate this Agreement at any time on at
least thirty days prior written notice to the Distributor
(1) if proceedings are commenced by the Distributor or any
of its partners for the Distributor's liquidation or
dissolution or the winding up of the Distributor's affairs;
(2) if a receiver or trustee of the Distributor or any of
its property is appointed and such appointment is not
vacated within thirty days thereafter; (3) if, due to any
action by or before any court or any federal or state
commission, regulatory body, or administrative agency or
other governmental body, the Distributor shall be prevented
from
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<PAGE>
selling securities in the United States or because of any
action or conduct on the Distributor's part, sales of
Portfolio shares are not qualified for sale. The Fund may
also terminate this Agreement at any time upon prior written
notice to the Distributor of its intention to so terminate
at the expiration of three months from the date of the
delivery of such written notice to the Distributor.
15. The validity, interpretation and construction of this Agreement,
and of each part hereof, will be governed by the laws of the
Commonwealth of Pennsylvania.
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<PAGE>
16. In the event any provision of this Agreement is determined to be
void or unenforceable, such determination shall not affect the
remainder of the Agreement, which shall continue to be in force.
DELAWARE DISTRIBUTORS, L.P.
By: DELAWARE DISTRIBUTORS, INC.,
General Partner
Attest:
____________________________ By: ______________________
Name: _____________________ Name: ___________________
Title:______________________ Title: ___________________
DELAWARE POOLED TRUST, INC.
for THE GLOBAL EQUITY PORTFOLIO
Attest:
____________________________ By: ______________________
Name: _____________________ Name: ___________________
Title:______________________ Title: ___________________
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<PAGE>
FORM OF AGREEMENT
DELAWARE POOLED TRUST, INC.
THE REAL ESTATE INVESTMENT TRUST PORTFOLIO II
DISTRIBUTION AGREEMENT
Agreement made as of this 14th day of October, 1997 by and between
DELAWARE POOLED TRUST, INC., a Maryland corporation (the "Fund") for THE REAL
ESTATE INVESTMENT TRUST PORTFOLIO II (the "Portfolio"), and DELAWARE
DISTRIBUTORS, L.P. (the "Distributor"), a Delaware limited partnership.
WITNESSETH
WHEREAS, the Fund is a series investment company regulated by Federal
and State regulatory bodies, and
WHEREAS, the Distributor is engaged in the business of promoting the
distribution of the securities of investment companies and, in connection
therewith and acting solely as agent for such investment companies and not as
principal, advertising, promoting, offering and selling their securities to the
public, and
WHEREAS, the Fund desires to distribute its Portfolio securities
(collectively, the "shares") with the assistance of the Distributor as
underwriter,
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. The Fund hereby engages the Distributor to promote the
distribution of Portfolio shares and, in connection therewith and
as agent for the Fund and not as principal, to advertise,
<PAGE>
promote, offer and sell Portfolio shares to the classes of
investors described in the Portfolio's Prospectus, as such may be
amended from time to time.
2. The Distributor agrees to serve as distributor of Portfolio
shares and, as agent for the Fund and not as principal, to
advertise, promote and use its best efforts to sell Portfolio
shares wherever their sale is legal, either through dealers or
otherwise, in such manner, not inconsistent with the law and the
provisions of this Agreement and the Fund's Registration
Statement under the Securities Act of 1933 and the Prospectus
contained therein as may be determined by the Fund from time to
time. The Distributor will bear all costs of financing any
activity which is primarily intended to result in the sale of
Portfolio shares, including, but not necessarily limited to,
advertising, compensation of underwriters, dealers and sales
personnel, the printing and mailing of sales literature and
distribution of Portfolio shares.
3. (a) The Fund agrees to make available for sale by the Fund
through the Distributor all or such part of the authorized
but unissued Portfolio shares as the Distributor shall
require from time to time, all subject to the further
provisions of this Agreement, and except with the
Distributor's written consent or as provided in Paragraph
3(b) hereof, it will not sell Portfolio shares other than
through the efforts of the Distributor.
(b) The Fund reserves the right from time to time (1) to sell
and issue shares other than for cash; (2) to issue shares in
exchange for substantially all of the assets of any
corporation or trust, or in exchange for shares of any
corporation or trust; (3) to pay stock dividends to its
shareholders, or to pay dividends in cash or stock at the
option of its shareholders, or to sell stock to existing
shareholders to the extent of dividends payable from time to
time in cash, or to split up or combine
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its outstanding shares of common stock; (4) to offer shares
for cash to its shareholders as a whole, by the use of
transferable rights or otherwise, and to sell and issue
shares pursuant to such offers; and (5) to act as its own
distributor in any jurisdiction where the Distributor is not
registered as a broker-dealer.
4. The Fund warrants the following:
(a) The Fund is, or will be, a properly registered investment
company, and any and all Portfolio shares which it will sell
through the Distributor are, or will be, properly registered
with the Securities and Exchange Commission ("SEC").
(b) The provisions of this Agreement do not violate the terms of
any instrument by which the Fund is bound, nor do they
violate any law or regulation of any body having
jurisdiction over the Fund or its property.
5. (a) The Fund will supply to the Distributor a conformed copy of
the Registration Statement, all amendments thereto, all
exhibits, and each Prospectus.
(b) The Fund will register or qualify Portfolio shares for sales
in such states as is deemed desirable.
(c) The Fund, without expense to the Distributor,
(1) will give and continue to give such financial
statements and other information as may be required by
the SEC or the proper public bodies of the states in
which the shares may be qualified;
(2) from time to time, will furnish the Distributor as soon
as reasonably practicable the following information:
(a) true copies of its periodic reports to
shareholders, and unaudited quarterly balance sheets
and income statements for the period from the beginning
of the then current fiscal year to such balance sheet
dates; and (b) a profit and loss statement
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<PAGE>
and a balance sheet at the end of each fiscal half year
accompanied by a copy of the certificate or report
thereon of an independent public accountant (who may be
the regular accountant for the Fund), provided that in
lieu of furnishing at the end of any fiscal half year a
statement of profit and loss and a balance sheet
certified by an independent public accountant as above
required, the Fund may furnish a true copy of its
detailed semi-annual report to its shareholders;
(3) will promptly advise the Distributor in person or by
telephone or telegraph, and promptly confirm such
advice in writing, (a) when any amendment or supplement
to the Registration Statement becomes effective, (b) of
any request by the SEC for amendments or supplements to
the Registration Statement or the Prospectus or for
additional information, and (c) of the issuance by the
SEC of any Stop Order suspending the effectiveness of
the Registration Statement, or the initiation of any
proceedings for that purpose;
(4) if at any time the SEC shall issue any Stop Order
suspending the effectiveness of the Registration
Statement, will make every reasonable effort to obtain
the lifting of such order at the earliest possible
moment;
(5) will from time to time, use its best efforts to keep a
sufficient supply of Portfolio shares authorized, any
increases being subject to the approval of
shareholders, as may be required;
(6) before filing any further amendment to the Registration
Statement or to the Prospectus, will furnish the
Distributor copies of the proposed amendment and will
not, at any time, whether before or after the
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<PAGE>
effective date of the Registration Statement, file any
amendment to the Registration Statement or supplement
to the Prospectus of which the Distributor shall not
previously have been advised or to which the
Distributor shall reasonably object (based upon the
accuracy or completeness thereof) in writing;
(7) will continue to make available to its shareholders
(and forward copies to the Distributor) such periodic,
interim and any other reports as are now, or as
hereafter may be, required by the provisions of the
Investment Company Act of 1940; and
(8) will, for the purpose of computing the offering price
of Portfolio shares, advise the Distributor within one
hour after the close of the New York Stock Exchange (or
as soon as practicable thereafter) on each business day
upon which the New York Stock Exchange may be open of
the net asset value per share of Portfolio shares of
common stock outstanding, determined in accordance with
any applicable provisions of law and the provisions of
the Articles of Incorporation, as amended, of the Fund
as of the close of business on such business day. In
the event that prices are to be calculated more than
once daily, the Fund will promptly advise the
Distributor of the time of each calculation and the
price computed at each such time.
6. The Distributor agrees to submit to the Fund, prior to its use,
the form of all sales literature proposed to be generally
disseminated by or for the Distributor on behalf of the Fund, all
advertisements proposed to be used by the Distributor, and all
sales literature or advertisements prepared by or for the
Distributor for such dissemination or for use by
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others in connection with the sale of Portfolio shares. The
Distributor also agrees that the Distributor will submit such
sales literature and advertisements to the NASD, SEC or other
regulatory agency as from time to time may be appropriate,
considering practices then current in the industry. The
Distributor agrees not to use or to permit others to use such
sales literature or advertisements without the written consent
of the Fund if any regulatory agency expresses objection
thereto or if the Fund delivers to the Distributor a written
objection thereto.
7. The purchase price of each share sold hereunder shall be the net
asset value per share of Portfolio shares outstanding, determined
by the Fund in accordance with any applicable provision of law,
the provisions of its Articles of Incorporation and the Conduct
Rules of the National Association of Securities Dealers, Inc.
8. The responsibility of the Distributor hereunder shall be limited
to the promotion of sales of Portfolio shares. The Distributor
shall undertake to promote such sales solely as agent of the
Fund, and shall not purchase or sell such shares as principal.
Orders for Portfolio shares and payment for such orders shall be
directed to the Fund for acceptance or to the Fund's agent,
Delaware Service Company, Inc. ("DSC") for acceptance on behalf
of the Fund. The Distributor is not empowered to approve orders
for sales of Portfolio shares or accept payment for such orders.
Sales of Portfolio shares shall be deemed to be made when and
where accepted by the Fund or by DSC on behalf of the Fund.
9. With respect to the apportionment of costs between the Fund and
the Distributor of activities with which both are concerned, the
following will apply:
(a) The Fund and the Distributor will cooperate in preparing the
Registration Statements, the Prospectus, and all amendments,
supplements and replacements thereto. The Fund will pay all
costs incurred in the preparation of the Fund's
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<PAGE>
registration statement, including typesetting, the costs
incurred in printing and mailing prospectuses to its own
shareholders and fees and expenses of counsel and
accountants.
(b) The Distributor will pay the costs incurred in printing and
mailing copies of prospectuses to prospective investors.
(c) The Distributor will pay advertising and promotional
expenses, including the costs of literature sent to
prospective investors.
(d) The Fund will pay the costs and fees incurred in registering
Portfolio shares with the various states and with the SEC.
(e) The Distributor will pay the costs of any additional copies
of the Fund reports and other Fund literature supplied to
the Distributor by the Fund for sales promotion purposes.
10. The Distributor may engage in other business, provided such other
business does not interfere with the performance by the
Distributor of its obligations under this Agreement. The
Distributor may serve as distributor for and promote the
distribution of and sell and offer for sale the securities of
other investment companies.
11. The Fund agrees to indemnify, defend and hold harmless from the
assets of the Portfolio, the Distributor and each person, if any,
who controls the Distributor within the meaning of Section 15 of
the Securities Act of 1933, from and against any and all losses,
damages, or liabilities to which, jointly or severally, the
Distributor or such controlling person may become subject,
insofar as the losses, damages or liabilities arise out of the
performance of its duties hereunder, except that the Fund shall
not be liable for indemnification of the Distributor or any
controlling person thereof for any liability to the Fund or its
security holders to which they would otherwise be subject by
reason of willful misfeasance, bad
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<PAGE>
faith, or gross negligence in the performance of their duties
hereunder or by reason of their reckless disregard of their
obligations and duties under this Agreement.
12. Copies of financial reports, registration statements and
prospectuses, as well as demands, notices, requests, consents,
waivers, and other communications in writing which it may be
necessary or desirable for either party to deliver or furnish to
the other will be duly delivered or furnished, if delivered to
such party at its address shown below during regular business
hours, or if sent to that party by registered mail or by prepaid
telegram filed with an office or with an agent of Western Union,
in all cases within the time or times herein prescribed,
addressed to the recipient at 1818 Market Street, Philadelphia,
Pennsylvania 19103, or at such other address as the Fund or the
Distributor may designate in writing and furnish to the other.
13. This Agreement shall not be assigned, as that term is defined in
the Investment Company Act of 1940, by the Distributor and shall
terminate automatically in the event of its attempted assignment
by the Distributor. This Agreement shall not be assigned by the
Fund without the written consent of the Distributor signed by its
duly authorized officers and delivered to the Fund. Except as
specifically provided in the indemnification provisions contained
in Paragraph 11 hereof, this Agreement and all conditions and
provisions hereof are for the sole and exclusive benefit of the
parties hereto and their legal successors and no express or
implied provision of this Agreement is intended or shall be
construed to give any person other than the parties hereto and
their legal successors, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provisions
herein contained. The Distributor shall look only to the assets
of the Portfolio to meet the obligations of, or claims against,
the Fund under this Agreement and not to the holder of any share
of the Fund.
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<PAGE>
14. (a) This Agreement shall remain in force for a period of two
years from the date of this Agreement and from year to year
thereafter, but only so long as such continuance is
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 and the
renewal thereof have been approved by the vote of a majority
of the Directors of the Fund, who are not parties hereto or
interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval.
(b) The Distributor may terminate this Agreement on written
notice to the Fund at any time in case the effectiveness of
the Registration Statement shall be suspended, or in case
Stop Order proceedings are initiated by the SEC in respect
of the Registration Statement and such proceedings are not
withdrawn or terminated within thirty days. The Distributor
may also terminate this Agreement at any time by giving the
Fund written notice of its intention to terminate it at the
expiration of three months from the date of delivery of such
written notice of intention to the Fund.
(c) The Fund may terminate this Agreement at any time on at
least thirty days prior written notice to the Distributor
(1) if proceedings are commenced by the Distributor or any
of its partners for the Distributor's liquidation or
dissolution or the winding up of the Distributor's affairs;
(2) if a receiver or trustee of the Distributor or any of
its property is appointed and such appointment is not
vacated within thirty days thereafter; (3) if, due to any
action by or before any court or any federal or state
commission, regulatory body, or administrative agency or
other governmental body, the Distributor shall be prevented
from
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<PAGE>
selling securities in the United States or because of any
action or conduct on the Distributor's part, sales of
Portfolio shares are not qualified for sale. The Fund may
also terminate this Agreement at any time upon prior written
notice to the Distributor of its intention to so terminate
at the expiration of three months from the date of the
delivery of such written notice to the Distributor.
15. The validity, interpretation and construction of this Agreement,
and of each part hereof, will be governed by the laws of the
Commonwealth of Pennsylvania.
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<PAGE>
16. In the event any provision of this Agreement is determined to be
void or unenforceable, such determination shall not affect the
remainder of the Agreement, which shall continue to be in force.
DELAWARE DISTRIBUTORS, L.P.
By: DELAWARE DISTRIBUTORS, INC.,
General Partner
Attest:
____________________________ By: _______________________
Name: _____________________ Name: ____________________
Title:______________________ Title: ____________________
DELAWARE POOLED TRUST, INC.
for THE REAL ESTATE INVESTMENT
TRUST PORTFOLIO II
Attest:
____________________________ By: _______________________
Name: _____________________ Name: ____________________
Title:______________________ Title: ____________________
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<PAGE>
FORM OF AGREEMENT
DELAWARE POOLED TRUST, INC.
THE REAL ESTATE INVESTMENT TRUST PORTFOLIO
AMENDED AND RESTATED DISTRIBUTION AGREEMENT
Amended and Restated Distribution Agreement (the "Agreement") made as
of this 14th day of October, 1997 by and between DELAWARE POOLED TRUST, INC.
(the "Fund"), a Maryland corporation, for THE REAL ESTATE INVESTMENT TRUST
PORTFOLIO (the "Portfolio"), and DELAWARE DISTRIBUTORS, L.P. (the
"Distributor"), a Delaware limited partnership.
WITNESSETH
WHEREAS, the Fund is an investment company regulated by
Federal and State regulatory bodies, and
WHEREAS, the Distributor is engaged in the business of
promoting the distribution of the securities of investment companies and, in
connection therewith and acting solely as agent for such investment companies
and not as principal, advertising, promoting, offering and selling their
securities to the public, and
WHEREAS, the Fund, on behalf of the Portfolio, and the
Distributor previously entered into a Distribution Agreement dated as of
November 29, 1995, pursuant to which the Distributor provided distribution
services in respect of the then only class of shares of the Portfolio; and
<PAGE>
WHEREAS, in connection with the restructuring of the Portfolio
to make available shares for sale to the retail market place, the Board of
Directors of the Fund authorized the addition of four new classes of shares of
the Portfolio; and
WHEREAS, in connection with the restructuring, the Fund
desires to amend and restate the previous agreement with the Distributor to
appoint the Distributor as the national distributor of the Portfolio's REIT Fund
A Class ("Class A Shares"), REIT Fund B Class ("Class B Shares"), REIT Fund C
Class ("Class C Shares"), REIT Fund Institutional Class (the "Institutional
Class Shares") and The Real Estate Investment Trust Portfolio class, which
Portfolio and classes may do business under these or such other names as the
Board of Directors may designate from time to time, on the terms and conditions
set forth below,
NOW, THEREFORE, the parties hereto, intending to be legally
bound hereby, agree as follows:
1. The Fund hereby engages the Distributor to promote the distribution of the
Portfolio's shares and, in connection therewith and as agent for the Fund
and not as principal, to advertise, promote, offer and sell the Portfolio's
shares to classes of investors described in the Portfolio's Prospectuses,
as such may be amended from time to time.
2. (a) The Distributor agrees to serve as distributor of the Portfolio's
shares and, as agent for the Fund and not as principal, to advertise,
promote and use its best
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<PAGE>
efforts to sell the Portfolio's shares wherever their sale is legal,
either through dealers or otherwise, in such places and in such
manner, not inconsistent with the law and the provisions of this
Agreement and the Fund's Registration Statement under the Securities
Act of 1933, including the Prospectuses contained therein, and the
Statement of Additional Information contained therein as may be
mutually determined by the Fund and the Distributor from time to time.
(b) For the Institutional Class Shares and The Real Estate Investment
Trust Portfolio class, the Distributor will bear all costs of
financing any activity which is primarily intended to result in the
sale of those classes of shares, including, but not necessarily
limited to, advertising, compensation of underwriters, dealers and
sales personnel, the printing and mailing of sales literature and
distribution of those classes of shares.
(c) For its services as agent for the Class A Shares, Class B Shares, and
Class C Shares, the Distributor shall be entitled to compensation on
each sale or redemption, as appropriate, of shares of such classes
equal to any front-end or deferred sales charge described in the
Prospectus from time to time and may allow concessions to dealers in
such amounts and on such terms as are therein set forth.
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<PAGE>
(d) For the Class A Shares, Class B Shares, and Class C Shares, the Fund
shall, in addition, compensate the Distributor for its services as
provided in the Distribution Plan as adopted on behalf of the Class A
Shares, Class B Shares, and Class C Shares, respectively, pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "Plans"),
copies of which as presently in force are attached hereto as,
respectively, Exhibit "A," "B," and "C."
3. (a) The Fund agrees to make available for sale by the Fund through the
Distributor all or such part of the authorized but unissued shares of
the Portfolio as the Distributor shall require from time to time, and
except as provided in Paragraph 3(b) hereof, the Fund will not sell
Portfolio shares other than through the efforts of the Distributor.
(b) The Fund reserves the right from time to time (1) to sell and issue
shares other than for cash; (2) to issue shares in exchange for
substantially all of the assets of any corporation or trust, or in
exchange of shares of any corporation or trust; (3) to pay stock
dividends to its shareholders, or to pay dividends in cash or stock at
the option of its stockholders, or to sell stock to existing
stockholders to the extent of dividends payable from time to time in
cash, or to split up or combine its outstanding shares of common
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<PAGE>
stock; (4) to offer shares for cash to its stockholders as a whole, by
the use of transferable rights or otherwise, and to sell and issue
shares pursuant to such offers; and (5) to act as its own distributor
in any jurisdiction in which the Distributor is not registered as a
broker-dealer.
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<PAGE>
4. The Fund warrants the following:
(a) The Fund is, or will be, a properly registered investment
company, and any and all Portfolio's shares which it will sell
through the Distributor are, or will be, properly registered
with the Securities and Exchange Commission ("SEC").
(b) The provisions of this Agreement do not violate the terms of
any instrument by which the Fund is bound, nor do they violate
any law or regulation of any body having jurisdiction over the
Fund or its property.
5. (a) The Fund will supply to the Distributor a conformed copy of
the Registration Statement, all amendments thereto, all
exhibits, and each Prospectus and Statement of Additional
Information.
(b) The Fund will register or qualify the Portfolio's shares for
sale in such states as is deemed desirable.
(c) The Fund, without expense to the Distributor,
(1) will give and continue to give such financial
statements and other information as may be required by
the SEC or the proper public bodies of the states in
which the Portfolio's shares may be qualified;
(2) from time to time, will furnish to the Distributor as
soon as reasonably practicable true copies of its
periodic reports to stockholders;
(3) will promptly advise the Distributor in person or by
telephone or telegraph, and promptly confirm such
advice in writing, (a) when any amendment or
supplement to the Registration Statement becomes
effective, (b) of any request by the SEC for
amendments or supplements to the Registration
Statement or the Prospectuses or for additional
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<PAGE>
information, and (c) of the issuance by the SEC of
any Stop Order suspending the effectiveness of the
Registration Statement, or the initiation of any
proceedings for that purpose;
(4) if at any time the SEC shall issue any Stop Order
suspending the effectiveness of the Registration
Statement, will make every reasonable effort to
obtain the lifting of such order at the earliest
possible moment;
(5) will from time to time, use its best effort to keep a
sufficient supply of Portfolio's shares authorized,
any increases being, subject to the approval of
shareholders as may be required;
(6) before filing any further amendment to the
Registration Statement or to any Prospectus, will
furnish to the Distributor copies of the proposed
amendment and will not, at any time, whether before
or after the effective date of the Registration
Statement, file any amendment to the Registration
Statement or supplement to any Prospectus of which
the Distributor shall not previously have been
advised or to which the Distributor shall reasonably
object (based upon the accuracy or completeness
thereof) in writing;
(7) will continue to make available to its stockholders
(and forward copies to the Distributor) of such
periodic, interim and any other reports as are now,
or as hereafter may be, required by the provisions of
the Investment Company Act of 1940; and
(8) will, for the purpose of computing the offering price
of Portfolio's shares, advise the Distributor within
one hour after the close of the New York Stock
Exchange (or as soon as practicable thereafter) on
each business day upon which the New York Stock
Exchange may be open of the net asset value per share
of the Portfolio's shares of common stock
outstanding, determined in accordance with any
applicable provisions of law and the provisions of
the Articles of Incorporation, as amended, of the
Fund as of the close of business on such business
day. In the event that prices are to be calculated
more than once daily, the Fund will promptly advise
the Distributor of the time of each calculation and
the price computed at each such time.
