<PAGE>
DELAWARE POOLED TRUST
Delaware Pooled Trust, Inc. ("Fund") is an open-end management investment
company. The Fund offers 19 portfolios (collectively, the "portfolios," or,
individually, a "portfolio"), which provide no-load investment alternatives for
institutional clients and high net-worth individuals. This Prospectus describes
The Global Fixed Income Portfolio (the "Portfolio") of the Fund.
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.
This Prospectus is designed to set forth concisely the information about The
Global Fixed Income Portfolio 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
August 31, 1998, 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
In addition, the Securities and Exchange Commission maintains a Web site
(http://www.sec.gov) that contains the Statement of Additional Information,
material we incorporated by reference, and other information regarding
registrants that electronically file with the Securities and Exchange
Commission.
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page Page
<S> <C> <C> <C>
Fund Expenses 3 Investment Limitations 29
Financial Highlights 5 Management of the Fund 30
Delaware Pooled Trust Summary 7 Shareholder Services 32
Fund Officers and Portfolio Managers 8 Dividends and Capital Gains Distributions 33
Risk Factors 10 Taxes 34
Investment Objective, Policies Valuation of Shares 36
and Risk Considerations 11 Portfolio Transactions 37
Purchase of Shares 14 Performance Information 38
Redemption of Shares 16 General Information 39
Additional Investment Information 19 Appendix A--Ratings 40
</TABLE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is:
August 31, 1998
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 amounts set forth below corresponding to
the caption "Other Expenses" are based on actual results for the Portfolio's
most recently completed fiscal year ended October 31, 1997.
===================================
Shareholder The Global
Transaction Fixed Income
Expenses Portfolio
-----------------------------------
Sales Charge
Imposed on None
Purchases
-----------------------------------
Sales Charge
Imposed on
Reinvested None
Dividends
-----------------------------------
Redemption Fees None
-----------------------------------
Exchange Fees None
===================================
===================================
Annual Fund
Operating
Expenses (as
a percentage
of average The Global
net assets) Fixed Income
Portfolio
-----------------------------------
Investment
Advisory Fees 0.45%*
After Voluntary
Waiver and
Payment
-----------------------------------
12b-1 Fees None
-----------------------------------
Other Expenses
0.15%
-----------------------------------
Total Fund
Operating
Expenses After 0.60%*
Voluntary Waiver
and Payment
===================================
* Delaware International Advisers Ltd. ("Delaware International"), the
investment adviser to the 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 the Portfolio (exclusive of taxes, interest, brokerage commissions and
extraordinary expenses) do not exceed, as a percentage of average net
assets, on an annualized basis, 0.60% during the period from November 1,
1997 through October 31, 1998. In the absence of such voluntary waivers
and payments, "Investment Advisory Fees" (as a percentage of net assets)
would have been 0.50% and "Total Fund Operating Expenses" (as a percentage
of average net assets) would have been 0.65% for the Portfolio. See
"MANAGEMENT OF THE FUND" for additional information regarding expense
caps.
3
<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.
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
The Global Fixed Income Portfolio 6 19 33 75
</TABLE>
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 following financial highlights for the periods ended on or before October
31, 1997 are derived from the financial statements of Delaware Pooled Trust,
Inc. for the Portfolio and are incorporated by reference into the Statement of
Additional Information, and have been audited by Ernst & Young LLP, independent
auditors. The data should be read in conjunction with the financial statements
and related notes. Further information about the performance of the Portfolio is
contained in the Fund's Annual Report.
Unaudited financial highlights for the period ended April 30, 1998 are also
provided below. The data should be read in conjunction with the financial
statements and related notes for the period ended April 30, 1998, all of which
are incorporated by reference into the Statement of Additional Information.
Further information about the performance of the Portfolio is contained in the
Fund's Semi-Annual Report.
The Annual Report (which includes related notes and the report of Ernst & Young
LLP), the Semi-Annual Report and the Statement of Additional Information may be
obtained from the Fund upon request at no charge.
5
<PAGE>
<TABLE>
<CAPTION>
The Global Fixed Income Portfolio
------------------------------------------------------------------------
Unaudited
Period Period
11/1/97 11/30/92(2)
through Year ended through
4/30/98(1) 10/31/97 10/31/96 10/31/95 10/31/94 10/31/93
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.................... $11.220 $11.620 $11.040 $9.790 $11.090 $10.000
Income From Investment Operations
Net Investment Income................................... 0.303 0.721 0.777 0.736 0.419 0.955
Net Gains (Losses) on Securities
(both realized and unrealized) ........................ (0.316) (0.116) 0.725 0.924 (0.193) 0.743
------- ------- ------- ------- ------ -------
Total from Investment Operations....................... (0.013) 0.605 1.502 1.660 0.226 1.698
------- ------- ------- ------- ------ -------
Less Dividends and Distributions
Dividends (from net investment income).................. (0.450) (0.835) (0.720) (0.410) (0.949) (0.608)
Distributions (from capital gains)...................... (0.177) (0.170) (0.202) none (0.577) none
------- ------- ------- ------- ------ -------
Total Dividends and Distributions...................... (0.627) (1.005) (0.922) (0.410) (1.526) (0.608)
------- ------- ------- ------- ------ -------
Net Asset Value, End of Period.......................... $10.580 $11.220 $11.620 $11.040 $9.790 $11.090
======= ======= ======= ======= ====== =======
Total Return............................................ (0.04%)(3) 5.59%(3) 16.40%(3) 17.38%(3) 2.07%(3) 18.96%(3)
- ------------
Ratios/Supplemental Data
Net Assets, End of Period (000's omitted)............... $534,418 $431,076 $252,068 $99,161 $42,266 $29,313
Ratio of Expenses to Average Daily Net Assets........... 0.60% 0.60% 0.60% 0.60% 0.62% 0.62%
Ratio of Expenses to Average Daily Net Assets
Prior to Expense Limitations....................... 0.63% 0.65% 0.66% 0.68% 0.76% 0.88%
Ratio of Net Investment Income to Average
Daily Net Assets................................... 5.69% 6.28% 8.52% 6.73% 3.62% 10.68%
Ratio of Net Investment Income to Average
Daily Net Assets Prior to Expense Limitations...... 5.66% 6.23% 8.46% 6.65% 3.48% 10.42%
Portfolio Turnover Rate................................. 85% 114% 63% 77% 205% 198%
</TABLE>
(1) Ratios have been annualized but total return has not been annualized.
