<PAGE>
SUPPLEMENT TO PROSPECTUS DATED DECEMBER 24, 1997
- --------------------------------------------------------------------------------
DELAWARE POOLED TRUST, INC. December 24, 1997
The following supplements the information in the section of the Prospectus
entitled Performance Information.
COMPARATIVE PERFORMANCE
- --------------------------------------------------------------------------------
The Emerging Markets Portfolio of Delaware Pooled Trust, Inc. ("The
Emerging Markets Portfolio of DPT") commenced operations on April 14, 1997.
Delaware International Advisers Ltd. ("Delaware International"), the investment
adviser to The Emerging Markets Portfolio of DPT, also serves as investment
manager to Delaware Group's Emerging Markets Fund (the "G&I Emerging Markets
Fund"), which is an investment series of Delaware Group Global & International
Funds, Inc. Shares of the G&I Emerging Markets Fund were initially offered to
the public on June 10, 1996. Except as set forth below, The Emerging Markets
Portfolio of DPT and the G&I Emerging Markets Fund are managed with
substantially similar investment objectives, policies and strategies.
For the period from the commencement of its operations on April 14, 1997
through October 31, 1997, The Emerging Markets Portfolio of DPT has achieved the
performance set forth below. The Institutional Class of the G&I Emerging Markets
Fund has achieved the performance set forth below for the period from April 14,
1997 through October 31, 1997, the one-year period ended October 31, 1997, and
the period from the commencement of operations through October 31, 1997.
Performance information for the Morgan Stanley Capital International Emerging
Markets Free Index, an unmanaged index, has also been provided below.
The performance of the G&I Emerging Markets Fund is being presented to provide
investors with additional information on which to base their investment
decision. Emerging markets investment performance can be volatile and should be
evaluated over a multi-year period. The performance of the G&I Emerging Markets
Fund is not the performance of The Emerging Markets Portfolio of DPT and should
not be considered as a substitute for the performance of The Emerging Markets
Portfolio of DPT. The performance of the G&I Emerging Markets Fund should not be
considered indicative of the past or future performance of The Emerging Markets
Portfolio of DPT.
The charts on the following pages contain certain additional performance
information. For a description of the differences between The Emerging Markets
Portfolio of DPT and the G&I Emerging Markets Fund, see Differences Between
Funds, below.
<PAGE>
The Emerging G&I MSCI
Markets Emerging Emerging
Portfolio Markets Markets
of DPT(1)(2) Fund(1)(3) Free Index(4)
4/14/97-10/31/97 4/14/97-10/31/97 4/30/97-10/31/97
(8.00%) (5.57%) (17.54%)
Lifetime 5.66% One Year (8.48%)
One Year 9.07% 6/30/96-10/31/97
(10.81%)
1 Return and share value fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. Past performance is not a
guarantee of future results.
2 The performance presented is the aggregate total return for The Emerging
Markets Portfolio of DPT for the period from the commencement of operations
on April 14, 1997 through October 31, 1997. During the period presented,
Delaware International voluntarily waived its investment management fee
and/or paid fund expenses to the extent necessary to limit total fund
operating expenses to no more than 1.55%.
3 The performance presented is the aggregate total return for the period from
April 14, 1997 through October 31, 1997, and average annual total return
for the one-year and lifetime periods, for the G & I Emerging Markets Fund
Institutional Class, which is available only to certain eligible investors.
The G & I Emerging Markets Fund also offers an A Class, B Class and C
Class. The performance of the A Class, B Class, and C Class varies from the
performance of the Institutional Class due to varying expense structures.
During the periods presented, Delaware International voluntarily waived its
management fee and/or paid fund expenses to the extent necessary to limit
total fund operating expenses to no more than 1.70%.
4 The performance presented is for the Morgan Stanley Capital International
Emerging Markets Free Index, an unmanaged index of emerging market stocks.
Performance of the index has not been adjusted to reflect fees or expenses.
One year performance is for the one-year period ended October 31, 1997.
Performance for the period from 4/30/97 through 10/31/97 is the aggregate
total return.
MONTHLY RESULTS
G&I EMERGING MARKETS FUND JUNE 30, 1997 - OCTOBER 31, 1997
MONTHLY RETURN
<PAGE>
G&I
The Emerging
Emerging G&I Markets MSCI
Markets Emerging Fund EMF
Portfolio Markets Relative Index
of DPT Fund Return* Return
7/96 (4.18%) 2.8% (6.53%)
8/96 4.36% 1.8% 2.56%
9/96 0.30% (0.6%) 0.87%
10/96 (1.79%) 0.9% (2.67%)
11/96 0.91% (0.8%) 1.68%
12/96 1.62% 1.2% 0.45%
1/97 9.55% 2.6% 6.82%
2/97 4.27% 0.0% 4.28%
3/07 (2.00%) 0.6% (2.63%)
4/97 2.84% 2.7% 0.18%
5/97 4.55% 4.06% 1.2% 2.86%
6/97 5.87% 6.15% 0.8% 5.35%
7/97 0.36% 1.17% (0.3%) 1.49%
8/97 (8.37%) (7.50%) 6.0% (12.72%)
9/97 4.86% 4.43% 1.6% 2.77%
10/97 (14.74%) (14.41%) 2.4% (16.41%)
7/96 8/96 9/96 10/96 11/96 12/96
DPT Portfolio
G&I Fund (4.18) 4.36 0.30 (1.79) 0.91 1.62
Index (6.53) 2.56 0.87 (2.67) 1.68 0.45
Relative 2.80 1.80 (0.60) 0.90 (0.80) 1.20
1/97 2/97 3/97 4/97 5/97 6/97
DPT Portfolio 4.55% 5.87%
G&I Fund 9.55 4.27 (2.00) 2.84 4.06 6.15
Index 6.82 4.28 (2.63) 0.18 2.86 5.35
Relative 2.60 0.00 0.60 2.70 1.20 0.80
7/97 8/97 9/97 10/97
DPT Portfolio 0.36 (8.37) 4.86 (14.74)
G&I Fund 1.17 (7.50) 4.43 (14.41)
Index 1.49 (12.72) 2.77 (16.41)
Relative (0.30) 6.00 1.60 2.40
*Fund relative return is the geometric difference between the monthly
performance of the Delaware Group Global and International Funds, Inc. Emerging
Markets Fund (the G&I Emerging Markets Fund") Institutional Class, net of
management fees and
<PAGE>
expenses, and the Morgan Stanley Capital International Emerging Markets Free
Index, an unmanaged index of emerging markets stocks. For example (1.000 -
0.0418) / (1.000 - 0.0653) = (1.000 + 0.0280). Performance of the Index has not
been adjusted to reflect management fees or other expenses. Past performance may
not be indicative of future results.
DEFENSIVE CHARACTERISTICS(1)
JUNE 30, 1997 - OCTOBER 31, 1997
G&I
EMERGING MSCI US CONSUMER
MARKETS EMF PRICE
FUND(2) INDEX(3) INDEX(5)
BULL MARKET PERFORMANCE
(UNANNUALIZED)
11 MONTHS
G&I
EMERGING MSCI
MARKETS EMF
FUND INDEX
47.2% 33.3%
BEAR MARKET PERFORMANCE
(UNANNUALIZED)
5 MONTHS
G&I
EMERGING MSCI
MARKETS EMF
FUND INDEX
(27.0%) (35.6%)
TOTAL PERFORMANCE
(ANNUALIZED)(4)
16 MONTHS
G&I
EMERGING MSCI US CONSUMER
MARKETS EMF PRICE
FUND INDEX INDEX
<PAGE>
5.5% (10.8%) 3.4%
1. A Bull Market month is defined as one in which the MSCI EMF Index showed a
positive US dollar return, and a Bear Market month as one in which the MSCI
EMF Index showed a negative US dollar return. Bull Market months were
August, September, November and December, 1996 and January, February,
April, May, June, July and September, 1997. Bear Market months were July
and October, 1996 and March, August and October, 1997. Past performance may
not be indicative of future results.
2. Performance of Delaware Group Global & International Funds, Inc. Emerging
Markets Fund (the "G&I Emerging Markets Fund) Institutional Class, net of
management fees and expenses.
3. Morgan Stanley Capital International Emerging Markets Free Index is an
unmanaged index of emerging markets stocks. The performance of the Index
has not been adjusted to reflect management fees or other expenses.
4. Total performance is calculated as the compound product of the Bull Market
period and the Bear Market period. For example, the G&I Emerging Markets
Fund performance is calculated as follows: (1.000 + 0.472) x (1.000 -
0.270) = (1.000 + 0.074) or 5.5% annualized.
5. Source: United States Department of Labor.
GROWTH OF $10,000 INVESTMENT
DISTRIBUTIONS REINVESTED JUNE 10, 1996 - OCTOBER 31, 1997
LIPPER
G&I EMERGING
EMERGING MARKETS MSCI
MARKETS FUND EMF
FUND(1) AVERAGE(2) INDEX(3)
6/10/96 10,000 10,000 10,000
7/96 9,582 9,408 9,317
8/96 10,000 9,663 9,556
9/96 10,030 9,726 9,639
10/96 9,850 9,476 9,381
11/96 9,940 9,685 9,539
12/96 10,101 9,853 9,582
1/97 11,066 10,643 10,235
2/97 11,538 11,036 10,673
3/97 11,307 10,803 10,393
<PAGE>
4/97 11,628 10,867 10,411
5/97 12,101 11,305 10,709
6/97 12,845 11,926 11,282
7/97 12,995 12,282 11,450
8/97 12,020 11,171 9,994
9/97 12,553 11,619 10,271
10/97 10,744 9,849 8,585
Charts assumes $10,000 invested on June 10, 1996 and includes the effect of the
reinvestment of all dividends and capital gains.
1. Performance of Delaware Group Global & International Funds, Inc. Emerging
Markets Fund (the "G&I Emerging Markets Fund) Institutional Class, net of
management fees and expenses. Past performance may not be indicative of
future results.
2. Performance of the Lipper Emerging Markets Equity Fund Universe consisting
of 112 funds during the measurement period. Multiple share classes are
combined and regional or country funds are excluded.
3. Morgan Stanley Capital International Emerging Markets Free Index, an
unmanaged index of emerging markets stocks. The performance of the Index
has not been adjusted to reflect management fees or other expenses.
DIFFERENCES BETWEEN FUNDS
- --------------------------------------------------------------------------------
The investment objective of The Emerging Markets Portfolio of DPT is
identical to the investment objective of the G&I Emerging Markets Fund and the
two funds invest in substantially similar securities. Investment strategies for
the two funds will be substantially similar; however, because of the nature of
investors in The Emerging Markets Portfolio of DPT, cash flows can be expected
to be substantial and irregular, while cash flows in the G&I Emerging Markets
Fund tend to be more regular and in smaller amounts. The differences in cash
flows may affect the timing of investment decisions, the relative speed with
which such decisions may be implemented, the investments held by each Fund from
time to time, and, consequently, performance. In addition, investments may be
made for each fund during varying market conditions.
Shares of each of The Emerging Markets Portfolio of DPT and the G&I
Emerging Markets Fund Institutional Class may be purchased and sold without the
imposition of a sales charge; however, investors in The Emerging Markets
Portfolio of DPT are subject to a purchase reimbursement fee and a redemption
reimbursement fee equal in each case to 0.75% (as a percentage of the dollar
amount purchased or redeemed). The reimbursement
<PAGE>
fees, which are paid directly to The Emerging Markets Portfolio of DPT, are
designed to reflect an approximation of the brokerage and related transaction
costs associated with the investment of an investor's purchase amount or the
disposition of assets to meet redemptions, and to limit the extent to which The
Emerging Markets Portfolio of DPT and its existing shareholders would have to
bear such costs. The G&I Emerging Markets Fund does not assess reimbursement
fees; therefore, all transaction costs associated with purchases and redemptions
are borne by the G&I Emerging Markets Fund.
After giving effect to voluntary expense limitations described in each
fund's prospectus, the total operating expenses of The Emerging Markets
Portfolio of DPT during the current fiscal year are not expected to exceed 1.55%
of the average net assets of the Portfolio, compared to 1.70% for the
Institutional Class of the G&I Emerging Markets Fund. A component of the total
operating expenses is the investment management fee payable to Delaware
International, which is currently subject to a limit of 1.00% for The Emerging
Markets Portfolio of DPT compared to a maximum fee of 1.25% for the G&I Emerging
Markets Fund.
<PAGE>
DELAWARE POOLED TRUST
Delaware Pooled Trust, Inc. ("Fund") is an open-end management investment
company. In this Prospectus, the Fund offers 16 portfolios (collectively, the
"Portfolios," or, individually, a "Portfolio"), which provide no-load
investment alternatives for institutional clients and high net-worth
individuals. Investors may make investments in only one or in more than one of
the following Portfolios:
<TABLE>
<S> <C>
EQUITY ORIENTED FIXED-INCOME ORIENTED
The Aggressive Growth Portfolio The Aggregate Fixed Income Portfolio
The Large-Cap Value Equity Portfolio The Diversified Core Fixed Income Portfolio
(formerly named The Defensive Equity Portfolio) The Intermediate Fixed Income Portfolio (formerly named
The Emerging Markets Portfolio The Fixed Income Portfolio)
The Global Equity Portfolio The Global Fixed Income Portfolio
The International Equity Portfolio The High-Yield Bond Portfolio
The Labor Select International Equity Portfolio The International Fixed Income Portfolio
The Real Estate Investment Trust Portfolio The Limited-Term Maturity Portfolio
The Real Estate Investment Trust Portfolio II
The Small/Mid-Cap Value Equity Portfolio (formerly named
The Defensive Equity Small/Mid-Cap Portfolio)
</TABLE>
The Fund is designed to meet the investment needs of discerning institutional
investors and high net-worth individuals who desire experienced investment
management and place a premium on personal service.
The High-Yield Bond Portfolio invests up to 100% and The Diversified Core Fixed
Income Portfolio invest up to 30% of their respective assets in lower rated
fixed-income securities, commonly known as "junk bonds," which involve greater
risks, including default risks, than higher rated fixed-income securities.
Purchasers should carefully assess these risks before investing in The
High-Yield Bond Portfolio and The Diversified Core Fixed Income Portfolio. See
"INVESTMENT OBJECTIVES, POLICIES AND RISK CONSIDERATIONS" and "ADDITIONAL
INVESTMENT INFORMATION - HIGH-YIELD, HIGH RISK SECURITIES."
This Prospectus is designed to set forth concisely the information about the
Fund that a prospective client should know before investing and it should be
retained for future reference. Additional information about the Fund is
contained in a Statement of Additional Information dated December 24, 1997,
as it may be amended from time to time. That information is incorporated
herein by reference and is available without charge upon request from the
Fund:
<PAGE>
(DPT-I)
Delaware Pooled Trust, Inc.
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
1-800-231-8002
The Real Estate Investment Trust Portfolio offers five classes of shares. This
Prospectus relates only to The Real Estate Investment Trust Portfolio class,
which is being offered for sale to investors beginning November 3, 1997. The
other classes are subject to sales charges and/or other expenses, which may
affect their performance. To obtain the Prospectus that relates to such other
classes write to Delaware Distributors, L.P. at 1818 Market Street,
Philadelphia, PA 19103 or call 1-800-523-4640 for Class A, B and C shares or
1-800-828-5052 for institutional class shares. References to The Real Estate
Investment Trust Portfolio in this Prospectus shall mean The Real Estate
Investment Trust Portfolio class, unless otherwise noted. The SEC also maintains
a Website (http://www.sec.gov) that contains Part B, material we incorporated by
reference, and other information regarding registrants that electronically file
with the SEC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page Page
<S> <C> <C> <C>
Fund Expenses Additional Investment Information
Financial Highlights Investment Limitations
Delaware Pooled Trust Summary Management of the Fund
Fund Officers and Portfolio Managers Shareholder Services
Risk Factors Dividends and Capital Gains
Investment Objectives, Policies Distributions
and Risk Considerations Taxes
Purchase of Shares Valuation of Shares
Redemption of Shares Portfolio Transactions
Performance Information
General Information
Appendix A--Ratings
</TABLE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is:
December 24, 1997
2
<PAGE>
(DPT-I)
FUND EXPENSES
The following tables illustrate all expenses and fees that a shareholder of
the Fund can expect to incur. The purpose of the tables is to assist the
investor in understanding the various expenses that an investor in the Fund
will bear directly or indirectly.
With respect to The Aggregate Fixed Income Portfolio, The Diversified Core Fixed
Income Portfolio, The Limited-Term Maturity Portfolio, The International Fixed
Income Portfolio, The Small/Mid-Cap Value Equity Portfolio, The Global Equity
Portfolio, The Emerging Markets Portfolio and The Real Estate Investment Trust
Portfolio II, the amounts set forth below corresponding to the caption "Other
Expenses" are based on estimates for the initial fiscal year in which they
conduct operations. For The Real Estate Investment Trust Portfolio, "Other
Expenses" represent an estimate of the expenses anticipated for the initial
fiscal year in which The Real Estate Investment Trust Portfolio class is to be
offered. That class of shares was made available for the first time on October
14, 1997. The estimate for the new class' expenses is based on the actual
results for the most recently completed fiscal year for the only class offered
by the Portfolio prior to October 14, 1997. See "FINANCIAL HIGHLIGHTS." With
respect to The Large-Cap Value Equity Portfolio, The Aggressive Growth
Portfolio, The International Equity Portfolio, The Intermediate Fixed Income
Portfolio, The High-Yield Bond Portfolio, The Global Fixed Income Portfolio and
The Labor Select International Equity Portfolio, the amounts set forth below
corresponding to the caption "Other Expenses" are based on actual results for
the Portfolios' most recently completed fiscal year.
<TABLE>
<CAPTION>
===================================================================================================================================
The
The Inter- The Inter-
Shareholder Large- The mediate The national
Transaction Cap Value Aggressive The Inter- Fixed Limited- Fixed
Expenses Equity Growth national Income Term The Global Income
Portfolio Portfolio Equity Portfolio Maturity Fixed Portfolio
Portfolio Portfolio Income
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales Charge
Imposed on
Purchases None None None None None None None
- -----------------------------------------------------------------------------------------------------------------------------------
Sales Charge
Imposed on
Reinvested None None None None None None None
Dividends
- -----------------------------------------------------------------------------------------------------------------------------------
Redemption Fees None None None None None None None
- -----------------------------------------------------------------------------------------------------------------------------------
Exchange Fees None None None None None None None
===================================================================================================================================
</TABLE>
3
<PAGE>
(DPT-I)
<TABLE>
<CAPTION>
==========================================================================================================================
Annual Fund
Operating The
Expenses (as The The The Inter- The Limited- The Global The
a percentage Large-Cap Aggressive International mediate Term Fixed International
of average Value Equity Growth Equity Fixed Maturity Income Fixed Income
net assets) Portfolio Portfolio Portfolio Income Portfolio Portfolio Portfolio
Portfolio
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment Advisory
Fees After Voluntary 0.54%* 0.33%* 0.75%* 0.09%* 0.22%* ^ 0.45%* ^ 0.24%*
Waiver and Payment
- --------------------------------------------------------------------------------------------------------------------------
12b-1 Fees None None None None None None None
- --------------------------------------------------------------------------------------------------------------------------
Other Expenses 0.12% 0.60% 0.18% 0.44% ^ 0.21% ^ 0.15% ^ 0.36%
----- ----- ------- ----- ------- -------
- --------------------------------------------------------------------------------------------------------------------------
Total Fund Operating
Expenses After
Voluntary Waiver 0.66%* 0.93%* 0.93%* 0.53%* 0.43%* 0.60%* 0.60%*
and Payment ===== ===== ===== ===== ===== ===== =====
==========================================================================================================================
</TABLE>
* The above information for The ^ Large-Cap Value Equity Portfolio, The
Aggressive Growth Portfolio, The International Equity Portfolio, The
Intermediate Fixed Income Portfolio and The Global Fixed Income Portfolio
reflects the expenses these Portfolios incurred for the Fund's fiscal
year ended October 31, 1997. For The Limited-Term Maturity Portfolio,
which has not yet commenced operations, "Other Expenses" are based on
estimates for its first full year of operations. The International
Fixed Income Portfolio did not sell shares publicly until April 11, 1997;
consequently, "Other Expenses" for this Portfolio are based on estimated
amounts derived from The Global Fixed Income Portfolio assuming the
voluntary waiver of fees in effect.
<PAGE>
With respect to The Large-Cap Value Equity Portfolio, The Aggressive Growth
Portfolio, The Intermediate Fixed Income Portfolio and The Limited-Term
Maturity Portfolio, Delaware Investment Advisers has elected voluntarily to
waive that portion, if any, of the annual Investment Advisory Fees payable
by a Portfolio and to pay a Portfolio's expenses to the extent necessary to
ensure that "Total Fund Operating Expenses" of that Portfolio (exclusive of
taxes, interest, brokerage commissions and extraordinary expenses) do not
exceed, as a percentage of average net assets, on an annualized basis,
0.68%, 0.93%, 0.53% and 0.43%, respectively, during the period from
November 1, 1997 through April 30, 1998. In the absence of such voluntary
waivers and payments, "Investment Advisory Fees" (as a percentage of net
assets) would have been or are estimated to be, 0.55%, 0.80%, 0.40% and
0.30%, respectively, and "Total Fund Operating Expenses" (as a percentage
of average net assets) would have been or are estimated to be 0.67%, 1.40%,
0.84% and 0.51%, respectively, for The Large-Cap Value Equity, The
Aggressive Growth, The Intermediate Fixed Income and The Limited-Term
Maturity Portfolios.
Similarly, Delaware International Advisers Ltd. ("Delaware International"),
the investment adviser to The International Equity Portfolio, The Global
Fixed Income Portfolio and The International Fixed Income Portfolio, has
elected voluntarily to waive that portion, if any, of its annual Investment
Advisory Fees and to pay the Portfolio's expenses to the extent necessary
to ensure that the expenses of that Portfolio (exclusive of taxes,
interest, brokerage commissions and extraordinary expenses) do not exceed,
as a percentage of average net assets, on an annualized basis, 0.96%, 0.60%
and 0.60%, respectively, during the period from November 1, 1997 through
April 30, 1998. In the absence of such voluntary waivers and payments,
"Investment Advisory Fees" (as a percentage of net assets) would have been
0.50% and 0.50%, respectively, and "Total Fund Operating Expenses" (as a
percentage of average net assets) would have been 0.65%, and 0.86%,
respectively for The Global Fixed Income and The International Fixed Income
Portfolios. The actual "Total Operating Expenses" of The International
Equity Portfolio were 0.93% for the fiscal year ended October 31, 1997 and
therefore the voluntary waiver and payment noted above was not triggered.
4
<PAGE>
(DPT-I)
<TABLE>
<CAPTION>
==================================================================================================================================
The
Small/ The Labor The Real The Real The The
Mid-Cap Select Estate Estate The Aggregate The Diversified
Shareholder Value International Investment Investment The High- Global Fixed Emerging Core Fixed
Transaction Equity Equity Trust Trust Yield Bond Equity Income Markets Income
Expenses Portfolio Portfolio Portfolio Portfolio II Portfolio Portfolio Portfolio Portfolio Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sales Charge
Imposed on None None None None None None None None None
Purchases
- ----------------------------------------------------------------------------------------------------------------------------------
Sales Charge
Imposed on None None None None None None None None None
Reinvested
Dividends
- ----------------------------------------------------------------------------------------------------------------------------------
Purchase
Reimbursement None None None None None 0.40% None 0.75% None
Fees*
- ----------------------------------------------------------------------------------------------------------------------------------
Redemption
Reimbursement None None None None None 0.30% None 0.75% None
Fees*
- ----------------------------------------------------------------------------------------------------------------------------------
Exchange Fees None None None None None None None None None
==================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
===================================================================================================================================
The
Annual Fund Small/ The Labor The Real The Real The The
Operating Mid-Cap Select Estate Estate The Aggregate The Diversified
Expenses (as a Value International Investment Investment The High- Global Fixed Emerging Core Fixed
percentage of Equity Equity Trust Trust Yield Bond Equity Income Markets Income
average net assets) Portfolio Portfolio Portfolio Portfolio II Portfolio Portfolio Portfolio Portfolio Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment
Advisory Fees
After Voluntary 0.57%** 0.55%** 0.19%** 0.00%** 0.03%** 0.72%** 0.22%**
Waiver and 0.35%** 0.55%**
Payment
- ----------------------------------------------------------------------------------------------------------------------------------
12b-1 Fees None None None None None None None None None
- ----------------------------------------------------------------------------------------------------------------------------------
Other Expenses 0.54% 0.32% 0.31% 0.31% 0.40% 0.96% 0.50% 0.83% 0.35%
- ----------------------------------------------------------------------------------------------------------------------------------
Total Fund
Operating
Expenses After 0.89%** 0.86%** 0.86%** 0.59%** 0.96%** 0.53%** 1.55%** 0.57%**
Voluntary 0.89%**
Waiver and
Payment
===================================================================================================================================
</TABLE>
<PAGE>
* A purchase reimbursement fee and a redemption reimbursement fee each
equal to 0.75% (as a percentage of the dollar amount purchased or
redeemed, as the case may be) are assessed against investors in shares of
The Emerging Markets Portfolio. For The Global Equity Portfolio those
fees are 0.40% for purchases and 0.30% for redemptions. Both fees are
paid to the Portfolio that assess them. These fees are designed to
reflect an approximation of the brokerage and related transaction costs
associated with the investment of an investor's purchase amount or the
disposition of assets to meet redemptions, and to limit the extent to
which The Emerging Markets Portfolio or The Global Equity Portfolio (and,
indirectly, the Portfolio's existing shareholders) would have to bear
such costs. In lieu of the purchase reimbursement fee, investors in The
Global Equity Portfolio may elect to invest by a contribution of
securities or follow procedures that have the same economic effect as
such a contribution. See "HOW TO INVEST," "PURCHASE OF SHARES," "HOW TO
REDEEM," "REDEMPTION OF SHARES" and "PURPOSE OF REIMBURSEMENT FEES -- THE
EMERGING MARKETS AND THE GLOBAL EQUITY PORTFOLIOS."
5
<PAGE>
(DPT-I)
** The above information for The Labor Select International Equity Portfolio
and The High-Yield Bond Portfolio reflects the expenses the Portfolios
incurred for the Fund's fiscal year ended October 31, 1997. Since The
Small/Mid-Cap Value Equity Portfolio, The Real Estate Investment Trust
Portfolio II, The Aggregate Fixed Income Portfolio and The Diversified
Core Fixed Income Portfolio have not commenced operations as of October
31, 1997 (the Fund did not commence selling shares of The Real Estate
Investment Trust Portfolio until November 3, 1997; the Fund did not
commence selling shares of The Global Equity Portfolio until October 15,
1997; and The Emerging Markets Portfolio did not sell shares until April
14, 1997), "Other Expenses" is based on estimated amounts each Portfolio
expects to pay during their first full fiscal year of operations. For The
Real Estate Investment Trust Portfolio and The Real Estate Investment
Trust Portfolio II, "Other Expenses" are estimates based on the expenses
incurred by the REIT Fund A Class, absent 12b-1 expenses, which is the
original class of shares of The Real Estate Investment Trust Portfolio
for the Fund's fiscal year ended October 31, 1997. Such original class
of shares, like The Real Estate Investment Trust Portfolio class being
offered in this Prospectus, carried no front-end sales charge and was not
subject to Rule 12b-1 expenses. Effective October 14, 1997, that original
class was redesignated REIT Fund A Class, which is offered by a
separate prospectus.
With respect to The Small/Mid-Cap Value Equity Portfolio, The High-Yield
Bond Portfolio, The Aggregate Fixed Income Portfolio and The Diversified
Core Fixed Income Portfolio, Delaware Investment Advisers has elected
voluntarily to waive that portion, if any, of the annual Investment
Advisory Fee payable by each such Portfolio and to pay such Portfolio's
expenses to the extent necessary to ensure that "Total Operating Expenses"
of that Portfolio (exclusive of taxes, interest, brokerage commissions and
extraordinary expenses) do not exceed, as a percentage of average net
assets, on an annualized basis, 0.89%, 0.59%, 0.53% and 0.57%,
respectively, during the period from the commencement of the public
offering of such Portfolio through April 30, 1998. With respect to The Real
Estate Investment Trust Portfolio and The Real Estate Investment Trust
Portfolio II, the voluntary waiver and commitment to pay expenses would
limit the relevant expenses to 0.86% through April 30, 1998. The expense
cap for The Real Estate Investment Trust Portfolio through October 14, 1997
was 0.89%. In the absence of such voluntary waivers and payments,
"Investment Advisory Fees" (as a percentage of average net assets) would be
0.75%, 0.45%, 0.75%, 0.40% and 0.43% and "Total Fund Operating Expenses"
(as a percentage of average net assets) would have been or are estimated to
be 1.29%, 0.79%, 1.06%, 0.90% and 0.78%, respectively, for The
Small/Mid-Cap Value Equity Portfolio, The High-Yield Bond Portfolio, The
Real Estate Investment Trust Portfolio II, The Aggregate Fixed Income
Portfolio and The Diversified Core Fixed Income Portfolio; for The Real
Estate Investment Trust Portfolio, "Investment Advisory Fees" (as a
percentage of average daily net assets) are estimated to be 0.75% and"Total
Fund Operating Expenses" are estimated to be 1.23%, based on the original
class' data, adjusted to reflect an anticipated increase in shareholder
service and other expenses.
<PAGE>
Similarly, Delaware International, the investment adviser to The Labor
Select International Equity Portfolio, The Global Equity Portfolio and The
Emerging Markets Portfolio, has elected voluntarily to waive that portion,
if any, of the annual Investment Advisory Fee payable by each such
Portfolio and to pay such Portfolio's expenses to the extent necessary to
ensure that "Total Operating Expenses" of that Portfolio (exclusive of
taxes, interest, brokerage commissions and extraordinary expenses) do not
exceed, as a percentage of average net assets, on an annualized basis,
0.96%, 0.96% and 1.55%, respectively, during the period from the
commencement of the public offering of the Portfolio through April 30,
1998. Separately, with respect to The Emerging Markets Portfolio, Delaware
International has elected voluntarily to limit its annual Investment
Advisory Fee to no more than 1.00% of the Portfolio's average daily net
assets during the period from October 1, 1997 through October 31, 1998. The
effect of the current fee waiver with respect to "Total Operating Expenses"
and the 1.00% fee limitation set forth in the preceding two sentences with
respect to The Emerging Markets Portfolio is that the annual Investment
Advisory Fee paid to Delaware International on behalf of that Portfolio
will be an amount equal to the lesser of 1.00% or the amount necessary to
limit "Total Operating Expenses" of the Portfolio (exclusive of taxes,
interest, brokerage commissions and extraordinary expenses) to no more than
1.55% of average net assets, on an annualized basis. Delaware International
has also voluntarily agreed that the annual Investment Advisory Fee payable
to Delaware International on behalf of The Emerging Markets Portfolio will
not exceed 1.00% unless shareholders of the Portfolio have been notified of
the change to the 1.00% fee limitation at least one year in advance of such
increase. In the absence of such voluntary waivers and payments,
"Investment Advisory Fees" (as a percentage of average net assets) would be
0.75%, 0.75% and 1.20%, respectively, and "Total Fund Operating Expenses"
(as a percentage of average net assets) would have been or are estimated to
be 1.06%, 2.95% and 2.02%, respectively, for The Labor Select International
Equity Portfolio, The Global Equity Portfolio and The Emerging Markets
Portfolio.
6
<PAGE>
(DPT-I)
The following example illustrates the expenses that you would incur on a
$1,000 investment, assuming (1) a 5% annual rate of return, and (2) redemption
at the end of each time period. The following examples also assume the
voluntary waiver of the management fee and/or other payments of expenses by
the investment adviser as discussed in this Prospectus. For The Emerging
Markets and The Global Equity Portfolios, the expenses include the purchase
reimbursement and redemption reimbursement fees payable to the Portfolios.
No other Portfolio charges these fees.