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<PAGE>
6. The Distributor agrees to submit to the Fund, prior to its use, the form of
all sales literature proposed to be generally disseminated by or for the
Distributor, all advertisements proposed to be used by the Distributor, all
sales literature or advertisements prepared by or for the Distributor for
such dissemination or for use by others in connection with the sale of the
Portfolio's shares, and the form of dealers' sales contract the Distributor
intends to use in connection with sales of the Portfolio's shares. The
Distributor also agrees that the Distributor will submit such sales
literature and advertisements to the NASD, SEC or other regulatory agency
as from time to time may be appropriate, considering practices then current
in the industry. The Distributor agrees not to use such form of dealers'
sales contract or to use or to permit others to use such sales literature
or advertisements without the written consent of the Fund if any regulatory
agency expresses objection thereto or if the Fund delivers to the
Distributor a written objection thereto.
7. The purchase price of each share sold hereunder shall be the offering price
per share mutually agreed upon by the parties hereto, and as described in
the Fund's Prospectuses, as amended from time to time, determined in
accordance with any applicable provision of law, the provisions of its
Articles of Incorporation and the Conduct Rules of the National Association
of Securities Dealers, Inc.
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<PAGE>
8. The responsibility of the Distributor hereunder shall be limited to the
promotion of sales of Portfolio's shares. The Distributor shall undertake
to promote such sales solely as agent of the Fund, and shall not purchase
or sell such shares as principal. Orders for Portfolio's shares and payment
for such orders shall be directed to the Fund's agent, Delaware Service
Company, Inc. for acceptance on behalf of the Fund. The Distributor is not
empowered to approve orders for sales of Portfolio's shares or accept
payment for such orders. Sales of Portfolio's shares shall be deemed to be
made when and where accepted by Delaware Service Company, Inc. on behalf of
the Fund.
9. With respect to the apportionment of costs between the Fund and the
Distributor of activities with which both are concerned, the following will
apply:
(a) The Fund and the Distributor will cooperate in preparing the
Registration Statements, the Prospectuses, the Statement of Additional
Information, and all amendments, supplements and replacements thereto.
The Fund will pay all costs incurred in the preparation of the Fund's
Registration Statement, including typesetting, the costs incurred in
printing and mailing Prospectuses and Annual, Semi-Annual and other
financial reports to its own shareholders and fees and expenses of
counsel and accountants.
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<PAGE>
(b) The Distributor will pay the costs incurred in printing and mailing
copies of Prospectuses to prospective investors.
(c) The Distributor will pay advertising and promotional expenses,
including the costs of literature sent to prospective investors.
(d) The Fund will pay the costs and fees incurred in registering or
qualifying the Portfolio's shares with the various states and with the
SEC.
(e) The Distributor will pay the costs of any additional copies of Fund
financial and other reports and other Fund literature supplied to the
Distributor by the Fund for sales promotion purposes.
10. The Distributor may engage in other business, provided such other business
does not interfere with the performance by the Distributor of its
obligations under this Agreement.
11. The Fund agrees to indemnify, defend and hold harmless from the assets of
the Portfolio the Distributor and each person, if any, who controls the
Distributor within the meaning of Section 15 of the Securities Act of 1933,
from and against any and all losses, damages, or liabilities to which,
jointly or severally, the Distributor or such controlling person may become
subject, insofar as the losses, damages or liabilities arise out of the
performance of its duties hereunder except that the Fund shall not be
liable for indemnification of the Distributor or any controlling person
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<PAGE>
thereof for any liability to the Fund or its security holders to which they
would otherwise be subject by reason of willful misfeasance, bad faith, or
gross negligence in the performance of their duties under this Agreement.
12. Copies of financial reports, Registration Statements and Prospectuses, as
well as demands, notices, requests, consents, waivers, and other
communications in writing which it may be necessary or desirable for either
party to deliver or furnish to the other will be duly delivered or
furnished, if delivered to such party at its address shown below during
regular business hours, or if sent to that party by registered mail or by
prepaid telegram filed with an office or with an agent of Western Union or
another nationally recognized telegraph service, in all cases within the
time or times herein prescribed, addressed to the recipient at 1818 Market
Street, Philadelphia, Pennsylvania 19103, or at such other address as the
Fund or the Distributor may designate in writing and furnish to the other.
13. This Agreement shall not be assigned, as that term is defined in the
Investment Company Act of 1940, by the Distributor and shall terminate
automatically in the event of its attempted assignment by the Distributor.
This Agreement shall not be assigned by the Fund without the written
consent of the Distributor signed by its duly authorized officers and
delivered to the Fund. Except as specifically provided in the
indemnification provision
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<PAGE>
contained in Paragraph 11 herein, this Agreement and all conditions and
provisions hereof are for the sole and exclusive benefit of the parties
hereto and their legal successors and no express or implied provision of
this Agreement is intended or shall be construed to give any person other
than the parties hereto and their legal successors any legal or equitable
right, remedy or claim under or in respect of this Agreement or any
provisions herein contained.
14. (a) This Agreement shall remain in force for a period of two years from
the date hereof and from year to year thereafter, but only so long as
such continuance is 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 and the renewal
thereof have been approved by the vote of a majority of the Directors
of the Fund who are not parties hereto or interested persons of any
such party, cast in person at a meeting called for the purpose of
voting on such approval.
(b) The Distributor may terminate this Agreement on written notice to the
Fund at any time in case the effectiveness of the Registration
Statement shall be suspended, or in case Stop Order proceedings are
initiated by the SEC in respect of the Registration Statement and such
proceedings are not withdrawn or
-12-
<PAGE>
terminated within thirty days. The Distributor may also terminate this
Agreement at any time by giving the Fund written notice of its
intention to terminate the Agreement at the expiration of three months
from the date of delivery of such written notice of intention to the
Fund.
(c) The Fund may terminate this Agreement at any time on at least thirty
days prior written notice to the Distributor (1) if proceedings are
commenced by the Distributor or any of its partners for the
Distributor's liquidation or dissolution or the winding up of the
Distributor's affairs; (2) if a receiver or trustee of the Distributor
or any of its property is appointed and such appointment is not
vacated within thirty days thereafter; (3) if, due to any action by or
before any court or any federal or state commission, regulatory body,
or administrative agency or other governmental body, the Distributor
shall be prevented from selling securities in the United States or
because of any action or conduct on the Distributor's part, sales of
the shares are not qualified for sale. The Fund may also terminate
this Agreement at any time upon prior written notice to the
Distributor of its intention to so terminate at the expiration of
three months from the date of the delivery of such written notice to
the Distributor.
-13-
<PAGE>
15. The validity, interpretation and construction of this Agreement, and of
each part hereof, will be governed by the laws of the Commonwealth of
Pennsylvania.
-14-
<PAGE>
16. In the event any provision of this Agreement is determined to be void or
unenforceable, such determination shall not affect the remainder of the
Agreement, which shall continue to be in force.
DELAWARE DISTRIBUTORS, L.P.
By: DELAWARE DISTRIBUTORS, INC.,
General Partner
Attest:
_______________________________ By:_______________________________
Name: Name:
Title: Title:
DELAWARE POOLED TRUST, INC. for THE
REAL ESTATE INVESTMENT TRUST
PORTFOLIO
Attest:
_______________________________ By:_______________________________
Name: Name:
Title: Title:
-15-
<PAGE>
EXHIBIT A
DISTRIBUTION PLAN
DELAWARE POOLED TRUST, INC.
THE REAL ESTATE INVESTMENT TRUST PORTFOLIO
REIT FUND A CLASS
The following Distribution Plan (the "Plan") has been adopted
pursuant to Rule l2b-l under the Investment Company Act of l940 (the "Act") by
Delaware Pooled Trust, Inc., (the "Fund"), for The Real Estate Investment Trust
Portfolio (the "Portfolio") on behalf of REIT Fund A Class ("Class"), which
Fund, Portfolio and Class may do business under these or such other names as the
Board of Directors of the Fund may designate from time to time. The Plan has
been approved by a majority of the Board of Directors, including a majority of
the Directors who are not interested persons of the Fund and who have no direct
or indirect financial interest in the operation of the Plan or in any agreements
related thereto ("non-interested Directors"), cast in person at a meeting called
for the purpose of voting on such Plan. Such approval by the Directors included
a determination that in the exercise of reasonable business judgment and in
light of their fiduciary duties, there is a reasonable likelihood that the Plan
will benefit the Portfolio and shareholders of the
<PAGE>
Class. The Plan has been adopted prior to any public offering of the Class.
The Fund is a corporation organized under the laws of the
State of Maryland, is authorized to issue different series and classes of
securities and is an open-end management investment company registered under the
Act. Delaware Management Company, Inc. serves as the Portfolio's investment
adviser and manager pursuant to an Investment Management Agreement. Delaware
Service Company, Inc. serves as the Portfolio's shareholder servicing, dividend
disbursing and transfer agent. Delaware Distributors, L.P. (the "Distributor")
is the principal underwriter and national distributor for the Portfolio's
shares, including shares of the Class, pursuant to the Amended and Restated
Distribution Agreement between the Distributor and the Fund on behalf of the
Portfolio ("Distribution Agreement").
The Plan provides that:
l. The Fund shall pay to the Distributor a monthly fee not to
exceed 0.3% (3/10 of l%) per annum of the Portfolio's average daily net assets
represented by shares of the Class (the "Maximum Amount") as may be determined
by the Fund's Board of Directors from time to time. Such monthly fee shall be
reduced by the aggregate sums paid by the Fund on behalf of the Portfolio to
persons other than broker-dealers (the "Service Providers") who may, pursuant to
servicing agreements, provide to the Portfolio services in the Portfolio's
marketing of shares of the Class.
A-2
<PAGE>
2. (a) The Distributor shall use the monies paid to it
pursuant to paragraph l above to furnish, or cause or encourage others to
furnish, services and incentives in connection with the promotion, offering and
sale of Class shares and, where suitable and appropriate, the retention of Class
shares by shareholders.
(b) The Service Providers shall use the monies paid
respectively to them to reimburse themselves for the actual costs they have
incurred in confirming that their customers have received the Prospectus and
Statement of Additional Information, if applicable, and as a fee for (l)
assisting such customers in maintaining proper records with the Fund, (2)
answering questions relating to their respective accounts, and (3) aiding in
maintaining the investment of their respective customers in the Class.
3. The Distributor shall report to the Fund at least monthly
on the amount and the use of the monies paid to it under the Plan. The Service
Providers shall inform the Fund monthly and in writing of the amounts each
claims under the Plan; both the Distributor and the Service Providers shall
furnish the Board of Directors of the Fund with such other information as the
Board may reasonably request in connection with the payments made under the Plan
and the use thereof by the Distributor and the Service Providers, respectively,
in order to enable the Board to make an informed determination of the amount of
the Fund's payments and whether the Plan should be continued.
A-3
<PAGE>
4. The officers of the Fund shall furnish to the Board of
Directors of the Fund, for their review, on a quarterly basis, a written report
of the amounts expended under the Plan and the purposes for which such
expenditures were made.
5. This Plan shall take effect at such time as the Distributor
shall notify the Fund in writing of the commencement of the Plan (the
"Commencement Date"); thereafter, the Plan shall continue in effect for a period
of more than one year from the Commencement Date only so long as such
continuance is specifically approved at least annually by a vote of the Board of
Directors of the Fund, and of the non-interested Directors, cast in person at a
meeting called for the purpose of voting on such Plan.
6. (a) The Plan may be terminated at any time by vote of a
majority of the non-interested Directors or by vote of a majority of the
outstanding voting securities of the Class.
(b) The Plan may not be amended to increase materially the
amount to be spent for distribution pursuant to paragraph l hereof without
approval by the shareholders of the Class.
7. All material amendments to this Plan shall be approved by
the non-interested Directors in the manner described in paragraph 5 above.
8. So long as the Plan is in effect, the selection and
nomination of the Fund's non-interested Directors shall be committed to the
discretion of such non-interested Directors.
A-4
<PAGE>
9. The definitions contained in Sections 2(a)(19) and 2(a)(42)
of the Act shall govern the meaning of "interested person(s)" and "vote of a
majority of the outstanding voting securities," respectively, for the purposes
of this Plan.
This Plan shall take effect on the Commencement Date, as
previously defined.
October 14, 1997
A-5
<PAGE>
EXHIBIT B
DISTRIBUTION PLAN
DELAWARE POOLED TRUST, INC.
THE REAL ESTATE INVESTMENT TRUST PORTFOLIO
REIT FUND B CLASS
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Pooled Trust, Inc., (the "Fund"), for The Real Estate Investment Trust Portfolio
(the "Portfolio") on behalf of REIT Fund B Class ("Class"), which Fund,
Portfolio and Class may do business under these or such other names as the Board
of Directors of the Fund may designate from time to time. The Plan has been
approved by a majority of the Board of Directors, including a majority of the
Directors who are not interested persons of the Fund and who have no direct or
indirect financial interest in the operation of the Plan or in any agreements
related thereto ("non-interested Directors"), cast in person at a meeting called
for the purpose of voting on such Plan. Such approval by the Directors included
a determination that in the exercise of reasonable business judgment and in
light of their fiduciary duties, there is a reasonable likelihood that the Plan
will benefit the Portfolio and shareholders of the Class. The Plan has been
adopted prior to any public offering of the Class.
B-1
<PAGE>
The Fund is a corporation organized under the laws of the State of
Maryland, is authorized to issue different series and classes of securities and
is an open-end management investment company registered under the Act. Delaware
Management Company, Inc. serves as the Portfolio's investment adviser and
manager pursuant to an Investment Management Agreement. Delaware Service
Company, Inc. serves as the Portfolio's shareholder servicing, dividend
disbursing and transfer agent. Delaware Distributors, L.P. (the "Distributor")
is the principal underwriter and national distributor for the Portfolio's
shares, including shares of the Class, pursuant to the Amended and Restated
Distribution Agreement between the Distributor and the Fund on behalf of the
Portfolio ("Distribution Agreement").
The Plan provides that:
1. (a) The Fund shall pay to the Distributor a monthly fee not to
exceed 0.75% (3/4 of 1%) per annum of the Portfolio's average daily net assets
represented by shares of the Class as may be determined by the Fund's Board of
Directors from time to time.
(b) In addition to the amounts described in (a) above, the
Fund shall pay (i) to the Distributor for payment to dealers or others, or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
Portfolio's average daily net assets represented by shares of the Class, as a
service fee pursuant to dealer or servicing agreements.
B-2
<PAGE>
2. (a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing personnel, and holding special
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.
(b) The monies to be paid pursuant to paragraph 1(b) above
shall be used to pay dealers or others for, among other things, furnishing
personal services and maintaining shareholder accounts, which services include
confirming that customers have received the Prospectus and Statement of
Additional Information, if applicable; assisting such customers in maintaining
proper records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under paragraph 1(a) above. In
addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of Directors of
the Fund with such other information as the Board
B-3
<PAGE>
may reasonably request in connection with the payments made under the Plan and
the use thereof by the Distributor and others in order to enable the Board to
make an informed determination of the amount of the Fund's payments and whether
the Plan should be continued.
4. The officers of the Fund shall furnish to the Board of Directors of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund of the commencement of the Plan (the "Commencement Date");
thereafter, the Plan shall continue in effect for a period of more than one year
from the Commencement Date only so long as such continuance is specifically
approved at least annually by a vote of the Board of Directors of the Fund, and
of the non-interested Directors, cast in person at a meeting called for the
purpose of voting on such Plan.
6. (a) The Plan may be terminated at any time by vote of a majority of
the non-interested Directors or by vote of a majority of the outstanding voting
securities of the Class.
(b) The Plan may not be amended to increase materially the
amount to be spent for distribution pursuant to paragraph 1 thereof without
approval by the shareholders of the Class.
7. All material amendments to this Plan shall be approved by the
non-interested Directors in the manner described in paragraph 5 above.
B-4
<PAGE>
8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of such
non-interested Directors.
9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
October 14, 1997
B-5
<PAGE>
EXHIBIT C
DISTRIBUTION PLAN
DELAWARE POOLED TRUST, INC.
THE REAL ESTATE INVESTMENT TRUST PORTFOLIO
REIT FUND C CLASS
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Pooled Trust, Inc., (the "Fund"), for The Real Estate Investment Trust Portfolio
(the "Portfolio") on behalf of REIT Fund C Class ("Class"), which Fund,
Portfolio and Class may do business under these or such other names as the Board
of Directors of the Fund may designate from time to time. The Plan has been
approved by a majority of the Board of Directors, including a majority of the
Directors who are not interested persons of the Fund and who have no direct or
indirect financial interest in the operation of the Plan or in any agreements
related thereto ("non-interested Directors"), cast in person at a meeting called
for the purpose of voting on such Plan. Such approval by the Directors included
a determination that in the exercise of reasonable business judgment and in
light of their fiduciary duties, there is a reasonable likelihood that the Plan
will benefit the Portfolio and shareholders of the Class. The Plan has been
adopted prior to any public offering of the Class.
C-1
<PAGE>
The Fund is a corporation organized under the laws of the State of
Maryland, is authorized to issue different series and classes of securities and
is an open-end management investment company registered under the Act. Delaware
Management Company, Inc. serves as the Portfolio's investment adviser and
manager pursuant to an Investment Management Agreement. Delaware Service
Company, Inc. serves as the Portfolio's shareholder servicing, dividend
disbursing and transfer agent. Delaware Distributors, L.P. (the "Distributor")
is the principal underwriter and national distributor for the Portfolio's
shares, including shares of the Class, pursuant to the Amended and Restated
Distribution Agreement between the Distributor and the Fund on behalf of the
Portfolio ("Distribution Agreement").
The Plan provides that:
1.(a) The Fund shall pay to the Distributor a monthly fee not to exceed
0.75% (3/4 of 1%) per annum of the Portfolio's average daily net assets
represented by shares of the Class as may be determined by the Fund's Board of
Directors from time to time.
(b) In addition to the amounts described in paragraph 1(a) above, the
Fund shall pay: (i) to the Distributor for payment to dealers or others or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
Portfolio's average daily net assets represented by shares of the Class, as a
service fee pursuant to dealer or servicing agreements.
C-2
<PAGE>
2.(a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing personnel, and holding special
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.
(b) The monies to be paid pursuant to paragraph 1(b) above shall be
used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under paragraph 1(a) above. In
addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of Directors of
the Fund with such other information as the Board
C-3
<PAGE>
may reasonably request in connection with the payments made under the Plan and
the use thereof by the Distributor and others in order to enable the Board to
make an informed determination of the amount of the Fund's payments and whether
the Plan should be continued.
4. The officers of the Fund shall furnish to the Board of Directors of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund of the commencement of the Plan (the "Commencement Date");
thereafter, the Plan shall continue in effect for a period of more than one year
from the Commencement Date only so long as such continuance is specifically
approved at least annually by a vote of the Board of Directors of the Fund, and
of the non-interested Directors, cast in person at a meeting called for the
purpose of voting on such Plan.
6.(a) The Plan may be terminated at any time by vote of a majority of
the non-interested Directors or by vote of a majority of the outstanding voting
securities of the Class.
(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph 1 thereof without approval by
the shareholders of the Class.
7. All material amendments to this Plan shall be approved by the
non-interested Directors in the manner described in paragraph 5 above.
C-4
<PAGE>
8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of such
non-interested Directors.
9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
October 14, 1997
C-5
<PAGE>
CHASE
GLOBAL CUSTODY AGREEMENT
AGREEMENT, effective May 1, 1996, between THE CHASE MANHATTAN BANK, N.A.
(the "Bank") and those registered investment companies listed on Schedule A
hereto (each a Customer ) on behalf of certain of their respective series,
as listed on Schedule A (individually and collectively the Series ).
1. Customer Accounts.
The Bank agrees to establish and maintain the following accounts
("Accounts"):
(a) A custody account in the name of the Customer on behalf of each
Series ("Custody Account") for any and all stocks, shares, bonds, debentures,
notes, mortgages or other obligations for the payment of money, bullion, coin
and any certificates, receipts, warrants or other instruments representing
rights to receive, purchase or subscribe for the same or evidencing or
representing any other rights or interests therein and other similar property
whether certificated or uncertificated as may be received by the Bank or its
Subcustodian (as defined in Section 3) for the account of the Customer
("Securities"); and
(b) A deposit account in the name of the Customer on behalf of each
Series ("Deposit Account") for any and all cash in any currency received by
the Bank or its Subcustodian for the account of the Customer, which cash
shall not be subject to withdrawal by draft or check.
The Customer warrants its authority to: 1) deposit the cash and
Securities ("Assets") received in the Accounts and 2) give Instructions (as
defined in Section 11) concerning the Accounts. Such Instructions shall
specifically indicate to which Series such Assets belong or, if such Assets
belong to more than one Series, shall allocate such Assets to the appropriate
Series. The Bank may deliver securities of the same class in place of those
deposited in the Custody Account.