(2) ate of initial sale; ratios and total return have been annualized.
(3) Total return reflects the expense limitations referenced in Fund Expenses.
6
<PAGE>
DELWARE POOLED TRUST SUMMARY
This Prospectus offers The Global Fixed Income Portfolio (the "Portfolio")
providing eligible investors with the advantage of a no-load mutual fund with
the service companies of Delaware Investments providing customized services as
investment adviser, administrator and distributor. The Portfolio is a
non-diversified fund as defined by the Investment Company Act of 1940 (the "1940
Act").
The 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.
For further information, see "INVESTMENT OBJECTIVE, POLICIES AND RISK
CONSIDERATIONS" and "ADDITIONAL INVESTMENT INFORMATION."
INVESTMENT MANAGEMENT
Delaware International is the investment adviser to the Portfolio. The
investment management fee payable to Delaware International by the Portfolio is
0.50% of the Portfolio's average net assets.
In addition, out of the investment advisory fees to which it is otherwise
entitled, Delaware International pays its proportionate share of the fees paid
to unaffiliated directors by the Fund.
See "MANAGEMENT OF THE FUND."
7
<PAGE>
FUND OFFICERS AND PORTFOLIO MANAGERS
Wayne A. Stork
Chairman
A graduate of Brown University, Mr. Stork also attended the NYU Graduate School
of Business Administration while a senior transportation analyst at the Irving
Trust Company. He joined Delaware in 1962 as a security analyst covering a wide
range of industry groups. He is Chairman, President, Chief Executive Officer and
Chief Investment Officer of Delaware. Mr. Stork is a Director of Delaware
Management Company, Inc. and its affiliates, and is Chairman of the Delaware
Investments funds. He is a member of the Institute of Chartered Financial
Analysts and the Financial Analysts Federation.
Jeffrey J. Nick
President and Chief Executive Officer
Mr. Nick is a graduate of Princeton University with a BA in English Literature.
While pursuing his baccalaureate degree from Princeton, Mr. Nick had the
opportunity to study in Germany at Bonn University. This was followed by studies
at the University of Chicago, which led to an MBA in Finance and Marketing. Mr.
Nick joined Lincoln National Corporation in its US headquarters in 1989 as
Senior Vice President responsible for corporate planning and development for
Lincoln National Corporation. He held this position until 1992. From 1992 to
1996, Mr. Nick was Managing Director of Lincoln National UK plc. Before joining
Lincoln, his career included assignments in management consultancy (with Arthur
D. Little, Inc.) and merchant banking (Chase Investment Bank). Mr. Nick is
President, Chief Executive Officer and Director of the funds in Delaware
Investments, Delaware Management Holdings, Inc. and Lincoln National Investment
Companies, Inc.
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 International in 1990 as Managing Director
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 International was Chief Investment Officer of Hill Samuel Investment
Advisers Ltd.
Ian G. Sims
Director/Deputy Managing Director/Chief Investment Officer/Global Fixed Income -
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 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 International, 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.
ADMINISTRATIVE SERVICES
Delaware Service Company, Inc., an affiliate of Delaware Management Company
("Delaware") and Delaware International, provides the Fund with administrative,
dividend disbursing, accounting and transfer agency services. See "MANAGEMENT OF
THE FUND."
8
<PAGE>
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 adviser'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, the investment
adviser's 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 value for the Portfolio is 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
International and an affiliate of Delaware, may invest in the Portfolio. The
Portfolio may experience relatively large investments or redemptions as a result
of the institutional separate accounts either purchasing or redeeming the
Portfolio's shares. These transactions may affect the Portfolio, since the
portfolio that experiences redemptions may be required to sell portfolio
securities, and the portfolio that receives 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 Portfolio may be required to sell securities or invest cash at times when it
would not otherwise do so. Delaware and Delaware International, representing the
interests of the Portfolio, are committed to minimizing the impact of such
transactions on the Portfolio. In addition, the advisers to the institutional
separate accounts, are also committed to minimizing the impact on the Portfolio
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 the Portfolio
has an investment counseling relationship with Delaware, Delaware International
or their affiliates, Delaware 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 Portfolio. This procedure would be utilized
with clients having contractual relationships based on total assets managed by
Delaware, Delaware International or their affiliates to avoid situations where
excess advisory fees might be paid to Delaware or Delaware International. In no
event will a client pay higher total advisory fees as a result of the client's
investment in the Portfolio.
See "SHAREHOLDER SERVICES."
