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(DPT19-SAI/PART B)
PART B
DELAWARE POOLED TRUST, INC.
STATEMENT OF ADDITIONAL INFORMATION
AUGUST 31, 1998
(revised December 28, 1998)
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Delaware Pooled Trust, Inc. ("Pooled Trust, Inc.") is an open-end
management investment company. Pooled Trust, Inc. consists of 19 series
("Portfolios") offering a broad range of investment choices. Pooled Trust, Inc.
is designed to provide clients with attractive alternatives for meeting their
investment needs. This Statement of Additional Information (Part B of Pooled
Trust, Inc.'s registration statement) addresses information of Pooled Trust,
Inc. applicable to each of the 19 Portfolios. In addition, investors may make
investments in The Asset Allocation Portfolio. That Portfolio is a "fund of
funds" which primarily invests in several of the Portfolios of Pooled Trust,
Inc. The Asset Allocation Portfolio is a series of Delaware Group Foundation
Funds ("Foundation Funds") which is also an open-end management investment
company. Although the Asset Allocation Portfolio is technically not a Portfolio
of the Fund, all references herein to "Portfolio" or "the Fund" shall be deemed
to also include The Asset Allocation Portfolio, where appropriate.
This Statement of Additional Information is not a prospectus but should
be read in conjunction with the related Prospectus for each Portfolio. To obtain
the proper Prospectus for the Portfolios, please write to the Delaware Pooled
Trust, Inc. at One Commerce Square, 2005 Market Street, Philadelphia, PA 19103,
Attn: Client Services or call Pooled Trust, Inc. at 1-800-231-8002.
Correspondence relating to The Asset Allocation Portfolio will be forwarded to
Foundation Funds. To obtain the Prospectus for the Class A, B and C Shares or
the Institutional Class of The Real Estate Investment Trust Portfolio, write to
the Distributor at 1818 Market Street, Philadelphia, PA 19103 or call
1-800-523-1918 for the Class A, B and C Shares or 1-800-828-5052 for the
Institutional Class.
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(DPT19-SAI/PART B)
TABLE OF CONTENTS
Page
Investment Policies, Portfolio Techniques and Risk Considerations
Accounting and Tax Issues
Performance Information
Trading Practices and Brokerage
Purchasing Shares
Determining Offering Price and Net Asset Value
Redemption and Repurchase
Dividends and Capital Gain Distributions
Taxes
Investment Management Agreements
Officers and Directors
Exchange Privilege General Information
Appendix A--IRA Information
Financial Statements
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(DPT19-SAI/PART B)
INVESTMENT POLICIES, PORTFOLIO TECHNIQUES AND RISK CONSIDERATIONS
Investment Restrictions
Pooled Trust, Inc. has adopted the following restrictions for each of
the Portfolios (except where otherwise noted) which, along with its respective
investment objective (except in the case of The International Mid-Cap Sub
Portfolio), cannot be changed without approval by the holders of a "majority" of
the respective Portfolio's outstanding shares, which is a vote by the holders of
the lesser of a) 67% or more of the voting securities present in person or by
proxy at a meeting, if the holders of more than 50% of the outstanding voting
securities are present or represented by proxy; or b) more than 50% of the
outstanding voting securities. The percentage limitations contained in the
restrictions and policies set forth herein apply at the time a Portfolio
purchases securities.
Each Portfolio (other than The International Mid-Cap Sub Portfolio, The
Mid-Cap Value Equity Portfolio, The Global Equity Portfolio, The Emerging
Markets Portfolio, The Aggregate Fixed Income Portfolio and The Diversified Core
Fixed Income Portfolio) shall not:
1. Make loans, except to the extent that purchases of debt obligations
(including repurchase agreements), in accordance with a Portfolio's investment
objective and policies, are considered loans, and except that each Portfolio may
loan up to 25% of its respective assets to qualified broker/dealers or
institutional investors for their use relating to short sales or other security
transactions.
2. Purchase or sell real estate or real estate limited partnerships,
but this shall not otherwise prevent a Portfolio from investing in securities
secured by real estate or interests therein and except that The Real Estate
Investment Trust Portfolio and The Real Estate Investment Trust Portfolio II
(collectively, "The Real Estate Investment Trust Portfolios") may each own real
estate directly as a result of a default on securities the Portfolio owns.
3. Engage in the underwriting of securities of other issuers, except
that in connection with the disposition of a security, a Portfolio may be deemed
to be an "underwriter" as that term is defined in the Securities Act of 1933.
4. Make any investment which would cause more than 25% of the market or
other fair value of its respective total assets to be invested in the securities
of issuers all of which conduct their principal business activities in the same
industry, except that each of The Real Estate Investment Trust Portfolios shall
invest in excess of 25% of its total assets in the securities of issuers in the
real estate industry. This restriction does not apply to obligations issued or
guaranteed by the U.S. government, its agencies or instrumentalities.
5. Purchase or sell commodities or commodity contracts, except that The
Mid-Cap Growth Equity Portfolio, The Real Estate Investment Trust Portfolios and
The International Fixed Income Portfolio may enter into futures contracts and
may purchase and sell options on futures contracts in accordance with the
related Prospectus, subject to investment restriction 6 below.
6. Enter into futures contracts or options thereon, except that The
Mid-Cap Growth Equity Portfolio, The Real Estate Investment Trust Portfolios and
The International Fixed Income Portfolio may each enter into futures contracts
and options thereon to the extent that not more than 5% of its assets are
required as futures contract margin deposits and premiums on options and only to
the extent that obligations under such contracts and transactions represent not
more than 20% of its total assets.
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(DPT19-SAI/PART B)
7. Make short sales of securities, or purchase securities on margin,
except that The Mid-Cap Growth Equity Portfolio, The Real Estate Investment
Trust Portfolios and The International Fixed Income Portfolio may satisfy margin
requirements with respect to futures transactions.
8. Purchase or retain the securities of any issuer which has an
officer, director or security holder who is a director or officer of Pooled
Trust, Inc. or of either of the investment advisers if or so long as the
directors and officers of Pooled Trust, Inc. and of the investment advisers
together own beneficially more than 5% of any class of securities of such
issuer.
9. Invest in interests in oil, gas and other mineral leases or other
mineral exploration or development programs.
10. Borrow money, except as a temporary measure for extraordinary
purposes or to facilitate redemptions. Any borrowing will be done from a bank
and to the extent that such borrowing exceeds 5% of the value of its respective
net assets, asset coverage of at least 300% is required. In the event that such
asset coverage shall at any time fall below 300%, a Portfolio shall, within
three days thereafter (not including Sunday or holidays) or such longer period
as the Securities and Exchange Commission ("Commission") may prescribe by rules
and regulations, reduce the amount of its borrowings to such an extent that the
asset coverage of such borrowings shall be at least 300%. No investment
securities will be purchased while a Portfolio has an outstanding borrowing. A
Portfolio will not pledge more than 10% of its respective net assets. A
Portfolio will not issue senior securities as defined in the Investment Company
Act of 1940 (the "1940 Act"), except for notes to banks.
In addition to the restrictions set forth above, in connection with the
qualification of a Portfolio's shares for sale in certain states, a Portfolio
may not invest in warrants if such warrants, valued at the lower of cost or
market, would exceed 5% of the value of a Portfolio's net assets. Included
within such amount, but not to exceed 2% of a Portfolio's net assets may be
warrants which are not listed on the New York Stock Exchange or American Stock
Exchange. Warrants acquired by a Portfolio in units or attached to securities
may be deemed to be without value.
Additional Fundamental Investment Restrictions
The following additional investment restrictions apply to each of the
Portfolios, except The International Mid-Cap Sub Portfolio, The Small/Mid-Cap
Value Equity Portfolio, The Labor Select International Equity Portfolio, The
Real Estate Investment Trust Portfolios, The International Fixed Income
Portfolio, The High-Yield Bond Portfolio, The Emerging Markets Portfolio, The
Aggregate Fixed Income Portfolio and The Diversified Core Fixed Income
Portfolio, or as otherwise noted. They cannot be changed without approval by the
holders of a "majority" of the respective Portfolio's outstanding shares, as
described above.
Each Portfolio (other than The International Mid-Cap Sub Portfolio, The
Small/Mid-Cap Value Equity Portfolio, The Labor Select International Equity
Portfolio, The Real Estate Investment Trust Portfolios, The International Fixed
Income Portfolio, The High-Yield Bond Portfolio, The Emerging Markets Portfolio,
The Aggregate Fixed Income Portfolio and The Diversified Core Fixed Income
Portfolio shall not:
1. As to 75% of its respective total assets, invest more than 5% of its
respective total assets in the securities of any one issuer (other than
obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities). This restriction shall also apply to The Labor Select
International Equity Portfolio and The
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(DPT19-SAI/PART B)
High-Yield Bond Portfolio. This restriction shall apply to only 50% of the total
assets of The Global Fixed Income Portfolio.
2. Invest in securities of other investment companies, except by
purchase in the open market involving only customary brokers' commissions or in
connection with a merger, consolidation or other acquisition or as may otherwise
be permitted by the 1940 Act.
3. Purchase more than 10% of the outstanding voting securities of any
issuer, or invest in companies for the purpose of exercising control or
management.
4. Write, purchase or sell options, puts, calls or combinations thereof
with respect to securities, except that The Mid-Cap Growth Equity Portfolio may:
(a) write covered call options with respect to any or all parts of its portfolio
securities; (b) purchase call options to the extent that the premiums paid on
all outstanding call options do not exceed 2% of the Portfolio's total assets;
(c) write secured put options; and (d) purchase put options, if the Portfolio
owns the security covered by the put option at the time of purchase, and
provided that premiums paid on all put options outstanding do not exceed 2% of
its total assets. The Portfolio may sell call or put options previously
purchased and enter into closing transactions with respect to the activities
noted above.
5. Invest more than 5% of the value of its respective total assets in
securities of companies less than three years old. Such three-year period shall
include the operation of any predecessor company or companies.
6. Invest more than 10% of its respective total assets in repurchase
agreements maturing in more than seven days and other illiquid assets.
For purposes of investment restriction 6, it is Pooled Trust, Inc.'s
policy, changeable without shareholder vote, that "illiquid assets" include
securities of foreign issuers which are not listed on a recognized U.S. or
foreign exchange and for which a bona fide market does not exist at the time of
purchase or subsequent valuation.
The Labor Select International Equity Portfolio, The Real Estate Investment
Trust Portfolios, The International Fixed Income Portfolio and
The High-Yield Bond Portfolio
The following additional investment restrictions apply to The Labor
Select International Equity Portfolio, The Real Estate Investment Trust
Portfolios, The International Fixed Income Portfolio and The High-Yield Bond
Portfolio. Unlike the investment restrictions listed above, these are
non-fundamental investment restrictions and may be changed by Pooled Trust,
Inc.'s Board of Directors without shareholder approval.
Except as noted below, each of The Labor Select International Equity
Portfolio, The Real Estate Investment Trust Portfolios, The International Fixed
Income Portfolio and The High-Yield Bond Portfolio shall not:
1. As to 50% of the respective total assets of The Real Estate
Investment Trust Portfolios and The International Fixed Income Portfolio, invest
more than 5% of its respective total assets in the securities of any one issuer
(other than obligations issued or guaranteed by the U.S. government, its
agencies or instrumentalities).
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(DPT19-SAI/PART B)
2. Invest in securities of other investment companies, except by
purchase in the open market involving only customary brokers' commissions or in
connection with a merger, consolidation or other acquisition or as may otherwise
be permitted by the 1940 Act.
3. Invest more than 5% of the value of its respective total assets in
securities of companies less than three years old. Such three-year old period
shall include the operation of any predecessor company or companies. This
restriction shall not apply to The Real Estate Investment Trust Portfolios and
their investments in the securities of real estate investment trusts.
4. Purchase more than 10% of the outstanding voting securities of any
issuer, or invest in companies for the purpose of exercising control or
management.
5. Write, purchase or sell options, puts, calls or combinations thereof
with respect to securities, except that each of The Real Estate Investment Trust
Portfolios may: (a) write covered call options with respect to any or all parts
of its portfolio securities; (b) purchase call options to the extent that the
premiums paid on all outstanding call options do not exceed 2% of the
Portfolio's total assets; (c) write secured put options; and (d) purchase put
options, if the Portfolio owns the security covered by the put option at the
time of purchase, and provided that premiums paid on all put options outstanding
do not exceed 2% of its total assets. Each Portfolio may sell call or put
options previously purchased and enter into closing transactions with respect to
the activities noted above.
6. Invest more than 15% of its respective total assets, determined at
the time of purchase, in repurchase agreements maturing in more than seven days
and other illiquid assets.
For purposes of investment restriction 6, it is Pooled Trust, Inc.'s
policy that "illiquid assets" include securities of foreign issuers which are
not listed on a recognized U.S. or foreign exchange and for which no bona fide
market exists at the time of purchase.
The Mid-Cap Value Equity Portfolio, The Global Equity Portfolio,
The Emerging Markets Portfolio, The Aggregate Fixed Income Portfolio and
The Diversified Core Fixed Income Portfolio
Pooled Trust, Inc. has adopted the following restrictions for The
Mid-Cap Value Equity Portfolio, The Global Equity Portfolio, The Emerging
Markets Portfolio, The Aggregate Fixed Income Portfolio and The Diversified Core
Fixed Income Portfolio (except where otherwise noted) which, along with each
such Portfolio's investment objective, cannot be changed without approval by a
"majority" of the Portfolio's outstanding shares, as described above. The
percentage limitations contained in these restrictions and policies apply at the
time a Portfolio purchases securities.
Except as noted below, each of The Mid-Cap Value Equity Portfolio, The Global
Equity Portfolio, The Emerging Markets Portfolio, The Aggregate Fixed Income
Portfolio and The Diversified Core Fixed Income Portfolio shall not:
1. As to 75% of its total assets, invest more than 5% of its total
assets in the securities of any one issuer (other than obligations issued, or
guaranteed by, the U.S. government, its agencies or instrumentalities).
This restriction shall not apply to The Emerging Markets Portfolio.
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(DPT19-SAI/PART B)
2. Invest 25% or more of its total assets in any one industry provided
that there is no limitation with respect to investments in obligations issued or
guaranteed as to principal or interest by the U.S.
Government, its agencies or instrumentalities.
3. Make loans other than by the purchase of all or a portion of a
publicly or privately distributed issue of bonds, debentures or other debt
securities of the types commonly offered publicly or privately and purchased by
financial institutions (including repurchase agreements), whether or not the
purchase was made upon the original issuance of the securities, and except that
the Portfolio may loan its assets to qualified broker/dealers or institutional
investors.
4. Engage in underwriting of securities of other issuers, except that
portfolio securities, including securities purchased in private placements, may
be acquired under circumstances where, if sold, the Portfolio might be deemed to
be an underwriter under the Securities Act of 1933. No limit is placed on the
proportion of the Portfolio's assets which may be invested in such securities.
5. Borrow money or issue senior securities, except to the extent
permitted by the 1940 Act or any rule or order thereunder or interpretation
thereof. Subject to the foregoing, the Portfolio may engage in short sales,
purchase securities on margin, and write put and call options.
6. Purchase or sell physical commodities or physical commodity
contracts, including physical commodity options or futures contracts in a
contract market or other futures market.
7. Purchase or sell real estate; provided that the Portfolio may invest
in securities secured by real estate or interests therein or issued by companies
which invest in real estate or interests therein.
The International Mid-Cap Sub Portfolio, The Small-Cap Growth Equity Portfolio,
The Growth and Income Portfolio and The Asset Allocation Portfolio
Pooled Trust, Inc. has adopted the following restrictions for The
Small-Cap Growth Equity Portfolio and The Growth and Income Portfolio and
Foundation Funds has adopted the following restrictions for The Asset Allocation
Portfolio. These restrictions cannot be changed without approval by a "majority"
of the Portfolio's outstanding shares, as described above. Except with respect
to borrowing, the percentage limitations contained in these restrictions and
policies apply at the time a Portfolio purchases securities.
Each of The International Mid-Cap Sub Portfolio, The Small-Cap Growth Equity
Portfolio, The Growth and Income Portfolio and The Asset Allocation Portfolio
shall not:
1. Make investments that will result in the concentration (as that term
may be defined in the 1940 Act, any rule or order thereunder, or U.S. Securities
and Exchange Commission ("SEC") staff interpretation thereof) of its investments
in the securities of issuers primarily engaged in the same industry, provided
that this restriction does not prevent a Portfolio from investing in obligations
issued or guaranteed by the U.S.
government, its agencies or instrumentalities, or in certificates of deposit.
2. Borrow money or issue senior securities, except as the 1940 Act, any
rule or order thereunder, or SEC staff interpretation thereof, may permit.
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(DPT19-SAI/PART B)
3. Underwrite the securities of other issuers, except that a Portfolio
may engage in transactions involving the acquisition, disposition or resale of
its portfolio securities, under circumstances where it may be considered to be
an underwriter under the Securities Act of 1933.
4. Purchase or sell real estate, unless acquired as a result of
ownership of securities or other instruments and provided that this restriction
does not prevent a Portfolio from investing in issuers which invest, deal or
otherwise engage in transactions in real estate or interests therein, or
investing in securities that are secured by real estate or interests therein.
5. Purchase or sell physical commodities, unless acquired as a result
of ownership of securities or other instruments and provided that this
restriction does not prevent a Portfolio from engaging in transactions involving
futures contracts and options thereon or investing in securities that are
secured by physical commodities.
6. Make loans, provided that this restriction does not prevent a
Portfolio from purchasing debt obligations, entering into repurchase agreements,
loaning its assets to broker/dealers or institutional investors and investing in
loans, including assignments and participation interests.
In addition to the fundamental policies and investment restrictions
described above, and the various general investment policies described in the
Prospectus, The International Mid-Cap Sub Portfolio, The Small- Cap Growth
Equity Portfolio, The Growth and Income Portfolio and The Asset Allocation
Portfolio will be subject to the following investment restrictions (except as
otherwise noted), which are considered non- fundamental and may be changed by
the Board of Directors or Trustees, as applicable, without shareholder approval.
1. The International Mid-Cap Sub Portfolio, The Small-Cap Growth Equity
Portfolio, The Growth and Income Portfolio and The Asset Allocation Portfolio
are permitted to invest in other investment companies, including open-end,
closed-end or unregistered investment companies, either within the percentage
limits set forth in the 1940 Act , any rule or order thereunder or SEC staff
interpretation thereof, or without regard to percentage limits in connection
with a merger, reorganization, consolidation or other similar transaction.
However, none of The International Mid-Cap Sub Portfolio, The Small-Cap Growth
Equity Portfolio or The Growth and Income Portfolio may operate as a "fund of
funds" which invests primarily in the shares of other investment companies as
permitted by Section 12(d)(1)(F) or (G) of the 1940 Act, if its own shares are
utilized as investments by such a "fund of funds."
2. A Portfolio may not invest more than 15% of its net assets in
securities which it can not sell or dispose of in the ordinary course of
business within seven days at approximately the value at which the Fund has
valued the investment.
Foreign Investment Information (The International Mid-Cap Sub Portfolio, The
International Equity Portfolio, The Labor Select International Equity Portfolio,
The Real Estate Investment Trust Portfolios, The Global Fixed Income Portfolio,
The International Fixed Income Portfolio, The High-Yield Bond Portfolio, The
Diversified Core Fixed Income Portfolio, The Emerging Markets Portfolio, The
Global Equity Portfolio, The Asset Allocation Portfolio, The Small-Cap Growth
Equity Portfolio and The Growth and Income Portfolio)
Investors in The International Mid-Cap Sub Portfolio, The International
Equity Portfolio, The Labor Select International Equity Portfolio, The Global
Fixed Income Portfolio, The International Fixed Income
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(DPT19-SAI/PART B)
Portfolio, The Emerging Markets Portfolio and The Global Equity Portfolio (as
well as in The Real Estate Investment Trust Portfolios, The Diversified Core
Fixed Income Portfolio, The High-Yield Bond Portfolio, The Asset Allocation
Portfolio, The Small-Cap Growth Equity Portfolio and The Growth and Income
Portfolio, each of which possesses a limited ability to invest in foreign
securities) should recognize that investing in securities issued by foreign
corporations and foreign governments involves certain considerations, including
those set forth in the related Prospectus, which are not typically associated
with investments in United States issuers. Since the securities of foreign
issuers are frequently denominated in foreign currencies, and since each
Portfolio may temporarily hold uninvested reserves in bank deposits in foreign
currencies, these Portfolios will be affected favorably or unfavorably by
changes in currency rates and in exchange control regulations, and may incur
costs in connection with conversions between various currencies. The investment
policies of each Portfolio, except The High-Yield Bond Portfolio, permit each to
enter into forward foreign currency exchange contracts and permit The
International Fixed Income Portfolio, The Diversified Core Fixed Income
Portfolio, The Emerging Markets Portfolio, The Global Equity Portfolio, The
Asset Allocation Portfolio, The Small-Cap Growth Equity Portfolio and The Growth
and Income Portfolio to engage in certain options and futures activities, in
order to hedge holdings and commitments against changes in the level of future
currency rates. See Foreign Currency Transactions (The International Equity
Portfolio, The International Mid-Cap Sub Portfolio, The Labor Select
International Equity Portfolio, The Real Estate Investment Trust Portfolios, The
Global Fixed Income Portfolio, The International Fixed Income Portfolio, The
Emerging Markets Portfolio, The Global Equity Portfolio, The Diversified Core
Fixed Income Portfolio, The Asset Allocation Portfolio, The Small-Cap Growth
Equity Portfolio and The Growth and Income Portfolio), below.
There has been in the past, and there may be again in the future, an
interest equalization tax levied by the United States in connection with the
purchase of foreign securities such as those purchased by the Portfolios.
Payment of such interest equalization tax, if imposed, would reduce a
Portfolio's rate of return on its investment. Dividends paid by foreign issuers
may be subject to withholding and other foreign taxes which may decrease the net
return on such investments as compared to dividends paid to a Portfolio by
United States issuers. Special rules govern the federal income tax treatment of
certain transactions denominated in terms of a currency other than the U.S.
dollar or determined by reference to the value of one or more currencies other
than the U.S. dollar. The types of transactions covered by the special rules
include, as relevant, the following: (i) the acquisition of, or becoming the
obligor under, a bond or other debt instrument (including, to the extent
provided in Treasury Regulations, preferred stock); (ii) the accruing of certain
trade receivables and payables; and (iii) the entering into or acquisition of
any forward contract and similar financial instrument if such instrument is not
"marked to market." The disposition of a currency other than the U.S. dollar by
a U.S. taxpayer is also treated as a transaction subject to the special currency
rules. With respect to transactions covered by the special rules, foreign
currency gain or loss is calculated separately from any gain or loss on the
underlying transaction and is normally taxable as ordinary gain or loss. A
taxpayer may elect to treat as capital gain or loss foreign currency gain or
loss arising from certain identified forward contracts that are capital assets
in the hands of the taxpayer and which are not part of a straddle. The Treasury
Department has authority to issue regulations under which certain transactions
subject to the special currency rules that are part of a "section 988 hedging
transaction" (as defined in the Internal Revenue Code of 1986, as amended (the
"Code"), and the Treasury Regulations) will be integrated and treated as a
single transaction or otherwise treated consistently for purposes of the Code.
Any gain or loss attributable to the foreign currency component of a transaction
engaged in by a Portfolio which is not subject to the special currency rules
(such as foreign equity investments other than certain preferred stocks) will be
treated as capital gain or loss and will not be segregated from the gain or loss
on the underlying transaction. It is anticipated that some of the non-U.S.
dollar denominated investments and foreign currency contracts the Portfolios may
make or enter into will be subject to the special currency rules described
above.
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As disclosed in the related Prospectus, there are a number of risks
involved in investing in foreign securities, including securities of issuers in
emerging market countries in which The Emerging Markets, The International
Equity, The Labor Select International Equity, The Global Equity, The
International Fixed Income, The Global Fixed Income (and with respect to The
Real Estate Investment Trust, The High Yield Bond, The Diversified Core Fixed
Income Portfolios, The Asset Allocation Portfolio, The Small-Cap Growth Equity
Portfolio and The Growth and Income Portfolio as to 10%, 10%, 10%, 5%, 10%, 5%
and 20% of their assets, respectively) Portfolios may invest. For example, the
assets and profits appearing on the financial statements of a developing or
emerging country issuer may not reflect its financial position or results of
operations in the way they would be reflected had the financial statements been
prepared in accordance with United States generally accepted accounting
principles. Also, for an issuer that keeps accounting records in a local
currency, inflation accounting rules may require both tax and accounting
purposes, that certain assets and liabilities be restated on the issuer's
balance sheet in order to express items in terms of currency or constant
purchasing power. Inflation accounting may indirectly generate losses on
profits.
With reference to the Portfolios' investments in foreign government
securities, there is the risk that a foreign governmental issuer may default on
its obligations. If such a default occurs, a Portfolio may have limited
effective legal recourse against the issuer and/or guarantor. Remedies must, in
some cases, be pursued in the courts of the defaulting party itself, and the
ability of the holder of foreign government and government- related debt
securities to obtain recourse may be subject to the political climate in the
relevant country. In addition, no assurance can be given that the holders of
commercial bank debt will not contest payments to the holders of other foreign
government and government-related debt obligations in the event of default under
their commercial bank loan agreements.
The issuers of foreign government and government-related debt
securities have in the past experienced substantial difficulties in servicing
their external debt obligations, which have 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 Brady Bonds and other foreign
government and government-related securities will not be subject to similar
defaults or restructuring arrangements which may adversely affect the value of
such investments. Furthermore, certain participants in the secondary market for
such debt may be directly involved in negotiating the terms of these
arrangements and may therefore have access to information not available to other
market participants.
Investments and opportunities for investments by foreign investors in
emerging market countries are subject to a variety of national policies and
restrictions. These restrictions may take the form of prior governmental
approval, limits on the amount or type of securities held by foreigners, limits
on the types of companies in which foreigners may invest and prohibitions on
foreign investments in issuers or industries deemed sensitive to national
interests. Additional restrictions may be imposed at any time by these or other
countries in which the Portfolios' invest. Although these restrictions may in
the future make it undesirable to invest in emerging countries, a Portfolio's
adviser or sub-adviser, as relevant, does not believe that any current
registration restrictions would affect its decision to invest in such countries.
As disclosed in the Prospectus for The International Mid-Cap Sub
Portfolio, the foreign short-term fixed-income securities in which the Portfolio
may invest may be U.S. dollar or foreign currency denominated,
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(DPT19-SAI/PART B)
including the EURO. Such securities may include supranational entities. A
supranational entity is an entity established or financially supported by the
national governments of one or more countries to promote development or
reconstruction. They include: The Work Bank, European Investment Bank, Asian
Development Bank, European Economic Community and the Inter-American Development
Bank. Such fixed-income securities will be typically rated, at the time of
purchase, AA or higher by Standard & Poor's Ratings Group or Aa or higher by
Moody's Investor Service, Inc. or of comparable quality as determined by the
Portfolio's investment adviser.
Foreign Currency Transactions (The International Equity Portfolio, The
International Mid-Cap Sub Portfolio, The Labor Select International Equity
Portfolio, The Real Estate Investment Trust Portfolios, The Global Fixed Income
Portfolio, The International Fixed Income Portfolio, The Emerging Markets
Portfolio, The Global Equity Portfolio, The Diversified Core Fixed Income
Portfolio, The Asset Allocation Portfolio, The Small-Cap Growth Equity Portfolio
and The Growth and Income Portfolio)
The International Equity Portfolio, The International Mid-Cap Sub
Portfolio, The Labor Select International Equity Portfolio, The Global Fixed
Income Portfolio, The International Fixed Income Portfolio, The Emerging Markets
Portfolio and The Global Equity Portfolio (as well as The Real Estate Investment
Trust Portfolios, The Diversified Core Fixed Income Portfolio, The Asset
Allocation Portfolio, The Small-Cap Growth Equity Portfolio and The Growth and
Income Portfolio, consistent with their limited ability to invest in foreign
securities) may purchase or sell currencies and/or engage in forward foreign
currency transactions in order to expedite settlement of portfolio transactions
and to minimize currency value fluctuations.
Forward foreign currency contracts are traded in the interbank market
conducted directly between currency traders (usually large commercial banks) and
their customers. A forward contract generally has no deposit requirement, and no
commissions are charged at any stage for trades. A Portfolio will account for
forward contracts by marking to market each day at daily exchange rates.
When a Portfolio enters into a forward contract to sell, for a fixed
amount of U.S. dollars or other appropriate currency, the amount of foreign
currency approximating the value of some or all of its assets denominated in
such foreign currency, its Custodian Bank will place or will cause to be placed
cash or liquid equity or debt securities in a separate account of that Portfolio
in an amount not less than the value of that Portfolio's total assets committed
to the consummation of such forward contracts. If the additional cash or
securities placed in the separate account declines, additional cash or
securities will be placed in the account on a daily basis so that the value of
the account will equal the amount of that Portfolio's commitments with respect
to such contracts.
As noted in the related Prospectus, The International Fixed Income
Portfolio, The Emerging Markets Portfolio, The Global Equity Portfolio, The
Diversified Core Fixed Income Portfolio and The Asset Allocation Portfolio may
also enter into transactions involving foreign currency options, futures
contracts and options on futures contracts, in order to minimize the currency
risk in its investment portfolio.
Foreign currency options are traded in a manner substantially similar
to options on securities. In particular, an option on foreign currency provides
the holder with the right to purchase, in the case of a call option, or to sell,
in the case of a put option, a stated quantity of a particular currency for a
fixed price up to a stated expiration date. The writer of the option undertakes
the obligation to deliver, in the case of a call option, or to purchase, in the
case of a put option, the quantity of the currency called for in the option,
upon exercise of the option by the holder.
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(DPT19-SAI/PART B)
As in the case of other types of options, the holder of an option on
foreign currency is required to pay a one-time, non-refundable premium, which
represents the cost of purchasing the option. The holder can lose the entire
amount of this premium, as well as related transaction costs, but not more than
this amount. The writer of the option, in contrast, generally is required to
make initial and variation margin payments, similar to margin deposits required
in the trading of futures contacts and the writing of other types of options.
The writer is therefore subject to risk of loss beyond the amount originally
invested and above the value of the option at the time it is entered into.
Certain options on foreign currencies, like forward contracts, are
traded over-the-counter through financial institutions acting as market-makers
in such options and the underlying currencies. Such transactions therefore
involve risks not generally associated with exchange-traded instruments. Options
on foreign currencies may also be traded on national securities exchanges
regulated by the Commission or commodities exchanges regulated by the Commodity
Futures Trading Commission.
A foreign currency futures contract is a bilateral agreement providing
for the purchase and sale of a specified type and amount of a foreign currency.
By its terms, a futures contract provides for a specified settlement date on
which, in the case of the majority of foreign currency futures contracts, the
currency underlying the contract is delivered by the seller and paid for by the
purchaser, or on which, in the case of certain futures contracts, the difference
between the price at which the contract was entered into and the contract's
closing value is settled between the purchaser and seller in cash. Futures
contracts differ from options in that they are bilateral agreements, with both
the purchaser and the seller equally obligated to complete the transactions. In
addition, futures contracts call for settlement only on the expiration date, and
cannot be "exercised" at any other time during their term.
The purchase or sale of a futures contract also differs from the
purchase or sale of a security or the purchase of an option in that no purchase
price is paid or received. Instead, an amount of cash or cash equivalents, which
varies but may be as low as 5% or less of the value of the contract, must be
deposited with the broker as "initial margin" as a good faith deposit.
Subsequent payments to and from the broker referred to as "variation margin" are
made on a daily basis as the value of the currency underlying the futures
contract fluctuates, making positions in the futures contract more or less
valuable, a process known as "marking to the market."
A futures contract may be purchased or sold only on an exchange, known
as a "contract market," designated by the Commodity Futures Trading Commission
for the trading of such contract, and only through a registered futures
commission merchant which is a member of such contract market. A commission must
be paid on each completed purchase and sale transaction. The contract market
clearinghouse guarantees the performance of each party to a futures contract by
in effect taking the opposite side of such contract. At any time prior to the
expiration of a futures contract, a trader may elect to close out its position
by taking an opposite position on the contract market on which the position was
entered into, subject to the availability of a secondary market, which will
operate to terminate the initial position. At that time, a final determination
of variation margin is made and any loss experienced by the trader is required
to be paid to the contract market clearing house while any profit due to the
trader must be delivered to it.
A call option on a futures contract provides the holder with the right
to purchase, or enter into a "long" position in, the underlying futures
contract. A put option on a futures contract provides the holder with the right
to sell, or enter into a "short" position, in the underlying futures contract.
In both cases, the option provides for a fixed exercise price up to a stated
expiration date. Upon exercise of the option by the holder, the contract
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(DPT19-SAI/PART B)
market clearinghouse establishes a corresponding short position for the writer
of the option, in the case of a call option, or a corresponding long position in
the case of a put option and the writer delivers to the holder the accumulated
balance in the writer's margin account which represents the amount by which the
market price of the futures contract at exercise exceeds, in the case of a call,
or is less than, in the case of a put, the exercise price of the option on the
futures contract. In the event that an option written by the Portfolio is
exercised, the Portfolio will be subject to all the risks associated with the
trading of futures contracts, such as payment of variation margin deposits. In
addition, the writer of an option on a futures contract, unlike the holder, is
subject to initial and variation margin requirements on the option position.
A position in an option on a futures contract may be terminated by the
purchaser or seller prior to expiration by effecting a closing purchase or sale
transaction, subject to the availability of a liquid secondary market, which is
the purchase or sale of an option of the same series (i.e., the same exercise
price and expiration date) as the option previously purchased or sold. The
difference between the premiums paid and received represents the trader's profit
or loss on the transaction.
An option becomes worthless to the holder when it expires. Upon
exercise of an option, the exchange or contract market clearinghouse assigns
exercise notices on a random basis to those of its members which have written
options of the same series and with the same expiration date. A brokerage firm
receiving such notices then assigns them on a random basis to those of its
customers which have written options of the same series and expiration date. A
writer therefore has no control over whether an option will be exercised against
it, nor over the timing of such exercise.
Brady Bonds (The Global Fixed Income Portfolio, The International Fixed Income
Portfolio, The Diversified Core Fixed Income Portfolio, The Emerging Markets
Portfolio and The Asset Allocation Portfolio)
The Global Fixed Income Portfolio, The International Fixed Income
Portfolio, The Diversified Core Fixed Income Portfolio, The Emerging Markets
Portfolio and The Asset Allocation Portfolio may invest, within the limits
specified in the related Prospectus, in Brady Bonds and other sovereign debt
securities of countries that have restructured or are in the process of
restructuring sovereign debt pursuant to the Brady Plan. Brady Bonds are debt
securities issued under the framework of the Brady Plan, an initiative announced
by then U.S. Treasury Secretary Nicholas F. Brady in 1989, as a mechanism for
debtor nations to restructure their outstanding external indebtedness
(generally, commercial bank debt). In restructuring its external debt under the
Brady Plan framework, a debtor nation negotiates with its existing bank lenders
as well as multilateral institutions such as the World Bank and the
International Monetary Fund (the "IMF"). The Brady Plan framework, as it has
developed, contemplates the exchange of commercial bank debt for newly issued
bonds (Brady Bonds). The World Bank and/or the IMF support the restructuring by
providing funds pursuant to loan agreements or other arrangements which enable
the debtor nation to collateralize the new Brady Bonds or to repurchase
outstanding bank debt at a discount. Under these arrangements with the World
Bank and/or the IMF, debtor nations have been required to agree to the
implementation of certain domestic monetary and fiscal reforms. Such reforms
have included the liberalization of trade and foreign investment, the
privatization of state-owned enterprises and the setting of targets for public
spending and borrowing. These policies and programs seek to promote the debtor
country's ability to service its external obligations and promote its economic
growth and development. Investors should recognize that the Brady Plan only sets
forth general guiding principles for economic reform and debt reduction,
emphasizing that solutions must be negotiated on a case-by-case basis between
debtor nations and their creditors. The investment adviser to the Portfolios
believes that economic reforms undertaken by countries in connection with the
issuance of Brady Bonds make the debt
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(DPT19-SAI/PART B)
of countries which have issued or have announced plans to issue Brady Bonds an
attractive opportunity for investment.
To date, Mexico, Costa Rica, Venezuela, Uruguay and Nigeria have issued
approximately $50 billion of Brady Bonds, and Argentina, Brazil and the
Philippines have announced plans to issue approximately $90 billion, based on
current estimates, of Brady Bonds. Investors should recognize that Brady Bonds
have been issued only recently, and accordingly do not have a long payment
history. Agreements implemented under the Brady Plan to date are designed to
achieve debt and debt-service reduction through specific options negotiated by a
debtor nation with its creditors. As a result, the financial packages offered by
each country differ. The types of options have included the exchange of
outstanding commercial bank debt for bonds issued at 100% of face value of such
debt, bonds issued at a discount of face value of such debt, bonds bearing an
interest rate which increases over time and bonds issued in exchange for the
advancement of new money by existing lenders. Certain Brady Bonds have been
collateralized as to principal due at maturity by U.S. Treasury zero coupon
bonds with a maturity equal to the final maturity of such Brady Bonds, although
the collateral is not available to investors until the final maturity of the
Brady Bonds. Collateral purchases are financed by the IMF, the World Bank and
the debtor nations' reserves. In addition, the first two or three interest
payments on certain types of Brady Bonds may be collateralized by cash or
securities agreed upon by creditors.