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C> <C>
The Large-Cap Value Equity Portfolio $7 $21 $37 $ 82
The Aggressive Growth Portfolio 9 30 51 114
The International Equity Portfolio 9 30 51 114
The Labor Select International Equity Portfolio 9 28 49 110
The Intermediate Fixed Income Portfolio 5 17 30 66
The High-Yield Bond Portfolio 6 19 33 74
The Limited-Term Maturity Portfolio 4 14 24 54
The Global Fixed Income Portfolio 6 19 33 75
The International Fixed Income Portfolio 6 19 33 75
</TABLE>
<TABLE>
<CAPTION>
1 year 3 years
------ -------
<S> <C> <C>
The Small/Mid-Cap Value Equity Portfolio* $ 9 $28
The Global Equity Portfolio* 17 37
The Real Estate Investment Trust Portfolio** 8 26
The Real Estate Investment Trust Portfolio II** 9 27
The Emerging Markets Portfolio* 31 64
The Aggregate Fixed Income Portfolio* 5 17
The Diversified Core Fixed Income Portfolio* 6 18
</TABLE>
For The Emerging Markets and The Global Equity Portfolios, the only Portfolios
subject to a redemption reimbursement fee, you would pay the following
expenses on the same investment, assuming no redemption:
<TABLE>
<CAPTION>
1 year 3 years
------ -------
<S> <C> <C>
The Emerging Markets Portfolio $23 $56
The Global Equity Portfolio 14 34
</TABLE>
* Assumes net assets of each Portfolio equal to $75 million.
** Based upon the expenses incurred by the original class of shares of
The Real Estate Investment Trust Portfolio , which has been redesignated
REIT Fund A Class of shares, absent front-end sales charges and 12b-1
expenses, for the Fund's fiscal year ended October 31, 1997. REIT Fund A
Class carried no front-end sales charges or Rule 12b-1 distribution
fees through October 14, 1997 and is offered by a separate prospectus.
This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be greater or less than those
shown.
7
<PAGE>
(DPT-I)
FINANCIAL HIGHLIGHTS
The following financial highlights are derived from the financial statements of
Delaware Pooled Trust, Inc. for The Large-Cap Value Equity Portfolio (formerly
The Defensive Equity Portfolio, The Aggressive Growth Portfolio, The
International Equity Portfolio, The Global Fixed Income Portfolio, The Labor
Select International Equity Portfolio, The Real Estate Investment Trust
Portfolio , The Intermediate Fixed Income Portfolio (formerly The Fixed Income
Portfolio), The High-Yield Bond Portfolio, The International Fixed Income
Portfolio, The Emerging Markets Portfolio and The Global Equity Portfolio and
are incorporated by reference into the Statement of Additional Information,
and have been audited by Ernst & Young LLP, independent auditors. The data
should be read in conjunction with the financial statements and related notes.
Further information about the performance of these Portfolios is contained in
their Annual Report.
The Annual Report (which includes related notes and the report of Ernst &
Young LLP) and the Statement of Additional Information may be obtained from
the Fund upon request at no charge.
The Small/Mid-Cap Value Equity Portfolio (formerly The Defensive Equity
Small/Mid-Cap Portfolio), The Limited-Term Maturity Portfolio, The Real Estate
Investment Trust Portfolio II, The Aggregate Fixed Income Portfolio and The
Diversified Core Fixed Income Portfolio have sold no shares to public investors
as of October 31, 1997 and, thus, financial highlights are not provided for
these Portfolios.
8
<PAGE>
DPT-I-CHT
<TABLE>
<CAPTION>
The Large-Cap Value
Equity Portfolio (3)
------------------------------------------------------------------------
Period
2/3/92(1)
Year ended through
10/31/97 10/31/96 10/31/95 10/31/94 10/31/93 10/31/92
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................. $16.4600 $14.6600 $13.0800 $12.7300 $10.6600 $10.0000
Income From Investment Operations
Net Investment Income................................ 0.3807 0.4404 0.4303 0.3203 0.2841 0.2291
Net Gains (Losses) on Securities
(both realized and unrealized).................... 3.5993 2.9596 1.9797 0.6527 2.3159 0.5109
-------- ------ ------ ------ ------ ------
Total from Investment Operations............... 3.9800 3.4000 2.4100 0.9730 2.6000 0.7400
-------- ------ ------ ------ ------ ------
Less Dividends and Distributions
Dividends (from net investment income)............... (0.4100) (0.4400) (0.3400) (0.2800) (0.3200) (0.0800)
Distributions (from capital gains)................... (1.5000) (1.1600) (0.4900) (0.3430) (0.2100) none
-------- -------- -------- -------- -------- ------
Total Dividends and Distributions.............. (1.9100) (1.6000) (0.8300) (0.6230) (0.5300) (0.0800)
-------- -------- -------- -------- -------- ------
Net Asset Value, End of Period....................... $18.5300 $16.4600 $14.6600 $13.0800 $12.7300 $10.6600
======== ======== ======== ======== ======== ========
- ------------
Total Return......................................... 26.73%(2) 24.87%(2) 19.77%(2) 7.96%(2) 25.17%(2) 10.13%(2)
- ------------
Ratios/Supplemental Data
Net Assets, End of Period (000's omitted)............ $81,102 $67,179 $51,947 $37,323 $13,418 $4,473
Ratio of Expenses to Average Daily Net Assets........ 0.66% 0.67% 0.68% 0.68% 0.68% 0.68%
Ratio of Expenses to Average Daily Net Assets
Prior to Expense Limitations.................... 0.67% 0.70% 0.71% 0.82% 1.38% 2.38%
Ratio of Net Investment Income to Average Daily Net Assets 2.15% 2.85% 3.33% 3.26% 2.90% 3.65%
Ratio of Net Investment Income to Average Daily Net Assets
Prior to Expense Limitations.................... 2.14% 2.83% 3.30% 3.12% 2.20% 1.95%
Portfolio Turnover Rate.............................. 73% 74% 88% 73% 37% 28%
Average Commission Rate Paid......................... $0.0600 $0.0600 N/A N/A N/A N/A
</TABLE>
(1) Date of initial sale; ratios and total return have been annualized.
(2) Total return reflects the expense limitations referenced in Fund Expenses.
(3) Formerly known as The Defensive Equity Portfolio.
9
<PAGE>
DPT-I-CHT
<TABLE>
<CAPTION>
The Aggressive
Growth Portfolio
--------------------------------------------------------------------------
Period
2/27/92(1)
Year ended through
10/31/97 10/31/96 10/31/95 10/31/94 10/31/93 10/31/92
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.................. $14.5700 $12.8600 $11.0100 $11.2000 $9.0400 $10.0000
Income From Investment Operations
Net Investment Income (Loss)......................... (0.1165) (0.0188) 0.0428 0.0075 0.0181 0.0167
Net Gains (Losses) on Securities
(both realized and unrealized)..................... 1.6065 2.3913 2.0552 0.0325 2.1589 (0.9767)
-------- ------ ------ ------ ------ --------
Total from Investment Operations................ 1.4900 2.3725 2.0980 0.0400 2.1770 (0.9600)
-------- ------ ------ ------ ------ --------
Less Dividends and Distributions
Dividends (from net investment income)............... none (0.0425) (0.0120) (0.0200) (0.0170) none
Distributions (from capital gains)................... (2.3800) (0.6200) (0.2360) (0.2100) none none
-------- -------- -------- -------- -------- --------
Total Dividends and Distributions.............. (2.3800) (0.6625) (0.2480) (0.2300) (0.0170) none
============= -------- -------- -------- -------- -------- --------
Net Asset Value, End of Period....................... $13.6800 $14.5700 $12.8600 $11.0100 $11.2000 $9.0400
========== ======== ======== ======== ======== =======
- --------------------
Total Return......................................... 11.84%(2) 19.19%(2) 19.61%(2) 0.34%(2) 24.10%(2) (13.89%)(2)
- --------------------
Ratios/Supplemental Data
Net Assets, End of Period (000's omitted)............ $10,317 $28,526 $29,092 $22,640 $20,478 $4,538
Ratio of Expenses to Average Daily Net Assets........ 0.93% 0.90% 0.93% 0.93% 0.93% 0.93%
Ratio of Expenses to Average Daily Net Assets
Prior to Expense Limitations.................... 1.40% 1.01% 1.08% 1.17% 1.40% 2.56%
Ratio of Net Investment Income (Loss) to
Average Daily Net Assets...................... (0.29%) (0.18%) 0.37% 0.07% 0.23% 0.28%
Ratio of Net Investment Income (Loss) to
Average Daily Net Assets
Prior to Expense Limitations.................... (0.76%) (0.29%) 0.22% (0.17%) (0.24%) (1.35%)
Portfolio Turnover Rate.............................. 117% 95% 64% 43% 81% 34%
Average Commission Rate Paid......................... $0.0600 $0.0600 N/A N/A N/A N/A
</TABLE>
- ---------
(1) Date of initial sale; ratios and total return have been annualized.
(2) Total return reflects the expense limitations referenced in Fund Expenses.
10
<PAGE>
DPT-I-CHT
<TABLE>
<CAPTION>
The International
Equity Portfolio
-----------------------------------------------------------------------
Period
2/4/92(1)
Year ended through
10/31/97 10/31/96 10/31/95 10/31/94 10/31/93 10/31/92
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................. $14.7800 $13.1200 $13.1100 $11.9900 $9.5000 $10.0000
Income From Investment Operations
Net Investment Income................................ 0.3287 0.5063 0.4749 0.1440 0.2414 0.2282
Net Gains (Losses) on Securities
(both realized and unrealized).................... 1.2713 1.7937 0.0011 1.2360 2.5686 (0.6282)
-------- ------ ------ ------ ------ --------
Total from Investment Operations............... 1.6000 2.3000 0.4760 1.3800 2.8100 (0.4000)
-------- ------ ------ ------ ------ --------
Less Dividends and Distributions
Dividends (from net investment income)............... (0.5200) (0.4900) (0.1700) (0.1600) (0.3200) (0.1000)
Distributions (from capital gains)................... none (0.1500) (0.2960) (0.1000) none none
-------- -------- -------- -------- -------- --------
Total Dividends and Distributions.............. (0.5200) (0.6400) (0.4660) (0.2600) (0.3200) (0.1000)
============= --------- -------- -------- -------- -------- --------
Net Asset Value, End of Period....................... $15.8600 $14.7800 $13.1200 $13.1100 $11.9900 $9.5000
========== ======== ======== ======== ======== =======
- ------------------
Total Return......................................... 11.01% 18.12% 3.91% 11.66%(2) 30.28%(2) (5.44%)(2)
- ------------------
Ratios/Supplemental Data
Net Assets, End of Period (000's omitted)............ $500,196 $299,950 $156,467 $70,820 $24,288 $5,966
Ratio of Expenses to Average Daily Net Assets........ 0.93% 0.89% 0.90% 0.94% 0.96% 0.96%
Ratio of Expenses to Average Daily Net Assets
Prior to Expense Limitations.................... 0.93% 0.89% 0.90% 0.97% 1.38% 2.94%
Ratio of Net Investment Income to Average Daily Net Assets 2.21% 4.36% 4.81% 1.36% 2.98% 4.67%
Ratio of Net Investment Income to Average Daily Net Assets
Prior to Expense Limitations.................... 2.21% 4.36% 4.81% 1.33% 2.56% 2.69%
Portfolio Turnover Rate.............................. 8% 8% 20% 22% 28% 2%
Average Commission Rate Paid......................... $0.0217 $0.0198 N/A N/A N/A N/A
</TABLE>
- ---------
(1) Date of initial sale; ratios and total return have been annualized.
(2) Total return reflects the expense limitations referenced in Fund Expenses.
11
<PAGE>
DPT-I-CHT
<TABLE>
<CAPTION>
The Global
Fixed Income Portfolio
-------------------------------------------------------------------------
Period
11/30/92(1)
Year ended through
10/31/97 10/31/96 10/31/95 10/31/94 10/31/93
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................. $11.6200 $11.0400 $9.7900 $11.0900 $10.0000
Income From Investment Operations
Net Investment Income................................ 0.7205 0.7774 0.7357 0.4189 0.9547
Net Gains (Losses) on Securities
(both realized and unrealized).................... (0.1155) 0.7246 0.9243 (0.1929) 0.7433
--------- ------ ------ ------ ------
Total from Investment Operations............... 0.6050 1.5020 1.6600 0.2260 1.6980
-------- ------ ------ ------ ------
Less Dividends and Distributions
Dividends (from net investment income)............... (0.8350) (0.7200) (0.4100) (0.9490) (0.6080)
Distributions (from capital gains)................... (0.1700) (0.2020) none (0.5770) none
-------- -------- -------- -------- ------
Total Dividends and Distributions.............. (1.0050) (0.9220) (0.4100) (1.5260) (0.6080)
-------- -------- -------- -------- ------
Net Asset Value, End of Period....................... $11.2200 $11.6200 $11.0400 $9.7900 $11.0900
========== ======== ======== ======= ========
- ------------
Total Return......................................... 5.59%(2) 16.40%(2) 17.38%(2) 2.07%(2) 18.96%(2)
- ------------
Ratios/Supplemental Data
Net Assets, End of Period (000's omitted)............ $431,076 $252,068 $99,161 $42,266 $29,313
Ratio of Expenses to Average Daily Net Assets........ 0.60% 0.60% 0.60% 0.62% 0.62%
Ratio of Expenses to Average Daily Net Assets
Prior to Expense Limitations.................... 0.65% 0.66% 0.68% 0.76% 0.88%
Ratio of Net Investment Income to Average Daily Net Assets 6.28% 8.52% 6.73% 3.62% 10.68%
Ratio of Net Investment Income to Average Daily Net Assets
Prior to Expense Limitations.................... 6.23% 8.46% 6.65% 3.48% 10.42%
Portfolio Turnover Rate.............................. 114% 63% 77% 205% 198%
</TABLE>
- ---------
(1) Date of initial sale; ratios and total return have been annualized.
(2) Total return reflects the expense limitations referenced in Fund Expenses.
12
<PAGE>
DPT-I-CHT
<TABLE>
<CAPTION>
The Labor Select The Real Estate
International Equity Portfolio Investment Trust Portfolio(3)
------------------------------ -------------------------------
Period Period
Year 12/19/95(1) Year 12/6/95(1)
Ended through Ended through
10/31/97 10/31/96 10/31/97 10/31/96
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................. $11.6900 $10.0000 $12.4900 $10.0000
Income From Investment Operations
Net Investment Income................................ 0.4740 0.4785 0.6162 0.6515
Net Gains (Losses) on Securities
(both realized and unrealized).................... 1.3460 1.3115 4.6638 1.9385
-------- ------ -------- ------
Total from Investment Operations............... 1.8200 1.7900 5.2800 2.5900
-------- ------ -------- ------
Less Dividends and Distributions
Dividends (from net investment income)............... (0.5200) (0.1000) (0.7200) (0.1000)
Distributions (from capital gains)................... none none (0.7900) none
--------- -------- -------- --------
Total Dividends and Distributions.............. (0.5200) (0.1000) (1.5100) (0.1000)
--------- -------- -------- --------
Net Asset Value, End of Period....................... $12.9900 $11.6900 $16.2600 $12.4900
========== ======== ========= ========
Total Return......................................... 16.01%(2) 17.97%(2) 46.50%(2) 26.12%(2)
Ratios/Supplemental Data
Net Assets, End of Period (000's omitted)............ $50,896 $23,154 $60,089 $26,408
Ratio of Expenses to Average Daily Net Assets........ 0.89% 0.92% 0.82% 0.89%
Ratio of Expenses to Average Daily Net Assets
Prior to Expense Limitations.................... 1.06% 1.30% 0.99% 1.02%
Ratio of Net Investment Income to Average Daily Net Assets 2.37% 6.64% 4.25% 6.70%
Ratio of Net Investment Income to Average Daily Net Assets
Prior to Expense Limitations.................... 2.20% 6.26% 4.08% 6.57%
Portfolio Turnover Rate.............................. 11% 7% 58% 109%
Average Commission Rate Paid......................... $0.0263 $0.0330 $0.0576 $0.0600
</TABLE>
RESTUBBED FROM TABLE ABOVE
<PAGE>
<TABLE>
<CAPTION>
The Intermediate Fixed
Income Portfolio (4)
-----------------------------
Period
Year 3/12/96(1)
Ended through
10/31/97 10/31/96
<S> <C> <C>
Net Asset Value, Beginning of Period................. $10.0100 $10.0000
Income From Investment Operations
Net Investment Income................................ 0.6053 0.3856
Net Gains (Losses) on Securities
(both realized and unrealized).................... 0.0800 0.0100
-------- ------
Total from Investment Operations............... 0.6853 0.3956
-------- ------
Less Dividends and Distributions
Dividends (from net investment income)............... (0.6053) (0.3856)
Distributions (from capital gains)................... none none
---------- -------
Total Dividends and Distributions.............. (0.6053) (0.3856)
--------- --------
Net Asset Value, End of Period....................... $10.0900 $10.0100
========== ========
Total Return......................................... 7.09%(2) 4.08%(2)
Ratios/Supplemental Data
Net Assets, End of Period (000's omitted)............ $30,366 $10,518
Ratio of Expenses to Average Daily Net Assets........ 0.53% 0.53%
Ratio of Expenses to Average Daily Net Assets
Prior to Expense Limitations.................... 0.84% 1.20%
Ratio of Net Investment Income to Average Daily Net Assets 6.05% 6.14%
Ratio of Net Investment Income to Average Daily Net Assets
Prior to Expense Limitations.................... 5.74% 5.47%
Portfolio Turnover Rate.............................. 205% 232%
Average Commission Rate Paid......................... N/A N/A
</TABLE>
- ---------
(1) Date of initial sale; ratios have been annualized, but total return has
not been annualized.
(2) Total return reflects the expense limitations referenced in Fund
Expenses.
(3) December 6, 1995 is the date of initial sale of the original (and then
only) class of shares offered by The Real Estate Investment Trust
Portfolio. Data presented above is for that class of shares which, as of
October 14, 1997, was redesignated the "REIT Fund A Class" and is offered
in a separate prospectus. The shares being offered in this Prospectus
were offered for sale beginning October 14, 1997 and are designated in
the Fund's charter as "The Real Estate Investment Trust Portfolio class";
like the original class, prior to its redesignation, The Real Estate
Investment Trust Portfolio class carries no front-end or contingent
deferred sales charges and is not subject to Rule 12b-1 Distribution Plan
fees.
(4) Formerly known as The Fixed Income Portfolio.
13
<PAGE>
DPT-I-CHT
<TABLE>
<CAPTION>
The High-Yield The International The Emerging The Global
Bond Fixed Income Markets Equity
Portfolio Portfolio Portfolio Portfolio
Period Period Period Period
12/2/96(1) 4/11/97(1) 4/14/97(1) 10/15/97(1)
through through through through
10/31/97 10/31/97 10/31/97 10/31/97
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period....................... $10.0000 $10.0000 $10.0000 $8.5000
=======
Income From Investment Operations
Net Investment Income...................................... 0.7875 0.2359 0.0279 0.0092
====== ====== ====== ======
Net Gains (Losses) on Securities
(both realized and unrealized).......................... 0.9575 0.4741 (0.8279) (0.3892)
-------- ------ -------- -------
Total from Investment Operations..................... 1.7450 0.7100 (0.8000) (3.8000)
-------- ------ -------- -------
Less Dividends and Distributions
Dividends (from net investment income)..................... (0.5650) (0.0500) none none
Distributions (from capital gains)......................... none none none none
--------- -------- -------- -------
Total Dividends and Distributions.................... (0.5650) (0.0500) none none
--------- -------- -------- -------
Net Asset Value, End of Period............................. $11.1800 $10.6600 $9.2000 $8.1200
========== ======== ======= =======
- -------------
Total Return............................................... 17.92%(2)(3) 7.11%(2)(3) (8.00%)(2)(3) (4.47%)(2)(3)
- -------------
Ratios/Supplemental Data
Net Assets, End of Period (000's omitted).................. $11,348 $33,734 $18,565 $2,855
Ratio of Expenses to Average Daily Net Assets.............. 0.59% 0.60% 1.55% 0.96%
Ratio of Expenses to Average Daily Net Assets
Prior to Expense Limitations.......................... 0.79% 0.86% 2.02% 2.95%
Ratio of Net Investment Income to Average Daily Net Assets 9.05% 6.05% 0.74% 2.54%
Ratio of Net Investment Income to Average Daily Net Assets
Prior to Expense Limitations.......................... 8.85% 5.79% 0.27% 0.55%
Portfolio Turnover Rate.................................... 281% 145% 46% 0%
Average Commission Rate Paid............................... N/A N/A $0.0049 $0.0169
</TABLE>
- ---------
(1) Date of initial sale; ratios have been annualized, but total return has
not been annualized.
(2) Total return reflects the expense limitations referenced in Fund
Expenses.
(3) Total return for this short of a time period may not be representative of
longer term results.
14
<PAGE>
DELAWARE POOLED TRUST SUMMARY
THE FUND
In this Prospectus, the Fund is offering 16 Portfolios providing eligible
investors a broad range of investment choices coupled with the advantage of a
no-load mutual fund with the service companies of the Delaware Group providing
customized services as investment adviser, administrator and distributor. Each
Portfolio, other than The Real Estate Investment Trust Portfolio, The Real
Estate Investment Trust Portfolio II, The Global Fixed Income Portfolio, The
International Fixed Income Portfolio and The Emerging Markets Portfolio, is a
diversified fund as defined by the Investment Company Act of 1940 ("1940
Act"). The Real Estate Investment Trust Portfolio, The Real Estate Investment
Trust Portfolio II, The Global Fixed Income Portfolio, The International Fixed
Income Portfolio and The Emerging Markets Portfolio are nondiversified funds
as defined by the 1940 Act. The investment objectives and principal policies
of each of the 16 Portfolios are as follows:
The Aggressive Growth Portfolio--seeks to realize maximum long-term capital
growth. The Portfolio seeks to achieve this objective by investing in equity
securities of smaller and medium-sized companies that, in the opinion of
Delaware Investment Advisers, offer, at the time of purchase, significant
long-term growth potential.
The Large-Cap Value Equity Portfolio--seeks to realize maximum long-term
total return, consistent with reasonable risk. The Portfolio seeks to achieve
this objective through investments in equity securities of companies which, at
the time of purchase, have dividend yields above the current yield of the
Standard & Poor's 500 Stock Index and which, in the opinion of Delaware
Investment Advisers, offer capital gains potential as well.
The Emerging Markets Portfolio--seeks to achieve long-term capital
appreciation. The Portfolio seeks to achieve its objective by investing
primarily in equity securities of issuers located or operating in emerging
countries.
The Global Equity Portfolio-- seeks to achieve long-term growth without undue
risk to principal. The Portfolio seeks to achieve this objective by investing in
global equity securities that provide the potential for capital appreciation and
income.
The International Equity Portfolio--seeks to achieve maximum long-term total
return. The Portfolio seeks to achieve this objective by investing primarily
in equity securities of issuers organized or having a majority of their assets
in or deriving a majority of their operating income outside of the United
States which, in the opinion of Delaware International, are undervalued, at
the time of purchase, based on rigorous fundamental analysis conducted by the
investment adviser.
The Labor Select International Equity Portfolio--seeks to achieve maximum
long-term total return. The Portfolio seeks to achieve this objective by
investing primarily in equity securities of issuers organized or having a
majority of their assets in or deriving a majority of their operating income
outside of the United States which, in the opinion of Delaware International,
are undervalued, at the time of purchase, based on rigorous fundamental
analysis conducted by the investment adviser, and furthermore, present certain
characteristics that are compatible or operate in accordance with certain
investment policies or restrictions followed by organized labor.
The Real Estate Investment Trust Portfolio and The Real Estate Investment Trust
Portfolio II--seek to achieve maximum long-term total return. Capital
appreciation is a secondary objective. Each Portfolio seeks to achieve its
objectives by investing in securities of companies principally engaged in the
real estate industry. Under normal circumstances, investments will be made
primarily in equity securities of real estate investment trusts. The Real Estate
Investment Trust Portfolio and The Real Estate Investment Trust Portfolio II are
sometimes referred to collectively as "The Real Estate Investment Trust
Portfolios" in this Prospectus.
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The Small/Mid-Cap Value Equity Portfolio--seeks to realize maximum long-term
total return. The Portfolio seeks to achieve this objective by investing in
equity securities of companies which, at the time of purchase, are dividend
paying and, generally represent the smallest 30% in terms of market
capitalization of U.S. equity securities listed on a national securities
exchange or the National Association of Securities Dealers Automated Quotation
System ("NASDAQ"), and which, in Delaware Investment Advisers' opinion, offer
capital gains potential.
The Aggregate Fixed Income Portfolio--seeks to realize maximum long-term total
return, consistent with reasonable risk. The Portfolio seeks to achieve this
objective by investing in a diversified portfolio of fixed-income obligations.
The Portfolio will include U.S. government securities, mortgage-backed
securities, corporate bonds and other fixed-income securities. The benchmark
against which its performance will be measured is the Lehman Brothers
Aggregate Bond Index.
The Diversified Core Fixed Income Portfolio--seeks to realize maximum long-term
total return, consistent with reasonable risk. The Portfolio seeks to achieve
its objective by using a multi-sector investment approach, investing its assets
principally in the following sectors of the fixed-income securities markets:
investment grade fixed-income securities, high yield, higher risk securities;
investment grade fixed-income securities; and foreign government and other
foreign fixed-income securities.
The Intermediate Fixed Income Portfolio--seeks to realize maximum long-term
total return, consistent with reasonable risk. The Portfolio seeks to achieve
this objective by investing in a diversified portfolio of investment grade
fixed-income obligations. The Portfolio will include U.S. government
securities, mortgage-backed securities, corporate bonds and other fixed-income
securities. The benchmark against which its performance will be measured is
the Lehman Brothers Government/Corporate Intermediate Bond Index.
The Global Fixed Income Portfolio--seeks to achieve current income consistent
with the preservation of investors' principal. The Portfolio seeks to achieve
this objective by investing primarily in fixed-income securities of issuers
organized or having a majority of their assets in or deriving a majority of
their operating income in at least three different countries, one of which may
be the United States and that may also provide the potential for capital
appreciation.
The High-Yield Bond Portfolio--seeks high total return. The Portfolio seeks to
achieve its objective by investing primarily in bonds rated B- or higher by
Standard & Poor's Ratings Group, a Division of McGraw Hill ("S&P") or B3 or
higher by Moody's Investors Service, Inc. ("Moody's") or, if unrated, judged to
be of comparable quality by the Portfolio's investment adviser.
The International Fixed Income Portfolio--seeks to achieve current income
consistent with the preservation of investors' principal. The Portfolio seeks
to achieve this objective by investing primarily in fixed-income securities of
issuers organized or having a majority of their assets in or deriving a
majority of their operating income in at least three different countries
outside of the United States and that may also provide the potential for
capital appreciation. Under normal circumstances, the Portfolio intends to
invest in securities that are denominated in foreign currencies.
The Limited-Term Maturity Portfolio--seeks to provide a high level of current
income, consistent with the preservation of principal and reasonable risk. The
Portfolio will include U.S. government securities, mortgage-backed securities,
corporate bonds and other fixed-income securities. At no time will the average
maturity of the Portfolio exceed five years.
For further information, see "INVESTMENT OBJECTIVES, POLICIES AND RISK
CONSIDERATIONS" and "ADDITIONAL INVESTMENT INFORMATION."
INVESTMENT MANAGEMENT
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Delaware Investment Advisers, a division of Delaware Management Company, Inc.
("Delaware"), acts as investment adviser to The Large-Cap Value Equity, The
Aggressive Growth, The Aggregate Fixed Income, The Diversified Core Fixed
Income, The Intermediate Fixed Income, The Limited-Term Maturity, The
Small/Mid-Cap Value Equity, The Real Estate Investment Trust and The High-Yield
Bond Portfolios. The investment management fees payable to Delaware Investment
Advisers by these Portfolios are, respectively, 0.55%, 0.80%, 0.40%, 0.43%,
0.40%, 0.30%, 0.75%, 0.75% (for each of The Real Estate Investment Trust
Portfolios) and 0.45% of the respective Portfolio's average net assets. Lincoln
Investment Management, Inc., acts as sub-adviser to Delaware with respect to The
Real Estate Investment Trust Portfolios and receives 30% of the management fees
paid to Delaware. Delaware International, an affiliate of Delaware, acts as
sub-adviser to Delaware with respect to The Diversified Core Fixed Income
Portfolio and receives 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 Portfolio, such amount to be calculated at the same time
and measured over the same period as the management fee.
Delaware International is the investment adviser to The International Equity,
The Global Fixed Income, The International Fixed Income, The Labor Select
International Equity, The Global Equity and The Emerging Markets Portfolios.
The investment management fees payable to Delaware International by The
International Equity, The Global Fixed Income, The International Fixed Income,
The Labor Select International Equity, The Global Equity and The Emerging
Markets Portfolios are, respectively, 0.75%, 0.50%, 0.50%, 0.75%, 0.75% and
1.20% of the respective Portfolio's average net assets. Delaware acts as
sub-adviser to Delaware International with respect to The Global Equity
Portfolio managing the U.S. securities portion of the Portfolio and receives
50% of the management fee paid to Delaware International.
In addition, out of the investment advisory fees to which they are otherwise
entitled, Delaware and Delaware International pay their proportionate share of
the fees paid to unaffiliated directors by the Fund, except that Delaware will
make no such payments out of the fees it receives for managing The Small/Mid-Cap
Value Equity, The Real Estate Investment Trust, The Aggregate Fixed Income, The
Diversified Core Fixed Income and The High-Yield Bond Portfolios and Delaware
International will make no such payments out of the fees it receives for
managing The International Fixed Income, The Labor Select International Equity,
The Global Equity and The Emerging Markets Portfolios.
See "MANAGEMENT OF THE FUND."
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FUND OFFICERS AND PORTFOLIO MANAGERS
Wayne A. Stork
Chairman
A graduate of Brown University, Mr. Stork also attended the NYU Graduate
School of Business Administration while a senior transportation analyst at the
Irving Trust Company. He joined Delaware in 1962 as a security analyst
covering a wide range of industry groups. In 1975, he became Chief Investment
Officer of Delaware Investment Advisers, President in 1984, and in 1990 was
named Chairman. Mr. Stork is a Director of Delaware Management Company, Inc.
and its affiliates, and is Chairman of the Delaware Group of funds. He is a
member of the Institute of Chartered Financial Analysts and the Financial
Analysts Federation.
Jeffrey J. Nick
President and Chief Executive Officer
Mr. Nick is a graduate of Princeton University with a BA in English Literature.
While pursuing his baccalaureate degree at Princeton, Mr. Nick had the
opportunity to study in Germany at Bonn University. This was followed by studies
at the University of Chicago, which led to an MBA in Finance and Marketing. Mr.
Nick joined Lincoln National Corporation in its US headquarters in 1989 as
Senior Vice President responsible for corporate planning and development for
Lincoln National Corporation. He held this position until 1992. From 1992 to
1996, Mr. Nick was Managing Director of Lincoln National UK plc. Before joining
Lincoln, his career included assignments in management consultancy (with Arthur
D. Little, Inc.) and merchant banking (Chase Investment Bank). Mr. Nick is
President, Chief Executive Officer and Director of the Delaware Group of Funds,
Delaware Management Holdings, Inc. and Lincoln National Investment Companies,
Inc.
David G. Tilles
Managing Director and Chief Investment Officer - Delaware International
Advisers Ltd.
Mr. Tilles was educated at the Sorbonne, Warwick University and
Heidelberg University. Prior to joining Delaware in 1990 as Managing Principal
and Chief Investment Officer of Delaware International Advisers Ltd., he spent
16 years with Hill Samuel Investment Management Group in London, serving in a
number of investment capacities. His most recent position prior to joining
Delaware was Chief Investment Officer of Hill Samuel Investment Advisers Ltd.
George E. Deming
Vice President/Senior Portfolio Manager - The Large-Cap Value Equity Portfolio
Mr. Deming received his BA in Economics and Political Science from the
University of Vermont and an MA in International Affairs from the University
of Pennsylvania. Prior to joining Delaware in 1978, he was responsible for
portfolio management and institutional sales at White, Weld & Co., Inc. He is
a member of the Financial Analysts of Philadelphia. Mr. Deming has managed The
Large-Cap Value Equity Portfolio since its inception.
Gerald S. Frey
Vice President/Senior Portfolio Manager - The Aggressive Growth Portfolio
Mr. Frey holds a BA in Economics from Bloomsburg University and attended
Wilkes College and New York University. He has approximately 20 years'
experience in the money management business. Prior to joining the Delaware
Group in 1996, he was a Senior Director with Morgan Grenfell Capital
Management in New York. Mr. Frey has managed The Aggressive Growth Portfolio
since June 1996.