Upon written agreement between the Bank and the Customer, additional
Accounts may be established and separately accounted for as additional
Accounts under the terms of this Agreement.
2. Maintenance of Securities and Cash at Bank and Subcustodian Locations.
Unless Instructions specifically require another location acceptable to
the Bank:
(a) Securities will be held in the country or other jurisdiction in
which the principal trading market for such Securities is located, where such
Securities are to be presented for payment or where such Securities are
acquired; and
(b) Cash will be credited to an account in a country or other
jurisdiction in which such cash may be legally deposited or is the legal
currency for the payment of public or private debts.
To the extent available and permissible under applicable law and
regulation, Cash held pursuant to Instructions shall be held in interest
bearing accounts. If interest bearing accounts are not available, such cash
may be held in non-interest bearing accounts. The Bank is authorized to
maintain cash balances on deposit for the Customer with itself or one of its
affiliates. Interest bearing accounts shall bear interest at such reasonable
rates of interest as may from time to time be paid on such accounts by the
Bank or its affiliates.
(iii) For each Series that is exclusively a domestic Series, the following
additional provisions shall apply:
(x) In the event that during a given calendar month a Series has maintained
an average daily cash balance greater than zero, the Bank shall provide an
earnings credit against custody fees otherwise owing hereunder by such Series
during such calendar month in an amount equal to the product of (A) 75% of
the 90 day U.S. government Treasury bill rate as quoted in the Wall Street
Journal for the last Business Day (being a day on which the Bank is open
for the transaction of all its ordinary business) of such calendar month, (B)
the average daily cash balance for such month, and (C) the number of days in
such calendar month divided by 365.
(y) In the event that during a given calendar month a Series has maintained
an average daily cash balance less than or equal to zero, the Bank shall be
paid interest on such amount by such Series in an amount equal to the product
of (A) the Overnight Fed Funds Rate (as defined below) plus 25 basis points
for the last Business Day of such calendar month, (B) the average daily cash
balance for such month, and (C) the number of days in such calendar month
divided by 365.
(z) For purposes of (y) above, the term Overnight Fed Funds Rate shall mean
the weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds brokers,
as published by the Federal Reserve Bank of New York (with the rate for the
last Business Day of a given calendar month being the rate so published on
the Business Day immediately following such Day), or, if such rate is note so
published, the average quotations, for the last Business Day of a given
calendar month, of such transactions received by the Bank from three Federal
funds brokers of recognized standing selected by the Bank.
If the Customer wishes to have any of its Assets held in the custody of
an institution other than the established Subcustodians as defined in Section
3 (or their securities depositories), such arrangement must be authorized by
a written agreement, signed by the Bank and the Customer.
3. Subcustodians and Securities Depositories.
The Bank may act under this Agreement through the subcustodians listed
in Schedule B of this Agreement with which the Bank has entered into
subcustodial agreements ("Subcustodians"). The Customer authorizes the Bank
to hold Assets in the Accounts in accounts which the Bank has established
with one or more of its branches or Subcustodians. The Bank and
Subcustodians are authorized to hold any of the Securities in their account
with any securities depository in which they participate.
The Bank reserves the right to add new, replace or remove Subcustodians.
The Customer will be given reasonable notice by the Bank of any amendment to
Schedule B. Upon request by the Customer, the Bank will identify the name,
address and principal place of business of any Subcustodian of the Customer's
Assets and the name and address of the governmental agency or other
regulatory authority that supervises or regulates such Subcustodian.
Upon receipt of Instructions, the Bank shall cease using any
Subcustodian with respect to the customer, and arrange for delivery of
Securities held with such Subcustodian to another entity as designated by the
Customer; provided that, the Bank shall have no responsibility for the
performance of such other entity.
4. Use of Subcustodian.
(a) The Bank will identify the Assets on its books as belonging to the
Customer.
(b) A Subcustodian will hold such Assets together with assets belonging
to other customers of the Bank in accounts identified on such Subcustodian's
books as special custody accounts for the exclusive benefit of customers of
the Bank.
(c) Any Assets in the Accounts held by a Subcustodian will be subject
only to the instructions of the Bank or its agent. Any Securities held in a
securities depository for the account of a Subcustodian will be subject only
to the instructions of such Subcustodian.
(d) Any agreement the Bank enters into with a Subcustodian for holding
its customer's assets shall provide that: (i) such assets will not be subject
to any right, charge, security interest, lien or claim of any kind in favor
of such Subcustodian except for safe custody or administration, (ii) the
beneficial ownership of such assets will be freely transferable without the
payment of money or value other than for safe custody or administration;
(iii) adequate records will be maintained identifying the assets held
pursuant to such agreement as belonging to the customers of the Bank; (iv)
subject to applicable law, Subcustodian shall permit independent public
accountants for Bank and customers of the Bank reasonable access to
Subcustodian s books and records as they pertain to the subcustody account in
connection with such accountants' examination of the books and records of
such account; and (v) the Bank will receive periodic reports with respect to
the safekeeping of assets in the subcustody account, including advices and/or
notifications of any transfers to or from such subcustody account. The
foregoing shall not apply to the extent of any special agreement or
arrangement made by the Customer with any particular Subcustodian.
(e) Upon request of the Customer, the Bank shall deliver to the Customer
annually a report stating: (i) the identity of each Subcustodian then acting
on behalf of the Bank and the name and address of the governmental agency or
other regulatory authority that supervises or regulates such Subcustodian;
(ii) the countries in which each Subcustodian is located; and (iii) as long
as Securities and Exchange Commission ("SEC") Rule 17f-5 under the Investment
Company Act of 1940, as amended ("1940 Act"), requires the Customer s Board
of Directors/Trustees directly to approve its foreign custody arrangements,
such other information relating to such Subcustodians as may reasonably be
requested by the Customer to ensure compliance with Rule 17f-5. As long as
Rule 17f-5 requires the Customer s Board of Directors/Trustees directly to
approve its foreign custody arrangements, the Bank shall also furnish
annually to the Customer information concerning such Subcustodians similar in
kind and scope as that furnished to the Customer in connection with the
initial approval hereof. The Bank shall timely advise the Customer of any
material adverse change in the facts or circumstances upon which such
information is based where such changes would affect the eligibility of the
Subcustodian under Rule 17f-5 as soon as practicable after it becomes aware
of any such material adverse change in the normal course of its custodial
activities.
5. Deposit Account Transactions
(a) The Bank or its Subcustodians will make payments from the Deposit
Account upon receipt of Instructions which include all information required
by the Bank.
(b) In the event that any payment to be made under this Section 5
exceeds the funds available in the Deposit Account, the Bank, in its
discretion, may advance the Customer such excess amount which shall be deemed
a loan payable on demand, bearing interest at the rate customarily charged by
the Bank on similar loans.
(c) If the Bank credits the Deposit Account on a payable date, or at
any time prior to actual collection and reconciliation to the Deposit
Account, with interest, dividends, redemptions or any other amount due, the
Customer will promptly return any such amount upon oral or written
notification: (i) that such amount has not been received in the ordinary
course of business or (ii) that such amount was incorrectly credited. If the
Customer does not promptly return any amount upon such notification, the Bank
shall be entitled, upon oral or written notification to the Customer, to
reverse such credit by debiting the Deposit Account for the amount previously
credited. The Bank or its Subcustodian shall have no duty or obligation to
institute legal proceedings, file a claim or a proof of claim in any
insolvency proceeding or take any other action with respect to the collection
of such amount, but may act for the Customer upon Instructions after
consultation with the Customer.
6. Custody Account Transactions.
(a) Securities will be transferred, exchanged or delivered by the Bank
or its Subcustodian upon receipt by the Bank of Instructions which include
all information required by the Bank. Settlement and payment for Securities
received for, and delivery of Securities out of, the Custody Account may be
made in accordance with the customary or established securities trading or
securities processing practices and procedures in the jurisdiction or market
in which the transaction occurs, including, without limitation, delivery of
Securities to a purchaser, dealer or their agents against a receipt with the
expectation of receiving later payment and free delivery. Delivery of
Securities out of the Custody Account may also be made in any manner
specifically required by Instructions acceptable to the Bank.
(b) The Bank shall credit or debit the Accounts on a contractual
settlement date with cash or Securities with respect to any sale, exchange or
purchase of Securities in those countries set forth in Appendix A hereto;
provided that, the Bank may amend Appendix A from time to time in its sole
discretion and shall advise the Customer of such amendments. Otherwise,
transactions will be credited or debited to the Accounts on the date cash or
Securities are actually received by the Bank and reconciled to the Account.
(i) The Bank may reverse credits or debits made to the Accounts in its
discretion if the related transaction fails to settle within a reasonable
period, determined by the Bank in its discretion, after the contractual
settlement date for the related transaction; provided that, the Bank shall
give Customer prior notification of any such reversal. Where the foregoing
notification is oral, the Bank shall promptly provide written confirmation of
the same (which confirmation may be electronic).
(ii) If any Securities delivered pursuant to this Section 6 are returned
by the recipient thereof, the Bank may reverse the credits and debits of the
particular transaction at any time.
7. Actions of the Bank.
The Bank shall follow Instructions received regarding assets held in the
Accounts. However, until it receives Instructions to the contrary, the Bank
will:
(a) Present for payment any Securities which are called, redeemed or
retired or otherwise become payable and all coupons and other income items
which call for payment upon presentation, to the extent that the Bank or
Subcustodian is actually aware of such opportunities.
(b) Execute in the name of the Customer such ownership and other
certificates as may be required to obtain payments in respect of Securities.
(c) Exchange interim receipts or temporary Securities for definitive
Securities.
(d) Appoint brokers and agents for any transaction involving the
Securities, including, without limitation, affiliates of the Bank or any
Subcustodian, subject to applicable SEC rules and regulations under the Act.
(e) Issue statements to the Customer, at times mutually agreed upon,
identifying the Assets in the Accounts.
The Bank will send the Customer an advice or notification of any
transfers of Assets to or from the Accounts. Such statements, advices or
notifications shall indicate the identity of the entity having custody of the
Assets. Unless the Customer advises the Bank orally and then promptly sends
the Bank a written exception or objection to any Bank statement within 180
days of receipt, the Customer shall be deemed to have approved such
statement.
All collections of funds or other property paid or distributed in
respect of Securities in the Custody Account shall be made at the risk of the
Customer. Subject to the standard of care in Section 12 hereof, the Bank shall
have no liability for any loss occasioned by delay in the actual receipt of
notice by the Bank or by its Subcustodians of any payment, redemption or other
transaction regarding Securities in the Custody Account in respect of which
the Bank has agreed to take any action under this Agreement.
8. Corporate Actions; Proxies; Tax Reclaims.
a. Corporate Actions. Whenever the Bank receives information
concerning the Securities which requires discretionary action by the
beneficial owner of the Securities (other than a proxy), such as subscription
rights, bonus issues, stock repurchase plans and rights offerings, or legal
notices or other material intended to be transmitted to securities holders
("Corporate Actions"), the Bank will give the Customer written notice (which
may be electronic) of such Corporate Actions to the extent that the Bank's
central corporate actions department has actual knowledge of a Corporate
Action in time to notify its customers.
When a rights entitlement or a fractional interest resulting from a
rights issue, stock dividend, stock split or similar Corporate Action is
received which bears an expiration date, the Bank will endeavor to obtain
Instructions from the Customer or its Authorized Person (as defined in Section
10 hereof), but if Instructions are not received in time for the Bank to take
timely action, or actual notice of such Corporate Action was received too
late to seek Instructions, the Bank is authorized to sell such rights
entitlement or fractional interest and to credit the Deposit Account with the
proceeds or take any other action it deems, in good faith, to be appropriate
in which case it shall be held harmless for any such action.
b. Proxy Voting. With respect to domestic U.S. and Canadian Securities
(the latter if held in DTC), the Bank will send to the Customer or the
Authorized Person (as defined in Section 10) for a Custody Account, such proxies
(signed in blank, if issued in the name of the Bank's nominee or the nominee
of a central depository) and communications with respect to Securities in the
Custody Account as call for voting or relate to legal proceedings within a
reasonable time after sufficient copies are received by the Bank for
forwarding to its customers. In addition, the Bank will follow coupon
payments, redemptions, exchanges or similar matters with respect to
Securities in the Custody Account and advise the Customer or the Authorized
Person for such Account of rights issued, tender offers or any other
discretionary rights with respect to such Securities, in each case, of which
the Bank has received notice from the issuer of the Securities, or as to
which notice is published in publications routinely utilized by the Bank for
this purpose.
With respect to Securities other than the foregoing, proxy voting
services shall be provided in accordance with separate proxy voting agreement
annexed hereto a Appendix B.
The foregoing proxy voting services may be provided by Bank, in whole or
in part, by one or more third parties appointed by the Bank (which may be
affiliates of the Bank), provided that the Bank shall be liable for the
performance of any such third parties to the same extent as the Bank would
have been if it performed such services itself..
c. Tax Reclaims. (i) Subject to the provisions hereof, the Bank will
apply for a reduction of withholding tax and any refund of any tax paid or
tax credits which apply in each applicable market in respect of income
payments on Securities for the benefit of the Customer which the Bank
believes may be available to such Customer. Where such reports are available,
the Bank shall periodically report to Customer concerning the making of
applications for a reduction of withholding tax and refund of any tax paid or
tax credits which apply in each applicable market in respect of income
payments on Securities for the benefit of the Customer.
(ii) The provision of tax reclaim services by the Bank is conditional
upon the Bank receiving from the beneficial owner of Securities (A) a
declaration of its identity and place of residence and (B) certain other
documentation (pro forma copies of which are available from the Bank). The
Bank shall use reasonable means to advise the Customer of the declarations,
documentation and information which the Customer is to provide to the Bank in
order for the Bank to provide the tax reclaim services described herein. The
Customer acknowledges that, if the Bank does not receive such declarations,
documentation and information, additional United Kingdom taxation will be
deducted from all income received in respect of Securities issued outside the
United Kingdom and that U.S. non-resident alien tax or U.S. backup
withholding tax will be deducted from U.S. source income. The Customer shall
provide to the Bank such documentation and information as it may require in
connection with taxation, and warrants that, when given, this information
shall be true and correct in every respect, not misleading in any way, and
contain all material information. The Customer undertakes to notify the Bank
immediately if any such information requires updating or amendment.
(iii) Subject to subsection (vii) hereof, the Bank shall not be liable
to the Customer or any third party for any tax, fines or penalties payable by
the Bank or the Customer, and shall be indemnified accordingly, whether these
result from the inaccurate completion of documents by the Customer or any
third party, or as a result of the provision to the Bank or any third party
of inaccurate or misleading information or the withholding of material
information by the Customer or any other third party, or as a result of any
delay of any revenue authority or any other matter beyond the control of the
Bank.
(iv) The Customer confirms that the Bank is authorized to deduct from
any cash received or credited to the Cash Account any taxes or levies
required by any revenue or governmental authority for whatever reason in
respect of the Securities or Cash Accounts.
(v) The Bank shall perform tax reclaim services only with respect to
taxation levied by the revenue authorities of the countries notified to the
Customer from time to time and the Bank may, by notification in writing, at
its absolute discretion, supplement or amend the markets in which the tax
reclaim services are offered. Other than as expressly provided in this sub-
clause, the Bank shall have no responsibility with regard to the Customer's
tax position or status in any jurisdiction. Except as provided in Section
8(c)(ii) and pursuant to Instructions, the Bank shall take no action in the
servicing of the Customer s Securities which, in and of itself, creates a
taxable nexus for the Customer in any jurisdiction other than with respect to
interest, dividends and capital gains that may otherwise be subject to tax by
such jurisdiction with respect to a foreign investor not otherwise engaged in
a trade or business in such jurisdiction in a given taxable year. Bank shall
not be liable for any tax liability caused, directly or indirectly, by
Customer's actions or status in any jurisdiction.
(vi) In connection with obtaining tax relief, the Customer confirms
that the Bank is authorized to disclose any information requested by any
revenue authority or any governmental body in relation to the Customer or the
Securities and/or Cash held for the Customer. This provision does not
authorize any other voluntary disclosure to any revenue authority or any
governmental body without the prior written consent of Customer.
(vii) Tax reclaim services may be provided by the Bank or, in whole or
in part, by one or more third parties appointed by the Bank (which may be
affiliates of the Bank); provided that the Bank shall be liable for the
performance of any such third party to the same extent as the Bank would have
been if it performed such services itself.
9. Nominees.
Securities which are ordinarily held in registered form may be
registered in a nominee name of the Bank, Subcustodian or securities
depository, as the case may be. The Bank may without notice to the Customer
cause any such Securities to cease to be registered in the name of any such
nominee and to be registered in the name of the Customer. In the event that
any Securities registered in a nominee name are called for partial redemption
by the issuer, the Bank may allot the called portion to the respective
beneficial holders of such class of security in any manner the Bank deems to
be fair and equitable. The Customer agrees to hold the Bank, Subcustodians,
and their respective nominees harmless from any liability arising directly or
indirectly from their status as a mere record holder of Securities in the
Custody Account.
10. Authorized Persons.
As used in this Agreement, the term "Authorized Person" means employees
or agents including investment managers as have been designated by written
notice from the Customer or its designated agent to act on behalf of the
Customer under this Agreement. Such persons shall continue to be Authorized
Persons until such time as the Bank receives Instructions from the Customer
or its designated agent that any such employee or agent is no longer an
Authorized Person.
11. Instructions.
The term "Instructions" means instructions of any Authorized Person
received by the Bank, via telephone, telex, TWX, facsimile transmission, bank
wire or other teleprocess or electronic instruction or trade information
system acceptable to the Bank which the Bank reasonably believes in good
faith to have been given by Authorized Persons or which are transmitted with
proper testing or authentication pursuant to terms and conditions which the
Bank may specify. Unless otherwise expressly provided, all Instructions
shall continue in full force and effect until canceled or superseded. For
purposes hereof, reasonableness shall mean compliance with applicable
procedures.
Any Instructions delivered to the Bank by telephone (including cash
transfer instructions as described below) shall promptly thereafter be
confirmed in writing by any two Authorized Persons (which confirmation may
bear the facsimile signature of such Persons), but the Customer will hold the
Bank harmless for the failure of such Authorized Persons to send such
confirmation in writing, the failure of such confirmation to conform to the
telephone instructions received or the Bank's failure to produce such
confirmation at any subsequent time; provided that, where the Bank receives
a telephone Instruction from an Authorized Person requiring the transfer of
cash, prior to executing such Instruction the Bank will, to confirm such
Instruction, call back any one of the individuals on a list of persons
authorized to confirm such oral transfer Instructions (which Person shall be
a person other than the initiator of the transfer Instruction) and the Bank
shall not execute the Instruction until it has received such confirmation.
Either party may electronically record any Instructions given by telephone,
and any other telephone discussions with respect to the Custody Account. The
Customer shall be responsible for safeguarding any testkeys, identification
codes or other security devices which the Bank shall make available to the
Customer or its Authorized Persons.
12. Standard of Care; Liabilities.
(a) The Bank shall be responsible for the performance of only such
duties as are set forth in this Agreement or expressly contained in
Instructions which are consistent with the provisions of this Agreement as
follows:
(i) The Bank will use reasonable care with respect to its obligations
under this Agreement and the safekeeping of Assets. The Bank shall be liable
to the Customer for any loss which shall occur as the result of the failure
of a Subcustodian to exercise reasonable care with respect to the safekeeping
of such Assets to the same extent that the Bank would be liable to the
Customer if the Bank were holding such Assets in New York. In the event that
Securities are lost by reason of the failure of the Bank or its Subcustodian
to use reasonable care, the Bank shall be liable to the Customer based on the
market value of the property which is the subject of the loss on the date it
is replaced by the Bank and without reference to any special conditions or
circumstances, it being understood that for purposes of measuring damages
hereunder, the value of Securities which are sold by the Customer prior to
the replacement thereof shall be equal to the sale price thereof less the
expenses of such sale incurred by the Customer. The Bank shall act with
reasonable promptness in making such replacements. In no event shall the
Bank be liable for special, indirect or consequential loss or damage of any
kind whatsoever (including but not limited to lost profits), even if the Bank
has been advised of the likelihood of such loss or damage and regardless of
the form of action. Subject to the Bank's obligations pursuant to Section 4(e)
hereof, the Bank will not be responsible for the insolvency of any
Subcustodian which is not a branch or affiliate of Bank.
(ii) The Bank will not be responsible for any act, omission, default or
the solvency of any broker or agent which it or a Subcustodian appoints
unless such appointment was made negligently or in bad faith.
(iii) (a) The Bank shall be indemnified by, and without liability to
the Customer for any action taken or omitted by the Bank whether pursuant to
Instructions or otherwise pursuant to this Agreement if such act or omission
was in good faith, without negligence. In performing its obligations under
this Agreement, the Bank may rely on the genuineness of any Customer document
which it reasonably believes in good faith to have been validly executed.
(b) The Bank shall hold Customer harmless from, and shall indemnify Customer
for, any loss, liability, claim or expense incurred by Customer (including,
but not limited to, Customer's reasonable legal fees) to the extent that such
loss, liability, claim or expense arises from the negligence or willful mis-
conduct on the part of the Bank or a Subcustodian; provided that, in no event
shall the Bank be liable for special, indirect or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits),
even if the Bank has been advised of the likelihood of such loss or damage
and regardless of the form of action. Subject to the Bank's obligations
pursuant to Section 4(e) hereof, the Bank will not be responsible for the
insolvency of any Subcustodian which is not a branch or affiliate of Bank.
(iv) The Customer agrees to pay for and hold the Bank harmless from any
liability or loss resulting from the imposition or assessment of any taxes or
other governmental charges, and any related expenses with respect to income
from or Assets in the Accounts.
(v) The Bank shall be entitled to rely, and may act, upon the advice of
counsel (who may be counsel for the Customer) on all matters and shall be
without liability for any action reasonably taken or omitted pursuant to such
advice.