Options on Securities, Futures Contracts and Options on Futures Contracts (The
Mid-Cap Growth Equity Portfolio, The Real Estate Investment Trust Portfolios,
The Diversified Core Fixed Income Portfolio, The Emerging Markets Portfolio, The
Global Equity Portfolio, The Asset Allocation Portfolio, The Small-Cap Growth
Equity Portfolio and The Growth and Income Portfolio)
In order to remain fully invested, and to reduce transaction costs, The
Mid-Cap Growth Equity Portfolio, The Real Estate Investment Trust Portfolios,
The Diversified Core Fixed Income Portfolio, The Emerging Markets Portfolio, The
Global Equity Portfolio, The Asset Allocation Portfolio, The Small-Cap Growth
Equity Portfolio and The Growth and Income Portfolio may, to the limited extent
identified in the related Prospectus, use futures contracts, options on futures
contracts and options on securities and may enter into closing transactions with
respect to such activities. The Portfolios may only enter into these
transactions for hedging purposes, if it is consistent with the Portfolios'
investment objectives and policies. The Portfolios will not engage in such
transactions to the extent that obligations resulting from these activities in
the aggregate exceed 25% of the Portfolios' assets.
Options
The Mid-Cap Growth Equity Portfolio, The Real Estate Investment Trust
Portfolios, The Emerging Markets Portfolio, The Global Equity Portfolio, The
Asset Allocation Portfolio, The Small-Cap Growth Equity Portfolio and The Growth
and Income Portfolio may purchase call options, write call options on a covered
basis, purchase put options and write put options. Writing put options will
require the Portfolio to segregate assets sufficient to cover the put while the
option is outstanding.
The Portfolios may invest in options that are either exchange-listed or
traded over-the-counter. Certain over-the-counter options may be illiquid. Thus,
it may not be possible to close options positions and this may have an adverse
impact on the Portfolios' ability to effectively hedge their securities. The
Mid-Cap Growth Equity Portfolio will not invest more than 10% of its assets in
illiquid securities, and The Real Estate Investment Trust Portfolios, The
Diversified Core Fixed Income Portfolio, The Emerging Markets Portfolio, The
Global Equity Portfolio, The Asset Allocation Portfolio, The Small-Cap Growth
Equity Portfolio and The Growth and Income Portfolio will not invest more than
15% of their respective assets in illiquid securities.
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(DPT19-SAI/PART B)
A. Covered Call Writing--The Portfolios may write covered call options
from time to time on such portion of their securities as the investment adviser
determines is appropriate given the limited circumstances under which the
Portfolios intend to engage in this activity. A call option gives the purchaser
of such option the right to buy and the writer (in this case a Portfolio) the
obligation to sell the underlying security at the exercise price during the
option period. If the security rises in value, however, the Portfolio may not
fully participate in the market appreciation.
During the option period, a covered call option writer may be assigned
an exercise notice by the broker/dealer through whom such call option was sold
requiring the writer to deliver the underlying security against payment of the
exercise price. This obligation is terminated upon the expiration of the option
period or at such earlier time in which the writer effects a closing purchase
transaction. A closing purchase transaction cannot be effected with respect to
an option once the option writer has received an exercise notice for such
option.
With respect to options on actual portfolio securities owned by the
Portfolios, a Portfolio may enter into closing purchase transactions. A closing
purchase transaction is one in which the Portfolio, when obligated as a writer
of an option, terminates its obligation by purchasing an option of the same
series as the option previously written.
Consistent with the limited purposes for which the Portfolios intend to
engage in the writing of covered calls, closing purchase transactions will
ordinarily be effected to realize a profit on an outstanding call option, to
prevent an underlying security from being called, to permit the sale of the
underlying security or to enable the Portfolios to write another call option on
the underlying security with either a different exercise price or expiration
date or both.
The Portfolios may realize a net gain or loss from a closing purchase
transaction depending upon whether the net amount of the original premium
received on the call option is more or less than the cost of effecting the
closing purchase transaction. Any loss incurred in a closing purchase
transaction may be partially or entirely offset by the premium received from a
sale of a different call option on the same underlying security. Such a loss may
also be wholly or partially offset by unrealized appreciation in the market
value of the underlying security. Conversely, a gain resulting from a closing
purchase transaction could be offset in whole or in part by a decline in the
market value of the underlying security.
If a call option expires unexercised, a Portfolio will realize a
short-term capital gain in the amount of the premium on the option, less the
commission paid. Such a gain, however, may be offset by depreciation in the
market value of the underlying security during the option period. If a call
option is exercised, a Portfolio will realize a gain or loss from the sale of
the underlying security equal to the difference between the cost of the
underlying security, and the proceeds of the sale of the security plus the
amount of the premium on the option, less the commission paid.
The market value of a call option generally reflects the market price
of an underlying security. Other principal factors affecting market value
include supply and demand, interest rates, the price volatility of the
underlying security and the time remaining until the expiration date.
The Portfolios will write call options only on a covered basis, which
means that the Portfolios will own the underlying security subject to a call
option at all times during the option period. Unless a closing purchase
transaction is effected, the Portfolios would be required to continue to hold a
security which they might
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<PAGE>
(DPT19-SAI/PART B)
otherwise wish to sell, or deliver a security it would want to hold. Options
written by the Portfolios will normally have expiration dates between one and
nine months from the date written. The exercise price of a call option may be
below, equal to, or above the current market value of the underlying security at
the time the option is written.
B. Purchasing Call Options--The Portfolios may purchase call options to
the extent that premiums paid by the Portfolios do not aggregate more than 2% of
their total assets. When a Portfolio purchases a call option, in return for a
premium paid by the Portfolio to the writer of the option, the Portfolio obtains
the right to buy the security underlying the option at a specified exercise
price at any time during the term of the option. The writer of the call option,
who receives the premium upon writing the option, has the obligation, upon
exercise of the option, to deliver the underlying security against payment of
the exercise price. The advantage of purchasing call options is that the
Portfolios may alter portfolio characteristics and modify portfolio maturities
without incurring the cost associated with portfolio transactions.
The Portfolios may, following the purchase of a call option, liquidate
their positions by effecting a closing sale transaction. This is accomplished by
selling an option of the same series as the option previously purchased. The
Portfolios will realize a profit from a closing sale transaction if the price
received on the transaction is more than the premium paid to purchase the
original call option; the Portfolios will realize a loss from a closing sale
transaction if the price received on the transaction is less than the premium
paid to purchase the original call option.
Although the Portfolios will generally purchase only those call options
for which there appears to be an active secondary market, there is no assurance
that a liquid secondary market on an exchange will exist for any particular
option, or at any particular time, and for some options no secondary market on
an exchange may exist. In such event, it may not be possible to effect closing
transactions in particular options, with the result that the Portfolios would
have to exercise their options in order to realize any profit and would incur
brokerage commissions upon the exercise of such options and upon the subsequent
disposition of the underlying securities acquired through the exercise of such
options. Further, unless the price of the underlying security changes
sufficiently, a call option purchased by a Portfolio may expire without any
value to the Portfolio.
C. Purchasing Put Options--The Portfolios may purchase put options to
the extent premiums paid by the Portfolios do not aggregate more than 2% of
their total assets. The Mid-Cap Growth Equity, The Real Estate Investment Trust
and The Diversified Core Fixed Income Portfolios will, at all times during which
they hold a put option, own the security covered by such option.
A put option purchased by the Portfolios gives them the right to sell
one of their securities for an agreed price up to an agreed date. Consistent
with the limited purposes for which the Portfolios intend to purchase put
options, the Portfolios intend to purchase put options in order to protect
against a decline in the market value of the underlying security below the
exercise price less the premium paid for the option ("protective puts"). The
ability to purchase put options will allow a Portfolio to protect unrealized
gain in an appreciated security in its portfolio without actually selling the
security. If the security does not drop in value, the Portfolio will lose the
value of the premium paid. The Portfolio may sell a put option which it has
previously purchased prior to the sale of the securities underlying such option.
Such sales will result in a net gain or loss depending on whether the amount
received on the sale is more or less than the premium and other transaction
costs paid on the put option which is sold.
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(DPT19-SAI/PART B)
The Portfolios may sell a put option purchased on individual portfolio
securities. Additionally, the Portfolios may enter into closing sale
transactions. A closing sale transaction is one in which a Portfolio, when it is
the holder of an outstanding option, liquidates its position by selling an
option of the same series as the option previously purchased.
D. Writing Put Options--A put option written by a Portfolio obligates
it to buy the security underlying the option at the exercise price during the
option period and the purchaser of the option has the right to sell the security
to the Portfolio. During the option period, the Portfolio, as writer of the put
option, may be assigned an exercise notice by the broker/dealer through whom the
option was sold requiring the Portfolio to make payment of the exercise price
against delivery of the underlying security. The obligation terminates upon
expiration of the put option or at such earlier time at which the writer effects
a closing purchase transaction. A Portfolio may write put options only if the
Portfolio will maintain in a segregated account with its Custodian Bank, cash,
U.S. government securities or other assets in an amount not less than the
exercise price of the option at all times during the option period. The amount
of cash, U.S. government securities or other assets held in the segregated
account will be adjusted on a daily basis to reflect changes in the market value
of the securities covered by the put option written by the Portfolios.
Consistent with the limited purposes for which the Portfolios intend to engage
in the writing of put options, such put options will generally be written in
circumstances where the investment adviser wishes to purchase the underlying
security for the Portfolios at a price lower than the current market price of
the security. In such event, a Portfolio would write a put option at an exercise
price which, reduced by the premium received on the option, reflects the lower
price it is willing to pay.
Following the writing of a put option, the Portfolios may wish to
terminate the obligation to buy the security underlying the option by effecting
a closing purchase transaction. This is accomplished by buying an option of the
same series as the option previously written. The Portfolios may not, however,
effect such a closing transaction after they have been notified of the exercise
of the option.
Options on Stock Indices
The Emerging Markets Portfolio, The Global Equity Portfolio, The
Diversified Core Fixed Income Portfolio, The Asset Allocation Portfolio, The
Small-Cap Growth Equity Portfolio and The Growth and Income Portfolio may
acquire options on stock indices. A stock index assigns relative values to the
common stocks included in the index with the index fluctuating with changes in
the market values of the underlying common stock.
Options on stock indices are similar to options on stocks but have
different delivery requirements. Stock options provide the right to take or make
delivery of the underlying stock at a specified price. A stock index option
gives the holder the right to receive a cash "exercise settlement amount" equal
to (i) the amount by which the fixed exercise price of the option exceeds (in
the case of a put) or is less than (in the case of a call) the closing value of
the underlying index on the date of exercise, multiplied by (ii) a fixed "index
multiplier." Receipt of this cash amount will depend upon the closing level of
the stock index upon which the option is based being greater than (in the case
of a call) or less than (in the case of a put) the exercise price of the option.
The amount of cash received will be equal to such difference between the closing
price of the index and exercise price of the option expressed in dollars times a
specified multiple. The writer of the option is obligated, in return for the
premium received to make delivery of this amount. Gain or loss to a Portfolio on
transactions in stock index options will depend on price movements in the stock
market generally (or in a particular industry or segment of the market) rather
than price movements of individual securities. As with stock options, a
Portfolio may offset its position in stock index options prior to expiration by
entering into a closing transaction on an Exchange or it may let the option
expire unexercised.
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<PAGE>
(DPT19-SAI/PART B)
A stock index fluctuates with changes in the market values of the stock
so included. Some stock index options are based on a broad market index such as
the Standard & Poor's 500 or the New York Stock Exchange Composite Index, or a
narrower market index such as the Standard & Poor's 100. Indices are also based
on an industry or market segment such as the AMEX Oil and Gas Index or the
Computer and Business Equipment Index. Options on stock indices are currently
traded on domestic exchanges such as: The Chicago Board Options Exchange, the
New York Stock Exchange and American Stock Exchange as well as on foreign
exchanges.
A Portfolio's ability to hedge effectively all or a portion of its
securities through transactions in options on stock indices depends on the
degree to which price movements in the Portfolio's securities. Since a Portfolio
will not duplicate the components of an index, the correlation will not be
exact. Consequently, a Portfolio bears the risk that the prices of the
securities being hedged will not move in the same amount as the hedging
instrument. It is also possible that there may be a negative correlation between
the index or other securities which would result in a loss on both such
securities and the hedging instrument.
Positions in stock index options may be closed out only on an Exchange
which provides a secondary market. There can be no assurance that a liquid
secondary market will exist for any particular stock index option. Thus, it may
not be possible to close such an option. The inability to close options
positions could have an adverse impact on a Portfolio's ability effectively to
hedge its securities. A Portfolio will enter into an option position only if
there appears to be a liquid secondary market for such options.
A Portfolio will not engage in transactions in options on stock indices
for speculative purposes but only to protect appreciation attained and to take
advantage of the liquidity available in the option markets.
Futures and Options on Futures
Consistent with the limited circumstances under which The Mid-Cap
Growth Equity Portfolio, The Real Estate Investment Trust Portfolios, The
Diversified Core Fixed Income Portfolio, The Emerging Markets Portfolio, The
Global Equity Portfolio, The Asset Allocation Portfolio, The Small-Cap Growth
Equity Portfolio and The Growth and Income Portfolio will use futures, the
Portfolios may enter into contracts for the purchase or sale for future delivery
of securities. While futures contracts provide for the delivery of securities,
deliveries usually do not occur. Contracts are generally terminated by entering
into an offsetting transaction. When a Portfolio enters into a futures
transaction, it must deliver to the futures commission merchant selected by the
Portfolio an amount referred to as "initial margin." This amount is maintained
by the futures commission merchant in an account at the Portfolio's Custodian
Bank. Thereafter, a "variation margin" may be paid by the Portfolio to, or drawn
by the Portfolio from, such account in accordance with controls set for such
account, depending upon changes in the price of the underlying securities
subject to the futures contract.
Consistent with the limited purposes for which the Portfolios may
engage in these transactions, a Portfolio may enter into such futures contracts
to protect against the adverse effects of fluctuations in interest rates without
actually buying or selling the securities. For example, if interest rates are
expected to increase, a Portfolio might enter into futures contracts for the
sale of debt securities. Such a sale would have much the same effect as selling
an equivalent value of the debt securities owned by the Portfolio. If interest
rates did increase, the value of the debt securities in the portfolio would
decline, but the value of the futures contracts to the Portfolio would increase
at approximately the same rate, thereby keeping the net asset value of the
Portfolio from declining as much as it otherwise would have. Similarly, when it
is expected that interest rates may decline, futures contracts may be purchased
to hedge in anticipation of subsequent purchases of securities at higher prices.
Because the fluctuations in the value of futures contracts should be similar to
those of debt
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(DPT19-SAI/PART B)
securities, a Portfolio could take advantage of the anticipated rise in value of
debt securities without actually buying them until the market had stabilized. At
that time, the futures contracts could be liquidated and the Portfolio could
then buy debt securities on the cash market.
With respect to options on futures contracts, when a Portfolio is not
fully invested, it may purchase a call option on a futures contract to hedge
against a market advance due to declining interest rates. The purchase of a call
option on a futures contract is similar in some respects to the purchase of a
call option on an individual security. Depending on the pricing of the option
compared to either the price of the futures contract upon which it is based, or
the price of the underlying debt securities, it may or may not be less risky
than ownership of the futures contract or underlying debt securities.
The writing of a call option on a futures contract constitutes a
partial hedge against the declining price of the security which is deliverable
upon exercise of the futures contract. If the futures price at the expiration of
the option is below the exercise price, the Portfolio will retain the full
amount of the option premium which provides a partial hedge against any decline
that may have occurred in the Portfolio's holdings. The writing of a put option
on a futures contract constitutes a partial hedge against the increasing price
of the security which is deliverable upon exercise of the futures contract. If
the futures price at the expiration of the option is higher than the exercise
price, the Portfolio will retain the full amount of option premium which
provides a partial hedge against any increase in the price of securities which
the Portfolio intends to purchase.
If a put or call option that a Portfolio has written is exercised, the
Portfolio will incur a loss which will be reduced by the amount of the premium
it receives. Depending on the degree of correlation between changes in the value
of its portfolio securities and changes in the value of its futures positions, a
Portfolio's losses from existing options on futures may, to some extent, be
reduced or increased by changes in the value of portfolio securities. The
purchase of a put option on a futures contract is similar in some respects to
the purchase of protective puts on portfolio securities. For example, consistent
with the limited purposes for which the Portfolios will engage in these
activities, a Portfolio will purchase a put option on a futures contract to
hedge the Portfolio's securities against the risk of rising interest rates.
To the extent that interest rates move in an unexpected direction, the
Portfolios may not achieve the anticipated benefits of futures contracts or
options on futures contracts or may realize a loss. For example, if a Portfolio
is hedged against the possibility of an increase in interest rates which would
adversely affect the price of securities held in its portfolio and interest
rates decrease instead, the Portfolio will lose part or all of the benefit of
the increased value of its securities which it has because it will have
offsetting losses in its futures position. In addition, in such situations, if
the Portfolio had insufficient cash, it may be required to sell securities from
its portfolio to meet daily variation margin requirements. Such sales of
securities may, but will not necessarily, be at increased prices which reflect
the rising market. The Portfolios may be required to sell securities at a time
when it may be disadvantageous to do so.
Further, with respect to options on futures contracts, the Portfolios
may seek to close out an option position by writing or buying an offsetting
position covering the same securities or contracts and have the same exercise
price and expiration date. The ability to establish and close out positions on
options will be subject to the maintenance of a liquid secondary market, which
cannot be assured.
* * *
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<PAGE>
(DPT19-SAI/PART B)
From time to time, the Portfolios may also, as noted below, engage in
the following investment techniques:
Asset-Backed Securities (The Intermediate Fixed Income Portfolio,
The Limited-Term Maturity Portfolio, The Aggregate Fixed Income Portfolio,
The Diversified Core Fixed Income Portfolio, The Asset
Allocation Portfolio and The Growth and Income Portfolio)
The Intermediate Fixed Income Portfolio, The Limited-Term Maturity
Portfolio, The Aggregate Fixed Income Portfolio, The Diversified Core Fixed
Income Portfolio, The Asset Allocation Portfolio and The Growth and Income
Portfolio may each invest a portion of their assets in asset-backed securities.
The rate of principal payment on asset-backed securities generally depends on
the rate of principal payments received on the underlying assets. Such rate of
payments may be affected by economic and various other factors such as changes
in interest rates or the concentration of collateral in a particular geographic
area. Therefore, the yield may be difficult to predict and actual yield to
maturity may be more or less than the anticipated yield to maturity. The credit
quality of most asset-backed securities depends primarily on the credit quality
of the assets underlying such securities, how well the entities issuing the
securities are insulated from the credit risk of the originator or affiliated
entities, and the amount of credit support provided to the securities.
Asset-backed securities are often backed by a pool of assets
representing the obligations of a number of different parties. To lessen the
effect of failures by obligors on underlying assets to make payments, such
securities may contain elements of credit support. Such credit support falls
into two categories: (i) liquidity protection, and (ii) protection against
losses resulting from ultimate default by an obligor on the underlying assets.
Liquidity protection refers to the provision of advances, generally by the
entity administering the pool of assets, to ensure that the receipt of payments
due on the underlying pool is timely. Protection against losses resulting from
ultimate default enhances the likelihood of payments of the obligations on at
least some of the assets in the pool. Such protection may be provided through
guarantees, insurance policies or letters of credit obtained by the issuer or
sponsor from third parties, through various means of structuring the transaction
or through a combination of such approaches. The Portfolios will not pay any
additional fees for such credit support, although the existence of credit
support may increase the price of a security.
Examples of credit support arising out of the structure of the
transaction include "senior-subordinated securities" (multiple class securities
with one or more classes subordinate to other classes as to the payment of
principal thereof and interest thereon, with the result that defaults on the
underlying assets are borne first by the holders of the subordinated class),
creation of "reserve funds" (where cash or investments, sometimes funded from a
portion of the payments on the underlying assets, are held in reserve against
future losses) and "over collateralization" (where the scheduled payments on, or
the principal amount of, the underlying assets exceeds that required to make
payments of the securities and pay any servicing or other fees). The degree of
credit support provided for each issue is generally based on historical
information respecting the level of credit risk associated with the underlying
assets. Delinquencies or losses in excess of those anticipated could adversely
affect the return on an investment in such issue.
High-Yield Securities (The High Yield Bond Portfolio and The Diversified Core
Fixed Income Portfolio and The Asset Allocation Portfolio)
The High Yield Bond Portfolio and The Diversified Core Fixed Income
Portfolio and The Asset Allocation Portfolio may invest their assets in
high-yielding, lower rated or unrated fixed-income securities (commonly known as
"junk bonds") issued by U.S. companies or, in the case of The Diversified Core
Fixed Income Portfolio and The Asset Allocation Portfolio, also in foreign
companies. Among the possible risks of investing in high-yield securities are
the possibility of legislative and regulatory action and proposals. There are
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a variety of legislative actions which have been taken or which are considered
from time to time by the United States Congress which could adversely affect the
market for high-yield securities. For example, Congressional legislation limited
the deductibility of interest paid on certain high-yield securities used to
finance corporate acquisitions. Also, Congressional legislation has, with some
exceptions, generally prohibited federally-insured savings and loan institutions
from investing in high-yield securities. Regulatory actions have also affected
the high-yield market. For example, many insurance companies have restricted or
eliminated their purchases of high-yield securities as a result of, among other
factors, actions taken by the National Association of Insurance Commissioners.
If similar legislative and regulatory actions are taken in the future, they
could result in further tightening of the secondary market for high-yield
issues, could reduce the number of new high-yield securities being issued and
could make it more difficult for the Portfolios to attain their investment
objective.
Repurchase Agreements
While each Portfolio is permitted to do so, it normally does not invest
in repurchase agreements, except to invest cash balances or for temporary
defensive purposes.
The funds in the Delaware Investments family, including Pooled Trust,
Inc. and Foundation Funds, have obtained an exemption from the joint-transaction
prohibitions of Section 17(d) of the 1940 Act to allow such funds jointly to
invest cash balances. Each Portfolio may invest cash balances in a joint
repurchase agreement in accordance with the terms of the Order and subject
generally to the conditions described below.
A repurchase agreement is a short-term investment by which the
purchaser acquires ownership of a debt security and the seller agrees to
repurchase the obligation at a future time and set price, thereby determining
the yield during the purchaser's holding period. Should an issuer of a
repurchase agreement fail to repurchase the underlying security, the loss to a
Portfolio, if any, would be the difference between the repurchase price and the
market value of the security. Each Portfolio will limit its investments in
repurchase agreements to those which its respective investment adviser, under
the guidelines of the Board of Directors or Trustees, as applicable, determines
to present minimal credit risks and which are of high quality. In addition, a
Portfolio must have collateral of at least 102% of the repurchase price,
including the portion representing the Portfolio's yield under such agreements
which is monitored on a daily basis.
Portfolio Loan Transactions
Each Portfolio may loan up to 25% of its assets to qualified
broker/dealers or institutional investors for their use relating to short sales
or other security transactions.
It is the understanding of Pooled Trust, Inc. and Foundation Funds, as
applicable, that the staff of the Commission permits portfolio lending by
registered investment companies if certain conditions are met. These conditions
are as follows: 1) each transaction must have 100% collateral in the form of
cash, short-term U.S. government securities, or irrevocable letters of credit
payable by banks acceptable to Pooled Trust, Inc. from the borrower; 2) this
collateral must be valued daily and should the market value of the loaned
securities increase, the borrower must furnish additional collateral to a
Portfolio; 3) a Portfolio must be able to terminate the loan after notice, at
any time; 4) a Portfolio must receive reasonable interest on any loan, and any
dividends, interest or other distributions on the lent securities, and any
increase in the market value of such securities; 5) a Portfolio may pay
reasonable custodian fees in connection with the loan; and 6) the voting rights
on the lent securities may pass to the borrower; however, if the Board of
Directors or Trustees of Pooled Trust, Inc. or Foundation Funds, as applicable,
know that a material event will occur affecting an investment loan, they must
either terminate the loan in order to vote the proxy or enter into an
alternative arrangement with the borrower to enable the directors to vote the
proxy.
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The major risk to which a Portfolio would be exposed on a loan
transaction is the risk that the borrower would go bankrupt at a time when the
value of the security goes up. Therefore, a Portfolio will only enter into loan
arrangements after a review of all pertinent facts by the respective investment
adviser, under the supervision of the Board of Directors or Trustees as
applicable, including the creditworthiness of the borrowing broker, dealer or
institution and then only if the consideration to be received from such loans
would justify the risk. Creditworthiness will be monitored on an ongoing basis
by the respective investment adviser.
Restricted and Rule 144A Securities
Each Portfolio may invest in restricted securities, including
securities eligible for resale without registration pursuant to Rule 144A ("Rule
144A Securities") under the Securities Act of 1933. Rule 144A Securities are
traded among qualified institutional investors. While maintaining oversight, the
Board of Directors or Trustees, as applicable, has delegated to the respective
investment adviser the day-to-day function of determining whether or not
individual Rule 144A Securities are liquid for purposes of each Portfolio's
limitation (whether 15% or 10% of total assets) on investments in illiquid
assets. The Boards have instructed the respective investment adviser to consider
the following factors in determining the liquidity of a Rule 144A Security: (i)
the frequency of trades and trading volume for the security; (ii) whether at
least three dealers are willing to purchase or sell the security and the number
of other potential purchasers; (iii) whether at least two dealers are making a
market in the security; and (iv) the nature of the security and the nature of
the marketplace trades (e.g., the time needed to dispose of the security, the
method of soliciting offers, and the mechanics of transfer).
Investing in Rule 144A Securities could have the effect of increasing
the level of a Portfolio's illiquidity to the extent that qualified
institutional buyers become, for a time, uninterested in purchasing these
securities. After the purchase of a Rule 144A Security, however, the Board of
Directors or Trustees, as applicable, and the respective investment adviser will
continue to monitor the liquidity of that security to ensure that a Portfolio
has no more than 10% or 15%, as appropriate, of its total assets in illiquid
securities.
The International Mid-Cap Sub Portfolio, The Diversified Core Fixed
Income Portfolio, The Asset Allocation Portfolio, The Small-Cap Growth Equity
Portfolio and The Growth and Income Portfolio may purchase privately-placed
securities whose resale is restricted under applicable securities laws. Such
restricted securities generally offer a higher return potential than comparable
registered securities but involve some additional risk since they can be resold
only in privately-negotiated transactions or after registration under applicable
securities laws. The registration process may involve delays which would result
in the Portfolio obtaining a less favorable price on a resale. The International
Mid-Cap Sub Portfolio, Diversified Core Fixed Income Portfolio, The Asset
Allocation Portfolio, The Small-Cap Growth Equity Portfolio and The Growth and
Income Portfolio will not purchase illiquid assets if more than 15% of its net
assets would then consist of such illiquid securities.
Non-Traditional Equity Securities (The International Mid-Cap Sub Portfolio,
The Emerging Markets Portfolio and The Asset Allocation Portfolio)
The International Mid-Cap Sub Portfolio, The Emerging Markets Portfolio
and The Asset Allocation Portfolio may invest in convertible preferred stocks
that offer enhanced yield features, such as Preferred Equity Redemption
Cumulative Stock ("PERCS"), which provide an investor, such as a Portfolio, with
the opportunity to earn higher dividend income than is available on a company's
common stock. A PERCS is a preferred stock which generally features a mandatory
conversion date, as well as a capital appreciation limit which is usually
expressed in terms of a stated price. Upon the conversion date, most PERCS
convert into common stock of the issuer (PERCS are generally not convertible
into cash at maturity). Under a typical arrangement, if after a
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predetermined number of years the issuer's common stock is trading at a price
below that set by the capital appreciation limit, each PERCS would convert to
one share of common stock. If, however, the issuer's common stock is trading at
a price above that set by the capital appreciation limit, the holder of the
PERCS would receive less than one full share of common stock. If, however, the
issuer's common stock is trading at a price above that set by the capital
appreciation limit, the holder of the PERCS would receive less than one full
share of common stock. The amount of that fractional share of common stock
received by the PERCS holder is determined by dividing the price set by the
capital appreciation limit of the PERCS by the market price of the issuer's
common stock. PERCS can be called at any time prior to maturity, and hence do
not provide call protection. However, if called early, the issuer may pay a call
premium over the market price to the investor. This call premium declines at a
preset rate daily, up to the maturity date of the PERCS.
The International Mid-Cap Sub Portfolio, The Emerging Markets Portfolio
and The Asset Allocation Portfolio may also invest in other enhanced convertible
securities. These include but are not limited to ACES (Automatically Convertible
Equity Securities), PEPS (participating Equity Preferred Stock), PRIDES
(Preferred Redeemable Increased Dividend Equity Securities), SAILS (Stocks
Appreciation Income Linked Securities), TECONS (Term Convertible Notes), QICS
(Quarterly Income Cumulative Securities) and DECS (Dividend Enhanced Convertible
Securities). ACES, PEPS, PRIDES, SAILS, TECONS, QICS, and DECS all have the
following features: They are company-issued convertible preferred stock; unlike
PERCS, they do not have capital appreciation limits; they seek to provide the
investor with high current income, with some prospect of future capital
appreciation; they are typically issued with three to four-year maturities; they
typically have some built-in call protection for the first two to three years;
investors have the right to convert them into shares of common stock at a preset
conversion ratio or hold them until maturity; and upon maturity, they will
automatically convert to either cash or a specified number of shares of common
stock.
U.S. Government Securities
As disclosed in the Prospectus for The International Mid-Cap Sub
Portfolio, the Portfolio may invest in U.S. government securities for temporary
purposes and otherwise (see "INVESTMENT OBJECTIVES, POLICIES AND RISK
CONSIDERATIONS"). Such securities may include a variety of securities which are
issued or guaranteed as to the payment of principal and interest by the U.S.
government, and by various agencies or instrumentalities which have been
established or sponsored by the U.S. government.
U.S. Treasury securities are backed by the "full faith and credit" of the United
States. Securities issued or guaranteed by federal agencies and U.S. government
sponsored instrumentalities may or may not be backed by the full faith and
credit of the United States. In the case of securities not backed by the full
faith and credit of the United States, investors in such securities look
principally to the agency or instrumentality issuing or guaranteeing the
obligation for ultimate repayment, and may not be able to assert a claim against
the United States itself in the event the agency or instrumentality does not
meet its commitment. Agencies which are backed by the full faith and credit of
the United States include the Export-Import Bank, Farmers Home Administration,
Federal Financing Bank, and others. Certain agencies and instrumentalities, such
as the Government National Mortgage Association ("GNMA"), are, in effect, backed
by the full faith and credit of the United States through provisions in their
charters that they may make "indefinite and unlimited" drawings on the Treasury,
if needed to service its debt. Debt from certain other agencies and
instrumentalities, including the Federal Home Loan Bank and Federal National
Mortgage Association, are not guaranteed by the United States, but those
institutions are protected by the discretionary authority for the U.S. Treasury
to purchase certain amounts of their securities to assist the institutions in
meeting their debt obligations. Finally, other agencies and instrumentalities,
such as the Farm Credit System and the Federal Home Loan Mortgage Corporation,
are
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federally chartered institutions under U.S. government supervision, but their
debt securities are backed only by the creditworthiness of those institutions,
not the U.S. government.
Some of the U.S. government agencies that issue or guarantee securities include
the Export-Import Bank of the United States, Farmers Home Administration,
Federal Housing Administration, Maritime Administration, Small Business
Administration, and the Tennessee Valley Authority.
An instrumentality of a U.S. government agency is a government agency organized
under Federal charter with government supervision. Instrumentalities issuing or
guaranteeing securities include, among others, Federal Home Loan Banks, the
Federal Land Banks, Central Bank for Cooperatives, Federal Immediate Credit
Banks and the Federal National Mortgage Association.
Concentration
In applying The International Mid-Cap Sub Portfolio, The Small-Cap
Growth Equity Portfolio's, The Growth and Income Portfolio's and The Asset
Allocation Portfolio's policy on concentration: (i) utility companies will be
divided according to their services, for example, gas, gas transmission,
electric and telephone will each be considered a separate industry; (ii)
financial service companies will be classified according to the end users of
their services, for example, automobile finance, bank finance and diversified
finance will each be considered a separate industry; and (iii) asset backed
securities will be classified according to the underlying assets securing such
securities.
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ACCOUNTING AND TAX ISSUES
When The Mid-Cap Growth Equity Portfolio, either of The Real Estate
Investment Trust Portfolios, The International Fixed Income Portfolio, The
Emerging Markets Portfolio, The Global Equity Portfolio, The Diversified Core
Fixed Income Portfolio, The Asset Allocation Portfolio, The Small-Cap Growth
Equity Portfolio or The Growth and Income Portfolio writes a call, or purchases
a put option, an amount equal to the premium received or paid by it is included
in the section of the Portfolio's assets and liabilities as an asset and as an
equivalent liability.
In writing a call, the amount of the liability is subsequently "marked
to market" to reflect the current market value of the option written. The
current market value of a written option is the last sale price on the principal
exchange on which such option is traded or, in the absence of a sale, the mean
between the last bid and ask prices. If an option which a Portfolio has written
expires on its stipulated expiration date, the Portfolio recognizes a short-term
capital gain. If a Portfolio enters into a closing purchase transaction with
respect to an option which the Portfolio has written, the Portfolio realizes a
short-term gain (or loss if the cost of the closing transaction exceeds the
premium received when the option was sold) without regard to any unrealized gain
or loss on the underlying security, and the liability related to such option is
extinguished. If a call option which a Portfolio has written is exercised, the
Portfolio realizes a capital gain or loss from the sale of the underlying
security on foreign currency and the proceeds from such sale are increased by
the premium originally received.
The premium paid by a Portfolio for the purchase of a put option is
reported in the section of the Portfolio's assets and liabilities as an
investment and subsequently adjusted daily to the current market value of the
option. For example, if the current market value of the option exceeds the
premium paid, the excess would be unrealized appreciation and, conversely, if
the premium exceeds the current market value, such excess would be unrealized
depreciation. The current market value of a purchased option is the last sale
price on the principal exchange on which such option is traded or, in the
absence of a sale, the mean between the last bid and ask prices. If an option
which the Portfolio has purchased expires on the stipulated expiration date, the
Portfolio realizes a short-term or long-term capital loss for federal income tax
purposes in the amount of the cost of the option. If the Portfolio exercises a
put option, it realizes a capital gain or loss (long-term or short-term,
depending on the holding period of the underlying security) from the sale of the
underlying security and the proceeds from such sale will be decreased by the
premium originally paid.
Options on Certain Stock Indices
Accounting for options on certain stock indices will be in accordance
with generally accepted accounting principles. The amount of any realized gain
or loss on closing out such a position will result in a realized gain or loss
for tax purposes. Such options held by a Portfolio at the end of each fiscal
year on a broad-based stock index will be required to be "marked to market" for
federal income tax purposes. Generally, 60% of any net gain or loss recognized
on such deemed sales or on any actual sales will be treated as long-term capital
gain or loss, and the remainder will be treated as short-term capital gain or
loss.
Other Tax Requirements
Each Portfolio has qualified or intends to qualify, and each that has
qualified intends to continue to qualify, as a regulated investment company
under Subchapter M of the Code. As such, a Portfolio will not be subject to
federal income tax, or to any excise tax, to the extent its earnings are
distributed as provided in the Code and it satisfies other requirements relating
to the sources of its income and diversification of its assets.
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(DPT19-SAI/PART B)
In order to qualify as a regulated investment company for federal
income tax purposes, each Portfolio must meet certain specific requirements,
including:
(i) The Portfolio must maintain a diversified portfolio of securities,
wherein no security (other than U.S. government securities and securities of
other regulated investment companies) can exceed 25% of the Portfolio's total
assets, and, with respect to 50% of the Portfolio's total assets, no investment
(other than cash and cash items, U.S. government securities and securities of
other regulated investment companies) can exceed 5% of the Portfolio's total
assets. For purposes of the tax diversification test under Subchapter M of the
Internal Revenue Code, repurchase agreements constitute securities and are not
considered to be cash or cash items;
(ii) The Portfolio must derive at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, and gains from
the sale or disposition of stock and securities or foreign currencies, or other
income derived with respect to its business of investing in such stock,
securities, or currencies;
(iii) The Portfolio must distribute to its shareholders at least 90% of
its net investment income and net tax-exempt income for each of its fiscal
years, and
(iv) The Portfolio must realize less than 30% of its gross income for
each fiscal year from gains from the sale of securities and certain other assets
that have been held by the Portfolio for less than three months ("short-short
income"). The Taxpayer Relief Act of 1997 (the "1997 Act") repealed the 30%
short-short income test for tax years of regulated investment companies
beginning after August 5, 1997; however, this rule may have continuing effect in
some states for purposes of classifying the Portfolio as a regulated investment
company.
The Code requires the Portfolios to distribute at least 98% of its
taxable ordinary income earned during the calendar year and 98% of its capital
gain net income earned during the 12 month period ending October 31 (in addition
to amounts from the prior year that were neither distributed nor taxed to a
Portfolio) to you by December 31 of each year in order to avoid federal excise
taxes. The Portfolios intend as a matter of policy to declare and pay sufficient
dividends in December or January (which are treated by you as received in
December) but does not guarantee and can give no assurances that its
distributions will be sufficient to eliminate all such taxes.
The straddle rules of Section 1092 may apply. Generally, the straddle
provisions require the deferral of losses to the extent of unrecognized gains
related to the offsetting positions in the straddle. Excess losses, if any, can
be recognized in the year of loss. Deferred losses will be carried forward and
recognized in the year that unrealized losses exceed unrealized gains.
The 1997 Act has also added new provisions for dealing with
transactions that are generally called "Constructive Sale Transactions." Under
these rules, the Portfolio must recognize gain (but not loss) on any
constructive sale of an appreciated financial position in stock, a partnership
interest or certain debt instruments. The Portfolio will generally be treated as
making a constructive sale when it: 1) enters into a short sale on the same or
substantially identical property; 2) enters into an offsetting notional
principal contract; or 3) enters into a futures or forward contract to deliver
the same or substantially identical property. Other transactions (including
certain financial instruments called collars) will be treated as constructive
sales as provided in Treasury regulations to be published. There are also
certain exceptions that apply for transactions that are closed before the end of
the 30th day after the close of the taxable year.