Timothy W. Sanderson
Director/Senior Portfolio Manager - Delaware International Advisers Ltd. (The
International Equity Portfolio)
A graduate of University College, Oxford, Mr. Sanderson began his investment
career in 1979 with Hill Samuel Investment Management Group. Prior to joining
Delaware International Advisers Ltd. in 1990 as Senior
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Portfolio Manager and Director, he was an analyst and senior portfolio manager
for Hill Samuel where, since 1987, he had responsibility for Pacific Basin
research and the management of international institutional portfolios. Mr.
Sanderson has managed The International Equity Portfolio since its inception.
Clive A. Gillmore
Director/Senior Portfolio Manager - Delaware International Advisers Ltd. (The
Labor Select International Equity Portfolio and The Emerging Markets
Portfolio)
A graduate of the Warwick University, England, and the London
Business School Investment Program, Mr. Gillmore joined Delaware in 1990 after
eight years of investment experience. His most recent position prior to
joining Delaware was as a Pacific Basin equity analyst and senior portfolio
manager for Hill Samuel Investment Advisers Ltd. Prior to that, Mr. Gillmore
was an analyst and portfolio manager for Legal and General Investment in the
United Kingdom. Mr. Gillmore has managed of The Labor Select International
Equity Portfolio and The Emerging Markets Portfolio since their respective
dates of inception.
Robert Akester
Senior Portfolio Manager - Delaware International Advisers Ltd. (The Emerging
Markets Portfolio)
Prior to joining Delaware in 1996, Mr. Akester, who began his investment career
in 1969, was most recently a Director of Hill Samuel Investment Advisers Ltd.,
which he joined in 1985. His prior experience included working as a Senior
Analyst and head of the South-East Asian Research team at James Capel, and as a
Fund Manager at Prudential Assurance Co., Ltd. Mr. Akester holds a BS in
Statistics and Economics from University College, London and is an associate of
the Institute of Actuaries, with a certificate in Finance and Investment. Mr.
Akester has managed The Emerging Markets Portfolio since its inception.
Babak Zenouzi
Vice President/Portfolio Manager - The Real Estate Investment Trust Portfolios
Mr. Zenouzi holds a BS in Finance and Economics from Babson College in
Wellesley, Massachusetts, and an MS in Finance from Boston College. Prior to
joining Delaware in 1992, he was with The Boston Company where he held the
positions of assistant vice president, senior financial analyst, financial
analyst and portfolio accountant. Mr. Zenouzi has managed The Real Estate
Investment Trust Portfolio and The Real Estate Investment Trust Portfolio II
since their respective dates of inception.
Gary A. Reed
Vice President/Senior Portfolio Manager - The Intermediate Fixed Income
Portfolio, The Aggregate Fixed Income Portfolio and The Limited-Term Maturity
Portfolio
Mr. Reed holds an AB in Economics from the University of Chicago and an MA in
Economics from Columbia University. He began his investment career in 1978 with
The Equitable Life Assurance Society, specializing in credit analysis. Prior to
joining Delaware Investment Advisers in 1989, Mr. Reed served as Vice President
and Manager of the Fixed Income Department at Irving Trust Company. Mr. Reed has
managed both discretionary and structured fixed-income portfolios and is
experienced with a broad range of high-grade fixed-income securities.
Additionally, he has developed investment programs for Decommissioning Trust
Funds and supervised their management. Mr. Reed has managed The Intermediate
Fixed Income Portfolio since its inception and will manage The Aggregate Fixed
Income Portfolio and The Limited-Term Maturity Portfolio when they commence
operations.
Elizabeth Desmond
Senior Portfolio Manager - Delaware International Advisers Ltd. (The Global
Equity Portfolio)
Ms. Desmond is a graduate of Wellesley College and the masters program in East
Asian studies at Stanford University. After working for the Japanese government
for two years, she began her investment career as a Pacific Basin investment
manager with Shearson Lehman Global Asset Management. Prior to joining Delaware
International in the Spring of 1991, she was a Pacific Basin equity analyst and
senior portfolio manager at Hill Samuel Investment Advisers Ltd. Ms. Desmond is
a CFA charterholder. Ms. Desmond has managed the foreign securities component of
The Global Equity Portfolio since its inception.
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Robert L. Arnold
Vice President/Portfolio Manager - The Global Equity Portfolio
Mr. Arnold holds a BS from Carnegie Mellon University and earned an MBA from the
University of Chicago. Before acting as a portfolio manager at Delaware, he was
a financial analyst focusing on the financial services industry, including
banks, thrifts, insurance companies and consumer finance companies. Prior to
joining Delaware in March 1992, he was a planning analyst with Chemical Bank in
New York. He began his investment career as a management consultant with Arthur
Young in Philadelphia. When The Global Equity Portfolio commences operations,
Delaware will act as sub-adviser, managing the U.S. securities portion of the
Portfolio. In that capacity, Mr. Arnold will furnish investment recommendations,
asset allocation advice, research and other services with respect to U.S.
securities. Mr. Arnold has managed the U.S. component of The Global Equity
Portfolio since its inception.
Ian G. Sims
Director/Senior Portfolio Manager - Delaware International Advisers Ltd. (The
Global Fixed Income Portfolio, The International Fixed Income Portfolio and The
Diversified Core Fixed Income Portfolio) Mr. Sims is a graduate of the
University of Leicester and holds a postgraduate degree in statistics from the
University of Newcastle-Upon-Tyne. He joined Delaware International Advisers
Ltd. in 1990 as a senior international fixed-income and currency manager. Mr.
Sims began his investment career with the Standard Life Assurance Co., and
subsequently moved to the Royal Bank of Canada Investment Management
International Company, where he was an international fixed-income manager. Prior
to joining Delaware, he was a senior fixed-income and currency portfolio manager
with Hill Samuel Investment Advisers Ltd. Mr. Sims has managed The Global Fixed
Income Portfolio and The International Fixed Income Portfolio since their dates
of inception and will manage the foreign component of The Diversified Core Fixed
Income Portfolio when it commences operations.
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Paul A. Matlack
Vice President/Senior Portfolio Manager - The High-Yield Bond Portfolio and
The Diversified Core Fixed Income Portfolio
Mr. Matlack is a graduate of the University of Pennsylvania and received his MBA
in Finance from George Washington University. He began his career with Mellon
Bank as a credit specialist analyzing leveraged transactions in the chemical and
pharmaceutical industries. He subsequently served as a loan officer in Mellon's
Corporate Lending Division and in the Special Industries Group at Provident
National Bank, before joining Delaware in 1989. He is a CFA charterholder. Mr.
Matlack has served as a portfolio manager of The High-Yield Bond Portfolio since
its inception and will manage the U.S. high-yield component of The Diversified
Core Fixed Income Portfolio when it commences operations.
Gerald T. Nichols
Vice President/Senior Portfolio Manager - The High-Yield Bond Portfolio
Mr. Nichols is a graduate of the University of Kansas, where he received an MS
in Finance and a BS in Business Administration. Prior to joining Delaware in
1989, he was the investment officer for a merchant banking firm with interests
in the insurance and thrift industries. Mr. Nichols began his career in the
high-yield bond market with Waddell and Reed, Inc. in 1983 where, as a
high-yield credit analyst, he followed a variety of industries. He is a CFA
charterholder. Mr. Nichols has managed The High-Yield Bond Portfolio since
its inception.
Roger A. Early
Vice President/Senior Portfolio Manager - The Diversified Core Fixed Income
Portfolio
Mr. Early has an undergraduate degree in economics from the University of
Pennsylvania's Wharton School and an MBA in finance and accounting from the
University of Pittsburgh. He is also a CPA and a CFA charterholder. Prior to
joining the Delaware Group, Mr. Early was a portfolio manager for Federated
Investment Counseling's fixed-income group, with over $1 billion in assets. Mr.
Early will manage the U.S. high grade component of The Diversified Core Fixed
Income Portfolio when it commences operations.
Frank X. Morris
Vice President/Portfolio Manager - The Small/Mid-Cap Value Equity
Portfolio
Mr. Morris received a bachelor's degree at Providence College and an MBA degree
at Widener University. He joined Delaware in 1997. He previously served as vice
president and director of equity research at PNC Asset Management. He is
president of the Financial Analysis Society of Philadelphia and is a member of
the Association of Investment Management and Research and the National
Association of Petroleum Investment Analysts. Mr. Morris will manage The
Small/Mid-Cap Value Equity Portfolio when it commences operations.
James F. Stanley
Vice President/Portfolio Manager - The Small/Mid-Cap Value Equity Portfolio
Mr. Stanley, a chartered financial analyst, earned a bachelor's degree in
finance at the University of Rochester. He joined Delaware in 1997. He
previously served as a senior managing equity analyst covering the chemical,
building products, and housing industries at Dreyfus Corporation; initially he
was a research associate at the firm. Mr. Stanley will manage The
Small/Mid-Cap Value Equity Portfolio when it commences operations.
J. Paul Dokas
Vice President/Portfolio Manager- The Small/Mid-Cap Value Equity Portfolio
Mr. Dokas holds a BBA in Business from Loyola College and an MBA in Business
from the University of Maryland. Prior to joining the Delaware Group in 1997, he
was a Director of Trust Investments for Bell Atlantic Corporation in
Philadelphia. Mr. Dokas is a CFA charterholder. Mr. Dokas will manage The
Small/Mid-Cap Value Equity Portfolio when it commences operations.
ADMINISTRATIVE SERVICES
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Delaware Service Company, Inc., an affiliate of Delaware Management Company,
Inc. and Delaware International Advisers Ltd., provides the Fund with
administrative, dividend disbursing, accounting and transfer agency services.
See "MANAGEMENT OF THE FUND."
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SPECIAL REPORTS AND OTHER SERVICES
The Fund provides client shareholders with annual audited financial reports
and unaudited semi-annual financial reports. In addition, the investment
advisers' dedicated service staff may also provide client shareholders
detailed monthly appraisals of the status of their account and complete
reviews of portfolio assets, performance results and other pertinent data.
Finally, the investment advisers' service staff expects to conduct personal
reviews no less than annually with each shareholder, with interim telephone
updates and other communications, as appropriate. The Fund's dedicated
telephone number (1-800-231-8002) is available for shareholder inquiries
during normal business hours. The net asset values for the Portfolios are also
available by using the above "800" telephone number. Written correspondence
should be addressed to:
Delaware Pooled Trust, Inc.
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
Attn: Client Services
From time to time, certain institutional separate accounts advised by Delaware
Investment Advisers or Delaware International may invest in the Fund's
Portfolios. The Portfolios may experience relatively large investments or
redemptions as a result of the institutional separate accounts either
purchasing or redeeming the Portfolios' shares. These transactions will affect
the Portfolios, since Portfolios that experience redemptions may be required
to sell portfolio securities, and Portfolios that receive additional cash will
need to invest it. While it is impossible to predict the overall impact of
these transactions over time, there could be adverse effects on portfolio
management to the extent the Portfolios may be required to sell securities or
invest cash at times when they would not otherwise do so. Delaware Investment
Advisers and Delaware International, representing the interests of the
Portfolios, is committed to minimizing the impact of such transactions on the
Portfolios. In addition, Delaware Investment Advisers and Delaware
International, as advisers to the institutional separate accounts, are also
committed to minimizing the impact on the Portfolios to the extent it is
consistent with pursuing the investment objectives of the institutional
separate accounts.
If permitted under applicable law, in cases where a shareholder of any of the
Portfolios has an investment counseling relationship with Delaware Investment
Advisers or Delaware International, Delaware Investment Advisers or Delaware
International may, at its discretion, reduce the shareholder's investment
counseling fees by an amount equal to the pro-rata advisory fees paid by the
respective Portfolio. This procedure would be utilized with clients having
contractual relationships based on total assets managed by Delaware Investment
Advisers or Delaware International to avoid situations where excess advisory
fees might be paid to Delaware Investment Advisers or Delaware International.
In no event will a client pay higher total advisory fees as a result of the
client's investment in a Portfolio.
See "SHAREHOLDER SERVICES."
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CUSTODIAL SERVICES
The Chase Manhattan Bank, 4 Chase Metrotech Center, Brooklyn, NY 11245 serves
as custodian for The Global Fixed Income, The International Equity, The Labor
Select International Equity, The Real Estate Investment Trust, The High-Yield
Bond, The International Fixed Income, The Global Equity, The Aggregate Fixed
Income, The Diversified Core Fixed Income and The Emerging Markets Portfolios.
Bankers Trust Company, One Bankers Trust Plaza, New York, NY 10006 serves as
custodian for The Large-Cap Value Equity, The Aggressive Growth, The
Intermediate Fixed Income, The Limited-Term Maturity and The Small/Mid-Cap
Value Equity Portfolios.
HOW TO INVEST
Shares of each Portfolio are offered directly to institutions and high
net-worth individual investors at net asset value with no sales commissions or
12b-1 charges. In the case of The Emerging Markets and The Global Equity
Portfolios, there is a purchase reimbursement fee that applies to all
purchases, whether pursuant to the exchange privilege or otherwise. That fee
which is paid by investors to the relevant Portfolio equals 0.75% of the
dollar amount invested for The Emerging Markets Portfolio and 0.40% of the
dollar amount invested for The Global Equity Portfolio. This purchase
reimbursement fee is deducted automatically from the amount invested; it
cannot be paid separately. This purchase reimbursement fee does not apply to
investments in the Portfolios that are made by contributions of securities
in-kind or reinvestments of dividends or other distributions. See "PURPOSE OF
REIMBURSEMENT FEES --THE EMERGING MARKETS AND THE GLOBAL EQUITY PORTFOLIOS"
and "EXCHANGE PRIVILEGE" under "SHAREHOLDER SERVICES." The minimum initial
investment for a Portfolio of the Fund is $1,000,000. There is no minimum for
subsequent investments in a Portfolio where the minimum initial investment has
been satisfied. In addition, eligible investors in The International Equity
Portfolio may, under certain circumstances, be required to make their
investments in the Portfolio pursuant to instructions of the Fund, by a
contribution of securities in-kind to the Portfolio or by following another
procedure that will have the same economic effect as an in-kind purchase; in
either case, such investors will be required to pay the brokerage or other
transaction costs arising in connection with acquiring the subject securities.
Eligible investors in The Global Equity Portfolio may elect to pay the
purchase reimbursement fee or to invest by a contribution in-kind in
securities or by following another procedure that would have the same economic
effect as an in-kind purchase. At such time as the Fund receives appropriate
regulatory approvals to do so in the future, under certain circumstances, the
Fund may, at its sole discretion, allow eligible investors who have an
existing investment counseling relationship with Delaware Investment Advisers
or Delaware International to make investments in any of the Fund's Portfolios
by a contribution of securities in-kind to such Portfolios. See "PURCHASE OF
SHARES."
HOW TO REDEEM
Shares of each Portfolio, except The Emerging Markets and The Global Equity
Portfolios, may be redeemed at any time, without cost, at the net asset value
per share of the relevant Portfolio next determined after receipt of the
redemption request. For The Emerging Markets and The Global Equity Portfolios,
shares may be redeemed at any time at the net asset value per share of the
relevant Portfolio next determined after receipt of the redemption request,
less a redemption reimbursement fee equal to 0.75% of such value in the case
of The Emerging Markets Portfolio and 0.30% in the case of The Global Equity
Portfolio. The fee is deducted automatically from the redemption proceeds. The
fee also applies in the case of an exchange of shares of The Emerging Markets
Portfolio or The Global Equity Portfolio for shares of another Portfolio. See
"EXCHANGE PRIVILEGE" under "SHAREHOLDER SERVICES" and "PURPOSE OF
REIMBURSEMENT FEES -- THE EMERGING MARKETS AND THE GLOBAL EQUITY PORTFOLIOS."
The redemption price may be more or less than the purchase price and the
redemption may be in cash or, under certain circumstances, in-kind. If a
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shareholder reduces their investment in a Portfolio below $500,000, their
investment in that Portfolio may be subject to redemption. In addition,
investors in The International Equity, The Labor Select International Equity,
The Global Fixed Income, The International Fixed Income, The Global Equity and
The Emerging Markets Portfolios may, under certain circumstances, be required
to accept their redemption, pursuant to instructions from the Fund, in-kind in
portfolio securities or, at the election of the investor, by following another
procedure that will have the same economic effect as an in-kind redemption; in
either case, such investors will be required to pay the brokerage or other
transaction costs arising in connection with the sale of the subject
securities. If a redemption of shares of The Emerging Markets Portfolio or The
Global Equity Portfolio is made in-kind, the redemption reimbursement fee that
is otherwise applicable will not be assessed. See "REDEMPTION OF SHARES."
RISK FACTORS
An investment in the Fund entails certain risks and considerations about which
an investor should be aware.
Because both The Aggressive Growth Portfolio (which seeks long-term capital
growth) and The Small/Mid-Cap Value Equity Portfolio (which seeks to maximize
long-term total return) invest primarily in small- to medium-sized companies,
the Portfolios' investments are likely to involve a higher degree of liquidity
risk and price volatility than if investments were made in larger
capitalization securities.
The International Equity, The Labor Select International Equity, The Global
Fixed Income, The International Fixed Income, The Global Equity and The Emerging
Markets Portfolios will invest in securities of foreign issuers which normally
are denominated in foreign currencies and may hold foreign currency directly. In
addition, The Real Estate Investment Trust and The High-Yield Bond Portfolios
may invest up to 10% of their total assets and The Diversified Core Fixed Income
Portfolio may invest up to 20% of its total assets in foreign securities.
Investments in securities of non-United States issuers which are generally
denominated in foreign currencies involve certain risk and opportunity
considerations not typically associated with investing in United States
companies. Consequently, these Portfolios may be affected by changes in currency
rates and exchange control regulations and may incur costs in connection with
conversions between currencies. To hedge this currency risk associated with
investments in non-U.S. dollar denominated securities, a Portfolio may invest in
forward foreign currency contracts. Those activities pose special risks which do
not typically arise in connection with investments in U.S. securities. In
addition, The Real Estate Investment Trust, The International Fixed Income, The
Global Equity, The Diversified Core Fixed Income and The Emerging Markets
Portfolios may engage in foreign currency options and futures transactions. For
a discussion of the risks associated with foreign securities see "FOREIGN
INVESTMENT INFORMATION" and for those concerning these hedging instruments see
"FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS," "FUTURES CONTRACTS AND OPTIONS ON
FUTURES CONTRACTS," "OPTIONS," "RISKS OF TRANSACTIONS IN OPTIONS, FUTURES AND
FORWARD CONTRACTS," all of which references appear under the heading
"ADDITIONAL INVESTMENT INFORMATION."
The International Equity, The Labor Select International Equity, The Global
Equity, The Global Fixed Income, The International Fixed Income, and to a more
limited extent, The Real Estate Investment Trust, The Diversified Core Fixed
Income and The High-Yield Bond Portfolios may commit their assets eligible for
foreign investment to securities of issuers located in emerging markets. The
Emerging Markets Portfolio will invest its assets primarily in securities of
companies that are located or operated in emerging markets. Investments in
securities of companies in emerging markets present a greater degree of risk
than tends to be the case for foreign investments in Western Europe and other
developed markets. Among other things, there is a greater possibility of
expropriation, nationalization, confiscatory taxation, income earned or other
special taxes, foreign exchange restrictions, limitations on the repatriation of
income and capital from investments, defaults in foreign government debt, and
economic, political or social instability. In addition, in many emerging
markets, there is substantially less publicly available information about
issuers and the information that is available tends to be of a lesser quality.
Economic markets and structures tend to be less mature and diverse and the
securities markets which are subject to less government
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regulation or supervision may also be smaller, less liquid and subject to
greater price volatility. See "ADDITIONAL INVESTMENT INFORMATION--FOREIGN
INVESTMENT INFORMATION" for a more extensive discussion of these and other
factors.
The foreign securities in which The International Equity, The Labor Select
International Equity, The Global Fixed Income, The International Fixed Income,
The Global Equity and The Emerging Markets Portfolios (and The Real Estate
Investment Trust, The High-Yield Bond and The Diversified Core Fixed Income
Portfolios, up to 10%, 10%, 10% and 20% of their total assets, respectively) may
invest from time to time may be listed primarily on foreign exchanges which
trade on days when the New York Stock Exchange is closed (such as Saturday). As
a result, the net asset value of the Portfolios may be significantly affected by
such trading on days when shareholders will have no access to the Portfolios.
See "VALUATION OF SHARES."
The Aggressive Growth, The Small/Mid-Cap Value Equity, The Real Estate
Investment Trust, The Global Equity, The Diversified Core Fixed Income and The
Emerging Markets Portfolios also may, under certain circumstances, use certain
futures contracts and options on futures contracts, as well as options on
securities. The Portfolios will only enter into these transactions for hedging
purposes. See "FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS", "OPTIONS"
and "RISKS OF TRANSACTIONS IN OPTIONS, FUTURES AND FORWARD CONTRACTS," all of
which references appear under the heading "ADDITIONAL INVESTMENT INFORMATION."
The Real Estate Investment Trust Portfolios concentrate their investments in
the real estate industry. As a consequence, the net asset value of each
Portfolio can be expected to fluctuate in light of the factors affecting that
industry, and may fluctuate more widely than a portfolio that invests in a
broader range of industries. Each Portfolio may be more susceptible to any
single economic, political or regulatory occurrence affecting the real estate
industry.
The Real Estate Investment Trust Portfolios, by investing primarily in
securities of real estate investment trusts, are subject to interest rate
risk, in that as interest rates decline, the value of each Portfolio's
investments in real estate investment trusts can be expected to rise.
Conversely, when interest rates rise, the value of each Portfolio's
investments in real estate investment trusts holding fixed rate obligations
can be expected to decline. See "ADDITIONAL INVESTMENT INFORMATION--REITS."
The High-Yield Bond Portfolio invests primarily in lower rated fixed-income
securities, which, while generally having higher yields, are subject to
factors, such as reduced creditworthiness of issuers, increased risks of
default and a more limited and less liquid secondary market than higher rated
securities. The Diversified Core Fixed Income Portfolio may invest up to 30%
of its total assets in such securities. These securities are subject to
greater volatility and risk of loss of income and principal than are higher
rated securities. See "INVESTMENT OBJECTIVES, POLICIES AND RISK
CONSIDERATIONS" and "ADDITIONAL INVESTMENT INFORMATION--HIGH-YIELD, HIGH RISK
SECURITIES."
The Emerging Markets Portfolio may invest up to 35% of its assets in high-yield,
high risk fixed-income securities, including Brady Bonds. Consequently, greater
investment risks may be involved with an investment in this Portfolio. See
"ADDITIONAL INVESTMENT INFORMATION--HIGH-YIELD, HIGH RISK SECURITIES."
The Intermediate Fixed Income, The Aggregate Fixed Income, The Limited-Term
Maturity, The Global Fixed Income, The International Fixed Income and The
Diversified Core Fixed Income Portfolios will normally experience annual
portfolio turnover rates exceeding 100%, but those rates are not expected to
exceed 250% with respect to The Intermediate Fixed Income, The Aggregate Fixed
Income and The Diversified Core Fixed Income Portfolios and 200% with respect
to The Limited-Term Maturity, The Global Fixed Income and The International
Fixed Income Portfolios. Such relatively high portfolio turnover rates involve
correspondingly higher brokerage commissions, for equity transactions, and
other transaction costs and may affect the taxes payable by the Portfolios'
shareholders that are subject to federal income tax. See "INVESTMENT
OBJECTIVES, POLICIES AND RISK CONSIDERATIONS," "PORTFOLIO TRANSACTIONS" and
"TAXES."
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The Aggregate Fixed Income, The Diversified Core Fixed Income, The
Intermediate Fixed Income, The Limited-Term Maturity and The Global Fixed
Income Portfolios may invest in collateralized mortgage obligations and those
Portfolios, as well as The Real Estate Investment Trust Portfolios, may invest
in mortgage-backed securities. See "ADDITIONAL INVESTMENT
INFORMATION--MORTGAGE-BACKED SECURITIES."
Each of the 16 Portfolios may lend its portfolio securities, may invest in
repurchase agreements and may purchase securities on a when-issued basis.
While The Real Estate Investment Trust Portfolios, The Global Fixed Income
Portfolio, The International Fixed Income Portfolio and The Emerging Markets
Portfolio intend to seek to qualify as "diversified" investment companies
under provisions of Subchapter M of the Internal Revenue Code, they will not
be diversified under the 1940 Act. Thus, while at least 50% of each
Portfolio's total assets will be represented by cash, cash items, certain
qualifying securities and other securities limited in respect of any one
issuer to an amount not greater than 5% of the Portfolio's total assets, it
will not satisfy the 1940 Act requirement in this respect, which applies that
test to 75% of the Portfolio's assets. A nondiversified portfolio is believed
to be subject to greater risk because adverse effects on the portfolio's
security holdings may affect a larger portion of the overall assets.
Each of the investment strategies identified above involves special risks
which are described under "INVESTMENT OBJECTIVES, POLICIES AND RISK
CONSIDERATIONS" and "ADDITIONAL INVESTMENT INFORMATION" in this Prospectus and
"INVESTMENT POLICIES, PORTFOLIO TECHNIQUES AND RISK CONSIDERATIONS" in the
Statement of Additional Information.
INVESTMENT OBJECTIVES, POLICIES
AND RISK CONSIDERATIONS
The investment objective of each Portfolio of the Fund is described below,
together with the policies each Portfolio employs in its efforts to achieve
its objective. There is no assurance that a Portfolio will attain its
objective. The investment objective of each Portfolio is fundamental and may
only be changed by a majority approval of that Portfolio's shareholders.
Unless otherwise noted, the investment policies described below are not
fundamental policies and may be changed without shareholder approval.
THE LARGE-CAP VALUE EQUITY PORTFOLIO
The Large-Cap Value Equity Portfolio's investment objective is to realize
maximum long-term total return, consistent with reasonable risk. The Portfolio
seeks to achieve this objective by investing in equity securities of companies
which, at the time of purchase, have dividend yields above the current yield
of the Standard & Poor's 500 Stock Index ("S&P 500 Index") and which, in the
investment adviser's opinion, offer capital gains potential as well.
In selecting Portfolio securities, the investment adviser places an emphasis
on strong relative performance in falling markets. The Portfolio invests
primarily in equity securities of U.S. companies, although from time to time
the Portfolio will include sponsored or unsponsored American Depositary
Receipts actively traded in the
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United States. See "ADDITIONAL INVESTMENT INFORMATION -- DEPOSITARY RECEIPTS"
for a further description of American Depositary Receipts. Under normal market
conditions, at least 65% of the Portfolio's total assets will be invested in
equity securities. Equity securities for this purpose include, but are not
limited to, common stocks, securities convertible into common stocks and
securities having common stock characteristics, such as rights and warrants to
purchase common stocks. The Portfolio also may purchase preferred stock. The
Portfolio may hold cash or invest in short-term debt securities and other
money market instruments when, in the investment adviser's opinion, such
holdings are prudent given then prevailing market conditions. Except when the
investment adviser believes a temporary defensive approach is appropriate, the
Portfolio, normally, will not hold more than 5% of its total assets in cash or
such short-term investments. All these short-term investments will be of the
highest quality as determined by a nationally-recognized statistical rating
organization (e.g., AAA by S&P or Aaa by Moody's) or be of comparable quality
as determined by the investment adviser. Appendix A--Ratings to this
Prospectus describes the ratings of S&P and Moody's. See "ADDITIONAL
INVESTMENT INFORMATION" for further details concerning these and other
investment policies.
The investment adviser seeks to invest in high-yielding equity securities and
believes that, although capital gains are important, the dividend return
component will be a significant portion of the expected total return. The
investment adviser believes that a diversified portfolio of such high-yielding
stocks will outperform the market over the long-term, as well as preserve
principal in difficult market environments. Companies considered for purchase
generally will exhibit the following characteristics at the time of purchase:
1) a dividend yield greater than the prevailing yield of the S&P 500 Index; 2)
a price-to-book ratio lower than the average large capitalization company; and
3) a below-market price-to-earnings ratio.
The investment adviser takes a long-term investment approach by placing a
strong emphasis on its ability to determine attractive values and, generally,
does not seek to respond to short-term changes in the market. It is
anticipated that the annual turnover rate of the Portfolio will not exceed
100% under normal circumstances. See "PORTFOLIO TRANSACTIONS." The Portfolio
will maintain diversity among economic sectors and industries and will not
invest 25% or more of its total assets in the stocks of issuers in any one
industry, nor, ordinarily, more than 5%, at the time of purchase, of any one
company.
THE AGGRESSIVE GROWTH PORTFOLIO
The Aggressive Growth Portfolio's investment goal is to realize maximum
long-term capital growth. The Portfolio seeks to attain this objective by
investing in equity securities of smaller and medium-sized companies which, in
the opinion of the investment adviser, present, at the time of purchase,
significant long-term growth potential. In pursuing this objective, current
income is expected to be incidental.
Under normal market conditions, the Portfolio invests at least 65% of its
total assets in growth-oriented common stocks of domestic corporations. Such
companies, in the investment adviser's view, generally are those companies
that currently have total market capitalization between $100 million and $2.5
billion at the time of purchase. The Portfolio may invest in securities issued
by companies having a capitalization outside that range when, in the
investment adviser's opinion, such a company exhibits the same characteristics
and growth potential as companies within the range. Equity securities for this
purpose include, but are not to be limited to, common stocks, securities
convertible into common stocks and securities having common stock
characteristics, such as rights and warrants to purchase common stocks. The
Portfolio also may purchase preferred stock. Although the investment adviser
does not pursue a market timing approach to investing, the Portfolio may hold
cash or invest in short-term debt securities or other money market instruments
when, in the investment adviser's opinion, such holdings are prudent given the
prevailing market conditions. Except when the investment adviser believes a
temporary defensive approach is appropriate, the Portfolio, normally, will not
hold more than 10% of its total assets in cash or such short-term investments,
but, on occasion, may hold as much as 30% of its total assets in
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cash or such short-term investments. All such holdings will be of the highest
quality as determined by a nationally-recognized statistical rating
organization (e.g., AAA by S&P or Aaa by Moody's) or be of comparable quality
as determined by the investment adviser. See "ADDITIONAL INVESTMENT
INFORMATION" for further details concerning these and other investment
policies.
The Portfolio may also, to a limited extent, enter into futures contracts on
stocks, purchase or sell options on such futures, engage in certain options
transactions on stocks and enter into closing transactions with respect to
those activities. However, these activities will not be entered into for
speculative purposes, but rather to facilitate the ability quickly to deploy
into the stock market the Portfolio's positions in cash, short-term debt
securities and other money market instruments, at times when the Portfolio's
assets are not fully invested in equity securities. Such positions will
generally be eliminated when it becomes possible to invest in securities that
are appropriate for the Portfolio. See "ADDITIONAL INVESTMENT
INFORMATION--FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS" and "OPTIONS"
for a further discussion of these investment policies.
The Portfolio will not invest 25% or more of its total assets in securities of
companies which conduct their principal business activities in specific
industries. The Portfolio expects to invest in small- to medium-sized
companies that have been in existence for at least three years (including the
operation of any predecessor company) but which have the potential, in the
investment adviser's judgment, for significant long-term capital growth. The
investment adviser assesses economic, industry, market and company
developments to select investments in promising emerging growth companies that
are expected to benefit from new technology, new products or services,
research discoveries, rejuvenated management and the like. However, the
Portfolio may invest in any equity security which, in the investment adviser's
judgment, provides the potential for significant capital appreciation.
The investment adviser believes that consistent earnings per share growth is
just as important as high absolute growth. Because the Portfolio seeks
long-term capital growth by investing primarily in small- to medium-sized
companies, its investments are likely to involve a higher degree of liquidity
risk and price volatility than larger capitalization securities.
The investment adviser does not normally intend to respond to short-term
market fluctuations or to acquire securities for the purpose of short-term
trading; however, the investment adviser may take advantage of short-term
opportunities that are consistent with its investment objective. It is
anticipated that the annual turnover rate of the Portfolio, under normal
circumstances, will not exceed 100%. See "PORTFOLIO TRANSACTIONS."
THE INTERNATIONAL EQUITY PORTFOLIO
The investment objective of The International Equity Portfolio is to achieve
maximum long-term total return. The Portfolio seeks to achieve its objective
by investing, under normal market conditions, at least 65% of its total assets
in equity securities of issuers organized or having a majority of their assets
or deriving a majority of their operating income outside the United States,
and which, in the investment adviser's opinion, are undervalued at the time of
purchase based on fundamental analysis employed by the investment adviser.
In selecting portfolio securities the investment adviser emphasizes strong
performance in falling markets relative to other mutual funds focusing on
international equity investments. Equity securities in which the Portfolio may
invest include, but are not limited to, common stocks and securities
convertible into common stock and securities having common stock
characteristics, such as rights and warrants to purchase common stocks.