(vi) The Bank need not maintain any insurance for the benefit of the
Customer.
(vii) Without limiting the foregoing, the Bank shall not be liable
for any loss which results from: 1) the general risk of investing, or 2)
investing or holding Assets in a particular country including, but not
limited to, losses resulting from nationalization, expropriation or other
governmental actions; regulation of the banking or securities industry;
currency restrictions, devaluations or fluctuations; and market conditions
which prevent the orderly execution of securities transactions or affect the
value of Assets.
(viii) Neither party shall be liable to the other for any loss due to
forces beyond their control including, but not limited to strikes or work
stoppages, acts of war or terrorism, insurrection, revolution, nuclear
fusion, fission or radiation, or acts of God.
(b) Consistent with and without limiting the first paragraph of this
Section 12, it is specifically acknowledged that the Bank shall have no duty
or responsibility to:
(i) question Instructions or make any suggestions to the Customer or an
Authorized Person regarding such Instructions;
(ii) supervise or make recommendations with respect to investments or
the retention of Securities;
(iii) advise the Customer or an Authorized Person regarding any
default in the payment of principal or income of any security other than a
Security.
(iv) except as may be otherwise provided in any securities lending
agreement between the Customer and the Bank, evaluate or report to the
Customer or an Authorized Person regarding the financial condition of any
broker, agent or other party to which Securities are delivered or payments
are made pursuant to this Agreement;
(v) except for trades settled at DTC where the broker provides to the
Bank the trade confirmation and the Customer provides for the Bank to receive
the trade instruction, review or reconcile trade confirmations received from
brokers. The Customer or its Authorized Persons (as defined in Section 10)
issuing Instructions shall bear any responsibility to review such
confirmations against Instructions issued to and statements issued by the
Bank.
(c) The Customer authorizes the Bank to act, hereunder, in its capacity
as a custodian notwithstanding that the Bank or any of its divisions or
affiliates may have a material interest in a transaction, or circumstances
are such that the Bank may have a potential conflict of duty or interest
including the fact that the Bank or any of its affiliates may provide
brokerage services to other customers, act as financial advisor to the issuer
of Securities, act as a lender to the issuer of Securities, act in the same
transaction as agent for more than one customer, have a material interest in
the issue of Securities, or earn profits from any of the activities listed
herein.
13. Fees and Expenses.
The Customer agrees to pay the Bank for its services under this
Agreement such amount as may be agreed upon in writing ("Fee Schedule"),
together with the Bank's reasonable out-of-pocket or incidental expenses (as
further defined in the Fee Schedule), including, but not limited to, legal
fees. The Bank shall have a lien on and is authorized to charge any Accounts
of the Customer for any amount owing to the Bank under any provision of this
Agreement.
14. Miscellaneous.
(a) Foreign Exchange Transactions. To facilitate the administration of
the Customer's trading and investment activity, the Bank is authorized to
enter into spot or forward foreign exchange contracts with the Customer or an
Authorized Person for the Customer and may also provide foreign exchange
through its subsidiaries, affiliates or Subcustodians. Instructions,
including standing instructions, may be issued with respect to such contracts
but the Bank may establish rules or limitations concerning any foreign
exchange facility made available. In all cases where the Bank, its
subsidiaries, affiliates or Subcustodians enter into a foreign exchange
contract related to Accounts, the terms and conditions of the then current
foreign exchange contract of the Bank, its subsidiary, affiliate or
Subcustodian and, to the extent not inconsistent, this Agreement shall apply
to such transaction.
(b) Certification of Residency, etc. The Customer certifies that it is
a resident of the United States and agrees to notify the Bank of any changes
in residency. The Bank may rely upon this certification or the certification
of such other facts as may be required to administer the Bank's obligations
under this Agreement. The Customer will indemnify the Bank against all
losses, liability, claims or demands arising directly or indirectly from any
such certifications.
(c) Access to Records. Applicable accounts, books and records of the
Bank shall be open to inspection and audit at all reasonable times during
normal business hours upon reasonable advance notice by Customer s
independent public accountants and by employees of Customer designated to the
Bank. All such materials shall, to the extent applicable, be maintained and
preserved in conformity with the Act and the rules and regulations
thereunder, including without limitation, SEC Rules 31a-1 and 31a-2. Subject
to restrictions under applicable law, the Bank shall also obtain an
undertaking to permit the Customer's independent public accountants
reasonable access to the records of any Subcustodian which has physical
possession of any Assets as may be required in connection with the
examination of the Customer's books and records.
(d) Governing Law; Successors and Assigns. This Agreement shall be
governed by the laws of the State of New York and shall not be assignable by
either party, but shall bind the successors in interest of the Customer and
the Bank.
(e) Entire Agreement; Applicable Riders. Customer represents that the
Assets deposited in the Accounts are Mutual Fund assets subject to certain
Securities and Exchange Commission ("SEC") rules and regulations.
This Agreement consists exclusively of this document together with
Schedules A and B, Appendices 1 and 2, Exhibits I - _______ and the following
Rider(s) [Check applicable rider(s)]:
X MUTUAL FUND
----
X SPECIAL TERMS AND CONDITIONS
----
There are no other provisions of this Agreement, and this Agreement
supersedes any other agreements, whether written or oral, between the
parties. Any amendment to this Agreement must be in writing, executed by
both parties.
(f) Severability. In the event that one or more provisions of this
Agreement are held invalid, illegal or unenforceable in any respect on the
basis of any particular circumstances or in any jurisdiction, the validity,
legality and enforceability of such provision or provisions under other
circumstances or in other jurisdictions and of the remaining provisions will
not in any way be affected or impaired.
(g) Waiver. Except as otherwise provided in this Agreement, no failure
or delay on the part of either party in exercising any power or right under
this Agreement operates as a waiver, nor does any single or partial exercise
of any power or right preclude any other or further exercise, or the exercise
of any other power or right. No waiver by a party of any provision of this
Agreement, or waiver of any breach or default, is effective unless in writing
and signed by the party against whom the waiver is to be enforced.
(h) Notices. All notices under this Agreement shall be effective when
actually received. Any notices or other communications which may be required
under this Agreement are to be sent to the parties at the following addresses
or such other addresses as may subsequently be given to the other party in
writing:
Bank: The Chase Manhattan Bank, N.A.
4 Chase MetroTech Center
Brooklyn, NY 11245
Attention: Global Custody Division
or telex:
-------------------------------------
Customer: Delaware Group of Funds
1818 Market St.
Philadelphia, PA 19103
att: Messrs. Bishof and O Conner
or telex:
--------------------------------------
(i) Termination. This Agreement may be terminated by the Customer or
the Bank by giving sixty (60) days written notice to the other, provided that
such notice to the Bank shall specify the names of the persons to whom the
Bank shall deliver the Assets in the Accounts. If notice of termination is
given by the Bank, the Customer shall, within sixty (60) days following
receipt of the notice, deliver to the Bank Instructions specifying the names
of the persons to whom the Bank shall deliver the Assets. In either case the
Bank will deliver the Assets to the persons so specified, after deducting any
amounts which the Bank determines in good faith to be owed to it under
Section 13. If within sixty (60) days following receipt of a notice of
termination by the Bank, the Bank does not receive Instructions from the
Customer specifying the names of the persons to whom the Bank shall deliver
the Assets, the Bank, at its election, may deliver the Assets to a bank or
trust company doing business in the State of New York to be held and disposed
of pursuant to the provisions of this Agreement, or to Authorized Persons, or
may continue to hold the Assets until Instructions are provided to the Bank;
provided that, where the Bank is the terminating party and the Bank had not
notified the Customer that termination was for breach of this Agreement by
the Customer, such 60 day period shall be extended for an additional period
as requested by Customer of up to 120 days.
Termination as to One or More Series. This Agreement may be terminated
as to one or more Series (but less than all the Series) by delivery of an
amended Schedule A deleting such Series, in which case termination as to the
deleted Series shall take effect sixty (60) days after the date of such
delivery. The execution and delivery of an amended Schedule A which deletes
one or more Series, shall constitute a termination hereof only with respect
to such deleted Series, shall be governed by the preceding provisions of
Section 14 as to the identification of a successor custodian and the delivery
of the Assets of the Series so deleted to such successor custodian, and shall
not affect the obligations of the Bank and the Customer hereunder with
respect to the other Series set forth in Schedule A, as amended from time to
time.
(j) Several Obligations of the Series. With respect to any obligations
of the Customer on behalf of the Series and their related Accounts arising
hereunder, the Custodian shall look for payment or satisfaction of any such
obligation solely to the assets and property of the Series and such Accounts
to which such obligation relates as though the Customer had separately
contracted with the Custodian by separate written instrument with respect to
each Series and its Accounts.
CUSTOMER
By: /s/ Michael P. Bishof
---------------------
Title Vice President and Treasurer
THE CHASE MANHATTAN BANK, N.A.
By: /s/ Rosemary M. Stidmon
-----------------------
Title Vice President
STATE OF Pennsylvania)
: ss.
COUNTY OF Philadelphia)
On this 9th day of July, 1996, before me personally came Michael P. Bishof,
to me known, who being by me duly sworn, did depose and say that he resides
in Blue Bell, PA at 110 Spyglass Drive; that he is Vice President/Treasurer
of Delaware Group of Funds, the entity described in and which executed the
foregoing instrument; that he knows the seal of said entity, that the seal
affixed to said instrument is such seal, that it was so affixed by order of
said entity, and that he signed his name thereto by like order.
/s/ Maritza H. Cruzado
-----------------------
Maritza H. Cruzado
Notary
Sworn to before me this 9th
day of July, 1996.
STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK )
On this 24th day of May, 1996, before me personally came Rosemary
Stidmon, to me known, who being by me duly sworn, did depose and say that she
resides in New Providence, NJ at 31 Sagamore Drive; that she is a Vice
President of THE CHASE MANHATTAN BANK, (National Association), the
corporation described in and which executed the foregoing instrument; that
she knows the seal of said corporation, that the seal affixed to said
instrument is such corporate seal, that it was so affixed by order of the
Board of Directors of said corporation, and that she signed her name thereto
by like order.
Sworn to before me this 24th
day of May, 1996.
/s/ Laiyee Ng
- -------------
Laiyee Ng
Notary
Schedule A
Delaware Pooled Trust, Inc. - Global Fixed Income Portfolio
Delaware Pooled Trust, Inc. - International Equity Portfolio
Delaware Pooled Trust, Inc. - Labor Select International Equity Portfolio
Delaware Pooled Trust, Inc. - Real Estate Investment Trust Portfolio
Delaware Pooled Trust, Inc. - High Yield Portfolio
Delaware Pooled Trust, Inc. - International Fixed Income Portfolio
Delaware Pooled Trust, Inc. - Defensive Equity Utility Portfolio
Delaware Group Global & International Funds, Inc. - International Equity Fund
Delaware Group Global & International Funds, Inc. - Global Assets Fund
Delaware Group Global & International Funds, Inc. - Global Bond Fund
Delaware Group Global & International Funds, Inc. - Emerging Markets Fund
Delaware Group Premium Fund, Inc. - International Equity Series
Delaware Group Premium Fund, Inc. - Equity Income Series
Delaware Group Premium Fund, Inc. - High Yield Series
Delaware Group Premium Fund, Inc. - Capital Reserves Series
Delaware Group Premium Fund, Inc. - Money Market Series
Delaware Group Premium Fund, Inc. - Growth Series
Delaware Group Premium Fund, Inc. - Multiple Strategy Series
Delaware Group Premium Fund, Inc. - Value Series
Delaware Group Premium Fund, Inc. - Emerging Growth Series
Delaware Group Premium Fund, Inc. - Global Bond Series
Delaware Group Delchester High-Yield Bond Fund, Inc.
Delaware Group Delaware Fund, Inc. - Delaware Fund
Delaware Group Delaware Fund, Inc. - Devon Fund
Delaware Group Value Fund, Inc.
Delaware Group DelCap Fund, Inc.
Delaware Group Dividend & Income Fund, Inc.
Delaware Group Advisor Funds, Inc. - Enterprise Fund
Delaware Group Advisor Funds, Inc. - U.S. Growth Fund
Delaware Group Advisor Funds, Inc. - World Growth Fund
Delaware Group Advisor Funds, Inc. - New Pacific Fund
Delaware Group Advisor Funds, Inc. - Federal Bond Fund
Delaware Group Advisor Funds, Inc. - Corporate Income Fund
March, 1996 Schedule B
SUB-CUSTODIANS EMPLOYED BY
THE CHASE MANHATTAN BANK, N.A. LONDON, GLOBAL CUSTODY
<TABLE>
<CAPTION>
<S> <C> <C>
COUNTRY SUB-CUSTODIAN CORRESPONDENT BANK
ARGENTINA The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Arenales 707, 5th Floor Buenos Aires
De Mayo 130/140
1061Buenos Aires
ARGENTINA
AUSTRALIA The Chase Manhattan Bank The Chase Manhattan Bank
Australia Limited Australia Limited
36th Floor Sydney
World Trade Centre
Jamison Street
Sydney
New South Wales 2000
AUSTRALIA
AUSTRIA Creditanstalt - Bankverein Credit Lyonnais
Schottengasse 6 Vienna
A - 1011, Vienna
AUSTRIA
BANGLADESH Standard Chartered Bank Standard Chartered Bank
18-20 Motijheel C.A. Dhaka
Box 536,
Dhaka-1000
BANGLADESH
BELGIUM Generale Bank Credit Lyonnais Bank
3 Montagne Du Parc Brussels
1000 Bruxelles
BELGIUM
BOTSWANA Barclays Bank of Botswana Limited Barclays Bank of Botswana
Barclays House Gaborone
Khama Crescent
Gaborone
BOTSWANA
BRAZIL Banco Chase Manhattan, S.A. Banco Chase Manhattan S.A.
Chase Manhattan Center Sao Paulo
Rua Verbo Divino, 1400
Sao Paulo, SP 04719-002
BRAZIL
CANADA The Royal Bank of Canada Royal Bank of Canada
Royal Bank Plaza Toronto
Toronto
Ontario M5J 2J5
CANADA
Canada Trust Royal Bank of Canada
Canada Trust Tower Toronto
BCE Place
161 Bay at Front
Toronto
Ontario M5J 2T2
CANADA
CHILE The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Agustinas 1235 Santiago
Casilla 9192
Santiago
CHILE
COLOMBIA Cititrust Colombia S.A. Cititrust Colombia S.A.
Sociedad Fiduciaria Sociedad Fiduciaria
Carrera 9a No 99-02 Santafe de Bogota
Santafe de Bogota, DC
COLOMBIA
CZECH REPUBLIC
Ceskoslovenska Obchodni Banka, A.S. Komercni Banka, A.S.,
Na Prikope 14 Praha
115 20 Praha 1
CZECH REPUBLIC
DENMARK Den Danske Bank Den Danske Bank
2 Holmens Kanala DK 1091 Copenhagen
Copenhagen
DENMARK
EGYPT National Bank of Egypt National Bank of Egypt
24 Sherif Street Cairo
Cairo
EGYPT
EUROBONDS Cedel S.A. ECU:Lloyds Bank PLC
67 Boulevard Grande Duchesse Charlotte International Banking Division
LUXEMBOURG London
A/c The Chase Manhattan Bank, N.A. For all other currencies: see
London relevant country
A/c No. 17817
EURO CDS First Chicago Clearing Centre ECU:Lloyds Bank PLC
27 Leadenhall Street Banking Division London
London EC3A 1AA For all other currencies: see
UNITED KINGDOM relevant country
FINLAND Merita Bank KOP Merita Bank KOP
Aleksis Kiven 3-5 Helsinki
00500 Helsinki
FINLAND
FRANCE Banque Paribas Societe Generale
Ref 256 Paris
BP 141
3, Rue D'Antin
75078 Paris
Cedex 02
FRANCE
GERMANY Chase Bank A.G. Chase Bank A.G.
Alexanderstrasse 59 Frankfurt
Postfach 90 01 09
60441 Frankfurt/Main
GERMANY
GHANA Barclays Bank of Ghana Barclays Bank
Barclays House Accra
High Street
Accra
GHANA
GREECE Barclays Bank Plc National Bank of Greece S.A.
1 Kolokotroni Street Athens
10562 Athens A/c Chase Manhattan Bank, N.A.,
GREECE London
A/c No. 040/7/921578-68
HONG KONG The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
40/F One Exchange Square Hong Kong
8, Connaught Place
Central, Hong Kong
HONG KONG
HUNGARY Citibank Budapest Rt. Citibank Budapest Rt.
Vaci Utca 19-21 Budapest
1052 Budapest V
HUNGARY
INDIA The Hongkong and Shanghai The Hongkong and Shanghai
Banking Corporation Limited Banking Corporation Limited
52/60 Mahatma Gandhi Road Bombay
Bombay 400 001
INDIA
Deutsche Bank AG, Bombay Branch Deutsche Bank
Securities & Custody Services Bombay
Kodak House
222 D.N. Road, Fort
Bombay 400 001
INDIA
INDONESIA The Hongkong and Shanghai The Chase Manhattan Bank, N.A.
Banking Corporation Limited Jakarta
World Trade Center
J1. Jend Sudirman Kav. 29-31
Jakarta 10023
INDONESIA
IRELAND Bank of Ireland Allied Irish Bank
International Financial Services Centre Dublin
1 Harbourmaster Place
Dublin 1
IRELAND
ISRAEL Bank Leumi Le-Israel B.M. Bank Leumi Le-Israel B.M.
19 Herzl Street Tel Aviv
61000 Tel Aviv
ISRAEL
ITALY The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Piazza Meda 1 Milan
20121 Milan
ITALY
JAPAN The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
1-3 Marunouchi 1-Chome Tokyo
Chiyoda-Ku
Tokyo 100
JAPAN
JORDAN Arab Bank Limited Arab Bank Limited
P O Box 950544-5 Amman
Amman
Shmeisani
JORDAN
KENYA Barclays Bank of Kenya Barclays Bank of Kenya
Third Floor Nairobi
Queensway House
Nairobi
Kenya
LUXEMBOURG
Banque Generale du Luxembourg S.A. Banque Generale du Luxembourg
50 Avenue J.F. Kennedy S.A.
L-2951 LUXEMBOURG Luxembourg
MALAYSIA The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Pernas International Kuala Lumpur
Jalan Sultan Ismail
50250, Kuala Lumpur
MALAYSIA
MAURITIUS Hongkong and Shanghai Banking The Hongkong and Shanghai Banking
Corporation Ltd Corporation Ltd.
Curepipe Road Curepipe
Curepipe
MAURITIUS
MEXICO The Chase Manhattan Bank, S.A. No correspondent Bank
(Equities)Montes Urales no. 470, 4th Floor
Col. Lomas de Chapultepec
11000 Mexico D.F.
(Government Banco Nacional de Mexico, No correspondent Bank
Bonds) Avenida Juarez No. 104 - 11 Piso
06040 Mexico D.F.
MEXICO
MOROCCO Banque Commerciale du Maroc Banque Commerciale du Maroc
2 Boulevard Moulay Youssef Casablanca
Casablanca 20000
MOROCCO
NETHERLANDS
ABN AMRO N.V. Generale Bank
Securities Centre Nederland N.V.
P O Box 3200 Rotterdam
4800 De Breda
NETHERLANDS
NEW ZEALAND
National Nominees Limited National Bank of New Zealand
Level 2 BNZ Tower Wellington
125 Queen Street
Auckland
NEW ZEALAND
NORWAY Den Norske Bank Den Norske Bank
Kirkegaten 21 Oslo
Oslo 1
NORWAY
PAKISTAN Citibank N.A. Citibank N.A.
I.I. Chundrigar Road Karachi
AWT Plaza
Karachi
PAKISTAN
Deutsche Bank Deutsche Bank
Unitowers Karachi
I.I. Chundrigar Road
Karachi
PAKISTAN
PERU Citibank, N.A. Citibank N.A.
Camino Real 457 Lima
CC Torre Real - 5th Floor
San Isidro, Lima 27
PERU
PHILIPPINES
The Hongkong and Shanghai The Hongkong and Shanghai
Banking Corporation Limited Banking Corporation Limited
Hong Kong Bank Centre 3/F Manila
San Miguel Avenue
Ortigas Commercial Centre
Pasig Metro Manila
PHILIPPINES
POLAND Bank Polska Kasa Opieki S.A. Bank Polska Kasa Opieki S.A.
Curtis Plaza Warsaw
Woloska 18
02-675 Warsaw
POLAND
For Mutual Funds:
Bank Handlowy W. Warsawie. S.A. Bank Polska Kasa Opieki S.A.
Custody Dept. Warsaw
Capital Markets Centre
Ul, Nowy Swiat 6/12
00-920 Warsaw
POLAND
PORTUGAL Banco Espirito Santo & Comercial Banco Nacional Ultra Marino
de Lisboa Lisbon
Servico de Gestaode Titulos
R. Mouzinho da Silveira, 36 r/c
1200 Lisbon
PORTUGAL
SHANGHAI The Hongkong and Shanghai Citibank
(CHINA) Banking Corporation Limited New York
Shanghai Branch
Corporate Banking Centre
Unit 504, 5/F Shanghai Centre
1376 Nanjing Xi Lu
Shanghai
THE PEOPLE'S REPUBLIC OF CHINA
SHENZHEN The Hongkong and Shanghai The Chase Manhattan Bank, N.A.