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Investment in Foreign Currencies and Foreign Securities--Certain of the
Portfolios are authorized to invest certain limited amounts in foreign
securities. Such investments, if made, will have the following additional tax
consequences to each Portfolio:
Under the Code, gains or losses attributable to fluctuations in foreign
currency exchange rates which occur between the time a Portfolio accrues income
(including dividends), or accrues expenses which are denominated in a foreign
currency, and the time a Portfolio actually collects such income or pays such
expenses generally are treated as ordinary income or loss. Similarly, on the
disposition of debt securities denominated in a foreign currency and on the
disposition of certain options, futures, forward contracts, gain or loss
attributable to fluctuations in the value of foreign currency between the date
of acquisition of the security or contract and the date of its disposition are
also treated as ordinary gain or loss. These gains or losses, referred to under
the Code as "Section 988" gains or losses, may increase or decrease the amount
of a Portfolio's net investment company taxable income, which, in turn, will
affect the amount of income to be distributed to you by a Portfolio.
If a Portfolio's Section 988 losses exceed a Portfolio's other net
investment company taxable income during a taxable year, a Portfolio generally
will not be able to make ordinary dividend distributions to you for that year,
or distributions made before the losses were realized will be recharacterized as
return of capital distributions of federal income tax purposes, rather than as
an ordinary dividend or capital gain distribution. If a distribution is treated
as a return of capital, your tax basis in your Portfolio shares will be reduced
by a like amount (to the extent of such basis), and any excess of the
distribution over your tax basis in your Portfolio shares will be treated as
capital gain to you.
The 1997 Act generally requires that foreign income be translated into
U.S. dollars at the average exchange rate for the tax year in which the
transactions are conducted. Certain exceptions apply to taxes paid more than two
years after the taxable year to which they relate. This new law may require a
Portfolio to track and record adjustments to foreign taxes paid on foreign
securities in which it invests. Under a Portfolio's current reporting procedure,
foreign security transactions are recorded generally at the time of each
transaction using the foreign currency spot rate available for the date of each
transaction. Under the new law, a Portfolio will be required to record a fiscal
year end (and at calendar year end for excise tax purposes) an adjustment that
reflects the difference between the spot rates recorded for each transaction and
the year-end average exchange rate for all of a Portfolio's foreign securities
transactions. There is a possibility that the mutual fund industry will be given
relief from this new provision, in which case no year-end adjustments will be
required.
The Portfolios may be subject to foreign withholding taxes on income
from certain of its foreign securities. If more than 50% of the total assets of
a Portfolio at the end of its fiscal year are invested in securities of foreign
corporations, a Portfolio may elect to pass-through to you your pro rata share
of foreign taxes paid by a Portfolio. If this election is made, you will be: (i)
required to include in your gross income your pro rata share of foreign source
income (including any foreign taxes paid by a Portfolio); and (ii) entitled to
either deduct your share of such foreign taxes in computing your taxable income
or to claim a credit for such taxes against your U.S. income tax, subject to
certain limitations under the Code. You will be informed by a Portfolio at the
end of each calendar year regarding the availability of any such foreign tax
credits and the amount of foreign source income (including any foreign taxes
paid by a Portfolio). If a Portfolio elects to pass-through to you the foreign
income taxes that it has paid, you will be informed at the end of the calendar
year of the amount of foreign taxes paid and foreign source income that must be
included on your federal income tax return. If a Portfolio invests 50% or less
of its total assets in securities of foreign corporations, it will not be
entitled to pass-through to you your pro-rata shares of foreign taxes paid by a
Portfolio. In this case, these taxes will be taken as a deduction by a
Portfolio, and the income reported to you will be the net amount after these
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deductions. The 1997 Act also simplifies the procedures by which investors in
funds that invest in foreign securities can claim tax credits on their
individual income tax returns for the foreign taxes paid by a Portfolio. These
provisions will allow investors who pay foreign taxes of $300 or less on a
single return or $600 or less on a joint return during any year (all of which
must be reported on IRS Form 1099-DIV from a Portfolio to the investor) to claim
a tax credit against their U.S. federal income tax for the amount of foreign
taxes paid by a Portfolio. This process will allow you, if you qualify, to
bypass the burdensome and detailed reporting requirements on the foreign tax
credit schedule (Form 1116) and report your foreign taxes paid directly on page
2 of Form 1040. You should note that this simplified procedure will not be
available until calendar year 1998.
Investment in Passive Foreign Investment Company securities--The
Portfolios may invest in shares of foreign corporations which may be classified
under the Code as passive foreign investment companies ("PFICs"). In general, a
foreign corporation is classified as a PFIC if at least one-half of its assets
constitute investment-type assets or 75% or more of its gross income is
investment-type income. If a Portfolio receives an "excess distribution" with
respect to PFIC stock, the Portfolio itself may be subject to U.S. federal
income tax on a portion of the distribution, whether or not the corresponding
income is distributed by a Portfolio to you. In general, under the PFIC rules,
an excess distribution is treated as having been realized ratably over the
period during which a Portfolio held the PFIC shares. A Portfolio itself will be
subject to tax on the portion, if any, of an excess distribution that is so
allocated to prior Portfolio taxable years, and an interest factor will be added
to the tax, as if the tax had been payable in such prior taxable years. In this
case, you would not be permitted to claim a credit on your own tax return for
the tax paid by a Portfolio. Certain distributions from a PFIC as well as gain
from the sale of PFIC shares are treated as excess distributions. Excess
distributions are characterized as ordinary income even though, absent
application of the PFIC rules, certain distribution might have been classified
as capital gain. This may have the effect of increasing Portfolio distributions
to you that are treated as ordinary dividends rather than long-term capital gain
dividends.
A Portfolio may be eligible to elect alternative tax treatment with
respect to PFIC shares. Under an election that currently is available in some
circumstances, a Portfolio generally would be required to include in its gross
income its share of the earnings of a PFIC on a current basis, regardless of
whether distributions are received from the PFIC during such period. If this
election were made, the special rules, discussed above, relating to the taxation
of excess distributions, would not apply. In addition, the 1997 Act provides for
another election that would involve marking-to-market the Portfolio's PFIC
shares at the end of each taxable year (and on certain other dates as prescribed
in the Code), with the result that unrealized gains would be treated as though
they were realized. The Portfolio would also be allowed an ordinary deduction
for the excess, if any, of the adjusted basis of its investment in the PFIC
stock over its fair market value at the end of the taxable year. This deduction
would be limited to the amount of any net mark-to-market gains previously
included with respect to that particular PFIC security. If a Portfolio were to
make this second PFIC election, tax at the Portfolio level under the PFIC rules
would generally be eliminated.
The application of the PFIC rules may affect, among other things, the
amount of tax payable by a Portfolio (if any), the amounts distributable to you
by a Portfolio, the time at which these distributions must be made, and whether
these distributions will be classified as ordinary income or capital gain
distributions to you.
You should be aware that it is not always possible at the time shares
of a foreign corporation are acquired to ascertain that the foreign corporation
is a PFIC, and that there is always a possibility that a foreign corporation
will become a PFIC after a Portfolio acquires shares in that corporation. While
a Portfolio will generally seek to avoid investing in PFIC shares to avoid the
tax consequences detailed above, there are no
-28-
<PAGE>
(DPT19-SAI/PART B)
guarantees that it will do so and it reserves the right to make such investments
as a matter of its fundamental investment policy.
Most foreign exchange gains are classified as ordinary income which
will be taxable to you as such when distributed. Similarly, you should be aware
that any foreign exchange losses realized by a Portfolio, including any losses
realized on the sale of foreign debt securities, are generally treated as
ordinary losses for federal income tax purposes. This treatment could increase
or reduce a Portfolio's income available for distribution to you, and may cause
some or all of a Portfolio's previously distributed income to be classified as a
return of capital.
-29-
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(DPT19-SAI/PART B)
PERFORMANCE INFORMATION
From time to time, Pooled Trust, Inc. may state each Portfolio's total
return and each Portfolio class' total return in advertisements and other types
of literature. Any statements of total return performance data will be
accompanied by information on the Portfolio's or the Portfolio class' average
annual total rate of return over the most recent one-, five-, and ten-year
periods, as relevant. Pooled Trust, Inc. may also advertise aggregate and
average total return information of each Portfolio and Portfolio class over
additional periods of time.
Average annual total rate of return for each Portfolio and Portfolio
class is based on a hypothetical $1,000 investment that includes capital
appreciation and depreciation during the stated periods. The following formula
will be used for the actual computations:
n
P(1+T) = ERV
Where: P a hypothetical initial purchase order of $1,000,
after deduction of the maximum front-end sales charge
in the case of REIT Fund A Class of The Real Estate
Investment Trust Portfolio;
T = average annual total return;
n = number of years;
ERV = redeemable value of the
hypothetical $1,000 purchase at the
end of the period, after deduction
of the applicable CDSC, if any, in
the case of REIT Fund B Class and
REIT Fund C Class of The Real Estate
Investment Trust Portfolio.
Aggregate or cumulative total return is calculated in a similar manner,
except that the results are not annualized. Each calculation assumes that all
distributions are reinvested at net asset value.
The total return for REIT Fund A Class of The Real Estate Investment Trust
Portfolio at offer reflects the maximum front-end sales charge of 4.75% paid on
the purchase of shares. The total return for REIT Fund A Class at net asset
value (NAV) does not reflect the payment of any front-end sales charge. The
Limited CDSC, applicable only to certain redemptions of those shares, will not
be deducted from any computation of total return. See the Prospectus for REIT
Fund A Class for a description of the Limited CDSC and the limited instances in
which it applies. The Fund may also present total return information for The
Real Estate Investment Trust Portfolio that does not reflect the deduction of
the maximum front-end sales charge with respect to REIT Fund A Class.
The performance, as shown below, is the average annual total return
quotations for The Large-Cap Value Equity Portfolio, The Mid-Cap Growth Equity
Portfolio, The International Equity Portfolio, The Global Fixed Income
Portfolio, The Labor Select International Equity Portfolio, The Intermediate
Fixed Income Portfolio, The Real Estate Investment Trust Portfolio, The
High-Yield Bond Portfolio, The International Fixed Income Portfolio and The
Emerging Markets Portfolios through April 30, 1998. Securities prices fluctuated
during the period covered and the past results should not be considered as
representative of future performance.
-30-
<PAGE>
(DPT19-SAI/PART B)
Average Annual Total Return(1)
<TABLE>
<CAPTION>
The The
Large-Cap Aggressive
Value Equity Growth
Portfolio Portfolio
<S> <C> <C> <C> <C>
1 year ended 1 year ended
4/30/98 35.54% 4/30/98 39.63%
3 years ended 3 years ended
4/30/98 27.48% 4/30/98 20.11%
5 years ended 5 years ended
4/30/98 21.69% 4/30/98 16.67%
Period 2/3/92(2) Period 2/27/92(2)
through 4/30/98 20.86% through 4/30/98 12.31%
The
The Global
International Fixed
Equity Income
Portfolio Portfolio
1 year ended 1 year ended
4/30/98 13.36% 4/30/98 6.05%
3 years ended 3 years ended
4/30/98 15.17% 4/30/98 11.06%
5 years ended 5 years ended
4/30/98 13.21% 4/30/98 9.64%
Period 2/4/92(2) Period 11/30/92(2)
through 4/30/98 12.82% through 4/30/98 10.61%
</TABLE>
(1) Certain expenses of the Portfolios have been waived and paid by the
respective investment adviser. In the absence of such waiver and payment,
performance would have been affected negatively.
(2) Date of initial sale.
-31-
<PAGE>
(DPT19-SAI/PART B)
Average Annual Total Return(1)
The
Labor The
Select Intermediate
International Fixed
Equity Income
Portfolio Portfolio
1 year ended 1 year ended
4/30/98 20.38% 4/30/98 8.39%
Period Period
12/19/95(2) 3/12/96(2)
through through
4/30/98 20.66% 4/30/98 6.61%
(1) Certain expenses of the Portfolios have been waived and paid by the
respective investment adviser. In the absence of such waiver and payment,
performance would have been affected negatively.
(2) Date of initial sale.
Average Annual Total Return(1)
<TABLE>
<CAPTION>
The
The International The
High-Yield Fixed Emerging
Bond Income Markets
Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C> <C> <C>
1 year ended 1 year ended 1 year ended
4/30/98 21.22% 4/30/98 5.58% 4/30/98 (4.53%)
Period Period Period
12/2/96(2) 4/11/97(2) 4/14/97(2)
through through through
4/30/98 18.88% 4/30/98 5.48% 4/30/98 (3.34%)
</TABLE>
(1) Certain expenses of the Portfolios have been waived and paid by the
respective investment adviser. In the absence of such waiver and payment,
performance would have been affected negatively.
(2) Date of initial sale.
-32-
<PAGE>
(DPT19-SAI/PART B)
Average Annual Total Return(1)
The Real Estate Investment Trust Portfolio
The Real Estate
Investment Trust
Portfolio Class (2)
1 year ended
4/30/98 25.80%
Period
12/6/95(3)
through
4/30/98 30.09%
(1) Certain expenses of the Portfolios have been waived and paid by the
investment adviser. In the absence of such waiver and payment, performance
would have been affected negatively.
(2) Shares of The Real Estate Investment Trust Portfolio class were made
available for sale beginning October 14, 1997. Pursuant to applicable
regulation, total return shown for the class prior to commencement of
operations is that of the original (and then only) class of shares offered
by The Real Estate Investment Trust Portfolio. That original class has been
redesignated REIT Fund A Class. Like The Real Estate Investment Trust
Portfolio class, the original class, prior to its redesignation, did not
carry a front-end sales charge and was not subject to Rule 12b-1
distribution expenses.
(3) Date of initial sale of the original class (now REIT Fund A Class).
-33-
<PAGE>
(DPT19-SAI/PART B)
Average Annual Total Return(1)
The Real Estate Investment Trust Portfolio
<TABLE>
<CAPTION>
REIT Fund REIT Fund REIT Fund
A Class(2) A Class(2) Institutional Class(3)
(at Offer) (at NAV)
<S> <C> <C> <C> <C>
1 year ended
4/30/98 19.63% 25.63% 25.80%
Period
12/6/95(4)
through
4/30/98 27.41% 30.02% 30.09%
</TABLE>
(1) Certain expenses of the Portfolios have been waived and paid by the
investment adviser. In the absence of such waiver and payment, performance
would have been affected negatively.
(2) The total return presented above is based upon the performance of the
original (and then only) class of shares offered by The Real Estate
Investment Trust Portfolio, which did not carry a front-end sales charge
and was not subject to Rule 12b-1 distribution expenses. That original
class has been redesignated REIT Fund A Class. Effective October 14, 1997,
a front-end sales charge of 4.75% was imposed on sales of those shares and
effective November 3, 1997 the class was subject to annual 12b-1
distribution expenses of up to 0.30% of average daily net assets of the
class. Performance numbers for REIT Fund A Class (at Offer) are calculated
giving effect to the sales charge. For periods prior to November 3, 1997,
no adjustment has been made to reflect the effect of 12b-1 payments.
Performance on and after November 3, 1997 will be affected by 12b-1
payments. REIT Fund A Class is subject to other expenses (at a higher rate
than applicable to the original class) which may affect performance of the
Class.
(3) Shares of REIT Fund Institutional Class were made available for sale
beginning October 14, 1997. Pursuant to applicable regulation, total return
shown for the class prior to commencement of operations is that of the
original (and then only) class of shares offered by The Real Estate
Investment Trust Portfolio. That original class has been redesignated REIT
Fund A Class. Like REIT Fund Institutional Class, the original class, prior
to its redesignation, did not carry a front-end sales charge and was not
subject to Rule 12b-1 distribution expenses. REIT Fund Institutional Class
is subject to other expenses (at a higher rate than applicable to the
original class) which may affect performance of the Class.
(4) Date of initial sale of the original class (now REIT Fund A Class).
Pooled Trust, Inc. may also quote each Portfolio's current yield,
calculated as described below, in advertisements and investor communications.
-34-
<PAGE>
(DPT19-SAI/PART B)
The yield computation is determined by dividing the net investment income
per share earned during the period by the maximum offering price per share on
the last day of the period and annualizing the resulting figure, according to
the following formula:
a--b 6
YIELD = 2[(-------- + 1) -- 1]
cd
Where: a = dividends and interest earned during the period;
b = expenses accrued for the period (net of reimbursements);
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends;
d = the maximum offering price per share on the last day of the
period.
The above formula will be used in calculating quotations of yield, based
on specific 30-day periods identified in advertising by a Portfolio. Yield
quotations are based on the Portfolio's net asset value on the last day of the
period and will fluctuate depending on the period covered. The 30-day yields for
The Global Fixed Income Portfolio and The Intermediate Fixed Income Portfolio as
of April 30, 1998 were 4.68% and 5.66%, respectively. Each yield reflects the
waiver and reimbursement commitment by its investment adviser.
Investors should note that income earned and dividends paid by The
Intermediate Fixed Income Portfolio, The Limited-Term Maturity Portfolio, The
Global Fixed Income Portfolio, The International Fixed Income Portfolio, The
High-Yield Bond Portfolio, The Aggregate Fixed Income Portfolio and The
Diversified Core Fixed Income Portfolio will also vary depending upon
fluctuation in interest rates and performance of each Portfolio.
The net asset value of these seven Portfolios will fluctuate in value
inversely to movements in interest rates and, therefore, will tend to rise when
interest rates fall and fall when interest rates rise. Likewise, the net asset
value for these Portfolios will vary from day to day depending upon fluctuation
in the prices of the securities held by each Portfolio. Thus, investors should
consider net asset value fluctuation as well as yield in making an investment
decision.
Each Portfolio's total return performance will be computed by adding all
reinvested income and realized securities profits distributions plus the change
in net asset value during a specific period and dividing by the net asset value
at the beginning of the period. The computation will not reflect the impact of
any income taxes payable by shareholders (who are subject to such tax) on the
reinvested distributions included in the calculation. Portfolio shares are sold
without a sales charge, except for REIT Fund A Class, REIT Fund B Class and REIT
Fund C Class of The Real Estate Investment Trust Portfolio. Because security
prices fluctuate, past performance should not be considered as a representation
of the results which may be realized from an investment in the Portfolios in the
future.
-35-
<PAGE>
(DPT19-SAI/PART B)
Pooled Trust, Inc. may promote the total return performance of The Real
Estate Investment Trust Portfolio II by comparison to the original class (prior
to its redesignation as REIT Fund A Class) of The Real Estate Investment Trust
Portfolio.
From time to time, each Portfolio may also quote its actual total return
performance, dividend results and other performance information in advertising
and other types of literature. This information may be compared to that of other
mutual funds with similar investment objectives and to stock, bond and other
relevant indices or to rankings prepared by independent services or other
financial or industry publications that monitor the performance of mutual funds.
For example, the performance of a Portfolio may be compared to data prepared by
Lipper Analytical Services, Inc., Morningstar, Inc., or to the S&P 500 Index,
the Dow Jones Industrial Average, the Morgan Stanley Capital International
(MSCI), Europe, Australia and Far East (EAFE) Index, the MSCI Emerging Markets
Free Index, or the Salomon Brothers World Government Bond Index. Performance
also may be compared to data prepared by Lipper Analytical Services, Inc.,
Morningstar, Inc. or the performance of unmanaged indices compiled or maintained
by statistical research firms such as Lehman Brothers or Salomon Brothers, Inc.
Salomon Brothers and Lehman Brothers are statistical research firms that
maintain databases of international market, bond market, corporate and
government-issued securities of various maturities. This information, as well as
unmanaged indices compiled and maintained by these firms, will be used in
preparing comparative illustrations. In addition, the performance of multiple
indices compiled and maintained by these firms may be combined to create a
blended performance result for comparative purposes. Generally, the indices
selected will be representative of the types of securities in which a Portfolio
may invest and the assumptions that were used in calculating the blended
performance will be described.
Lipper Analytical Services, Inc. maintains statistical performance
databases, as reported by a diverse universe of independently-managed mutual
funds. Morningstar, Inc. is a mutual fund rating service that rates mutual funds
on the basis of risk-adjusted performance. Rankings that compare a Portfolio's
performance to another fund in appropriate categories over specific time periods
also may be quoted in advertising and other types of literature. The S&P 500 and
the Dow Jones Industrial Average are industry-accepted unmanaged indices of
generally-conservative securities used for measuring general market performance.
Similarly, the MSCI EAFE Index, the MSCI Emerging Markets Free Index, and the
Salomon Brothers World Government Bond Index are industry-accepted unmanaged
indices of equity securities in developed countries and global debt securities,
respectively, used for measuring general market performance. The total return
performance reported for these indices will reflect the reinvestment of all
distributions on a quarterly basis and market price fluctuations. The indices do
not take into account any sales charges or other fees. A direct investment in an
unmanaged index is not possible.
Comparative information on the Consumer Price Index may also be included
in advertisements or other literature. The Consumer Price Index, as prepared by
the U.S. Bureau of Labor Statistics, is the most commonly used measure of
inflation. It indicates the cost fluctuations of a representative group of
consumer goods. It does not represent a return from an investment.
-36-
<PAGE>
(DPT19-SAI/PART B)
Current interest rate and yield information on government debt obligations
of various durations, as reported weekly by the Federal Reserve (Bulletin H.15),
may also be used. As well, current industry rate and yield information on all
industry available fixed-income securities, as reported weekly by The Bond
Buyer, may also be used in preparing comparative illustrations.
A Portfolio may also promote its yield and/or total return performance and
use comparative performance information computed by and available from certain
industry and general market research and publications, such as Lipper Analytical
Services, Inc. and Morningstar, Inc.
The performance of multiple indices compiled and maintained by statistical
research firms, such as Morgan Stanley, Salomon Brothers and Lehman Brothers,
may be combined to create a blended performance result for comparative purposes.
Generally, the indices selected will be representative of the types of
securities in which a Portfolio may invest and the assumptions that were used in
calculating the blended performance will be described.
Wellesley Group Inc. is an investment management consulting firm
specializing in investment and market research for endowments and pension plans.
Wellesley Group will be maintaining, on behalf of Pooled Trust, Inc., peer group
comparison composites for each Portfolio. The peer group composites will be
constructed by selecting publicly-offered mutual funds that have investment
objectives that are similar to those maintained by each Portfolio. Wellesley
Group will also be preparing performance analyses of actual Portfolio
performance, and benchmark index exhibits, for inclusion in client quarterly
review packages.
Ibbotson Associates of Chicago, Illinois ("Ibbotson") provides
historical returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury bills,
the U.S. rate of inflation (based on the Consumer Price Index), and combinations
of various capital markets. The performance of these capital markets is based on
the returns of different indices. A Portfolio may use the performance of these
capital markets in order to demonstrate general risk-versus-reward investment
scenarios. Performance comparisons may also include the value of a hypothetical
investment in any of these capital markets. The risks associated with the
security types in any capital market may or may not correspond directly to those
of the Portfolio. A Portfolio may also compare performance to that of other
compilations or indices that may be developed and made available in the future.
A Portfolio may include discussions or illustrations of the potential
investment goals of a prospective investor (including materials that describe
general principles of investing, such as asset allocation, diversification, risk
tolerance, and goal setting, questionnaires designed to help create a personal
financial profile, worksheets used to project savings needs based on assumed
rates of inflation and hypothetical rates of return and action plans offering
investment alternatives), investment management techniques, policies or
-37-
<PAGE>
(DPT19-SAI/PART B)
investment suitability of a Portfolio (such as value investing, market timing,
dollar cost averaging, asset allocation, constant ratio transfer, automatic
account rebalancing, the advantages and disadvantages of investing in
tax-deferred and taxable investments or global or international investments),
economic and political conditions, the relationship between sectors of the
economy and the economy as a whole, the effects of inflation and historical
performance of various asset classes, including but not limited to, stocks,
bonds and Treasury bills. From time to time advertisements, sales literature,
communications to shareholders or other materials may summarize the substance of
information contained in shareholder reports (including the investment
composition of a Portfolio), as well as the views as to current market,
economic, trade and interest rate trends, legislative, regulatory and monetary
developments, investment strategies and related matters believed to be of
relevance to a Portfolio. In addition, selected indices may be used to
illustrate historic performance of selected asset classes. The Portfolio may
also include in advertisements, sales literature, communications to shareholders
or other materials, charts, graphs or drawings which illustrate the potential
risks and rewards of investment in various investment vehicles, including but
not limited to, domestic and international stocks, and/or bonds, treasury bills
and shares of a Portfolio. In addition, advertisements, sales literature,
communications to shareholders or other materials may include a discussion of
certain attributes or benefits to be derived by an investment in a Fund and/or
other mutual funds, shareholder profiles and hypothetical investor scenarios,
timely information on financial management, tax and retirement planning (such as
information on Roth IRAs and Education IRAs) and investment alternative to
certificates of deposit and other financial instruments. Such sales literature,
communications to shareholders or other materials may include symbols, headlines
or other material which highlight or summarize the information discussed in more
detail therein.
Materials may refer to the CUSIP numbers of a Portfolio and may
illustrate how to find the listings of a Portfolio in newspapers and
periodicals. Materials may also include discussions of other Portfolios,
products, and services.
A Portfolio may quote various measures of volatility and benchmark
correlation in advertising. In addition, the Portfolio may compare these
measures to those of other funds. Measures of volatility seek to compare the
historical share price fluctuations or total returns to those of a benchmark.
Measures of benchmark correlation indicate how valid a comparative benchmark may
be. Measures of volatility and correlation may be calculated using averages of
historical data. A Portfolio may advertise its current interest rate
sensitivity, duration, weighted average maturity or similar maturity
characteristics. Advertisements and sales materials relating to a Portfolio may
include information regarding the background and experience of its portfolio
managers.
The following tables are an example, for purposes of illustration only, of
cumulative total return performance through April 30, 1998 for each Portfolio,
other than The Limited-Term Maturity Portfolio, The International Mid-Cap Sub
Portfolio, The Asset Allocation Portfolio, The Small-Cap Growth Equity Portfolio
and The Growth and Income Portfolio. For these purposes, the calculations assume
the reinvestment of any capital gains distributions and income dividends paid
during the indicated periods.
-38-
<PAGE>
(DPT19-SAI/PART B)
Cumulative Total Return(1)
<TABLE>
<CAPTION>
The The
Large-Cap Aggressive
Value Equity Growth
Portfolio Portfolio
<S> <C> <C> <C> <C>
3 months ended 3 months ended
4/30/98 10.39% 4/30/98 15.57%
6 months ended 6 months ended
4/30/98 18.57% 4/30/98 14.12%
9 months ended 9 months ended
4/30/98 14.31% 4/30/98 15.64%
1 year ended 1 year ended
4/30/98 35.54% 4/30/98 39.63%
3 years ended 3 years ended
4/30/98 107.18% 4/30/98 73.27%
5 years ended 5 years ended
4/30/98 166.85% 4/30/98 116.13%
Period 2/3/92(2) Period 2/27/92(2)
through 4/30/98 226.18% through 4/30/98 104.81%
</TABLE>
(1) Certain expenses of the Portfolios have been waived and paid by the
respective investment adviser. In the absence of such waiver and payment,
performance would have been affected negatively.
(2) Date of initial sale.
-39-
<PAGE>
(DPT19-SAI/PART B)
Cumulative Total Return(1)
<TABLE>
<CAPTION>
The The
International Global Fixed
Equity Income
Portfolio Portfolio
<S> <C> <C> <C> <C>
3 months ended 3 months ended
4/30/98 9.65% 4/30/98 0.66%
6 months ended 6 months ended
4/30/98 11.33% 4/30/98 (0.04%)
9 months ended 9 months ended
4/30/98 0.86% 4/30/98 3.26%
1 year ended 1 year ended
4/30/98 13.36% 4/30/98 6.05%
3 years ended 3 years ended
4/30/98 52.76% 4/30/98 36.98%
5 years ended 5 years ended
4/30/98 85.97% 4/30/98 58.41%
Period 2/4/92(2) Period 11/30/92(2)
through 4/30/98 112.16% through 4/30/98 72.70%
</TABLE>
(1) Certain expenses of the Portfolios have been waived and paid by the
respective investment adviser. In the absence of such waiver and payment,
performance would have been affected negatively.
(2) Date of initial sale.
-40-
<PAGE>
(DPT19-SAI/PART B)
Cumulative Total Return(1)
<TABLE>
<CAPTION>
The
Intermediate
Fixed The High-
Income Yield Bond
Portfolio Portfolio
<S> <C> <C> <C> <C>
3 months ended 3 months ended
4/30/98 0.66% 4/30/98 3.58%
6 months ended 6 months ended
4/30/98 2.87% 4/30/98 8.23%
9 months ended 9 months ended
4/30/98 4.42% 4/30/98 12.73%
1 year ended 1 year ended
4/30/98 8.39% 4/30/98 21.22%
Period 3/12/96(2) Period 12/2/96(2)
through 4/30/98 14.66% through 4/30/98 27.63%
</TABLE>
(1) Certain expenses of the Portfolios have been waived and paid by the
respective investment adviser. In the absence of such waiver and payment,
performance would have been affected negatively.
(2) Date of initial sale.
-41-
<PAGE>
(DPT19-SAI/PART B)
Cumulative Total Return(1)
The Real Estate Investment Trust Portfolio
The Real Estate
Investment Trust
Portfolio Class (2)
3 months ended 4/30/98 (2.26%)
6 months ended 4/30/98 1.82%
9 months ended 4/30/98 9.27%
1 year ended 4/30/98 25.80%
Period 12/6/95(3) through 4/30/98 88.12%
(1) Certain expenses of the Portfolio have been waived and paid by the
investment adviser. In the absence of such waiver and payment, performance
would have been affected negatively.
(2) Shares of The Real Estate Investment Trust Portfolio class were made
available for sale beginning October 14, 1997. Pursuant to applicable
regulation, total return shown for the class prior to commencement of
operations is that of the original (and then only) class of shares offered
by The Real Estate Investment Trust Portfolio. That original class has been
redesignated REIT Fund A Class. Like The Real Estate Investment Trust
Portfolio class, the original class, prior to its redesignation, did not
carry a front-end sales charge and was not subject to Rule 12b-1
distribution expenses.
(3) Date of initial sale of the original class (now REIT Fund A Class).
-42-
<PAGE>
(DPT19-SAI/PART B)
Cumulative Total Return(1)
The Real Estate Investment Trust Portfolio
REIT Fund REIT Fund
A Class Institutional
(at Offer)(2) Class (3)
3 months ended
4/30/98 6.91% (2.26%)
6 months ended
4/30/98 (3.15%)(5) 1.82%
9 months ended
4/30/98 3.92% 9.27%
1 year ended
4/30/98 19.63% 25.80%
Period 12/6/95(4)
through 4/30/98 78.92% 88.12%
(1) Certain expenses of the Portfolio have been waived and paid by the
investment adviser. In the absence of such waiver and payment, performance
would have been affected negatively.
(2) The total return presented above is based upon the performance of the
original (and then only) class of shares offered by The Real Estate
Investment Trust Portfolio, which did not carry a front-end sales charge
and was not subject to Rule 12b-1 distribution expenses. That original
class has been redesignated REIT Fund A Class. Effective October 14, 1997,
a front-end sales charge of 4.75% was imposed on sales of those shares and
effective November 3, 1997 the class was subject to annual 12b-1
distribution expenses of up to 0.30% of average daily net assets of the
class. These performance numbers are calculated giving effect to the sales
charge. For periods prior to November 3, 1997, no adjustment has been made
to reflect the effect of 12b-1 payments. Performance on and after November
3, 1997 will be affected by 12b-1 payments. REIT Fund A Class is subject to
other expenses (at a higher rate than applicable to the original class)
which may affect performance of the Class.
(3) Shares of REIT Fund Institutional Class were made available for sale
beginning October 14, 1997. Pursuant to applicable regulation, total return
shown for the class prior to commencement of operations is that of the
original (and then only) class of shares offered by The Real Estate
Investment Trust Portfolio. That original class has been redesignated REIT
Fund A Class. Like REIT Fund Institutional Class, the original class, prior
to its redesignation, did not carry a front-end sales charge and was not
subject to Rule 12b-1 distribution expenses. REIT Institutional Class is
subject to other expenses (at a higher rate than applicable to the original
class) which may affect performance of the Class.
(4) Date of initial sale of the original class (now REIT Fund A Class).
(5) Cumulative total return at net asset value was 1.68% for the six months
ended April 30, 1998.
-43-
<PAGE>
(DPT19-SAI/PART B)
The cumulative total return for Class B Shares and Class C Shares of
The Real Estate Investment Trust Portfolio including deferred sales charge
reflects the deduction of the applicable CDSC that would be paid if the shares
were redeemed at April 30, 1998. The cumulative total return for Class B Shares
and Class C Shares excluding deferred sales charge assumes the shares were not
redeemed at April 30, 1998 and therefore does not reflect the deduction of a
CDSC.
Cumulative Total Return
The Real Estate Investment Trust Portfolio(1)
<TABLE>
<CAPTION>
REIT Fund REIT Fund REIT Fund REIT Fund
B Class B Class C Class C Class
(including (excluding (including (excluding
CDSC) CDSC) CDSC) CDSC)
<S> <C> <C> <C> <C> <C>
3 months ended 4/30/98 (6.41%) (2.53%) (3.50%) (2.53%)
Period 11/11/97 (2) through 4/30/98 (2.10%) 1.60% 0.67% 1.60%
</TABLE>
(1) Certain expenses of the Portfolio have been waived and paid by the
investment adviser. In the absence of such waiver and payment, performance
would have been affected negative
(2) Date of initial sale; total return for this short of a time period may not
be representative of longer term results.
-44-
<PAGE>
(DPT19-SAI/PART B)
Cumulative Total Return(1)
<TABLE>
<CAPTION>
The
Labor The
Select International
International Fixed
Equity Income
Portfolio Portfolio
<S> <C> <C> <C> <C>
3 months ended 3 months ended
4/30/98 10.87% 4/30/98 0.69%
6 months ended 6 months ended
4/30/98 13.95% 4/30/98 (1.23%)
9 months ended 9 months ended
4/30/98 8.36% 4/30/98 3.92%
1 year ended 1 year ended
4/30/98 20.38% 4/30/98 5.58%
Period 12/19/95(2) Period 4/11/97(2)
through 4/30/98 55.95% through 4/30/98 5.79%
The The
Emerging Global
Markets Equity
Portfolio Portfolio
3 months ended 3 months ended
4/30/98 13.55% 4/30/98 9.68%
6 months ended 6 months ended
4/30/98 4.92% 4/30/98 14.03%
9 months ended Period 10/15/97(3)
4/30/98 (14.05%) through 4/30/98 8.93%
1 year ended
4/30/98 (4.53%)
Period 4/14/97(2)
through 4/30/98 (3.48%)
</TABLE>
(1) Certain expenses of the Portfolio have been waived and paid by the
investment adviser. In the absence of such waiver and payment, performance
would have been affected negatively.
(2) Date of initial sale.
(3) Date of initial sale; total return for this short of a time period may not
be representative of longer term results.
-45-
<PAGE>
(DPT19-SAI/PART B)
Cumulative Total Return(1)
The Real Estate
Investment Trust
Portfolio II
3 months ended 4/30/98 (2.39%)
Period 11/4/97(2)
through 4/30/98 1.17%
(1) Certain expenses of the Portfolio have been waived and paid by the
investment adviser. In the absence of such waiver and payment, performance
would have been affected negatively.
(2) Date of initial sale; total return for this short of a time period may not
be representative of longer term results.
<TABLE>
<CAPTION>
Cumulative Total Return (1)
The Mid-Cap The Aggregate The Diversified
Value Equity Fixed Income Core Fixed
Portfolio Portfolio Income
Portfolio
<S> <C> <C> <C>
3 months ended 4/30/98 10.40% 0.81% 3.13%
Period 11/11/97 (2) through 4/30/98 9.88% 2.12% 4.71%
</TABLE>
(1) Certain expenses of the Portfolio have been waived and paid by the
investment adviser. In the absence of such waiver and payment, performance
would have been affected negatively.
(2) Date of initial sale; total return for this short of a time period may not
be representative of longer term results.
-46-
<PAGE>
(DPT19-SAI/PART B)
In addition, information will be provided that discusses the
overriding investment philosophies of Delaware Management Company ("Delaware"),
(the investment adviser to The Large-Cap Value Equity, The Mid-Cap Growth
Equity, The Small/Mid-Cap Value Equity, The Real Estate Investment Trust, The
Intermediate Fixed Income, The Aggregate Fixed Income, The Limited-Term
Maturity, The High-Yield Bond, The Diversified Core Fixed Income, The Asset
Allocation, The Small-Cap Growth Equity and The Growth and Income Portfolios),
and Delaware International Advisers Ltd. ("Delaware International"), (an
affiliate of Delaware and the investment adviser to The International Equity,
The International Mid-Cap Sub, The Labor Select International Equity, The Global
Fixed Income, The International Fixed Income, The Emerging Markets and The
Global Equity Portfolios and the sub-adviser to The Diversified Core Fixed
Income Portfolio) and how those philosophies impact each Portfolio in the
strategies Pooled Trust, Inc. and Foundation Funds employs in seeking respective
Portfolio objectives. Since the investment disciplines being employed for each
Portfolio are based on the disciplines and strategies employed by an affiliate
of Delaware and Delaware International to manage institutional separate
accounts, investment strategies and disciplines of these entities may also be
discussed.
The Large-Cap Value Equity Portfolio's strategy relies on the
consistency, reliability and predictability of corporate dividends. Dividends
tend to rise over time, despite market conditions, and keep pace with rising
prices; they are paid out in "current" dollars. Just as important, current
dividend income can help lessen the effects of adverse market conditions. This
equity dividend discipline, coupled with the potential for capital gains, seeks
to provide investors with a consistently higher total-rate-of-return over time.
In implementing this strategy, the investment adviser seeks to buy securities
with a yield higher than the average of the S&P 500 Index. If a security held by
the Portfolio moves out of the acceptable yield range, it typically is sold.
This strict buy/sell discipline is instrumental in implementing The Large-Cap
Value Equity Portfolio strategy.