CUSTODIAL SERVICES
The Chase Manhattan Bank, 4 Chase Metrotech Center, Brooklyn, NY 11245 serves as
custodian for the Portfolio.
9
<PAGE>
HOW TO INVEST
Shares of the Portfolio are offered directly to institutions and high net-worth
individual investors at net asset value with no sales commissions or 12b-1
charges. The minimum initial investment for the Portfolio is $1,000,000. There
is no minimum for subsequent investments in the Portfolio where the minimum
initial investment has been satisfied. 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
International or an affiliate of Delaware to make investments in the Portfolio
by a contribution of securities in-kind to such Portfolio. See "PURCHASE OF
SHARES."
HOW TO REDEEM
Shares of the Portfolio 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. 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 the
Portfolio below $500,000, their investment in the Portfolio may be subject to
redemption. In addition, investors in the Portfolio may, under certain
circumstances, be required to accept their redemption, pursuant to instructions
from the Fund, in-kind in portfolio securities or, at the election of the
investor, by following another procedure that will have the same economic effect
as an in-kind redemption; in either case, such investors will be required to pay
the brokerage or other transaction costs arising in connection with the sale of
the subject securities. See "REDEMPTION OF SHARES."
RISK FACTORS
An investment in the Fund 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. Those 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," under the heading "ADDITIONAL
INVESTMENT INFORMATION."
The Portfolio may commit its assets eligible for foreign investment to
securities of issuers located in emerging markets. Investments in securities of
companies in emerging markets present a greater degree of risk than tends to be
the case for foreign investments in Western Europe and other developed markets.
Among other things, there is a greater possibility of expropriation,
nationalization, confiscatory taxation, income earned or other special taxes,
foreign exchange restrictions, limitations on the repatriation of income and
capital from investments, defaults in foreign government debt, and economic,
political or social instability. In addition, in many emerging markets, there is
substantially less publicly available information about issuers and the
information that is available tends to be of a lesser quality. Economic markets
and structures tend to be less mature and diverse and the securities markets
which are subject to less government regulation or supervision may also be
smaller, less liquid and subject to greater price volatility. See "ADDITIONAL
INVESTMENT INFORMATION--FOREIGN INVESTMENT INFORMATION" for a more extensive
discussion of these and other factors.
10
<PAGE>
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 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 experience an annual portfolio turnover rate exceeding 100%,
but the rate is not expected to exceed 200%. 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 Portfolio's shareholders that are subject to federal income tax. See
"INVESTMENT OBJECTIVE, POLICIES AND RISK CONSIDERATIONS," "PORTFOLIO
TRANSACTIONS" and "TAXES."
The Portfolio may invest in collateralized mortgage obligations as well as
mortgage-backed securities. See "ADDITIONAL INVESTMENT
INFORMATION--MORTGAGE-BACKED SECURITIES."
The Portfolio may lend its portfolio securities, may invest in repurchase
agreements and may purchase securities on a when-issued basis.
While the Portfolio intends to seek to qualify as a "diversified" investment
company under provisions of Subchapter M of the Internal Revenue Code, it will
not be diversified under the 1940 Act. Thus, while 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, 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.
The investment strategies identified above involve special risks which are
described under "INVESTMENT OBJECTIVE, 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 OBJECTIVE, POLICIES AND RISK CONSIDERATIONS
The investment objective of the Portfolio is described below, together with the
policies 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 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 European Currency Unit
("ECU").
11
<PAGE>
The investment adviser's approach in selecting investments for the portfolio is
oriented to country selection and is value driven. In selecting fixed-income
instruments for the Portfolio, the investment adviser identifies those
countries' fixed-income markets which it believes will provide the United
States' domiciled investor the highest yield over a market cycle while also
offering the opportunity for capital gain and currency appreciation. The
investment adviser conducts extensive fundamental research on a global basis,
and it is through this effort that attractive fixed-income markets are selected
for investment. The core of the fundamental research effort is a value oriented
discounted income stream methodology which isolates value across country
boundaries. This approach focuses on future coupon and redemption payments and
discounts the value of those payments back to what they would be worth if they
were to be paid today. Comparisons of the values of different possible
investments are then made. The investment adviser's management approach is
long-term in orientation, and it is therefore expected that the annual turnover
of the Portfolio will not exceed 200% under normal circumstances. See "PORTFOLIO
TRANSACTIONS" and "TAXES."
The Portfolio will attempt to achieve its objective by investing in a broad
range of fixed-income securities, including debt obligations of foreign and U.S.
companies which are generally rated A or better by Standard and Poor's Ratings
Group ("S&P") or Moody's Investors Service, Inc. ("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."
12
<PAGE>
With respect to securities issued by foreign governments, their agencies,
instrumentalities or political subdivisions, the Portfolio will generally invest
in such securities if they have been rated AAA or AA by S&P or Aaa or Aa by
Moody's or, if unrated, have been determined by the investment adviser to be of
comparable quality. As noted above, the Portfolio may invest up to 5% of its
assets in non-investment grade fixed-income securities. These investments may
include foreign government securities, some of which may be so-called Brady
Bonds. See "ADDITIONAL INFORMATION-HIGH-YIELD, HIGH RISK SECURITIES." The
Portfolio may also invest in sponsored or unsponsored American Depositary
Receipts or European Depositary Receipts. While the Portfolio may purchase
securities of issuers in any foreign country, developed or underdeveloped, it is
currently anticipated that the countries in which the Portfolio may invest will
include, but not be limited to, Canada, Germany, the United Kingdom, New
Zealand, France, The Netherlands, Belgium, Spain, Switzerland, Ireland, Denmark,
Portugal, Italy, Austria, Norway, Sweden, Finland, Luxembourg, Japan and
Australia. With respect to certain countries, investments by an investment
company may only be made through investments in closed-end investment companies
that in turn are authorized to invest in the securities of issuers in such
countries. Any investment the Portfolio may make in other investment companies
is limited in amount by the 1940 Act and would involve the indirect payment of a
portion of the expenses, including advisory fees, of such other investment
companies. See "ADDITIONAL INVESTMENT INFORMATION--FOREIGN INVESTMENT
INFORMATION" and "DEPOSITARY RECEIPTS."