Additionally, the Portfolio may from time to time, hold its assets in cash
(which may be U.S. dollars or foreign currency, including European Currency
Units ("ECU")) or may invest in short-term debt securities or other money
market instruments. Except when the investment adviser believes a temporary
defensive approach is appropriate, the
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Portfolio generally will not hold more than 5% of its assets in cash or such
short-term instruments. All such holdings will be of the highest quality as
determined by a nationally-recognized statistical rating organization (e.g.,
AAA by S&P or Aaa by Moody's) or of comparable quality as determined by the
Portfolio's investment adviser. See "ADDITIONAL INFORMATION" for further
details concerning these and other investment policies.
The Portfolio may hold up to 15% of its assets in foreign fixed-income
securities when, in the investment adviser's opinion, equity securities are
overvalued and such fixed-income securities present an opportunity for
returns, over an 18-month period, greater than those available through
investments in equity securities or the short-term investments described
above. The foreign fixed-income securities in which the Portfolio may invest
may be U.S. dollar or foreign currency denominated, including ECU, and must
have a government or government agency backed credit status which would
include, but not be limited to, supranational entities. A supranational entity
is an entity established or financially supported by the national governments
of one or more countries to promote development or reconstruction. They
include: The World Bank, European Investment Bank, Asian Development Bank,
European Economic Community and the Inter-American Development Bank. Such
fixed-income securities will be, at the time of purchase, of the highest
quality (e.g., AAA by S&P or Aaa by Moody's) or of comparable quality as
determined by the Portfolio's investment adviser. The Portfolio may also
invest in sponsored and unsponsored American Depositary Receipts, European
Depositary Receipts or Global Depositary Receipts ("Depositary Receipts"). See
"ADDITIONAL INVESTMENT INFORMATION--DEPOSITARY RECEIPTS" for a further
description of Depositary Receipts.
The investment adviser's approach in selecting investments for the Portfolio
is oriented to individual stock selection and is value driven. In selecting
stocks for the Portfolio, the investment adviser identifies those stocks which
it believes will provide the highest total return over a market cycle taking
into consideration the movement in the price of the individual security, and
the impact of currency adjustment on a United States domiciled, dollar-based
investor. The investment adviser conducts extensive fundamental research on a
global basis, and it is through this research effort that securities which, in
the investment adviser's opinion, have the potential for maximum long-term
total return are identified. The center of the fundamental research effort is
a value oriented dividend discount methodology toward individual securities
and market analysis which isolates value across country boundaries. This
approach focuses on future anticipated dividends and discounts the value of
those dividends back to what they would be worth if they were being paid
today. Comparisons of the values of different possible investments are then
made. The investment adviser's management approach is long-term in
orientation, but it is expected that the annual turnover rate of the Portfolio
will not exceed 150% under normal circumstances. See "PORTFOLIO TRANSACTIONS"
and "TAXES."
While the Portfolio is not subject to any specific geographic diversification
requirements, it will, under normal market conditions, invest at least 65% of
its total assets in equity securities of issuers organized or having a
majority of their assets or deriving a majority of their operating income in
at least three different countries outside the United States. Investments will
be made mainly in marketable securities of companies located in developed
countries, but the stock markets of developing countries are rapidly becoming
accessible and the Portfolio may hold securities of issuers located in any
developing country determined to be appropriate by the investment adviser.
Investments in obligations of foreign issuers involve somewhat different
investment risks than those affecting obligations of United States issuers.
The risks posed by investments in emerging or developing countries frequently
are greater. See "ADDITIONAL INVESTMENT INFORMATION--FOREIGN INVESTMENT
INFORMATION."
Currency considerations carry a special risk for a portfolio of international
securities, and the investment adviser employs a purchasing power parity
approach to evaluate currency risk. In this regard, the Portfolio will
actively carry on hedging activities, and may invest in forward foreign
currency exchange contracts to hedge currency risks associated with the
purchase of individual securities denominated in a particular currency. See
"ADDITIONAL INVESTMENT INFORMATION--FORWARD FOREIGN CURRENCY EXCHANGE
CONTRACTS."
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THE SMALL/MID-CAP VALUE EQUITY PORTFOLIO
The Small/Mid-Cap Value Equity Portfolio's investment objective is to realize
maximum long-term total return. The Portfolio seeks to achieve this objective by
investing primarily in equity securities of companies which, at the time of
purchase, pay dividends, generally represent the smallest 30% in terms of market
capitalization of U.S. equity securities listed on a national securities
exchange or NASDAQ, and, in the investment adviser's opinion, offer capital
gains potential as well.
In selecting Portfolio securities, the investment adviser places an emphasis on
strong relative performance in falling markets. The Portfolio invests primarily
in equity securities of U.S. companies, although from time to time the Portfolio
will include sponsored or unsponsored American Depositary Receipts actively
traded in the United States. Under normal market conditions, at least 65% of the
value of the Portfolio's total assets will be invested in equity securities of
companies described above. Equity securities for this purpose include common
stocks, securities convertible into common stocks and securities having common
stock characteristics, such as rights and warrants to purchase common stocks.
The Portfolio also may purchase preferred stock, and certain other
non-traditional equity securities. See "ADDITIONAL INVESTMENT
INFORMATION--CONVERTIBLE, DEBT AND NON-TRADITIONAL EQUITY SECURITIES" and
"DEPOSITARY RECEIPTS" for further details concerning these and other investment
policies.
The Portfolio may hold cash or invest in short-term debt securities and other
money market instruments when, in the investment adviser's opinion, such
holdings are prudent given then prevailing market conditions. Except when the
investment adviser believes a temporary defensive approach is appropriate, the
Portfolio, normally, will not hold more than 5% of its total assets in cash or
such short-term investments. All these short-term investments will be of the
highest quality as determined by a nationally-recognized statistical rating
organization (e.g., AAA by S&P or Aaa by Moody's) or be of comparable quality
as determined by the investment adviser. See "ADDITIONAL INVESTMENT
INFORMATION" and Appendix A-Ratings for further details concerning these and
other investment policies.
The investment adviser seeks to invest in dividend paying equity securities of
small- and mid-cap companies and believes that, although capital gains are
important, the dividend return component will be a significant portion of the
expected total return. Further, the investment adviser believes that, although
more volatile, small- and mid-cap companies will provide higher returns over the
long-term. In the investment adviser's opinion, a diversified portfolio of such
dividend paying, small- and mid-cap companies will outperform the market over
the long-term, as well as preserve principal in difficult market environments.
Companies considered for purchase generally will exhibit the following
characteristics at the time of purchase: 1) dividend paying; and 2) generally
represent the smallest 30% in terms of market capitalization of U.S. equity
securities listed on a national securities exchange or NASDAQ.
The Portfolio expects to invest in companies in the capitalization range
described above, and that have been in existence for at least three years
(including the operation of any predecessor company) but which have the
potential, in the investment adviser's judgment, for providing long-term total
return. Because the Portfolio seeks long-term total return by investing
primarily in small- to mid-cap companies, its investments are likely to
involve a higher degree of liquidity risk and price volatility than
investments in larger capitalization securities. The Portfolio may also invest
in futures contracts and options on futures contracts subject to certain
limitations. See "FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS" under
"ADDITIONAL INVESTMENT INFORMATION".
The investment adviser takes a long-term investment approach by placing a
strong emphasis on its ability to determine attractive values and, generally,
does not seek to respond to short-term changes in the market. It is
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anticipated that the annual turnover rate of the Portfolio will generally not
exceed 100% under normal circumstances. See "PORTFOLIO TRANSACTIONS." The
Portfolio will maintain diversity among economic sectors and industries and
will not invest 25% or more of its total assets in the stocks of issuers in
any one industry, nor, ordinarily, more than 5%, at the time of purchase, of
any one company.
THE LABOR SELECT INTERNATIONAL EQUITY PORTFOLIO
The investment objective of The Labor Select International Equity Portfolio is
to achieve maximum long-term total return. The Portfolio seeks to achieve its
objective by investing, under normal market conditions, at least 65% of its
total assets in equity securities of issuers organized or having a majority of
their assets or deriving a majority of their operating income outside of the
United States, and which, in the investment adviser's opinion, are undervalued
at the time of purchase based on rigorous fundamental analysis employed by the
investment adviser. In addition to following these quantitative guidelines,
the Portfolio's investment adviser will select securities of issuers that
present certain characteristics that are compatible or operate in accordance
with certain investment policies or restrictions followed by organized labor.
In selecting portfolio securities, the investment adviser emphasizes strong
performance in falling markets relative to other mutual funds focusing on
international equity investments. Equity securities in which the Portfolio may
invest include common stocks and securities convertible into common stock and
securities having common stock characteristics, such as rights and warrants to
purchase common stocks. Additionally, the Portfolio may, from time to time,
hold its assets in cash (which may be U.S. dollars or foreign currency,
including the ECU) or may invest in short-term debt securities or other money
market instruments. Except when the investment adviser believes a temporary
defensive approach is appropriate, the Portfolio generally will not hold more
than 5% of its assets in cash or such short-term instruments. All such
holdings will be of the highest quality as determined by a
nationally-recognized statistical rating organization (e.g., AAA by S&P or Aaa
by Moody's) or be of comparable quality as determined by the Portfolio's
investment adviser.
The Portfolio may hold up to 15% of its assets in foreign fixed-income
securities when, in the investment adviser's opinion, equity securities are
overvalued and such fixed-income securities present an opportunity for returns
greater than those available through investments in equity securities or the
short-term investments described above. The foreign fixed-income securities in
which the Portfolio may invest may be U.S. dollar or foreign currency
denominated, including the ECU, and must have a government or government
agency backed credit status which would include, but not be limited to,
supranational entities. A supranational entity is an entity established or
financially supported by the national governments of one or more countries to
promote development or reconstruction. They include: the World Bank, European
Investment Bank, Asian Development Bank, European Economic Community and the
Inter-American Development Bank. Such fixed-income securities will be, at the
time of purchase, of the highest quality (e.g., AAA by S&P or Aaa by Moody's)
or be of comparable quality as determined by the Portfolio's investment
adviser. See "ADDITIONAL INVESTMENT INFORMATION" for a further description of
these and other investment policies.
The investment adviser's approach in selecting investments for the Portfolio
is primarily quantitatively oriented to individual stock selection and is
value driven. In selecting stocks for the Portfolio, the investment adviser
identifies those stocks which it believes will provide the highest total
return over a market cycle, taking into consideration the movement in the
price of the individual security, the impact of currency adjustment on a
United States domiciled, dollar-based investor and the investment guidelines
described below. The investment adviser conducts extensive fundamental
research on a global basis, and it is through this research effort that
securities which, in the investment adviser's opinion, have the potential for
maximum long-term total return are identified. The center of the fundamental
research effort is a value oriented dividend discount methodology toward
individual securities and market analysis which isolates value across country
boundaries. This approach
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focuses on future anticipated dividends and discounts the value of those
dividends back to what they would be worth if they were being paid today.
Comparisons of the values of different possible investments are then made.
Supplementing the adviser's quantitative approach to stock selection, the
investment adviser will, in managing the Portfolio, also attempt to follow
certain qualitative investment guidelines which seek to identify issuers that
present certain characteristics that are compatible or operate in accordance
with certain investment policies or restrictions followed by organized labor.
These qualitative investment guidelines include country screens, as well as
additional issuer-specific criteria. The country screens require that the
securities are of issuers domiciled in those countries that are included in
the Morgan Stanley Capital International Europe, Australia and Far East
("EAFE") Index and Canada, as long as the country does not appear on any list
of prohibited or boycotted nations of the AFL-CIO or certain other labor
organizations. Nations that are presently in the EAFE Index include Japan, the
United Kingdom, Germany, France and The Netherlands. In addition, the
Portfolio will tend to favor investment in issuers located in those countries
that the investment adviser perceives as enjoying favorable relations with the
United States. Pursuant to the Portfolio's issuer-specific criteria, the
Portfolio will (1) invest only in companies which are publicly traded; (2)
focus on companies that show, in the investment adviser's opinion, evidence of
pursuing fair labor practices; (3) focus on companies that have not been
subject to penalties or tariffs imposed by applicable U.S. government agencies
for unfair trade practices within the previous two years; and (4) not invest
in initial public offerings. In the opinion of the Portfolio's investment
adviser, evidence of pursuing fair labor practices would include whether a
company has demonstrated patterns of non-compliance with applicable labor or
health and safety laws. The qualitative labor sensitivity factors that the
Portfolio's investment adviser will utilize in selecting securities will vary
over time, and will be solely in the adviser's discretion.
While the Portfolio is not subject to any specific geographic diversification
requirements, it will, under normal conditions, invest at least 65% of its
total assets in equity securities of issuers organized or having a majority of
their assets or deriving a majority of their operating income in at least
three different countries outside the United States, and which comply with the
parameters described above. Investments in obligations of foreign issuers
involve somewhat different investment risks than those affecting obligations
of United States issuers. The risks posed by investments in foreign countries
frequently are greater. See "ADDITIONAL INVESTMENT INFORMATION--FOREIGN
INVESTMENT INFORMATION."
The investment adviser does not normally intend to respond to short-term
market fluctuations or to acquire securities for the purpose of short-term
trading; however, the investment adviser may take advantage of short-term
opportunities that are consistent with its investment objective. It is
anticipated that the annual turnover rate of the Portfolio, under normal
circumstances, will generally not exceed 100%. See "PORTFOLIO TRANSACTIONS."
Currency considerations carry a special risk for a portfolio of international
securities, and the investment adviser employs a purchasing power parity
approach to evaluate currency risk. In this regard, the Portfolio may actively
carry on hedging activities, and may invest in forward foreign currency
exchange contracts to hedge currency risks associated with the purchase of
individual securities denominated in a particular currency.
See"ADDITIONAL INVESTMENT INFORMATION--FORWARD FOREIGN CURRENCY EXCHANGE
CONTRACTS."
THE REAL ESTATE INVESTMENT TRUST PORTFOLIOS
The investment objective of each of The Real Estate Investment Trust
Portfolios is to achieve maximum long-term total return. Capital appreciation
is a secondary objective. Each Portfolio seeks to achieve its objectives by
investing in securities of companies principally engaged in the real estate
industry. Under normal
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circumstances, at least 65% of each Portfolio's total assets will be invested
in equity securities of real estate investment trusts ("REITs"). Each
Portfolio will operate as a nondiversified fund as defined by the 1940 Act.
The Portfolios invest in equity securities of REITs and other real estate
industry operating companies ("REOCs"). For purposes of the Portfolios'
investments, a REOC is a company that derives at least 50% of its gross
revenues or net profits from either (1) the ownership, development,
construction, financing, management or sale of commercial, industrial or
residential real estate, or (2) products or services related to the real
estate industry, such as building supplies or mortgage servicing. The
Portfolios' investments in equity securities of REITs and REOCs may include,
from time to time, sponsored or unsponsored American Depositary Receipts
actively traded in the United States. Equity securities for this purpose
include common stocks, securities convertible into common stocks and
securities having common stock characteristics, such as rights and warrants to
purchase common stocks. Each Portfolio may also purchase preferred stock. Each
Portfolio may invest up to 10% of its assets in foreign securities, and in
convertible securities. See "ADDITIONAL INVESTMENT INFORMATION--FOREIGN
INVESTMENT INFORMATION," "DEPOSITARY RECEIPTS" and "CONVERTIBLE, DEBT AND
NON-TRADITIONAL EQUITY SECURITIES" for further discussion of these investment
policies. Each Portfolio may also invest in mortgage-backed securities. See
"MORTGAGE-BACKED SECURITIES" for more detailed information about this
investment policy.
Each Portfolio may hold cash or invest in short-term debt securities and other
money market instruments when, in the investment adviser's opinion, such
holdings are prudent given then prevailing market conditions. Except when the
investment adviser believes a temporary defensive approach is appropriate,
each Portfolio will not hold more than 5% of its total assets in cash or such
short-term investments. All these short-term investments will be of the
highest quality as determined by a nationally-recognized statistical rating
organization (e.g. AAA by S&P or Aaa by Moody's) or be of comparable quality
as determined by the Portfolio's investment adviser. See "ADDITIONAL
INVESTMENT INFORMATION" for further details concerning these and other
investment policies.
Although the Portfolios do not invest directly in real estate, the Portfolios
do invest primarily in REITs, and may purchase equity securities of REOCs.
Thus, because the Portfolio concentrate their investments in the real estate
industry, an investment in either Portfolio may be subject to certain risks
associated with direct ownership of real estate and with the real estate
industry in general. These risks include, among others: possible declines in
the value of real estate; risks related to general and local economic
conditions; possible lack of availability of mortgage funds; overbuilding;
extended vacancies of properties; increases in competition; property taxes and
operating expenses; changes in zoning laws; costs resulting from the clean-up
of, and liability to third parties resulting from, environmental problems;
casualty for condemnation losses, uninsured damages from floods, earthquakes
or other natural disasters; limitations on and variations in rents; and
changes in interest rates.
The Portfolios may invest without limitation in shares of REITs. REITs are
pooled investment vehicles which invest primarily in income-producing real
estate or real estate related loans or interests. REITs are generally
classified as equity REITs, mortgage REITs or a combination of equity and
mortgage REITs. Equity REITs invest the majority of their assets directly in
real property and derive income primarily from the collection of rents. Equity
REITs can also realize capital gains by selling properties that have
appreciated in value. Mortgage REITs invest the majority of their assets in
real estate mortgages and derive income from the collection of interest
payments. Like investment companies such as the Fund, REITs are not taxed on
income distributed to shareholders provided they comply with several
requirements in the Internal Revenue Code of 1986, as amended (the "Code").
REITs are subject to substantial cash flow dependency, defaults by borrowers,
self-liquidation, and the risk of failing to qualify for tax-free pass-through
of income under the Code, and/or to maintain exemptions from the 1940 Act. By
investing in REITs indirectly through either Portfolio, a shareholder bears
not only a proportionate share of the expenses of the Portfolio, but also,
indirectly, similar expenses of the REITs. For a further discussion of the
risks presented by investing in REITs, see "ADDITIONAL INVESTMENT
INFORMATION--REITS."
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While the Portfolios do not intend to invest directly in real estate, either
Portfolio could, under certain circumstances, own real estate directly as a
result of a default on securities that it owns. In addition, if either
Portfolio has rental income or income from the direct disposition of real
property, the receipt of such income may adversely affect the Portfolio's
ability to retain its tax status as a regulated investment company.
Each Portfolio may also, to a limited extent, enter into futures contracts on
stocks, purchase or sell options on such futures, engage in certain options
transactions on stocks and enter into closing transactions with respect to
those activities. However, these activities will not be entered into for
speculative purposes, but rather to facilitate the ability quickly to deploy
into the stock market the Portfolio's positions in cash, short-term debt
securities and other money market instruments, at times when the Portfolio's
assets are not fully invested in equity securities. Such positions will
generally be eliminated when it becomes possible to invest in securities that
are appropriate for the Portfolio. See "ADDITIONAL INVESTMENT
INFORMATION--FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS" and "OPTIONS"
for a further discussion of these investment policies.
In connection with each Portfolio's ability to invest up to 10% of its total
assets in the securities of foreign issuers, currency considerations may
present risks if the Portfolio holds international securities. Currency
considerations carry a special risk for a portfolio of international
securities. In this regard, the Portfolio may actively carry on hedging
activities, and may invest in forward foreign currency exchange contracts to
hedge currency risks associated with the purchase of individual securities
denominated in a particular currency. See "ADDITIONAL INVESTMENT
INFORMATION--FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS."
The investment adviser does not normally intend to respond to short-term
market fluctuations or to acquire securities for the purpose of short-term
trading; however, the investment adviser may take advantage of short-term
opportunities that are consistent with its investment objective. It is
anticipated that the annual turnover rate of the Portfolio, under normal
circumstances, will generally not exceed 100%. See "PORTFOLIO TRANSACTIONS."
THE GLOBAL EQUITY PORTFOLIO
The objective of The Global Equity Portfolio is to achieve long-term growth
without undue risk to principal. The Portfolio seeks to achieve this objective
by investing in global equity securities that provide the potential for
capital appreciation and income. The Portfolio is a global fund. Under normal
circumstances, at least 65% of the Portfolio's assets will be invested in
equity securities of issuers organized or having a majority of their assets in
or deriving a majority of their operating income in at least three different
countries, one of which may be the United States. The Portfolio will invest in
a broad range of equity securities including common stocks, preferred stocks,
convertible securities and warrants. The Portfolio may also invest in
sponsored or unsponsored Depositary Receipts. See "DEPOSITARY RECEIPTS" under
"ADDITIONAL INVESTMENT INFORMATION."
The Portfolio will attempt to achieve its objective by investing in securities
traded in equity markets and currencies that Delaware International and
Delaware Investment Advisers (with respect to U.S. securities) believe offer
the best relative value within the global investment universe. A dividend
discount model will be employed to assess value across country boundaries.
When using a dividend discount analysis to value individual equity markets,
Delaware International and Delaware Investment Advisers (with respect to U.S.
securities) will look at future anticipated dividends and discount the value
of those dividends back to what they would be worth if they were being paid
today. Delaware International and Delaware Investment Advisers (with respect
to U.S. securities) will use this technique to attempt to compare the value of
different investments.
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In a global portfolio, currency return is also an integral component of an
investment's total return. Delaware International and Delaware Investment
Advisers (with respect to U.S. securities) will use a purchasing power parity
approach to access the value of individual currencies. Purchasing power parity
attempts to identify the amounts of goods and services that a dollar will buy
in the United States and compare that to the amount of a foreign currency
required to buy the same amount of goods and services in another country.
Eventually, currencies should trade at levels that would make it possible for
the dollar to buy the same amount of goods and services overseas as in the
United States. When the dollar buys less, the foreign currency may be
considered to be overvalued. When the dollar buys more, the currency may be
considered to be undervalued.
Simultaneous with identifying the most attractive equity markets and
currencies, Delaware International and Delaware Investment Advisers (with
respect to U.S. securities) will attempt to purchase undervalued securities.
Individual equity securities around the world will be selected on the basis of
an analysis of the issuing company's operations, financial statements and each
company's current valuation. In the selection process, Delaware International
and Delaware Investment Advisers (with respect to U.S. securities) will place
special emphasis on present dividend yield and expectations for dividend
growth.
The Portfolio may purchase securities in any foreign country, developed and
underdeveloped, or emerging market countries. With respect to certain
countries, investments by an investment company may only be made through
investments in closed-end investment companies that in turn are authorized to
invest in the securities of such countries. See "ADDITIONAL INVESTMENT
INFORMATION" for further details concerning these and other investment
policies.
The Portfolio may also seek to achieve growth through investment of up to 35%
of its assets in income producing debt securities such as U.S. or foreign
government or corporate bonds. In addition, for temporary defensive purposes,
the Portfolio may invest all or a substantial portion of its assets in high
quality debt instruments issued by foreign governments, their agencies,
instrumentalities or political subdivisions, the U.S. government, its agencies
or instrumentalities (and which are backed by the full faith and credit of the
U.S. government), or issued by foreign or U.S. companies and certain
short-term instruments. See "ADDITIONAL INVESTMENT INFORMATION" for further
details concerning these instruments. For example, the Portfolio may invest in
U.S. fixed-income markets when Delaware International believes that the global
equity markets are excessively volatile or overvalued so that the Fund's
objective cannot be achieved in such markets. Any corporate debt obligations
will be rated AA or better by Standard & Poor's Ratings Group ("S&P"), Aa or
better by Moody's Investors Service, Inc. ("Moody's"), or have an equivalent
rating from another nationally recognized statistical rating organization, or
if unrated, will be determined to be of comparable quality by Delaware
International or Delaware Investment Advisers, as relevant. The Portfolio may
also invest in the securities listed above pending investment of proceeds from
new sales of Portfolio shares and to maintain sufficient cash to meet
redemption requests.
It is anticipated that the annual portfolio turnover rate, under normal
circumstances, will not exceed 100%. See "PORTFOLIO TRANSACTIONS."
THE EMERGING MARKETS PORTFOLIO
The objective of The Emerging Markets Portfolio is to achieve long-term
capital appreciation. The Portfolio seeks to achieve this objective by
investing primarily in equity securities of issuers located or operating in
emerging countries. The Portfolio is an international fund. Under normal
circumstances, at least 65% of the Portfolio's assets will be invested in
equity securities of issuers organized or having a majority of their assets or
deriving a majority of their operating income in at least three different
emerging countries. The Portfolio will attempt to achieve its objective by
investing in a broad range of equity securities, including common stocks,
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preferred stocks, convertible securities and warrants issued by companies
located or operating in emerging countries.
The Portfolio considers an "emerging country" to be any country which is
generally recognized to be an emerging or developing country by the
international financial community, including the World Bank and the
International Finance Corporation, as well as countries that are classified by
the United Nations or otherwise regarded by their authorities as developing.
In addition, any country that is included in the IFC Free Index or MSCI EMF
Index will be considered to be an "emerging country." As of the date of this
Prospectus, there are more than 130 countries which, in Delaware
International's judgment, are generally considered to be emerging or
developing countries by the international financial community, approximately
40 of which currently have stock markets. Within this group of developing or
emerging countries are included almost every nation in the world, except the
United States, Canada, Japan, Australia, New Zealand and most nations located
in Western and Northern Europe.
Currently, investing in many emerging countries is not feasible, or may, in
Delaware International's opinion, involve unacceptable political risks. The
Portfolio will focus its investments in those emerging countries where
Delaware International considers the economies to be developing strongly and
where the markets are becoming more sophisticated. Delaware International
believes that investment opportunities may result from an evolving long-term
international trend favoring more market-oriented economies, a trend that may
particularly benefit certain countries having developing markets. This trend
may be facilitated by local or international political, economic or financial
developments that could benefit the capital markets in such countries.
In considering possible emerging countries in which the Portfolio may invest,
Delaware International will place particular emphasis on certain factors, such
as economic conditions (including growth trends, inflation rates and trade
balances), regulatory and currency controls, accounting standards and
political and social conditions. It is currently anticipated that the
countries in which the Portfolio may invest will include, but not be limited
to, Argentina, Brazil, Chile, China, Columbia, The Czech Republic, Egypt,
Greece, Hong Kong, Hungary, India, Indonesia, Israel, Jamaica, Jordan, Kenya,
Korea, Malaysia, Mexico, Nigeria, Pakistan, Peru, the Philippines, Poland,
Portugal, Russia, South Africa, Sri Lanka, Taiwan, Thailand, Turkey, Venezuela
and Zimbabwe. As markets in other emerging countries develop, Delaware
International expects to expand and further diversify the countries in which
the Portfolio invests.
Although not an exclusive list of criteria to be considered by Delaware
International, an emerging country equity security is one issued by a company
that, in the opinion of Delaware International, exhibits one or more of the
following characteristics: (i) its principal securities trading market is an
emerging country, as defined above; (ii) while traded in any market, alone or
on a consolidated basis, the company derives 50% or more of its annual
revenues from either goods produced, sales made or services performed in
emerging countries; or (iii) it is organized under the laws of, and has a
principal office in, an emerging country. Determinations as to eligibility
will be made by Delaware International based on publicly available information
and inquiries made of the companies. See "ADDITIONAL INVESTMENT
INFORMATION--FOREIGN INVESTMENT INFORMATION."
The Portfolio may invest in Depositary Receipts. See "DEPOSITARY RECEIPTS" and
"INVESTMENT COMPANY SECURITIES" under "ADDITIONAL INVESTMENT INFORMATION."
The Portfolio also may invest in convertible preferred stocks that offer
enhanced yield features, such as Preferred Equity Redemption Cumulative Stock,
and certain other non-traditional equity securities. See "ADDITIONAL
INVESTMENT INFORMATION--CONVERTIBLE, DEBT AND NON-TRADITIONAL EQUITY
SECURITIES."
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Up to 35% of the Portfolio's net assets may be invested in fixed-income
securities issued by emerging country companies, and foreign governments,
their agencies, instrumentalities or political subdivisions, all of which may
be high-yield, high risk fixed-income securities rated lower than BBB by S&P
and Baa by Moody's or, if unrated, are considered by Delaware International to
be of equivalent quality and which present special investment risks. The
Portfolio may also invest in Brady Bonds and zero coupon bonds. See
"HIGH-YIELD, HIGH RISK SECURITIES" and "ZERO COUPON AND PAY-IN-KIND BONDS"
under "ADDITIONAL INVESTMENT INFORMATION." The Portfolio may invest in
securities issued in any currency and may hold foreign currency. Securities of
issuers within a given country may be dominated in the currency of another
country or in multinational currency units, including ECU. See "ADDITIONAL
INVESTMENT INFORMATION--FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS."
For temporary defensive purposes, the Portfolio may invest all or a
substantial portion of its assets in the high quality debt instruments in
which The International Equity Portfolio may invest. See "INVESTMENT
OBJECTIVES, POLICIES AND RISK CONSIDERATIONS--THE INTERNATIONAL EQUITY
PORTFOLIO."
See "ADDITIONAL INVESTMENT INFORMATION" for a further discussion about the
above and other securities and investment practices.
It is anticipated that the annual portfolio turnover rate, under normal
circumstances, will not exceed 100%. See "PORTFOLIO TRANSACTIONS."
THE INTERMEDIATE FIXED INCOME PORTFOLIO
The Intermediate Fixed Income Portfolio's investment objective is to realize
maximum long-term total return, consistent with reasonable risk. It seeks to
achieve its objective by investing in a diversified portfolio of investment
grade fixed-income obligations, including securities issued or guaranteed by
the U.S. government, its agencies or instrumentalities ("U.S. government
securities"), mortgage-backed securities, asset-backed securities, corporate
bonds and other fixed-income securities. The benchmark against which the
Portfolio's performance will be measured is the Lehman Brothers
Government/Corporate Intermediate Bond Index.
It seeks maximum long-term total return by investing in debt securities having
an average effective maturity (that is, the market value weighted average time
to repayment of principal) of between one to ten years. Short-and
intermediate-term debt securities (under ten years) form the core of the
Portfolio, with long-term bonds (over ten years) purchased as well as when the
investment adviser believes they will enhance return without significantly
increasing risk. Average effective maturity may exceed the above range when
the investment adviser believes opportunities for enhanced returns exceed
risk.
Typically, approximately 50% of the Portfolio's assets will be invested in U.S.
government securities, mortgage-backed securities and asset-backed securities.
All securities purchased by the Portfolio will have an investment grade rating
at the time of purchase. Investment grade fixed-income obligations will be those
rated BBB or better by S&P or Baa or better by Moody's or those deemed to be of
comparable quality by the investment adviser. Obligations rated BBB and Baa have
speculative characteristics. To the extent that the rating of a debt obligation
held by the Portfolio falls below BBB or Baa, the Portfolio, as soon as
practicable, will dispose of the security, unless such disposal would be
detrimental to the Portfolio in light of market conditions. See "ADDITIONAL
INVESTMENT INFORMATION--U.S. GOVERNMENT SECURITIES", "ASSET-BACKED SECURITIES"
and "MORTGAGE-BACKED SECURITIES" for more detailed information about these and
other investment policies.
The Portfolio will normally experience an annual portfolio turnover rate
exceeding 100%, but that rate is not expected to exceed 250%. A 100% turnover
rate would occur if all of the securities in the Portfolio were sold
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and replaced within one year. The rate of portfolio turnover is not a limiting
factor when the investment adviser deems it desirable to purchase or sell
securities. High portfolio turnover (over 100%) involves correspondingly
greater transaction costs and may affect taxes payable by the Portfolio's
shareholders that are subject to federal income taxes. The turnover rate may
also be affected by cash requirements from redemptions and repurchases of the
Portfolio's shares. The degree of Portfolio activity may affect brokerage
costs of the Portfolio and taxes payable by institutional shareholders that
are subject to federal income taxes. See "PORTFOLIO TRANSACTIONS" and "TAXES.
THE AGGREGATE FIXED INCOME PORTFOLIO
The Aggregate Fixed Income Portfolio's investment objective is to realize
maximum long-term total return, consistent with reasonable risk. It seeks to
achieve its objective by investing in a diversified portfolio of investment
grade fixed-income obligations, including securities issued or guaranteed by
the U.S. government, its agencies or instrumentalities ("U.S. government
securities"), mortgage-backed securities, asset-backed securities, corporate
bonds and other fixed-income securities. The benchmark against which the
Portfolio's performance will be measured is the Lehman Brothers Aggregate Bond
Index.