(CHINA) Banking Corporation Limited Hong Kong
1st Floor
Central Plaza Hotel
No.1 Chun Feng Lu
Shenzhen
THE PEOPLE'S REPUBLIC OF CHINA
SINGAPORE The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Shell Tower Singapore
50 Raffles Place
Singapore 0104
SINGAPORE
SLOVAK REPUBLIC
Ceskoslovenska Obchodni Banka, A.S. Ceskoslovenska Obchodni Banka
Michalska 18 Slovak Republic
815 63 Bratislava
SLOVAK REPUBLIC
SOUTH AFRICA
Standard Bank of South Africa Standard Bank of South Africa
Standard Bank Chambers South Africa
46 Marshall Street
Johannesburg 2001
SOUTH AFRICA
SOUTH KOREA
The Hongkong & Shanghai The Hongkong & Shanghai
Banking Corporation Limited Banking Corporation Limited
6/F Kyobo Building Seoul
#1 Chongro, 1-ka Chongro-Ku,
Seoul
SOUTH KOREA
SPAIN The Chase Manhattan Bank, N.A. Banco Bilbao Vizcaya,
Calle Peonias 2 Madrid
7th Floor
La Piovera
28042 Madrid
SPAIN
SRI LANKA The Hongkong & Shanghai The Hongkong & Shangai
Banking Corporation Limited Banking Corporation Limited
Unit #02-02 West Block, Colombo
World Trade Center
Colombo 1,
SRI LANKA
SWEDEN Skandinaviska Enskilda Banken Svenska Handelsbanken
Kungstradgardsgatan 8 Stockholm
Stockholm S-106 40
SWEDEN
SWITZERLAND
Union Bank of Switzerland Union Bank of Switzerland
45 Bahnhofstrasse Zurich
8021 Zurich
SWITZERLAND
TAIWAN The Chase Manhattan Bank, N.A. No correspondent Bank
115 Min Sheng East Road - Sec 3,
9th Floor
Taipei
TAIWAN
Republic of China
THAILAND The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Bubhajit Building Bangkok
20 North Sathorn Road
Silom, Bangrak
Bangkok 10500
THAILAND
TUNISIA Banque Internationale Arabe de Tunisie Banque Internationale Arabe de
70-72 Avenue Habib Bourguiba Tunisie, Tunisia
P.O. Box 520
1080 Tunis Cedex
Tunisia
TURKEY The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Emirhan Cad. No: 145 Istanbul
Atakule, A Blok Kat:11
80700-Dikilitas/Besiktas
Istanbul
Turkey
U.K. The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Woolgate House London
Coleman Street
London EC2P 2HD
UNITED KINGDOM
URUGUAY The First National Bank of Boston The First National Bank of Boston
Zabala 1463 Montevideo
Montevideo
URUGUAY
U.S.A. The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
1 Chase Manhattan Plaza New York
New York
NY 10081
U.S.A.
VENEZUELA Citibank N.A. Citibank N.A.
Carmelitas a Altagracia Caracas
Edificio Citibank
Caracas 1010
VENEZUELA
ZAMBIA Barclays Bank of Zambia Barclays Bank of Zambia
Kafue House Lusaka
Cairo Road
P.O.Box 31936
Lusaka
ZAMBIA
ZIMBABWE Barclays Bank of Zimbabwe Barclays Bank of Zimbabwe
Ground Floor Harare
Tanganyika House
Corner of 3rd Street & Union Avenue
Harare
ZIMBABWE
</TABLE>
<PAGE>
SECURITIES LENDING AGREEMENT ("Lending Agreement"), dated as of
_______________ , 1996 between ____________________ ("Lender"), having its
principal place of business at ____________________ , and The Chase Manhattan
Bank, N.A. ("Chase"), having its principal place of business at One Chase
Manhattan Plaza, New York, New York 10081.
It is hereby agreed as follows:
Section 1 - Definitions
Unless the context clearly requires otherwise, the following words
shall have the meanings set forth below when used herein:
a. "Account" shall mean the securities account established and
maintained by Chase on behalf of Lender pursuant to, as the case may be, a
separate custody agreement or a separate directed trust agreement ("Agreement")
between Chase and Lender, which Agreement provides, inter alia, for the
safekeeping of Securities received by Chase from time to time on behalf of
Lender.
b. "Agreement" shall have the meaning assigned thereto in Section 1(a)
hereof.
c. "Authorized Investment" shall mean any type of instrument, security,
participation or other property in which Cash Collateral may be invested or
reinvested, as described in Section 5(f) hereof and Appendix 4 hereto (and as
such Appendix may be amended from time to time by written agreement of the
parties).
d. "Authorized Person" shall mean, except to the extent that Chase is
advised to the contrary by Proper Instruction, any person who is authorized to
give instructions to Chase pursuant to the Agreement and any mandates given to
Chase in connection with such Agreement. An Authorized Person shall continue to
be so until such time as Chase receives Proper Instructions that nay such person
is no longer an Authorized Person.
e. "Borrower" shall mean an entity listed on Appendix 1 hereto, other
than an entity which Chase shall have been instructed to delete from list
pursuant to Written Instructions and as such Appendix may be amended in
accordance with Section 4(b) hereof.
f. "Business Day" shall have the meaning assigned thereto in the
applicable MSLA.
g. "Buy-in" shall have the meaning assigned thereto in Section 7(c)
hereof.
<PAGE>
h. "Cash Collateral" shall mean fed funds, New York Clearing House
Association funds and such non-U.S. currencies as may be pledged by a Borrower
in connection with a particular Loan.
i. "Collateral" shall have the meaning assigned thereto in the
applicable MSLA, together with Cash Collateral.
j. "Collateral Account" shall mean, as the case may be, an account
maintained by Chase with itself, with any Depository or with any Triparty
Institution and designated as a Collateral Account for the purpose of holding
any one or more of Collateral, Authorized Investments, and Proceeds in
connection with Loans hereunder.
k. "Collateral Amount" shall have the meaning assigned thereto in
Section 5(c) hereof.
l. "Collateral Criterion" shall have the meaning assigned thereto in
Section 5(c) hereof.
m. "Depository" shall mean: (1) the Depository Trust Company, the
Participants' Trust Company and any other securities depository or clearing
agency (and each of their respective successors and nominees) registered with
the U.S. Securities and Exchange Commission or registered with or regulated by
the applicable foreign equivalent thereof or otherwise able to act as a
securities depository or clearing agency, (ii) any transnational depository,
(iii) the Federal Reserve book-entry system for the receiving and delivering of
U.S. Government Securities, and (iv) any other national system for the receiving
and delivering of that country's government securities.
n. "Difference" shall have the meaning assigned thereto in Section 7(c)
hereof.
o. "Distributions" shall have the meaning assigned thereto in Section
3(b)(v) hereof.
p. "Dollars" shall have the meaning assigned thereto in Section 7(b)
hereof.
q. "Due Date" shall have the meaning assigned thereto in Section 7(b)
hereof.
r. "Insolvency Event" shall have the meaning assigned thereto in
Section 7(b) hereof.
s. "Letter of Credit" shall have the meaning assigned thereto in the
applicable MSLA and be issued by a bank listed on Appendix 2 hereto (as such
list may be amended by Chase from time to time on notice to Lender), other than
a bank deleted from such list pursuant to Written Instruction.
<PAGE>
t. "Loan" shall mean a loan of Securities hereunder and under the
applicable MSLA.
u. "Loan Fee" shall mean the amount payable by a Borrower to Chase
pursuant to the applicable MSLA in connection with Loans collateralized other
than by Cash Collateral.
v. "Market Value" shall have the meaning assigned thereto in the
applicable MSLA.
w. "MSLA" shall mean a master securities lending agreement between
Chase and a Borrower, pursuant to which Chase as agent lends securities on
behalf of its customers (including Lender) from time to time. A copy of Chase's
standard form of MSLA, including the international addendum thereto, is annexed
as Appendix 3.
x. "Net Assets" shall have the meaning assigned thereto in Section 8
hereof.
y. "Net Realized Income" shall have the meaning thereto in Section 8
hereof.
z. "Oral Instructions" shall have the meaning assigned thereto in
Section 10 hereof.
aa. "Proceeds" shall mean interest, dividends and other payments and
Distributions received by Chase in connection with Authorized Investments.
bb. "Proper Instructions" shall mean Oral Instructions and Written
Instructions.
cc. "Rebate" shall mean the amount payable by Chase on behalf of Lender
to a Borrower in connection with Loans collateralized by Cash Collateral.
dd. "Return Date" shall have the meaning assigned thereto in Section
7(c) hereof.
ee. "Securities" shall mean government securities (including U.S.
Government Securities), equity securities, bonds, debentures, other corporate
debt securities, notes, mortgages or other obligations, and any certificates,
warrants or other instruments representing rights to receive, purchase, or
subscribe for the same, or evidencing or representing any other rights or
interests therein and held pursuant to the Agreement.
ff. "Term Loan" shall have the meaning assigned thereto in Section 5(i)
hereof.
<PAGE>
gg. "Triparty Institution" shall mean a financial institution with
which Chase shall have previously entered a triparty agreement among itself,
such Triparty Institution and a particular Borrower providing, among other
things, for the holding of Collateral in a Collateral Account at such Triparty
Institution in Chase's name on behalf of Chase's lending customers and for the
substitution of Collateral; provided, however, that any substituted Collateral
shall meet the then standards for acceptable Collateral set by Chase.
hh. "U.S. Government Security" shall mean book-entry securities issued
by the U.S. Treasury defined in Subpart 0 of Treasury Department Circular No.
300 and any successor provisions) and any other securities issued or fully
guaranteed by the United States government or any agency, instrumentality or
establishment of the U.S. government, including, without limitation, securities
commonly known as "Ginnie Maes," Sally Maes," "Fannie Maes" and "Freddie Maes".
ii. "Written Instructions" shall have the meaning assigned thereto in
Section 10 hereof.
Section 2 - Appointment, Authority
(a) Appointment. Lender hereby appoints Chase as its agent to lend
Securities in the Account on Lender's behalf on a fully disclosed basis to
Borrowers from time to time in accordance with the terms hereof and on such
terms and conditions and at such times as Chase shall determine and Chase may
exercise all rights and powers provided under any MSLA as may be incidental
thereto, and Chase hereby accepts appointment as such agent and agrees to so
act.
(b) Authority. Lender hereby authorizes and empowers Chase to execute
in Lender's name on its behalf and at its risk all agreements and documents as
may be necessary to carry out any of the powers herein granted to Chase. Lender
grants Chase the authority set forth herein notwithstanding its awareness that
Chase, in its individual capacity or acting in a fiduciary capacity for other
accounts, may have transactions with the same institutions to which Chase may be
lending Securities hereunder, which transactions may give rise to actual or
potential conflict of interest situations. Chase shall not be bound to: (i)
account to Lender for any sum received or profit made by Chase for its own
account or the account of any other person or (ii) disclose or refuse to
disclose any information or take any other action if the same would or might in
Chase's judgment, made in good faith, constitute a breach of any law or
regulation or be otherwise actionable with respect to Chase; provided that, in
circumstances mentioned in (ii) above, Chase shall promptly inform Lender of the
relevant facts (except where doing so would, or might in Chase's judgment, made
in good faith, constitute a breach of any law or regulation or be otherwise
actionable as aforesaid).
<PAGE>
Section 3 - Representation and Warranties
(a) Representations of each party. Each party hereto represents and
warrants to the other that: (i) it has the power to execute and deliver this
Lending Agreement, to enter into the transactions contemplated hereby, and to
perform its obligations hereunder; (ii) it has taken all necessary action to
authorize such execution, delivery, and performance; (iii) this Lending
Agreement constitutes a legal, valid, and binding obligation enforceable against
it; and (iv) the execution, delivery, and performance by it of this Lending
Agreement shall at all times comply with all applicable laws and regulations.
(b) Representations of Lender. Lender represents and warrants to Chase
that: (i) this Lending Agreement is, and each Loan shall be, legally and validly
entered into, and does not and shall not violate any statute, regulation, rule,
order or judgment binding on Lender, or any provision of Lender's charter or
by-laws, or any agreement binding on Lender or affecting its property, and is
enforceable against Lender in accordance with its terms, except as enforcement
may be limited by bankruptcy, insolvency or similar laws, or by equitable
principles relating to or limiting creditors' rights generally; (ii) the person
executing this Lending Agreement and all Authorized Persons acting on behalf of
Lender has and have been duly and properly authorized to do so; (iii) it is
lending Securities as principal and shall not transfer, assign or encumber its
interest in, or rights with respect to, any Securities available for Loan
hereunder; (iv) it is the beneficial owner of all Securities or otherwise has
the right to lend Securities; and (v) it is entitled to receive all interest,
dividends and other distributions ("Distributions") made by the issuer with
respect thereto. Lender shall promptly identify to Chase by notice, which notice
may be oral, any Securities that are no longer subject to the representations
contained in (b).
Section 4 - Borrowers
(a) MSLA. Lender hereby acknowledges receipt of the form of MSLA and
authorizes Chase to lend Securities in the Account to Borrowers thereunder
pursuant to an agreement substantially in the form thereof.
(b) Borrowers. Securities may be lent to any Borrower selected by Chase
in Chase's sole discretion, in accordance with the terms hereof. In that
connection, Appendix 1 may be amended from time to time by Chase on notice to
Lender.
<PAGE>
Section 5 - Loans
(a) Securities to be lent, Lending opportunities, Loan initiation. All
Securities of Lender held by Chase that are issued, settled or traded in the
markets that have been approved by Chase from time to time for purposes of
Chase's discretionary securities lending program shall be subject to the terms
hereof. Chase shall seek to assure that Lender receives a fair allocation of
lending opportunities vis-a-vis other lenders, taking into account the demand
for and availability of Securities, types of Collateral, eligibility of
Borrowers, limitations on investments of Cash Collateral, tax treatment, and
similar commercial factors. From time to time, Chase may lend to Borrowers
Securities held in the Account (except Securities that are no longer subject to
the representations set forth in Section 3) and shall deliver such Securities
against receipt of Collateral in accordance with the applicable MSLA. Chase
shall have the right to decline to make any Loans to any Borrower and to
discontinue lending to any Borrower in its sole discretion and without notice to
Lender.
(b) Receipt of Collateral, Collateral substitution. For each Loan,
Chase shall receive and hold Letters of Credit received as Collateral and Chase
or a Triparty Institution shall receive and hold all other Collateral required
by the applicable MSLA in a Collateral Account, and Chase is hereby authorized
and directed, without obtaining any further approval from Lender, to invest and
reinvest all or substantially all Cash Collateral. Chase shall credit, or where
applicable shall have a Triparty Institution credit, all Collateral, Authorized
Investments and Proceeds to a Collateral Account and Chase shall not mark its
books and records to identify Lender's interest therein, it being understood,
however, that all monies credited to a Collateral Account may for purposes of
investment be commingled with cash collateral held for other lenders of
securities on whose behalf Chase may act. Chase may, in its sole discretion,
liquidate any Authorized Investment and credit the net proceeds in a Collateral
Account. Chase shall accept substitutions of Collateral in accordance with the
applicable MSLA and shall credit, or where applicable shall have a Triparty
Institution credit, all such substitutions to a Collateral Account.
(c) Mark to market procedures. (i) Chase shall require initial
Collateral for a Loan in an amount determined by applying the then applicable
"Collateral Criterion" (as defined below) to the Market Value of the Security
that is the subject of the Loan. The Collateral Criterion with respect to a
given Security shall be an amount equal to the then applicable percentage
(currently 102% for securities issued in the U.S. and 105% for securities issued
outside of the U.S.) of the Market Value of the Security (plus accrued interest,
if any, with respect to debt securities) which is the subject of a Loan as
determined as of the close of trading on the preceding Business Day. (ii) Each
Business Day Chase shall determine if the Market Value of all Collateral
received by Chase from a given Borrower in connection with all loans to such
Borrower from all lenders is at least equal to the aggregate amount ("Collateral
Amount") determined by applying the applicable Collateral Criterion to each
security on loan to such Borrower from all lenders. (iii) In accordance with
general market practice, the Market Value of certain securities (including,
without limitation, U.S. Government Securities) whether on Loan or received as
Collateral, may be determined on a same day basis by reference to recognized
pricing services.
<PAGE>
(d) Demand for additional Collateral. If the determination made in
Section 5(c)(ii) above demonstrates that the Market Value of all Collateral
received from a given Borrower is not at least equal to the Collateral Amount,
Chase shall demand additional Collateral from such Borrower in accordance with
the applicable MSLA so as to meet the Collateral Amount by making specific
Loans; provided that, Chase may from time to time establish de minimis
guidelines pursuant to which a mark would not be made even where the aggregate
Collateral Amount has not been met.
(e) Changes in procedures applicable to Collateral. The Collateral
procedures set forth in Sections 5(b)-(d) above reflect Chase's current practice
and may be changed by Chase from time to time based on general market conditions
(including volatility of Securities on Loan and of securities Collateral), the
Market Value of Securities on Loan to a given Borrower, and in accordance with
general market practice and regulatory requirements. Chase shall notify Lender
of material revisions to the foregoing procedures.
(f) Investment of Cash Collateral. (i) Chase is hereby authorized to
invest and reinvest cash Collateral in accordance with the investment guidelines
(and the interpretations, procedures and definitions included therewith) annexed
hereto as Appendix 4. (ii) Authorized Investments are made for the account of,
and at the sole risk of, Lender. In that connection, Lender shall pay to Chase
on demand in cash an amount equal to any deficiency in the amount of Collateral
available for return to a Borrower pursuant to an applicable MSLA.
(g) Lender's rights with respect to Securities on Loan; Distribution
and voting rights. (i) An amount equal to the amount of all Distributions paid
with respect to Securities on Loan that Lender would have received had such
Securities not been on Loan shall be credited to Lender's account on the date
such Distributions are delivered by Borrower to Chase. Any non-cash Distribution
on Securities on Loan which is in the nature of a stock split or a stock
dividend, shall be added to the Loan (and shall be considered to constitute
Securities on Loan) as of the date such non-cash Distribution is received by the
Borrower and shall be subject to the provisions of this Lending Agreement;
provided that the Lender may, by giving chase ten (10) Business Days' notice
prior to the date of such non-cash Distribution (or such different amount of
time as Chase may from time to time require on advice to Lender), direct Chase
to request that the Borrower deliver such non-cash Distribution to Chase
pursuant to the applicable MSLA, in which case Chase shall credit such non-cash
Distribution to Lender's account on the date it is delivered to Chase. Without
regard to the reference to "delivered" in the foregoing, the "AutoCredit"
provisions of the Agreement shall apply where a Borrower fails to make a
Distribution payment to Chase, the effect of which would be for Chase to credit
Lender's account with Distributions on the payable date. (ii) During the term of
any Loan, Chase will permit the Securities on Loan to be transferred into the
name of and be voted by the Borrower or others. Lender shall not be entitled to
participate in any dividend reinvestment program or to vote proxies with respect
to Securities that are eligible for Loan (whether or not actually on Loan) as of
the applicable record date for such Securities.
(h) Advances, overdrafts and indebtedness, Security Interest. Chase
may, in its sole discretion, advance funds on behalf of Lender in order to pay
to Borrowers any Rebates or to
<PAGE>
return to Borrowers Cash Collateral to which they are entitled pursuant to the
applicable MSLA. Lender shall repay Chase on demand the amount of any advance or
any other amount owned by Lender hereunder plus accrued interest at a rate per
annum not to exceed the rate customarily charged by Chase for such loans at the
time such loan is made and shall otherwise be on such terms and conditions as
Chase customarily makes such loans available. In order to secure repayment of
any advance or other indebtedness of Lender to Chase arising hereunder, Chase
shall have a continuing lien and security interest in and to all assets now or
hereafter held in the Account and any Collateral Account (to which Lender is
entitled hereunder) and any other property at any time held by it for the
benefit of Lender or in which Lender may have an interest which is then in
Chase's possession or control or in the possession or control of any third party
acting on Chase's behalf. In this regard, Chase shall be entitled to all the
rights and remedies of a pledgee under common law and a secured party under the
New York Uniform Commercial Code and/or any other applicable laws and/or
regulations as then in effect.
(i) Termination of a Loan. (i) Loans shall generally be terminable on
demand. With the prior approval of Lender, however, Loans may be made on the
basis of a reasonably anticipated termination date ("Term Loan") and without
providing for the right of substitution of equivalent Securities. Termination of
a Term Loan prior to its anticipated termination date by either Lender or
Borrower may result in the terminating party having to pay non-terminating party
damages based on the cost of obtaining a replacement loan. (ii) Chase shall
terminate any Loan of Securities to a Borrower as soon as practicable after (a)
receipt by Chase of a notice of termination of the respective MSLA; (b) receipt
by Chase of Written Instructions directing it to terminate a Loan; (c) receipt
by Chase of Written Instructions instructing it to delete from Appendix 2 the
Borrower to whom such Loans was made; (d) receipt by Chase of Written
Instructions advising that the Security subject to a Loan is no longer subject
to the representation contained in Section 3 hereof; (e) receipt by Chase of
notice advising that an Event of Default (as defined in the applicable MSLA) has
occurred and is continuing beyond any applicable grace period; (f) whenever
Chase, in its sole discretion, elects to terminate such Loan other than a Term
Loan; or (g) termination of this Lending Agreement. (iii) If Securities which
are the subject of a Loan being terminated are to be sold by Lender, Written
Instructions shall in no event be given to Chase later than the trade date
established by Lender for such sale or such earlier date of which Chase may
advise Lender from time to time with respect to particular markets. Chase shall
not be liable for any failure of a Borrower to return Securities on Loans in a
time fashion.
(j) Recordkeeping and Reports. Chase shall establish and maintain such
records as are reasonably necessary to account for Loans that are made and the
income derived therefrom. Chase shall provide Lender with a monthly statement
describing the Loans made during the preceding month, and the income derived
from Loans, during the period covered by such statement. A party shall comply
with the reasonable requests of the other party for information necessary to the
requester's performance of its duties hereunder.