Currency considerations carry a special risk for a portfolio of international
securities and the investment adviser employs a purchasing power parity approach
to evaluate currency risk. In this regard, the Portfolio will actively carry on
hedging activities, and may invest in forward foreign currency exchange
contracts to hedge currency risks associated with its portfolio of securities.
See "ADDITIONAL INVESTMENT INFORMATION-- FORWARD FOREIGN CURRENCY EXCHANGE
CONTRACTS."
It is anticipated that the average weighted maturity of the Portfolio will be in
the five-to-ten year range. If, however, the investment adviser anticipates a
declining interest rate environment, the average weighted 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.
13
<PAGE>
PURCHASE OF SHARES
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 The Chase Manhattan Bank ("Custodian
Bank").
The minimum initial investment for the Portfolio is $1,000,000.
By Federal Funds Wire
Purchases of shares of the 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 Portfolio's name, 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 Bank 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 the Portfolio may also be made by mailing a check payable
to the Portfolio 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.
14
<PAGE>
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.
15
<PAGE>
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 without cost at its
net asset value next determined after receipt of your redemption request. 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 Fund may be redeemed by mail, FAX message, or telephone. No charge
is made for redemption. The proceeds of any redemption may be more or less than
the purchase price of your shares depending on the market value of the
investment securities held by the Portfolio. Shares of the Portfolio may, under
certain circumstances, be required to be redeemed in-kind in portfolio
securities, as noted below.
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.
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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<PAGE>
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
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 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 Portfolio
shares which are reasonably believed to be genuine. With respect to such
telephone transactions, the Fund will ensure that reasonable procedures are used
to confirm that instructions communicated by telephone are genuine (including
verification of a form of personal identification) as, if it does not, the Fund
or Delaware Service Company, Inc. may be liable for any losses due to
unauthorized or fraudulent transactions. A written confirmation will be provided
for all purchase, exchange and redemption transactions initiated by telephone.
To change the name of the commercial bank or account designated to receive the
redemption proceeds, a written request must be sent to the Fund at the address
above. Requests to change the bank or account designation must be signed by the
appropriate person(s) authorized to act on behalf of the shareholder.
The Fund's telephone redemption privileges and procedures may be modified or
terminated by the Fund only upon written notice to the Fund's client
shareholders.
Redemptions In-Kind or Similar Procedures
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 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
should contact the Fund at (1-800-231-8002) for further information.
Eligible investors who have an existing investment counseling relationship with
Delaware, Delaware International, or their affiliates, 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.
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<PAGE>
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 Portfolio, 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. Investors may incur brokerage charges on the sale of
Portfolio securities so received in payment of redemptions.
Due to the relatively high cost of maintaining shareholder accounts, the Fund
reserves the right to redeem shares in the Portfolio if the value of your
holdings in the Portfolio is below $500,000. The Fund, however, will not redeem
shares based solely upon market reductions in net asset value. If the Fund
intends to take such action, a shareholder would be notified and given 90 days
to make an additional investment before the redemption is processed.
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<PAGE>
ADDITIONAL INVESTMENT INFORMATION
U.S. GOVERNMENT SECURITIES
The U.S. government securities in which the Portfolio may invest for temporary
purposes and otherwise (see "INVESTMENT OBJECTIVE, POLICIES AND RISK
CONSIDERATIONS"), include a variety of securities which are issued or guaranteed
as to the payment of principal and interest by the U.S. government, and by
various agencies or instrumentalities which have been established or sponsored
by the U.S. government.
U.S. Treasury securities are backed by the "full faith and credit" of the United
States. Securities issued or guaranteed by federal agencies and U.S. government
sponsored instrumentalities may or may not be backed by the full faith and
credit of the United States. In the case of securities not backed by the full
faith and credit of the United States, investors in such securities look
principally to the agency or instrumentality issuing or guaranteeing the
obligation for ultimate repayment, and may not be able to assert a claim against
the United States itself in the event the agency or instrumentality does not
meet its commitment. Agencies which are backed by the full faith and credit of
the United States include the Export-Import Bank, Farmers Home Administration,
Federal Financing Bank, and others. Certain agencies and instrumentalities, such
as the Government National Mortgage Association ("GNMA"), are, in effect, backed
by the full faith and credit of the United States through provisions in their
charters that they may make "indefinite and unlimited" drawings on the Treasury,
if needed to service its debt. Debt from certain other agencies and
instrumentalities, including the Federal Home Loan Bank and Fannie Mae, 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 Fannie Mae.
MORTGAGE-BACKED SECURITIES
The Global Fixed Income Portfolio 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.