It seeks maximum long-term total return by investing in debt securities having a
broad range of maturities. However, the Portfolio typically will have an average
effective maturity (that is, the market value weighted average time to repayment
of principal) of between one to ten years. Short- and intermediate-term debt
securities (under ten years) form the core of the Portfolio, with long-term
bonds (over ten years) purchased as well when the investment adviser believes
they will enhance return without significantly increasing risk. Average
effective maturity may exceed the above range when the investment adviser
believes opportunities for enhanced returns exceed risk.
Typically, approximately 50% of the Portfolio's assets will be invested in U.S.
government securities, mortgage-backed securities and asset-backed securities.
All securities purchased by the Portfolio will have an investment grade rating
at the time of purchase. Investment grade fixed-income obligations will be those
rated BBB or better by S&P or Baa or better by Moody's or those deemed to be of
comparable quality by the investment adviser. Obligations rated BBB and Baa have
speculative characteristics. To the extent that the rating of a debt obligation
held by the Portfolio falls below BBB or Baa, the Portfolio, as soon as
practicable, will dispose of the security, unless such disposal would be
detrimental to the Portfolio in light of market conditions. See "ADDITIONAL
INVESTMENT INFORMATION--U.S. GOVERNMENT SECURITIES", "ASSET-BACKED SECURITIES"
and "MORTGAGE-BACKED SECURITIES" for more detailed information about these and
other investment policies.
The Portfolio will normally experience an annual portfolio turnover rate
exceeding 100%, but that rate is not expected to exceed 250%. A 100% turnover
rate would occur if all of the securities in the Portfolio were sold and
replaced within one year. The rate of portfolio turnover is not a limiting
factor when the investment adviser deems it desirable to purchase or sell
securities. High portfolio turnover (over 100%) involves correspondingly
greater transaction costs and may affect taxes payable by the Portfolio's
shareholders that are subject to federal income taxes. The turnover rate may
also be affected by cash requirements from redemptions and repurchases of the
Portfolio's shares. The degree of Portfolio activity may affect brokerage
costs of the Portfolio and taxes payable by institutional shareholders that
are subject to federal income taxes. See "PORTFOLIO TRANSACTIONS" and "TAXES.
THE LIMITED-TERM MATURITY PORTFOLIO
The Limited-Term Maturity Portfolio seeks to realize a high level of current
income, consistent with the preservation of principal and reasonable risk. It
seeks to achieve its objective by investing in a diversified portfolio of
investment grade fixed-income securities including: U.S. government
securities, mortgage-
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backed securities, asset-backed securities, corporate bonds and other
fixed-income securities. The Portfolio will not exceed an average effective
maturity (that is, the market value weighted average time to repayment of
principal) of five years and will invest at least a majority of its assets in
U.S. government securities and mortgage-backed securities. The Portfolio also
may hold up to 30% of its assets in investment grade corporate fixed-income
obligations (other than mortgage-backed securities and U.S. government
securities) and asset-backed securities, but may not invest more than 10% of
its assets in such investment grade corporate fixed-income securities rated,
at the time of purchase, Baa by Moody's or BBB by S&P or determined to be of
comparable quality by the investment adviser. To the extent that the rating of
a debt obligation held by the Portfolio falls below BBB or Baa, the Portfolio,
as soon as practicable, will dispose of the security, unless such disposal
would be detrimental to the Portfolio in light of market conditions.
The Limited-Term Maturity Portfolio will normally experience an annual
portfolio turnover rate exceeding 100%, but that rate is not expected to
exceed 200%. See "INVESTMENT OBJECTIVES, POLICIES AND RISK CONSIDERATIONS--THE
FIXED INCOME PORTFOLIO" for a discussion of the implication of a portfolio
turnover rate exceeding 100%.
THE GLOBAL FIXED INCOME PORTFOLIO
The Portfolio seeks to realize current income consistent with the preservation
of investors' principal. It seeks to achieve its objective by investing
primarily in fixed-income securities that may also provide the potential for
capital appreciation. The Portfolio is a global fund. As such, it may invest
in securities issued in any currency and may hold foreign currency. Under
normal circumstances, at least 65% of the Portfolio's assets will be invested
in the fixed-income securities of issuers organized or having a majority of
their assets in or deriving a majority of their operating income in at least
three different countries, one of which may be the United States. Securities
of issuers within a given country may be denominated in the currency of
another country or in multinational currency units such as the ECU. The
Portfolio will operate as a nondiversified fund as defined by the 1940 Act.
The investment adviser's approach in selecting investments for the portfolio
is oriented to country selection and is value driven. In selecting
fixed-income instruments for the Portfolio, the investment adviser identifies
those countries' fixed-income markets which it believes will provide the
United States' domiciled investor the highest yield over a market cycle while
also offering the opportunity for capital gain and currency appreciation. The
investment adviser conducts extensive fundamental research on a global basis,
and it is through this effort that attractive fixed-income markets are
selected for investment. The core of the fundamental research effort is a
value oriented discounted income stream methodology which isolates value
across country boundaries. This approach focuses on future coupon and
redemption payments and discounts the value of those payments back to what
they would be worth if they were to be paid today. Comparisons of the values
of different possible investments are then made. The investment adviser's
management approach is long-term in orientation, and it is therefore expected
that the annual turnover of the portfolio will not exceed 200% under normal
circumstances.
See "PORTFOLIO TRANSACTIONS" and "TAXES."
The Portfolio will attempt to achieve its objective by investing in a broad
range of fixed-income securities, including debt obligations of foreign and
U.S. companies which are generally rated A or better by S&P or Moody's or, if
unrated, are deemed to be of comparable quality by Delaware International, as
well as foreign and U.S. government securities with the limitation noted
below. The Portfolio may invest up to 5% of its assets in fixed-income
securities rated below investment grade, including foreign government
securities as discussed below. See "ADDITIONAL INVESTMENT
INFORMATION--HIGH-YIELD, HIGH RISK SECURITIES."
The Portfolio may also invest in zero coupon bonds, and in the debt securities
of supranational entities denominated in any currency. Zero coupon bonds are
debt obligations which do not entitle the holder to any
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periodic payments of interest prior to maturity or a specified date when the
securities begin paying current interest, and therefore are issued and traded
at a discount from their face amounts or par value. A supranational entity is
an entity established or financially supported by the national governments of
one or more countries to promote reconstruction or development. Examples of
supranational entities include, among others, the World Bank, the European
Economic Community, the European Coal and Steel Community, the European
Investment Bank, the Inter-Development Bank, the Export-Import Bank and the
Asian Development Bank. For increased safety, the Portfolio currently
anticipates that a large percentage of its assets will be invested in U.S.
government securities and foreign government securities and securities of
supranational entities. See "ADDITIONAL INVESTMENT INFORMATION" for further
details concerning these and other investment policies.
With respect to U.S. government securities, the Portfolio may invest only in
securities issued or guaranteed as to the payment of principal and interest by
the U.S. government, and those of its agencies or instrumentalities which are
backed by the full faith and credit of the United States. Direct obligations
of the U.S. government which are available for purchase by the Portfolio
include bills, notes, bonds and other debt securities issued by the U.S.
Treasury. These obligations differ mainly in interest rates, maturities and
dates of issuance. Agencies whose obligations are backed by the full faith and
credit of the United States include the Farmers Home Administration, Federal
Financing Bank and others. When the Portfolio's investment adviser believes a
temporary defensive approach is appropriate, the Portfolio may hold up to 100%
of its assets in such U.S. government securities and certain other short-term
instruments. See "ADDITIONAL INVESTMENT INFORMATION--U.S. GOVERNMENT
SECURITIES" and "SHORT-TERM INVESTMENTS."
With respect to securities issued by foreign governments, their agencies,
instrumentalities or political subdivisions, the Portfolio will generally
invest in such securities if they have been rated AAA or AA by S&P or Aaa or
Aa by Moody's or, if unrated, have been determined by the investment adviser
to be of comparable quality. As noted above, the Portfolio may invest up to 5%
of its assets in non-investment grade fixed-income securities. These
investments may include foreign government securities, some of which may be
so-called Brady Bonds. See "ADDITIONAL INFORMATION-HIGH-YIELD, HIGH RISK
SECURITIES." The Portfolio may also invest in sponsored or unsponsored
American Depositary Receipts or European Depositary Receipts. While the
Portfolio may purchase securities of issuers in any foreign country, developed
or underdeveloped, it is currently anticipated that the countries in which the
Portfolio may invest will include, but not be limited to, Canada, Germany, the
United Kingdom, New Zealand, France, The Netherlands, Belgium, Spain,
Switzerland, Ireland, Denmark, Portugal, Italy, Austria, Norway, Sweden,
Finland, Luxembourg, Japan and Australia. With respect to certain countries,
investments by an investment company may only be made through investments in
closed-end investment companies that in turn are authorized to invest in the
securities of issuers in such countries. Any investment the Portfolio may make
in other investment companies is limited in amount by the 1940 Act and would
involve the indirect payment of a portion of the expenses, including advisory
fees, of such other investment companies. See "ADDITIONAL INVESTMENT
INFORMATION--FOREIGN INVESTMENT INFORMATION" and "DEPOSITARY RECEIPTS."
Currency considerations carry a special risk for a portfolio of international
securities and the investment adviser employs a purchasing power parity
approach to evaluate currency risk. In this regard, the Portfolio will
actively carry on hedging activities, and may invest in forward foreign
currency exchange contracts to hedge currency risks associated with its
portfolio of securities. See "ADDITIONAL INVESTMENT INFORMATION--FORWARD
FOREIGN CURRENCY EXCHANGE CONTRACTS."
It is anticipated that the average weighted maturity of the Portfolio will be
in the five-to-ten year range. If, however, the investment adviser anticipates
a declining interest rate environment, the average weighted maturity may be
extended beyond ten years. Conversely, if the investment adviser anticipates a
rising rate environment, the average weighted maturity may be shortened to
less than five years. The Portfolio will not invest 25% or more of its total
assets in the securities of issuers all of which conduct their principal
business activities in the same industry.
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THE INTERNATIONAL FIXED INCOME PORTFOLIO
The Portfolio seeks to realize current income consistent with the preservation
of investors' principal. It seeks to achieve its objective by investing
primarily in fixed-income securities that may also provide the potential for
capital appreciation. The Portfolio is an international fund. As such, it may
invest in securities issued in any currency and may hold foreign currency.
Under normal circumstances, at least 65% of the Portfolio's assets will be
invested in the fixed-income securities of issuers organized or having a
majority of their assets in or deriving a majority of their operating income
in at least three different countries outside of the United States. Under
normal circumstances, the Portfolio intends to invest in securities which are
denominated in foreign currencies. Securities of issuers within a given
country may be denominated in the currency of another country or in
multinational currency units such as ECU. The Portfolio will operate as a
nondiversified fund as defined by the 1940 Act.
The investment adviser's approach in selecting investments for the portfolio
is oriented to country selection and is value driven. In selecting
fixed-income instruments for the Portfolio, the investment adviser identifies
those countries' fixed-income markets which it believes will provide the
United States domiciled investor the highest yield over a market cycle while
also offering the opportunity for capital gain and currency appreciation. The
investment adviser conducts extensive fundamental research on a global basis,
and it is through this effort that attractive fixed-income markets are
selected for investment. The core of the fundamental research effort is a
value oriented discounted income stream methodology which isolates value
across country boundaries. This approach focuses on future coupon and
redemption payments and discounts the value of those payments back to what
they would be worth if they were to be paid today. Comparisons of the values
of different possible investments are then made. The investment adviser's
management approach is long-term in orientation, but, it is expected that the
annual turnover of the portfolio will be approximately 200% under normal
circumstances. See "PORTFOLIO TRANSACTIONS" and "TAXES."
The Portfolio will attempt to achieve its objective by investing in a broad
range of fixed-income securities, including debt obligations of foreign
companies which are generally rated A or better by S&P or Moody's or, if
unrated, are deemed to be of comparable quality by Delaware International, as
well as, foreign government securities with the limitation noted below. The
Portfolio may invest up to 5% of its assets in fixed-income securities rated
below investment grade, including foreign government securities as discussed
below. See "ADDITIONAL INVESTMENT INFORMATION--HIGH-YIELD, HIGH RISK
SECURITIES."
The Portfolio may also invest in zero coupon bonds, and in the debt securities
of supranational entities denominated in any currency. Zero coupon bonds are
debt obligations which do not entitle the holder to any periodic payments of
interest prior to maturity or a specified date when the securities begin
paying current interest, and therefore are issued and traded at a discount
from their face amounts or par value. A supranational entity is an entity
established or financially supported by the national governments of one or
more countries to promote reconstruction or development. Examples of
supranational entities include, among others, the World Bank, the European
Economic Community, the European Coal and Steel Community, the European
Investment Bank, the Inter-Development Bank, the Export-Import Bank and the
Asian Development Bank. For increased safety, the Portfolio currently
anticipates that a large percentage of its assets will be invested in foreign
government securities and securities of supranational entities. See
"ADDITIONAL INVESTMENT INFORMATION" for further details about these and other
investment policies.
With respect to U.S. government securities, the Portfolio may invest only in
securities issued or guaranteed as to the payment of principal and interest by
the U.S. government, and those of its agencies or instrumentalities which are
backed by the full faith and credit of the United States. Direct obligations
of the U.S. government which are available for purchase by the Portfolio
include bills, notes, bonds and other debt securities issued by the U.S.
Treasury. These obligations differ mainly in interest rates, maturities and
dates of issuance. Agencies
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whose obligations are backed by the full faith and credit of the United States
include the Farmers Home Administration, Federal Financing Bank and others.
When the Portfolio's investment adviser believes a temporary defensive
approach is appropriate, the Portfolio may hold up to 100% of its assets in
such U.S. government securities and certain other short-term instruments. See
"ADDITIONAL INVESTMENT INFORMATION--U.S. GOVERNMENT SECURITIES" and
"SHORT-TERM INVESTMENTS."
With respect to securities issued by foreign governments, their agencies,
instrumentalities or political subdivisions, the Portfolio will generally
invest in such securities if they have been rated AAA or AA by S&P or Aaa or
Aa by Moody's or if unrated, have been determined by the investment adviser to
be of comparable quality. As noted above, the Portfolio may invest up to 5% of
its assets in non-investment grade fixed-income securities. These investments
may include foreign government securities, some of which may be so-called
Brady Bonds. See "ADDITIONAL INFORMATION--HIGH-YIELD, HIGH RISK SECURITIES."
The Portfolio may also invest in sponsored or unsponsored American Depositary
Receipts or European Depositary Receipts. While the Portfolio may purchase
securities of issuers in any foreign country, developed or underdeveloped, it
is currently anticipated that the countries in which the Portfolio may invest
will include, but not be limited to, Canada, Germany, the United Kingdom, New
Zealand, France, The Netherlands, Belgium, Spain, Switzerland, Ireland,
Denmark, Portugal, Italy, Austria, Norway, Sweden, Finland, Luxembourg, Japan
and Australia. With respect to certain countries, investments by an investment
company may only be made through investments in closed-end investment
companies that in turn are authorized to invest in the securities of issuers
in such countries. Any investment the Portfolio may make in other investment
companies is limited in amount by the 1940 Act and would involve the indirect
payment of a portion of the expenses, including advisory fees, of such other
investment companies. See "ADDITIONAL INVESTMENT INFORMATION--FOREIGN
INVESTMENT INFORMATION" and "DEPOSITARY RECEIPTS."
Currency considerations carry a special risk for a portfolio of international
securities and the investment adviser employs a purchasing power parity
approach to evaluate currency risk. In this regard, the Portfolio will
actively carry on hedging activities, and may utilize a wide range of hedging
instruments, including options, futures contracts, and related options, and
forward foreign currency exchange contracts to hedge currency risks associated
with its portfolios of securities. See "ADDITIONAL INVESTMENT
INFORMATION--FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS, FUTURES CONTRACTS
AND OPTIONS ON FUTURES CONTRACTS" and "OPTIONS."
It is anticipated that the average weighted maturity of the Portfolio will be
in the five-to-ten year range. If, however, the investment adviser anticipates
a declining interest rate environment, the average weighted maturity may be
extended beyond ten years. Conversely, if the investment adviser anticipates a
rising rate environment, the average weighted maturity may be shortened to
less than five years. The Portfolio will not invest 25% or more of its total
assets in the securities of issuers all of which conduct their principal
business activities in the same industry.
THE HIGH-YIELD BOND PORTFOLIO
The High-Yield Bond Portfolio's investment objective is to seek high total
return. The Portfolio seeks to achieve its objective by investing primarily in
bonds rated B- or higher by S&P or B3 or higher by Moody's or, if unrated,
judged to be of comparable quality by the investment adviser.
The Portfolio will invest at least 80% of its assets at the time of purchase
in: (1) corporate bonds that may be rated B- or higher by S&P or B3 or higher
by Moody's, or that may be unrated (which may be more speculative in nature
than rated bonds); (2) securities issued or guaranteed by the U.S. Government,
its agencies or instrumentalities; or (3) commercial paper of companies rated
A-1 or A-2 by S&P or rated P-1 or P-2 by Moody's or, if unrated, judged to be
of comparable quality by the investment adviser. The Portfolio may also
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invest in income-producing securities, including common stocks and preferred
stocks, some of which may have convertible features or attached warrants and
which may be speculative. See "ADDITIONAL INVESTMENT INFORMATION--CONVERTIBLE,
DEBT AND NON-TRADITIONAL EQUITY SECURITIES" for a further discussion of these
investment policies. The Portfolio may invest up to 10% of its total assets in
securities of issuers domiciled in foreign countries. The Portfolio may hold
cash or invest in short-term debt securities and other money market
instruments when, in the investment adviser's opinion, such holdings are
prudent given then prevailing market conditions. Except when the investment
adviser believes a temporary defensive approach is appropriate, the Portfolio
normally will not hold more than 5% of its total assets in cash or such
short-term investments. All these short-term investments will be of the
highest quality as determined by a nationally recognized statistical rating
organization (e.g., AAA by S&P or Aaa by Moody's) or, if unrated, judged to be
of comparable quality as determined by the investment adviser. See "ADDITIONAL
INVESTMENT INFORMATION" for further details concerning these and other
investment policies.
Although the Portfolio does not generally purchase a substantial amount of
zero coupon bonds or pay-in-kind (PIK) bonds, from time to time, the Portfolio
may acquire zero coupon bonds and, to a lesser extent, PIK bonds. Zero coupon
bonds and PIK bonds are generally considered to be more interest-sensitive
than income bearing bonds, to be more speculative than interest-bearing bonds,
and to have certain tax consequences which could, under certain circumstances,
be adverse to the Portfolio. For example, the Portfolio accrues, and is
required to distribute to shareholders income on its zero coupon bonds.
However, the Portfolio may not receive the cash associated with this income
until the bonds are sold or mature. If the Portfolio did not have sufficient
cash to make the required distribution of accrued income, the Portfolio could
be required to sell other securities in its portfolio or to borrow to generate
the cash required.
With respect to U.S. government securities, the Portfolio may invest only in
securities issued or guaranteed as to the payment of principal and interest by
the U.S. government, and those of its agencies or instrumentalities which are
backed by the full faith and credit of the United States. Direct obligations
of the U.S. government which are available for purchase by the Portfolio
include bills, notes, bonds and other debt securities issued by the U.S.
Treasury. These obligations differ mainly in interest rates, maturities and
dates of issuance. Agencies whose obligations are backed by the full faith and
credit of the United States include the Farmers Home Administration, Federal
Financing Bank and others. See "ADDITIONAL INVESTMENT INFORMATION-- U.S.
GOVERNMENT SECURITIES."
The investment adviser does not normally intend to respond to short-term
market fluctuations or to acquire securities for the purpose of short-term
trading; however, the investment adviser may take advantage of short-term
opportunities that are consistent with its investment objective. It is
anticipated that the annual turnover rate of the Portfolio, under normal
circumstances, will generally not exceed 100%. See "PORTFOLIO TRANSACTIONS."
It is anticipated that the Portfolio's assets will be invested primarily in
unrated corporate bonds and bonds rated B- or higher by S&P or B3 or higher by
Moody's, or, if unrated, judged to be of comparable quality by the investment
adviser. The market values of fixed-income securities generally fall when
interest rates rise and, conversely, rise when interest rates fall. Lower
rated and unrated fixed-income securities tend to reflect short-term corporate
and market developments to a greater extent than higher rated fixed-income
securities, which react primarily to fluctuations in the general level of
interest rates. These lower rated or unrated securities generally have higher
yields, but, as a result of factors such as reduced creditworthiness of
issuers, increased risks of default and a more limited and less liquid
secondary market, are subject to greater volatility and risks of loss of
income and principal than are higher rated securities. The investment adviser
will attempt to reduce such risks through portfolio diversification, credit
analysis, and attention to trends in the economy, industries and financial
markets.
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Investing in these so-called "junk" or "high-yield" bonds entails certain
risks, including the risk of loss of principal, which may be greater than the
risks involved in investment grade bonds, and which should be considered by
investors contemplating an investment in the Portfolio. Such bonds are
sometimes issued by companies whose earnings at the time of issuance are less
than the projected debt service on the junk bonds. Some of the principal risks
to which junk bonds are subject are discussed below.
Although the market for high-yield bonds has been in existence for many years,
including periods of economic downturns, the high-yield market grew rapidly
during the long economic expansion which took place in the United States
during the 1980s. During the economic expansion, the use of high-yield debt
securities to fund highly leveraged corporate acquisitions and restructurings
increased dramatically. As a result, the high-yield market grew substantially
during the economic expansion. Although experts disagree on the impact
recessionary periods have had and will have on the high-yield market, some
analysts believe a protracted economic downturn would severely disrupt the
market for high yield bonds, would adversely affect the value of outstanding
bonds and would adversely affect the ability of high-yield issuers to repay
principal and interest. Those analysts cite volatility experienced in the
high-yield market in the past as evidence for their position. It is likely
that protracted periods of economic uncertainty would result in increased
volatility in the market prices of high-yield bonds, an increase in the number
of high-yield bond defaults and corresponding volatility in the Portfolio's
net asset value.
In addition, if, as a result of volatility in the high-yield market or other
factors, the Portfolio experiences substantial net redemptions of the
Portfolio's shares for a sustained period of time, the Portfolio may be
required to sell securities without regard to the investment merits of the
securities to be sold. If the Portfolio sells a substantial number of
securities to generate proceeds for redemptions, the asset base of the
Portfolio will decrease and the Portfolio's expense ratios may increase.
Furthermore, the secondary market for high-yield securities is currently
dominated by institutional investors, including mutual funds and certain
financial institutions. There is generally no established retail secondary
market for high-yield securities. As a result, the secondary market for
high-yield securities is more limited and less liquid than other secondary
securities markets. The high-yield secondary market is particularly
susceptible to liquidity problems when the institutions which dominate it
temporarily cease buying bonds for regulatory, financial or other reasons,
such as the savings and loan crisis. A less liquid secondary market may have
an adverse effect on the Portfolio's ability to dispose of particular issues,
when necessary, to meet the Portfolio's liquidity needs or in response to a
specific economic event, such as the deterioration in the creditworthiness of
the issuer. In addition, a less liquid secondary market makes it more
difficult for the Portfolio to obtain precise valuations of the high-yield
securities in its portfolio. During periods involving such liquidity problems,
judgment plays a greater role in valuing high-yield securities than is
normally the case. The secondary market for high-yield securities is also
generally considered to be more likely to be disrupted by adverse publicity
and investor perceptions than the more established secondary securities
markets. The Portfolio's privately placed high-yield securities are
particularly susceptible to the liquidity and valuation risks outlined above.
Finally, there are a variety of legislative actions which have been taken or
which are considered from time to time by the United States Congress which
could adversely affect the market for high-yield bonds. For example,
Congressional legislation limited the deductibility of interest paid on
certain high-yield bonds used to finance corporate acquisitions. Also,
Congressional legislation has, with some exceptions, generally prohibited
federally-insured savings and loan institutions from investing in high-yield
securities. Regulatory actions have also affected the high-yield market. For
example, many insurance companies have restricted or eliminated their purchase
of high-yield bonds as a result of, among other factors, actions taken by the
National Association of Insurance Commissioners. If similar legislative and
regulatory actions are taken in the future, they could result in further
tightening of the secondary market for high-yield issues, could reduce the
number of new high-yield securities being issued and could make it more
difficult for the Portfolio to attain its investment objective.
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See "ADDITIONAL INVESTMENT INFORMATION--HIGH-YIELD, HIGH RISK SECURITIES" for
further information about high-yield securities.
THE DIVERSIFIED CORE FIXED INCOME PORTFOLIO
The objective of the Portfolio is to seek to provide investors with maximum
long-term total return, consistent with reasonable risk. The Portfolio will seek
to achieve its objective by allocating its investments principally among the
following three sectors of the fixed-income securities markets:
(1) a U.S. investment grade sector, consisting of investment grade debt
obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities, or by U.S. companies;
(2) a U.S. high-yield sector, consisting of high-yielding, lower-rated or
unrated fixed-income securities issued by U.S. companies; and
(3) an international sector, consisting of obligations of foreign governments,
their agencies and instrumentalities, and other fixed-income securities of
issuers in foreign countries and denominated in foreign currencies.
The investment adviser will determine the amount of assets of the Portfolio that
will be allocated to each of the three sectors in which the Portfolio will
invest, based on its analysis of economic and market conditions and its
assessment of the returns and potential for appreciation that can be achieved
from investments in each of the three sectors. The investment adviser will
periodically reallocate the Portfolio's assets, as it deems necessary, and, the
relative proportion of the Portfolio's assets to be allocated among sectors is
described below.
U.S. Investment Grade Sector
- ----------------------------
Under normal circumstances, between 50% and 90% of
the Portfolio's total assets will be invested in the U.S. investment grade
sector. In managing the Portfolio's assets allocated to the investment grade
sector, the investment manager will invest principally in debt obligations
issued or guaranteed by the U.S. government, its agencies or instrumentalities
and by U.S. corporations. The corporate debt obligations in which the Portfolio
may invest include bonds, notes, debentures and commercial paper of U.S.
companies.
The U.S. government securities in which the Portfolio may invest include a
variety of securities which are issued or guaranteed as to the payment of
principal and interest by the U.S. government, and by various agencies or
instrumentalities which have been established or sponsored by the U.S.
government. See "U.S. GOVERNMENT SECURITIES" under "ADDITIONAL INVESTMENT
INFORMATION" for a discussion of these types of securities.
The investment grade sector of the Portfolio's assets may also be invested in
mortgage-backed securities issued or guaranteed by the U.S. government, its
agencies or instrumentalities or by
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government sponsored corporations. Other mortgage-backed securities in which the
Portfolio may invest are issued by certain private, non-government entities. Two
principal types of mortgage-backed securities are collateralized mortgage
obligations (CMOs) and real estate mortgage investment conduits (REMICs). See
"MORTGAGE-BACKED SECURITIES" under "ADDITIONAL INVESTMENT INFORMATION" for a
discussion of these types of securities. Subject to the quality limitations set
forth in this Prospectus, the Portfolio may also invest in securities which are
backed by assets such as receivables on home equity and credit card loans, and
receivables regarding automobile, mobile home, recreational vehicle and other
loans, wholesale dealer floor plans and leases. See "ASSET-BACKED SECURITIES"
under "ADDITIONAL INVESTMENT INFORMATION".
Securities purchased by the Portfolio within the investment grade sector will be
rated in one of the four highest rating categories or will be unrated securities
that are of comparable quality as determined by the investment manager. The four
highest rating categories are, for example, AAA, AA, A or BBB by S&P and Fitch,
or Aaa, Aa, A or Baa by Moody's. Debt securities within the top three categories
comprise what are known as high-grade bonds and are regarded as having a strong
capacity to pay principal and interest. Securities in the fourth category, known
as medium- grade bonds, are regarded as having an adequate capacity to pay
principal and interest but with greater vulnerability to adverse economic
conditions and speculative characteristics. See Appendix A - Ratings in this
Prospectus for more rating information.
U.S. High-Yield Sector
- ----------------------
Under normal circumstances, between 5% and 30% of the
Portfolio's total assets will be allocated to the U.S. high-yield sector. The
investment adviser will invest the Portfolio's assets that are allocated to the
domestic high-yield sector primarily in those securities having a liberal and
consistent yield and those tending to reduce the risk of market fluctuations.
The Portfolio may invest in domestic corporate debt obligations, including,
notes, which may be convertible or non-convertible, commercial paper, units
consisting of bonds with stock or warrants to buy stock attached, debentures,
convertible debentures, zero coupon bonds and pay-in-kind securities ("PIKs").
See "ZERO COUPON BONDS AND PAY-IN-KIND BONDS" under "ADDITIONAL INVESTMENT
INFORMATION."
The Portfolio will invest in both rated and unrated bonds. The rated bonds that
the Portfolio may purchase in this sector will generally be rated BB or lower by
Standard & Poor's Rating Group ("S&P") or Fitch Investors Service, Inc.
("Fitch"), Ba or lower by Moody's Investors Service, Inc. ("Moody's"), or
similarly rated by another nationally recognized statistical rating
organization. See Appendix A--Ratings in this Prospectus for more rating
information and "HIGH YIELD, HIGH RISK SECURITIES" under "ADDITIONAL INVESTMENT
INFORMATION" and "INVESTMENT OBJECTIVES,
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POLICIES AND RISK CONSIDERATIONS - THE HIGH-YIELD BOND PORTFOLIO" for a
description of the risks associated with investing in lower-rated fixed-income
securities. Unrated bonds may be more speculative in nature than rated bonds.
International Sector
- --------------------
Under normal circumstances, between 5% and 20% of the Portfolio's total assets
will be invested in the international sector. Delaware International, the
sub-adviser will invest the assets of the Portfolio that are allocated to the
international sector primarily in fixed-income securities of issuers organized
or having a majority of their assets or deriving a majority of their operating
income in foreign countries. These fixed-income securities include foreign
government securities, debt obligations of foreign companies, and securities
issued by supranational entities.
A supranational entity is an entity established or financially supported by the
national governments of one or more countries to promote reconstruction or
development. Examples of supranational entities include, among others, the
International Bank for Reconstruction and Development (more commonly known as
the World Bank), the European Economic Community, the European Coal and Steel
Community, the European Investment Bank, the Inter- Development Bank, the
Export-Import Bank and the Asian Development Bank.
The Portfolio may invest in securities issued in any currency and may hold
foreign currencies. Securities of issuers within a given country may be
denominated in the currency of another country or in multinational currency
units, such as the European Currency Unit. The Portfolio will, from time to
time, purchase or sell foreign currencies and/or engage in forward foreign
currency transactions in order to expedite settlement of Portfolio transactions
and to minimize currency value fluctuations. See "FORWARD FOREIGN CURRENCY
EXCHANGE CONTRACTS" and "RISKS OF OPTIONS, FUTURES AND FUTURES CONTRACTS" under
"ADDITIONAL INVESTMENT INFORMATION" for a further description of the Portfolio's
foreign currency transactions.
The Portfolio will invest in both rated and unrated foreign securities. It may
purchase securities of issuers in any foreign country, developed and
underdeveloped. These investments may include direct obligations of issuers
located in emerging markets countries and so-called Brady Bonds. However,
investments in emerging markets, Brady Bonds and in foreign securities that are
rated below investment grade (e.g. lower than BBB by S&P), or if unrated, judged
to be of comparable quality by the sub-adviser, will in the aggregate be limited
to no more than 5% of the Portfolio's total assets. See, "FOREIGN INVESTMENT
INFORMATION" and "HIGH-YIELD, HIGH RISK SECURITIES" under "ADDITIONAL INVESTMENT
INFORMATION" for a description and discussion of the risks of investing in
emerging markets securities, Brady Bonds and securities rated lower than
investment grade.
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The Portfolio may invest in sponsored and unsponsored American Depositary
Receipts, European Depositary Receipts, or Global Depositary Receipts. See
"DEPOSITARY RECEIPTS" under "ADDITIONAL INVESTMENT INFORMATION". The Portfolio
may also invest in zero coupon bonds and may purchase shares of other investment
companies. See "ZERO COUPON AND PAY-IN-KIND BONDS" and "INVESTMENT COMPANY
SECURITIES" under "ADDITIONAL INVESTMENT INFORMATION".
In unusual market conditions, in order to meet redemption requests, for
temporary defensive purposes, and pending investment, the Portfolio may hold a
substantial portion of its assets in cash or short-term fixed-income
obligations. See, "ADDITIONAL INVESTMENT INFORMATION--SHORT TERM INVESTMENTS."