Section 6 - Default by Borrower
(1) Chase may assume (unless it has actual knowledge to the contrary)
that any representations made by a Borrower in connection with any Loan are
true, that no event which is
<PAGE>
or may become an Event of Default (as defined in the applicable MSLA) has
occurred and that a Borrower has complied with its obligations under the
applicable MSLA. Subject to Sections 7(b)-(d), Chase shall have no
responsibility for the accuracy or completeness of any information supplied, or
for any breach of any obligation, by any Borrower under or in connection with
any MSLA or Loan. Chase shall not be liable as a result of taking or omitting to
take any action provided that Chase shall have carried out its responsibilities
hereunder in good faith. (ii) If any Borrower with respect to any Loan affected
pursuant hereto and pursuant to the applicable MSLA fails to return any loaned
Securities when due thereunder for reasons other than relating to the solvency
of the Borrower, Chase shall then take whatever action its deems appropriate in
accordance with general market practice and Chase's reasonable judgment,
including, but no necessarily limited to, claiming compensation from such
Borrower on behalf of Lender in the event a trade executed by Lender fails on
account of such Borrower's failure timely to have returned Securities on Loan
or, where Chase deems it necessary, such other action as may be permitted by the
applicable MSLA, including collecting any applicable MSLA fails to return any
Securities on Loan when due thereunder for reasons relating to the solvency of
the Borrower, Chase shall take such action as its deems appropriate in
accordance with Chase's reasonable judgment under the applicable MSLA.
Section 7 - Standard of Care, Liabilities, Indemnification
(a) Standard of care, Liabilities. Except as provided in paragraphs (b)
and (c) hereof, Chase shall be liable for any costs, expenses, damages,
liabilities or claims (including attorneys' and accountants' fees) incurred by
Lender, except those costs, expenses, damages, liabilities and claims arising
out of the negligence, bad faith or willful misconduct of Chase. Chase shall
have no obligation hereunder for: (i) costs, expenses, damages, liabilities or
claims (including attorneys' and accountants' fees), which are sustained or
incurred by Lender by reason of any action or inaction by any pricing service,
any Depository or a Triparty Institution or their respective successors or
nominees; and (ii) any failure to perform any obligation due to any matters
beyond the control of Chase. In no event shall Chase be liable for indirect or
consequential damages or lost profits or loss of business, arising hereunder or
in connection herewith, even if previously informed of the possibility of such
damages and regardless of the form of action.
Except for any costs or expenses incurred by Chase in performing its
obligations pursuant to paragraphs (b) and (c) hereof any ordinary operating
expenses incurred by Chase in providing services hereunder, Lender shall
indemnify Chase and hold it harmless from and against any and all costs,
expenses, damages, liabilities or claims, including reasonable fees and expenses
of counsel, which Chase may sustain or incur or which may be asserted against
Chase by reason of or as a result of any action taken or omitted by Chase in
connection with operating under this Lending Agreement or enforcing Lender's
rights under the applicable MSLA, other than those costs, expenses, damages,
liabilities or claims arising out of the negligence, bad faith or willful
misconduct of Chase. The foregoing indemnity shall be a continuing obligation of
the Lender, its successors and assigns, notwithstanding the termination of any
Loans hereunder or of this Lending Agreement. Chase may charge any amounts to
which it is entitled hereunder against the Account, and Lender shall be entitled
to an accounting of all amounts so charged. Actions taken
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or omitted in reliance upon Proper Instructions, or upon any information, order,
indenture, stock certificate, power of attorney, assignment, affidavit or other
instrument reasonably believed by Chase, in good faith, to be genuine or bearing
the signature of a person or persons believed, in good faith, to be authorized
to sign, countersign or execute the same, shall be conclusively presumed to have
been taken or omitted in good faith.
(b) Indemnification of Lender in respect to Distributions. If the
Borrower in respect of any Loan effected pursuant hereto and pursuant to the
applicable MSLA fails, as a result of its bankruptcy, insolvency,
reorganization, liquidation, receivership or similar event (each an "Insolvency
Event"), to remit to Chase for Lender's account any Distributions on or with
respect to Securities on Loan when due (the "Due Date") in accordance with such
MSLA and such Due Date occurs at least one day prior to an Insolvency Event then
Chase shall at its expense (subject to paragraph (d) hereof) and within one (1)
Business Day of the Due Date, undertake the following: (i) with respect to
Distributions in the form of cash, Chase shall credit Lender's account with the
full amount of such Distributions and (ii) with respect to Distributions in the
form of securities, Chase shall, at its option, either purchase replacement
securities (of an equal amount of the same issue, class, type or series as the
Distributions) on the principal market in which such securities are traded or
credit Lender's account with the market value in United States dollars
("Dollars") of such Distributions on the Due Date as determined by Chase in good
faith. Market value shall be determined by Chase in accordance with the
applicable MSLA, including the computation of Dollar equivalents where
Securities on Loan and/or Collateral (and Proceeds) are denominated in a
currency other than Dollars.
(c) Indemnification of Lender in respect of Securities. If the Borrower
in respect of any Loan effected pursuant hereto and pursuant to the applicable
MSLA fails to return any Securities on Loan to Chase for Lender's account when
due thereunder (the "Return Date") which is the date of default, then Chase
shall, at its expense (subject to paragraph (d) hereof) and within one (1)
Business Day of the Return Date, credit Lender's account in Dollars with the
difference ("Difference") (where a positive number), if any, between (x) the
market value of such lent Securities on the Return Date (including, in the case
of debt Securities, accrued but unpaid interest), and (y) in the case of Loans
collateralized by (i) Cash Collateral, the greater of (A) the Market Value of
the Cash Collateral on the date of initial pledge as adjusted for any subsequent
marks-to-market through the Return Date and (B) the Market Value of Cash
Collateral investments on the Return Date, (ii) non-Cash Collateral comprising
securities Collateral, the greater of the Market Value of such Collateral on the
(A) Business Day immediately preceding the Return Date and (B) Return Date, or
(iii) non-Cash Collateral comprising Letter of Credit Collateral, the Market
Value of the Letter of Credit Collateral on the date of initial pledge as
adjusted for any subsequent marks-to-market through the Return Date. Market
Value shall be determined by Chase in accordance with the applicable MSLA,
including the computation of Dollar equivalents where Securities on Loan and/or
Collateral (and Proceeds) are denominated in a currency other than Dollars.
Where Cash Collateral and non-Cash Collateral have each been allocated to a Loan
as of the Return Date, the Difference payable by Chase shall be computed in
accordance with the foregoing as if there had been two Loans in effect on the
Return Date, one collateralized by Cash Collateral and the other collateralized
by non-Cash Collateral. In lieu of paying Lender the Difference, Chase may, at
its sole option and expense, purchase for Lender's
<PAGE>
account ("Buy-in") replacement securities of the same issue, type, class, and
series as that of the Securities on Loan.
(d) Subrogation. If Chase makes a payment or a purchase pursuant to
Section 7(b) or effects a Buy-in pursuant to Section 7(c), or if Chase effects a
Difference payment pursuant to Section 7(c) on account of a failure to return
Securities on Loan not arising from an Insolvency Event, Chase shall, to the
extent of such payment, purchase, Difference payment or Buy-in, be subrogated
to, and Lender shall assign and be deemed to have assigned to Chase, all of its
rights in, to and against the Borrower (and any guarantor thereof) in respect of
such Loan, any Collateral pledged by the Borrower in respect of such Loan, and
all proceeds of such Collateral. In the event that Lender receives or is
credited with any payment, benefit or value from or on behalf of the Borrower in
respect of rights to which Chase is subrogated as provided herein, Lender shall
promptly remit or pay to Chase the same (or its Dollar equivalent) but only to
the extent that Lender has been paid all amounts owed to it by Borrower.
Section 8 - Chase Compensation
(a) In connection with each Loan hereunder, Lender shall pay to Chase a
fee equal to ___% of (i) earnings (less any Rebate paid by Chase to a Borrower)
derived from Authorized Investments in connection with Loans collateralized by
cash, and (ii) any Securities Loan Fee paid or payable by the Borrower on Loans
not collateralized by cash. (b) The fee payable to Chase for services performed
pursuant to Section 5(f) hereof shall be equal to one tenth of the one percent
(0.1%) of the Fund's average daily Assets (with "Fund" being as defined in
Appendix 4 hereto). All securities in the Fund shall be valued based on their
amortized cost. Fees shall be accrued and charged daily against the Fund's yield
or assets, as appropriate, and shall be payable monthly in arrears on the first
business day of the month following the month in which earned. (c) Chase is
authorized, on a monthly basis, to charge all the foregoing fees (together with
reasonable expenses incurred by Chase hereunder) and any other amounts owed by
Lender hereunder against the Account and/or a Collateral Account.
Section 9 - Taxes
Lender shall be responsible for all filings, tax returns and reports on
any Loans undertaken by Chase on Lender's behalf which are to be made to any
authority whether governmental or otherwise and for the payment of all unpaid
calls, taxes (including, without limitations, any value added tax), imposts,
levies or duties due on any principal or interest, or any other liability or
payments arising out of or in connection with any Securities or any Collateral,
and in so far as Chase is under obligation (whether of a governmental nature or
otherwise) to pay the same on Lender's behalf Chase may do so out of any monies
or assets held by it pursuant to the terms of the Agreement or hereunder.
Section 10 - Instructions
(a)(i) Written Instructions. "Written Instructions" shall mean written
communications actually received by Chase from an Authorized Person or from a
person reasonably believed by
<PAGE>
Chase to be an Authorized Person by letter, memorandum, telegram, cable, telex,
telecopy facsimile, computer, video (CRT) terminal or other on-line system, or
any other method reasonably acceptable to Chase and whereby Chase is able to
verify with a reasonable degree of certainty the identity of the sender of such
communications or with communications are transmitted with proper testing or
authentication pursuant to terms and conditions which Chase may specify. (ii)
Oral Instructions. "Oral Instructions" shall mean oral communications actually
received by Chase from an Authorized Person or from a person reasonably believed
by Chase to be an Authorized Person. Oral Instructions shall promptly thereafter
be confirmed in writing by an Authorized Person (which confirmation may bear the
facsimile signature of such Person), but Lender will hold Chase harmless for the
failure of an Authorized Person to send such confirmation in writing, the
failure of such confirmation to conform to the Oral Instructions received, or
Chase's failure to produce such confirmation at any subsequent time. Lender
shall be responsible for safeguarding any testkeys, identification codes or
other security devices which Chase may make available to Lender or its
Authorized Persons.
(b) Unless otherwise expressly provided, all Proper Instructions shall
continue in full force and effect until canceled or superseded.
Section 11 - Pricing Services
Chase may use any pricing service referred to in an applicable MSLA and
any other recognized pricing service (including itself and any of its
affiliates) in order to perform its valuation responsibilities with respect to
Securities, Collateral and Authorized Investments, and Lender shall hold Chase
harmless from and against any loss or damage suffered or incurred as a result of
errors or omissions of any such pricing service.
Section 12 - Termination
This Lending Agreement may be terminated at any time by either party
upon delivery to the other party of notice specifying the date of such
termination, which shall be not less than 30 days after the date of receipt of
such notice. Notwithstanding any such notice, this Lending Agreement shall
continue in full force and effect with respect to all Loans outstanding on the
termination date, which Loans shall, however, be terminated as soon as
reasonably practicable.
Section 13 - Miscellaneous
(a) Legal proceedings. Chase may refrain from bringing any legal action
or proceeding arising out of or in connection with any Loan until it shall have
received such security as it may require for all costs, expenses (including
legal fees) and liabilities which it will or may expend or incur in relation
thereto.
(b) Integration, Lending Agreement to Govern. This Lending Agreement
and the Agreement contain the complete agreement of the parties with respect to
the subject matter hereof and supersede and replace any previously made
proposals, representations, warranties or
<PAGE>
agreements with respect thereto by the parties. In the event of any conflict
between this Lending Agreement, and the Agreement, this Lending Agreement shall
govern.
(c) Notice. Unless expressly provided herein to the contrary, notices
hereunder shall be in writing, and delivered by telecopier, overnight express
mail, first-class postage prepaid, delivered personally or by receipt courier
service. All such notices which are mailed shall be deemed delivered upon
receipt. Notices shall be addresses as follows (or to such other address as a
party may from time to time designate on notice duly given in accordance with
this paragraph): notices to Chase shall be addressed to it at 2 Chase Manhattan
Plaza, 19th Floor, New York, New York 10081, Attention: Securities Lending
Division; notices to be given to Lender shall be addressed to it at its offices
at Attention: .
(d) Amendments, Waiver. This Lending Agreement may be modified only by
a written amendment signed by both parties, and no waiver of any provisions
hereof shall be effective unless expressed in a writing signed by the party to
be charged.
(e) Government Law, Consent to Jurisdiction, Waiver of Immunity. This
Lending Agreement shall be construed in accordance with laws of the State of New
York, without regard to the conflict of laws principles thereof. Chase and
Lender each hereby consents to the jurisdiction of a state or federal court
situated in New York City, New York in connection with any dispute arising
hereunder and Lender hereby waives any claim of forum non conveniens to the
extent that it may lawfully do so. To the extent that in any jurisdiction Lender
may now or hereafter be entitled to claim, for itself or its assets, immunity
from suit, execution, attachment (before or after judgment) or other legal
process, Lender irrevocably shall not claim, and it hereby waives, such
immunity.
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(f) Counterparts, Headings. This Lending Agreement may be executed in
several counterparts, each one of which shall constitute an original, and all
collectively shall constitute but one instrument. The headings of the sections
hereof are included for convenience of reference only and do not form part of
this Lending Agreement.
(g) Severability. Any provisions of this Lending Agreement which may be
determined by competent authority to be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition, or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceably in any jurisdiction
shall not invalidate or render unenforceable such provisions in any other
jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Lending Agreement as
of the date first above-written.
[Insert name of LENDER] THE CHASE MANHATTAN BANK, N.A.
By: By:
Title: Title:
<PAGE>
FORM OF AGREEMENT
DELAWARE POOLED TRUST, INC.
FIFTH AMENDED AND RESTATED SHAREHOLDERS SERVICES AGREEMENT
THIS AGREEMENT, made as of this 14th day of October, 1997 by and
between DELAWARE POOLED TRUST, INC. (the "Fund"), a Maryland Corporation, for
THE AGGRESSIVE GROWTH PORTFOLIO, THE DEFENSIVE EQUITY PORTFOLIO, THE DEFENSIVE
EQUITY SMALL/MID-CAP PORTFOLIO, THE EMERGING MARKETS PORTFOLIO, THE FIXED INCOME
PORTFOLIO, THE GLOBAL FIXED INCOME PORTFOLIO, THE HIGH-YIELD BOND PORTFOLIO, THE
INTERNATIONAL EQUITY PORTFOLIO, THE INTERNATIONAL FIXED INCOME PORTFOLIO, THE
LABOR SELECT INTERNATIONAL EQUITY PORTFOLIO, THE LIMITED-TERM MATURITY
PORTFOLIO, THE REAL ESTATE INVESTMENT TRUST PORTFOLIO, THE REAL ESTATE
INVESTMENT TRUST PORTFOLIO II and THE GLOBAL EQUITY PORTFOLIO (individually, a
"Portfolio" and collectively, "Portfolios"), and DELAWARE SERVICE COMPANY, INC.
("DSC"), a Delaware corporation.
<PAGE>
W I T N E S S E T H:
WHEREAS, the Investment Management Agreements between the Fund on
behalf of the Portfolios and Delaware Management Company, Inc. and Delaware
International Advisers Ltd. provide that the Fund shall conduct its own business
and affairs and shall bear the expenses and salaries necessary and incidental
thereto including, but not in limitation of the foregoing, the costs incurred
in: the maintenance of its corporate existence; the maintenance of its own
books, records and procedures; dealing with its own shareholders; the payment of
dividends; transfer of stock, including issuance, redemption and repurchase of
shares; preparation of share certificates; reports and notices to stockholders;
calling and holding of stockholders' meetings; miscellaneous office expenses;
brokerage commissions; custodian fees; legal and accounting fees; taxes; and
federal and state registration fees;
WHEREAS, the Fund and DSC desire to have a written agreement concerning
the performance of the foregoing services and providing compensation therefor;
and
WHEREAS, the Fund and DSC previously consolidated and restated the
separate Shareholder Services Agreements dated November 12, 1991 for The
Defensive Equity Portfolio, The Aggressive Growth Portfolio, The International
Equity Portfolio, The Fixed Income Portfolio and The Limited-Term Maturity
Portfolio into a combined agreement including The Global Fixed Income Portfolio;
such Amended and Restated Shareholder Services Agreement was dated November 2,
1992 ("1992 Agreement"); and
WHEREAS, the 1992 Agreement was amended on February 28, 1994 to include
The International Fixed Income Portfolio ("Second Amended and Restated
Agreement"); and
WHEREAS, the Second Amended and Restated Agreement was amended on
November 29, 1995, to include The Defensive Equity Small/Mid-Cap Portfolio, The
Defensive Equity Utility Portfolio,
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<PAGE>
The High-Yield Bond Portfolio, The Labor Select International Equity Portfolio
and The Real Estate Investment Trust Portfolio ("Third Amended and Restated
Agreement");
WHEREAS, the Third Amended and Restated Agreement was amended on April
14, 1997 to include The Emerging Markets Portfolio ("Fourth Amended and Restated
Agreement");
WHEREAS, the Fund and DSC wish to amend the Fourth Amended and Restated
Agreement to modify the compensation schedule as it applies to The Real Estate
Investment Trust Portfolio to reflect the restructuring of that Portfolio to add
retail classes of shares, to add The Real Estate Investment Trust Portfolio II
and The Global Equity Portfolio and to reflect the deletion of The Defensive
Equity Utility Portfolio, shares of which were deregistered by action of the
Fund's Board;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth, and intending legally to be bound, it is agreed:
I. APPOINTMENT AS AGENT
1.1 The Fund hereby appoints DSC Shareholder Services Agent for the
Portfolios to provide as agent for the Fund services as Transfer Agent, Dividend
Disbursing Agent and Shareholder Servicing Agent and DSC hereby accepts such
appointment and agrees to provide the Fund, as its agent, the services described
herein.
1.2 The Fund shall pay DSC and DSC shall accept, for the services
provided hereunder, the compensation provided for in Section VIII hereof. The
Fund also shall reimburse DSC for expenses incurred or advanced by it for the
Fund in connection with its services hereunder.
3
<PAGE>
II. DOCUMENTATION
2.1 The Fund represents that it has provided or made available to DSC
(or has given DSC an opportunity to examine) copies of, and DSC represents that
it has received from the Fund (or is otherwise familiar with), the following
documents:
(a) The Articles of Incorporation or other documents
evidencing the Fund's form of organization and any current amendments or
supplements thereto.
(b) The By-Laws of the Fund;
(c) Any resolution or other action of the Fund or the Board of
Directors of the Fund establishing or affecting the rights, privileges or other
status of each class or series of shares of the Fund, including those relating
to the Portfolios or altering or abolishing each such class or series;
(d) A certified copy of a resolution of the Board of Directors
of the Fund appointing DSC as Shareholder Services Agent for the Portfolios and
authorizing the execution of this Agreement;
(e) The forms of share certificates of the Portfolios in the
forms approved by the Board of Directors of the Fund;
(f) A copy of the Fund's currently effective Prospectuses and
Statement of Additional Information under the Securities Act of 1933, if
effective;
(g) Copies of all account application forms and other
documents relating to stockholder accounts in the Portfolios;
(h) Copies of documents relating to Plans of the Fund for the
purchase, sale or repurchase of its shares, including periodic payment or
withdrawal plans, reinvestment plans or retirement plans;
4
<PAGE>
(i) Any opinion of counsel to the Fund relating to the
authorization and validity of the shares of the Portfolios issued or proposed to
be issued under the law of the State of the Fund's organization, including the
status thereof under any applicable securities laws;
(j) A certified copy of any resolution of the Board of
Directors of the Fund authorizing any person to give instructions to DSC under
this Agreement (with a specimen signature of such person if not already
provided), setting forth the scope of such authority; and
(k) Any amendment, revocation or other documents altering,
adding, qualifying or repealing any document or authority called for under this
Section 2.1.
2.2 The Fund and DSC may consult as to forms or documents that may be
required in performing services hereunder.
2.3 The Fund shall provide or make available to DSC a certified copy of
any resolution of the stockholders or the Board of Directors of the Fund
providing for a dividend, capital gains distribution, distribution of capital,
stock dividend, stock split or other similar action affecting the authorization
or issuance of shares of the Fund or the payment of dividends.
2.4 In the case of any recapitalization or other capital adjustment
requiring a change in the form of stock certificates or the books recording the
same, the Fund shall deliver or make available to DSC:
(a) A certified copy of any document authorizing or effecting
such change;
(b) Written instructions from an authorized officer implementing
such change; and
(c) An opinion of counsel to the Fund as to the validity of such
action, if requested by DSC.
2.5 The Fund warrants the following:
5
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(a) The Fund is, or will be, a properly registered investment
company under the Investment Company Act of 1940 and any and all Portfolio
shares which it issues will be properly registered and lawfully issued under
applicable federal and state laws.
(b) The provisions of this contract do not violate the terms
of any instrument by which the Fund is bound; nor do they violate any law or
regulation of any body having jurisdiction over the Fund or its property.
2.6 DSC warrants the following:
(a) DSC is and will be properly registered as a transfer agent
under the Securities and Exchange Act of 1934 and is duly authorized to serve,
and may lawfully serve as such.
(b) The provisions of this contract do not violate the terms
of any instrument by which DSC is bound; nor do they violate any law or
regulation of any body having jurisdiction over DSC or its property.
III. STOCK CERTIFICATES
3.1 The Fund shall furnish or authorize DSC to obtain, at the Fund's
expense, a sufficient supply of blank stock certificates for the Portfolios, and
from time to time will replenish such supply upon the request of DSC. The Fund
agrees to indemnify and exonerate, save and hold DSC harmless, from and against
any and all claims or demands that may be asserted against DSC concerning the
genuineness of any stock certificate supplied to DSC pursuant to this Section.
3.2 DSC shall safeguard, and shall account to the Fund, upon its demand
for, all such stock certificates: (a) as issued, showing to whom issued, or (b)
as unissued, establishing the safekeeping, cancellation or destruction thereof.