19
<PAGE>
The Portfolio also may invest in collateralized mortgage obligations ("CMOs")
and real estate mortgage investment conduits ("REMICs"). CMOs are debt
securities issued by U.S. government agencies or by financial institutions and
other mortgage lenders and collateralized by a pool of mortgages held under an
indenture. CMOs are issued in a number of classes or series with different
maturities. The classes or series are retired in sequence as the underlying
mortgages are repaid. REMICs, which were authorized under the Tax Reform Act of
1986, are private entities formed for the purpose of holding a fixed pool of
mortgages secured by an interest in real property. REMICs are similar to CMOs in
that they issue multiple classes of securities. To the extent any
privately-issued CMOs or REMICs in which the Portfolio may invest are considered
by the Commission to be investment companies, the Portfolio will limit its
investments in such securities in a manner consistent with the provisions of the
1940 Act.
The mortgages backing these securities include conventional 30-year fixed rate
mortgages, graduated payment mortgages and adjustable rate mortgages. These
mortgages may be supported by various types of insurance, may be backed by GNMA
certificates or other mortgage pass-throughs issued or guaranteed by the U.S.
government, its agencies or instrumentalities. However, the guarantees do not
extend to the mortgage-backed securities' value, which is likely to vary
inversely with fluctuations in interest rates. These certificates are in most
cases "pass-through" instruments, through which the holder receives a share of
all interest and principal payments from the mortgages underlying the
certificate. Because the prepayment characteristics of the underlying mortgages
vary, it is not possible to predict accurately the average life or realized
yield of a particular issue of pass-through certificates. During periods of
declining interest rates, prepayment of mortgages underlying mortgage-backed
securities can be expected to accelerate. When the mortgage obligations are
prepaid, the 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 Portfolio may invest.
Stripped mortgage securities are usually structured with two classes that
receive different proportions of the interest and principal distributions on a
pool of mortgage assets. A common type of stripped mortgage security will have
one class receiving some of the interest and most of the principal from the
mortgage assets, while the other class will receive most of the interest and the
remainder of the principal. In the most extreme case, one class will receive all
of the interest (the "interest-only" class), while the other class will receive
all of the principal (the "principal-only" class). The yield to maturity on an
interest-only class is extremely sensitive not only to changes in prevailing
interest rates but also to the rate of principal payments (including
prepayments) on the related underlying mortgage assets, and a rapid rate of
principal payments may have a material adverse effect on the Portfolio's yield
to maturity. If the underlying mortgage assets experience greater than
anticipated prepayments of principal, the 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 the Portfolio's net assets.
20
<PAGE>
CMOs and REMICs issued by private entities are not government securities and are
not directly guaranteed by any government agency. They are secured by the
underlying collateral of the private issuer. The Portfolio may invest in such
private-backed securities but will do so (i) only if the securities are 100%
collateralized at the time of issuance by securities issued or guaranteed by the
U.S. government, its agencies or instrumentalities and (ii) currently, only if
they are rated at the time of purchase in the two highest grades by a
nationally-recognized statistical rating agency.
SHORT-TERM INVESTMENTS
The short-term investments in which the Portfolio may invest consistent with the
limits recited above (see "INVESTMENT OBJECTIVE, 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 10% 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 the Portfolio's investment
adviser;
(3) Short-term corporate obligations with the highest quality rating by a
nationally-recognized statistical rating organization (e.g., AAA by S&P or Aaa
by Moody's) or, if not so rated, of comparable quality as determined by the
Portfolio's investment adviser;
(4) U.S. government securities (see "U.S. GOVERNMENT SECURITIES"); and
(5) Repurchase agreements collateralized by securities listed above.
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<PAGE>
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES
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 the Portfolio's investment adviser under
guidelines of the Fund's directors. In a repurchase agreement, the 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 the Portfolio's assets may
be invested in repurchase agreements having a maturity in excess of seven days.
Repurchase agreements may be viewed as a fully collateralized loan of money by
the 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
Delaware Investments 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 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
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 will be consistent with
Commission rules. See the Statement of Additional Information.
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<PAGE>
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
substantial risks involved in investing in securities issued by companies and
governments of foreign nations. These risks are in addition to the usual risks
inherent in domestic investments. There is the possibility of expropriation,
nationalization or confiscatory taxation, taxation of income earned in foreign
nations or other taxes imposed with respect to investments in foreign nations,
foreign exchange control (which may include suspension of the ability to
transfer currency from a given country), default in foreign government
securities, political or social instability or diplomatic developments which
could affect investments in securities of issuers in those nations.
In addition, in many countries, there is substantially less publicly available
information about issuers than is available in reports about companies in the
United States and this information tends to be of a lesser quality. Foreign
companies are not subject to uniform accounting, auditing and financial
reporting standards, and auditing practices and requirements may not be
comparable to those applicable to United States companies. In particular, the
assets and profits appearing on the financial statements of a developing or
emerging country issuer may not reflect its financial position or results of
operations in the way they would be reflected had the financial statements been
prepared in accordance with United States generally accepted accounting
principles. Also, for an issuer that keeps accounting records in local currency,
inflation accounting rules may require for both tax and accounting purposes,
that certain assets and liabilities be restated on the issuer's balance sheet in
order to express items in terms of currency or constant purchasing power.
Inflation accounting may indirectly generate losses or profits. Consequently,
financial data may be materially affected by restatements for inflation and may
not accurately reflect the real condition of those issuers and securities
markets.
It is also expected that the expenses for custodial arrangements of the
Portfolio's foreign securities will be somewhat greater than the expenses for
the custodial arrangements for U.S. securities of equal value. Dividends and
interest paid by foreign issuers may be subject to withholding and other foreign
taxes. Although in some countries a portion of these taxes is recoverable, the
non-recovered portion of foreign withholding taxes will reduce the income the
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.