-47-
<PAGE>
(DPT19-SAI/PART B)
TRADING PRACTICES AND BROKERAGE
Pooled Trust, Inc. or Foundation Funds, as applicable, (and, in the
case of The International Equity, The International Mid-Cap Sub, The Labor
Select International Equity, The Global Fixed Income, The International Fixed
Income, The Emerging Markets, The Global Equity and The Diversified Core Fixed
Income Portfolios, their investment adviser or sub-adviser) selects brokers or
dealers to execute transactions for the purchase or sale of portfolio securities
on the basis of its judgment of their professional capability to provide the
service. The primary consideration is to have brokers or dealers execute
transactions at best price and execution. Best price and execution refers to
many factors, including the price paid or received for a security, the
commission charged, the promptness and reliability of execution, the
confidentiality and placement accorded the order and other factors affecting the
overall benefit obtained by the account on the transaction. A number of trades
are made on a net basis where securities either are purchased directly from the
dealer or are sold to the dealer. In these instances, there is no direct
commission charged but there is a spread (the difference between the buy and
sell price) which is the equivalent of a commission. When a commission is paid,
Pooled Trust, Inc. or Foundation Funds pays reasonably competitive brokerage
commission rates based upon the professional knowledge of its trading department
(and, in the case of The International Equity, The International Mid-Cap Sub,
The Labor Select International Equity, The Global Fixed Income, The
International Fixed Income, The Emerging Markets, The Global Equity and The
Diversified Core Fixed Income Portfolios, their investment adviser or
sub-adviser) as to rates paid and charged for similar transactions throughout
the securities industry. In some instances, Pooled Trust, Inc. pays a minimal
share transaction cost when the transaction presents no difficulty.
Securities transactions for The International Equity, The
International Mid-Cap Sub, The Labor Select International Equity, The Global
Equity, The Emerging Markets, The Global Fixed Income, The International Fixed
Income, The High Yield Bond, The Real Estate Investment Trust and The
Diversified Core Fixed Income Portfolios may be effected in foreign markets
which may not allow negotiation of commissions or where it is customary to pay
fixed rates.
During the fiscal years ended October 31, 1995, 1996 and 1997, the
aggregate dollar amounts of brokerage commissions paid by the Portfolios listed
below amounted to the following:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
The Large-Cap Value Equity Portfolio $137,685 $117,326 $108,104
The Mid-Cap Growth Equity Portfolio $66,754 46,384 26,361
The International Equity Portfolio $618,700 398,781 280,594
The Global Fixed Income Portfolio --- --- 1,545
The Labor Select International Equity Portfolio(1) $72,413 78,514 N/A
The Real Estate Investment Trust Portfolio(2) $111,633 122,865 N/A
The Emerging Markets Portfolio(3) $92,535 N/A N/A
The Global Equity Portfolio(4) $5,176 N/A N/A
</TABLE>
(1) Commenced operations on December 19, 1995.
(2) Commenced operations on December 6, 1995.
(3) Commenced operations on April 14, 1997.
(4) Commenced operations on October 15, 1997.
-48-
<PAGE>
(DPT19-SAI/PART B)
The investment advisers or sub-advisers may allocate out of all
commission business generated by all of the funds and accounts under management
by them, brokerage business to brokers or dealers who provide brokerage and
research services. These services include advice, either directly or through
publications or writings, as to the value of securities, the advisability of
investing in, purchasing or selling securities, and the availability of
securities or purchasers or sellers of securities; furnishing of analyses and
reports concerning issuers, securities or industries; providing information on
economic factors and trends; assisting in determining portfolio strategy;
providing computer software and hardware used in security analyses; and
providing portfolio performance evaluation and technical market analyses. Such
services are used by the investment advisers in connection with their investment
decision-making process with respect to one or more funds and accounts they
manage, and may not be used, or used exclusively, with respect to the fund or
account generating the brokerage.
During the fiscal year ended October 31, 1997, portfolio transactions
of the following Portfolios in the amounts listed below, resulting in brokerage
commissions in the amounts listed below, were directed to brokers for brokerage
and research services provided:
<TABLE>
<CAPTION>
Portfolio Brokerage
Transactions Commissions
Amounts Amounts
<S> <C> <C>
The Large-Cap Value Equity Portfolio $10,302,300 $11,904
The Mid-Cap Growth Equity Portfolio 8,559,187 17,899
The International Equity Portfolio 37,630,165 107,244
The Labor Select International Equity Portfolio 5,600,920 16,999
The Real Estate Investment Trust Portfolio 18,902,123 39,120
The Emerging Markets Portfolio(1) 196,846 176
</TABLE>
(1) Commenced operations on April 14, 1997.
As provided in the Securities Exchange Act of 1934 and each Portfolio's
Investment Management Agreement, higher commissions are permitted to be paid to
broker/dealers who provide brokerage and research services than to
broker/dealers who do not provide such services if such higher commissions are
deemed reasonable in relation to the value of the brokerage and research
services provided. Although transactions are directed to broker/dealers who
provide such brokerage and research services, Pooled Trust, Inc. believes that
the commissions paid to such broker/dealers are not, in general, higher than
commissions that would be paid to broker/dealers not providing such services and
that such commissions are reasonable in relation to the value of the brokerage
and research services provided. In some instances, services may be provided to
the investment advisers which constitute in some part brokerage and research
services used by the investment advisers in connection with their investment
decision-making process and constitute in some part services used by them in
connection with administrative or other functions not related to their
investment decision-making process. In such cases, the investment advisers will
make a good faith allocation of brokerage and research services and will pay out
of their own resources for services used by them in connection with
administrative or other functions not related to their investment
decision-making process. In addition, so long as no fund is disadvantaged,
portfolio transactions which generate commissions or their equivalent are
allocated to broker/dealers who provide daily portfolio pricing services to
Pooled Trust, Inc. and to other funds in the Delaware Investments family.
Subject to best price and execution, commissions allocated to brokers providing
such pricing services may or may not be generated by the funds receiving the
pricing service.
-49-
<PAGE>
(DPT19-SAI/PART B)
Combined orders for two or more accounts or funds engaged in the
purchase or sale of the same security may be placed if the judgment is made that
joint execution is in the best interest of each participant and will result in
best price and execution. Transactions involving commingled orders are allocated
in a manner deemed equitable to each account or fund. When a combined order is
executed in a series of transactions at different prices, each account
participating in the order may be allocated an average price obtained from the
executing broker. It is believed that the ability of the accounts to participate
in volume transactions will generally be beneficial to the accounts and funds.
Although it is recognized that, in some cases, the joint execution of orders
could adversely affect the price or volume of the security that a particular
account or fund may obtain, it is the opinion of the investment advisers, the
Board of Directors of Pooled Trust, Inc. and the Board of Trustees of Foundation
Funds that the advantages of combined orders outweigh the possible disadvantages
of separate transactions.
Consistent with the Conduct Rules of the National Association of
Securities Dealers, Inc., and subject to seeking best price and execution,
orders may be placed with broker/dealers that have agreed to defray certain
Portfolio expenses, such as custodian fees.
Portfolio Turnover
Portfolio trading will be undertaken principally to accomplish each
Portfolio's objective in relation to anticipated movements in the general level
of interest rates. A Portfolio is free to dispose of portfolio securities at any
time, subject to complying with the Code and the 1940 Act, when changes in
circumstances or conditions make such a move desirable in light of the
investment objective. A Portfolio will not attempt to achieve or be limited to a
predetermined rate of portfolio turnover. Such a turnover always will be
incidental to transactions undertaken with a view to achieving a Portfolio's
investment objective.
The degree of portfolio activity may affect brokerage costs of a
Portfolio and taxes payable by a Portfolio's shareholders. A turnover rate of
100% would occur, for example, if all the investments in a Portfolio's
securities at the beginning of the year were replaced by the end of the year. In
investing for capital appreciation, a relevant Portfolio may hold securities for
any period of time. Portfolio turnover will also be increased by The Mid-Cap
Growth Equity Portfolio, either of The Real Estate Investment Trust Portfolios,
The International Equity Portfolio, The Emerging Markets Portfolio, The Global
Equity Portfolio, The Diversified Core Fixed Income Portfolio, The Asset
Allocation Portfolio, The Small-Cap Growth Equity Portfolio and The Growth and
Income Portfolio, if the Portfolio writes a large number of call options which
are subsequently exercised. To the extent a Portfolio realizes gains on
securities held for less than six months, such gains are taxable to the
shareholder subject to tax or to a Portfolio at ordinary income tax rates. The
turnover rate also may be affected by cash requirements from redemptions and
repurchases of Portfolio shares. Total brokerage costs generally increase with
higher portfolio turnover rates.
Under normal circumstances: (1) the annual portfolio turnover rate of
The International Equity Portfolio is not expected to exceed 50%; (2) the annual
portfolio turnover rate of The Global Fixed Income Portfolio, The International
Fixed Income Portfolio and The Limited-Term Maturity Portfolio is not expected
to exceed 200%; (3) the annual portfolio turnover rate of The Large-Cap Value
Equity Portfolio, The Mid-Cap Growth Equity Portfolio, The Small/Mid-Cap Value
Equity Portfolio, The Labor Select International Equity Portfolio, The Real
Estate Investment Trust Portfolios, The Emerging Markets Portfolio, The Global
Equity Portfolio, The High-Yield Bond Portfolio, The International Mid-Cap Sub
Portfolio, The Growth and Income Portfolio and The Asset Allocation Portfolio is
not expected to exceed 100%; (4) the annual portfolio turnover rate of The
Intermediate Fixed Income Portfolio and The Aggregate Fixed Income Portfolio is
not expected to exceed 250%; (5) the annual portfolio turnover rate of The
Diversified Core Fixed Income Portfolio is not expected to
-50-
<PAGE>
(DPT19-SAI/PART B)
exceed 50%; and (6) the annual portfolio turnover rate of The Small-Cap Growth
Equity Portfolio is expected to be 100%. The portfolio turnover rate of a
Portfolio is calculated by dividing the lesser of purchases or sales of
securities for the particular fiscal year by the monthly average of the value of
the securities owned by the Portfolio during the particular fiscal year,
exclusive of securities whose maturities at the time of acquisition are one year
or less.
The portfolio turnover rates of the following Portfolios for the past
two fiscal years were as follows:
<TABLE>
<CAPTION>
October 31, 1997 October 31, 1996
---------------- ----------------
<S> <C> <C>
The Large-Cap Value Equity Portfolio 73% 74%
The Mid-Cap Growth Equity Portfolio 117% 95%
The International Equity Portfolio 8% 8%
The Global Fixed Income Portfolio 114% 63%
The Labor Select International Equity Portfolio(1) 11% 7%*
The Real Estate Investment Trust Portfolio(2) 58% 109%*
The Intermediate Fixed Income Portfolio(3) 205% 232%*
The High-Yield Bond Portfolio(4) 281%* N/A
The International Fixed Income Portfolio(5) 145%* N/A
The Emerging Markets Portfolio(6) 46%* N/A
The Global Equity Portfolio(7) 0% N/A
</TABLE>
*Annualized
(1) Commenced operations on December 19, 1995.
(2) Commenced operations on December 6, 1995.
(3) Commenced operations on March 12, 1996.
(4) Commenced operations on December 2, 1996.
(5) Commenced operations on April 11, 1997.
(6) Commenced operations on April 14, 1997.
(7) Commenced operations on October 15, 1997.
-51-
<PAGE>
(DPT19-SAI/PART B)
PURCHASING SHARES
The following supplements the disclosure provided in the Portfolios'
Prospectuses.
Delaware Distributors, L.P. serves as the national distributor for each
Portfolio's shares. See the related Prospectus for information on how to invest.
Pooled Trust, Inc. or Foundation Funds, as applicable, reserves the right to
suspend sales of Portfolio shares, and reject any order for the purchase of
Portfolio shares if in the opinion of management such rejection is in the
Portfolio's best interest.
Certificates representing shares purchased are not ordinarily issued
unless a shareholder submits a specific request. Certificates are not issued in
the case of Class B Shares or Class C Shares of The Real Estate Investment Trust
Portfolio or, in the case of The International Mid-Cap Sub Portfolio shares, or
in the case of any retirement plan account including self-directed IRAs.
However, purchases not involving the issuance of certificates are confirmed to
the investor and credited to the shareholder's account on the books maintained
on behalf of Pooled Trust, Inc. The investor will have the same rights of
ownership with respect to such shares as if certificates had been issued. An
investor that is permitted to obtain a certificate may receive a certificate
representing full share denominations purchased by sending a letter signed by
each owner of the account to the Transfer Agent requesting the certificate. No
charge is assessed by Pooled Trust, Inc. or Foundation Funds for any certificate
issued. A shareholder may be subject to fees for replacement of a lost or stolen
certificate, under certain conditions, including the cost of obtaining a bond
covering the lost or stolen certificate. Please contact the Portfolios for
further information. Investors who hold certificates representing any of their
shares may only redeem those shares by written request. The investor's
certificate(s) must accompany such request.
Purchasing Shares (The Real Estate Investment Trust Portfolio class of
The Real Estate Investment Trust Portfolio and all other Portfolios)
Shares of each Portfolio are sold on a continuous basis directly to
institutions and high net-worth individuals at the net asset value next
determined after the receipt of a purchase order and a Federal Funds wire as
described more fully in the related Prospectus. In addition, for purchases of
shares in The Emerging Markets Portfolio, a purchase reimbursement fee of 0.75%
of the dollar amount invested is charged to investors and paid to the Portfolio
to help defray expenses of investing purchase proceeds. For The International
Mid-Cap Sub Portfolio, the purchase reimbursement fee is equal to 0.60% of the
dollar amount invested and for The Global Equity Portfolio, the purchase
reimbursement fee is equal to 0.40% of the dollar amount invested. In lieu of
paying that fee, an investor in The International Mid-Cap Sub Portfolio or The
Global Equity Portfolio may elect, subject to agreement by DIA Ltd., to invest
by a contribution of in-kind securities or may follow another procedure that has
the same economic impact on the Portfolio and its shareholders, in which case
the purchase reimbursement fee will not apply. See "DETERMINING OFFERING PRICE
AND NET ASSET VALUE." The minimum for initial investments is $1,000,000 for each
Portfolio. There are no minimums for subsequent investments. See the related
Prospectus for special purchase procedures and requirements that may be
applicable to prospective investors in The International Equity Portfolio and
The Global Equity Portfolio. At such time as Pooled Trust, Inc. receives
appropriate regulatory approvals to do so in the future, under certain
circumstances, Pooled Trust, Inc. may, at its sole discretion, allow eligible
investors who have an existing investment counseling relationship with Delaware
International or an affiliate of Delaware to make investments in the Portfolios
by a contribution of securities in-kind to such Portfolios.
-52-
<PAGE>
(DPT19-SAI/PART B)
Purchasing Shares (REIT Fund A, B, C and Institutional Classes of
The Real Estate Investment Trust Portfolio)
The minimum initial purchase is generally $1,000 for REIT Fund A Class
("Class A Shares"), REIT Fund B Class ("Class B Shares") and REIT Fund C Class
("Class C Shares"). Subsequent purchases must generally be at least $100. The
initial and subsequent investment minimums for Class A Shares will be waived for
purchases by officers, directors and employees of any fund in the Delaware
Investments family, the Manager or any of the Manager's affiliates if the
purchases are made pursuant to a payroll deduction program. Shares purchased
pursuant to the Uniform Gifts to Minors Act or the Uniform Transfers to Minors
Act and shares purchased in connection with an Automatic Investing Plan are
subject to a minimum initial purchase of $250 and a minimum subsequent purchase
of $25. Accounts opened under an Asset Planner Service are subject to a minimum
initial investment of $2,000 per Asset Planner strategy selected. There are no
minimum purchase requirements for REIT Fund Institutional Class ("Institutional
Class Shares").
Each purchase of Class B Shares is subject to a maximum purchase
limitation of $250,000. For Class C Shares, each purchase must be in an amount
that does not exceed $1,000,000. See Investment Plans for purchase limitations
applicable to retirement plans. Pooled Trust, Inc. will reject any purchase
order for more than $250,000 of Class B Shares and $1,000,000 or more of Class C
Shares. An investor may exceed these limitations by making cumulative purchases
over a period of time. In doing so, an investor should keep in mind, however,
that reduced front-end sales charges apply to investments of $100,000 or more in
Class A Shares, and that Class A Shares are subject to lower annual 12b-1 Plan
expenses than Class B Shares and Class C Shares and generally are not subject to
a CDSC.
The NASD has adopted Conduct Rules, as amended, relating to investment
company sales charges. Pooled Trust, Inc. and the Distributor intend to operate
in compliance with these rules.
Class A Shares are purchased at the offering price, which reflects a
maximum front-end sales charge of 5.75%; however, lower front-end sales charges
apply for larger purchases. See the table in the appropriate Prospectus. Class A
Shares are also subject to annual 12b-1 Plan expenses for the life of the
investment.
Class B Shares are purchased at net asset value and are subject to a
CDSC of: (i) 5% if shares are redeemed within one year of purchase; (ii) 4% if
shares are redeemed within the second year of purchase; (iii) 3% if shares are
redeemed during the third or fourth year following purchase; (iv) 2% if shares
are redeemed during the fifth year following purchase; and (v) 1% if shares are
redeemed during the sixth year following purchase. Class B Shares are also
subject to annual 12b-1 Plan expenses which are higher than those to which Class
A Shares are subject and are assessed against the Class B Shares for
approximately eight years after purchase. See Automatic Conversion of Class B
Shares under Classes of Shares in the related Prospectus.
Class C Shares are purchased at net asset value and are subject to a
CDSC of 1% if shares are redeemed within 12 months following purchase. Class C
Shares are also subject to annual 12b-1 Plan expenses for the life of the
investment which are equal to those to which Class B Shares are subject.
Institutional Class Shares are purchased at net asset value per share
without the imposition of a front-end or contingent deferred sales charge or
12b-1 Plan expenses.
Class A Shares, Class B Shares, Class C Shares and Institutional Class
Shares represent a proportionate interest in the Portfolio's assets and will
receive a proportionate interest in the Portfolio's income, before
-53-
<PAGE>
(DPT19-SAI/PART B)
application, as to the Class A, Class B and Class C Shares, of any expenses
under Pooled Trust, Inc.'s 12b-1 Plans.
Alternative Purchase Arrangements
The alternative purchase arrangements of Class A, Class B and Class C
Shares permit investors to choose the method of purchasing shares that is most
suitable for their needs given the amount of their purchase, the length of time
they expect to hold their shares and other relevant circumstances. Investors
should determine whether, given their particular circumstances, it is more
advantageous to purchase Class A Shares and incur a front-end sales charge and,
absent any applicable fee waiver, annual 12b-1 Plan expenses of up to a maximum
of 0.30% of the average daily net assets of Class A Shares, or to purchase
either Class B or Class C Shares and have the entire initial purchase amount
invested in the Portfolio with the investment thereafter subject to a CDSC and
annual 12b-1 Plan expenses.
Class A Shares
Purchases of $50,000 or more of Class A Shares at the offering price
carry reduced front-end sales charges and may include a series of purchases over
a 13-month period under a Letter of Intention signed by the purchaser. See
Front-End Sales Charge Alternative - Class A Shares in the appropriate
Prospectus for a table illustrating reduced front-end sales charge. See also
Special Purchase Features - Class A Shares, below for more information on ways
in which investors can avail themselves of reduced front-end sales charges and
other purchase features.
Certain dealers who enter into an agreement to provide extra training
and information on Delaware Investments products and services and who increase
sales of funds in the Delaware Investments family may receive an additional
commission of up to 0.15% of the offering price in connection with sales of
Class A Shares. Such dealers must meet certain requirements in terms of
organization and distribution capabilities and their ability to increase sales.
The Distributor should be contacted for further information on these
requirements as well as the basis and circumstances upon which the additional
commission will be paid. Participating dealers may be deemed to have additional
responsibilities under the securities laws.
Dealer's Commission
As described more fully in the related Prospectus, for initial
purchases of Class A Shares of $1,000,000 or more, a dealer's commission may be
paid by the Distributor to financial advisers through whom such purchases are
effected. See Front-End Sales Charge Alternative - Class A Shares in the related
Prospectus for the applicable schedule and further details.
Contingent Deferred Sales Charge - Class B Shares and Class C Shares
Class B and Class C Shares are purchased without a front-end sales
charge. Class B Shares redeemed within six years of purchase may be subject to a
CDSC at the rates set forth above, and Class C Shares redeemed within 12 months
of purchase may be subject to a CDSC of 1%. CDSCs are charged as a percentage of
the dollar amount subject to the CDSC. The charge will be assessed on an amount
equal to the lesser of the net asset value at the time of purchase of the shares
being redeemed or the net asset value of those shares at the time of redemption.
No CDSC will be imposed on increases in net asset value above the initial
purchase price, nor will a CDSC be assessed on redemptions of shares acquired
through reinvestment of dividends or capital gains distributions. See Waiver of
Contingent Deferred Sales Charge - Class B and Class C Shares under Redemption
and Exchange in the related Prospectus for a list of the instances in which the
CDSC is waived.
-54-
<PAGE>
(DPT19-SAI/PART B)
During the seventh year after purchase and, thereafter, until converted
automatically into Class A Shares, Class B Shares, will still be subject to the
annual 12b-1 Plan expenses of up to 1% of average daily net assets of those
shares. At the end of approximately eight years after purchase, the investor's
Class B Shares will be automatically converted into Class A Shares of the
Portfolio. See Automatic Conversion of Class B Shares under Classes of Shares in
the related Prospectus. Such conversion will constitute a tax-free exchange for
federal income tax purposes. See Taxes in the related Prospectus.
Plans Under Rule 12b-1
Pursuant to Rule 12b-1 under the 1940 Act, Pooled Trust, Inc. has
adopted a separate plan for each of Class A Shares, the Class B Shares and the
Class C Shares of The Real Estate Investment Trust Portfolio (the "Plans"). Each
Plan permits the Portfolio to pay for certain distribution, promotional and
related expenses involved in the marketing of only the Class to which the Plan
applies.
The Plans permit the Portfolio, pursuant to the Distribution Agreement,
to pay out of the assets of Class A Shares, Class B Shares and Class C Shares
monthly fees to the Distributor for its services and expenses in distributing
and promoting sales of shares of such classes. These expenses include, among
other things, preparing and distributing advertisements, sales literature and
prospectuses and reports used for sales purposes, compensating sales and
marketing personnel, and paying distribution and maintenance fees to securities
brokers and dealers who enter into agreements with the Distributor. The Plan
expenses relating to Class B and Class C Shares are also used to pay the
Distributor for advancing the commission costs to dealers with respect to the
initial sale of such shares.
In addition, the Portfolio may make payments out of the assets of Class
A, Class B and Class C Shares directly to other unaffiliated parties, such as
banks, who either aid in the distribution of shares of, or provide services to,
such classes.
The maximum aggregate fee payable by the Portfolio under the Plans, and
the Portfolio's Distribution Agreement, is on an annual basis up to 0.30% of
Class A Shares' average daily net assets for the year, and up to 1% (0.25% of
which are service fees to be paid to the Distributor, dealers and others for
providing personal service and/or maintaining shareholder accounts) of each of
Class B Shares' and Class C Shares' average daily net assets for the year.
Pooled Trust, Inc.'s Board of Directors may reduce these amounts at any time.
Pursuant to Board action, the maximum aggregate fee payable by Class A Shares is
0.25%.
All of the distribution expenses incurred by the Distributor and
others, such as broker/dealers, in excess of the amount paid on behalf of Class
A, Class B and Class C Shares would be borne by such persons without any
reimbursement from such Classes. Subject to seeking best price and execution,
the Classes may, from time to time, buy or sell portfolio securities from or to
firms which receive payments under the Plans.
From time to time, the Distributor may pay additional amounts from its
own resources to dealers for aid in distribution or for aid in providing
administrative services to shareholders.
The Plans and the Distribution Agreement, as amended, have been
approved by the Board of Directors of Pooled Trust, Inc., including a majority
of the directors who are not "interested persons" (as defined in the 1940 Act)
of Pooled Trust, Inc. and who have no direct or indirect financial interest in
the Plans by vote cast in person at a meeting duly called for the purpose of
voting on the Plans and such Agreement. Continuation of the Plans and the
Distribution Agreement, as amended, must be approved annually by the Board of
Directors in the same manner, as specified above.
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(DPT19-SAI/PART B)
Each year, the directors must determine whether continuation of the
Plans is in the best interest of shareholders of, respectively, the Class A
Shares, Class B Shares and Class C Shares and that there is a reasonable
likelihood of the Plan relating to a Class providing a benefit to that Class.
The Plans and the Distribution Agreement, as amended, may be terminated at any
time without penalty by a majority of those directors who are not "interested
persons" or by a majority vote of the outstanding voting securities of the
relevant Class. Any amendment materially increasing the maximum percentage
payable under the Plans must likewise be approved by a majority vote of the
outstanding voting securities of the relevant Class, as well as by a majority
vote of those directors who are not "interested persons." With respect to the
Class A Share Plan, any material increase in the maximum percentage payable
thereunder must also be approved by a majority of the outstanding voting
securities of the Class B Shares. Also, any other material amendment to the
Plans must be approved by a majority vote of the directors including a majority
of the noninterested directors of Pooled Trust, Inc. having no interest in the
Plans. In addition, in order for the Plans to remain effective, the selection
and nomination of directors who are not "interested persons" of Pooled Trust,
Inc. must be effected by the directors who themselves are not "interested
persons" and who have no direct or indirect financial interest in the Plans.
Persons authorized to make payments under the Plans must provide written reports
at least quarterly to the Board of Directors for their review.
Other Payments to Dealers - Class A, Class B and Class C Shares
From time to time, at the discretion of the Distributor, all registered
broker/dealers whose aggregate sales of the Class A, B and C Shares exceed
certain limits as set by the Distributor, may receive from the Distributor an
additional payment of up to 0.25% of the dollar amount of such sales. The
Distributor may also provide additional promotional incentives or payments to
dealers that sell shares of the funds in the Delaware Investments family. In
some instances, these incentives or payments may be offered only to certain
dealers who maintain, have sold or may sell certain amounts of shares. The
Distributor may also pay a portion of the expense of preapproved dealer
advertisements promoting the sale of shares of funds in the Delaware Investments
family.
Special Purchase Features - Class A Shares
Buying Class A Shares at Net Asset Value
Class A Shares may be purchased without a front-end sales charge under
the Dividend Reinvestment Plan and, under certain circumstances, the Exchange
Privilege and the 12-Month Reinvestment Privilege.
Current and former officers, trustees and employees of Pooled Trust,
Inc., any other fund in the Delaware Investments family, the Manager, the
Manager's affiliates or any of the Manager's affiliates that may in the future
be created, legal counsel to the funds and registered representatives and
employees of broker/dealers who have entered into Dealer's Agreements with the
Distributor may purchase Class A Shares of the Portfolio and any of the funds in
the Delaware Investments family, including any fund that may be created, at net
asset value per share. Family members of such persons at their direction, and
any employee benefit plan established by any of the foregoing funds,
corporations, counsel or broker/dealers may also purchase Class A Shares at net
asset value. Class A Shares may also be purchased at net asset value by current
and former officers, directors and employees (and members of their families) of
the Dougherty Financial Group LLC. Purchases of Class A Shares may also be made
by clients of registered representatives of an authorized investment dealer at
net asset value within 12 months after the registered representative changes
employment, if the purchase is funded by proceeds from an investment where a
front-end sales charge, contingent deferred sales charge or other sales charge
has been assessed.
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(DPT19-SAI/PART B)
Purchases of Class A Shares may also be made at net asset value by bank
employees who provide services in connection with agreements between the bank
and unaffiliated brokers or dealers concerning sales of shares of funds in the
Delaware Investments family. Officers, directors and key employees of
institutional clients of the Manager, or any of its affiliates, may purchase
Class A Shares at net asset value. Moreover, purchases may be effected at net
asset value for the benefit of the clients of brokers, dealers and registered
investment advisers affiliated with a broker or dealer, if such broker, dealer
or investment adviser has entered into an agreement with the Distributor
providing specifically for the purchase of Class A Shares in connection with
special investment products, such as wrap accounts or similar fee based
programs. Such purchasers are required to sign a letter stating that the
purchase is for investment only and that the securities may not be resold except
to the issuer. Such purchasers may also be required to sign or deliver such
other documents as The Real Estate Investment Trust Portfolio may reasonably
require to establish eligibility for purchase at net asset value.
Investors in Delaware Investments Unit Investment Trusts may reinvest
monthly dividend checks and/or repayment of invested capital into Class A Shares
of any of the funds in the Delaware Investments family at net asset value.
Purchases of Class A Shares at net asset value may also be made by the
following: financial institutions investing for the account of their trust
customers if they are not eligible to purchase shares of the Institutional
Class; any group retirement plan (excluding defined benefit pension plans), or
such plans of the same employer, for which plan participant records are
maintained on the Retirement Financial Services, Inc. proprietary record keeping
system that (i) has in excess of $500,000 of plan assets invested in Class A
Shares of funds in the Delaware Investments family and any stable value product
available through the funds in the Delaware Investments family, or (ii) is
sponsored by an employer that has at any point after May 1, 1997 had more than
100 employees while such plan has held Class A Shares of a fund in the Delaware
Investments family and such employer has properly represented to Retirement
Financial Services, Inc. in writing that it has the requisite number of
employees and has received written confirmation back from Retirement Financial
Services, Inc.
Investments in Class A Shares made by plan level and/or participant
retirement accounts that are for the purpose of repaying a loan taken from such
accounts will be made at net asset value. Loan repayments made to a Delaware
Investments account in connection with loans originated from accounts previously
maintained by another investment firm will also be invested at net asset value.
The Portfolio must be notified in advance that the trade qualifies for
purchase at net asset value.
Letter of Intention
The reduced front-end sales charges described above with respect to the
Class A Shares are also applicable to the aggregate amount of purchases made by
any such purchaser previously enumerated within a 13-month period pursuant to a
written Letter of Intention provided by the Distributor and signed by the
purchaser, and not legally binding on the signer or Pooled Trust, Inc., which
provides for the holding in escrow by the Transfer Agent of 5% of the total
amount of Class A Shares intended to be purchased until such purchase is
completed within the 13-month period. A Letter of Intention may be dated to
include shares purchased up to 90 days prior to the date the Letter is signed.
The 13-month period begins on the date of the earliest purchase. If the intended
investment is not completed, except as noted below, the purchaser will be asked
to pay an amount equal to the difference between the front-end sales charge on
the Class A Shares purchased at the reduced rate and the front-end sales charge
otherwise applicable to the total shares purchased. If such payment is not made
within 20 days following the expiration of the 13-month period, the Transfer
Agent will surrender an appropriate number of the escrowed shares for redemption
in order to realize the difference. Such
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<PAGE>
(DPT19-SAI/PART B)
purchasers may include the value (at offering price at the level designated in
their Letter of Intention) of all their shares of the Portfolio and of any class
of any of the other mutual funds in the Delaware Investments family (except
shares of any fund in the Delaware Investments family which does not carry a
front-end sales charge, CDSC or Limited CDSC, other than shares of Delaware
Group Premium Fund, Inc. beneficially owned in connection with the ownership of
variable insurance products, unless they were acquired through an exchange from
a Delaware Investments fund which carried a front-end sales charge, CDSC or
Limited CDSC) previously purchased and still held as of the date of their Letter
of Intention toward the completion of such Letter.
Employers offering a Delaware Investments retirement plan may also
complete a Letter of Intention to obtain a reduced front-end sales charge on
investments of Class A Shares made by the plan. The aggregate investment level
of the Letter of Intention will be determined and accepted by the Transfer Agent
at the point of plan establishment. The level and any reduction in front-end
sales charge will be based on actual plan participation and the projected
investments in funds in the Delaware Investments family that are offered with a
front-end sales charge, CDSC or Limited CDSC for a 13-month period. The Transfer
Agent reserves the right to adjust the signed Letter of Intention based on this
acceptance criteria. The 13-month period will begin on the date this Letter of
Intention is accepted by the Transfer Agent. If actual investments exceed the
anticipated level and equal an amount that would qualify the plan for further
discounts, any front-end sales charges will be automatically adjusted. In the
event this Letter of Intention is not fulfilled within the 13-month period, the
plan level will be adjusted (without completing another Letter of Intention) and
the employer will be billed for the difference in front-end sales charges due,
based on the plan's assets under management at that time. Employers may also
include the value (at offering price at the level designated in their Letter of
Intention) of all their shares intended for purchase that are offered with a
front-end sales charge, CDSC or Limited CDSC of any class. Class B Shares and
Class C Shares of the Portfolio and other funds in the Delaware Investments
family which offer corresponding classes of shares may also be aggregated for
this purpose.
Combined Purchases Privilege
In determining the availability of the reduced front-end sales charge
previously set forth with respect to Class A Shares, purchasers may combine the
total amount of any combination of Class A Shares, Class B Shares and/or Class C
Shares of the Portfolio, as well as shares of any other class of any of the
other funds in the Delaware Investments family (except shares of any Delaware
Investments fund which does not carry a front-end sales charge, CDSC or Limited
CDSC, other than shares of Delaware Group Premium Fund, Inc. beneficially owned
in connection with the ownership of variable insurance products, unless they
were acquired through an exchange from a fund in the Delaware Investments family
which carried a front-end sales charge, CDSC or Limited CDSC). In addition,
assets held by investment advisory clients of the Manager or its affiliates in a
stable value account may be combined with other Delaware Investments fund
holdings.
The privilege also extends to all purchases made at one time by an
individual; or an individual, his or her spouse and their children under 21; or
a trustee or other fiduciary of trust estates or fiduciary accounts for the
benefit of such family members (including certain employee benefit programs).
Right of Accumulation
In determining the availability of the reduced front-end sales charge
with respect to Class A Shares, purchasers may also combine any subsequent
purchases of Class A Shares, Class B Shares and Class C Shares of the Portfolio,
as well as shares of any other class of any of the other fund in the Delaware
Investments family which offer such classes (except shares of any Delaware
Investments fund which does not carry a front-end sales charge, CDSC or Limited
CDSC, other than shares of Delaware Group Premium Fund, Inc. beneficially owned
in connection with the ownership of variable insurance products, unless they
were acquired through an
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(DPT19-SAI/PART B)
exchange from shares from a fund in the Delaware Investments family which
carried a front-end sales charge, CDSC or Limited CDSC). If, for example, any
such purchaser has previously purchased and still holds Class A Shares and/or
shares of any other of the classes described in the previous sentence with a
value of $40,000 and subsequently purchases $60,000 at offering price of
additional shares of Class A Shares, the charge applicable to the $60,000
purchase would be 3.75%. For the purpose of this calculation, the shares
presently held shall be valued at the public offering price that would have been
in effect were the shares purchased simultaneously with the current purchase.
Investors should refer to the table of sales charges for Class A Shares to
determine the applicability of the Right of Accumulation to their particular
circumstances.
12-Month Reinvestment Privilege
Holders of Class A Shares (and of the Institutional Class holding
shares which were acquired through an exchange from one of the other mutual
funds in the Delaware Investments family offered with a front-end sales charge)
who redeem such shares of the Portfolio have one year from the date of
redemption to reinvest all or part of their redemption proceeds in Class A
Shares of the Portfolio or in Class A Shares of any of the other funds in the
Delaware Investments family, subject to applicable eligibility and minimum
purchase requirements, in states where shares of such other funds may be sold,
at net asset value without the payment of a front-end sales charge. This
privilege does not extend to Class A Shares where the redemption of the shares
triggered the payment of a Limited CDSC. Persons investing redemption proceeds
from direct investments in mutual funds in the Delaware Investments family
offered without a front-end sales charge will be required to pay the applicable
sales charge when purchasing Class A Shares. The reinvestment privilege does not
extend to a redemption of either Class B Shares or Class C Shares.
Any such reinvestment cannot exceed the redemption proceeds (plus any
amount necessary to purchase a full share). The reinvestment will be made at the
net asset value next determined after receipt of remittance. A redemption and
reinvestment could have income tax consequences. It is recommended that a tax
adviser be consulted with respect to such transactions. Any reinvestment
directed to a fund in which the investor does not then have an account will be
treated like all other initial purchases of a fund's shares. Consequently, an
investor should obtain and read carefully the prospectus for the fund in which
the investment is intended to be made before investing or sending money. The
prospectus contains more complete information about the fund, including charges
and expenses.
Investors should consult their financial advisers or the Transfer
Agent, which also serves as the Portfolio's shareholder servicing agent, about
the applicability of the Limited CDSC (see Contingent Deferred Sales Charge for
Certain Redemptions of Class A Shares Purchased at Net Asset Value under
Redemption and Exchange in the related Prospectus) in connection with the
features described above
Group Investment Plans
Group Investment Plans which are not eligible to purchase shares of the
Institutional Class may also benefit from the reduced front-end sales charges
for investments in Class A Shares set forth in the table in the related
Prospectus, based on total plan assets. If a company has more than one plan
investing in the Delaware Investments family, then the total amount invested in
all plans would be used in determining the applicable front-end sales charge
reduction upon each purchase, both initial and subsequent, upon notification to
the Portfolio at the time of each such purchase. Employees participating in such
Group Investment Plans may also combine the investments made in their plan
account when determining the applicable front-end sales charge on purchases to
non-retirement Delaware Investments accounts if they so notify the Portfolio in
connection with each purchase. For other retirement plans and special services,
see Retirement Plans for the Fund Classes under Investment Plans for information
about Retirement Plans.
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(DPT19-SAI/PART B)
Institutional Class Shares of the Portfolio
Institutional Class Shares of the Portfolio are available for purchase
only by: (a) retirement plans introduced by persons not associated with brokers
or dealers that are primarily engaged in the retail securities business and
rollover individual retirement accounts from such plans; (b) tax-exempt employee
benefit plans of Delaware, Delaware International or their affiliates and
securities dealer firms with a selling agreement with the Distributor; (c)
institutional advisory accounts of Delaware, Delaware International or their
affiliates and those having client relationships with Delaware, Delaware
International or their affiliates and their corporate sponsors, as well as
subsidiaries and related employee benefit plans and rollover individual
retirement accounts from such institutional advisory accounts; (d) a bank, trust
company and similar financial institution investing for its own account or for
the account of its trust customers for whom such financial institution is
exercising investment discretion in purchasing Institutional Class Shares,
except where the investment is part of a program that requires payment to the
financial institution of a Rule 12b-1 Plan fee; and (e) registered investment
advisers investing on behalf of clients that consist solely of institutions and
high net-worth individuals having at least $1,000,000 entrusted to the adviser
for investment purposes, but only if the adviser is not affiliated or associated
with a broker or dealer and derives compensation for its services exclusively
from its clients for such advisory services.