3.3 The Fund shall promptly inform DSC in writing of any change in the
officers authorized to sign stock certificates or in the form thereof. If an
officer whose manual or facsimile signature is
6
<PAGE>
affixed to any blank share certificate shall die, resign or be removed prior to
the issuance of such certificate, DSC may nevertheless issue such certificate
notwithstanding such death, resignation or removal, and the Fund shall with
respect thereto promptly provide to DSC any approval, adoption or ratification
as may be required by DSC.
IV. TRANSFER AGENT
4.1 As Transfer Agent for the Fund, DSC shall issue, redeem and
transfer shares of the Portfolios, and, in connection therewith but not in
limitation thereof, it shall:
(a) Upon receipt of authority to issue shares, determine the
total shares to be issued and issue such shares by crediting shares to accounts
created and maintained in the registration forms provided; as applicable,
prepare, issue and deliver stock certificates.
(b) Upon proper transfer authorization, transfer shares by
debiting transferor-stockholder accounts and crediting such shares to accounts
created and/or maintained for transferee-stockholders; if applicable, issue
and/or cancel stock certificates.
(c) Upon proper redemption authorization, determine the total
shares redeemed and to be redeemed; determine the total redemption payments made
and to be made; redeem shares by debiting stockholder accounts; as applicable
receive and cancel stock certificates for shares redeemed; and remit or cause to
be remitted the redemption proceeds to stockholders.
(d) Create and maintain accounts; reconcile and control cash
due and paid, shares issued and to be issued, cash remitted and to be remitted
and shares debited and credited to accounts; provide such notices, instructions
or authorizations as the Fund may require.
4.2 DSC shall not be required to issue, transfer or redeem Portfolio
shares upon receipt of DSC from the Fund, or from any federal or state
regulatory agency or authority, written notice that the issuance, transfer or
redemption of Portfolio shares has been suspended or discontinued.
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<PAGE>
V. DIVIDEND DISBURSING AGENT
5.1 As Dividend Disbursing Agent for the Portfolios, DSC shall disburse
and cause to be disbursed to stockholders of each Portfolio's dividends, capital
gains distributions or any payments from other sources as directed by the Fund.
In connection therewith, but not in the limitation thereof, DSC shall:
(a) Calculate the total disbursement due and payable and the
disbursement to each stockholder as to shares owned, in accordance with the
Fund's authorization.
(b) Calculate the total disbursements for each stockholder, as
aforesaid, to be disbursed in cash; prepare and mail checks therefor.
(c) Calculate the total disbursement for each stockholder of
each Portfolio, as aforesaid, for which Portfolio shares are to be issued and
authorized and instruct the issuance of Portfolio shares therefor in accordance
with Section IV hereof.
(d) Prepare and mail or deliver such forms and notices
pertaining to disbursements as required by federal or state authority.
(e) Create and maintain records, reconcile and control
disbursements to be made and made, both as to cash and shares, as aforesaid;
provide such notices, instruction or authorization as the Fund may require.
5.2 DSC shall not be required to make any disbursement upon the receipt
of DSC from the Fund, or from any federal or state agency or authority, written
notice that such disbursement shall not be made.
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<PAGE>
VI. SHAREHOLDER SERVICING AGENT
6.1 As Shareholder Servicing Agent for the Portfolios, DSC shall
provide those services ancillary to, but in implementation of, the services
provided under Sections I through V hereof, and those generally defined and
accepted as shareholder services. In connection therewith, but not in limitation
thereof, DSC shall:
(a) Except where instructed in writing by the Fund not to do
so, and where in compliance with applicable law, accept orders on behalf of the
Fund; receive and process investments and applications; remit to the Fund or its
custodian payments for shares acquired and to be issued; and direct the issuance
of shares in accordance with Section IV hereof.
(b) Receive, record and respond to communications of
stockholders and their agents.
(c) As instructed by the Fund, prepare and mail stockholder
account information, mail Portfolio stockholder reports and Portfolio
prospectuses.
(d) Prepare and mail proxies and material for Fund stockholder
meetings, receive and process proxies from stockholders, and deliver such
proxies as directed by the Fund.
(e) Administer investment plans offered by the Fund to
investors and stockholders of each Portfolio, including retirement plans,
including activities not otherwise provided in Section I through V of this
Agreement.
VII. PERFORMANCE OF DUTIES
7.1 The parties hereto intend that Portfolio stockholders and their
stockholdings shall be confidential, and any information relating thereto shall
be released by DSC only to those persons or authorities who DSC has reason to
believe are authorized to receive such information; or, as instructed by the
Fund.
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<PAGE>
7.2 DSC may, in performing this Agreement, require the Fund or the
Fund's distributor to provide it with an adequate number of copies of
prospectuses, reports or other documents required to be furnished to investors
or stockholders.
7.3 DSC may request or receive instructions from the Fund and may, at
the Fund's expense, consult with counsel for the Fund or its own counsel with
respect to any matter arising in connection with the performance of its duties
hereunder, and shall not be liable for any action taken or omitted by it in good
faith in accordance with such instructions or opinions of counsel.
7.4 DSC shall maintain reasonable insurance coverage for errors and
omissions and reasonable bond coverage for fraud.
7.5 Upon notice thereof to the Fund, DSC may employ others to provide
services to DSC in its performance of this Agreement.
7.6 Personnel and facilities of DSC used to perform services hereunder
may be used to perform similar services to other funds of the Delaware Group and
to others, and may be used to perform other services for the Fund, the other
funds of the Delaware Group and others.
7.7 DSC shall provide its services as transfer agent hereunder in
accordance with Section 17 of the Securities Exchange Act of 1934, and the rules
and regulations thereunder. Further, the parties intend that the processes,
procedures, safeguards and controls employed should be those generally applied
and accepted for the type services provided hereunder by other institutions
providing the same or similar services, and, those which should provide
efficient, safe and economical services so as to promote promptness and accuracy
and to maintain the integrity of the Fund's records.
7.8 The Fund and DSC may, from time to time, set forth in writing
Guidelines For Selective Procedures to be applicable to the services hereunder.
10
<PAGE>
VIII. COMPENSATION
8.1 The Fund and DSC acknowledge that because DSC has common ownership
and close management ties with the Fund's investment advisor and the Fund's
distributor and serves the other funds of the Delaware Group (DSC having been
originally established to provide the services hereunder for the funds of the
Delaware Group), advantages and benefits to the Fund in the employment of DSC
hereunder can be available which may not generally be available to it from
others providing similar services.
8.2 The Fund and DSC further acknowledge that the compensation by the
Fund to DSC is intended to induce DSC to provide services under this Agreement
of a nature and quality which the Board of Directors of the Fund, including a
majority who are not parties to this Agreement or interested person of the
parties hereto, has determined after due consideration to be necessary for the
conduct of the business of the Fund, in the best interests of the Fund, the
Portfolios and their stockholders.
8.3 Compensation by the Fund to DSC hereunder shall be determined in
accordance with Schedule A hereto as it shall be amended from time to time as
provided for herein and which is incorporated herein as a part hereof.
8.4 Compensation as provided in Schedule A shall be reviewed and
approved in the manner set forth in Section 10.1 hereof by the Board of
Directors of the Fund at least annually and may be reviewed and approved more
frequently at the request of either party. The Board may request, and DSC shall
provide, such information as the Board may reasonably require to evaluate the
basis of and approve the compensation.
IX. STANDARD OF CARE
9.1 The Fund acknowledges that DSC shall not be liable for, and in the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of the performance of its duties under this Agreement, agrees to
indemnify DSC against, any claim or deficiency arising from the performance of
11
<PAGE>
DSC's duties hereunder, including DSC's costs, counsel fees and expenses
incurred in investigation or defending any such claim or any administrative or
other proceeding, and acknowledges that any risk of loss or damage arising from
the conduct of the Fund's affairs in accordance herewith or in accordance with
Guidelines or instructions given hereunder, shall be borne by the Fund.
X. CONTRACTUAL STATUS
10.1 This Agreement shall be executed and become effective on the date
first written above if approved by a vote of the Board of Directors of the Fund,
including an affirmative vote of a majority of the non-interested members of the
Board, cast in person at a meeting called for the purpose of voting on such
approval. It shall continue in effect for an indeterminate period, and is
subject to termination on sixty (60) days notice by either party unless earlier
terminated or amended by agreement among the parties. Compensation under this
Agreement shall require approval by a majority vote of the Board of Directors of
the Fund, including an affirmative vote of the majority of the non-interested
members of the Board cast in person at a meeting called for the purpose of
voting on such approval.
10.2 This Agreement may not be assigned without the approval of the
Fund.
12
<PAGE>
10.3 This Agreement shall be governed by the laws of the Commonwealth
of Pennsylvania.
DELAWARE SERVICE COMPANY, INC.
ATTEST: _________________ By: ________________________________________
Title:
DELAWARE POOLED TRUST, INC. for
THE AGGRESSIVE GROWTH PORTFOLIO
THE DEFENSIVE EQUITY PORTFOLIO
THE DEFENSIVE EQUITY SMALL/MID-CAP
PORTFOLIO
THE EMERGING MARKETS PORTFOLIO
THE FIXED INCOME PORTFOLIO
THE GLOBAL FIXED INCOME PORTFOLIO
THE HIGH-YIELD BOND PORTFOLIO
THE INTERNATIONAL EQUITY PORTFOLIO
THE INTERNATIONAL FIXED INCOME
PORTFOLIO
THE LABOR SELECT INTERNATIONAL
EQUITY PORTFOLIO
THE LIMITED-TERM MATURITY PORTFOLIO
THE REAL ESTATE INVESTMENT
TRUST PORTFOLIO
THE REAL ESTATE INVESTMENT
TRUST PORTFOLIO II
THE GLOBAL EQUITY PORTFOLIO
ATTEST: _________________ By: ________________________________________
Title:
13
<PAGE>
FORM OF SCHEDULE A
SCHEDULE A
DELAWARE POOLED TRUST, INC.
(THE "FUND")
FIFTH AMENDED AND RESTATED
SHAREHOLDERS SERVICES AGREEMENT
COMPENSATION SCHEDULE
1. Delaware Service Company, Inc. ("DSC") will determine and report to the
Fund, at least annually, the compensation for services to be provided to
the Fund for DSC's forthcoming fiscal year or period.
2. In determining such compensation, DSC will fix and report a fee to be
charged per account and/or transaction, as may be applicable, for services
provided. DSC will bill, and the Fund will pay, such compensation monthly.
3. For the period commencing on January 1, 1997, the charge will consist of
two charges for all the Funds in the Delaware Group, except the Delaware
Group Premium Fund, Inc. and the Delaware Pooled Trust, Inc. (other than
with respect to The Real Estate Investment Trust Portfolio), an annual
charge and a per transaction charge for each account on the transfer
agent's records and each account on an automated retirement processing
system. These charges are as follows:
A. ANNUAL CHARGE
Daily Dividend Funds $11.00 Per Annum
Other Funds $ 5.50 Per Annum
Merrill Lynch - Omnibus Accounts*
Regular Accounts $16.00 Per Annum
Accounts with a Contingent
Deferred Sales Charge $19.00 Per Annum
Networked Accounts $3.00 - 6.00 Per Annum
14
<PAGE>
SCHEDULE A
DELAWARE POOLED TRUST, INC.
(THE "FUND")
FIFTH AMENDED AND RESTATED
SHAREHOLDERS SERVICES AGREEMENT
COMPENSATION SCHEDULE
CONTINUED
B. TRANSACTION CHARGE
Transaction Charge
----------- ------
1. Dividend Payment $ 0.25
2. New Account $ 6.00
3. Purchase:
a. Wire $ 8.00
b. Automated $ 1.50
c. Other $ 2.60
4. Transfer $ 8.00
5. Certificate Issuance $ 4.00
6. Liquidations
a. Wires $12.25
b. Drafts $ 0.75
c. Money Market Regular $ 4.50
d. Other Regular $ 4.50
7. Exchanges
a. Dividend Exchanges $ 3.00
b. Other $10.00
15
<PAGE>
4. For the period commencing January 1, 1997, DSC's compensation for providing
services to the Delaware Group Premium Fund, Inc. (the "Premium Fund") will
be $50,000 annually. DSC will bill, and the Premium Fund will pay, such
compensation monthly, allocated among the current Series of the Premium
Fund based on the relative percentage of assets of each Series at the time
of billing and adjusted appropriately to reflect the length of time a
particular Series is in operation during any billing period.
5. For the period commencing January 1, 1997, DSC's compensation for providing
services to the Portfolios (other than The Real Estate Investment Trust
Portfolio) of Delaware Pooled Trust, Inc. (the "Trust") will be $25,000
annually. DSC will bill, and the Trust will pay, such compensation monthly
allocated among the current Portfolios (other than The Real Estate
Investment Trust Portfolio) of the Trust based on the relative percentage
of assets of each Portfolio at the time of billing and adjusted
appropriately to reflect the length of time a particular Portfolio is in
operation during any billing period.
* Effective January 1, 1998 for existing funds and July 1, 1997 for new funds.
16
<PAGE>
AMENDMENT NO. 7
to
SCHEDULE A
of
DELAWARE GROUP OF FUNDS*
FUND ACCOUNTING AGREEMENT
Delaware Group Adviser Funds, Inc.
Corporate Income Fund (liquidated September 19, 1997)
Enterprise Fund (liquidated September 19, 1997)
Federal Bond Fund (liquidated September 19, 1997)
New Pacific Fund
U.S. Growth Fund
Overseas Equity 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 III, Inc. (formerly Trend)
Trend Fund
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.
<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 (registration withdrawn
January 14, 1997)
The Emerging Markets Portfolio (New)
The Fixed Income Portfolio
The Global Equity Portfolio (New)
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
The Real Estate Investment Trust Portfolio II (New)
2
<PAGE>
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)
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.
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)
3
<PAGE>
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)
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)
4
<PAGE>
Dated as of October 14, 1997
DELAWARE SERVICE COMPANY, INC.
By: _________________________________________________
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 III, 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 STATE TAX-FREE INCOME TRUST
DELAWARE GROUP TAX-FREE FUND, INC.
DELAWARE GROUP TAX FREE MONEY 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.
By: _____________________________
Wayne A. Stork
Chairman
5
<PAGE>
DISTRIBUTION PLAN
DELAWARE POOLED TRUST, INC.
THE REAL ESTATE INVESTMENT TRUST PORTFOLIO
REIT FUND A CLASS
The following Distribution Plan (the "Plan") has been adopted
pursuant to Rule l2b-l under the Investment Company Act of l940 (the "Act") by
Delaware Pooled Trust, Inc., (the "Fund"), for The Real Estate Investment Trust
Portfolio (the "Portfolio") on behalf of REIT Fund A Class ("Class"), which
Fund, Portfolio and Class may do business under these or such other names as the
Board of Directors of the Fund may designate from time to time. The Plan has
been approved by a majority of the Board of Directors, including a majority of
the Directors who are not interested persons of the Fund and who have no direct
or indirect financial interest in the operation of the Plan or in any agreements
related thereto ("non-interested Directors"), cast in person at a meeting called
for the purpose of voting on such Plan. Such approval by the Directors included
a determination that in the exercise of reasonable business judgment and in
light of their fiduciary duties, there is a reasonable likelihood that the Plan
will benefit the Portfolio and shareholders of the Class. The Plan has been
adopted prior to any public offering of the Class.
The Fund is a corporation organized under the laws of the
State of Maryland, is authorized to issue different series and classes of
securities and is an open-end management
<PAGE>
investment company registered under the Act. Delaware Management Company, Inc.
serves as the Portfolio's investment adviser and manager pursuant to an
Investment Management Agreement. Delaware Service Company, Inc. serves as the
Portfolio's shareholder servicing, dividend disbursing and transfer agent.
Delaware Distributors, L.P. (the "Distributor") is the principal underwriter and
national distributor for the Portfolio's shares, including shares of the Class,
pursuant to the Amended and Restated Distribution Agreement between the
Distributor and the Fund on behalf of the Portfolio ("Distribution Agreement").
The Plan provides that:
l. The Fund shall pay to the Distributor a monthly fee not to
exceed 0.3% (3/10 of l%) per annum of the Portfolio's average daily net assets
represented by shares of the Class (the "Maximum Amount") as may be determined
by the Fund's Board of Directors from time to time. Such monthly fee shall be
reduced by the aggregate sums paid by the Fund on behalf of the Portfolio to
persons other than broker-dealers (the "Service Providers") who may, pursuant to
servicing agreements, provide to the Portfolio services in the Portfolio's
marketing of shares of the Class.
2. (a) The Distributor shall use the monies paid to it
pursuant to paragraph l above to furnish, or cause or encourage others to
furnish, services and incentives in connection with the promotion, offering and
sale of Class shares and, where suitable and appropriate, the retention of Class
shares by shareholders.
<PAGE>
(b) The Service Providers shall use the monies
paid respectively to them to reimburse themselves for the actual costs they have
incurred in confirming that their customers have received the Prospectus and
Statement of Additional Information, if applicable, and as a fee for (l)
assisting such customers in maintaining proper records with the Fund, (2)
answering questions relating to their respective accounts, and (3) aiding in
maintaining the investment of their respective customers in the Class.
3. The Distributor shall report to the Fund at least monthly
on the amount and the use of the monies paid to it under the Plan. The Service
Providers shall inform the Fund monthly and in writing of the amounts each
claims under the Plan; both the Distributor and the Service Providers shall
furnish the Board of Directors of the Fund with such other information as the
Board may reasonably request in connection with the payments made under the Plan
and the use thereof by the Distributor and the Service Providers, respectively,
in order to enable the Board to make an informed determination of the amount of
the Fund's payments and whether the Plan should be continued.
4. The officers of the Fund shall furnish to the Board of
Directors of the Fund, for their review, on a quarterly basis, a written report
of the amounts expended under the Plan and the purposes for which such
expenditures were made.
5. This Plan shall take effect at such time as the Distributor
shall notify the Fund in writing of the commencement of the Plan (the
"Commencement Date"); thereafter, the Plan shall
<PAGE>
continue in effect for a period of more than one year from the Commencement Date
only so long as such continuance is specifically approved at least annually by a
vote of the Board of Directors of the Fund, and of the non-interested Directors,
cast in person at a meeting called for the purpose of voting on such Plan.
6. (a) The Plan may be terminated at any time by vote of a
majority of the non-interested Directors or by vote of a majority of the
outstanding voting securities of the Class.
(b) The Plan may not be amended to increase
materially the amount to be spent for distribution pursuant to paragraph l
hereof without approval by the shareholders of the Class.
7. All material amendments to this Plan shall be approved by
the non-interested Directors in the manner described in paragraph 5 above.
8. So long as the Plan is in effect, the selection and
nomination of the Fund's non-interested Directors shall be committed to the
discretion of such non-interested Directors.
9. The definitions contained in Sections 2(a)(19) and 2(a)(42)
of the Act shall govern the meaning of "interested person(s)" and "vote of a
majority of the outstanding voting securities," respectively, for the purposes
of this Plan.
This Plan shall take effect on the Commencement Date, as
previously defined.
October 14, 1997
<PAGE>
DISTRIBUTION PLAN
DELAWARE POOLED TRUST, INC.
THE REAL ESTATE INVESTMENT TRUST PORTFOLIO
REIT FUND B CLASS
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Pooled Trust, Inc., (the "Fund"), for The Real Estate Investment Trust Portfolio
(the "Portfolio") on behalf of REIT Fund B Class ("Class"), which Fund,
Portfolio and Class may do business under these or such other names as the Board
of Directors of the Fund may designate from time to time. The Plan has been
approved by a majority of the Board of Directors, including a majority of the
Directors who are not interested persons of the Fund and who have no direct or
indirect financial interest in the operation of the Plan or in any agreements
related thereto ("non-interested Directors"), cast in person at a meeting called
for the purpose of voting on such Plan. Such approval by the Directors included
a determination that in the exercise of reasonable business judgment and in
light of their fiduciary duties, there is a reasonable likelihood that the Plan
will benefit the Portfolio and shareholders of the Class. The Plan has been
adopted prior to any public offering of the Class.
The Fund is a corporation organized under the laws of the
<PAGE>
State of Maryland, is authorized to issue different series and classes of
securities and is an open-end management investment company registered under the
Act. Delaware Management Company, Inc. serves as the Portfolio's investment
adviser and manager pursuant to an Investment Management Agreement. Delaware
Service Company, Inc. serves as the Portfolio's shareholder servicing, dividend
disbursing and transfer agent. Delaware Distributors, L.P. (the "Distributor")
is the principal underwriter and national distributor for the Portfolio's
shares, including shares of the Class, pursuant to the Amended and Restated
Distribution Agreement between the Distributor and the Fund on behalf of the
Portfolio ("Distribution Agreement").
The Plan provides that:
1. (a) The Fund shall pay to the Distributor a monthly fee not to
exceed 0.75% (3/4 of 1%) per annum of the Portfolio's average daily net assets
represented by shares of the Class as may be determined by the Fund's Board of
Directors from time to time.
(b) In addition to the amounts described in (a) above, the
Fund shall pay (i) to the Distributor for payment to dealers or others, or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
Portfolio's average daily net assets represented by shares of the Class, as a
service fee pursuant to dealer or servicing agreements.
2. (a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the
<PAGE>
Distributor under the Plan may be used for, among other things, preparation and
distribution of advertisements, sales literature and prospectuses and reports
used for sales purposes, as well as compensation related to sales and marketing
personnel, and holding special promotions. In addition, such fees may be used to
pay for advancing the commission costs to dealers with respect to the sale of
Class shares.