23
<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, the investment adviser for the Portfolio does not
believe that any current repatriation restrictions would affect the decision to
invest in such countries. Countries such as those in which the Portfolio may
invest, have historically experienced and may continue to experience,
substantial, and in some periods extremely high rates of inflation for many
years, high interest rates, exchange rate fluctuations or currency depreciation,
large amounts of external debt, balance of payments and trade difficulties and
extreme poverty and unemployment. Other factors which may influence the ability
or willingness to service debt include, but are not limited to, a country's cash
flow situation, the availability of sufficient foreign exchange on the date a
payment is due, the relative size of its debt service burden to the economy as a
whole, its government's policy towards the International Monetary Fund, the
World Bank and other international agencies and the political constraints to
which a government debtor may be subject.
With respect to investment in debt issues of foreign governments, the ability of
a foreign government or government-related issuer to make timely and ultimate
payments on its external debt obligations will also be strongly influenced by
the issuer's balance of payments, including export performance, its access to
international credits and investments, fluctuations in interest rates and the
extent of its foreign reserves. A country whose exports are concentrated in a
few commodities or whose economy depends on certain strategic imports could be
vulnerable to fluctuations in international prices of these commodities or
imports. To the extent that a country receives payment for its exports in
currencies other than dollars, its ability to make debt payments denominated in
dollars could be adversely affected. If a foreign government or
government-related issuer cannot generate sufficient earnings from foreign trade
to service its external debt, it may need to depend on continuing loans and aid
from foreign governments, commercial banks and multilateral organizations, and
inflows of foreign investment. The commitment on the part of these foreign
governments, multilateral organizations and others to make such disbursements
may be conditioned on the government's implementation of economic reforms and/or
economic performance and the timely service of its obligations. Failure to
implement such reforms, achieve such levels of economic performance or repay
principal or interest when due may curtail the willingness of such third parties
to lend funds, which may further impair the issuer's ability or willingness to
service its debts in a timely manner. The cost of servicing external debt will
also generally be adversely affected by rising international interest rates
because many external debt obligations bear interest at rates which are adjusted
based upon international interest rates. The ability to service external debt
will also depend on the level of the relevant government's international
currency reserves and its access to foreign exchange. Currency devaluations may
affect the ability of a government issuer to obtain sufficient foreign exchange
to service its external debt.
As a result of the foregoing, a foreign governmental issuer may default on its
obligations. If such a default occurs, the 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.
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<PAGE>
Among the foreign government and government related issuers in which the
Portfolio may invest are certain high-yield securities, including so-called
Brady Bonds. Brady Bonds are debt securities issued under the framework of the
Brady Plan, an initiative announced by former U.S. Treasury Secretary Nicholas
F. Brady in 1989 as a mechanism for debtor nations to restructure their
outstanding external indebtedness (generally, commercial bank debt). In
restructuring its external debt under the Brady Plan framework, a debtor nation
negotiates with its existing bank lenders as well as multilateral institutions
such as the World Bank and the International Monetary Fund. The Brady Plan
framework, as it has developed, contemplates the exchange of commercial bank
debt for new issued bonds (Brady Bonds). The investment adviser 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. 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 Portfolio expects 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 Portfolio 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 Portfolio present currency
considerations which pose special risks. The investment adviser 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.
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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.
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 the investment adviser, 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 the Portfolio security if its market value exceeds the
amount of foreign currency the Portfolio is obligated to deliver.
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RISKS OF TRANSACTIONS IN OPTIONS, FUTURES AND FORWARD CONTRACTS
The use of forward contracts for hedging and other non-speculative purposes as
described above involves certain risks. For example, if movements of foreign
currencies do not correlate as expected by the investment adviser at a time when
the 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 assets being hedged could render the Portfolio's hedging
strategy unsuccessful and could result in losses. If the direction of 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, the Portfolio may be required to maintain a position
until exercise or expiration, which could result in losses. Further, forward
contracts entail particular risks related to conditions affecting the underlying
currency. Over-the-counter transactions in forward contracts also involve risks
arising from the lack of an organized exchange trading environment.
HIGH-YIELD, HIGH RISK SECURITIES
The Portfolio may invest up to 5% of its assets in high risk, high-yield
fixed-income securities of foreign governments, including, with specified
limitations, so-called 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.
Fixed-income securities of this type are considered to be of poor standing and
predominantly speculative. Such securities are subject to a substantial degree
of credit risk. In the past, the high-yields from these bonds have more than
compensated for their higher default rates. There can be no assurance, however,
that yields will continue to offset default rates on these bonds in the future.
The Portfolio's investment adviser intends to maintain an adequately diversified
portfolio of these bonds. While diversification can help to reduce the effect of
an individual default on the Portfolio, there can be no assurance that
diversification will protect the Portfolio from widespread bond defaults brought
about by a sustained economic downturn.
Medium and low-grade bonds held by the Portfolio 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 Portfolio's net asset
value per share.
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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 10% of the value of its net assets in
illiquid securities. Illiquid securities, for purposes of this policy, include
repurchase agreements maturing in more than seven days.
While maintaining oversight, the Board of Directors has delegated to the
Portfolio's investment adviser the day-to-day functions 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 the 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 the 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% limit 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.
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").