Institutional Class Shares of the Portfolio are available for purchase
at net asset value, without the imposition of a front-end or contingent deferred
sales charge and are not subject to Rule 12b-1 expenses.
Investment Plans
Reinvestment Plan/Open Account
Unless otherwise designated by shareholders in writing, dividends from
net investment income and distributions from realized securities profits, if
any, will be automatically reinvested in additional shares of the respective
Class (based on the net asset value in effect on the payable date) and will be
credited to the shareholder's account on that date. All dividends and
distributions of the Institutional Class Shares are reinvested in the accounts
of the holders of such shares (based on the net asset value in effect on the
reinvestment date). A confirmation of each dividend payment from net investment
income will be mailed to shareholders quarterly. A confirmation of any
distributions from realized securities profits will be mailed to shareholders in
the first quarter of the fiscal year.
Under the Reinvestment Plan/Open Account, shareholders may purchase and
add full and fractional shares to their plan accounts at any time either through
their investment dealers or by sending a check or money order to The Portfolio.
Such purchases, which must meet the minimum subsequent purchase requirements
stated in the related Prospectus and this Statement of Additional Information,
are made for Class A Shares at the public offering price and for Class B Shares,
Class C Shares and Institutional Class Shares at the net asset value, at the end
of the day of receipt. A reinvestment plan may be terminated at any time. This
plan does not assure a profit nor protect against depreciation in a declining
market.
Reinvestment of Dividends in Other Funds in the Delaware Investments Family
Subject to applicable eligibility and minimum initial purchase
requirements of each fund and the limitations set forth below, holders of Class
A, Class B and Class C Shares may automatically reinvest their dividends and/or
distributions in any of the mutual funds in the Delaware Investments family,
including the Portfolio, in states where their shares may be sold. Such
investments will be at net asset value at the close of business on the
reinvestment date without any front-end sales charge or service fee. The
shareholder must
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(DPT19-SAI/PART B)
notify the Transfer Agent in writing and must have established an account in the
fund into which the dividends and/or distributions are to be invested. Any
reinvestment directed to a fund in which the investor does not then have an
account, will be treated like all other initial purchases of a fund's shares.
Consequently, an investor should obtain and read carefully the prospectus for
the fund in which the investment is intended to be made before investing or
sending money. The prospectus contains more complete information about the fund,
including charges and expenses. See also Additional Methods of Adding to Your
Investment - Dividend Reinvestment Plan under How to Buy Shares in the related
Prospectus.
Subject to the following limitations, dividends and/or distributions
from other funds in the Delaware Investments family may be invested in shares of
the Portfolio, provided an account has been established. Dividends from Class A
Shares may not be directed to Class B Shares or Class C Shares. Dividends from
Class B Shares may only be directed to other Class B Shares and dividends from
Class C Shares may only be directed to other Class C Shares. See Appendix
B-Classes Offered in the related Prospectus for the funds in the Delaware
Investments family that are eligible for investment by holders of Portfolio
shares.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money Purchase
Pension Plans, 401(k) Defined Contribution Plans, 403(b)(7) Deferred
Compensation Plans or 457 Deferred Compensation Plans.
Investing by Electronic Fund Transfer
Direct Deposit Purchase Plan--Investors may arrange for the Portfolio
to accept for investment in Class A, Class B or Class C Shares, through an agent
bank, preauthorized government or private recurring payments. This method of
investment assures the timely credit to the shareholder's account of payments
such as social security, veterans' pension or compensation benefits, federal
salaries, Railroad Retirement benefits, private payroll checks, dividends, and
disability or pension fund benefits. It also eliminates lost, stolen and delayed
checks.
Automatic Investing Plan--Shareholders of Class A, Class B and Class C
Shares may make automatic investments by authorizing, in advance, monthly
payments directly from their checking account for deposit into their Portfolio
account. This type of investment will be handled in either of the following
ways. (1) If the shareholder's bank is a member of the National Automated
Clearing House Association ("NACHA"), the amount of the investment will be
electronically deducted from his or her account by Electronic Fund Transfer
("EFT"). The shareholder's checking account will reflect a debit each month at a
specified date although no check is required to initiate the transaction. (2) If
the shareholder's bank is not a member of NACHA, deductions will be made by
preauthorized checks, known as Depository Transfer Checks. Should the
shareholder's bank become a member of NACHA in the future, his or her
investments would be handled electronically through EFT.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money Purchase
Pension Plans, 401(k) Defined Contribution Plans, 403(b)(7) Deferred
Compensation Plans or 457 Deferred Compensation Plans.
* * *
Initial investments under the Direct Deposit Purchase Plan and the
Automatic Investing Plan must be for $250 or more and subsequent investments
under such plans must be for $25 or more. An investor wishing to
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(DPT19-SAI/PART B)
take advantage of either service must complete an authorization form. Either
service can be discontinued by the shareholder at any time without penalty by
giving written notice.
Payments to the Portfolio from the federal government or its agencies
on behalf of a shareholder may be credited to the shareholder's account after
such payments should have been terminated by reason of death or otherwise. Any
such payments are subject to reclamation by the federal government or its
agencies. Similarly, under certain circumstances, investments from private
sources may be subject to reclamation by the transmitting bank. In the event of
a reclamation, the Portfolio may liquidate sufficient shares from a
shareholder's account to reimburse the government or the private source. In the
event there are insufficient shares in the shareholder's account, the
shareholder is expected to reimburse the Portfolio.
Direct Deposit Purchases by Mail
Shareholders may authorize a third party, such as a bank or employer,
to make investments directly to their Portfolio accounts. The Portfolio will
accept these investments, such as bank-by-phone, annuity payments and payroll
allotments, by mail directly from the third party. Investors should contact
their employers or financial institutions who in turn should contact the
Portfolio for proper instructions.
Wealth Builder Option
Shareholders can use the Wealth Builder Option to invest in Class A
Shares, Class B Shares or Class C Shares through regular liquidations of shares
in their accounts in other mutual funds in the Delaware Investments family.
Shareholders of the Classes may elect to invest in one or more of the other
mutual funds in the Delaware Investments family through the Wealth Builder
Option. See Wealth Builder Option and Redemption and Exchange in the related
Prospectus.
Under this automatic exchange program, shareholders can authorize
regular monthly investments (minimum of $100 per fund) to be liquidated from
their account and invested automatically into other mutual funds in the Delaware
Investments family, subject to the conditions and limitations set forth in the
related Prospectus. The investment will be made on the 20th day of each month
(or, if the fund selected is not open that day, the next business day) at the
public offering price or net asset value, as applicable, of the fund selected on
the date of investment. No investment will be made for any month if the value of
the shareholder's account is less than the amount specified for investment.
Periodic investment through the Wealth Builder Option does not insure
profits or protect against losses in a declining market. The price of the fund
into which investments are made could fluctuate. Since this program involves
continuous investment regardless of such fluctuating value, investors selecting
this option should consider their financial ability to continue to participate
in the program through periods of low fund share prices. This program involves
automatic exchanges between two or more fund accounts and is treated as a
purchase of shares of the fund into which investments are made through the
program. See Exchange Privilege for a brief summary of the tax consequences of
exchanges. Shareholders can terminate their participation at any time by giving
written notice to the fund from which exchanges are made.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money Purchase
Pension Plans, 401(k) Defined Contribution Plans, 403(b)(7) Deferred
Compensation Plans or 457 Deferred Compensation Plans. This option also is not
available to shareholders of the Institutional Class.
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(DPT19-SAI/PART B)
Asset Planner
To invest in Delaware Investments funds using the Asset Planner asset
allocation service, you should complete a Asset Planner Account Registration
Form, which is available only from a financial adviser or investment dealer.
Effective as of September 1, 1997, the Asset Planner Service is only available
to financial advisers or investment dealers who have previously used this
service.
The Asset Planner service offers a choice of four predesigned asset
allocation strategies (each with a different risk/reward profile) in
predetermined percentages in Delaware Investments funds. With the help of a
financial adviser, you may also design a customized asset allocation strategy.
The sales charge on an investment through the Asset Planner service is
determined by the individual sales charges of the underlying funds and their
percentage allocation in the selected Strategy. Exchanges from existing Delaware
Investments accounts into the Asset Planner service may be made at net asset
value under the circumstances described under Investing by Exchange in the
Prospectus. The minimum initial investment per Strategy is $2,000; subsequent
investments must be at least $100. Individual fund minimums do not apply to
investments made using the Asset Planner service. Generally, only shares within
the same class may be used within the same Strategy. However, Class A Shares of
The Real Estate Investment Trust Portfolio and of other funds in the Delaware
Investments family may be used in the same Strategy with consultant class shares
that are offered by certain other funds in the Delaware Investments family.
An annual maintenance fee, currently $35 per Strategy, is due at the
time of initial investment and by September 30th of each subsequent year. The
fee, payable to Delaware Service Company, Inc. to defray extra costs associated
with administering the Asset Planner service, will be deducted automatically
from one of the funds within your Asset Planner account if not paid by September
30th. However, effective November 1, 1996, the annual maintenance fee is waived
until further notice. Investors who utilize the Asset Planner for an IRA will
continue to pay an annual IRA fee of $15 per Social Security number.
Investors will receive a customized quarterly Strategy Report
summarizing all Asset Planner investment performance and account activity during
the prior period. Confirmation statements will be sent following all
transactions other than those involving a reinvestment of distributions.
Certain shareholder services are not available to investors using the
Asset Planner service, due to its special design. These include Delaphone,
Checkwriting, Wealth Builder Option and Letter of Intention. Systematic
Withdrawal Plans are available after the account has been open for two years.
Retirement Plans for the Fund Classes
An investment in The Real Estate Investment Trust Portfolio may be
suitable for tax-deferred retirement plans. Delaware Investments offers a full
spectrum of retirement plans, including the 401(k) Deferred Compensation Plan,
Individual Retirement Account ("IRA"), and the new Roth IRA.
Among the retirement plans that Delaware Investments offers, Class B
Shares are available only by Individual Retirement Accounts, SIMPLE IRAs, Roth
IRAs, Education IRAs, Simplified Employee Pension Plans, Salary Reduction
Simplified Employee Pension Plans, and 403(b)(7) and 457 Deferred Compensation
Plans. The CDSC may be waived on certain redemptions of Class B Shares and Class
C Shares. See Waiver of Contingent Deferred Sales Charge - Class B Shares and
Class C Shares under Redemption and Exchange in the Prospectus for the Fund
Classes for a list of the instances in which the CDSC is waived.
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(DPT19-SAI/PART B)
Purchases of Class B Shares are subject to a maximum purchase
limitation of $250,000 for retirement plans. Purchases of Class C Shares must be
in an amount that is less than $1,000,000 for such plans. The maximum purchase
limitations apply only to the initial purchase of shares by the retirement plan.
Minimum investment limitations generally applicable to other investors
do not apply to retirement plans, other than Individual Retirement Accounts for
which there is a minimum initial purchase of $250, and a minimum subsequent
purchase of $25, regardless of which class is selected. Retirement plans may be
subject to plan establishment fees, annual maintenance fees and/or other
administrative or trustee fees. Fees are based upon the number of participants
in the plan as well as the services selected. Additional information about fees
is included in retirement plan materials. Fees are quoted upon request. Annual
maintenance fees may be shared by Delaware Management Trust Company, the
Transfer Agent, other affiliates of the Manager and others that provide services
to such plans.
Certain shareholder investment services available to non-retirement
plan shareholders may not be available to retirement plan shareholders. Certain
retirement plans may qualify to purchase shares of the Institutional Class. For
additional information on any of the plans and Delaware's retirement services,
call the Shareholder Service Center telephone number.
It is advisable for an investor considering any one of the retirement
plans described below to consult with an attorney, accountant or a qualified
retirement plan consultant. For further details, including applications for any
of these plans, contact your investment dealer or the Distributor.
Taxable distributions from the retirement plans may be subject to
withholding.
Please contact your investment dealer or the Distributor for the
special application forms required for the plans.
Prototype Profit Sharing or Money Purchase Pension Plans
Prototype Plans are available for self-employed individuals,
partnerships, corporations and other eligible forms of organizations. These
plans can be maintained as Section 401(k), profit sharing or money purchase
pension plans. Contributions may be invested only in Class A Shares and Class C
Shares.
Individual Retirement Account ("IRA")
A document is available for an individual who wants to establish an IRA
and make contributions which may be tax-deductible, even if the individual is
already participating in an employer-sponsored retirement plan. Even if
contributions are not deductible for tax purposes, as indicated below, earnings
will be tax-deferred. In addition, an individual may make contributions on
behalf of a spouse who has no compensation for the year; however, participation
may be restricted based on certain income limits.
IRA Disclosures
The 1997 Act provides new opportunities for investors. Individuals have
five types of tax-favored IRA accounts that can be utilized depending on the
individual's circumstances. A new Roth IRA and Education IRA are available in
addition to the existing deductible IRA and non-deductible IRA.
Deductible and Non-deductible IRAs
An individual can contribute up to $2,000 in his or her IRA each year.
Contributions may or may not be deductible depending upon the taxpayer's
adjusted gross income ("AGI") and whether the taxpayer is an
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(DPT19-SAI/PART B)
active participant in an employer sponsored retirement plan. Even if a taxpayer
is an active participant in an employer sponsored retirement plan, the full
$2,000 is still available if the taxpayer's AGI is below $30,000 ($50,000 for
taxpayers filing joint returns) for years beginning after December 31, 1997. A
partial deduction is allowed for married couples with income between $50,000 and
$60,000, and for single individuals with incomes between $30,000 and $40,000.
These income phase-out limits reach $80,000-$100,000 in 2007 for joint filers
and $50,000-$60,000 in 2005 for single filers. No deductions are available for
contributions to IRAs by taxpayers whose AGI after IRA deductions exceeds the
maximum income limit established for each year and who are active participants
in an employer sponsored retirement plan.
Taxpayers who are not allowed deductions on IRA contributions still can
make non-deductible IRA contributions of as much as $2,000 for each working
spouse and defer taxes on interest or other earnings from the IRAs.
Under the new law, a married individual is not considered an active
participant in an employer sponsored retirement plan merely because the
individual's spouse is an active participant if the couple's combined AGI is
below $150,000. The maximum deductible IRA contribution for a married individual
who is not an active participant, but whose spouse is, is phased out for
combined AGI between $150,000 and $160,000.
Conduit (Rollover) IRAs
Certain individuals who have received or are about to receive eligible
rollover distributions from an employer-sponsored retirement plan or another IRA
may rollover the distribution tax-free to a Conduit IRA. The rollover of the
eligible distribution must be completed by the 60th day after receipt of the
distribution; however, if the rollover is in the form of a direct
trustee-to-trustee transfer without going through the distributee's hand, the
60-day limit does not apply.
A distribution qualifies as an "eligible rollover distribution" if it
is made from a qualified retirement plan, a 403(b) plan or another IRA and does
not constitute one of the following:
(i) Substantially equal periodic payments over the employee's life or
life expectancy or the joint lives or life expectancies of the employee and
his/her designated beneficiary;
(ii) Substantially equal installment payments for a period certain of
10 or more years;
(iii) A distribution, all of which represents a required minimum
distribution after attaining age 70 1/2;
(iv) A distribution due to a Qualified Domestic Relations Order to an
alternate payee who is not the spouse (or former spouse) of the employee; and
(v) A distribution of after-tax contributions which is not includable
in income.
Roth IRAs
For taxable years beginning after December 31, 1997, non-deductible
contributions of up to $2,000 per year can be made to a new Roth IRA. As a
result of the Internal Revenue Service Restructuring and Reform Act of 1998 (the
"1998 Act"), the $2,000 annual limit will not be reduced by any contributions to
a deductible or nondeductible IRA for the same year. The maximum contribution
that can be made to a Roth IRA is phased out for single filers with AGI between
$95,000 and $110,000, and for couples filing jointly with AGI between
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(DPT19-SAI/PART B)
$150,000 and $160,000. Qualified distributions from a Roth IRA would be exempt
from federal taxes. Qualified distributions are distributions (1) made after the
five-taxable year period beginning with the first taxable year for which a
contribution was made to a Roth IRA and (2) that are (a) made on or after the
date on which the individual attains age 59 1/2, (b) made to a beneficiary on or
after the death of the individual, (c) attributed to the individual being
disabled, or (d) for a qualified special purpose (e.g., first time homebuyer
expenses).
Distributions that are not qualified distributions would always be
tax-free if the taxpayer is withdrawing contributions, not accumulated earnings.
Taxpayers with AGI of $100,000 or less are eligible to convert an
existing IRA (deductible, nondeductible and conduit) to a Roth IRA. Earnings and
contributions from a deductible IRA are subject to a tax upon conversion;
however, no 10% excise tax for early withdrawal would apply. If the conversion
is done prior to January 1, 1999, then the income from the conversion can be
included in income ratably over a four-year period beginning with the year of
conversion.
Education IRAs
For taxable years beginning after December 31, 1997, an Education IRA
has been created exclusively for the purpose of paying qualified higher
education expenses. Taxpayers can make non-deductible contributions up to $500
per year per beneficiary. The $500 annual limit is in addition to the $2,000
annual contribution limit applicable to IRAs and Roth IRAs. Eligible
contributions must be in cash and made prior to the date the beneficiary reaches
age 18. Similar to the Roth IRA, earnings would accumulate tax-free. There is no
requirement that the contributor be related to the beneficiary, and there is no
limit on the number of beneficiaries for whom one contributor can establish
Education IRAs. In addition, multiple Education IRAs can be created for the same
beneficiaries, however, the contribution limit of all contributions for a single
beneficiary cannot exceed $500 annually.
This $500 annual contribution limit for Education IRAs is phased out
ratably for single contributors with modified AGI between $95,000 and $110,000,
and for couples filing jointly with modified AGI of between $150,000 and
$160,000. Individuals with modified AGI above the phase-out range are not
allowed to make contributions to an Education IRA established on behalf of any
other individual.
Distributions from an Education IRA are excludable from gross income to
the extent that the distribution does not exceed qualified higher education
expenses incurred by the beneficiary during the year the distribution is made
regardless of whether the beneficiary is enrolled at an eligible educational
institution on a full-time, half-time, or less than half-time basis.
Any balance remaining in an Education IRA at the time a beneficiary
becomes 30 years old must be distributed, and the earnings portion of such a
distribution will be includible in gross income of the beneficiary and subject
to an additional 10% penalty tax if the distribution is not for qualified higher
educations expenses. Tax-free (and penalty-free) transfers and rollovers of
account balances from one Education IRA benefiting one beneficiary to another
Education IRA benefiting a different beneficiary (as well as redesignations of
the named beneficiary) is permitted, provided that the new beneficiary is a
member of the family of the old beneficiary and that the transfer or rollover is
made before the time the old beneficiary reaches age 30 and the new beneficiary
reaches age 18.
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(DPT19-SAI/PART B)
A company or association may establish a Group IRA or Group Roth IRA
for employees or members who want to purchase shares of the Fund.
Investments generally must be held in the IRA until age 59 1/2 in order
to avoid premature distribution penalties, but distributions generally must
commence no later than April 1 of the calendar year following the year in which
the participant reaches age 70 1/2. Individuals are entitled to revoke the
account, for any reason and without penalty, by mailing written notice of
revocation to Delaware Management Trust Company within seven days after the
receipt of the IRA Disclosure Statement or within seven days after the
establishment of the IRA, except, if the IRA is established more than seven days
after receipt of the IRA Disclosure Statement, the account may not be revoked.
Distributions from the account (except for the pro-rata portion of any
nondeductible contributions) are fully taxable as ordinary income in the year
received. Excess contributions removed after the tax filing deadline, plus
extensions, for the year in which the excess contributions were made are subject
to a 6% excise tax on the amount of excess. Premature distributions
(distributions made before age 59 1/2, except for death, disability and certain
other limited circumstances) will be subject to a 10% excise tax on the amount
prematurely distributed, in addition to the income tax resulting from the
distribution. For information concerning the applicability of a CDSC upon
redemption of Class B Shares and Class C Shares, see Contingent Deferred Sales
Charge - Class B Shares and Class C Shares under Classes of Shares in the
Prospectus for Class B and Class C Shares.
Effective January 1, 1997, the 10% premature distribution penalty will
not apply to distributions from an IRA that are used to pay medical expenses in
excess of 7.5% of adjusted gross income or to pay health insurance premiums by
an individual who has received unemployment compensation for 12 consecutive
weeks. In addition, effective January 1, 1998, the new law allows for premature
distribution without a 10% penalty if (i) the amounts are used to pay qualified
higher education expenses (including graduate level courses) of the taxpayer,
the taxpayer's spouse or any child or grandchild of the taxpayer or the
taxpayer's spouse, or (ii) used to pay acquisition costs of a principle
residence for the purchase of a first-time home by the taxpayer, taxpayer's
spouse or any child or grandchild of the taxpayer or the taxpayer's spouse. A
qualified first-time homebuyer is someone who has had no ownership interest in a
residence during the past two years. The aggregate amount of distribution for
first-time home purchases cannot exceed a lifetime cap of $10,000.
Simplified Employee Pension Plan ("SEP/IRA")
A SEP/IRA may be established by an employer who wishes to sponsor a
tax-sheltered retirement program by making contributions on behalf of all
eligible employees. Each of the Classes is available for investment by a
SEP/IRA.
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(DPT19-SAI/PART B)
Salary Reduction Simplified Employee Pension Plan ("SAR/SEP")
Although new SAR/SEP plans may not be established after December 31,
1996, existing plans may continue to be maintained by employers having 25 or
fewer employees. An employer may elect to make additional contributions to such
existing plans.
Prototype 401(k) Defined Contribution Plan
Section 401(k) of the Code permits employers to establish qualified
plans based on salary deferral contributions. Effective January 1, 1997,
non-governmental tax-exempt organizations may establish 401(k) plans. Plan
documents are available to enable employers to establish a plan. An employer may
also elect to make profit sharing contributions and/or matching contributions
with investments in only Class A Shares and Class C Shares or certain other
funds in the Delaware Investments family. Purchases under the Plan may be
combined for purposes of computing the reduced front-end sales charge applicable
to Class A Shares as set forth in the table the related Prospectus.
Deferred Compensation Plan for Public Schools and Non-Profit Organizations
("403(b)(7)")
Section 403(b)(7) of the Code permits public school systems and certain
non-profit organizations to use mutual fund shares held in a custodial account
to fund deferred compensation arrangements for their employees. A custodial
account agreement is available for those employers who wish to purchase shares
of any of the Classes in conjunction with such an arrangement. Purchases under
the Plan may be combined for purposes of computing the reduced front-end sales
charge applicable to Class A Shares as set forth in the table the related
Prospectus.
Deferred Compensation Plan for State and Local Government Employees ("457")
Section 457 of the Code permits state and local governments, their
agencies and certain other entities to establish a deferred compensation plan
for their employees who wish to participate. This enables employees to defer a
portion of their salaries and any federal (and possibly state) taxes thereon.
Such plans may invest in shares of the Fund. Although investors may use their
own plan, there is available a Delaware Investments 457 Deferred Compensation
Plan. Interested investors should contact the Distributor or their investment
dealers to obtain further information. Purchases under the Plan may be combined
for purposes of computing the reduced front-end sales charge applicable to Class
A Shares as set forth in the table in the related Prospectus.
SIMPLE IRA
A SIMPLE IRA combines many of the features of an IRA and a 401(k) Plan
but is easier to administer than a typical 401(k) Plan. It requires employers to
make contributions on behalf of their employees and also has a salary deferral
feature that permits employees to defer a portion of their salary into the plan
on a pre-tax basis. A SIMPLE IRA is available only to plan sponsors with 100 or
fewer employees.
SIMPLE 401(k)
A SIMPLE 401(k) is like a regular 401(k) except that it is available
only to plan sponsors 100 or fewer employees and, in exchange for mandatory plan
sponsor contributions, discrimination testing is no longer required. Class B
Shares are not available for purchase by such plans.
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(DPT19-SAI/PART B)
DETERMINING OFFERING PRICE AND NET ASSET VALUE
The Real Estate Investment Trust Portfolio Class of The Real Estate
Investment Trust Portfolio and all other Portfolios
Orders for purchases of shares of a Portfolio are effected at the net
asset value of that Portfolio next calculated after receipt of the order by
Pooled Trust, Inc. and Federal Funds wire by the Portfolio's Custodian Bank,
plus in the case of The International Mid-Cap Sub Portfolio, The Emerging
Markets Portfolio and the Global Equity Portfolio, any applicable purchase
reimbursement fee equal to 0.60%, 0.75% and 0.40%, respectively, of the dollar
amount invested. In the case of The International Mid-Cap Sub Portfolio, in
certain circumstances, orders for the purchase of shares placed by or at the
direction of DIA Ltd. on behalf of its institutional separate account clients
will be effected at the net asset value of The International Mid-Cap Sub
Portfolio next calculated after receipt of the order and satisfactory assurances
regarding payment of the purchase price. The purchase price may be paid either
in cash upon settlement of a corresponding sale of client securities held
outside of the Portfolio through an in-kind transfer, through an alternative
method arranged through the client's custodian, or any other method reasonably
acceptable to Pooled Trust, Inc.
Net asset value is computed at the close of regular trading on the New
York Stock Exchange, generally 4 p.m., Eastern time, on days when the New York
Stock Exchange is open and an order to purchase or sell shares of a Portfolio
has been received or is on hand, having been received since the last previous
computation of net asset value. The New York Stock Exchange is scheduled to be
open Monday through Friday throughout the year except days when the following
holidays are observed: New Year's Day, Martin Luther King, Jr.'s Birthday,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas. When the New York Stock Exchange is closed, Pooled
Trust, Inc. and Foundation Funds will generally be closed, pricing calculations
will not be made and purchase and redemption orders will not be processed.
Class A, B and C Shares and Institutional Class Shares of The Real Estate
Investment Trust Portfolio Orders for purchases of Class A Shares are
effected at the offering price next calculated by the Fund in
which shares are being purchased after receipt of the order by Pooled Trust,
Inc., its agent or certain other authorized persons. See Distribution and
Service under Investment Management Agreements. Orders for purchases of Class B
Shares, Class C Shares and the Institutional Classes are effected at the net
asset value per share next calculated after receipt of the order by the Fund,
its agent or certain other authorized persons. Selling dealers are responsible
for transmitting orders promptly.
The offering price for Class A Shares consists of the net asset value
per share plus any applicable front-end sales charges. Offering price and net
asset value are computed as of the close of regular trading on the New York
Stock Exchange (ordinarily, 4 p.m., Eastern time) on days when the Exchange is
open. The New York Stock Exchange is scheduled to be open Monday through Friday
throughout the year except days when the following holidays are observed: New
Year's Day, Martin Luther King, Jr.'s Birthday, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas. When the
New York Stock Exchange is closed, Pooled Trust, Inc. will generally be closed,
pricing calculations will not be made and purchase and redemption orders will
not be processed.
Each Class will bear, pro-rata, all of the common expenses of the
Portfolio. The net asset values of all outstanding shares of each Class will be
computed on a pro-rata basis for each outstanding share based on the
proportionate participation in the Portfolio represented by the value of shares
of that Class. All income earned and expenses incurred by the Portfolio will be
borne on a pro-rata basis by each outstanding share of a Class, based on each
Class' percentage in the Portfolio represented by the value of shares of such
Classes, except that the Class A, Class B and Class C Shares alone will bear the
12b-1 Plan expenses payable under their respective Plans. Due to the specific
distribution expenses and other costs that would be allocable to each Class, the
dividends paid to each Class of The Real Estate Investment Trust Portfolio may
vary. However, the net asset value per share of each Class is expected to be
equivalent.
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(DPT19-SAI/PART B)
* * *
The net asset value per share of each Portfolio is determined by
dividing the total market value of the Portfolio's investments and other assets,
less any liabilities, by the total outstanding shares of the Portfolio.
Securities listed on a U.S. securities exchange for which market quotations are
available are valued at the last quoted sale price on the day the valuation is
made. Price information on listed securities is taken from the exchange where
the security is primarily traded. Securities listed on a foreign exchange are
valued at the last quoted sale price available before the time when net assets
are valued. Unlisted securities and listed securities not traded on the
valuation date for which market quotations are readily available are valued at a
price that is considered to best represent fair value within a range not in
excess of the current ask prices nor less than the current bid prices. Domestic
over-the-counter equities, domestic equity securities that are not traded and
U.S. government securities (and those of its agencies and instrumentalities) are
priced at the mean of the bid and ask price.
Bonds and other fixed-income securities are valued according to the
broadest and most representative market, which will ordinarily be the
over-the-counter market. Net asset value includes interest on fixed-income
securities, which is accrued daily. In addition, bonds and other fixed-income
securities may be valued on the basis of prices provided by a pricing service
when such prices are believed to reflect the fair market value of such
securities. The prices provided by a pricing service are determined without
regard to bid or last sale prices but take into account institutional size
trading in similar groups of securities and any developments related to the
specific securities. Securities not priced in this manner are valued at the most
recent quoted mean price or, when stock exchange valuations are used, at the
latest quoted sale price on the day of valuation. If there is no such reported
sale, the latest quoted mean price will be used. Securities with remaining
maturities of 60 days or less are valued at amortized cost, if it approximates
market value. In the event that amortized cost does not approximate market
value, market prices as determined above will be used.
Exchange-traded options are valued at the last reported sales price or,
if no sales are reported, at the mean between the last reported bid and ask
prices. Non-exchange traded options are valued at fair value using a
mathematical model. Futures contracts are valued at their daily quoted
settlement price. The value of other assets and securities for which no
quotations are readily available (including restricted securities) are
determined in good faith at fair value using methods determined by the Board of
Directors or Trustees, as applicable.
The securities in which The International Equity Portfolio, The
International Mid-Cap Sub Portfolio, The Labor Select International Equity
Portfolio, The Global Fixed Income Portfolio, The International Fixed Income
Portfolio, The Emerging Markets Portfolio and The Global Equity Portfolio (as
well as The Real Estate Investment Trust Portfolios, The High-Yield Bond
Portfolio, The Diversified Core Fixed Income Portfolio The Asset Allocation
Portfolio, The Small-Cap Growth Equity Portfolio and The Growth and Income
Portfolio, to the limited extent described in the Prospectus) may invest from
time to time may be listed primarily on foreign exchanges which trade on days
when the New York Stock Exchange is closed (such as holidays or Saturday). As a
result, the net asset value of those Portfolios may be significantly affected by
such trading on days when shareholders have no access to the Portfolios.
For purposes of calculating net asset value per share, all assets and
liabilities initially expressed in foreign currencies will be converted into
U.S. dollars at the mean between the bid and ask prices of such currencies
against the U.S. dollar as provided by an independent pricing service or any
major bank, including the Custodian Banks. Forward foreign currency contracts
are valued at the mean price of the contract.
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(DPT19-SAI/PART B)
Interpolated values will be derived when the settlement date of the contract is
on an interim period for which quotations are not available. Foreign securities
and the prices of foreign securities denominated in foreign currencies are
translated into U.S. dollars at the mean between the bid and offer quotations of
such currencies based on rates in effect as of the close of the London Stock
Exchange.
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(DPT19-SAI/PART B)
REDEMPTION AND REPURCHASE
The following supplements the disclosure provided in Pooled Trust,
Inc.'s Prospectuses.
The Real Estate Investment Trust Portfolio Class of The Real Estate Investment
Trust Portfolio and all other Portfolios
Each Portfolio may suspend redemption privileges or postpone the date
of payment (i) during any period that the New York Stock Exchange is closed, or
trading on the New York Stock Exchange is restricted as determined by the
Commission, (ii) during any period when an emergency exists as defined by the
rules of the Commission as a result of which it is not reasonably practicable
for a Portfolio to dispose of securities owned by it, or fairly to determine the
value of its assets, and (iii) for such other periods as the Commission may
permit.
No charge is made by any Portfolio for redemptions, except that
shareholders that redeem shares of The International Mid-Cap Sub-Portfolio, The
Emerging Markets Portfolio and The Global Equity Portfolio are assessed by the
relevant Portfolio a redemption reimbursement fee of 0.50%, 0.75% and 0.30%,
respectively. Payment for shares redeemed or repurchased may be made either in
cash or in-kind, or partly in cash and partly in-kind. If a redemption of shares
is made in-kind, the redemption reimbursement fee that is otherwise applicable
will not be assessed. Any portfolio securities paid or distributed in-kind would
be valued as described in "DETERMINING OFFERING PRICE AND NET ASSET VALUE."
Subsequent sales by an investor receiving a distribution in-kind could result in
the payment of brokerage commissions. Payment for shares redeemed ordinarily
will be made within three business days, but in no case later than seven days,
after receipt of a redemption request in good order. See "REDEMPTION OF SHARES"
in the related Prospectus for special redemption procedures and requirements
that may be applicable to shareholders in The International Equity Portfolio,
The Labor Select International Equity Portfolio, The Global Fixed Income
Portfolio, The International Fixed Income Portfolio and The Global Equity
Portfolio. Under certain circumstances, eligible investors who have an existing
investment counseling relationship with Delaware Investment Advisers or Delaware
International will not be subject to Pooled Trust, Inc.'s in-kind redemption
requirements until such time as Pooled Trust, Inc. or Foundation Funds, as
applicable, receives appropriate regulatory approvals to permit such redemptions
for the account of such investors.
Pooled Trust, Inc. and Foundation Funds has elected to be governed by
Rule 18f-1 under the 1940 Act pursuant to which Pooled Trust, Inc. is obligated
to redeem shares solely in cash up to the lesser of $250,000 or 1% of the net
asset value of each Portfolio during any 90-day period for any one shareholder.
The value of a Portfolio's investments is subject to changing market
prices. Redemption proceeds may be more or less than the shareholder's cost
depending upon the market value of the Portfolio's securities. Thus, a
shareholder redeeming shares of a Portfolio may, if such shareholder is subject
to federal income tax, sustain either a gain or loss, depending upon the price
paid and the price received for such shares.
Small Accounts
Due to the relatively higher cost of maintaining small accounts, Pooled
Trust, Inc. and Foundation Funds reserves the right to redeem Portfolio shares
in any of its accounts at the then-current net asset value if as a result of
redemption or transfer a shareholder's investment in a Portfolio has a value of
less than $500,000. However, before Pooled Trust, Inc. redeems such shares and
sends the proceeds to the shareholder, the shareholder will be notified in
writing that the value of the shares in the account is less than $500,000 and
will be allowed 90 days from that date of notice to make an additional
investment to meet the required minimum.
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(DPT19-SAI/PART B)
Any redemption in an inactive account established with a minimum investment may
trigger mandatory redemption.
* * *
Pooled Trust, Inc. and Foundation Funds has available certain
redemption privileges, as described below. They are unavailable to shareholders
of The International Equity Portfolio, The Labor Select International Equity
Portfolio, The Global Fixed Income Portfolio, The International Fixed Income
Portfolio and The Global Equity Portfolio whose redemptions trigger the special
in-kind redemption procedures. See the related Prospectus. The Portfolios
reserve the right to suspend or terminate these expedited payment procedures at
any time in the future.
Expedited Telephone Redemptions
Shareholders wishing to redeem shares for which certificates have not
been issued may call Pooled Trust, Inc. at (1-800-231-8002) prior to 4 p.m.,
Eastern time, and have the proceeds mailed to them at the record address.
Redemptions involving The Asset Allocation Portfolio will be forwarded to
Foundation Funds. Checks payable to the shareholder(s) of record will normally
be mailed three business days, but no later than seven days, after receipt of
the redemption request.
In addition, redemption proceeds can be transferred to your
predesignated bank account by wire or by check by calling Pooled Trust, Inc., as
described above. The Telephone Redemption Option on the Account Registration
Form must have been elected by the shareholder and filed with Pooled Trust, Inc.
before the request is received. Payment will be made by wire or check to the
bank account designated on the authorization form as follows:
1. Payment By Wire: Request that Federal Funds be wired to the bank
account designated on the Account Registration Form. Redemption proceeds will
normally be wired on the next business day following receipt of the redemption
request. There is no charge for this service. If the proceeds are wired to the
shareholder's account at a bank which is not a member of the Federal Reserve
System, there could be a delay in the crediting of the funds to the
shareholder's bank account.
2. Payment by Check: Request a check be mailed to the bank account
designated on the Account Registration Form. Redemption proceeds will normally
be mailed three business days, but no later than seven days, from the date of
the telephone request. This procedure will take longer than the Payment by Wire
option (1 above) because of the extra time necessary for the mailing and
clearing of the check after the bank receives it. If expedited payment under
these procedures could adversely affect a Portfolio, Pooled Trust, Inc. or as
applicable, Foundation Funds may take up to seven days to pay the shareholder.
To reduce the risk of attempted fraudulent use of the telephone
redemption procedure, payment will be made only to the bank account designated
on the Account Registration Form. If a shareholder wishes to change the bank
account designated for such redemption, a written request in accordance with the
instructions set forth in the Prospectus will be required.
Exchange Privilege
Shares of each Portfolio may be exchanged for shares of any other
Portfolio or for the institutional classes of the other funds in the Delaware
Investments family. Exchange requests should be sent to Delaware
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<PAGE>
(DPT19-SAI/PART B)
Pooled Trust, Inc., One Commerce Square, 2005 Market Street, Philadelphia, PA
19103 Attn: Client Services. Exchanges involving The Asset Allocation Portfolio
will be forwarded to Foundation Funds.