The Portfolio may also use a wide range of hedging instruments, including
options, futures contracts and options on futures contracts subject to certain
limitations. See "FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS", "OPTIONS"
and "RISKS OF OPTIONS, FUTURES AND FUTURES CONTRACTS" under "ADDITIONAL
INVESTMENT INFORMATION". The Portfolio may invest in repurchase agreements, but
it normally does so only to invest cash balances. The Portfolio is permitted to
borrow money.
* * *
For a description of the Portfolios' other investment policies and a further
discussion of some of the policies described above, see "ADDITIONAL INVESTMENT
INFORMATION."
PURCHASE OF SHARES
Shares of each Portfolio may be purchased without a sales commission, at net
asset value per share next determined after (i) the Fund has been notified by
telephone of your purchase order and (ii) Federal Funds have been delivered to
the Fund's bank account maintained with, as appropriate, The Chase Manhattan
Bank or Bankers Trust Company ("Custodian Banks"). In addition, a purchase
reimbursement fee equal to 0.75% of the dollar amount invested is charged to
investors in shares of The Emerging Markets Portfolio and paid to the Portfolio;
for The Global Equity Portfolio, the reimbursement fee paid to the Portfolio is
equal to 0.40% of the dollar amount invested. See "HOW TO INVEST" and "PURPOSE
OF REIMBURSEMENT FEES -- THE EMERGING MARKETS AND THE GLOBAL EQUITY PORTFOLIOS."
Shares of The International Equity Portfolio may, under certain circumstances,
be required to be purchased in-kind, as noted below. Eligible investors in The
Global Equity Portfolio may elect to follow these procedures in lieu of paying
a purchase reimbursement fee. At such time as the Fund receives appropriate
regulatory approvals to do so in the future, under certain circumstances, the
Fund may, at its sole discretion, allow eligible
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investors who have an existing investment counseling relationship with
Delaware Investment Advisers or Delaware International to make investments in
the Portfolios by a contribution of securities in-kind to such Portfolios.
The minimum initial investment for a Portfolio is $1,000,000.
By Federal Funds Wire
Purchases of shares of a Portfolio may be made by having your bank wire
Federal Funds to CoreStates Bank, N.A. as described below. In order to ensure
prompt receipt of your Federal Funds Wire and processing of your purchase
order, it is important that the following steps be taken:
1. Telephone the Fund (Toll Free: 1-800-231-8002) and provide us with the
account name, address, telephone number, Tax Identification Number, the
Portfolio(s) selected, the amount being wired and by which bank and which
specific branch, if applicable. We will provide you with a Fund account
number.
2. Instruct your bank to wire the specified amount of Federal Funds to
CoreStates Bank, N.A., Philadelphia, PA, ABA #031000011, DSC Wire Purchase
Bank Account #1412893401. The funds should be sent to the attention of
Delaware Pooled Trust, Inc. (be sure to have your bank include the name of the
Portfolio(s) selected, the account number assigned to you and your account
name). Federal Funds purchase orders will be accepted only on a day on which
the Fund, the NYSE and the Custodian Banks are open for business.
3. Complete the Account Registration Form within two days and mail it to:
Delaware Pooled Trust, Inc.
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
Attn: Client Services
By Mail
Purchases of shares of a Portfolio may also be made by mailing a check payable
to the specific Portfolio selected to the above address (be sure to complete
an Investment Application before sending your check).
Purchase Price
In order for share purchases to be priced at the end of a given business day,
the Fund must be notified by telephone and Federal Funds must be received no
later than the close of regular trading on the New York Stock Exchange
("NYSE") (ordinarily, 4 p.m., Eastern time) on days when the Exchange is open.
If notice is given or Federal Funds are delivered after that time, the
purchase order will be priced on the following business day.
In-Kind Purchases or Similar Procedures (The International Equity and The
Global Equity Portfolios)
Institutions proposing to invest an amount which at the time they telephone
the Fund (as required above), would constitute 5% or more of the assets of The
International Equity Portfolio will, under normal circumstances, be required
to make purchases by tendering securities in which the Portfolio otherwise
would invest or, by following another procedure that will have the same
economic effect as an in-kind purchase. In either case, an investor that is
required to purchase shares pursuant to those procedures will be required to
pay the brokerage or other transaction costs of acquiring the subject
securities. Prospective investors will be notified when they
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<PAGE>
telephone the Fund whether their investment must be made in-kind or by such
other procedure and, if in-kind, what securities must be tendered. The
purchase price per share for such investors shall be the net asset value next
determined after, as the case may be, (1) delivery of cash or securities to
the Custodian Banks and/or (2) the assignment to the Portfolio by a
prospective purchaser on trade date of the investor's right to delivery of
securities as to which brokerage orders have been placed (but, as to which
settlement is yet to occur) and delivery of cash in an amount necessary to pay
for those securities on settlement date. The assets provided to the Portfolio
pursuant to these procedures shall be valued consistent with the same
valuation procedures used to calculate the Portfolio's net asset value. In
lieu of paying the purchase reimbursement fee otherwise payable by investors
in The Global Equity Portfolio, such investors may follow the same procedures
required for The International Equity Portfolio. See "VALUATION OF SHARES."
Investors in The International Equity Portfolio required to follow these
procedures and those proposing to invest in The Global Equity Portfolio
electing to do so should contact the Fund at (1-800-231-8002) for further
information.
ADDITIONAL INVESTMENTS
You may add to your shareholder account at any time and in any amount.
Procedures are the same as those to be followed for a new account, in as much
as it is very important to notify the Fund of your impending purchase by first
calling the Fund (1-800-231-8002). Then you must be sure that your bank
follows the same procedures as described above with respect to the wiring of
Federal Funds to CoreStates Bank, N.A. Additional investments in The
International Equity Portfolio are subject to the same procedures and
requirements (including the in-kind or similar procedures) set forth above.
REDEMPTION OF SHARES
You may withdraw all or any portion of the amount in your account by redeeming
shares at any time by submitting a request in accordance with the instructions
provided below. The Fund will redeem shares of each Portfolio, other than The
Emerging Markets and The Global Equity Portfolios, without cost at its net
asset value next determined after receipt of your redemption request. For
redemptions of shares of The Emerging Markets Portfolio, a redemption
reimbursement fee equal to 0.75% of the amount redeemed is deducted
automatically and paid to the Portfolio; for The Global Equity Portfolio, the
reimbursement fee paid to the Portfolio is equal to 0.30% of the amount
redeemed. See "HOW TO REDEEM" and "PURPOSE OF REIMBURSEMENT FEES --THE
EMERGING MARKETS AND THE GLOBAL EQUITY PORTFOLIOS." On days that the Fund, the
NYSE and the Custodian Banks are open for business, the net asset value of the
Fund's Portfolios are determined as of the close of regular trading of the
NYSE (ordinarily, 4 p.m., Eastern time). See "VALUATION OF SHARES."
Shares of the Fund may be redeemed by mail, FAX message, or telephone. No
charge is made for redemption, except the reimbursement fee assessed to
investors in The Emerging Markets Portfolio and The Global Equity Portfolio.
The proceeds of any redemption may be more or less than the purchase price of
your shares depending on the market value of the investment securities held by
the Portfolio. Shares of The International Equity Portfolio, The Labor Select
International Equity Portfolio, The Global Fixed Income Portfolio, The
International Fixed Income Portfolio, The Global Equity Portfolio and The
Emerging Markets Portfolio may, under certain circumstances, be required to be
redeemed in-kind in portfolio securities, as noted below.
By Mail or FAX Message
Each Portfolio will redeem its shares at the net asset value next determined
on the date the request is received in "good order." Your request should be
addressed to:
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Delaware Pooled Trust, Inc.
Attn: Client Services
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
FAX # 215-255-8864
"Good order" for purposes of mail or FAX message redemptions means that the
request to redeem must include the following documentation:
a. A letter of instruction specifying the number of shares or dollar amount to
be redeemed signed by the appropriate corporate or organizational officer(s)
exactly as it appears on the Account Registration Form.
b. If you wish to change the name of the commercial bank or account
designation to receive the redemption proceeds as provided in the Account
Registration Form, then a separate written request must be submitted to the
Fund at the above address and copies of this request sent to both the current
commercial bank and the new designee bank. Prior to redemption, the Fund will
telephonically confirm the change with both the current and the new designee
banks. Further clarification of these procedures can be obtained by calling
the Fund.
By Telephone
If you have previously elected the Telephone Redemption Option on the Account
Registration Form, you can request a redemption of your shares by calling the
Fund and requesting the redemption proceeds be wired to the commercial bank or
account designation identified in the Account Registration Form. Shares cannot
be redeemed by telephone if stock certificates are held for those shares or,
in the case of The International Equity Portfolio, The Labor Select
International Equity Portfolio, The Global Fixed Income Portfolio, The
International Fixed Income Portfolio, The Global Equity Portfolio or The
Emerging Markets Portfolio, in instances when the special in-kind redemption
procedures are triggered, as described below. Please contact the Fund for
further details. In times of drastic market conditions, the telephone
redemption option may be difficult to implement. If you experience difficulty
in making a telephone redemption, your request may be made by mail or FAX
message, pursuant to the procedures described above. It will be priced at the
net asset value next determined after it is received. Neither the Fund, the
Portfolios nor the Fund's transfer agent, Delaware Service Company, Inc., is
responsible for any losses incurred in acting upon written or telephone
instructions for redemption or exchange of Portfolio shares which are
reasonably believed to be genuine. With respect to such telephone
transactions, the Fund will ensure that reasonable procedures are used to
confirm that instructions communicated by telephone are genuine (including
verification of a form of personal identification) as, if it does not, the
Fund or Delaware Service Company, Inc. may be liable for any losses due to
unauthorized or fraudulent transactions. A written confirmation will be
provided for all purchase, exchange and redemption transactions initiated by
telephone.
To change the name of the commercial bank or account designated to receive the
redemption proceeds, a written request must be sent to the Fund at the address
above. Requests to change the bank or account designation must be signed by
the appropriate person(s) authorized to act on behalf of the shareholder.
The Fund's telephone redemption privileges and procedures may be modified or
terminated by the Fund only upon written notice to the Fund's client
shareholders.
Redemptions In-Kind or Similar Procedures (The International Equity, The Labor
Select International Equity, The Global Fixed Income, The International Fixed
Income, The Global Equity and the Emerging Markets Portfolios)
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Institutions proposing to redeem an amount which, at the time they notify the
Fund of their intention to redeem (as described below), would constitute 5% or
more of the assets of The International Equity Portfolio, The Labor Select
International Equity Portfolio, The Global Fixed Income Portfolio, The
International Fixed Income Portfolio, The Global Equity Portfolio or The
Emerging Markets Portfolio will, under normal circumstances, and if applicable
law permits, be required to accept their redemption proceeds in-kind in
Portfolio securities, unless they elect another procedure which will have the
same economic effect as an in-kind redemption. In either case, an investor
that is required to redeem shares pursuant to this election will bear the
brokerage or other transaction costs of selling the Portfolio securities
representing the value of their redeemed shares. Any Portfolio securities
delivered upon redemption will be valued as described in "VALUATION OF
SHARES." Investors in these Portfolios should contact the Fund at
(1-800-231-8002) for further information.
Eligible investors who have an existing investment counseling relationship
with Delaware Investment Advisers or Delaware International will not be
subject to the Fund's in-kind redemption requirements until such time as the
Fund receives appropriate regulatory approvals to permit such redemptions for
the account of such eligible investors.
IMPORTANT REDEMPTION INFORMATION
Because the Fund's shares are sold to institutions and high net-worth
individuals investors with a relatively high investment minimum, Fund
shareholders likely will hold a significant number of Fund shares. For this
reason, the Fund requests that shareholders proposing to make a large
redemption order give the Fund at least ten days advanced notice of any such
order. This request can easily be satisfied by calling the Fund at
(1-800-231-8002), and giving notification of your future intentions. Once a
formal redemption order is received, the Fund, in the case of redemptions to
be made in cash, normally will make payment for all shares redeemed under this
procedure within three business days of receipt of the order. In no event,
however, will payment be made more than seven days after receipt of a
redemption request in good order. The Fund may suspend the right of redemption
or postpone the date at times when the NYSE is closed, or under any emergency
circumstances as determined by the Securities and Exchange Commission
("Commission").
With respect to The International Equity, The Labor Select International
Equity, The Global Fixed Income, The International Fixed Income, The Global
Equity and The Emerging Markets Portfolios, as noted above, or if the Fund
otherwise determines that it would be detrimental to the best interests of the
remaining shareholders of a Portfolio to make payment wholly or partly in
cash, the Fund may pay the redemption proceeds in whole or in part by a
distribution in-kind of securities held by a Portfolio in lieu of cash in
conformity with applicable rules of the Commission. Investors may incur
brokerage charges on the sale of Portfolio securities so received in payment
of redemptions.
Due to the relatively high cost of maintaining shareholder accounts, the Fund
reserves the right to redeem shares in a Portfolio if the value of your
holdings in that Portfolio is below $500,000. The Fund, however, will not
redeem shares based solely upon market reductions in net asset value. If the
Fund intends to take such action, a shareholder would be notified and given 90
days to make an additional investment before the redemption is processed.
PURPOSE OF REIMBURSEMENT FEES -- THE EMERGING MARKETS AND THE GLOBAL
EQUITY PORTFOLIOS
The purchase and redemption transaction fees are designed to reflect an
approximation of the brokerage and related transaction costs associated with
the investment of an investor's purchase amount or the disposition of assets
to meet redemptions, and to limit the extent to which The Emerging Markets
Portfolio or The Global
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Equity Portfolio (and, indirectly, the Portfolio's existing shareholders)
would have to bear such costs. These costs include: (1) brokerage costs; (2)
market impact costs, i.e., the increase in markets prices which may result
when a Portfolio purchases or sells thinly traded stocks; and (3) the effect
of the "bid-asked" spread in international markets.
The fees represent the manager's estimate of the brokerage and other
transaction costs incurred by a Portfolio in purchasing and selling portfolio
securities, especially international stocks. Without the fee, a Portfolio
would incur these costs directly, resulting in reduced investment performance
for all its shareholders. With the fee, the transaction costs of purchasing
and selling stocks are borne not by all existing shareholders, but only by
those investors making transactions. Also, when a portfolio acquires
securities of companies in emerging markets, transaction costs incurred when
purchasing or selling stocks are extremely high. There are three components of
transaction costs - brokerage fees, the difference between the bid/asked
spread and market impact. Each one of these factors is significantly more
expensive in emerging market countries than in the United States, because of
less competition among brokers, lower utilization of technology on the part of
the exchanges and brokers, the lack of derivative instruments and generally
less liquid markets. Consequently, brokerage commissions are high, bid/asked
spreads are wide, and the market impact is significant in those markets. In
addition to these customary costs, most foreign countries have exchange fees
or stamp taxes.
ADDITIONAL INVESTMENT INFORMATION
U.S. GOVERNMENT SECURITIES
The U.S. government securities in which the various Portfolios may invest for
temporary purposes and otherwise (see "INVESTMENT OBJECTIVES, POLICIES AND
RISK CONSIDERATIONS"), include a variety of securities which are issued or
guaranteed as to the payment of principal and interest by the U.S. government,
and by various agencies or instrumentalities which have been established or
sponsored by the U.S. government.
U.S. Treasury securities are backed by the "full faith and credit" of the
United States. Securities issued or guaranteed by federal agencies and U.S.
government sponsored instrumentalities may or may not be backed by the full
faith and credit of the United States. In the case of securities not backed by
the full faith and credit of the United States, investors in such securities
look principally to the agency or instrumentality issuing or guaranteeing the
obligation for ultimate repayment, and may not be able to assert a claim
against the United States itself in the event the agency or instrumentality
does not meet its commitment. Agencies which are backed by the full faith and
credit of the United States include the Export-Import Bank, Farmers Home
Administration, Federal Financing Bank, and others. Certain agencies and
instrumentalities, such as the Government National Mortgage Association
("GNMA"), are, in effect, backed by the full faith and credit of the United
States through provisions in their charters that they may make "indefinite and
unlimited" drawings on the Treasury, if needed to service its debt. Debt from
certain other agencies and instrumentalities, including the Federal Home Loan
Bank and Federal National Mortgage Association, are not guaranteed by the
United States, but those institutions are protected by the discretionary
authority for the U.S. Treasury to purchase certain amounts of their
securities to assist the institutions in meeting their debt obligations.
Finally, other agencies and instrumentalities, such as the Farm Credit System
and the Federal Home Loan Mortgage Corporation, are federally chartered
institutions under U.S. government supervision, but their debt securities are
backed only by the creditworthiness of those institutions, not the U.S.
government.
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.
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An instrumentality of a U.S. government agency is a government agency
organized under Federal charter with government supervision. Instrumentalities
issuing or guaranteeing securities include, among others, Federal Home Loan
Banks, the Federal Land Banks, Central Bank for Cooperatives, Federal
Immediate Credit Banks and the Federal National Mortgage Association.
MORTGAGE-BACKED SECURITIES
The Real Estate Investment Trust, The Aggregate Fixed Income, The Diversified
Core Fixed Income, The Intermediate Fixed Income, The Limited-Term Maturity
and The Global Fixed Income Portfolios may invest in mortgage-backed
securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities or by government sponsored corporations. Those securities
include, but are not limited to, GNMA certificates. Such securities differ
from other fixed-income securities in that principal is paid back by the
borrower over the length of the loan rather than returned in a lump sum at
maturity. When prevailing interest rates rise, the value of a GNMA security
may decrease as do other debt securities. When prevailing interest rates
decline, however, the value of GNMA securities may not rise on a comparable
basis with other debt securities because of the prepayment feature of GNMA
securities. Additionally, if a GNMA certificate is purchased at a premium
above its principal value because its fixed rate of interest exceeds the
prevailing level of yields, the decline in price to par may result in a loss
of the premium in the event of prepayment. Funds received from prepayments may
be reinvested at the prevailing interest rates which may be lower than the
rate of interest that had previously been earned.
The Portfolios also may invest in collateralized mortgage obligations ("CMOs")
and real estate mortgage investment conduits ("REMICs"). CMOs are debt
securities issued by U.S. government agencies or by financial institutions and
other mortgage lenders and collateralized by a pool of mortgages held under an
indenture. CMOs are issued in a number of classes or series with different
maturities. The classes or series are retired in sequence as the underlying
mortgages are repaid. REMICs, which were authorized under the Tax Reform Act
of 1986, are private entities formed for the purpose of holding a fixed pool
of mortgages secured by an interest in real property. REMICs are similar to
CMOs in that they issue multiple classes of securities. To the extent any
privately-issued CMOs or REMICs in which the Portfolios may invest are
considered by the Commission to be investment companies, the Portfolios will
limit their investments in such securities in a manner consistent with the
provisions of the 1940 Act.
The mortgages backing these securities include conventional 30-year fixed rate
mortgages, graduated payment mortgages and adjustable rate mortgages. These
mortgages may be supported by various types of insurance, may be backed by
GNMA certificates or other mortgage pass-throughs issued or guaranteed by the
U.S. government, its agencies or instrumentalities. However, the guarantees do
not extend to the mortgage-backed securities' value, which is likely to vary
inversely with fluctuations in interest rates. These certificates are in most
cases "pass-through" instruments, through which the holder receives a share of
all interest and principal payments from the mortgages underlying the
certificate. Because the prepayment characteristics of the underlying
mortgages vary, it is not possible to predict accurately the average life or
realized yield of a particular issue of pass-through certificates. During
periods of declining interest rates, prepayment of mortgages underlying
mortgage-backed securities can be expected to accelerate. When the mortgage
obligations are prepaid, the Portfolio may reinvest the prepaid amounts in
securities, the yield of which reflects interest rates prevailing at the time.
Moreover, prepayments of mortgages which underlie securities purchased at a
premium could result in capital losses.
Certain CMOs and REMICs may have variable or floating interest rates and
others may be stripped. Stripped mortgage securities have greater market
volatility than other types of mortgage securities in which the Portfolios may
invest.
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Stripped mortgage securities are usually structured with two classes that
receive different proportions of the interest and principal distributions on a
pool of mortgage assets. A common type of stripped mortgage security will have
one class receiving some of the interest and most of the principal from the
mortgage assets, while the other class will receive most of the interest and
the remainder of the principal. In the most extreme case, one class will
receive all of the interest (the "interest-only" class), while the other class
will receive all of the principal (the "principal-only" class). The yield to
maturity on an interest-only class is extremely sensitive not only to changes
in prevailing interest rates but also to the rate of principal payments
(including prepayments) on the related underlying mortgage assets, and a rapid
rate of principal payments may have a material adverse effect on a Portfolio's
yield to maturity. If the underlying mortgage assets experience greater than
anticipated prepayments of principal, a Portfolio may fail to fully recoup its
initial investment in these securities even if the securities are rated in the
highest rating categories.
Although stripped mortgage securities are purchased and sold by institutional
investors through several investment banking firms acting as brokers or
dealers, these securities were only recently developed. As a result,
established trading markets have not yet been fully developed and,
accordingly, these securities are generally illiquid and to such extent,
together with any other illiquid investments, will not exceed 10% of a
Portfolio's net assets.
CMOs and REMICs issued by private entities are not government securities and
are not directly guaranteed by any government agency. They are secured by the
underlying collateral of the private issuer. Each of the Portfolios may invest
in such private-backed securities but, the Portfolios, other than The
Intermediate Fixed Income Portfolio and The Aggregate Fixed Income Portfolio,
will do so (i) only if the securities are 100% collateralized at the time of
issuance by securities issued or guaranteed by the U.S. government, its
agencies or instrumentalities and (ii) currently, only if they are rated at
the time of purchase in the two highest grades by a nationally-recognized
statistical rating agency.
The Intermediate Fixed Income Portfolio, The Aggregate Fixed Income and The
Diversified Core Fixed Income Portfolio each may invest up to 20% of its total
assets in CMOs and REMICs issued by private entities which are not
collateralized by securities issued or guaranteed by the U.S. government, its
agencies or instrumentalities, so-called non-agency mortgage-backed securities.
Investments in these securities may be made only if the securities (i) are rated
at the time of purchase in the four top rating categories by a
nationally-recognized statistical rating organization (e.g., BBB or better by
S&P or Baa or better by Moody's) and (ii) represent interests in whole-loan
mortgages, multi-family mortgages, commercial mortgages and other mortgage
collateral supported by a first mortgage lien on real estate. Non-agency
mortgage-backed securities are subject to the interest rate and prepayment
risks, described above, to which other CMOs and REMICs issued by private issuers
are subject. Non-agency mortgage-backed securities may also be subject to a
greater risk of loss of interest and principal because they are not
collateralized by securities issued or guaranteed by the U.S. government. In
addition, timely information concerning the loans underlying these securities
may not be as readily available and the market for these securities may be less
liquid than other CMOs and REMICs.
ASSET-BACKED SECURITIES
The Intermediate Fixed Income, The Aggregate Fixed Income, The Diversified
Core Fixed Income and The Limited-Term Maturity Portfolios may also invest in
securities which are backed by assets such as receivables on home equity and
credit card loans, receivables regarding automobile, mobile home and
recreational vehicle loans, wholesale dealer floor plans and leases or other
loans or financial receivables currently available or which may be developed
in the future. All such securities must be rated in one of the four highest
rating categories by a reputable credit rating agency (e.g., BBB by S&P or Baa
by Moody's). Such receivables are securitized in either a pass-through or a
pay-through structure. Pass-through securities provide investors with an
income stream consisting of both principal and interest payments in respect of
the receivables in the underlying pool.
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Pay-through asset-backed securities are debt obligations issued usually by a
special purpose entity, which are collateralized by the various receivables
and in which the payments on the underlying receivables provide the funds to
pay the debt service on the debt obligations issued.
The rate of principal payment on asset-backed securities generally depends
upon the rate of principal payments received on the underlying assets. Such
rate of payments may be affected by economic and various other factors such as
changes in interest rates or the concentration of collateral in a particular
geographic area. Therefore, the yield may be difficult to predict and actual
yield to maturity may be more or less than the anticipated yield to maturity.
Due to the shorter maturity of the collateral backing such securities, there
tends to be less of a risk of substantial prepayment than with mortgage-backed
securities but the risk of such a prepayment does exist. See "MORTGAGE-BACKED
SECURITIES," above. Such asset-backed securities do, however, involve certain
risks not associated with mortgage-backed securities, including the risk that
security interests cannot be adequately or in many cases, ever, established
and other risks which may be peculiar to particular classes of collateral. For
example, with respect to credit card receivables, a number of state and
federal consumer credit laws give debtors the right to set off certain amounts
owed on the credit cards, thereby reducing the outstanding balance. In the
case of automobile receivables, there is a risk that the holders may not have
either a proper or first security interest in all of the obligations backing
such receivables due to the large number of vehicles involved in a typical
issuance and technical requirements under state laws. Therefore, recoveries on
repossessed collateral may not always be available to support payments on the
securities.
SHORT-TERM INVESTMENTS
The short-term investments in which The Large-Cap Value Equity, The
Aggressive Growth, The International Equity, The Small/Mid-Cap Value Equity,
The Diversified Core Fixed Income, The Labor Select International Equity, The
Real Estate Investment Trust, The Global Fixed Income, The International Fixed
Income, The High-Yield Bond, The Global Equity and The Emerging Markets
Portfolios may invest consistent with the limits recited above (see
"INVESTMENT OBJECTIVES, POLICIES AND RISK CONSIDERATIONS") are:
(1) Time deposits, certificates of deposit (including marketable variable rate
certificates of deposit) and bankers' acceptances issued by a U.S. commercial
bank. Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate. Time
deposits maturing in more than seven days will not be purchased by a
Portfolio, and time deposits maturing from two business days through seven
calendar days will not exceed 10% of the total assets of a Portfolio, in the
case of The Large-Cap Value Equity, The Aggressive Growth, The International
Equity, The Global Fixed Income and The International Fixed Income Portfolios,
and 15% of the total assets of a Portfolio, in the case of The Small/Mid-Cap
Value Equity, The Diversified Core Fixed Income, The Labor Select
International Equity, The Real Estate Investment Trust, The Global Equity, The
Emerging Markets and The High-Yield Bond Portfolios. Certificates of deposit
are negotiable short-term obligations issued by commercial banks against funds
deposited in the issuing institution. Variable rate certificates of deposit
are certificates of deposit on which the interest rate is periodically
adjusted prior to their stated maturity based upon a specified market rate. A
bankers' acceptance is a time draft drawn on a commercial bank by a borrower
usually in connection with an international commercial transaction (to finance
the import, export, transfer or storage of goods).
A Portfolio will not invest in any security issued by a commercial bank unless
(i) the bank has total assets of at least $1 billion or, in the case of a bank
which does not have total assets of at least $1 billion, the aggregate
investment made in any one such bank is limited to $100,000 and the principal
amount of such investment is insured in full by the Federal Deposit Insurance
Corporation, (ii) it is a member of the Federal Deposit Insurance Corporation,
and (iii) the bank or its securities have received the highest quality rating
by a nationally-recognized statistical rating organization;
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(2) Commercial paper with the highest quality rating by a
nationally-recognized statistical rating organization (e.g., A-1 by S&P or
Prime-1 by Moody's) or, if not so rated, of comparable quality as determined
by a Portfolio's investment adviser;
(3) Short-term corporate obligations with the highest quality rating by a
nationally-recognized statistical rating organization (e.g., AAA by S&P or Aaa
by Moody's) or, if not so rated, of comparable quality as determined by a
Portfolio's investment adviser;
(4) U.S. government securities (see "U.S. GOVERNMENT SECURITIES"); and
(5) Repurchase agreements collateralized by securities listed above.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES
Each Portfolio of the Fund may purchase securities on a when-issued or delayed
delivery basis. In such transactions, instruments are purchased with payment
and delivery taking place in the future in order to secure what is considered
to be an advantageous yield or price at the time of the transaction. Delivery
of and payment for these securities may take as long as a month or more after
the date of the purchase commitment. Each Portfolio will maintain with its
Custodian Bank a separate account with a segregated portfolio of securities in
an amount at least equal to these commitments. The payment obligation and the
interest rates that will be received are each fixed at the time a Portfolio
enters into the commitment and no interest accrues to the Portfolio until
settlement. Thus, it is possible that the market value at the time of
settlement could be higher or lower than the purchase price if the general
level of interest rates has changed. It is a current policy of the Portfolios
not to enter into when-issued commitments exceeding in the aggregate 15% of
the market value of the Portfolio's total assets less liabilities other than
the obligations created by these commitments.
REPURCHASE AGREEMENTS
Each Portfolio may enter into repurchase agreements with brokers, dealers or
banks deemed to be creditworthy by a Portfolio's investment adviser under
guidelines of the Fund's directors. In a repurchase agreement, a Portfolio
buys securities from a seller that has agreed to repurchase it at a mutually
agreed upon date and price, reflecting the interest rate effective for the
term of the agreement. The term of these agreements is usually from overnight
to one week and never exceeds one year. Not more than 10% of a Portfolio's
assets may be invested in repurchase agreements having a maturity in excess of
seven days in the case of The Large-Cap Value Equity, The Aggressive Growth,
The International Equity, The Global Fixed Income and The International Fixed
Income Portfolios, and 15% of the total assets of a Portfolio, in the case of
The Large-Cap Value Equity Small/Mid-Cap, The Labor Select International
Equity, The Real Estate Investment Trust and The High-Yield Bond Portfolios.
Repurchase agreements may be viewed as a fully collateralized loan of money by
a Portfolio to the seller. The Portfolio always receives securities as
collateral with a market value at least equal to the purchase price and this
value is maintained during the term of the agreement. If the seller defaults
and the collateral value declines, a Portfolio might incur a loss. If
bankruptcy proceedings are commenced with respect to the seller, a Portfolio's
realization upon the collateral may be delayed or limited. Each Portfolio may
invest cash balances in a joint repurchase agreement in accordance with an
Order the Delaware Group has obtained from the Commission under Section 17(d)
of the 1940 Act.
SECURITIES LENDING ACTIVITIES
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Each Portfolio may loan up to 25% of its assets to qualified broker/dealers or
institutional investors for their use relating to short sales or other
security transactions.
The major risk to which a Portfolio would be exposed on a loan transaction is
the risk that the borrower would go bankrupt at a time when the value of the
security goes up. Therefore, a Portfolio will only enter into loan
arrangements after a review of all pertinent facts by the investment adviser,
subject to overall supervision by the Board of Directors, including the
creditworthiness of the borrowing broker, dealer or institution and then only
if the consideration to be received from such loans would justify the risk.
Creditworthiness will be monitored on an ongoing basis by the investment
adviser.
BORROWING FROM BANKS
Each Portfolio may borrow money as a temporary measure or to facilitate
redemptions. No Portfolio has the intention of increasing its net income
through borrowing. Any borrowing will be done from a bank and, consistent with
Commission rules. See the Statement of Additional Information.
FOREIGN INVESTMENT INFORMATION
The International Equity Portfolio, The Labor Select International Equity
Portfolio, The Global Equity Portfolio, The Emerging Markets Portfolio, The
Global Fixed Income Portfolio and The International Fixed Income Portfolio
(and The Real Estate Investment Trust, The High-Yield Bond and The Diversified
Core Fixed Income Portfolios, up to 10%, 10% and 20%, respectively, of their
total assets) will invest in securities of foreign issuers and may hold
foreign currency. Each of these Portfolios has the right to purchase
securities in any developed, underdeveloped or emerging country. The Emerging
Markets Portfolio, under normal market conditions, will invest at least 65% of
its total assets in securities of issuers in emerging markets. Investors
should consider carefully the substantial risks involved in investing in
securities issued by companies and governments of foreign nations. These risks
are in addition to the usual risks inherent in domestic investments. There is
the possibility of expropriation, nationalization or confiscatory taxation,
taxation of income earned in foreign nations or other taxes imposed with
respect to investments in foreign nations, foreign exchange control (which may
include suspension of the ability to transfer currency from a given country),
default in foreign government securities, political or social instability or
diplomatic developments which could affect investments in securities of
issuers in those nations.
In addition, in many countries, there is substantially less publicly available
information about issuers than is available in reports about companies in the
United States and this information tends to be of a lesser quality. Foreign
companies are not subject to uniform accounting, auditing and financial
reporting standards, and auditing practices and requirements may not be
comparable to those applicable to United States companies. In particular, the
assets and profits appearing on the financial statements of a developing or
emerging country issuer may not reflect its financial position or results of
operations in the way they would be reflected had the financial statements
been prepared in accordance with United States generally accepted accounting
principles. Also, for an issuer that keeps accounting records in local
currency, inflation accounting rules may require for both tax and accounting
purposes, that certain assets and liabilities be restated on the issuer's
balance sheet in order to express items in terms of currency or constant
purchasing power. Inflation accounting may indirectly generate losses or
profits. Consequently, financial data may be materially affected by
restatements for inflation and may not accurately reflect the real condition
of those issuers and securities markets.