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 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 or EDRs are issued jointly by the issuer of the
underlying security and a Depositary, and "unsponsored" ADRs or EDRs are issued
without the participation of the issuer of the deposited security. Holders of
unsponsored ADRs or EDRs generally bear all the costs of such facilities and the
Depositary of an unsponsored ADR or EDR 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 or EDR. ADRs may be listed on a national
securities exchange or may be traded in the over-the-counter market. EDRs 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 and EDRs involve risks similar to
those accompanying direct investments in foreign securities.
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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
The Portfolio's investment objective, its designation as a non-diversified
portfolio, and its 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 the 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 the 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 the Portfolio which may not be
changed without a majority shareholder vote.
Except as specified above and under the heading "INVESTMENT OBJECTIVE, 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 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.
Delaware International Advisers Ltd. ("Delaware International") furnishes
investment management services to the 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 International is affiliated with Delaware Management Company
("Delaware"). Delaware and its predecessors have been managing the funds in
Delaware Investments since 1938. On July 31, 1998, Delaware and its affiliates
within Delaware Investments, including Delaware International, were managing in
the aggregate more than $43 billion in assets in various institutional or
separately managed (approximately $25,873,990,000) and investment company
(approximately $17,929,500,000) accounts.
As compensation for the services to be rendered under its advisory agreement,
Delaware International is entitled to an advisory fee calculated by applying a
quarterly rate, based on an annual percentage rate of 0.50%, to the Portfolio's
average daily net assets for the quarter.
As noted in "FUND EXPENSES," Delaware International elected voluntarily to waive
that portion, if any, of its investment advisory fees and to pay the Portfolio's
expenses to the extent necessary to ensure that the Portfolio's expenses
(investment advisory fees, plus certain other noted expenses) do not exceed, on
an annualized basis, the amount noted in that section of this Prospectus through
October 31, 1998. This means that as long as the voluntary expense caps are in
place, the Portfolio's expenses may be as much as, but will not exceed, the
expense cap amounts set forth in the footnote to the fee table.
For the fiscal year ended October 31, 1997, the investment management fees paid
by the Portfolio (as a percentage of average daily net assets) were 0.45%,
reflecting the voluntary waiver of fees.
Delaware is an indirect, wholly owned subsidiary of Delaware Management
Holdings, Inc. ("DMH"). DMH, Delaware and Delaware International are now
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. Delaware International's address is 3rd
Floor, 80 Cheapside, London, England EC2V 6EE. Lincoln's address is 200 E. Berry
Street, Fort Wayne, IN 46802.
Administrator
Delaware Service Company, Inc., an affiliate of Delaware and an indirect, wholly
owned subsidiary of DMH, provides the Fund with administrative services pursuant
to the Amended and Restated Shareholders Services Agreement with the Fund on
behalf of the Portfolio. 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 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 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.
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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 Agreements with the Fund on behalf of the 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.
* * *
Additional Risk Factors
As with other mutual funds, financial and business organizations and individuals
around the world, the Portfolio could be adversely affected if the computer
systems used by its service providers do not properly process and calculate
date-related information from and after January 1, 2000. This is commonly known
as the "Year 2000 Problem." The Fund is taking steps to obtain satisfactory
assurances that the Portfolio's major service providers are taking steps
reasonably designed to address the Year 2000 Problem with respect to the
computer systems that such service providers use. There can be no assurance that
these steps will be sufficient to avoid any adverse impact on the business of
the Portfolio.
Several European countries are participating in the European Economic and
Monetary Union, which will establish a common European currency for
participating countries. This currency will commonly be known as the "Euro." It
is anticipated that each such participating country will replace its existing
currency on January 1, 1999. Additional European countries may elect to
participate after that date. The Portfolio, by investing in securities of
participating countries, could be adversely affected if the computer systems
used by its major service providers are not properly prepared to handle the
implementation of this single currency or the adoption of the Euro by additional
countries in the future. The Fund is taking steps to obtain satisfactory
assurances that the major service providers of the Portfolio are taking steps
reasonably designed to address these matters with respect to the computer
systems that such service providers use. There can be no assurances that these
steps will be sufficient to avoid any adverse impact on the business of the
Portfolio.
Expenses
The 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, 1997, the ratio of expenses to average daily net assets
for the Portfolio was 0.60%. This ratio reflects the waiver and payment of fees
by the investment adviser, as described above.
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SHAREHOLDER SERVICES
Special Reports and Other Services
The Fund provides client shareholders with annual audited financial reports and
unaudited semi-annual financial reports. In addition, the investment adviser's
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
adviser expects 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 value for
the Portfolio is also available by using the above "800" telephone number.
Exchange Privilege
The Portfolio's shares may be exchanged for shares of the other portfolios of
the Fund or the institutional class shares of the other funds in Delaware
Investments based on the respective net asset values of the shares involved and
as long as the portfolio's minimum is satisfied. There are no minimum purchase
requirements for the institutional class shares of the other Delaware
Investments 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 dividends monthly and distribute them monthly.
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, 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 has qualified, and intends to continue to qualify, as a regulated
investment company under the Internal Revenue Code of 1986, as amended (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 and it satisfies certain other requirements relating to the sources
of its income and diversification of its assets.
On August 5, 1997, President Clinton signed into law the Taxpayer Relief Act of
1997 (the "1997 Act"). This new law makes sweeping changes in the Internal
Revenue Code (the "Code"). Because many of these changes are complex, and only
indirectly affect the Portfolio and its distributions to you, they are discussed
in the Statement of Additional Information. Changes in the treatment of capital
gains, however, are discussed in this section.