Any such exchange will be calculated on the basis of the respective net
asset values of the shares involved and will be subject to the minimum
investment requirements noted above. There is no sales commission or charge of
any kind, except for the special purchase and redemption reimbursement fees for
exchanges involving shares of The International Mid-Cap Sub Portfolio, The
Emerging Markets Portfolio and The Global Equity Portfolio. See Exchange
Privilege under Shareholder Services in the related Prospectus. The shares of a
Portfolio into which an exchange is made, if necessary, must be authorized for
sale in the state in which the investor is domiciled. Before making an exchange,
a shareholder should consider the investment objectives of the Portfolio to be
purchased.
Exchange requests may be made either by mail, FAX message or by
telephone. Telephone exchanges will be accepted only if the certificates for the
shares to be exchanged are held by Pooled Trust, Inc. or, as applicable,
Foundation Funds for the account of the shareholder and the registration of the
two accounts will be identical. Requests for exchanges received prior to 4 p.m.,
Eastern time, for the Portfolios will be processed as of the close of business
on the same day. Requests received after this time will be processed on the next
business day. Exchanges may also be subject to limitations as to amounts or
frequency, and to other restrictions established by the Board of Directors or
Trustees, as applicable, to assure that such exchanges do not disadvantage a
Portfolio and its shareholders. Exchanges into and out of The International
Equity Portfolio, The Labor Select International Equity Portfolio, The Global
Fixed Income Portfolio, The International Fixed Income Portfolio and The Global
Equity Portfolio shall be subject to the special purchase and redemption
procedures identified in sections of the related Prospectus entitled Purchase of
Shares and Redemption of Shares.
For federal income tax purposes, an exchange between Portfolios is a
taxable event for shareholders subject to federal income tax, and, accordingly,
a gain or loss may be realized. Pooled Trust, Inc. and Foundation Funds reserves
the right to suspend or terminate or amend the terms of the exchange privilege
upon 60 days' written notice to client shareholders.
* * *
Neither Pooled Trust, Inc., Foundation Funds, the Portfolios nor the
Portfolios' transfer agent, Delaware Service Company, Inc., is responsible for
any losses incurred in acting upon written or telephone instructions for
redemption or exchange of Portfolio shares which are reasonably believed to be
genuine. With respect to such telephone transactions, Pooled Trust, Inc. or, as
applicable, Foundation Funds will ensure that reasonable procedures are used to
confirm that instructions communicated by telephone are genuine (including
verification of a form of personal identification) as if it does not, Pooled
Trust, Inc., Foundation Funds or Delaware Service Company, Inc. may be liable
for any losses due to unauthorized or fraudulent transactions. A written
confirmation will be provided for all purchase, exchange and redemption
transactions initiated by telephone.
Class A, B and C Shares and Institutional Class Shares of The Real Estate
Investment Trust Portfolio Any shareholder may require The Real Estate
Investment Trust Portfolio to redeem shares by sending a
written request, signed by the record owner or owners exactly as the shares are
registered, to the Portfolio, at 1818 Market Street, Philadelphia, PA 19103. In
addition, certain expedited redemption methods described below are available
when stock certificates have not been issued. Certificates are issued for the
Class A Shares and Institutional Class Shares only if a shareholder specifically
requests them. Certificates are not issued for Class B Shares or Class C Shares.
If stock certificates have been issued for shares being redeemed, they must
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(DPT19-SAI/PART B)
accompany the written request. For redemptions of $50,000 or less paid to the
shareholder at the address of record, the request must be signed by all owners
of the shares or the investment dealer of record, but a signature guarantee is
not required. When the redemption is for more than $50,000, or if payment is
made to someone else or to another address, signatures of all record owners are
required and a signature guarantee is required. A signature guarantee can be
obtained from a commercial bank, a trust company or a member of a securities
transfer association medallion program. A signature guarantee cannot be provided
by a notary public. A signature guarantee is designed to protect the
shareholders, the Fund and its agents from fraud. The Fund reserves the right to
reject a signature guarantee supplied by an institution based on its
creditworthiness. The Portfolio may request further documentation from
corporations, retirement plans, executors, administrators, trustees or
guardians.
In addition to redemption of Portfolio shares, the Distributor, acting
as agent of The Real Estate Investment Trust Portfolio, offers to repurchase
Portfolio shares from broker/dealers acting on behalf of shareholders. The
redemption or repurchase price, which may be more or less than the shareholder's
cost, is the net asset value per share next determined after receipt of the
request in good order by the Portfolio, its agent or certain other authorized
persons, subject to any applicable CDSC or Limited CDSC. See Distribution and
Service under Investment Management Agreements. This is computed and effective
at the time the offering price and net asset value are determined. See
Determining Offering Price and Net Asset Value. The Portfolio and the
Distributor end their business days at 5 p.m., Eastern time. This offer is
discretionary and may be completely withdrawn without further notice by the
Distributor.
Orders for the repurchase of Portfolio shares which are submitted to
the Distributor prior to the close of its business day will be executed at the
net asset value per share computed that day (subject to any applicable CDSC or
Limited CDSC), if the repurchase order was received by the broker/dealer from
the shareholder prior to the time the offering price and net asset value are
determined on such day. The selling dealer has the responsibility of
transmitting orders to the Distributor promptly. Such repurchase is then settled
as an ordinary transaction with the broker/dealer (who may make a charge to the
shareholder for this service) delivering the shares repurchased.
Certain redemptions of Class A Shares purchased at net asset value may
result in the imposition of a Limited CDSC. See Contingent Deferred Sales Charge
for Certain Redemptions of Class A Shares Purchased at Net Asset Value under
Redemption and Exchange in the related Prospectus. Redemptions of Class B Shares
are subject to the following CDSC: (i) 4% if shares are redeemed within two
years of purchase; (ii) 3% if shares are redeemed during the third or fourth
year following purchase; (iii) 2% if shares are redeemed during the fifth year
following purchase; and (iv) 1% if shares are redeemed during the sixth year
following purchase. Class C Shares are subject to a CDSC of 1% if shares are
redeemed within 12 months following purchase. See Contingent Deferred Sales
Charge under Classes of Shares in the related Prospectus. Except for the
applicable CDSC or Limited CDSC, and with respect to the expedited payment by
wire described below, for which there is currently a $7.50 bank wiring cost,
neither The Portfolio nor its Distributor charges a fee for redemptions or
repurchases, but such fees could be charged at any time in the future.
Payment for shares redeemed will ordinarily be mailed the next business
day, but in no case later than seven days, after receipt of a redemption request
in good order; provided, however, that each commitment to mail or wire
redemption proceeds by a certain time, as described below, is modified by the
qualifications described in the next paragraph.
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(DPT19-SAI/PART B)
The Portfolio will process written or telephone redemption requests to
the extent that the purchase orders for the shares being redeemed have already
been settled. The Portfolio will honor the redemption requests as to shares for
which a check was tendered as payment, but the Portfolio will not mail or wire
the proceeds until it is reasonably satisfied that the check has cleared. This
potential delay can be avoided by making investments by wiring Federal Funds.
If a shareholder has been credited with a purchase by a check which is
subsequently returned unpaid for insufficient funds or for any other reason, the
Portfolio will automatically redeem from the shareholder's account the shares
purchased by the check plus any dividends earned thereon. Shareholders may be
responsible for any losses to the Portfolio or to the Distributor.
In case of a suspension of the determination of the net asset value
because the New York Stock Exchange is closed for other than weekends or
holidays, or trading thereon is restricted or an emergency exists as a result of
which disposal by the Portfolio of securities owned by it is not reasonably
practical, or it is not reasonably practical for the Portfolio fairly to value
its assets, or in the event that the Securities and Exchange Commission has
provided for such suspension for the protection of shareholders, the Portfolio
may postpone payment or suspend the right of redemption or repurchase. In such
case, the shareholder may withdraw the request for redemption or leave it
standing as a request for redemption at the net asset value next determined
after the suspension has been terminated.
Payment for shares redeemed or repurchased may be made either in cash
or kind, or partly in cash and partly in kind. Any portfolio securities paid or
distributed in kind would be valued as described in Determining Offering Price
and Net Asset Value. Subsequent sale by an investor receiving a distribution in
kind could result in the payment of brokerage commissions. However, Pooled
Trust, Inc. has elected to be governed by Rule 18f-1 under the 1940 Act pursuant
to which the Portfolio is obligated to redeem shares solely in cash up to the
lesser of $250,000 or 1% of the net asset value of the Portfolio during any
90-day period for any one shareholder.
The value of the Portfolio's investments is subject to changing market
prices. Thus, a shareholder reselling shares to the Portfolio may sustain either
a gain or loss, depending upon the price paid and the price received for such
shares.
Small Accounts
Before the Portfolio involuntarily redeems shares from an account that,
under the circumstances listed in the related Prospectus, has remained below the
minimum amounts required by the Portfolio's Prospectus and sends the proceeds to
the shareholder, the shareholder will be notified in writing that the value of
the shares in the account is less than $1,000 and will be allowed 60 days from
that date of notice to make an additional investment to meet the required
minimum of $1,000. See The Conditions of Your Purchase under How to Buy Shares
in the related Prospectus. Any redemption in an inactive account established
with a minimum investment may trigger mandatory redemption. No CDSC or Limited
CDSC will apply to the redemptions described in this paragraph.
* * *
The Portfolio has made available certain redemption privileges, as
described below. The Portfolio reserves the right to suspend or terminate these
expedited payment procedures upon 60 days' written notice to shareholders.
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(DPT19-SAI/PART B)
Expedited Telephone Redemptions
Holders of Class A Shares, Class B Shares and Class C Shares or their
investment dealers of record wishing to redeem any amount of shares of $50,000
or less for which certificates have not been issued may call the Shareholder
Service Center at 800-523-1918 or, in the case of shareholders of the
Institutional Class, their Client Services Representative at 800-828-5052 prior
to the time the offering price and net asset value are determined, as noted
above, and have the proceeds mailed to them at the record address. Checks
payable to the shareholder(s) of record will normally be mailed the next
business day, but no later than seven days, after the receipt of the redemption
request. This option is only available to individual, joint and individual
fiduciary-type accounts.
In addition, redemption proceeds of $1,000 or more can be transferred
to your predesignated bank account by wire or by check by calling the phone
number listed above. An authorization form must have been completed by the
shareholder and filed with the Portfolio before the request is received. Payment
will be made by wire or check to the bank account designated on the
authorization form as follows:
1. Payment by Wire: Request that Federal Funds be wired to the bank
account designated on the authorization form. Redemption proceeds will normally
be wired on the next business day following receipt of the redemption request.
There is a $7.50 wiring fee (subject to change) charged by CoreStates Bank, N.A.
which will be deducted from the withdrawal proceeds each time the shareholder
requests a redemption from Class A Shares, Class B Shares or Class C Shares. If
the proceeds are wired to the shareholder's account at a bank which is not a
member of the Federal Reserve System, there could be a delay in the crediting of
the funds to the shareholder's bank account.
2. Payment by Check: Request a check be mailed to the bank account
designated on the authorization form. Redemption proceeds will normally be
mailed the next business day, but no later than seven days, from the date of the
telephone request. This procedure will take longer than the Payment by Wire
option (1 above) because of the extra time necessary for the mailing and
clearing of the check after the bank receives it.
Redemption Requirements: In order to change the name of the bank and
the account number it will be necessary to send a written request to the
Portfolio and a signature guarantee may be required. Each signature guarantee
must be supplied by an eligible guarantor institution. The Portfolio reserves
the right to reject a signature guarantee supplied by an eligible institution
based on its creditworthiness.
To reduce the shareholder's risk of attempted fraudulent use of the
telephone redemption procedure, payment will be made only to the bank account
designated on the authorization form.
If expedited payment under these procedures could adversely affect the
Portfolio, the Portfolio may take up to seven days to pay the shareholder.
Neither the Portfolio nor its Transfer Agent is responsible for any
shareholder loss incurred in acting upon written or telephone instructions for
redemption or exchange of Portfolio shares which are reasonably believed to be
genuine. With respect to such telephone transactions, the Portfolio will follow
reasonable procedures to confirm that instructions communicated by telephone are
genuine (including verification of a form of personal identification) as, if it
does not, the Portfolio or the Transfer Agent may be liable for any losses
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(DPT19-SAI/PART B)
due to unauthorized or fraudulent transactions. Telephone instructions received
by Class A, B and C shareholders are generally tape recorded. A written
confirmation will be provided for all purchase, exchange and redemption
transactions initiated by telephone.
Systematic Withdrawal Plans
Shareholders of Class A Shares, Class B Shares and Class C Shares who
own or purchase $5,000 or more of shares at the offering price or net asset
value, as applicable for which certificates have not been issued may establish a
Systematic Withdrawal Plan for monthly withdrawals of $25 or more, or quarterly
withdrawals of $75 or more, although the Fund does not recommend any specific
amount of withdrawal. This $5,000 minimum does not apply for the Portfolio's
prototype retirement plans. Shares purchased with the initial investment and
through reinvestment of cash dividends and realized securities profits
distributions will be credited to the shareholder's account and sufficient full
and fractional shares will be redeemed at the net asset value calculated on the
third business day preceding the mailing date.
Checks are dated either the 1st or the 15th of the month, as selected
by the shareholder (unless such date falls on a holiday or a weekend), and are
normally mailed within two business days. Both ordinary income dividends and
realized securities profits distributions will be automatically reinvested in
additional shares of the Class at net asset value. This plan is not recommended
for all investors and should be started only after careful consideration of its
operation and effect upon the investor's savings and investment program. To the
extent that withdrawal payments from the plan exceed any dividends and/or
realized securities profits distributions paid on shares held under the plan,
the withdrawal payments will represent a return of capital and the share balance
may in time be depleted, particularly in a declining market.
The sale of shares for withdrawal payments constitutes a taxable event
and a shareholder may incur a capital gain or loss for federal income tax
purposes. This gain or loss may be long-term or short-term depending on the
holding period for the specific shares liquidated. Premature withdrawals from
retirement plans may have adverse tax consequences.
Withdrawals under this plan made concurrently with the purchases of
additional shares may be disadvantageous to the shareholder. Purchases of Class
A Shares through a periodic investment program in a fund managed by the Manager
must be terminated before a Systematic Withdrawal Plan with respect to such
shares can take effect, except if the shareholder is a participant in one of our
retirement plans or is investing in Delaware Investments funds which do not
carry a sales charge. Redemptions of Class A Shares pursuant to a Systematic
Withdrawal Plan may be subject to a Limited CDSC if the purchase was made at net
asset value and a dealer's commission has been paid on that purchase.
Redemptions of Class B Shares or Class C Shares pursuant to a Systematic
Withdrawal Plan may be subject to a CDSC, unless the annual amount selected to
be withdrawn is less than 12% of the account balance on the date that the
Systematic Withdrawal Plan was established. See Waiver of Contingent Deferred
Sales Charge - Class B and Class C Shares and Waiver of Limited Contingent
Deferred Sales Charge - Class A Shares under Redemption and Exchange in the
related Prospectus. Shareholders should consult their financial adviser to
determine whether a Systematic Withdrawal Plan would be suitable for them.
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(DPT19-SAI/PART B)
An investor wishing to start a Systematic Withdrawal Plan must complete
an authorization form. If the recipient of Systematic Withdrawal Plan payments
is other than the registered shareholder, the shareholder's signature on this
authorization must be guaranteed. Each signature guarantee must be supplied by
an eligible guarantor institution. The Fund reserves the right to reject a
signature guarantee supplied by an eligible institution based on its
creditworthiness. This plan may be terminated by the shareholder or the Transfer
Agent at any time by giving written notice.
The Systematic Withdrawal Plan is not available for the Institutional
Class Shares.
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(DPT19-SAI/PART B)
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
Each Portfolio has qualified or intends to qualify, and each that has
qualified intends to continue to qualify, as a regulated investment company
under Subchapter M of the Code. As such, a Portfolio will not be subject to
federal income tax, or to any excise tax, to the extent its earnings are
distributed as provided in the Code and it satisfies other requirements relating
to the sources of its income and diversification of its assets.
The policy of Pooled Trust, Inc. and Foundation Funds, as applicable,
is to distribute substantially all of each Portfolio's net investment income and
any net realized capital gains in the amount and at the times that will avoid
any federal income or excise taxes. All dividends and capital gains
distributions of accounts in REIT Fund Institutional Class shall be
automatically reinvested in the Class. For all other Portfolios and Classes of
The Real Estate Investment Trust Portfolio, shareholders may elect to receive
dividends and capital gains distributions in cash, otherwise, all such dividends
and distributions will be automatically reinvested in the Portfolios. The
amounts of any dividend or capital gains distributions cannot be predicted.
All dividends out of net investment income, together with distributions
from short-term capital gains, will be taxable to those shareholders who are
subject to income taxes as ordinary income. (These distributions may be eligible
for the dividends-received deductions for corporations.) Any net long-term
capital gains distributed to those shareholders who are subject to income tax
will be taxable as such, regardless of the length of time a shareholder has
owned their shares. Of the dividends paid by The Large-Cap Value Equity
Portfolio and The Real Estate Investment Trust Portfolio for the fiscal year
ended October 31, 1997, 40% and 62%, respectively, were eligible for the
dividends-received deduction for corporations. For the fiscal year ended October
31, 1997, no portion of the dividends paid by The Mid-Cap Growth Equity
Portfolio qualified for the dividends-received deduction.
Undistributed net investment income is included in the Portfolio's net
assets for the purpose of calculating net asset value per share. Therefore on
the "ex-dividend" date, the net asset value per share excludes the dividend
(i.e., is reduced by the per share amount of the dividend). Dividends paid
shortly after the purchase of shares by an investor, although in effect a return
of capital, are taxable to shareholders who are subject to tax.
Each Portfolio is treated as a separate entity (and hence as a separate
"regulated investment company") for federal tax purposes. Any net capital gains
recognized by a Portfolio are distributed to its investors without need to
offset (for federal income tax purposes) such gains against any net capital
losses of another Portfolio.
Each year, Pooled Trust, Inc. or, as applicable, Foundation Funds will
mail information to investors on the amount and tax status of each Portfolio's
dividends and distributions. Shareholders should consult their own tax advisers
regarding specific questions as to federal, state or local taxes.
Each class of shares of The Real Estate Investment Trust Portfolio will
share proportionately in the investment income and expenses of the Portfolio,
except that Class A Shares, Class B Shares and Class C Shares alone will incur
distribution fees under their respective 12b-1 plans.
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(DPT19-SAI/PART B)
TAXES
The following supplements the tax disclosure provided in the
Prospectuses.
Under the Taxpayer Relief Act of 1997 (the "1997 Act"), as revised by
the 1998 Act, the Fund is required to track its sales of portfolio securities
and to report its capital gain distributions to you according to the following
categories of holding periods:
"Pre-Act long-term capital gains": securities sold by a Portfolio
before May 7, 1997, that were held for more than 12 months. These gains
will be taxable to individual investors at a maximum rate of 28%.
"Mid-term capital gains" or "28 percent rate gain": securities sold by
a Portfolio after July 28, 1997 that were held more than one year but
not more than 18 months. These gains will be taxable to individual
investors at a maximum rate of 28%.
"1997 Act long-term capital gains" or "20 percent rate gain":
securities sold by the Fund between May 7, 1997 and July 28, 1997 that
were held for more than 12 months, and securities sold by the Fund
after July 28, 1997 that were held for more than 18 months. As revised
by the 1998 Act, this rate applies to securities held for more than 12
months for tax years beginning after December 31, 1997. These gains
will be taxable to individual investors at a maximum rate of 20% for
investors in the 28% or higher federal income tax brackets, and at a
maximum rate of 10% for investors in the 15% federal income tax
bracket.
"Qualified 5-year gains": For individuals in the 15% bracket, qualified
5-year gains are net gains on securities held for more than 5 years
which are sold after December 31, 2000. For individuals who are subject
to tax at higher rate brackets, qualified 5-year gains are net gains on
securities which are purchased after December 31, 2000 and are held for
more than 5 years. Taxpayers subject to tax at a higher rate brackets
may also make an election for shares held on January 1, 2001 to
recognize gain on their shares (any loss is disallowed) in order to
qualify such shares as qualified 5-year property as though purchased
after December 31, 2000. These gains will be taxable to individual
investors at a maximum rate of 18% for investors in the 28% or higher
federal income tax brackets, and at a maximum rate of 8% for investors
in the 15% federal income tax bracket when sold after the 5 year
holding period.
A portion of each Portfolio's dividends may qualify for the
dividends-received deduction for corporations provided in the federal income tax
law. The portion of dividends paid by a Portfolio that so qualifies will be
designated each year in a notice mailed to a Portfolio's shareholders, and
cannot exceed the gross amount of dividends received by a Portfolio from
domestic (U.S.) corporations that would have qualified for the
dividends-received deduction in the hands of a Portfolio if the Portfolio was a
regular corporation. The availability of the dividends-received deduction is
subject to certain holding period and debt financing restrictions imposed under
the Code on the corporation claiming the deduction. Under the 1997 Act, the
amount that a Portfolio may designate as eligible for the dividends-received
deduction will be reduced or eliminated if the shares on which the dividends
earned by a Portfolio were debt-financed or held by a Portfolio for less than a
46-day period during a 90-day period beginning 45 days before the ex-dividend
date and ending 45 days after the ex-dividend date. Similarly, if your Portfolio
shares are debt-financed or held by you for less than a 46-day period during a
90-day period beginning 45 days before the ex-dividend date and ending 45 days
after the ex- dividend date, then the dividends-received deduction for Portfolio
dividends on your shares may also be reduced or eliminated. Even if designated
as dividends eligible for the dividends-received deduction, all dividends
(including any deducted portion) must be included in your alternative minimum
taxable income calculation.
Shareholders will be notified annually by Pooled Trust, Inc. as to the
federal income tax status of dividends and distributions paid by their
Portfolio.
In addition to the federal taxes described above, shareholders may or
may not be subject to various state and local taxes. Because shareholders' state
and local taxes may be different than the federal taxes described above,
shareholders should consult their own tax advisers.
See also Other Tax Requirements under Accounting and Tax Issues in this
Part B.
Futures Contracts and Stock Options
(The Mid-Cap Growth Equity Portfolio, The Real Estate Investment Trust
Portfolios, The Emerging Markets Portfolio, The Global Equity Portfolio, The
Diversified Core Fixed Income Portfolio, The Asset Allocation Portfolio, The
Small-Cap Growth Equity Portfolio and The Growth and Income Portfolio)
The Mid-Cap Growth Equity Portfolio's, The Real Estate Investment Trust
Portfolios', The Emerging Markets Portfolio's, The Global Equity Portfolio's,
The Diversified Core Fixed Income Portfolio's, The Asset Allocation Portfolio's,
The Small-Cap Growth Equity Portfolio's and The Growth and Income Portfolio's
transactions in options and futures contracts will be subject to special tax
rules that may affect the amount, timing and character of distributions to
shareholders. For example, certain positions held by a Portfolio on the last
business day of each taxable year will be marked to market (i.e., treated as if
closed out) on such day, and any gain or loss associated with such positions
will be treated as 60% long-term and 40% short-term capital gain or loss.
Certain positions held by a Portfolio that substantially diminish its risk of
loss with respect to other positions in a Portfolio will constitute "straddles,"
which are subject to special tax rules that may cause deferral of the
Portfolio's losses, adjustments in the holding periods of Portfolio securities
and conversion of short-term into long-term capital losses. Certain tax
elections exist for straddles which could alter the effects of these rules. The
Portfolios will limit their activities in options and futures contracts to the
extent necessary to meet the requirements of Subchapter M of the Code.
Forward Currency Contracts
(The International Equity Portfolio, The International Mid-Cap Sub Portfolio,
The Labor Select International Equity Portfolio, The Real Estate Investment
Trust Portfolios, The Global Fixed Income Portfolio, The Emerging Markets
Portfolio, The International Fixed Income Portfolio, The Global Equity
Portfolio, The Diversified Core Fixed Income Portfolio, The Asset Allocation
Portfolio, The Small-Cap Growth Equity Portfolio and The Growth and Income
Portfolio)
The International Equity Portfolio, The International Mid-Cap Sub
Portfolio, The Labor Select International Equity Portfolio, The Real Estate
Investment Trust Portfolios, The Global Fixed Income Portfolio, The
International Fixed Income Portfolio, The Emerging Markets Portfolio, The Global
Equity Portfolio, The Diversified Core Fixed Income Portfolio, The Asset
Allocation Portfolio, The Small-Cap Growth Equity Portfolio and The Growth and
Income Portfolio will be required for federal income tax purposes to recognize
any gains and losses on forward currency contracts as of the end of each taxable
year as well as those actually realized during the year. In most cases, any such
gain or loss recognized with respect to a forward currency
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(DPT19-SAI/PART B)
contract is considered to be ordinary income or loss. Furthermore, forward
currency futures contracts which are intended to hedge against a change in the
value of securities held by these Portfolios may affect the holding period of
such securities and, consequently, the nature of the gain or loss on such
securities upon disposition.
Special tax considerations also apply with respect to foreign
investments of these Portfolios. For example, certain foreign exchange gains and
losses (including exchange gains and losses on forward currency contracts)
realized by the Portfolio will be treated as ordinary income or losses.
State and Local Taxes
Shares of Pooled Trust, Inc. are exempt from Pennsylvania county
personal property tax.
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(DPT19-SAI/PART B)
INVESTMENT MANAGEMENT AGREEMENTS
Delaware Management Company ("Delaware"), One Commerce Square,
Philadelphia, PA 19103, furnishes investment management services to The
Large-Cap Value Equity, The Mid-Cap Growth Equity, The Intermediate Fixed
Income, The Aggregate Fixed Income, The Limited-Term Maturity, The Small/Mid-Cap
Value Equity, The Real Estate Investment Trust, The High-Yield Bond, The
Diversified Core Fixed Income and The Asset Allocation, The Small-Cap Growth
Equity and The Growth and Income Portfolios, subject to the supervision and
direction of Board of Directors or Trustees of Pooled Trust, Inc. or, as
applicable, Foundation Funds. Delaware International Advisers Ltd. ("Delaware
International"), Third Floor, 80 Cheapside, London, England EC2V 6EE, furnishes
similar services to The International Equity, The International Mid-Cap Sub
Portfolio, The Labor Select International Equity, The Global Fixed Income, The
International Fixed Income, The Emerging Markets and The Global Equity
Portfolios, and provides sub-advisory services to The Diversified Core Fixed
Income Portfolio subject to the supervision and direction of Pooled Trust,
Inc.'s Board of Directors. Lincoln Investment Management, Inc. ("Lincoln")
serves as sub-adviser to Delaware with respect to The Real Estate Investment
Trust Portfolios. Lincoln's address is 200 E. Berry Street, Fort Wayne, Indiana
46802.
Delaware and its predecessors have been managing the funds in the
Delaware Investments family since 1938. On July 31, 1998, Delaware and its
affiliates within Delaware Investments, including Delaware International
Advisers Ltd., were managing in the aggregate more than $43 billion in assets in
the various institutional or separately managed (approximately $25,873,990,000)
and investment company ($17,929,500,000) accounts.
Lincoln (formerly Lincoln National Investment Management Company) was
incorporated in 1930. As of July 31, 1998, Lincoln had approximately $39 billion
in assets under management.
The Investment Management Agreements for The Large-Cap Value Equity,
The Mid-Cap Growth Equity, The Intermediate Fixed Income, The Limited-Term
Maturity, The International Equity, The Global Fixed Income and The
International Fixed Income Portfolios are each dated April 3, 1995 and were
approved by shareholders on March 29, 1995. The Investment Management Agreements
for The Small/Mid-Cap Value Equity, The Labor Select International Equity, The
Real Estate Investment Trust and The High-Yield Bond Portfolios are each dated
November 29, 1995 and were approved by the initial shareholders on November 30,
1995. The Sub-Advisory Agreement for The Real Estate Investment Trust Portfolio
is dated November 29, 1995 and was approved by the initial shareholder on
November 30, 1995. The Investment Management Agreement for The Emerging Markets
Portfolio is dated April 14, 1997 and was approved by the initial shareholder on
that date. The Investment Management Agreements for The Global Equity Portfolio
and The Real Estate Investment Trust Portfolio II are both dated October 14,
1997 and were approved by the initial shareholder as of October 14, 1997; the
Sub-Advisory Agreement between Delaware and Lincoln is dated as of October 14,
1997 and was approved by the initial shareholder on that date. The Investment
Management Agreements for The Aggregate Fixed Income Portfolio and The
Diversified Core Fixed Income Portfolio are each dated December 24, 1997 and
were approved by the initial shareholders on that date. The Sub-Advisory
Agreement between Delaware and Delaware International relating to the
Diversified Core Fixed Income Portfolio is dated December 24, 1997 and was
approved by the initial shareholder on that date. The Investment Management
Agreements for The Asset Allocation Portfolio, The Small-Cap Growth Equity
Portfolio and The Growth and Income Portfolio are each dated August 31, 1998 and
were approved by the initial shareholder on that date. The Investment Management
Agreement for The International Mid-Cap Sub Portfolio is dated December 23, 1998
and will be approved by the initial shareholder prior to commencement of
operations.
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<PAGE>
(DPT19-SAI/PART B)
Each such Agreement has an initial term of two years and may be renewed
after its initial term only so long as such renewal and continuance are
specifically approved at least annually by the Board of Directors or Trustees,
as applicable, or by vote of a majority of the outstanding voting securities of
the Portfolio, and only if the terms of the renewal thereof have been approved
by the vote of a majority of the directors or trustees of Pooled Trust, Inc. or
Foundation Funds who are not parties thereto or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval. Each Agreement is terminable without penalty on 60 days' notice by the
directors of Pooled Trust, Inc., the trustees of Foundation Funds or by the
investment adviser. Each Agreement will terminate automatically in the event of
its assignment.
As compensation for the services to be rendered under their advisory
agreements, Delaware or, as relevant, Delaware International is entitled to an
advisory fee calculated by applying a quarterly rate, based on the following
annual percentage rates, to the Portfolio's average daily net assets for the
quarter:
Portfolio Rate
The Large-Cap Value Equity Portfolio 0.55%
The Mid-Cap Growth Equity Portfolio 0.80%
The International Equity Portfolio 0.75%
The International Mid-Cap Sub Portfolio 0.75%*
The Small/Mid-Cap Value Equity Portfolio 0.75%
The Labor Select International Equity Portfolio 0.75%
The Real Estate Investment Trust Portfolio 0.75%**
The Real Estate Investment Trust Portfolio II 0.75%**
The Intermediate Fixed Income Portfolio 0.40%
The Aggregate Fixed Income Portfolio 0.40%
The Limited-Term Maturity Portfolio 0.30%
The Global Fixed Income Portfolio 0.50%
The International Fixed Income Portfolio 0.50%
The High-Yield Bond Portfolio 0.45%
The Emerging Markets Portfolio 1.20%***
The Global Equity Portfolio 0.75%****
The Diversified Core Fixed Income Portfolio 0.43%****
The Asset Allocation Portfolio 0.05%
The Small-Cap Growth Equity Portfolio 0.75%
The Growth and Income Portfolio 0.55%
* DIA Ltd., the investment adviser to The International Mid-Cap Sub
Portfolio, has elected voluntarily to waive that portion, if any, of its
annual Investment Advisory Fee to the extent necessary to limit the "Total
Fund Operating Expenses" of The Portfolio (exclusive of taxes, interest,
brokerage commissions, and extraordinary expenses) to 0.85% of The
Portfolio's average net assets, on an annualized basis during the period
from the commencement of operations through October 31, 1999.
** Delaware has entered into a sub-advisory agreement with Lincoln with
respect to The Real Estate Investment Trust Portfolios. As compensation
for its services as sub-adviser to Delaware, Lincoln is entitled to
receive a sub-advisory fee equal to 30% of the investment management fee
under Delaware's Investment Management Agreement with Pooled Trust, Inc.
on behalf of the Portfolio.
-84-
<PAGE>
(DPT19-SAI/PART B)
*** Delaware International has elected voluntarily to limit its annual
Investment Advisory Fee to no more than 1.00% of The Emerging Markets
Portfolio's average daily net assets during the period from October 1,
1997 through April 1999. The effect of the current fee waiver of 1.55%
with respect to "Total Operating Expenses" and the 1.00% fee limitation
with respect to The Emerging Markets Portfolio is that the annual
Investment Advisory Fee paid to Delaware International on behalf of that
Portfolio will be an amount equal to the lesser of 1.00% or the amount
necessary to limit "Total Operating Expenses" of the Portfolio (exclusive
of taxes, interest, brokerage commissions and extraordinary expenses) to
no more than 1.55% of average net assets, on an annualized basis. Delaware
International has also voluntarily agreed that the annual Investment
Advisory Fee payable to Delaware International on behalf of The Emerging
Markets Portfolio will not exceed 1.00% unless shareholders of the
Portfolio have been notified of the change to the 1.00% fee limitation at
least one year in advance of such increase.
**** Delaware has entered into sub-advisory agreements with Delaware
International with respect to The Global Equity Portfolio and The
Diversified Core Fixed Income Portfolio. As compensation for its services
as sub-adviser to Delaware, Delaware International is entitled to receive
sub-advisory fees equal to 50% of the investment management fees under
Delaware's Investment Management Agreement with Pooled Trust, Inc. on
behalf of The Global Equity Portfolio. With respect to The Diversified
Core Fixed Income Portfolio, as compensation for Delaware International's
services as sub-adviser to Delaware, Delaware International is entitled to
receive sub-advisory fees from Delaware an amount equal to the management
fee paid to Delaware times a ratio; the numerator of which is the average
daily net assets represented by foreign assets and the denominator of
which is the average daily net assets of The Diversified Core Fixed Income
Portfolio, such amount to be calculated at the same time and measured over
the same period as the management fee.
Out of the investment advisory fees to which they are otherwise entitled,
Delaware and Delaware International pay their proportionate share of the fees
paid to unaffiliated directors by Pooled Trust, Inc., except that Delaware
International will make no such payments out of the fees it receives from
managing The International Fixed Income, The Emerging Markets, The Labor Select
International Equity, The International Mid-Cap Sub Portfolio and The Global
Equity Portfolios, and Delaware will make no such payments out of the fees it
receives from managing The Small/Mid-Cap Value Equity, The Real Estate
Investment Trust, The High-Yield Bond, The Diversified Core Fixed Income, The
Asset Allocation, The Small-Cap Growth Equity and The Growth and Income
Portfolios.
Delaware, or as applicable Delaware International, has elected voluntarily
to waive that portion, if any of the annual investment advisory fees payable by
a particular Portfolio and (except with respect to The International Mid-Cap Sub
Portfolio) to pay a Portfolio for its expenses to the extent necessary to ensure
that the expenses of that Portfolio (exclusive of taxes, interest, brokerage
commissions and extraordinary expenses) did not exceed, on an annualized basis,
the following percentages of average daily net assets from the commencement of
operations through April 30, 1999 (unless otherwise noted) :
-85-
<PAGE>
(DPT19-SAI/PART B)
Portfolio
The Large-Cap Value Equity Portfolio 0.68%
The Mid-Cap Growth Equity Portfolio 0.93%
The International Equity Portfolio 0.96%
The International Mid-Cap Sub Portfolio 0.85%
The Small/Mid-Cap Value Equity Portfolio 0.89%
The Labor Select International Equity Portfolio 0.96%
The Real Estate Investment Trust Portfolio 0.95%*
The Real Estate Investment Trust Portfolio II 0.86%
The Intermediate Fixed Income Portfolio 0.53%
The Aggregate Fixed Income Portfolio 0.53%
The Limited-Term Maturity Portfolio 0.43%
The Global Fixed Income Portfolio 0.60%**
The International Fixed Income Portfolio 0.60%***
The High-Yield Bond Portfolio 0.59%
The Emerging Markets Portfolio 1.55%
The Global Equity Portfolio 0.96%
The Diversified Core Fixed Income Portfolio 0.57%
The Asset Allocation Portfolio 0.15%****
The Small-Cap Growth Equity Portfolio 0.89%****
The Growth and Income Portfolio 0.68%****
* With respect to REIT Fund A Class, REIT Fund B Class, REIT Fund C Class
and REIT Fund Institutional Class of The Real Estate Investment Trust
Portfolio, Delaware has elected voluntarily to waive that portion, if any,
of the annual Investment Advisory Fee payable by such classes and to
reimburse each class for its expenses to the extent necessary to ensure
that the expenses of each class (exclusive of applicable 12b-1 plan
expenses, taxes, interest, brokerage commissions, extraordinary expenses)
do not exceed, as a percentage of average net assets, on an annualized
basis, 0.95% during the period November 11, 1998 through April 30, 1999.
From commencement of operations of the classes through November 11, 1998,
expenses were capped at 0.86%. The expense cap for The Real Estate
Investment Trust Portfolio that was in effect from the commencement of
operations through October 14, 1997 was 0.89%.
** Delaware International voluntarily elected to waive that portion, if any,
of its annual investment advisory fees and to pay The Global Fixed Income
Portfolio for its expenses to the extent necessary to ensure that the
expenses of that Portfolio (exclusive of taxes, interest, brokerage
commissions and extraordinary expenses) did not exceed, on an annualized
basis, 0.62% as a percentage of average net assets for the period from the
commencement of the public offering for the Portfolio through October 31,
1994. Such waiver was modified effective November 1, 1994 to provide that
such expenses of the Portfolio do not exceed, on an annualized basis,
0.60%.
*** Delaware International voluntarily elected to waive that portion, if any,
of its annual investment advisory fees and to pay The International Fixed
Income Portfolio for its respective expenses to the extent necessary to
ensure that the expenses of that Portfolio (exclusive of taxes, interest,
brokerage commissions and extraordinary expenses) did not exceed, on an
annualized basis, 0.62% as a percentage of average net assets for the
period from the commencement of the public offering for the Portfolio
-86-
<PAGE>
(DPT19-SAI/PART B)
through April 30, 1994. Such waiver for The International Fixed Income
Portfolio was modified effective May 1, 1994 to provide that such
expenses of the Portfolio do not exceed, on an annual basis, 0.60%.