(b) The monies to be paid pursuant to paragraph 1(b) above
shall be used to pay dealers or others for, among other things, furnishing
personal services and maintaining shareholder accounts, which services include
confirming that customers have received the Prospectus and Statement of
Additional Information, if applicable; assisting such customers in maintaining
proper records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under paragraph 1(a) above. In
addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of Directors of
the Fund with such other information as the Board may reasonably request in
connection with the payments made under the Plan and the use thereof by the
Distributor and others in order to enable the Board to make an informed
determination of the amount of the Fund's payments and whether the Plan should
be continued.
<PAGE>
4. The officers of the Fund shall furnish to the Board of Directors of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund of the commencement of the Plan (the "Commencement Date");
thereafter, the Plan shall continue in effect for a period of more than one year
from the Commencement Date only so long as such continuance is specifically
approved at least annually by a vote of the Board of Directors of the Fund, and
of the non-interested Directors, cast in person at a meeting called for the
purpose of voting on such Plan.
6. (a) The Plan may be terminated at any time by vote of a majority of
the non-interested Directors or by vote of a majority of the outstanding voting
securities of the Class.
(b) The Plan may not be amended to increase materially the
amount to be spent for distribution pursuant to paragraph 1 thereof without
approval by the shareholders of the Class.
7. All material amendments to this Plan shall be approved by the
non-interested Directors in the manner described in paragraph 5 above.
8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of such
non-interested Directors.
9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested
<PAGE>
person(s)" and "vote of a majority of the outstanding voting securities,"
respectively, for the purposes of this Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
October 14, 1997
<PAGE>
EXHIBIT C
DISTRIBUTION PLAN
DELAWARE POOLED TRUST, INC.
THE REAL ESTATE INVESTMENT TRUST PORTFOLIO
REIT FUND C CLASS
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Pooled Trust, Inc., (the "Fund"), for The Real Estate Investment Trust Portfolio
(the "Portfolio") on behalf of REIT Fund C Class ("Class"), which Fund,
Portfolio and Class may do business under these or such other names as the Board
of Directors of the Fund may designate from time to time. The Plan has been
approved by a majority of the Board of Directors, including a majority of the
Directors who are not interested persons of the Fund and who have no direct or
indirect financial interest in the operation of the Plan or in any agreements
related thereto ("non-interested Directors"), cast in person at a meeting called
for the purpose of voting on such Plan. Such approval by the Directors included
a determination that in the exercise of reasonable business judgment and in
light of their fiduciary duties, there is a reasonable likelihood that the Plan
will benefit the Portfolio and shareholders of the Class. The Plan has been
adopted prior to any public offering of the Class.
The Fund is a corporation organized under the laws of the
<PAGE>
State of Maryland, is authorized to issue different series and classes of
securities and is an open-end management investment company registered under the
Act. Delaware Management Company, Inc. serves as the Portfolio's investment
adviser and manager pursuant to an Investment Management Agreement. Delaware
Service Company, Inc. serves as the Portfolio's shareholder servicing, dividend
disbursing and transfer agent. Delaware Distributors, L.P. (the "Distributor")
is the principal underwriter and national distributor for the Portfolio's
shares, including shares of the Class, pursuant to the Amended and Restated
Distribution Agreement between the Distributor and the Fund on behalf of the
Portfolio ("Distribution Agreement").
The Plan provides that:
1.(a) The Fund shall pay to the Distributor a monthly fee not to exceed
0.75% (3/4 of 1%) per annum of the Portfolio's average daily net assets
represented by shares of the Class as may be determined by the Fund's Board of
Directors from time to time.
(b) In addition to the amounts described in paragraph 1(a) above, the
Fund shall pay: (i) to the Distributor for payment to dealers or others or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
Portfolio's average daily net assets represented by shares of the Class, as a
service fee pursuant to dealer or servicing agreements.
2.(a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution
<PAGE>
and promotion of shares of the Class. Payments made to the Distributor under the
Plan may be used for, among other things, preparation and distribution of
advertisements, sales literature and prospectuses and reports used for sales
purposes, as well as compensation related to sales and marketing personnel, and
holding special promotions. In addition, such fees may be used to pay for
advancing the commission costs to dealers with respect to the sale of Class
shares.
(b) The monies to be paid pursuant to paragraph 1(b) above shall be
used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under paragraph 1(a) above. In
addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of Directors of
the Fund with such other information as the Board may reasonably request in
connection with the payments made under the Plan and the use thereof by the
Distributor and others in order to enable the Board to make an informed
determination of
<PAGE>
the amount of the Fund's payments and whether the Plan should be continued.
4. The officers of the Fund shall furnish to the Board of Directors of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund of the commencement of the Plan (the "Commencement Date");
thereafter, the Plan shall continue in effect for a period of more than one year
from the Commencement Date only so long as such continuance is specifically
approved at least annually by a vote of the Board of Directors of the Fund, and
of the non-interested Directors, cast in person at a meeting called for the
purpose of voting on such Plan.
6.(a) The Plan may be terminated at any time by vote of a majority of
the non-interested Directors or by vote of a majority of the outstanding voting
securities of the Class.
(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph 1 thereof without approval by
the shareholders of the Class.
7. All material amendments to this Plan shall be approved by the
non-interested Directors in the manner described in paragraph 5 above.
8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of such
non-interested Directors.
9. The definitions contained in Sections 2(a)(19) and
<PAGE>
2(a)(42) of the Act shall govern the meaning of "interested person(s)" and "vote
of a majority of the outstanding voting securities," respectively, for the
purposes of this Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
October 14, 1997
<PAGE>
The Delaware Group of Funds
Multiple Class Plan Pursuant to Rule 18f-3
This Multiple Class Plan (the "Plan") has been adopted by a
majority of the Board of Directors of each of the investment companies listed on
Appendix A as may be amended from time to time (each individually a "Fund," and
collectively, the "Funds"), including a majority of the Directors who are not
interested persons of each Fund, pursuant to Rule 18f-3 under the Investment
Company Act of 1940, as amended (the "Act"). The Board of each Fund has
determined that the Plan, including the allocation of expenses, is in the best
interests of the Fund as a whole, each series of shares offered by such Fund
(individually and collectively the "Series") where the Fund offers its shares in
multiple series, and each class of shares offered by the Fund or Series, as
relevant. The Plan sets forth the provisions relating to the establishment of
multiple classes of shares for each Fund and, if relevant, its Series. To the
extent that a subject matter set forth in this Plan is covered by a Fund's
Articles of Incorporation or By-Laws, such Articles of Incorporation or ByLaws
will control in the event of any inconsistencies with descriptions contained in
this Plan.
The term "Portfolio," when used in this Plan in the context of
a Fund that offers only a single series of shares, shall be a reference to the
Fund, and when used in the context of a Fund that offers multiple series of
shares, shall be a reference to each series of such Fund.
CLASSES
1. Appendix A to this Plan describes the classes to be issued
by each Portfolio and identifies the names of such classes.
FRONT-END SALES CHARGE
2. Class A shares carry a front-end sales charge as described
in the Funds' relevant prospectuses; and Class B, Class C and Institutional
Class shares are sold without a front-end sales charge.
<PAGE>
CONTINGENT DEFERRED SALES CHARGE
3. Class A shares are not subject to a contingent deferred
sales charge ("CDSC"), except as described in the Fund's relevant prospectus.
4. Class B shares redeemed within six years of their purchase
shall be assessed a CDSC at the following rate: (i) 4.00% if shares are redeemed
within two years of purchase; (ii) 3.00% if shares are redeemed during the third
or fourth year following purchase; (iii) 2.00% if shares are redeemed during the
fifth year following purchase; (iv) 1.00% if shares are redeemed during the
sixth year following purchase; and (vi) 0% thereafter.
5. Class C shares redeemed within twelve months of their
purchase shall be assessed a CDSC at the rate of 1.00% of the lesser of (i) the
net asset value at the time of redemption, or (ii) the original net asset value
at the time of purchase.
6. The CDSC for each class is waived in certain circumstances,
as described in the Funds' relevant prospectuses. Shares that are subject to a
CDSC age one month at the end of the month in which the shares were purchased,
regardless of the specific date during the month that the shares were purchased.
7. Institutional Class shares are not subject to a CDSC.
RULE 12b-1 PLANS
8. In accordance with the Rule 12b-1 Plan for the Class A
shares of each Portfolio, the Fund shall pay to Delaware Distributors, L.P. (the
"Distributor") a monthly fee not to exceed 0.30% per annum of such Portfolio's
average daily net assets represented by Class A shares as may be determined by
the Fund's Board of Directors from time to time. The monthly fee shall be
reduced by the aggregate sums paid by or on behalf of such Portfolio to persons
other than broker-dealers (the "Service Providers") pursuant to servicing
agreements.
9. In accordance with the Rule 12b-1 Plan for the Class B
shares of each Portfolio, the Fund shall pay to the Distributor a monthly fee
not to exceed 0.75% per annum of such Portfolio's average daily net assets
represented by Class B shares as may be determined by the Fund's Board of
Directors from time to time. In addition to these amounts, the Fund shall pay
(i) to the Distributor for payment to dealers or others, or (ii) directly to
others, an amount not to exceed 0.25% per annum of such Portfolio's average
daily net assets represented by Class B
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<PAGE>
shares, as a service fee pursuant to dealer or servicing agreements.
10. In accordance with the Rule 12b-1 Plan for the Class C
shares of each Portfolio, the Fund shall pay to the Distributor a monthly fee
not to exceed 0.75% per annum of such Portfolio's average daily net assets
represented by Class C shares as may be determined by the Fund's Board of
Directors from time to time. In addition to these amounts, the Fund shall pay
(i) to the Distributor for payment to dealers or others, or (ii) directly to
others, an amount not to exceed 0.25% per annum of such Portfolio's average
daily net assets represented by Class C shares, as a service fee pursuant to
dealer or servicing agreements.
11. A Rule 12b-1 Plan has not been adopted for the
Institutional Class shares of any Portfolio.
ALLOCATION OF EXPENSES
12. The Fund shall allocate to each class of shares of a
Portfolio any fees and expenses incurred by the Fund in connection with the
distribution or servicing of such class of shares under a Rule 12b-1 Plan, if
any, adopted for such class. In addition, the Fund reserves the right, subject
to approval by the Fund's Board of Directors, to allocate fees and expenses of
the following nature to a particular class of shares of a Portfolio (to the
extent that such fees and expenses actually vary among each class of shares or
vary by types of services provided to each class of shares of the Portfolio):
(i) transfer agency and other recordkeeping costs;
(ii) Securities and Exchange Commission and blue sky
registration or qualification fees;
(iii) printing and postage expenses related to printing and
distributing class specific materials, such as
shareholder reports, prospectuses and proxies to
current shareholders of a particular class or to
regulatory authorities with respect to such class of
shares;
(iv) audit or accounting fees or expenses relating
solely to such class;
(v) the expenses of administrative personnel and services
as required to support the shareholders of such
class;
-3-
<PAGE>
(vi) litigation or other legal expenses relating solely to
such class of shares;
(vii) Directors' fees and expenses incurred as a result
of issues relating solely to such class of shares;
and
(viii) other expenses subsequently identified and determined
to be properly allocated to such class of shares.
13. Except for any expenses that are allocated to a particular
class as described in paragraph 11 above, all expenses incurred by a Portfolio
will be allocated to each class of shares of such Portfolio on the basis of the
net asset value of each such class in relation to the net asset value of the
Portfolio.
ALLOCATION OF INCOME AND GAINS
14. Income and realized and unrealized capital gains and
losses of a Portfolio will be allocated to each class of shares of such
Portfolio on the basis of the net asset value of each such class in relation to
the net asset value of the Portfolio.
CONVERSIONS
15. (a) Except for shares acquired through a reinvestment of
dividends or distributions, Class B shares held for eight years after purchase
are eligible for automatic conversion into Class A shares of the same Portfolio
in accordance with the terms described in the relevant prospectus. Class B
shares acquired through a reinvestment of dividends or distributions will
convert into Class A shares of the same Portfolio pro rata with the Class B
shares that were not acquired through the reinvestment of dividends and
distributions.
(b) The automatic conversion feature of Class B shares
shall be suspended at any time that the Board of Directors of the Fund
determines that there is not available a reasonably satisfactory opinion of
counsel to the effect that (i) the assessment of the higher fee under the Fund's
Rule 12b-1 Plan for Class B does not result in the Fund's dividends or
distributions constituting a preferential dividend under the Internal Revenue
Code of 1986, as amended, and (ii) the conversion of Class B shares into Class A
shares does not constitute a taxable event under federal income tax law. In
addition, the Board of Directors of a Fund may suspend the automatic conversion
feature by determining that any other condition to conversion set forth in the
relevant prospectus, as amended from time to time, is not satisfied.
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<PAGE>
(c) The Board of Directors of a Fund may also
suspend the automatic conversion of Class B shares if it determines that
suspension is appropriate to comply with the requirements of the Act, or any
rule or regulation issued thereunder, relating to voting by Class B shareholders
on the Fund's Rule 12b-1 Plan for Class A or, in the alternative, the Board of
Directors may provide Class B shareholders with alternative conversion or
exchange rights.
16. Class A, Class C and Institutional Class shares do not
have a conversion feature.
EXCHANGES
17. Exchanges are permitted between Class A Shares and
Institutional Class Shares of a Portfolio or of any other Portfolio in the
Delaware Group funds; Class B shares of a Portfolio may only be exchanged for
Class B shares of any other Portfolio in the Delaware Group; Class C shares of a
Portfolio may only be exchanged for Class C shares of any other Portfolio in the
Delaware Group. All exchanges are subject to the eligibility and minimum
purchase requirements set forth in the Funds' prospectuses. Exchanges cannot be
made between open-end and closed-end funds within the Delaware Group.
18. Each class will vote separately with respect to the Rule
12b-1 Plan related to that class; provided, however, that Class B shares of a
Portfolio may vote on any proposal to materially increase the fees to be paid by
the Fund under the Rule 12b-1 Plan for the Class A shares of the same Portfolio.
19. On an ongoing basis, the Directors, pursuant to their
fiduciary responsibilities under the Act and otherwise, will monitor the
Portfolio for the existence of any material conflicts between the interests of
all the classes of shares offered by such Portfolio. The Directors, including a
majority of the Directors who are not interested persons of the Fund, shall take
such action as is reasonably necessary to eliminate any such conflict that may
develop. The Manager and the Distributor shall be responsible for alerting the
Board to any material conflicts that arise.
20. As described more fully in the Funds' relevant
prospectuses, broker-dealers that sell shares of a Portfolio will be compensated
differently depending on which class of shares the investor selects.
21. Each Fund reserves the right to increase, decrease or
waive the CDSC imposed on any existing or future class of shares of a Portfolio
within the ranges permissible under applicable rules and regulations of the
Securities and Exchange
-5-
<PAGE>
Commission (the "SEC") and the rules of the National Association of Securities
Dealers, Inc. (the "NASD"), as such rules may be amended or adopted from time to
time. Each Fund may in the future alter the terms of the existing classes of
such Portfolio or create new classes in compliance with applicable rules and
regulations of the SEC and the NASD.
22. All material amendments to this Plan must be approved by a
majority of the Directors of each Fund affected by such amendments, including a
majority of the Directors who are not interested persons of the Fund.
Effective as of September 18, 1997
-6-
<PAGE>
APPENDIX A
List of Funds and Their Classes
1. Delaware Group Equity Funds I, Inc.
Delaware Fund
Delaware Fund A Class
Delaware Fund B Class
Delaware Fund C Class
Delaware Fund Institutional Class
Devon Fund
Devon Fund A Class
Devon Fund B Class
Devon Fund C Class
Devon Fund Institutional Class
2. Delaware Group Equity Funds II, Inc.
Decatur Income Fund
Decatur Income Fund A Class
Decatur Income Fund B Class
Decatur Income Fund C Class
Decatur Income Fund Institutional Class
Decatur Total Return Fund
Decatur Total Return Fund A Class
Decatur Total Return Fund B Class
Decatur Total Return Fund C Class
Decatur Total Return Fund Institutional Class
Blue Chip Fund (Added February 24, 1997)
Blue Chip Fund A Class
Blue Chip Fund B Class
Blue Chip Fund C Class
Blue Chip Fund Institutional Class
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<PAGE>
Quantum Fund (Added February 24, 1997)
Quantum Fund A Class
Quantum Fund B Class
Quantum Fund C Class
Quantum Fund Institutional Class
3. Delaware Group Equity Funds III, Inc.
Trend Fund
Trend Fund A Class
Trend Fund B Class
Trend Fund C Class
Trend Fund Institutional Class
4. Delaware Group Equity Funds V, Inc.
Value Fund
Value Fund A Class
Value Fund B Class
Value Fund C Class
Value Fund Institutional Class
Retirement Income Fund (Added November 29, 1996)
Retirement Income Fund A Class
Retirement Income Fund B Class
Retirement Income Fund C Class
Retirement Income Fund Institutional Class
5. Delaware Group Equity Funds IV, Inc.
DelCap Fund
DelCap Fund A Class
DelCap Fund B Class
DelCap Fund C Class
DelCap Fund Institutional Class
Capital Appreciation Fund (Added November 29, 1996)
Capital Appreciation Fund A Class
Capital Appreciation Fund B Class
Capital Appreciation Fund C Class
Capital Appreciation Fund Institutional Class
-8-
<PAGE>
6. Delaware Group Global & International Funds, Inc.
International Equity Series
International Equity Fund A Class
International Equity Fund B Class
International Equity Fund C Class
International Equity Fund Institutional Class
Global Bond Series
Global Bond Fund A Class
Global Bond Fund B Class
Global Bond Fund C Class
Global Bond Fund Institutional Class
Global Assets Series
Global Assets Fund A Class
Global Assets Fund B Class
Global Assets Fund C Class
Global Assets Fund Institutional Class
Emerging Markets Series (Added May 1, 1996)
Emerging Markets Fund A Class
Emerging Markets Fund B Class
Emerging Markets Fund C Class
Emerging Markets Fund Institutional Class
International Small Cap Series (Added July 21, 1997)
International Small Cap Fund A Class
International Small Cap Fund B Class
International Small Cap Fund C Class
International Small Cap Fund Institutional Class
Global Equity Series (Added July 21, 1997)
Global Equity Fund A Class
Global Equity Fund B Class
Global Equity Fund C Class
Global Equity Fund Institutional Class
7. Delaware Group Income Funds, Inc.
Strategic Income Fund (Added September 30, 1996)
Strategic Income Fund A Class
Strategic Income Fund B Class
Strategic Income Fund C Class
Strategic Income Fund Institutional Class
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<PAGE>
APPENDIX A
List of Funds and Their Classes
1. Delaware Group Equity Funds I, Inc.
Delaware Fund
Delaware Fund A Class
Delaware Fund B Class
Delaware Fund C Class
Delaware Fund Institutional Class
Devon Fund
Devon Fund A Class
Devon Fund B Class
Devon Fund C Class
Devon Fund Institutional Class
2. Delaware Group Equity Funds II, Inc.
Decatur Income Fund
Decatur Income Fund A Class
Decatur Income Fund B Class
Decatur Income Fund C Class
Decatur Income Fund Institutional Class
Decatur Total Return Fund
Decatur Total Return Fund A Class
Decatur Total Return Fund B Class
Decatur Total Return Fund C Class
Decatur Total Return Fund Institutional Class
Blue Chip Fund (Added February 24, 1997)
Blue Chip Fund A Class
Blue Chip Fund B Class
Blue Chip Fund C Class
Blue Chip Fund Institutional Class
<PAGE>
Quantum Fund (Added February 24, 1997)
Quantum Fund A Class
Quantum Fund B Class
Quantum Fund C Class
Quantum Fund Institutional Class
3. Delaware Group Equity Funds III, Inc.
Trend Fund
Trend Fund A Class
Trend Fund B Class
Trend Fund C Class
Trend Fund Institutional Class
4. Delaware Group Equity Funds V, Inc.
Value Fund
Value Fund A Class
Value Fund B Class
Value Fund C Class
Value Fund Institutional Class
Retirement Income Fund (Added November 29, 1996)
Retirement Income Fund A Class
Retirement Income Fund B Class
Retirement Income Fund C Class
Retirement Income Fund Institutional Class
5. Delaware Group Equity Funds IV, Inc.
DelCap Fund
DelCap Fund A Class
DelCap Fund B Class
DelCap Fund C Class
DelCap Fund Institutional Class
Capital Appreciation Fund (Added November 29, 1996)
Capital Appreciation Fund A Class
Capital Appreciation Fund B Class
Capital Appreciation Fund C Class
Capital Appreciation Fund Institutional Class
<PAGE>
6. Delaware Group Global & International Funds, Inc.
International Equity Series
International Equity Fund A Class
International Equity Fund B Class
International Equity Fund C Class
International Equity Fund Institutional Class
Global Bond Series
Global Bond Fund A Class
Global Bond Fund B Class
Global Bond Fund C Class
Global Bond Fund Institutional Class
Global Assets Series
Global Assets Fund A Class
Global Assets Fund B Class
Global Assets Fund C Class
Global Assets Fund Institutional Class
Emerging Markets Series (Added May 1, 1996)
Emerging Markets Fund A Class
Emerging Markets Fund B Class
Emerging Markets Fund C Class
Emerging Markets Fund Institutional Class
International Small Cap Series (Added July 21, 1997)
International Small Cap Fund A Class
International Small Cap Fund B Class
International Small Cap Fund C Class
International Small Cap Fund Institutional Class
Global Equity Series (Added July 21, 1997)
Global Equity Fund A Class
Global Equity Fund B Class
Global Equity Fund C Class
Global Equity Fund Institutional Class
7. Delaware Group Income Funds, Inc.
Strategic Income Fund (Added September 30, 1996)
Strategic Income Fund A Class
Strategic Income Fund B Class
Strategic Income Fund C Class
Strategic Income Fund Institutional Class
<PAGE>
8. Delaware Pooled Trust, Inc.
The Real Estate Investment Trust Portfolio
REIT Fund A Class
REIT Fund B Class
REIT Fund C Class
REIT Fund Institutional Class