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It is also expected that the expenses for custodial arrangements of The
International Equity, The Labor Select International Equity, The Real Estate
Investment Trust, The Diversified Core Fixed Income, The Global Fixed Income,
The International Fixed Income, The High-Yield Bond, The Global Equity and The
Emerging Markets Portfolios' foreign securities will be somewhat greater than
the expenses for the custodial arrangements for U.S. securities of equal
value. Dividends and interest paid by foreign issuers may be subject to
withholding and other foreign taxes. Although in some countries a portion of
these taxes is recoverable, the non-recovered portion of foreign withholding
taxes will reduce the income a Portfolio receives from the companies
comprising the Portfolio's investments. See "TAXES."
Further, a Portfolio may encounter difficulty or be unable to pursue legal
remedies and obtain judgments in foreign courts. Commission rates on
securities transactions in foreign countries, which are sometimes fixed rather
than subject to negotiation as in the United States, are likely to be higher.
Further, the settlement period of securities transactions in foreign markets
may be longer than in domestic markets, and may be subject to administrative
uncertainties. In many foreign countries, there is less government supervision
and regulation of business and industry practices, stock exchanges, brokers
and listed companies than in the United States, and capital requirements for
brokerage firms are generally lower. The foreign securities markets of many of
the countries in which a Portfolio may invest may also be smaller, less liquid
and subject to greater price volatility than those in the United States.
Compared to the United States and other developed countries, emerging
countries may have volatile social conditions, relatively unstable governments
and political systems, economies based on only a few industries and economic
structures that are less diverse and mature, and securities markets that trade
a small number of securities, which can result in a low or nonexistent volume
of trading. Prices in these securities markets tend to be volatile and, in the
past, securities in these countries have offered greater potential for gain
(as well as loss) than securities of companies located in developed countries.
Until recently, there has been an absence of a capital market structure or
market-oriented economy in certain emerging countries. Further, investments
and opportunities for investments by foreign investors are subject to a
variety of national policies and restrictions in many emerging countries.
These restrictions may take the form of prior governmental approval, limits on
the amount or type of securities held by foreigners, limits on the types of
companies in which foreigners may invest and prohibitions on foreign
investments in issuers or industries deemed sensitive to national interests.
Additional restrictions may be imposed at any time by these or other countries
in which a Portfolio invests. Also, the repatriation of both investment income
and capital from several foreign countries is restricted and controlled under
certain regulations, including, in some cases, the need for certain
governmental consents. Although these restrictions may in the future make it
undesirable to invest in emerging countries, the investment managers for the
Portfolios do not believe that any current repatriation restrictions would
affect their decision to invest in such countries. Countries such as those in
which a Portfolio may invest, and in which The Emerging Markets Portfolio will
primarily invest, have historically experienced and may continue to
experience, substantial, and in some periods extremely high rates of inflation
for many years, high interest rates, exchange rate fluctuations or currency
depreciation, large amounts of external debt, balance of payments and trade
difficulties and extreme poverty and unemployment. Other factors which may
influence the ability or willingness to service debt include, but are not
limited to, a country's cash flow situation, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of its debt
service burden to the economy as a whole, its government's policy towards the
International Monetary Fund, the World Bank and other international agencies
and the political constraints to which a government debtor may be subject.
With respect to investment in debt issues of foreign governments, the ability
of a foreign government or government-related issuer to make timely and
ultimate payments on its external debt obligations will also be strongly
influenced by the issuer's balance of payments, including export performance,
its access to international credits and investments, fluctuations in interest
rates and the extent of its foreign reserves. A country whose exports are
concentrated in a few commodities or whose economy depends on certain
strategic imports could be vulnerable to fluctuations in international prices
of these commodities or imports. To the extent that a country
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receives payment for its exports in currencies other than dollars, its ability
to make debt payments denominated in dollars could be adversely affected. If a
foreign government or government-related issuer cannot generate sufficient
earnings from foreign trade to service its external debt, it may need to
depend on continuing loans and aid from foreign governments, commercial banks
and multilateral organizations, and inflows of foreign investment. The
commitment on the part of these foreign governments, multilateral
organizations and others to make such disbursements may be conditioned on the
government's implementation of economic reforms and/or economic performance
and the timely service of its obligations. Failure to implement such reforms,
achieve such levels of economic performance or repay principal or interest
when due may curtail the willingness of such third parties to lend funds,
which may further impair the issuer's ability or willingness to service its
debts in a timely manner. The cost of servicing external debt will also
generally be adversely affected by rising international interest rates because
many external debt obligations bear interest at rates which are adjusted based
upon international interest rates. The ability to service external debt will
also depend on the level of the relevant government's international currency
reserves and its access to foreign exchange. Currency devaluations may affect
the ability of a government issuer to obtain sufficient foreign exchange to
service its external debt.
As a result of the foregoing, a foreign governmental issuer may default on its
obligations. If such a default occurs, a Portfolio may have limited effective
legal recourse against the issuer and/or guarantor. Remedies must, in some
cases, be pursued in the courts of the defaulting party itself, and the
ability of the holder of foreign government and government-related debt
securities to obtain recourse may be subject to the political climate in the
relevant country. In addition, no assurance can be given that the holders of
commercial bank debt will not contest payments to the holders of other foreign
government and government-related debt obligations in the event of default
under their commercial bank loan agreements.
Among the foreign government and government related issuers in which The
Emerging Markets, The International Fixed Income, The Global Fixed Income and
The Diversified Core Fixed Income Portfolios may invest are certain high-yield
securities, including so-called Brady Bonds. Brady Bonds are debt securities
issued under the framework of the Brady Plan, an initiative announced by
former U.S. Treasury Secretary Nicholas F. Brady in 1989 as a mechanism for
debtor nations to restructure their outstanding external indebtedness
(generally, commercial bank debt). In restructuring its external debt under
the Brady Plan framework, a debtor nation negotiates with its existing bank
lenders as well as multilateral institutions such as the World Bank and the
International Monetary Fund. The Brady Plan framework, as it has developed,
contemplates the exchange of commercial bank debt for new issued bonds (Brady
Bonds). The investment advisers believe that economic reforms undertaken by
countries in connection with the issuance of Brady Bonds make the debt of
countries which have issued or have announced plans to issue Brady Bonds an
attractive opportunity for investment. Investors, however, should recognize
that the Brady Plan only sets forth general guiding principles for economic
reform and debt reduction, emphasizing that solutions must be negotiated on a
case-by-case basis between debtor nations and their creditors. In addition,
Brady Bonds have been issued only recently and, accordingly, do not have a
long payment history. See "BRADY BONDS" in the Statement of Additional
Information for further information.
The issuers of the foreign government and government-related high-yield
securities, including Brady Bonds, in which The Emerging Markets, The
International Fixed Income, The Global Fixed Income and The Diversified Core
Fixed Income Portfolios expect to invest have in the past experienced
substantial difficulties in servicing their external debt obligations, which
have led to defaults on certain obligations and the restructuring of certain
indebtedness. Restructuring arrangements have included, among other things,
reducing and rescheduling interest and principal payments by negotiating new
or amended credit agreements or converting outstanding principal and unpaid
interest to Brady Bonds, and obtaining new credit to finance interest
payments. Holders of certain foreign government and government-related high
yield securities may be requested to participate in the restructuring of such
obligations and to extend further loans to their issuers. There can be no
assurance that the Brady Bonds and other foreign government and
government-related high yield securities in which The Emerging Markets, The
International Fixed Income, The Global Fixed Income and The Diversified Core
Fixed Income
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Portfolios may invest will not be subject to similar defaults or restructuring
arrangements which may adversely affect the value of such investments.
Furthermore, certain participants in the secondary market for such debt may be
directly involved in negotiating the terms of these arrangements and may
therefore have access to information not available to other market
participants.
With respect to forward foreign currency exchange, the precise matching of
forward contract amounts and the value of the securities involved is generally
not possible since the future value of such securities in foreign currencies
will change as a consequence of market movements in the value of those
securities between the date the forward contract is entered into and the date
it matures. The projection of short-term currency strategy is highly
uncertain. See "FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS," below.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
As noted above, the foreign investments made by The International Equity, The
Labor Select International Equity, The Real Estate Investment Trust, The
Diversified Core Fixed Income, The Global Fixed Income, The International
Fixed Income, The Global Equity and The Emerging Markets Portfolios present
currency considerations which pose special risks. The investment advisers use
a purchasing power parity approach to evaluate currency risk. A purchasing
power parity approach attempts to identify the amount of goods and services
that a dollar will buy in the United States and compares that to the amount of
a foreign currency required to buy the same amount of goods and services in
another country. When the dollar buys less abroad, the foreign currency may be
considered to be overvalued. When the dollar buys more abroad, the foreign
currency may be considered to be undervalued. Eventually, currencies should
trade at levels that should make it possible for the dollar to buy the same
amount of goods and services overseas as in the United States.
Although The International Equity, The Labor Select International Equity, The
Real Estate Investment Trust, The Diversified Core Fixed Income, The Global
Fixed Income, The International Fixed Income, The Global Equity and The
Emerging Markets Portfolios value their assets daily in terms of U.S. dollars,
they do not intend to convert their holdings of foreign currencies into U.S.
dollars on a daily basis. A Portfolio will, however, from time to time,
purchase or sell foreign currencies and/or engage in forward foreign currency
transactions in order to expedite settlement of Portfolio transactions and to
minimize currency value fluctuations. A Portfolio may conduct its foreign
currency exchange transactions on a spot (i.e., cash) basis at the spot rate
prevailing in the foreign currency exchange market or through entering into
contracts to purchase or sell foreign currencies at a future date (i.e., a
"forward foreign currency" contract or "forward" contract). A Portfolio will
convert currency on a spot basis from time to time, and investors should be
aware of the costs of currency conversion.
A forward contract involves an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days from the date
of the contract, agreed upon by the parties, at a price set at the time of the
contract.
A Portfolio may enter into forward contracts to "lock in" the price of a
security it has agreed to purchase or sell, in terms of U.S. dollars or other
currencies in which the transaction will be consummated. By entering into a
forward contract for the purchase or sale, for a fixed amount of U.S. dollars
or foreign currency, of the amount of foreign currency involved in the
underlying security transaction, a Portfolio will be able to protect itself
against a possible loss resulting from an adverse change in currency exchange
rates during the period between the date the security is purchased or sold and
the date on which payment is made or received.
For example, when the investment adviser believes that the currency of a
particular foreign country may suffer a significant decline against the U.S.
dollar or against another currency, a Portfolio may enter into a forward
contract to sell, for a fixed amount of U.S. dollars or other appropriate
currency, the amount of foreign currency approximating the value of some or
all of the Portfolio's securities denominated in such foreign currency. A
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Portfolio will not enter into forward contracts or maintain a net exposure to
such contracts where the consummation of the contracts would obligate the
Portfolio to deliver an amount of foreign currency in excess of the value of
the Portfolio's securities or other assets denominated in that currency.
The Portfolios may enter into forward contracts to hedge the currency risk
associated with the purchase of individual securities denominated in
particular currencies. In the alternative, the Portfolios may also engage in
currency "cross hedging" when, in the opinion of the investment advisers, as
appropriate, the historical relationship among foreign currencies suggests
that the Portfolios may achieve the same protection for a foreign security at
reduced cost and/or administrative burden through the use of a forward
contract relating to a currency other than the U.S. dollar or the foreign
currency in which the security is denominated.
At the maturity of a forward contract, a Portfolio may either sell the
portfolio security and make delivery of the foreign currency, or it may retain
the security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract with the same currency trader
obligating it to purchase, on the same maturity date, the same amount of the
foreign currency. The Portfolio may realize gain or loss from currency
transactions.
With respect to forward foreign currency contracts, the precise matching of
forward contract amounts and the value of the securities involved is generally
not possible since the future value of such securities in foreign currencies
will change as a consequence of market movements in the value of those
securities between the date the forward contract is entered into and the date
it matures. The projection of short-term currency strategy is highly
uncertain.
It is impossible to forecast the market value of Portfolio securities at the
expiration of the contract. Accordingly, it may be necessary for a Portfolio
to purchase additional foreign currency on the spot market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency the Portfolio is obligated to deliver and if a
decision is made to sell the security and make delivery of the foreign
currency. Conversely, it may be necessary to sell on the spot market some of
the foreign currency received upon the sale of a Portfolio security if its
market value exceeds the amount of foreign currency the Portfolio is obligated
to deliver.
HIGH-YIELD, HIGH RISK SECURITIES
The International Fixed Income Portfolio, The Global Fixed Income and The
Diversified Core Fixed Income Portfolio may invest up to 5%, 5% and 20%,
respectively, of its assets in high risk, high-yield fixed-income securities of
foreign governments, including, with specified limitations, so-called Brady
Bonds. The Emerging Markets Portfolio may invest up to 35% of its net assets in
fixed-income securities issued by emerging country companies, and foreign
governments, their agencies and instrumentalities or political sub-divisions,
all of which may be high-yield, high risk securities, including Brady Bonds. For
a description of Brady Bonds and their attendant risks, see "ADDITIONAL
INVESTMENT INFORMATION - FOREIGN INVESTMENT INFORMATION." These high-yield, high
risk securities are rated lower than BBB by S&P and Baa by Moody's or, if
unrated, are considered by the investment adviser to have characteristics
similar to such rated securities.
The High-Yield Bond Portfolio invests primarily in securities rated B- or
higher by S&P or B3 or higher by Moody's or, if unrated, judged to be of
comparable quality by the investment adviser. In its U.S. high yield sector,
The Diversified Core Fixed Income Portfolio, under normal circumstances,
invests between 5% and 30% in U.S. Bonds generally rated BB or lower by S&P or
Fitch or Ba or lower by Moody's or similarly rated by another nationally
recognized statistical rating organization. See "APPENDIX A--RATINGS" to this
Prospectus for more rating information. The discussion in this section
supplements the description of the risks of high-yield securities found
earlier in this Prospectus in "INVESTMENT OBJECTIVES, POLICIES AND RISK
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CONSIDERATIONS - THE HIGH- YIELD BOND PORTFOLIO," and investors should refer
to that section for a further discussion of the risks of high-yield bonds.
Fixed-income securities of this type are considered to be of poor standing and
predominantly speculative. Such securities are subject to a substantial degree
of credit risk. In the past, the high-yields from these bonds have more than
compensated for their higher default rates. There can be no assurance,
however, that yields will continue to offset default rates on these bonds in
the future. The Portfolios' investment advisers intend to maintain an
adequately diversified portfolio of these bonds. While diversification can
help to reduce the effect of an individual default on the Portfolios, there
can be no assurance that diversification will protect the Portfolios from
widespread bond defaults brought about by a sustained economic downturn.
Medium and low-grade bonds held by the Portfolios may be issued as a
consequence of corporate restructurings, such as leveraged buy-outs, mergers,
acquisitions, debt recapitalizations or similar events. Also, these bonds are
often issued by smaller, less creditworthy companies or by highly leveraged
(indebted) firms, which are generally less able than more financially stable
firms to make scheduled payments of interest and principal. The risks posed by
bonds issued under such circumstances are substantial.
The economy and interest rates may affect these high-yield, high risk
securities differently from other securities. Prices have been found to be
less sensitive to interest rate changes than higher rated investments, but
more sensitive to adverse economic changes or individual corporate
developments. Also, during an economic downturn or substantial period of
rising interest rates, highly leveraged issuers may experience financial
stress which would adversely affect their ability to service principal and
interest payment obligations, to meet projected business goals and to obtain
additional financing. Changes by recognized rating agencies in their rating of
any security and in the ability of an issuer to make payments of interest and
principal will also ordinarily have a more dramatic effect on the values of
these investments than on the values of higher rated securities. Such changes
in value will not affect cash income derived from these securities, unless the
issuers fail to pay interest or dividends when due. Such changes will,
however, affect the Portfolios' net asset value per share.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
In order to remain fully invested, to facilitate investments in portfolio
securities and to reduce transaction costs, The Aggressive Growth, The
Small/Mid-Cap Value Equity, The Real Estate Investment Trust, The Diversified
Core Fixed Income, The Global Equity and The Emerging Markets Portfolios may,
to a limited extent, enter into futures contracts, purchase or sell options on
futures contracts and engage in certain transactions in options on securities,
and may enter into closing transactions with respect to such activities. The
Portfolios will only enter into these transactions for hedging purposes if it
is consistent with the Portfolios' investment objectives and policies and the
Portfolios will not engage in such transactions to the extent that obligations
relating to futures contracts, options on futures contracts and options on
securities (see "FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS--OPTIONS
ON SECURITIES"), in the aggregate, exceed 25% of the Portfolios' assets.
Additionally, The International Fixed Income, The Global Equity, The Emerging
Markets and The Diversified Core Fixed Income Portfolios may enter into
futures contracts, purchase or sell options on futures contracts, and trade in
options on foreign currencies, and may enter into closing transactions with
respect to such activities to hedge or "cross hedge" the currency risks
associated with its investments, as described under "FORWARD FOREIGN CURRENCY
EXCHANGE CONTRACTS," above.
The Aggressive Growth, The Small/Mid-Cap Value Equity, The Real Estate
Investment Trust, The Diversified Core Fixed Income, The Global Equity and The
Emerging Markets Portfolios may enter into contracts for the purchase or sale
for future delivery of securities. When a futures contract is sold, the
Portfolios incur a
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contractual obligation to deliver the securities underlying the contract at a
specified price on a specified date during a specified future month. A
purchase of a futures contract means the acquisition of a contractual right to
obtain delivery to the Portfolio of the securities called for by the contract
at a specified price during a specified future month. Because futures
contracts require only a small initial margin deposit, the Portfolios would
then be able to keep a cash reserve applicable to meet potential redemptions
while at the same time being effectively fully invested.
Foreign currency futures contracts operate similarly to futures contracts
concerning securities. When The International Fixed Income, The Global Equity,
The Emerging Markets or The Diversified Core Fixed Income Portfolio sells a
futures contract on a foreign currency, it is obligated to deliver that
foreign currency at a specified future date. Similarly, a purchase by the
Portfolio gives it a contractual right to receive a foreign currency. This
enables the Portfolio to "lock in" exchange rates.
The Portfolios may also purchase and write options to buy or sell futures
contracts. Options on futures are similar to options except that options on
futures give the purchaser the right, in return for the premium paid, to
assume a position in a futures contract, rather than actually to purchase or
sell the futures contract, at a specified exercise price at any time during
the period of the option. The Portfolios will not enter into futures contracts
and options thereon to the extent that more than 5% of a Portfolio's assets
are required as futures contract margin deposits and premiums on options and
only to the extent that obligations under such futures contracts and options
thereon would not exceed 20% of the Portfolio's total assets. In the case of
an option that is in-the-money at the time of purchase, the in-the-money
amount may be excluded in calculating the 5%.
To the extent that interest or exchange rates move in an unexpected direction,
the Portfolio may not achieve the anticipated benefits of investing in futures
contracts and options thereon, or may realize a loss. To the extent that a
Portfolio purchases an option on a futures contract and fails to exercise the
option prior to the exercise date, it will suffer a loss of the premium paid.
Further, the possible lack of a secondary market would prevent the Portfolio
from closing out its positions relating to futures.
OPTIONS
Options on Securities
The Aggressive Growth, The Real Estate Investment Trust, The Diversified Core
Fixed Income, The Global Equity and The Emerging Markets Portfolios may write
covered call options on securities, purchase call options on such securities
and enter into closing transactions related thereto. A Portfolio may also
purchase put options on U.S. securities, may write secured put options on such
securities and enter into closing transactions related thereto.
A covered call option obligates the writer, in return for the premium
received, to sell one of its securities to the purchaser of the option for an
agreed price up to an agreed date. The advantage is that the writer receives
premium income and the purchaser may hedge against an increase in the price of
securities it ultimately wishes to buy. A Portfolio will only purchase call
options to the extent that premiums paid on all outstanding call options do
not exceed 2% of the Portfolio's total assets.
A put option obligates the writer, in return for the premium received, to buy
the security underlying the option at the exercise price during the option
period, and the purchaser of the option has the right to sell the security to
the writer. Each Portfolio will only write put options on a secured basis
which means that the Portfolio will maintain, in a segregated account with its
Custodian Bank, cash or U.S. government securities in an amount not less than
the exercise price of the option at all times during the option period. A
Portfolio will only purchase put options if the Portfolio owns the security
covered by the put option at the time of purchase and to the extent that
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the premiums on all outstanding put options do not exceed 2% of the
Portfolio's total assets. The advantage is that the writer receives premium
income while the purchaser can be protected should the market value of the
security decline.
Closing transactions essentially let the Portfolios offset put options or call
options prior to exercise or expiration. If a Portfolio cannot effect closing
transactions, it may have to hold a security it would otherwise sell or
deliver a security it might want to hold.
The Portfolios may use both exchange-traded and over-the-counter options.
Certain over-the-counter options may be illiquid. The Aggressive Growth
Portfolio will only invest in such options to the extent consistent with its
10% limit on investments in illiquid securities, and The Real Estate
Investment Trust, The Diversified Core Fixed Income, The Global Equity and The
Emerging Markets Portfolios will only invest in such options to the extent
consistent with their 15% limit on investments in illiquid securities.
With respect to writing covered call options, the Portfolios may lose the
potential market appreciation of the securities subject to the option, if the
investment adviser's judgment is wrong and the price of the security moves in
the opposite direction from what was anticipated. In purchasing put and call
options, the premium paid by a Portfolio plus any transaction costs will
reduce any benefit realized by the Portfolio upon exercise of the option. When
writing put options, the Portfolios may be required, when the put is
exercised, to purchase securities at higher prices than current market prices.
Options on Stock Indices
The Global Equity Portfolio, The Diversified Core Fixed Income Portfolio and
The Emerging Markets Portfolio also may acquire options on stock indices. A
stock index assigns relative values to the common stocks included in the index
with the index fluctuating with changes in the market values of the underlying
stock. Options on stock indices are similar to options on stocks, but have
different delivery requirements. See "OPTIONS ON STOCK INDICES" in the
Statement of Additional Information.
Options on Foreign Currencies
The International Fixed Income, The Global Equity, The Emerging Markets and
The Diversified Core Fixed Income Portfolios may purchase call options and
write covered call options on foreign currencies and enter into related
closing transactions. A Portfolio may also purchase put options and write
secured put options on foreign currencies and enter into related closing
transactions. A Portfolio will enter into such transactions to hedge or "cross
hedge" the currency risks associated with its investments, as described under
"FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS," above.
Options on foreign currencies operate similarly to options on securities. The
purchase of an option on a foreign currency may constitute an effective hedge
against fluctuations in exchange rates although, in the event of a rate
movement adverse to a Portfolio's position, a Portfolio may forfeit the entire
amount of the premium plus any related transaction costs. As in the case of
other types of options, the writing of an option on a foreign currency will
constitute only a partial hedge, up to the amount of the premium received, and
a Portfolio could be required to purchase or sell foreign currencies at
disadvantageous exchange rates, thereby incurring losses.
A Portfolio will write call options only if they are "covered" and put options
only if they are secured. A call written by a Portfolio will be considered
covered if a Portfolio owns short-term debt securities with a value equal to
the face amount of the option contract and denominated in the currency upon
which the call is written. A put option written by a Portfolio will be
considered secured if, so long as a Portfolio is obligated as the writer of
the put, it segregates with its Custodian Bank cash or liquid high grade debt
securities equal at all times to the aggregate exercise price of the put.
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RISKS OF TRANSACTIONS IN OPTIONS, FUTURES AND FORWARD CONTRACTS
The use of futures contracts, options on futures contracts, forward contracts
and certain options for hedging and other non-speculative purposes as
described above involves certain risks. For example, a lack of correlation
between price changes of an option or futures contract and the assets being
hedged could render a Portfolio's hedging strategy unsuccessful and could
result in losses. The same results could occur if movements of foreign
currencies do not correlate as expected by the investment adviser at a time
when a Portfolio is using a hedging instrument denominated in one foreign
currency to protect the value of a security denominated in a second foreign
currency against changes caused by fluctuations in the exchange rate for the
dollar and the second currency. If the direction of securities prices,
interest rates or foreign currency prices is incorrectly predicted, the
Portfolio will be in a worse position than if such transactions had not been
entered into. In addition, since there can be no assurance that a liquid
secondary market will exist for any contract purchased or sold, a Portfolio
may be required to maintain a position (and in the case of written options may
be required to continue to hold the securities used as cover) until exercise
or expiration, which could result in losses. Further, options and futures
contracts on foreign currencies, and forward contracts, entail particular
risks related to conditions affecting the underlying currency.
Over-the-counter transactions in options and forward contracts also involve
risks arising from the lack of an organized exchange trading environment.
RESTRICTED/ILLIQUID SECURITIES
Each Portfolio may invest in restricted securities, including securities
eligible for resale without registration pursuant to Rule 144A ("Rule 144A
Securities") under the Securities Act of 1933 ("1933 Act"). Rule 144A exempts
many privately placed and legally restricted securities from the registration
requirements of the 1933 Act and permits such securities to be freely traded
among certain institutional buyers such as the Portfolios.
Each Portfolio, other than The Diversified Core Fixed Income, The Aggregate
Fixed Income, The Small/Mid-Cap Value Equity, The Labor Select International
Equity, The Real Estate Investment Trust, The High-Yield Bond and The
International Fixed Income Portfolios, may invest no more than 10% of the
value of its net assets in illiquid securities. The Diversified Core Fixed
Income, The Aggregate Fixed Income, The Small/Mid-Cap Value Equity, The Labor
Select International Equity, The Real Estate Investment Trust, The High-Yield
Bond, The International Fixed Income, The Global Equity and The Emerging
Markets Portfolios may each invest no more than 15% of the value of its net
assets in illiquid securities. Illiquid securities, for purposes of this
policy, include repurchase agreements maturing in more than seven days.
While maintaining oversight, the Board of Directors has delegated to each
Portfolio's investment adviser the day-to-day functions of determining whether
or not individual Rule 144A Securities are liquid for purposes of a
Portfolio's limitation on investments in illiquid assets. The Board has
instructed each Portfolio's investment adviser to consider the following
factors in determining the liquidity of a Rule 144A Security: (i) the
frequency of trades and trading volume for the security; (ii) whether at least
three dealers are willing to purchase or sell the security and the number of
potential purchasers; (iii) whether at least two dealers are making a market
in the security; and (iv) the nature of the security and the nature of the
marketplace trades (e.g., the time needed to dispose of the security, the
method of soliciting offers, and the mechanics of transfer).
If an investment adviser determines that a Rule 144A Security which was
previously determined to be liquid is no longer liquid and, as a result, the
Portfolio's holdings of illiquid securities exceed the Portfolio's 10% or 15%
limit, as applicable, on investment in such securities, the investment adviser
will determine what action shall be taken to ensure that the Portfolio
continues to adhere to such limitation.
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CONVERTIBLE, DEBT AND NON-TRADITIONAL EQUITY SECURITIES
A portion of The Small/Mid-Cap Value Equity and The High-Yield Bond
Portfolios' assets may be invested in convertible and debt securities of
issuers in any industry, and The Real Estate Investment Trust Portfolios'
assets may be invested in convertible securities of issuers in the real estate
industry. A convertible security is a security which may be converted at a
stated price within a specified period of time into a certain quantity of the
common stock of the same or a different issuer. Convertible and debt
securities are senior to common stocks in a corporation's capital structure,
although convertible securities are usually subordinated to similar
nonconvertible securities. Convertible and debt securities provide a
fixed-income stream and the opportunity, through its conversion feature, to
participate in the capital appreciation resulting from a market price advance
in the convertible security's underlying common stock. Just as with debt
securities, convertible securities tend to increase in market value when
interest rates decline and tend to decrease in value when interest rates rise.
However, the price of a convertible security is also influenced by the market
value of the security's underlying common stock and tends to increase as the
market value of the underlying stock rises, whereas it tends to decrease as
the market value of the underlying stock declines. Convertible and debt
securities acquired by The Small/Mid-Cap Value Equity, The Real Estate
Investment Trust, and The High-Yield Bond Portfolios may be rated below
investment grade, or unrated. These lower rated convertible and debt
securities are subject to credit risk considerations substantially similar to
such considerations affecting high risk, high-yield bonds, commonly referred
to as "junk bonds." See "INVESTMENT OBJECTIVES, POLICIES AND RISK
CONSIDERATIONS--THE HIGH-YIELD BOND PORTFOLIO" and "HIGH-YIELD, HIGH RISK
SECURITIES" for a further discussion of these types of investments.
The Small/Mid-Cap Value Equity, The Real Estate Investment Trust, The
High-Yield Bond and The Emerging Markets Portfolios may invest in convertible
preferred stocks that offer enhanced yield features, such as Preferred Equity
Redemption Cumulative Stock ("PERCS"), which provide an investor, such as a
Portfolio, with the opportunity to earn higher dividend income than is
available on a company's common stock. A PERCS is a preferred stock which
generally features a mandatory conversion date, as well as a capital
appreciation limit which is usually expressed in terms of a stated price. Upon
the conversion date, most PERCS convert into common stock of the issuer (PERCS
are generally not convertible into cash at maturity). Under a typical
arrangement, if after a predetermined number of years the issuer's common
stock is trading at a price below that set by the capital appreciation limit,
each PERCS would convert to one share of common stock. If, however, the
issuer's common stock is trading at a price above that set by the capital
appreciation limit, the holder of the PERCS would receive less than one full
share of common stock. The amount of that fractional share of common stock
received by the PERCS holder is determined by dividing the price set by the
capital appreciation limit of the PERCS by the market price of the issuer's
common stock. PERCS can be called at any time prior to maturity, and hence do
not provide call protection. However, if called early, the issuer may pay a
call premium over the market price to the investor. This call premium declines
at a preset rate daily, up to the maturity date of the PERCS.
The Small/Mid-Cap Value Equity, The Real Estate Investment Trust, The
High-Yield Bond and The Emerging Markets Portfolios may also invest in other
enhanced convertible securities. These include but are not limited to ACES
(Automatically Convertible Equity Securities), PEPS (Participating Equity
Preferred Stock), PRIDES (Preferred Redeemable Increased Dividend Equity
Securities), SAILS (Stock Appreciation Income Linked Securities), TECONS (Term
Convertible Notes), QICS (Quarterly Income Cumulative Securities) and DECS
(Dividend Enhanced Convertible Securities). ACES, PEPS, PRIDES, SAILS, TECONS,
QICS and DECS all have the following features: they are company-issued
convertible preferred stock; unlike PERCS, they do not have capital
appreciation limits; they seek to provide the investor with high current
income, with some prospect of future capital appreciation; they are typically
issued with three to four-year maturities; they typically have some built-in
call protection for the first two to three years; investors have the right to
convert them into shares of common stock at a preset conversion ratio or hold
them until maturity; and upon maturity, they will automatically convert to
either cash or a specified number of shares of common stock.
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REITS
The Real Estate Investment Trust Portfolios' investment in REITs presents
certain further risks that are unique and in addition to the risks associated
with investing in the real estate industry in general. Equity REITs may be
affected by changes in the value of the underlying property owned by the
REITs, while mortgage REITs may be affected by the quality of any credit
extended. REITs are dependent on management skills, are not diversified, and
are subject to the risks of financing projects. REITs whose underlying assets
include long-term health care properties, such as nursing, retirement and
assisted living homes, may be impacted by federal regulations concerning the
health care industry.
REITs (especially mortgage REITs) are also subject to interest rate risks -
when interest rates decline, the value of a REIT's investment in fixed rate
obligations can be expected to rise. Conversely, when interest rates rise, the
value of a REIT's investment in fixed rate obligations can be expected to
decline. In contrast, as interest rates on adjustable rate mortgage loans are
reset periodically, yields on a REIT's investments in such loans will
gradually align themselves to reflect changes in market interest rates,
causing the value of such investments to fluctuate less dramatically in
response to interest rate fluctuations than would investments in fixed rate
obligations.
REITs may have limited financial resources, may trade less frequently and in a
limited volume, and may be subject to more abrupt or erratic price movements
than other securities.