**** Effective from the commencement of operations through April 30, 1999.
Investment management fees incurred for the last three fiscal years with
respect to each Portfolio follows:
<TABLE>
<CAPTION>
Portfolio October 31, 1997 October 31, 1996 October 31, 1995
- --------- ---------------- ---------------- ----------------
<S> <C> <C> <C>
The Large-Cap Value Equity Portfolio $441,785 earned $343,114 earned $255,586 earned
$433,247 paid $328,126 paid $237,776 paid
$8,538 waived $14,988 waived $17,810 waived
The Mid-Cap Growth Equity Portfolio $156,524 earned $214,315 earned $202,809 earned
$64,669 paid $185,753 paid $163,397 paid
$91,855 waived $28,562 waived $39,412 waived
The International Equity Portfolio $3,119,494 paid $1,632,036 paid $792,936 earned
$374,822 paid
$15,248 waived
The Global Fixed Income Portfolio $1,591,678 earned $762,870 earned $349,107 earned
$1,425,392 paid $661,220 paid $293,883 paid
$166,286 waived $101,650 waived $55,224 waived
The Labor Select International $291,778 earned $100,144 earned N/A
Equity Portfolio(1) $222,760 paid $50,055 paid
$69,018 waived $50,089 waived
The Real Estate Investment $354,157 earned $153,313 earned N/A
Trust Portfolio(2) $273,770 paid $127,250 paid
$80,387 waived $26,063 waived
The Intermediate Fixed Income $84,846 earned $19,389 earned N/A
Portfolio(3) $18,659 paid $-0- paid
$66,187 waived $19,389 waived
The High-Yield Bond Portfolio(4) $27,213 earned N/A N/A
$13,551 paid
$13,662 waived
</TABLE>
-87-
<PAGE>
(DPT19-SAI/PART B)
<TABLE>
<CAPTION>
Portfolio October 31, 1997 October 31, 1996 October 31, 1995
<S> <C> <C> <C>
The International Fixed Income $61,031 earned N/A N/A
Portfolio(5) $29,230 paid
$31,801 waived
The Emerging Markets Portfolio(6) $89,760 earned N/A N/A
$54,085 paid
$35,675 waived
The Global Equity Portfolio(7) $941 earned N/A N/A
$941 waived
</TABLE>
(1) Commenced operations on December 19, 1995.
(2) Commenced operations on December 6, 1995.
(3) Commenced operations on March 12, 1996.
(4) Commenced operations on December 2, 1996.
(5) Commenced operations on April 11, 1997.
(6) Commenced operations on April 14, 1997.
(7) Commenced operations on October 15, 1997.
On October 31, 1997, the total net assets of Pooled Trust, Inc. were
$1,230,563,646, broken down as follows:
The Large-Cap Value Equity Portfolio $81,101,898
The Mid-Cap Growth Equity Portfolio $10,317,447
The International Equity Portfolio $500,195,661
The Global Fixed Income Portfolio $431,075,603
The Labor Select International Equity Portfolio $50,895,705
The Real Estate Investment Trust Portfolio $60,089,209
The Intermediate Fixed Income Portfolio $30,366,196
The High-Yield Bond Portfolio $11,347,586
The Emerging Markets Portfolio $18,564,600
The Global Equity Portfolio $2,854,885
The International Fixed Income Portfolio $33,733,856
The Limited-Term Maturity Portfolio $21,000
Delaware and DIA Ltd. are indirect, wholly owned subsidiaries of Delaware
Management Holdings, Inc. ("DMH").
Except for the expenses borne by the investment advisers under their
respective Investment Management Agreements and the distributor under the
Distribution Agreements, each Portfolio, is responsible for all of its own
expenses. Among others, these expenses include each Portfolio's proportionate
share of rent and certain other administrative expenses; the investment
management fees; transfer and dividend disbursing agent fees and costs;
custodian expenses; federal and state securities registration fees; proxy costs;
and the costs of preparing prospectuses and reports sent to shareholders.
-88-
<PAGE>
(DPT19-SAI/PART B)
Distribution and Service
Delaware Distributors, L.P., located at 1818 Market Street, Philadelphia,
PA 19103, serves as the national distributor for each Portfolio under separate
Distribution Agreements dated as follows:
The Large-Cap Value Equity Portfolio April 3, 1995
The Mid-Cap Growth Equity Portfolio April 3, 1995
The Intermediate Fixed Income Portfolio April 3, 1995
The Limited-Term Maturity Portfolio April 3, 1995
The International Equity Portfolio April 3, 1995
The Global Fixed Income Portfolio April 3, 1995
The International Fixed Income Portfolio April 3, 1995
The Real Estate Investment Trust Portfolio November 29, 1995
The Small/Mid-Cap Value Equity Portfolio November 29, 1995
The Labor Select International Equity Portfolio November 29, 1995
The High-Yield Bond Portfolio November 29, 1995
The Emerging Markets Portfolio April 14, 1997
The Global Equity Portfolio October 14, 1997
The Real Estate Investment Trust Portfolio II October 14, 1997.
The International Mid-Cap Sub Portfolio December 23, 1998
The Aggregate Fixed Income Portfolio December 24, 1997
The Diversified Core Fixed Income Portfolio December 24, 1997.
The Asset Allocation Portfolio August 31, 1998
The Small-Cap Growth Equity Portfolio August 31, 1998
The Growth and Income Portfolio August 31, 1998
Delaware Distributors, L.P. is an affiliate of the investment advisers and
bears all of the costs of promotion and distribution.
Delaware Service Company, Inc., an affiliate of Delaware, is Pooled Trust,
Inc.'s shareholder servicing, dividend disbursing and transfer agent for each
Portfolio pursuant to an Amended and Restated Shareholders Services Agreement
dated August 31, 1998. Delaware Service Company, Inc. also provides accounting
services to the Portfolio pursuant to the terms of a separate Fund Accounting
Agreement. Delaware Service Company, Inc.'s principal business address is 1818
Market Street, Philadelphia, PA 19103. It is also an indirect, wholly owned
subsidiary of DMH.
-89-
<PAGE>
(DPT19-SAI/PART B)
OFFICERS AND DIRECTORS
The business and affairs of Pooled Trust, Inc. and Foundation Funds are
managed under the direction of its Board of Directors or Trustees, as
applicable.
As of July 31, 1998, no one account held 25% or more of the outstanding
shares of any of Pooled Trust, Inc.'s Portfolios or Foundation Funds'
portfolios. As of July 31, 1998, the directors and officers of Pooled Trust,
Inc., as a group, owned less than 1% of the outstanding shares of The Real
Estate Investment Trust Portfolio; they did not hold shares of any of the other
Portfolios. As of July 31, 1998, the trustees and officers of Foundation Funds
did not hold any shares of the Portfolios.
As of July 31, 1998, management believes the following accounts held of
record 5% or more of the outstanding shares of a Portfolio. Management has no
knowledge of beneficial ownership.
Delaware Pooled Trust, Inc.
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
The Large-Cap Value Northern Trust
Equity Portfolio TRST PHH Group
P.O. Box 92956
Chicago, IL 60675 622,822 10.88%
Mac & Co.
A/C LNFF5033902
Mutual Funds Operations
P.O. Box 3198
Pittsburgh, PA 15230 481,796 8.41%
Amsouth Bank TTEE FBO
Lloyd Nolan Foundation Retirement Plan
Attn: Trust Operations - Mutual Funds
P.O. Box 11426
Birmington, AL 25202 388,758 6.79%
Commerce Bank of Kansas City
Trust Burns & McDonnell
Employee Stock Ownership Plan
P.O. Box 419248
Kansas City, MO 64141 365,715 6.39%
Lasalle National Bank Trustee
FBO Metz Baking Company
P.O. Box 1443
Chicago, IL 60690 355,282 6.20%
</TABLE>
-90-
<PAGE>
(DPT19-SAI/PART B)
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
The Large-Cap Value Cherrytrust & Co.
Equity Portfolio FBO Colorado Open Shop
Employers Pension Trust
C/O The Bank of Cherry Creek NA
3033 E. First Ave
Denver, CO 80206 343,086 5.99%
Strafe & Co.
For Consolidated Products
Profit Sharing Plan
P.O. Box 160
Westerville, OH 43086 320,799 5.60%
The Northern Trust Company
TRST Children's Memorial
Pension Trust
P.O. Box 92956
Chicago, IL 60675 294,829 5.15%
The Mid-Cap Crestar Bank
Growth Equity Portfolio Cust the College of William and Mary
P.O. Box 8795
Blow Memorial Hall
Williamsburg, VA 23187 209,023 31.89%
The City of Groton
295 Meridian Street
Groton, CT 06340 126,514 19.30%
NCSC Staff Pension Plan
Defined Benefit
8403 Colesville Rd. Ste 1200
Silver Spring, MD 20910 116,006 17.69%
Philadelphia Association of Zeta Psi
Fraternity U/T/A E W Weil
613 Kirsch Avenue
Wayne, PA 19087 90,479 13.80%
Our Sunday Visitor, Inc.
200 Noll Plaza
Huntington, IN 46750 38,125 5.81%
</TABLE>
-91-
<PAGE>
(DPT19-SAI/PART B)
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
The International Father Flanagan's Foundation Fund
Equity Portfolio 14100 Crawford St.
Boys Town, NE 68010 3,070,753 8.34%
The Salvation Army
Eastern Territory
440 West Nyack Road
West Nyack, NY 10994 2,843,234 7.72%
The Intermediate Northumberland City
Fixed Income Portfolio Employees Retirement Fund
Cust. Northern Central Bank
c/o Keystone Financial Trust Operation
P.O. Box 2450
Altoona, PA 16603 662,855 22.07%
Patterson & Co.
c/o CoreStates Bank
P.O. Box 7829
Philadelphia, PA 19101 428,145 14.25%
The City of Groton
295 Meridian Street
Groton, CT 06340 359,423 11.96%
Crestar Bank
Cust The College of William and Mary
Room 224 Private Funds Office
Blow Memorial Hall
P.O. Box 8795
Williamsburg, VA 23187 340,105 11.32%
</TABLE>
-92-
<PAGE>
(DPT19-SAI/PART B)
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
The Intermediate NCSC Staff Pension Plan
Fixed Income Portfolio Defined Benefit
8403 Colesville Rd. Ste 1200
Silver Spring, MD 20910 322,797 10.74%
Our Sunday Visitor Inc.
200 Noll Plaza
Huntington, IN 46750 204,301 6.80%
Philadelphia Association of Zeta Psi
Fraternity U/T/A E W Weil
613 Kirsch Avenue
Wayne, PA 19087 175,637 5.84%
Fleet National Bank TTEE
FBO International Terminal
Operating Pension
Attn: 50502918
P.O. Box 92800
Rochester, NY 14692 166,881 5.55%
The Limited-Term Delaware Management Company
Maturity Portfolio Attn. Joe Hastings
1818 Market Street
Philadelphia, PA 19103 2,100 100.00%
The Global Fixed Public School Retirement System
Income Portfolio of the City of ST Louis
One Mercantile Center
Suite 2607
St Louis, MO 63101 6,679,389 11.43%
Bankers Trust Co
FBO SLU Delaware Fund
Attn: Tom DeAngelo
34 Exchange Place MS 3029
Jersey City, NJ 07302 4,514,815 7.72%
Saxon & Co.
FBO Western Pennsylvania Teamsters
& Employers Pension Fund
P.O. Box 7780-1888
Philadelphia, PA 19183 4,357,039 7.45%
</TABLE>
-93-
<PAGE>
(DPT19-SAI/PART B)
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
The Global Fixed Bost & Co.
Income Portfolio Mutual Funds Operations
P.O. Box 3198
Pittsburgh, PA 15230 4,028,764 6.89%
Washington Suburban Sanitary Commission
Employees Retirement Plan
14501 Sweitzer Ln.
Laurel, MD 20707 3,208,871 5.49%
The International Montgomery County Public Schools
Fixed Income Portfolio Employee's Pension & Retirement System
850 Hungerford Dr. Rm 154
Rockville, MD 20850 1,833,616 24.50%
Adventist Health System Sunbelt
Healthcare Corp.- Core
111 N. Orlando Ave.
Winter Park, FL 32789 1,831,227 24.47%
El Paso Firemen & Policemen's
Pension Fund Policemen's Division
8201 Lockheed Drive Ste. 229
El Paso, TX 79925 1,210,732 16.18%
Comerica Bank Trustee
Oakwood Pension Plan
P.O. Box 75000 M/C #3446
Detriot, MI 48275 907,821 12.13%
El Paso Firemen & Policemen's
Pension Fund Policemen's Division
8201 Lockheed Drive Ste. 229
El Paso, TX 79925 756,708 10.11%
The Bank of New York ITF Unisource Group Trust
12/29/97 One Wall Street 12th Fl.
New York, NY 10005 521,024 6.96%
</TABLE>
-94-
<PAGE>
(DPT19-SAI/PART B)
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
The Mid-Cap The Lincoln National Life Insurance Company
Value Equity Portfolio 1300 South Clinton Street
Fort Wayne, IN 46802 352,941 99.99%
The Labor Select Maritime Association IRA
International Equity Pension Fund
Portfolio 11550 Fuqua St Ste 425
Houston, TX 77034 2,071,578 28.20%
Operating Engineers
LCL 101 Pension
301 E. Armour Blvd. Suite 203
Kansas City, MO 64111 1,104,287 15.03%
Carpenters 626 Pension Fund
P.O. Box 740
Davis Road and Oakwood Lane
Valley Forge, PA 19482 786,333 10.70%
Local 25 S.E.I.U. & Participating
Employees Pension Trust
111 W. Jackson Blvd Ste 2102
Chicago, IL 60604 570,318 7.76%
Operating Engineers Pension Trust Fund
8401 Corporate Drive Suite 200
Landover, MD 20785 431,204 5.87%
Keystone District Council of Carpenters
Pension Fund
524 S. 22nd Street
Harrisburg, PA 17104 421,441 5.73%
First of America Trust Company
Cust Plumbers and Steamfitters
Local 137 Pension Trust
International Portfolio
P.O. Box 4042
Kalamazoo, MI 49002 381,856 5.19%
</TABLE>
-95-
<PAGE>
(DPT19-SAI/PART B)
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
The Real Estate Charles Schwab & Co, Inc.
Investment Trust Special Custody Account for the
Portfolio A Class Exclusive Benefit of Custodians
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104 55,983 6.10%
The High-Yield The Bank of New York ITF
Bond Portfolio Unisource Group Trust 12/29/97
One Wall Street 12th Fl.
New York, NY 10005 612,542 31.80%
Schwartz 1996 Charitable Remainder Unitrust
c/o TCS Group, L.L.C.
1200 Shermer Road Suite 212
Northbrook, IL 60062 348,252 18.08%
Chicago Trust Co.
FBO Lincoln National Corp.
Employees Retirement Plan
c/o Marshall & Ilsley Trust Co.
P.O. Box 2977
Milwaukee, WI 53201 347,376 18.03%
Melhorn & Co Shopmen's Iron
Workers Union #502 Pension Fund
C/O PNC Bank
1600 Market Street
Lower Level 2
Philadelphia, PA 19103 179,842 9.33%
Mac & Co LCWF
Mutual Funds Operations
P.O. Box 3198
Pittsburgh PA 15320 159,244 8.26%
Trust Seven Hundred Thirty
U/A/D 4/2/94
c/o TCS Group, L.L.C.
1200 Shermer Road Suite 212
Northbrook, IL 60062 125,153 6.49%
</TABLE>
-96-
<PAGE>
(DPT19-SAI/PART B)
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
The High-Yield Trust Four Hundred Thirty
Bond Portfolio U/A/D 4/2/94
c/o TCS Group, L.L.C.
1200 Shermer Road Suite 212
Northbrook, IL 60062 125,153 6.49%
The Emerging Congra Master Pension Trust
Markets Portfolio One Congra Drive
Omaha, NE 68102 1,675,977 30.30%
Burlington Northern Santa Fe
Retirement Plan
1700 E. Golf Rd.
Schaumburg, IL 60173 1,024,092 18.51%
Father Flanagan's Trust Fund
14100 Crawford St.
Boys Town, NE 68010 904,395 16.35%
Mac & Co
Mutual Fund Operations
P.O. Box 3198
Pittsburgh, PA 15230 588,235 10.63%
Chicago Trust Company
FBO Lincoln National Corp.
Employees Retirement Trust
1000 N. Water St. TR 4
Milwaukee, WI 53202 549,182 9.93%
The Global Lincoln National Life Insurance Company
Equity Portfolio 1300 S. Clinton Street
Fort Wayne, IN 46802 354,720 99.99%
</TABLE>
-97-
<PAGE>
(DPT19-SAI/PART B)
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
REIT Fund B Class MLPF&S For the Sole Benefit of its
Customers 4800 Deer Lake Drive E 2nd Fl.
Jacksonville, FL 32246 250,643 27.90%
REIT Fund C Class MLPF&S For the Sole Benefit of its
Customers 4800 Deer Lake Drive E 2nd Fl.
Jacksonville, FL 32246 38,277 23.61%
REIT Fund DMC Employee Profit Sharing Plan
Institutional Class Delaware Management Company
1818 Market Street
Philadelphia, PA 19103 123,044 94.43%
The Real Estate The Lincoln National Life Insurance Company
Investment Trust 1300 S. Clinton Street
Portfolio Class Fort Wayne, IN 46802 1,474,826 43.88%
The Lincoln National Life Insurance Company
1300 S. Clinton Street
Fort Wayne, IN 46802 1,260,377 37.50%
American States Insurance Company
500 Meridan Street
Indianapolis, IN 46204 625,797 18.61%
</TABLE>
-98-
<PAGE>
(DPT19-SAI/PART B)
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
The Real Estate The Philadelphia Orchestra Association
Investment 1420 Locust Street Ste 400
Trust Portfolio II Philadelphia, PA 19103 124,421 30.72%
Lincoln National Life Insurance Company
1300 S. Clinton Street
Fort Wayne, IN 46802 123,303 30.45%
City of Groton
295 Merdian Street
Groton, CT 06340 71,785 17.72%
Marian and Speros Martel
Foundation, Inc.
1001 Fannin Street
Houston, TX 77002 63,475 16.67%
Family Health Council, Inc.
Money Purchase Pension Plan
2400 CNG Tower
Pittsburgh, PA 15222 21,904 5.40%
The Aggregate Fixed Lincoln National Life Insurance Company
Income Portfolio 1300 S. Clinton Street
Fort Wayne, IN 46802 235,294 99.99%
The Diversified Core Lincoln National Life Insurance Company
Fixed Income Portfolio 1300 S. Clinton Street
Fort Wayne, IN 46802 352,941 99.99%
</TABLE>
-99-
<PAGE>
(DPT19-SAI/PART B)
<TABLE>
<CAPTION>
Delaware Group Foundation Funds
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
Income Portfolio RS DMTC MPP Plan
A Class Shiawassee Community TCH CU MPPP
Attn: Retirement Plans
1818 Market Street
Philadelphia, PA 19103-3638 9,435 23.21%
DMTC C/F Profit Sharing Plan
for Richard Scott
FBO Richard Scott
P.O. Box 80845
College Station
Fairbanks, AK 99708-0845 9,175 22.57%
DMTC C/F Pension Plan
for Richard Scott
FBO Richard Scott
P.O. Box 80845
College Station
Fairbanks, AK 99708-0845 8,028 19.74%
Ann M. Garber
92 Strasburg Pike
Lancaster, PA 17602-1322 5,816 14.30%
RS DMTC 401(k) Plan
Waltz Brothers 401(k)
Attn: Retirement Plans
1818 Market Street
Philadelphia, PA 19103-3638 5,734 14.10%
Income Portfolio NFSC FEBO # BQ7-019119
B Class R. James Benninghoff
5601 Coldwater Road
Fort Wayne, IN 46825-5450 2,508 93.68%
Income Portfolio H. Dale Zimmermann
C Class Norma J. Zimmermann JTWROS
775 Stone Hill Road
Shoemakersville, PA 19555-9046 2,247 93.00%
</TABLE>
-100-
<PAGE>
(DPT19-SAI/PART B)
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
Income Portfolio Delaware Management Business TR-DIA
Institutional Class Attn: Joseph Hastings
1818 Market Street, 16th Floor
Philadelphia, PA 19103-3691 5,925 99.99%
Balanced Portfolio RS DMTC MPP Plan
A Class Shiawassee Community TCH CU MPPP
Attn: Retirement Plans
1818 Market Street
Philadelphia, PA 19103-3638 9,926 19.57%
DMTC C/F Profit Sharing Plan
for Richard Scott
FBO Richard Scott
P.O. Box 80845
College Station
Fairbanks, AK 99708-0845 9,080 17.90%
DMTC C/F Pension Plan
for Richard Scott
FBO Richard Scott
P.O. Box 80845
College Station
Fairbanks, AK 99708-0845 7,945 15.66%
Glenn A. Shively and
Deborah Z. Shively JT WROS
1401 Le Boutillier Road
Malvern, PA 19355-8741 5,364 10.57%
Patricia A. McDaniel
7500 Hampton Blvd., Apt. C2
Norfolk, VA 23505-1764 5,077 10.01%
Mary E. Siegrist
P.O. Box 288
Intercourse, PA 17534-0288 4,775 9.41%
</TABLE>
-101-
<PAGE>
(DPT19-SAI/PART B)
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
Balanced Portfolio Sarah A. Anthony
B Class RR 3 Box 137
Kunkletown, PA 18058-9521 9,349 24.64%
Attn: Mutual Funds
BHC Securities Inc.
FAO 45021199
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7042 7,706 20.31%
DMTC C/F The Rollover IRA
of Dewey H. Moon
2832 Fannie Thompson Road
Monroe, GA 30656-3445 5,440 14.34%
Balanced Portfolio DMTC Custodian for the IRA
B Class of Alfred R. Kroening
304 E. Arlington St.
Bangor, MI 49013-1444 3,451 9.09%
Lucille F. Goss
502 Elizabeth Drive, Apt. 313
Lancaster, PA 17601-4406 2,733 7.20%
Patsy S. Charles
P.O. Box 3
Willow Street, PA 17584-0003 2,242 5.91%
</TABLE>
-102-
<PAGE>
(DPT19-SAI/PART B)
>
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
Balanced Portfolio Diabetes Foundation of
C Class Rhode Island, Inc.
1007 Waterman Ave.
East Providence, RI 02914 14,472 19.53%
Elaine J. Avery
1789 E. 91 St.
Brooklyn, NY 11236-5405 10,983 14.82%
Rollie Culp and Deborah T. Culp JT WROS
1143 Whitehall Rd.
Williamstown, NJ 08094-7684 9,885 13.34%
DMTC C/F The Rollover IRA of
Joan F. Sylvander
1757 E. 26th St.
Brooklyn, NY 11229-2405 7,968 10.75%
DMTC C/F The Rollover IRA of
Catherine A. Horch
133 Henry St., Apt. 8
Brooklyn, NY 11201-2250 6,409 8.65%
DMTC C/F The Rollover IRA of Josephine Benfatti 2017
Kimball St.
Brooklyn, NY 11234-5021 5,512 7.44%
Paul K. Graybill & Grace H. Graybill
Ten ENT
4 Bomberger Road
Lititz, PA 17543-9510 4,947 6.67%
Balanced Portfolio Delaware Management Business TR-DIA
Institutional Class Attn: Joseph Hastings
1818 Market Street, 16th Fl.
Philadelphia, PA 19103-3691 5,905 100.00%
</TABLE>
-103-
<PAGE>
(DPT19-SAI/PART B)
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
Growth Portfolio RS DMTC 401(k) Plan
A Class Angelheart Designs Inc.
Attn: Retirement Plans
1818 Market Street
Philadelphia, PA 19103-3638 15,148 29.81%
DMTC C/F Profit Sharing Plan
for Richard Scott
FBO Richard Scott
P.O. Box 80845
College Station
Fairbanks, AK 99708-0845 8,908 17.53%
DMTC C/F Pension Plan
for Richard Scott
FBO Richard Scott
P.O. Box 80845
College Station
Fairbanks, AK 99708-0845 7,795 15.34%
RS DMTC 401(k) Plan
Waltz Brothers 401(k)
Attn: Retirement Plans
1818 Market Street
Philadelphia, PA 19103-3638 4,909 9.66%
DMTC C/F The 403(b)(7) Plan of D Rex Tyson 8920
Palmtree Ln.
Pembroke Pines, Fl 33024-4610 2,737 5.38%
Growth Portfolio NSFC FEBO # BQ5-00540
B Class Carolyn W. Shay
9 North Marsh Rd.
Savannah, GA 31410-1036 8,721 10.77%
Jonathan A. Carver and
Charles D. Carver, Sr. JT WROS
151 Amberidge Dr. NW
Cartersville, GA 30120 7,716 9.53%
</TABLE>
-104-
<PAGE>
(DPT19-SAI/PART B)
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
Growth Portfolio DMTC Custodian for IRA of
B Class Charlotte K. Sebacher
5 Meadow Way
Sharpsburg, GA 30277-9767 6,186 7.64%
NSFC FEBO # BQ5-918326
NSFC/DMTC IRA Rollover
FBO Jennifer R. Williams
P.O. Box 30156
Raleigh, NC 27622-0156 5,155 6.36%
DMTC C/F The Rollover IRA of
Marlyn S. Dochenetz
868 Wilton Ln. NW
Lilburn, GA 30047-4865 5,017 6.19%
Charles D. Carver Cust
Cara T. Carver UTMA - GA
151 Amberidge Dr. NW
Cartersville, GA 30121-7388 4,717 5.82%
Charles D. Carver, Sr. Cust
Charles D. Carver, Jr. UTMA - ga
151 Amberidge Dr. NW
Cartersville, GA 30121-7388 4,696 5.80%
Growth Portfolio Richard K. Moreford
C Class 1109 Tall Pines CT
Petoskey, MI 49770-3200 3,230 53.42%
NSFC FEBO # BQ5-022128
Judy A. Martinelli
239 Clifton Ln.
Peachtree City, GA 30269-4225 1,049 17.35%
</TABLE>
-105-
<PAGE>
(DPT19-SAI/PART B)
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
Growth Portfolio RS DMTC 401(k) Plan
C Class GENFED Federal Credit Union
Attn: Retirement Plans
1818 Market Street
Philadelphia, PA 19103-3638 598 9.89%
RS DMTC 401(k) Plan
Shore Line Construction Inc.
Attn: Retirement Plans
1818 Market Street
Philadelphia, PA 19103-3638 493 7.27%
Growth Portfolio Delaware Management Business TR-DIA
Attn: Joseph Hastings
1818 Market Street, 16th Fl.
Philadelphia, PA 19103-3638 5,882 99.99%
</TABLE>
DMH Corp., Delvoy, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Management Company, Inc., Delaware Investment Advisers, (a series of Delaware
Management Business Trust), Delaware Distributors, L.P., Delaware Distributors,
Inc., Delaware Service Company, Inc., Delaware Management Trust Company,
Delaware International Holdings Ltd., Founders Holdings, Inc., Delaware
International Advisers Ltd., Delaware Capital Management, Inc. and Retirement
Financial Services, Inc. are direct or indirect, wholly owned subsidiaries of
Delaware Management Holdings, Inc. ("DMH"). On April 3, 1995, a merger between
DMH and a wholly owned subsidiary of Lincoln National Corporation ("Lincoln
National") was completed. DMH, Delaware and Delaware International are now
indirect, wholly owned subsidiaries, and subject to the ultimate control, of
Lincoln National. Lincoln National, with headquarters in Fort Wayne, Indiana, is
a diversified organization with operations in many aspects of the financial
services industry, including insurance and investment management.
Certain officers and directors of Pooled Trust, Inc. and Foundation
Funds hold identical positions in each of the other funds in the Delaware
Investments family. Directors or Trustees, as applicable, and principal officers
of Pooled Trust, Inc. and Foundation Funds are noted below along with their ages
and their business experience for the past five years. Unless otherwise noted,
the address of each officer and director is One Commerce Square, Philadelphia,
PA 19103.
-106-
<PAGE>
(DPT19-SAI/PART B)
*Jeffrey J. Nick (45)
Chairman, President, Chief Executive Officer and Director and/or
Trustee of the Pooled Trust, Inc. and
Foundation Funds and 32 other investment companies in the
Delaware Investments family
President and Director of Delaware Management Holdings, Inc.
President, Chief Executive Officer and Director of Lincoln National
Investment Companies, Inc.
President of Lincoln Funds Corporation
Director of Delaware International Advisers Ltd.
From 1992 to 1996, Mr. Nick was Managing Director of Lincoln
National UK plc and from 1989 to 1992, he was Senior Vice
President responsible for corporate planning and development
for Lincoln National Corporation.
*Wayne A. Stork (61)
Director and/or Trustee of Pooled Trust, Inc. and Foundation Funds, 32
other investment companies in the Delaware Investments family
and Delaware Capital Management, Inc.
Chairman, President, Chief Executive Officer and Director of DMH Corp.,
Delaware Distributors, Inc. and Founders Holdings, Inc.
Chairman, President, Chief Executive Officer, Chief Investment Officer
and Director/Trustee of Delaware Management Company, Inc. and
Delaware Management Business Trust
Chairman, President, Chief Executive Officer and Chief Investment
Officer of Delaware Management Company (a series of Delaware
Management Business Trust)
Chairman, Chief Executive Officer and Chief Investment Officer of
Delaware Investment Advisers (a series of Delaware Management
Business Trust)
Chairman, Chief Executive Officer and Director of Delaware
International Advisers Ltd., Delaware International Holdings
Ltd. and Delaware Management Holdings, Inc.
President and Chief Executive Officer of Delvoy, Inc.
Chairman of Delaware Distributors, L.P.
Director of Delaware Service Company, Inc. and Retirement Financial
Services, Inc.
During the past five years, Mr. Stork has served in various executive
capacities at different times within the Delaware
organization.
Richard G. Unruh, Jr. (59)
Executive Vice President of Pooled Trust, Inc., Foundation Funds, 32
other investment companies in the Delaware Investments family,
Delaware Management Holdings, Inc., Delaware Management
Company (a series of Delaware Management Business Trust) and
Delaware Capital Management, Inc.
President of Delaware Investment Advisers (a series of Delaware
Management Business Trust)
Executive Vice President and Director/Trustee of Delaware Management
Company, Inc. and Delaware Management Business Trust
Director of Delaware International Advisers Ltd.
During the past five years, Mr. Unruh has served in various executive
capacities at different times within the Delaware
organization.
- ----------------------
* Director/Trustee affiliated with the Portfolio's investment manager and
considered an "interested person" as defined in the 1940 Act.
-107-
<PAGE>
(DPT19-SAI/PART B)
Paul E. Suckow (51)
Executive Vice President/Chief Investment Officer, Fixed Income of
Pooled Trust, Inc., Foundation Funds, 32 other investment
companies in the Delaware Investments family, Delaware
Management Company, Inc., Delaware Management Company (a
series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business
Trust) and Delaware Management Holdings, Inc.
Executive Vice President and Director of Founders Holdings, Inc.
Executive Vice President of Delaware Capital Management, Inc. and
Delaware Management Business Trust
Director of Founders CBO Corporation Director of Delaware Offshore
Funds Limited Director of HYPPCO Finance Company Ltd.
Before returning to Delaware Investments in 1993, Mr. Suckow was
Executive Vice President and Director of Fixed Income for
Oppenheimer Management Corporation, New York, NY from 1985 to
1992. Prior to that, Mr. Suckow was a fixed-income portfolio
manager for Delaware Investments.
David K. Downes (58)
Executive Vice President, Chief Operating Officer, Chief Financial
Officer of Pooled Trust, Inc., Foundation Funds, 32 other
investment companies in the Delaware Investments family,
Delaware Management Holdings, Inc., Founders CBO Corporation,
Delaware Capital Management, Inc., Delaware Management Company
(a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business
Trust) and Delaware Distributors, L.P.
Executive Vice President, Chief Financial Officer, Chief Administrative
Officer and Trustee of Delaware Management Business Trust
Executive Vice President, Chief Operating Officer, Chief Financial
Officer and Director of Delaware Management Company, Inc., DMH
Corp., Delaware Distributors, Inc., Founders Holdings, Inc.
and Delvoy, Inc.
President, Chief Executive Officer, Chief Financial Officer and
Director of Delaware Service Company, Inc.
President, Chief Operating Officer, Chief Financial Officer and
Director of Delaware International Holdings Ltd.
Chairman, Chief Executive Officer and Director of Delaware Management
Trust Company and Retirement Financial Services, Inc.
Director of Delaware International Advisers Ltd.
Vice President of Lincoln Funds Corporation
During the past five years, Mr. Downes has served in various
executive capacities at different times within the Delaware
organization.
-108-
<PAGE>
(DPT19-SAI/PART B)
Walter P. Babich (71)
Director and/or Trustee of Pooled Trust, Inc., Foundation Funds and 32
other investment companies in the Delaware Investments family
460 North Gulph Road, King of Prussia, PA 19406 Board Chairman, Citadel
Constructors, Inc.
From 1986 to 1988, Mr. Babich was a partner of Irwin & Leighton and
from 1988 to 1991, he was a partner of I&L Investors.
John H. Durham (61)
Director and/or Trustee of Pooled Trust, Inc., Foundation Funds and 17
other investment companies in the Delaware Investments family
Partner, Complete Care Services
120 Gibraltar Road, Horsham, PA 19044
Mr. Durham served as Chairman of the Board of each fund in the
Delaware Investments family from 1986 to 1991; President of
each fund from 1977 to 1990; and Chief Executive Officer of
each fund from 1984 to 1990. Prior to 1992, with respect to
Delaware Management Holdings, Inc., Delaware Management
Company, Delaware Distributors, Inc. and Delaware Service
Company, Inc., Mr. Durham served as a director and in various
executive capacities at different times.
Anthony D. Knerr (60)
Director and/or Trustee of Pooled Trust, Inc., Foundation Funds and 32
other investment companies in the Delaware Investments family
500 Fifth Avenue, New York, NY 10110
Founder and Managing Director, Anthony Knerr & Associates
From 1982 to 1988, Mr. Knerr was Executive Vice President/Finance
and Treasurer of Columbia University, New York. From 1987 to
1989, he was also a lecturer in English at the University. In
addition, Mr. Knerr was Chairman of The Publishing Group,
Inc., New York, from 1988 to 1990. Mr. Knerr founded The
Publishing Group, Inc. in 1988.
Ann R. Leven (58)
Director and/or Trustee of Pooled Trust, Inc., Foundation Funds and 32
other investment companies in the Delaware Investments family
785 Park Avenue, New York, NY 10021
Treasurer, National Gallery of Art
From 1984 to 1990, Ms. Leven was Treasurer and Chief Fiscal Officer
of the Smithsonian Institution, Washington, DC, and from 1975
to 1992, she was Adjunct Professor of Columbia Business
School.
W. Thacher Longstreth (78)
Director and/or Trustee of Pooled Trust, Inc., Foundation Funds and 32
other investment companies in the Delaware Investments family
City Hall, Philadelphia, PA 19107
Philadelphia City Councilman.
-109-
<PAGE>
(DPT19-SAI/PART B)
Thomas F. Madison (62)
Director and/or Trustee of Pooled Trust, Inc., Foundation Funds and 32
other investment companies in the Delaware Investments family
200 South Fifth Street, Suite 2100, Minneapolis, Minnesota 55402
President and Chief Executive Officer, MLM Partners, Inc.
Mr. Madison has also been Chairman of the Board of Communications
Holdings, Inc. since 1996.
From February to September 1994, Mr. Madison served as Vice
Chairman--Office of the CEO of The Minnesota Mutual Life
Insurance Company and from 1988 to 1993, he was President of
U.S. WEST Communications--Markets.
Charles E. Peck (73)
Director and/or Trustee of Pooled Trust, Inc., Foundation Funds and 32
other investment companies in the Delaware Investments family
P.O. Box 1102, Columbia, MD 21044
Secretary/Treasurer, Enterprise Homes, Inc.
From 1981 to 1990, Mr. Peck was Chairman and Chief Executive
Officer of The Ryland Group, Inc., Columbia, MD.
George M. Chamberlain, Jr. (51)
Senior Vice President, Secretary and General Counsel of Pooled Trust,
Inc., Foundation Funds and 32 other investment companies in
the Delaware Investments family.
Senior Vice President and Secretary of Delaware Distributors, L.P.,
Delaware Management Company (a series of Delaware Management
Business Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust) and Delaware Management
Holdings, Inc.
Senior Vice President, Secretary and Director/Trustee of DMH Corp.,
Delaware Management Company, Inc., Delaware Distributors,
Inc., Delaware Service Company, Inc., Founders Holdings, Inc.,
Retirement Financial Services, Inc., Delaware Capital
Management, Inc., Delvoy, Inc. and Delaware Management
Business Trust
Executive Vice President, Secretary, and Director of Delaware
Management Trust Company
Senior Vice President and Director of Delaware International Holdings
Ltd.
Director of Delaware International Advisers Ltd.
Secretary of Lincoln Funds Corporation
Attorney.
During the past five years, Mr. Chamberlain has served in various
executive capacities at different times within the Delaware
organization.
-110-
<PAGE>
(DPT19-SAI/PART B)
Joseph H. Hastings (49)
Senior Vice President/Corporate Controller of Pooled Trust, Inc.,
Foundation Funds, 32 other investment companies in the
Delaware Investments family and Founders Holdings, Inc.
Senior Vice President/Corporate Controller and Treasurer of Delaware
Management Holdings, Inc., DMH Corp., Delaware Management
Company, Inc., Delaware Management Company (a series of
Delaware Management Business Trust), Delaware Distributors,
L.P., Delaware Distributors, Inc., Delaware Service Company,
Inc., Delaware Capital Management, Inc., Delaware
International Holdings Ltd., Delvoy, Inc. and Delaware
Management Business Trust
Chief Financial Officer/Treasurer of Retirement Financial Services,
Inc.
Executive Vice President/Chief Financial Officer/Treasurer of Delaware
Management Trust Company Senior Vice President/Assistant Treasurer of
Founders CBO Corporation Treasurer of Lincoln Funds Corporation During
the past five years, Mr. Hastings has served in various
executive capacities at different times within the Delaware
organization.