The Treatment of Capital Gain Distributions under the Taxpayer Relief Act of
1997
The 1997 Act creates a category of long-term capital gain for individuals that
will be taxed at new lower tax rates. For investors who are in the 28% or higher
federal income tax brackets, these gains will be taxed at a maximum of 20%. For
investors who are in the 15% federal income tax bracket, these gains will be
taxed at a maximum of 10%. Capital gain distributions will qualify for these new
maximum tax rates, depending on when the Portfolio's securities were sold and
how long they were held by the Portfolio before they were sold. The holding
periods for which the new rates apply were revised by the Internal Revenue
Service Restructuring and Reform Act of 1998. Investors who want more
information on holding periods and other qualifying rules relating to these new
rates should review the expanded discussion in the Statement of Additional
Information, or should contact their own tax advisers.
The Fund will advise you in its annual information reporting at calendar year
end of the amount of its capital gain distributions which will qualify for these
maximum federal tax rates.
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.
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 the 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.
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In addition to the federal taxes described above, shareholders may or may not be
subject to various state and local taxes. For example, distributions of interest
income and capital gains realized from certain types of U.S. government
securities may be exempt from state personal income taxes. Because investors'
state and local taxes may be different than the federal taxes described above,
investors should consult their own tax advisers. 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.
Foreign Taxes
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 its gross income its 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.
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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 U.S. securities
exchange for which market quotations are available are valued at the last quoted
sale price on the day the valuation is made. Price information on listed
securities is taken from the exchange where the security is primarily traded.
Securities listed on a foreign exchange are valued at the last quoted sale price
available before the time when net assets are valued. Unlisted securities and
listed securities not traded on the valuation date for which market quotations
are readily available are valued at a price that is considered to best represent
fair value within a range not in excess of the current asked price nor less than
the current bid prices. Domestic equity securities traded over-the-counter,
domestic equity securities which are not traded on the valuation date and U.S.
government securities are priced at the mean of the bid and ask price.
Bonds and other fixed-income securities are valued according to the broadest and
most representative market, which will ordinarily be the over-the-counter
market. In addition, bonds and other fixed-income securities may be valued on
the basis of prices provided by a pricing service when such prices are believed
to reflect the fair market value of such securities. The prices provided by a
pricing service are determined without regard to bid or last sale prices but
take into account institutional size trading in similar groups of securities and
any developments related to the specific securities. Securities not priced in
this manner are valued at the most recent quoted mean price, or, when stock
exchange valuations are used, at the latest quoted sale price on the day of
valuation. If there is no such reported sale, the latest quoted mean price will
be used. Securities with remaining maturities of 60 days or less are valued at
amortized cost, if it approximates market value. In the event that amortized
cost does not approximate market value, market prices as determined above will
be used.
Exchange-traded options are valued at the last reported sales price or, if no
sales are reported, at the mean between the last reported bid and ask prices.
Non-exchange traded options are valued at fair value using a mathematical model.
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
Saturday). 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, 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 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 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 Fund. These services may be used by the investment adviser in
servicing any of their other accounts. Some securities considered for investment
by the Portfolio may also be appropriate for other clients served by the
investment adviser. 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 the investment adviser is considered at or about the same time,
transactions in such securities will be allocated among the Portfolio and
clients in a manner deemed fair and reasonable. Although there is no specified
formula for allocating such transactions, the various allocation methods used
and the results of such allocations are subject to periodic review by the Fund's
directors.
Subject to best price and execution, Portfolio orders may be placed with
qualified broker/dealers who recommend the Fund's portfolios or who act as
agents in the purchase of shares of the portfolios for their clients.
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PERFORMANCE INFORMATION
From time to time, the Portfolio may quote yield in advertising and other types
of sales literature. The current yield for the Portfolio will be calculated by
dividing the annualized net investment income earned by the Portfolio 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. The 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. The
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.
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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 two billion shares of common stock
with $.01 par value and fifty million 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. The shares of the Portfolio have
noncumulative voting rights, which means that the holders of more than 50% of
the shares voting for the election of directors/trustees can elect 100% of the
directors/trustees if they choose to do so. Shares of the 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 the
Portfolio or class of shares of the Portfolio when otherwise expressly required
by law. The Fund issues certificates for shares only if a shareholder submits a
specific request. Under Maryland law, the Fund is not required, and does not
intend, to hold annual meetings of its shareholders unless, under certain
circumstances, it is required to do so under the 1940 Act.
Custodian Bank
The Chase Manhattan Bank, 4 Chase Metrotech Center, Brooklyn, NY 11245 serves as
custodian for the Portfolio.
Independent Auditors
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
its investment adviser under its Investment Advisory Agreement and the
distributor under the Distribution Agreement.
Litigation
The Fund is not involved in any litigation.
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APPENDIX A - RATINGS
Bonds
Excerpts from Moody's description of its bond ratings: Aaa--judged to be the
best quality. They carry the smallest degree of investment risk; Aa--judged to
be of high quality by all standards; A--possess favorable attributes and are
considered "upper medium" grade obligations; Baa--considered as medium grade
obligations. Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time; Ba--judged to have
speculative elements; their future cannot be considered as well assured. Often
the protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class; B--generally lack
characteristics of the desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over any long period
of time may be small; Caa--are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest; Ca--represent obligations which are speculative in a high degree. Such
issues are often in default or have other marked shortcomings; C--the lowest
rated class of bonds and issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.
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 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.
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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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