Michael P. Bishof (36)
Senior Vice President/Treasurer of Pooled Trust, Inc., Foundation
Funds, 32 other investment companies in the Delaware
Investments family and Founders Holdings, Inc.
Senior Vice President/Investment Accounting of Delaware Management
Company, Inc., Delaware Management Company (a series of
Delaware Management Business Trust) and Delaware Service
Company, Inc.
Senior Vice President and Treasurer/Manager of Investment Accounting
of Delaware Distributors, L.P. and Delaware Investment
Advisers (a series of Delaware Management Business Trust)
Senior Vice President and Manager of Investment Accounting of
Delaware International Holdings Ltd.
Assistant Treasurer of Founders CBO Corporation
Before joining Delaware Investments in 1995, Mr. Bishof was a Vice
President for Bankers Trust, New York, NY from 1994 to 1995, a
Vice President for CS First Boston Investment Management, New
York, NY from 1993 to 1994 and an Assistant Vice President for
Equitable Capital Management Corporation, New York, NY from
1987 to 1993.
George E. Deming (57)
Vice President/Senior Portfolio Manager of The Large-Cap Value
Equity Portfolio.
Vice President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust).
Before joining Delaware Investments in 1978, Mr. Deming was
responsible for portfolio management and institutional sales
at White Weld & Co., Inc. He is a member of the Financial
Analysts of Philadelphia. During the past five years, Mr.
Deming has served in various capacities at different times
within the Delaware organization.
-111-
<PAGE>
(DPT19-SAI/PART B)
Gerald S. Frey (52)
Vice President/Senior Portfolio Manager of Pooled Trust, Inc., of
nine other investment companies in the Delaware Investments
family and of Delaware Management Company, Inc. and Delaware
Management Company (a series of Delaware Management Business
Trust)
Before joining Delaware Investments in 1996, Mr. Frey was a Senior
Director with Morgan Grenfell Capital Management, New York, NY
from 1986 to 1995.
Gary A. Reed (44)
Vice President/Senior Portfolio Manager of Pooled Trust, Inc., of
17 other investment companies in the Delaware Investments
family, Delaware Management Company, Inc., Delaware Investment
Advisers (a series of Delaware Management Business Trust),
Delaware Management Company (a series of Delaware Management
Business Trust) and Delaware Capital Management, Inc.
Vice President/Senior Portfolio Manager of Delaware Capital
Management, Inc.
During the past five years, Mr. Reed has served in such capacities
within the Delaware organization.
Gerald T. Nichols (40)
Vice President/Senior Portfolio Manager of Pooled Trust, Inc., of
17 other investment companies in the Delaware Investments
family, Delaware Management Company, Inc., Delaware Investment
Advisers (a series of Delaware Management Business Trust) and
Delaware Management Company (a series of Delaware Management
Business Trust)
Vice President of Founders Holdings, Inc.
Treasurer/Assistant Secretary and Director of Founders CBO Corporation.
During the past five years, Mr. Nichols has served in various
capacities at different times within the Delaware
organization.
Paul A. Matlack (39)
Vice President/Senior Portfolio Manager of Pooled Trust, Inc., of
17 other investment companies in the Delaware Investments
family, Delaware Management Company, Inc., Delaware Investment
Advisers (a series of Delaware Management Business Trust) and
Delaware Management Company (a series of Delaware Management
Business Trust)
Vice President of Founders Holdings, Inc.
President and Director of Founders CBO Corporation.
During the past five years, Mr. Matlack has served in various
capacities at different times within the Delaware
organization.
Babak Zenouzi (35)
Vice President/Senior Portfolio Manager of Pooled Trust, Inc., of
11 other investment companies in the Delaware Investments
family, Delaware Management Company, Inc. and Delaware
Management Company (a series of Delaware Management Business
Trust)
Vice President/Assistant Portfolio Manager of Delaware Investment
Advisers.
Before joining Delaware Investments in 1992, Mr. Zenouzi held
positions of Assistant Vice President, Senior Financial
Analyst and Portfolio Accountant for The Boston Company,
Boston, MA from 1986 to 1991.
-112-
<PAGE>
(DPT19-SAI/PART B)
Roger A. Early (44)
Vice President/Senior Portfolio Manager of Pooled Trust, Inc. and
17 other investment companies in the Delaware Investments
family, Delaware Management Company, Inc., Delaware Investment
Advisers (a series of Delaware Management Business Trust) and
Delaware Management Company (a series of Delaware Management
Business Trust)
Before joining Delaware Investments, Mr. Early was a portfolio
manager for Federated Investment Counseling's fixed-income
group, with over $1 billion in assets.
Frank X. Morris (37)
Vice President/Portfolio Manager of Pooled Trust, Inc.
Vice President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust)
Before joining Delaware Investments in 1997, he served as vice
president and director of equity research at PNC Asset
Management. Mr. Morris is president of the Financial Analysis
Society of Philadelphia and is a member of the Association of
Investment Management and Research and the National
Association of Petroleum Investment Analysts.
James F. Stanley (31)
Vice President/Portfolio Manager of Pooled Trust, Inc.
Vice President of Delaware Investment Advisers (a series of
Delaware Management Business Trust) Before joining Delaware
Investments in 1997, Mr. Stanley served as a senior managing
equity analyst covering the chemical, building products, and
housing industries at Dreyfus Corporation.
J. Paul Dokas (38)
Vice President/Portfolio Manager of Pooled Trust, Inc. and
Foundation Funds
Vice President/DIA Equity of Delaware Investment Advisers (a series
of Delaware Management Business Trust)
Before joining Delaware Investments in 1997, he was a Director of
Trust Investments for Bell Atlantic Corporation in
Philadelphia.
George H. Burwell (37)
Vice President/Senior Portfolio Manager of Pooled Trust, Inc., nine
other investment companies in Delaware Investments, Delaware
Management Company, Inc. and Delaware Management Company (a
series of Delaware Management Business Trust)
Before joining Delaware Investments in 1992, Mr. Burwell was a
portfolio manager for Midlantic Bank, New Jersey. In addition,
he was a security analyst for Balis & Zorn, New York and for
First Fidelity Bank, New Jersey.
-113-
<PAGE>
(DPT19-SAI/PART B)
With respect to Pooled Trust, Inc., the following is a compensation table
listing for each director entitled to receive compensation, the aggregate
compensation received from Pooled Trust, Inc. and the total compensation
received from all Delaware Investments funds for the fiscal year ended October
31, 1997 and an estimate of annual benefits to be received upon retirement under
the Delaware Group Retirement Plan for Directors/Trustees as of October 31,
1997. Only the independent directors of Pooled Trust, Inc. receive compensation
from the Fund.
<TABLE>
<CAPTION>
Pension or Total
Retirement Estimated Compensation
Aggregate Benefits Annual from 33
Compensation Accrued Benefits Delaware
from Pooled as Part of Upon Investment
Name Trust, Inc. Fund Expenses Retirement(1) Companies(2)
<S> <C> <C> <C> <C>
W. Thacher Longstreth $3,384 None $38,000 $58,618
Ann R. Leven $3,738 None $38,000 $63,743
Walter P. Babich $3,669 None $38,000 $62,743
Anthony D. Knerr $3,669 None $38,000 $62,743
Charles E. Peck $3,286 None $38,000 $55,432
Thomas F. Madison(3) $1,680 None $38,000 $30,913
John H. Durham(4) N/A None N/A N/A
</TABLE>
With respect to Foundation Funds, the following is a compensation table
listing for each trustee entitled to receive compensation, the aggregate
compensation expected to be received from Foundation Funds during its fiscal
year and the total compensation expected to be received from all funds in the
Delaware Investments family during the Trust's fiscal year and an estimate of
annual benefits to be received upon retirement under the Delaware Group
Retirement Plan for Directors/Trustees as of September 30, 1998. Only the
independent directors of Foundation Funds receive compensation from the Trust.
-114-
<PAGE>
(DPT19-SAI/PART B)
<TABLE>
<CAPTION>
Pension or Total
Aggregate Retirement Estimated Compensation
Compensation Benefits Annual from
expected to be Accrued Benefits Delaware
received from as Part Upon Investment
the Trust of the Trust Retirement(1) Companies(2)
Name
<S> <C> <C> <C> <C>
W. Thacher Longstreth (3) None $38,500 $63,447
Ann R. Leven (3) None $38,500 $69,609
Walter P. Babich (3) None $38,500 $68,447
Anthony D. Knerr (3) None $38,500 $68,447
Charles E. Peck (3) None $38,500 $63,447
Thomas F. Madison(4) (3) None $38,500 $65,115
John H. Durham(5) (3) None $31,000 $24,189
</TABLE>
(1) Under the terms of the Delaware Group Retirement Plan for
Directors/Trustees, each disinterested director/trustee who, at the
time of his or her retirement from the Board, has attained the age of
70 and served on the Board for at least five continuous years, is
entitled to receive payments from each investment company in the
Delaware Investments family for which he or she serves as a director or
trustee for a period equal to the lesser of the number of years that
such person served as a director or trustee or the remainder of such
person's life. The amount of such payments will be equal, on an annual
basis, to the amount of the annual retainer that is paid to
directors/trustees of each investment company at the time of such
person's retirement. If an eligible director/trustee retired as of the
periods noted above for Pooled Trust, Inc. and Foundation Funds, he or
she would be entitled to annual payments totaling the amounts noted
above, in the aggregate, from all of the investment companies in the
Delaware Investments family for which he or she served as director or
trustee, based on the number of investment companies in the Delaware
Investments family as of that date.
(2) Each independent director/trustee (other than John H. Durham) currently
receives a total annual retainer fee of $38,500 for serving as a
director or trustee for all 34 investment companies in Delaware
Investments, plus $3,145 for each Board Meeting attended. John H.
Durham currently receives a total annual retainer fee of $31,000 for
serving as a director or trustee for 19 investment companies in
Delaware Investments, plus $1,757.50 for each Board Meeting attended.
Ann R. Leven, Walter P. Babich, and Anthony D. Knerr serve on the
Fund's audit committee; Ms. Leven is the chairperson. Members of the
audit committee currently receive additional annual compensation of
$5,000 from all investment companies, in the aggregate, with the
exception of the chairperson, who receives $6,000.
(3) The payments to the independent directors of Foundation Funds are
expected to be de minimus for the fiscal year ended September 30, 1998.
(4) Thomas F. Madison joined the Board of Directors/Trustees on
April 30, 1997.
(5) John H. Durham joined the Board of Directors/Trustees of Pooled Trust,
Inc. and Foundation Funds and 17 other investment companies in Delaware
Investments on April 16, 1998.
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EXCHANGE PRIVILEGE
The Real Estate Investment Trust Portfolio
(Class A Shares, Class B Shares, Class C Shares and Institutional Class Shares)
The exchange privileges available for shareholders of the Class A
Shares, Class B Shares, Class C Shares and Institutional Class Shares of The
Real Estate Investment Trust Portfolio and for shareholders of the classes of
the other funds in the Delaware Investments family are set forth in the relevant
prospectuses for such classes. The following supplements that information. The
Portfolio may modify, terminate or suspend the exchange privilege upon 60 days'
notice to shareholders.
All exchanges involve a purchase of shares of the fund into which the
exchange is made. As with any purchase, an investor should obtain and carefully
read that fund's prospectus before buying shares in an exchange. The prospectus
contains more complete information about the fund, including charges and
expenses. A shareholder requesting such an exchange will be sent a current
prospectus and an authorization form for any of the other mutual funds in the
Delaware Investments family. Exchange instructions must be signed by the record
owner(s) exactly as the shares are registered.
An exchange constitutes, for tax purposes, the sale of one fund or
series and the purchase of another. The sale may involve either a capital gain
or loss to the shareholder for federal income tax purposes.
In addition, investment advisers and dealers may make exchanges between
funds in the Delaware Investments family on behalf of their clients by telephone
or other expedited means. This service may be discontinued or revised at any
time by the Transfer Agent. Such exchange requests may be rejected if it is
determined that a particular request or the total requests at any time could
have an adverse effect on any of the funds. Requests for expedited exchanges may
be submitted with a properly completed exchange authorization form, as described
above.
Telephone Exchange Privilege
Shareholders owning shares for which certificates have not been issued
or their investment dealers of record may exchange shares by telephone for
shares in other mutual funds in the Delaware Investments family. This service is
automatically provided unless the Portfolio receives written notice from the
shareholder to the contrary.
Shareholders or their investment dealers of record may contact the
Shareholder Service Center at 800-523-1918 or, in the case of shareholders of
the Institutional Class, their Client Services Representative at 800-828-5052 to
effect an exchange. The shareholder's current Fund account number must be
identified, as well as the registration of the account, the share or dollar
amount to be exchanged and the fund into which the exchange is to be made.
Requests received on any day after the time the offering price and net asset
value are determined will be processed the following day. See Determining
Offering Price and Net Asset Value. Any new account established through the
exchange will automatically carry the same registration, shareholder information
and dividend option as the account from which the shares were exchanged. The
exchange requirements of the fund into which the exchange is being made, such as
sales charges, eligibility and investment minimums, must be met. (See the
prospectus of the fund desired or inquire by calling the Transfer Agent or, as
relevant, your Client Services Representative.) Certain funds are not available
for retirement plans.
The telephone exchange privilege is intended as a convenience to
shareholders and is not intended to be a vehicle to speculate on short-term
swings in the securities market through frequent transactions in and out of
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the funds in the Delaware Investments family. Telephone exchanges may be subject
to limitations as to amounts or frequency. The Transfer Agent and the Portfolio
reserve the right to record exchange instructions received by telephone and to
reject exchange requests at any time in the future.
As described in the Portfolio's Prospectuses, neither the Portfolio nor
the Transfer Agent is responsible for any shareholder loss incurred in acting
upon written or telephone instructions for redemption or exchange of Portfolio
shares which are reasonably believed to be genuine.
Right to Refuse Timing Accounts
With regard to accounts that are administered by market timing services
("Timing Firms") to purchase or redeem shares based on changing economic and
market conditions ("Timing Accounts"), the Portfolio will refuse any new timing
arrangements, as well as any new purchases (as opposed to exchanges) in Delaware
Investments funds from Timing Firms. The Portfolio reserves the right to
temporarily or permanently terminate the exchange privilege or reject any
specific purchase order for any person whose transactions seem to follow a
timing pattern who: (i) makes an exchange request out of the Portfolio within
two weeks of an earlier exchange request out of the Portfolio, or (ii) makes
more than two exchanges out of the Portfolio per calendar quarter, or (iii)
exchanges shares equal in value to at least $5 million, or more than 1/4 of 1%
of the Portfolio's net assets. Accounts under common ownership or control,
including accounts administered so as to redeem or purchase shares based upon
certain predetermined market indicators, will be aggregated for purposes of the
exchange limits.
Restrictions on Timed Exchanges
Timing Accounts operating under existing timing agreements may only
execute exchanges between the following eight Delaware Investments funds: (1)
Decatur Income Fund, (2) Decatur Total Return Fund, (3) Delaware Fund, (4)
Limited-Term Government Fund, (5) Tax-Free USA Fund, (6) Delaware Cash Reserve,
(7) Delchester Fund and (8) Tax-Free Pennsylvania Fund. No other Delaware
Investments funds are available for timed exchanges. Assets redeemed or
exchanged out of Timing Accounts in Delaware Investments funds not listed above
may not be reinvested back into that Timing Account. The Portfolio reserves the
right to apply these same restrictions to the account(s) of any person whose
transactions seem to follow a timing pattern (as described above).
The Portfolio also reserves the right to refuse the purchase side of an
exchange request by any Timing Account, person, or group if, in the Manager's
judgment, the Portfolio would be unable to invest effectively in accordance with
its investment objectives and policies, or would otherwise potentially be
adversely affected. A shareholder's purchase exchanges may be restricted or
refused if the Portfolio receives or anticipates simultaneous orders affecting
significant portions of the Portfolio's assets. In particular, a pattern of
exchanges that coincide with a "market timing" strategy may be disruptive to the
Portfolio and therefore may be refused.
Except as noted above, only shareholders and their authorized brokers
of record will be permitted to make exchanges or redemptions.
* * *
Following is a summary of the investment objectives of the other
Delaware Investments funds:
Delaware Fund seeks long-term growth by a balance of capital
appreciation, income and preservation of capital. It uses a dividend-oriented
valuation strategy to select securities issued by established companies that
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are believed to demonstrate potential for income and capital growth. Devon Fund
seeks current income and capital appreciation by investing primarily in
income-producing common stocks, with a focus on common stocks the Manager
believes have the potential for above average dividend increases over time.
Trend Fund seeks long-term growth by investing in common stocks issued
by emerging growth companies exhibiting strong capital appreciation potential.
Small Cap Value Fund seeks capital appreciation by investing primarily
in common stocks whose market values appear low relative to their underlying
value or future potential.
DelCap Fund seeks long-term capital growth by investing in common
stocks and securities convertible into common stocks of companies that have a
demonstrated history of growth and have the potential to support continued
growth.
Decatur Income Fund seeks the highest possible current income by
investing primarily in common stocks that provide the potential for income and
capital appreciation without undue risk to principal. Decatur Total Return Fund
seeks long-term growth by investing primarily in securities that provide the
potential for income and capital appreciation without undue risk to principal.
Blue Chip Fund seeks to achieve long-term capital appreciation. Current income
is a secondary objective. It seeks to achieve these objectives by investing
primarily in equity securities and any securities that are convertible into
equity securities. Social Awareness Fund seeks to achieve long-term capital
appreciation. It seeks to achieve this objective by investing primarily in
equity securities of medium- to large-sized companies expected to grow over time
that meet the Fund's "Social Criteria" strategy.
Delchester Fund seeks as high a current income as possible by investing
principally in high yield, high risk corporate bonds, and also in U.S.
government securities and commercial paper. Strategic Income Fund seeks to
provide investors with high current income and total return by using a
multi-sector investment approach, investing principally in three sectors of the
fixed-income securities markets: high yield, higher risk securities, investment
grade fixed-income securities and foreign government and other foreign
fixed-income securities. High-Yield Opportunities Fund seeks to provide
investors with total return and, as a secondary objective, high current income.
U.S. Government Fund seeks high current income by investing primarily
in long-term U.S. government debt obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
Limited-Term Government Fund seeks high, stable income by investing
primarily in a portfolio of short- and intermediate-term securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities and
instruments secured by such securities. U.S. Government Money Fund seeks maximum
current income with preservation of principal and maintenance of liquidity by
investing only in short-term securities issued or guaranteed as to principal and
interest by the U.S. government, its agencies or instrumentalities, and
repurchase agreements collateralized by such securities, while maintaining a
stable net asset value.
Delaware Cash Reserve seeks the highest level of income consistent with
the preservation of capital and liquidity through investments in short-term
money market instruments, while maintaining a stable net asset value.
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Tax-Free USA Fund seeks high current income exempt from federal income
tax by investing in municipal bonds of geographically-diverse issuers. Tax-Free
Insured Fund invests in these same types of securities but with an emphasis on
municipal bonds protected by insurance guaranteeing principal and interest are
paid when due. Tax-Free USA Intermediate Fund seeks a high level of current
interest income exempt from federal income tax, consistent with the preservation
of capital by investing primarily in municipal bonds.
Tax-Free Money Fund seeks high current income, exempt from federal
income tax, by investing in short-term municipal obligations, while maintaining
a stable net asset value.
Tax-Free New Jersey Fund seeks a high level of current interest income
exempt from federal income tax and New Jersey state and local taxes, consistent
with preservation of capital. Tax-Free Ohio Fund seeks a high level of current
interest income exempt from federal income tax and Ohio state and local taxes,
consistent with preservation of capital. Tax-Free Pennsylvania Fund seeks a high
level of current interest income exempt from federal income tax and Pennsylvania
state and local taxes, consistent with the preservation of capital.
International Equity Fund seeks to achieve long-term growth without
undue risk to principal by investing primarily in international securities that
provide the potential for capital appreciation and income. Global Bond Fund
seeks to achieve current income consistent with the preservation of principal by
investing primarily in global fixed-income securities that may also provide the
potential for capital appreciation. Global Assets Fund seeks to achieve
long-term total return by investing in global securities which will provide
higher current income than a portfolio comprised exclusively of equity
securities, along with the potential for capital growth. Emerging Markets Fund
seeks long-term capital appreciation by investing primarily in equity securities
of issuers located or operating in emerging countries.
U.S. Growth Fund seeks to maximize capital appreciation by investing in
companies of all sizes which have low dividend yields, strong balance sheets and
high expected earnings growth rates relative to their industry. Overseas Equity
Fund seeks to maximize total return (capital appreciation and income),
principally through investments in an internationally diversified portfolio of
equity securities. New Pacific Fund seeks long-term capital appreciation by
investing primarily in companies which are domiciled in or have their principal
business activities in the Pacific Basin.
Foundation Funds are "fund of funds" which invest in other funds in the
Delaware Investments family. Foundation Funds Income Portfolio seeks a
combination of current income and preservation of capital with capital
appreciation by investing primarily in a mix of fixed income and domestic equity
securities, including fixed income and domestic equity Underlying Funds.
Foundation Funds Balanced Portfolio seeks capital appreciation with current
income as a secondary objective by investing primarily in domestic equity and
fixed income securities, including domestic equity and fixed income Underlying
Funds. Foundation Funds Growth Portfolio seeks long term capital growth by
investing primarily in equity securities, including equity Underlying Funds,
and, to a lesser extent, in fixed income securities, including fixed-income
Underlying Funds.
Delaware Group Premium Fund, Inc. offers 16 funds available exclusively
as funding vehicles for certain insurance company separate accounts. Decatur
Total Return Series seeks the highest possible total rate of return by selecting
issues that exhibit the potential for capital appreciation while providing
higher than average dividend income. Delchester Series seeks as high a current
income as possible by investing in rated and unrated corporate bonds, U.S.
government securities and commercial paper. Capital Reserves Series seeks a high
stable level of current income while minimizing fluctuations in principal by
investing in a diversified
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portfolio of short- and intermediate-term securities. Cash Reserve Series seeks
the highest level of income consistent with preservation of capital and
liquidity through investments in short-term money market instruments. DelCap
Series seeks long-term capital appreciation by investing its assets in a
diversified portfolio of securities exhibiting the potential for significant
growth. Delaware Series seeks a balance of capital appreciation, income and
preservation of capital. It uses a dividend-oriented valuation strategy to
select securities issued by established companies that are believed to
demonstrate potential for income and capital growth. International Equity Series
seeks long-term growth without undue risk to principal by investing primarily in
equity securities of foreign issuers that provide the potential for capital
appreciation and income. Small Cap Value Series seeks capital appreciation by
investing in small cap common stocks whose market values appear low relative to
their underlying value or future earnings and growth potential. Emphasis will
also be placed on securities of companies that may be temporarily out of favor
or whose value is not yet recognized by the market. Trend Series seeks long-term
capital appreciation by investing primarily in small-cap common stocks and
convertible securities of emerging and other growth-oriented companies. These
securities will have been judged to be responsive to changes in the market place
and to have fundamental characteristics to support growth. Income is not an
objective. Global Bond Series seeks to achieve current income consistent with
the preservation of principal by investing primarily in global fixed-income
securities that may also provide the potential for capital appreciation.
Strategic Income Series seeks high current income and total return by using a
multi-sector investment approach, investing primarily in three sectors of the
fixed-income securities markets: high-yield, higher risk securities; investment
grade fixed-income securities; and foreign government and other foreign
fixed-income securities. Devon Series seeks current income and capital
appreciation by investing primarily in income-producing common stocks, with a
focus on common stocks that the investment manager believes have the potential
for above-average dividend increases over time. Emerging Markets Series seeks to
achieve long-term capital appreciation by investing primarily in equity
securities of issuers located or operating in emerging countries. Convertible
Securities Series seeks a high level of total return on its assets through a
combination of capital appreciation and current income by investing primarily in
convertible securities. Social Awareness Series seeks to achieve long-term
capital appreciation by investing primarily in equity securities of medium to
large-sized companies expected to grow over time that meet the Series' "Social
Criteria" strategy. REIT Series seeks to achieve maximum long-term total return,
with capital appreciation as a secondary objective, by investing in securities
of companies primarily engaged in the real estate industry.
Delaware-Voyageur US Government Securities Fund seeks to provide a high
level of current income consistent with the prudent investment risk by investing
in U.S. Treasury bills, notes, bonds, and other obligations issued or
unconditionally guaranteed by the full faith and credit of the U.S. Treasury,
and repurchase agreements fully secured by such obligations.
Delaware-Voyageur Tax-Free Arizona Insured Fund seeks to provide a high
level of current income exempt from federal income tax and the Arizona personal
income tax, consistent with the preservation of capital. Delaware-Voyageur
Minnesota Insured Fund seeks to provide a high level of current income exempt
from federal income tax and the Minnesota personal income tax, consistent with
the preservation of capital.
Delaware-Voyageur Tax-Free Minnesota Intermediate Fund seeks to provide
a high level of current income exempt from federal income tax and the Minnesota
personal income tax, consistent with preservation of capital. The Fund seeks to
reduce market risk by maintaining an average weighted maturity from five to ten
years.
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Delaware-Voyageur Tax-Free California Insured Fund seeks to provide a
high level of current income exempt from federal income tax and the California
personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Florida Insured Fund seeks to provide a high level of
current income exempt from federal income tax, consistent with the preservation
of capital. The Fund will seek to select investments that will enable its shares
to be exempt from the Florida intangible personal property tax.
Delaware-Voyageur Tax-Free Florida Fund seeks to provide a high level of current
income exempt from federal income tax, consistent with the preservation of
capital. The Fund will seek to select investments that will enable its shares to
be exempt from the Florida intangible personal property tax. Delaware-Voyageur
Tax-Free Kansas Fund seeks to provide a high level of current income exempt from
federal income tax, the Kansas personal income tax and the Kansas Intangible
personal property tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Missouri Insured Fund seeks to provide a high level
of current income exempt from federal income tax and the Missouri personal
income tax, consistent with the preservation of capital. Delaware-Voyageur
Tax-Free New Mexico Fund seeks to provide a high level of current income exempt
from federal income tax and the New Mexico personal income tax, consistent with
the preservation of capital. Delaware-Voyageur Tax-Free Oregon Insured Fund
seeks to provide a high level of current income exempt from federal income tax
and the Oregon personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Utah Fund seeks to provide a high level of current
income exempt from federal income tax, consistent with the preservation of
capital. Delaware-Voyageur Tax-Free Washington Insured Fund seeks to provide a
high level of current income exempt from federal income tax, consistent with the
preservation of capital.
Delaware-Voyageur Tax-Free Arizona Fund seeks to provide a high level
of current income exempt from federal income tax and the Arizona personal income
tax, consistent with the preservation of capital. Delaware-Voyageur Tax-Free
California Fund seeks to provide a high level of current income exempt from
federal income tax and the California personal income tax, consistent with the
preservation of capital. Delaware-Voyageur Tax-Free Iowa Fund seeks to provide a
high level of current income exempt from federal income tax and the Iowa
personal income tax, consistent with the preservation of capital. Delaware-
Voyageur Tax-Free Idaho Fund seeks to provide a high level of current income
exempt from federal income tax and the Idaho personal income tax, consistent
with the preservation of capital. Delaware-Voyageur Minnesota High Yield
Municipal Bond Fund seeks to provide a high level of current income exempt from
federal income tax and the Minnesota personal income tax primarily through
investment in medium and lower grade municipal obligations. National High Yield
Municipal Fund seeks to provide a high level of income exempt from federal
income tax, primarily through investment in medium and lower grade municipal
obligations. Delaware-Voyageur Tax-Free New York Fund seeks to provide a high
level of current income exempt from federal income tax and the personal income
tax of the state of New York and the city of New York, consistent with the
preservation of capital. Delaware-Voyageur Tax-Free Wisconsin Fund seeks to
provide a high level of current income exempt from federal income tax and the
Wisconsin personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Colorado Fund seeks to provide a high level
of current income exempt from federal income tax and the Colorado personal
income tax, consistent with the preservation of capital.
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Aggressive Growth Fund seeks long-term capital appreciation, which the
Fund attempts to achieve by investing primarily in equity securities believed to
have the potential for high earnings growth. Although the Fund, in seeking its
objective, may receive current income from dividends and interest, income is
only an incidental consideration in the selection of the Fund's investments.
Growth Stock Fund has an objective of long-term capital appreciation. The Fund
seeks to achieve its objective from equity securities diversified among
individual companies and industries. Tax-Efficient Equity Fund seeks to obtain
for taxable investors a high total return on an after-tax basis. The Fund will
attempt to achieve this objective by seeking to provide a high long-term
after-tax total return through managing its portfolio in a manner that will
defer the realization of accrued capital gains and minimize dividend income.
Delaware-Voyageur Tax-Free Minnesota Fund seeks to provide a high level
of current income exempt from federal income tax and the Minnesota personal
income tax, consistent with the preservation of capital. Delaware-Voyageur
Tax-Free North Dakota Fund seeks to provide a high level of current income
exempt from federal income tax and the North Dakota personal income tax,
consistent with the preservation of capital.
For more complete information about any of the funds in the Delaware
Investments family, including charges and expenses, you can obtain a prospectus
from the Distributor. Read it carefully before you invest or forward funds.
Each of the summaries above is qualified in its entirety by the
information contained in each fund's prospectus(es).
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GENERAL INFORMATION
Delaware furnishes investment management services to The Large-Cap
Value Equity, The Mid-Cap Growth Equity, The Intermediate Fixed Income, The
Aggregate Fixed Income, The Limited-Term Maturity, The Small/Mid-Cap Value
Equity, The Real Estate Investment Trust, The High-Yield Bond, The Diversified
Core Fixed Income, The Asset Allocation, The Small-Cap Growth Equity and The
Growth and Income Portfolios. Delaware International furnishes similar services
to The International Equity, The International Mid- Cap Sub, The Labor Select
International Equity, The Global Fixed Income, The International Fixed Income,
The Emerging Markets and The Global Equity Portfolios and also serves as
sub-adviser to The Diversified Core Fixed Income Portfolio. Delaware and
Delaware International also provide investment management services to certain of
the other funds in the Delaware Investments family. While investment decisions
of the Portfolios are made independently from those of the other funds and
accounts, investment decisions for such other funds and accounts may be made at
the same time as investment decisions for the Portfolios.
Delaware or Delaware International also manages the investment options
for Delaware Medallion (SM) III Variable Annuity. Medallion is issued by
Allmerica Financial Life Insurance and Annuity Company (First Allmerica
Financial Life Insurance Company in New York and Hawaii). Delaware Medallion
offers various investment series ranging from domestic equity funds,
international equity and bond funds and domestic fixed income funds. Each
investment series available through Medallion utilizes an investment strategy
and discipline the same as or similar to one of the Delaware Investments mutual
funds available outside the annuity. See Delaware Group Premium Fund, Inc.,
above.
Access persons and advisory persons of the Delaware Investments funds,
as those terms are defined in SEC Rule 17j-1 under the 1940 Act, who provide
services to Delaware, Delaware International or their affiliates, are permitted
to engage in personal securities transactions subject to the exceptions set
forth in Rule 17j-1 and the following general restrictions and procedures: (1)
certain blackout periods apply to personal securities transactions of those
persons; (2) transactions must receive advance clearance and must be completed
on the same day as the clearance is received; (3) certain persons are prohibited
from investing in initial public offerings of securities and other restrictions
apply to investments in private placements of securities; (4) opening positions
may only be closed-out at a profit after a 60-day holding period has elapsed;
and (5) the Compliance Officer must be informed periodically of all securities
transactions and duplicate copies of brokerage confirmations and account
statements must be supplied to the Compliance Officer.
The Distributor acts as national distributor for each Portfolio and for
the other mutual funds in the Delaware Investments family. As previously
described, prior to January 3, 1995, DDI served as the national distributor for
the Portfolios' shares.
The Transfer Agent, an affiliate of Delaware and Delaware
International, acts as shareholder servicing, dividend disbursing and transfer
agent for the Portfolios and for the other mutual funds in the Delaware
Investments family. The Transfer Agent's compensation for providing services to
the Portfolios of Pooled Trust, Inc. (other than The Real Estate Investment
Trust Portfolio effective October 14, 1997) is $25,000 annually. The Transfer
Agent will bill, and Pooled Trust, Inc. (in the case of The International
Mid-Cap Sub Portfolio, Delaware International) will pay, such compensation
monthly allocated among the current Portfolios (other than The Real Estate
Investment Trust Portfolio) based on the relative percentage of assets of each
Portfolio at the time of billing and adjusted appropriately to reflect the
length of time a particular Portfolio is in operation during any billing period.
The Transfer Agent is paid a fee by The Real Estate Investment Trust Portfolio
for providing these services consisting of an annual per account charge of $5.50
plus transaction
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charges for particular services according to a schedule. The Transfer Agent is
paid a fee by The Asset Allocation Portfolio for providing these services
consisting of an annual per account charge of $11.00 plus transaction charges
for particular services according to a schedule. Compensation is fixed each year
and approved by the Board of Directors/Trustees, including a majority of the
disinterested directors. The Transfer Agent also provides accounting services to
the Portfolios. Those services include performing all functions related to
calculating each Portfolio's net asset value and providing all financial
reporting services, regulatory compliance testing and other related accounting
services. For its services, the Transfer Agent is paid a fee based on total
assets of all funds in the Delaware Investments family for which it provides
such accounting services. Such fee is equal to 0.25% multiplied by the total
amount of assets in the complex for which the Transfer Agent furnishes
accounting services, where such aggregate complex assets are $10 billion or
less, and 0.20% of assets if such aggregate complex assets exceed $10 billion.
The fees are charged to each fund, including the Portfolios, on an aggregate
pro-rata basis. The asset-based fee payable to the Transfer Agent is subject to
a minimum fee calculated by determining the total number of investment
portfolios and associated classes.
Custody Arrangements
The Chase Manhattan Bank ("Chase"), 4 Chase Metrotech Center,
Brooklyn, NY 11245 serves as custodian for each Portfolio. As custodian, Chase
maintains a separate account or accounts for a Portfolio; receives, holds and
releases portfolio securities on account of a Portfolio; receives and disburses
money on behalf of a Portfolio; and collects and receives income and other
payments and distributions on account of a Portfolio's portfolio securities.
With respect to foreign securities, Chase makes arrangements with
subcustodians who were approved by the directors/trustees of Pooled Trust, Inc.
or, as applicable, Foundation Funds in accordance with Rule 17f-5 of the 1940
Act. In the selection of foreign subcustodians, the directors consider a number
of factors, including, but not limited to, the reliability and financial
stability of the institution, the ability of the institution to provide
efficiently the custodial services required for the Portfolios, and the
reputation of the institutions in the particular country or region.
Capitalization
Pooled Trust, Inc. has a present authorized capitalization of two
billion shares of capital stock with a $.01 par value per share. The Board of
Directors has allocated fifty million shares to each Portfolio.
Foundation Funds currently consists four portfolios of shares.
Foundation Funds has an unlimited authorized number of shares of beneficial
interest with no par value allocated to each portfolio.
While all shares have equal voting rights on matters affecting Pooled
Trust, Inc. or Foundation Funds, as applicable, each Portfolio would vote
separately on any matter which affects only that Portfolio, such as any change
in its own investment objective and policy or action to dissolve a Portfolio and
as otherwise prescribed by the 1940 Act. Shares of each Portfolio have a
priority in that Portfolios' assets, and in gains on and income from the
portfolio of that Portfolio. Shares have no preemptive rights, are fully
transferable and, when issued, are fully paid and nonassessable.
Effective December 24, 1997, the name of The Defensive Equity
Small/Mid-Cap Portfolio was changed to The Mid-Cap Value Equity Portfolio, the
name of The Fixed Income Portfolio was changed to The Intermediate Fixed Income
Portfolio and the name of The Defensive Equity Portfolio was changed to The
Large-Cap Value Equity Portfolio.
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Noncumulative Voting
Portfolio shares have noncumulative voting rights which means that the
holders of more than 50% of the shares of Pooled Trust, Inc. voting for the
election of directors can elect all the directors if they choose to do so, and,
in such event, the holders of the remaining shares will not be able to elect any
directors.
This Statement of Additional Information does not include all of the
information contained in the Registration Statement which is on file with the
Securities and Exchange Commission.
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FINANCIAL STATEMENTS
Ernst & Young LLP serves as independent auditors for Delaware Pooled
Trust, Inc. ("Pooled Trust, Inc.") and, in its capacity as such, audits the
financial statements contained in Pooled Trust, Inc.'s Annual Reports. The Real
Estate Investment Trust, The Large-Cap Value Equity (formerly known as The
Defensive Equity), The Mid-Cap Growth Equity (formerly known as The Aggressive
Growth Portfolio), The International Equity, The Global Fixed Income, The Labor
Select International Equity, The Intermediate Fixed Income (formerly known as
The Fixed Income ), The High-Yield Bond, The Emerging Markets, The Global Equity
and The International Fixed Income Portfolios' Statements of Net Assets,
Statements of Operations, Statements of Changes in Net Assets, Financial
Highlights and Notes to Financial Statements, and The Limited-Term Maturity
Portfolio's Statement of Assets and Liabilities and Notes to Financial
Statements as well as the reports of Ernst & Young LLP for the fiscal year ended
October 31, 1997 are included in Pooled Trust, Inc.'s Annual Reports to
shareholders. The financial statements, financial highlights, the notes relating
thereto and the reports of Ernst & Young LLP listed above are incorporated by
reference from the Annual Reports into this Statement of Additional Information.
Ernst & Young LLP serves as the independent auditors for Delaware Group
Foundation Funds and, in its capacity as such, will audit the annual financial
statements of The Asset Allocation Portfolio.
Unaudited financial statements and the notes relating thereto for each
Portfolio other than The International Mid-Cap Sub Portfolio, The Asset
Allocation Portfolio, The Small-Cap Growth Equity Portfolio and The Growth and
Income Portfolio are incorporated by reference from the Semi-Annual Reports into
this Statement of Additional Information.
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