DEPOSITARY RECEIPTS
The Large-Cap Value Equity, The International Equity, The Diversified Core
Fixed Income, The Small/Mid-Cap Value Equity, The Real Estate Investment
Trust, The Global Fixed Income, The International Fixed Income, The Global
Equity and The Emerging Markets Portfolios may invest in sponsored and
unsponsored American Depositary Receipts ("ADRs") that are actively traded in
the United States. The Global Fixed Income and International Fixed Income
Portfolios may also invest in sponsored and unsponsored European Depositary
Receipts ("EDRs") and The International Equity, The Global Equity and The
Emerging Markets Portfolios may also invest in sponsored and unsponsored EDRs
and Global Depositary Receipts ("GDRs"). ADRs are receipts typically issued by
a U.S. bank or trust company which evidence ownership of underlying securities
issued by a foreign corporation. EDRs and GDRs are receipts issued by non-U.S.
Banks or trust companies and foreign branches of U.S. banks that evidence
ownership of the underlying foreign or U.S. securities. "Sponsored" ADRs, EDRs
or GDRs are issued jointly by the issuer of the underlying security and a
Depositary, and "unsponsored" ADRs, EDRs or GDRs are issued without the
participation of the issuer of the deposited security. Holders of unsponsored
ADRs, EDRs or GDRs generally bear all the costs of such facilities and the
Depositary of an unsponsored ADR, EDR or GDR facility frequently is under no
obligation to distribute shareholder communications received from the issuer
of the deposited security or to pass through voting rights to the holders of
such receipts in respect of the deposited securities. Therefore, there may not
be a correlation between information concerning the issuer of the security and
the market value of an unsponsored ADR, EDR or GDR. ADRs may be listed on a
national securities exchange or may be traded in the over-the-counter market.
EDRs and GDRs traded in the over-the-counter market which do not have an
active or substantial secondary market will be considered illiquid and
therefore will be subject to a Portfolio's limitation with respect to such
securities. ADR prices are denominated in U.S. dollars although the underlying
securities are denominated in a foreign currency. Investments in ADRs, EDRs
and GDRs involve risks similar to those accompanying direct investments in
foreign securities.
INVESTMENT COMPANY SECURITIES
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Any investments that The Emerging Markets Portfolio, The Global Equity
Portfolio or The Diversified Core Fixed Income Portfolio make in either
closed-end or open-end investment companies will be limited by the 1940 Act,
and would involve an indirect payment of a portion of the expenses, including
advisory fees, of such other investment companies. Under the 1940 Act's
limitations, The Portfolios may not (1) own more than 3% of the voting stock
of another investment company; (2) invest more than 5% of the Portfolio's
total assets in the shares of any one investment company; nor (3) invest more
than 10% of the Portfolio's total assets in shares of other investment
companies. These percentage limitations also apply to the Portfolio's
investments in unregistered investment companies.
ZERO COUPON AND PAY-IN-KIND BONDS
Zero coupon bonds are debt obligations which do not entitle the holder to any
periodic payments of interest prior to maturity or a specified date when the
securities begin paying current interest, and therefore are issued and traded
at a discount from their face amounts or par value. PIK bonds pay interest
through the issuance to holders of additional securities. Zero coupon bonds
and PIK bonds are generally considered to be more interest-sensitive than
income bearing bonds, to be more speculative than interest-bearing bonds, and
to have certain tax consequences which could, under certain circumstances, be
adverse to the Portfolio's authorized to invest in them. For example, with
zero coupon bonds, the Portfolio accrues, and is required to distribute to
shareholders, income on such bonds. However, the Portfolio may not receive the
cash associated with this income until the bonds are sold or mature. If the
Portfolio did not have sufficient cash to make the required distribution of
accrued income, the Portfolio could be required to sell other securities in
its portfolio or to borrow to generate the cash required.
INVESTMENT LIMITATIONS
Each Portfolio's investment objectives, their designation as a diversified
portfolio or, in the case of The Global Fixed Income and The Emerging Markets
Portfolios, as non-diversified portfolios, and their policies concerning
portfolio lending, borrowing from a bank and concentration of investments in
specific industries may not be changed unless authorized by the vote of a
majority of a Portfolio's outstanding voting securities. A "majority vote of
the outstanding voting securities" is the vote by the holders of the lesser of
a) 67% or more of a Portfolio's voting securities present in person or
represented by proxy; or b) more than 50% of the outstanding voting
securities. The Statement of Additional Information lists other more specific
investment restrictions of each Portfolio which may not be changed without a
majority shareholder vote.
Except as specified above and under the heading "INVESTMENT OBJECTIVES,
POLICIES AND RISK CONSIDERATIONS" in this Prospectus and as described under
"INVESTMENT POLICIES, PORTFOLIO TECHNIQUES AND RISK CONSIDERATIONS" in the
Statement of Additional Information, the foregoing investment policies are not
fundamental and the directors may change such policies without an affirmative
vote of a "majority of the Fund's outstanding voting securities," as defined
in the 1940 Act.
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MANAGEMENT OF THE FUND
Directors
The business and affairs of the Fund and its Portfolios are managed under the
direction of the Fund's Board of Directors. See "FUND OFFICERS AND PORTFOLIO
MANAGERS" under "DELAWARE POOLED TRUST SUMMARY" in this Prospectus and the
Fund's Statement of Additional Information for additional information about
the Fund's officers and directors.
Investment Advisers
Delaware Investment Advisers, a division of Delaware Management Company, Inc.
("Delaware"), furnishes investment advisory services to The Large-Cap Value
Equity, The Aggressive Growth, The Small/Mid-Cap Value Equity, The Aggregate
Fixed Income, The Diversified Core Fixed Income, The Real Estate Investment
Trust, The Intermediate Fixed Income, The Limited-Term Maturity and The
High-Yield Bond Portfolios and furnishes sub-investment advisory services to
The Global Equity Portfolio related to the U.S. securities portion of that
Portfolio. Lincoln Investment Management, Inc. ("Lincoln"), a wholly owned
subsidiary of Lincoln National Corporation, acts as sub-adviser to Delaware
with respect to The Real Estate Investment Trust Portfolios. In its capacity
as sub-adviser, Lincoln furnishes Delaware with investment recommendations,
asset allocation advice, research, economic analysis and other investment
services with respect to the securities in which The Real Estate Investment
Trust Portfolios may invest. Delaware and its predecessors have been managing
the funds in the Delaware Group since 1938. On October 31, 1997, Delaware
and its affiliates within the Delaware Group, including Delaware
International, were supervising in the aggregate more than $38 billion in
assets in various institutional or separately managed (approximately
$22,496,609,000) and investment company (approximately $16,012,252,000)
accounts. Lincoln (formerly named Lincoln National Investment Management
Company) was incorporated in 1930. Lincoln's primary activity is institutional
fixed-income investment management and consulting. Such activity includes
fixed-income portfolios, private placements, real estate debt and equity, and
asset/liability management. As of October 31, 1997, Lincoln had over $38
billion in assets under management. Lincoln provides investment management
services to Lincoln National Corporation, its principal subsidiaries and
affiliated registered investment companies, and acts as investment adviser to
other unaffiliated clients.
Delaware International Advisers Ltd. ("Delaware International") furnishes
investment advisory services to The International Equity, The Labor Select
International Equity, The Global Fixed Income, The International Fixed Income,
The Global Equity and The Emerging Markets Portfolios and furnishes
sub-advisory services to The Diversified Core Fixed Income Portfolio related
to the foreign securities portion of that Portfolio. Several of the principals
of Delaware International were previously associated with a registered
investment adviser which managed the assets of a registered investment
company. Delaware International commenced operations as a registered
investment adviser in December 1990.
Delaware has entered into Investment Advisory Agreements with the Fund on
behalf of The Large-Cap Value Equity, The Aggressive Growth, The
Small/Mid-Cap Value Equity, The Diversified Core Fixed Income, The Aggregate
Fixed Income, The Real Estate Investment Trust, The Intermediate Fixed Income,
The Limited-Term Maturity and The High-Yield Bond Portfolios. Delaware has
also entered into a Sub-Advisory Agreement with Lincoln with respect to The
Real Estate Investment Trust Portfolios and with Delaware International with
respect to The Diversified Core Fixed Income Portfolio. Delaware International
has entered into Investment Advisory Agreements with the Fund on behalf of The
International Equity, The Labor Select International Equity, The Global Fixed
Income, The International Fixed Income, The Global Equity and The Emerging
Markets Portfolios. Delaware acts as sub-adviser to Delaware International
with respect to The Global Equity Portfolio managing the U.S. securities
portion of that Portfolio. Under these Agreements, Delaware and Delaware
International, subject to the control and supervision of the Fund's Board of
Directors and in
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<PAGE>
conformance with the stated investment objectives and policies of the
Portfolios with which they have an agreement, manage the investment and
reinvestment of the assets of the Portfolios with which they have agreements.
In this regard, it is their responsibility to make investment decisions for
the respective Portfolios.
As compensation for the services to be rendered under their advisory
agreements, Delaware or, as relevant, Delaware International is entitled to an
advisory fee calculated by applying a quarterly rate, based on the following
annual percentage rates, to the Portfolio's average daily net assets for the
quarter:
Portfolio Rate
The Large-Cap Value Equity Portfolio 0.55%
The Aggressive Growth Portfolio 0.80%
The International Equity 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 Global Equity Portfolio 0.75%**
The Diversified Core Fixed Income Portfolio 0.43%***
The Aggregate Fixed Income Portfolio 0.40%
The Emerging Markets Portfolio 1.20%****
The Intermediate 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%
* Lincoln receives 30% of the advisory fee paid to Delaware for acting as
sub-adviser to Delaware with respect to The Real Estate Investment Trust
Portfolios.
** Delaware receives 50% of the advisory fee paid to Delaware International
for acting as sub-adviser to Delaware International with respect to the
U.S. securities portion of The Global Equity Portfolio.
*** Delaware International receives from Delaware, a sub-advisory fee for
managing the foreign securities portion of The Diversified Core Fixed
Income Portfolio based on the proportion of the Portfolio's average daily
net assets allocated to foreign securities. See "INVESTMENT MANAGEMENT."
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**** Delaware International has elected voluntarily to limit its annual
Investment Advisory Fee to no more than 1.00% of The Emerging Markets
Portfolio's average daily net assets during the period from October 1,
1997 through October 31, 1998. The effect of the current fee waiver of
1.55% with respect to "Total Operating Expenses" and the 1.00% fee
limitation with respect to The Emerging Markets Portfolio is that the
annual Investment Advisory Fee paid to Delaware International on behalf
of that Portfolio will be an amount equal to the lesser of 1.00% or the
amount necessary to limit "Total Operating Expenses" of the Portfolio
(exclusive of taxes, interest, brokerage commissions and extraordinary
expenses) to no more than 1.55% of average net assets, on an annualized
basis. Delaware International has also voluntarily agreed that the annual
Investment Advisory Fee payable to Delaware International on behalf of
The Emerging Markets Portfolio will not exceed 1.00% unless shareholders
of the Portfolio have been notified of the change to the 1.00% fee
limitation at least one year in advance of such increase.
As noted in "FUND EXPENSES," Delaware or, as relevant, Delaware International
elected voluntarily to waive that portion, if any, of its investment advisory
fees and to pay a Portfolio's expenses to the extent necessary to ensure that
a Portfolio's expenses (investment advisory fees, plus certain other noted
expenses) do not exceed, on an annualized basis, the amounts noted in that
section of this Prospectus through April 30, 1998. In addition, out of the
investment advisory fees to which they are otherwise entitled, Delaware and
Delaware International pay their proportionate share of the fees paid to
unaffiliated directors by the Fund, except that Delaware will make no such
payments out of the fees it receives for managing The Small/Mid-Cap Value
Equity, The Aggregate Fixed Income, The Diversified Core Fixed Income, The
Real Estate Investment Trust and The High-Yield Bond Portfolios and Delaware
International will make no such payments out of the fees it receives for
managing The Labor Select International Equity, The International Fixed
Income, The Global Equity and The Emerging Markets Portfolios.
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For the fiscal year ended October 31, 1997, the investment mangement fees
accrued and paid by the Portfolios (as a percentage of average daily net
assets) were as follows:
<TABLE>
<CAPTION>
Investment Investment
Management Management
Fees Fees
Portfolio Accrued Paid
<S> <C> <C>
The Large-Cap Value Equity 0.55% 0.54%
The Aggressive Growth 0.80% 0.33%
The Global Fixed Income 0.50% 0.45%
The Intermediate Fixed Income 0.40% 0.09%
The Labor Select International Equity Portfolio 0.75% 0.57%
The High-Yield Bond Portfolio(1) 0.45%(5) 0.19%(5)
The International Fixed Income Portfolio(2) 0.50%(5) 0.24%(5)
The Emerging Markets Portfolio(3) 1.20%(5) 0.72%(5)
The Global Equity Portfolio(4) 0.75%(5) none
</TABLE>
(1) Commenced operations on December 2, 1996.
(2) Commenced operations on April 11, 1997.
(3) Commenced operations on April 14, 1997.
(4) Commenced operations on October 15, 1997.
(5) Annualized.
For the fiscal year ended October 31, 1997, the investment management fee
paid by The International Equity Portfolio amounted to 0.75% of average daily
net assets. The advisory fees payable by The Aggressive Growth, The
International Equity, The Labor Select International Equity, The Real Estate
Investment Trust, The Global Equity and The Emerging Markets Portfolios, while
higher than the advisory fees paid by other mutual funds in general, are
comparable to fees paid by other mutual funds with similar objectives and
policies to the Portfolios.
Delaware is an indirect, wholly owned subsidiary of Delaware Management
Holdings, Inc. ("DMH"). On April 3, 1995, a merger between DMH and a wholly
owned subsidiary of Lincoln National Corporation ("Lincoln National") was
completed. DMH, Delaware and Delaware International are now indirect, wholly
owned subsidiaries, and subject to the ultimate control, of Lincoln National.
Lincoln Investment Management, Inc. ("Lincoln"), the sub-adviser to Delaware
with respect to The Real Estate Investment Trust Portfolios is a wholly owned
subsidiary of Lincoln National. Delaware, Delaware International and Lincoln
may be deemed to be affiliated persons under the 1940 Act, as the three
companies are each under the ultimate control of Lincoln National. Lincoln
National, with headquarters in Fort Wayne, Indiana, is a diversified
organization with operations in many aspects of the financial services
industry, including insurance and investment management. In connection with
the merger, new Investment Management Agreements between the Fund on behalf of
The Large-Cap Value Equity Portfolio, The Aggressive Growth Portfolio, The
Intermediate Fixed Income Portfolio and The Limited-Term Maturity Portfolio
and Delaware, and new Investment Management Agreements between the Fund on
behalf of The International Equity Portfolio, The Global Fixed Income
Portfolio and The International Fixed Income Portfolio and Delaware
International were executed following shareholder approval. Delaware's address
is One Commerce Square, 2005 Market Street, Philadelphia, PA 19103. Delaware
International's address is 3rd Floor, 80 Cheapside, London EC2V 6EE.
Lincoln's address is 200 E. Berry Street, Fort Wayne, IN 46802.
The Real Estate Investment Trust Portfolio II - Past Performance of Previous
Fund
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The investment objectives, policies and strategies of The Real Estate
Investment Trust Portfolio and The Real Estate Investment Trust Portfolio II
are identical. Mr. Zenouzi makes comparable selections of securities for each
Portfolio. The table below presents total return performance as of October
31, 1997 on an annualized basis for The Real Estate Investment Trust Portfolio
compared with The NAREIT Equity REIT Index:
Since Inception
(12/6/95)
---------------
The Real Estate Investment Trust Portfolio (1) 37.78%
The NAREIT Equity REIT Index (2) 29.48%
(1) The historical performance presented above is that of the original
(and, prior to October 14, 1997, only) class of shares ("Original
Class") offered by The Real Estate Investment Trust Portfolio. The
Original Class, like the only class of shares offered by The Real
Estate Investment Trust Portfolio II, did not carry a front-end sales
charge and was not subject to Rule 12b-1 distribution expenses. Total
return reflects changes in share prices and reinvestment of dividends
and distributions and is net of all expenses. The expense ratio of
the Original Class of The Real Estate Investment Trust Portfolio was
capped at 0.89% since inception. The Original Class has been
redesignated "REIT Fund A Class" and is now being offered in a
separate prospectus.
(2) The NAREIT Equity REIT Index is an unmanaged index and a theoretical
measure of the performance of real estate investment trust stocks in
aggregate rather than an actual available investment.
Please note that this historical performance presented above is for The Real
Estate Investment Trust Portfolio, a separate Portfolio of the Fund, and its
performance is not indicative of the potential performance of The Real Estate
Investment Trust Portfolio II. Share prices and investment returns will
fluctuate reflecting market conditions.
Administrator
Delaware Service Company, Inc., an affiliate of Delaware and an indirect,
wholly owned subsidiary of DMH, provides the Fund with administrative services
pursuant to the Amended and Restated Shareholders Services Agreement with the
Fund on behalf of the Portfolios. The services provided under the Amended and
Restated Shareholders Services Agreement are subject to the supervision of the
officers and directors of the Fund, and include day-to-day administration of
matters related to the corporate existence of the Fund, maintenance of its
records, preparation of reports, supervision of the Fund's arrangements with
its Custodian Banks, and assistance in the preparation of the Fund's
registration statements under Federal and State laws. The Amended and Restated
Shareholders Services Agreement also provides that Delaware Service Company,
Inc. will provide the Fund with dividend disbursing and transfer agent
services. Delaware Service Company, Inc. is located at 1818 Market Street,
Philadelphia, PA 19103. For its services under the Amended and Restated
Shareholders Services Agreement, the Fund pays Delaware Service Company, Inc.
an annual fixed fee, payable monthly, and allocated among the Portfolios of
the Fund based on the relative percentage of assets of each Portfolio.
Delaware Service Company, Inc. also provides accounting services to the Fund
pursuant to the terms of a separate Fund Accounting Agreement.
Distributor
Delaware Distributors, L.P. ("DDLP"), 1818 Market Street, Philadelphia, PA
19103, serves as the exclusive Distributor of the shares of the Fund's
Portfolios. Under its Distribution Agreements with the Fund on behalf of each
Portfolio, DDLP sells shares of the Fund upon the terms and at the current
offering price described in this Prospectus. DDLP is not obligated to sell any
certain number of shares of the Fund. DDLP is an indirect, wholly owned
subsidiary of DMH.
Expenses
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Each Portfolio is responsible for payment of certain other fees and expenses
(including legal fees, accountants' fees, custodial fees and printing and
mailing costs) specified in the Amended and Restated Shareholders Services
Agreement and each of the respective Distribution Agreements. For the fiscal
year ended October 31, 1997, the ratios of expenses to average daily net
assets for The Large-Cap Value Equity, The Aggressive Growth, The Global
Fixed Income, The Labor Select International Equity, The Real Estate
Investment Trust Portfolio , The International Equity Portfolio and The
Intermediate Fixed Income Portfolio were 0.66%, 0.93%, 0.60%, 0.89%, 0.82%,
0.93% and 0.53%, respectively. For each Portfolio other than The
International Equity Portfolio, these ratios reflect the waiver and payment of
fees by the respective investment adviser, as described above.
SHAREHOLDER SERVICES
Special Reports and Other Services
The Fund provides client shareholders with annual audited financial reports
and unaudited semi-annual financial reports. In addition, the investment
advisers' dedicated service staff may also provide client shareholders a
detailed monthly appraisal of the status of their account and a complete
review of portfolio assets, performance results and other pertinent data.
Finally, the investment advisers expect to conduct personal reviews no less
than annually with each client shareholder, with interim telephone updates and
other communication, as appropriate. The Fund's dedicated telephone number
(1-800-231-8002) is available for shareholder inquiries during normal business
hours. The net asset values for the Portfolios are also available by using the
above "800" telephone number.
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Exchange Privilege
Each Portfolio's shares may be exchanged for shares of the Fund's other
Portfolios or the institutional class shares of the other funds in the Delaware
Group based on the respective net asset values of the shares involved and as
long as a Portfolio's minimum is satisfied. With respect to exchanges involving
The Emerging Markets Portfolio or The Global Equity Portfolio, however, an
investor will be assessed a purchase reimbursement fee by the respective
Portfolio when exchanging from another Portfolio into The Emerging Markets
Portfolio or The Global Equity Portfolio and a shareholder of The Emerging
Markets Portfolio or The Global Equity Portfolio will be assessed a redemption
reimbursement fee by the respective Portfolio when exchanging out of The
Emerging Markets Portfolio or The Global Equity Portfolio into another
Portfolio. See "HOW TO INVEST," "HOW TO REDEEM" and "PURPOSE OF REIMBURSEMENT
FEES -- THE EMERGING MARKETS AND THE GLOBAL EQUITY PORTFOLIOS." There are no
minimum purchase requirements for the institutional class shares of the other
Delaware Group funds, but certain eligibility requirements must be satisfied.
Exchange requests should be sent to Delaware Pooled Trust, Inc., One Commerce
Square, 2005 Market Street, Philadelphia, PA 19103, Attn: Client Services. Such
an exchange would be considered a taxable event in instances where an
institutional shareholder is subject to tax. The exchange privilege is only
available with respect to Portfolios that are registered for sale in a
shareholder's state of residence. The Fund reserves the right to suspend or
terminate, or amend the terms of, the exchange privilege upon 60 days' written
notice to client shareholders.
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The Fund maintains the following dividend and capital gains policies for its
16 Portfolios.
The Intermediate Fixed Income and The Limited-Term Maturity Portfolios
expect to declare dividends daily and distribute them monthly. The High-Yield
Bond and The Global Fixed Income Portfolios expect to declare dividends
monthly and distribute them monthly. The Aggregate Fixed Income, The
Diversified Core Fixed Income, The Large-Cap Value Equity, The International
Equity, The Labor Select International Equity and The International Fixed
Income Portfolios expect to declare and distribute all of their net investment
income to shareholders as dividends quarterly. The Aggressive Growth, The
Small/Mid-Cap Value Equity, The Real Estate Investment Trust, The Global
Equity and The Emerging Markets Portfolios expect to declare and distribute
all of their net investment income to shareholders as dividends annually.
Net capital gains, if any, will be distributed annually. Unless a shareholder
elects to receive dividends and capital gains distributions in cash, all
dividends and capital gains distributions shall be automatically paid in
additional shares at net asset value of the Portfolio.
In addition, in order to satisfy certain distribution requirements of the Tax
Reform Act of 1986, each Portfolio may declare special year-end dividend and
capital gains distributions during November or December to shareholders of
record on a date in such month. Such distributions, if received by
shareholders by January 31, are deemed to have been paid by a Portfolio and
received by shareholders on the earlier of the date paid or December 31 of the
prior year.
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TAXES
General
Each Portfolio within the Fund has qualified or intends to qualify, and each
intends to continue to qualify, as a regulated investment company under the
Internal Revenue Code of 1986, as amended (the "Code"). As such, a Portfolio
will not be subject to federal income or excise tax to the extent its earnings
are distributed to its shareholders as provided in the Code and it satisfies
certain other requirements relating to the sources of its income and
diversification of its assets.
On August 5, 1997, President Clinton signed into law the Taxpayer Relief Act
of 1997 (the "1997 Act"). This new law makes sweeping changes in the Internal
Revenue Code (the "Code"). Because many of these changes are complex, and only
indirectly affect a Portfolio and its distributions to you, they are discussed
in Part B. Changes in the treatment of capital gains, however, are discussed
in this section.
The Treatment of Capital Gain Distributions under the Taxpayer Relief Act of
1997
The 1997 Act creates a category of long-term capital gain for individuals that
will be taxed at new lower tax rates. For investors who are in the 28% or
higher federal income tax brackets, these gains will be taxed at a maximum of
20%. For investors who are in the 15% federal income tax bracket, these gains
will be taxed at a maximum of 10%. Capital gain distributions will qualify for
these new maximum tax rates, depending on when a Portfolio's securities were
sold and how long they were held by a Portfolio before they were sold.
Investors who want more information on holding periods and other qualifying
rules relating to these new rates should review the expanded discussion in
Part B, or should contact their own tax advisers.
The Fund will advise you in its annual information reporting at calendar year
end of the amount of its capital gain distributions which will qualify for
these maximum federal tax rates.
Each Portfolio intends to distribute substantially all of its net investment
income and net capital gains. Dividends from net investment income or net
short-term capital gains will be taxable to you as ordinary income, whether
received in cash or in additional shares. For corporate investors, dividends
paid by the Equity Oriented Portfolios, with the exception of The
International Equity, The Labor Select International Equity, The Global Equity
and The Emerging Markets Portfolios, from net investment income will generally
qualify, in part, for the intercorporate dividends-received deduction.
However, the portion of the dividends so qualified depends on the aggregate
qualifying dividend income received by a Portfolio from domestic (U.S.)
sources. Of the dividends paid by The Large-Cap Value Equity and The Real
Estate Investment Trust Portfolios for the fiscal year ended October 31,
1997, 40% and 62%, respectively, were eligible for this deduction. None of
the dividends paid by The Aggressive Growth Portfolio for the fiscal year
ended October 31, 1997 qualified for this deduction.
Distributions paid by a Portfolio from long-term capital gains, whether
received in cash or in additional shares, are taxable to those investors who
are subject to income taxes as long-term capital gains, regardless of the
length of time an investor has owned shares in a Portfolio. The Portfolios do
not seek to realize any particular amount of capital gains during a year;
rather, realized gains are a by-product of Portfolio management activities.
Consequently, capital gains distributions may be expected to vary considerably
from year to year. Also, for those investors subject to tax, if purchases of
shares in a Portfolio are made shortly before the record date for a dividend
or capital gains distribution, a portion of the investment will be returned as
a taxable distribution.
The sale of shares of a Portfolio is a taxable event and may result in a
capital gain or loss to shareholders subject to tax. Capital gain or loss may
be realized from an ordinary redemption of shares or an exchange of shares
between two mutual funds (or two portfolios of a mutual fund). Any loss
incurred on the sale or exchange of the
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shares of a Portfolio, held for six months or less, will be treated as a
long-term capital loss to the extent of capital gain dividends received with
respect to such shares.
In addition to the federal taxes described above, shareholders may or may not
be subject to various state and local taxes. For example, distributions of
interest income and capital gains realized from certain types of U.S.
government securities may be exempt from state personal income taxes. Because
investors' state and local taxes may be different than the federal taxes
described above, investors should consult their own tax advisers. Each year,
the Fund will mail to you information on the amount and tax status of each
Portfolio's dividends and distributions. Shareholders should consult their own
tax advisers regarding specific questions as to federal, state, local or
foreign taxes.
The Fund is required to withhold 31% of taxable dividends capital gains
distributions, and redemptions paid to shareholders who have not complied with
IRS taxpayer identification regulations. You may avoid this withholding
requirement by certifying on your Account Registration Form your proper
Taxpayer Identification Number and by certifying that you are not subject to
backup withholding.
The International Equity Portfolio, The Labor Select International Equity
Portfolio, The Global Fixed Income Portfolio, The International Fixed Income
Portfolio, The Global Equity Portfolio and The Emerging Markets Portfolio -
Foreign Taxes
Each of The International Equity, The Labor Select International Equity, The
Global Fixed Income, The International Fixed Income, The Global Equity and The
Emerging Markets Portfolios may elect to "pass-through" to its shareholders
the amount of foreign income taxes paid by such Portfolio. A Portfolio will
make such an election only if it deems it to be in the best interests of its
shareholders.
If this election is made, shareholders of a Portfolio will be required to
include in their gross income their pro-rata share of foreign taxes paid by
the Portfolio. However, shareholders will be able to treat their pro-rata
share of foreign taxes as either an itemized deduction or a foreign tax credit
(but not both) against U.S. income taxes on their tax return.
The tax discussion set forth above is included for general information only.
Prospective investors should consult their own tax advisers concerning the
federal, state, local or foreign tax consequences of an investment in the
Fund. Additional information on tax matters is included in the Statement of
Additional Information.
VALUATION OF SHARES
The net asset value per share of each Portfolio is determined by dividing the
total market value of the Portfolio's investments and other assets, less any
liabilities, by the total outstanding shares of the Portfolio. Net asset value
per share is determined as of the close of regular trading on the NYSE on each
day the NYSE is open for business. Securities listed on a U.S. securities
exchange for which market quotations are available are valued at the last
quoted sale price on the day the valuation is made. Price information on
listed securities is taken from the exchange where the security is primarily
traded. Securities listed on a foreign exchange are valued at the last quoted
sale price available before the time when net assets are valued. Unlisted
securities and listed securities not traded on the valuation date for which
market quotations are readily available are valued at a price that is
considered to best represent fair value within a range not in excess of the
current asked price nor less than the current bid prices. Domestic equity
securities traded over-the-counter, domestic equity securities which are not
traded on the valuation date and U.S. government securities are priced at the
mean of the bid and ask price.
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Bonds and other fixed-income securities are valued according to the broadest
and most representative market, which will ordinarily be the over-the-counter
market. In addition, bonds and other fixed-income securities may be valued on
the basis of prices provided by a pricing service when such prices are
believed to reflect the fair market value of such securities. The prices
provided by a pricing service are determined without regard to bid or last
sale prices but take into account institutional size trading in similar groups
of securities and any developments related to the specific securities.
Securities not priced in this manner are valued at the most recent quoted mean
price, or, when stock exchange valuations are used, at the latest quoted sale
price on the day of valuation. If there is no such reported sale, the latest
quoted mean price will be used. Securities with remaining maturities of 60
days or less are valued at amortized cost, if it approximates market value. In
the event that amortized cost does not approximate market value, market prices
as determined above will be used.
Exchange-traded options are valued at the last reported sales price or, if no
sales are reported, at the mean between the last reported bid and ask prices.
Non-exchange traded options are valued at fair value using a mathematical
model. Futures contracts are valued at their daily quoted settlement price.
The value of other assets and securities for which no quotations are readily
available (including restricted securities) are determined in good faith at
fair value using methods determined by the Fund's Board of Directors. The
securities in which The International Equity, The Labor Select International
Equity, The Global Fixed Income, The International Fixed Income, The Global
Equity and The Emerging Markets Portfolios (and, to a limited extent, The Real
Estate Investment Trust, The Diversified Core Fixed Income and The High-Yield
Bond Portfolios) may invest from time to time may be listed primarily on
foreign exchanges which trade on days when the NYSE is closed (such as
Saturday). As a result, the net asset value of those Portfolios may be
significantly affected by such trading on days when shareholders have no
access to the Portfolios.
For purposes of calculating net asset value per share, all assets and
liabilities initially expressed in foreign currencies will be converted into
U.S. dollars at the mean between the bid and ask price of such currencies
against the U.S. dollar as provided by an independent pricing service or any
major bank, including the Custodian Banks. Forward foreign currency contracts
are valued at the mean price of the contracts. Interpolated values will be
derived when the settlement date of the contract is on an interim period for
which quotations are not available.
PORTFOLIO TRANSACTIONS
In purchasing and selling securities for each of the Portfolios, the Fund (and,
in the case of The International Equity, The Labor Select International Equity,
The Global Fixed Income, The International Fixed Income, The Global Equity, The
Diversified Core Fixed Income and The Emerging Markets Portfolios, the
investment adviser) uses its best efforts to obtain the best available price and
most favorable execution and may, where relevant, pay higher commissions in
recognition of brokerage services which in the opinion of the Fund's trading
department (and, in the case of The International Equity, The Labor Select
International Equity, The Global Fixed Income, The International Fixed Income,
The Global Equity, The Diversified Core Fixed Income and The Emerging Markets
Portfolios, the investment adviser) are necessary and in the best interest of
the Fund's shareholders. In selecting broker/dealers to execute the securities
transactions for the Portfolios, consideration will be given to such factors as
the price of the security, the rate of any commission, the size and difficulty
of the order, the reliability, integrity, financial condition, general execution
and operational capabilities of competing broker/dealers, and any brokerage and
research services which they provide to the Fund. These services may be used by
the investment advisers in servicing any of their other accounts. Some
securities considered for investment by each of the Fund's Portfolios may also
be appropriate for other clients served by the investment advisers. If a
purchase or sale of securities consistent with the investment policies of a
Portfolio and one or more of these other clients served by the investment
advisers is considered at or about the same time, transactions in such
securities will be allocated among the Portfolio and clients in a manner deemed
fair and reasonable. Although there is no specified formula for allocating such
transactions, the various allocation methods used and the results of such
allocations are subject to periodic review by the Fund's directors.
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Subject to best price and execution, Portfolio orders may be placed with
qualified broker/dealers who recommend the Fund's Portfolios or who act as
agents in the purchase of shares of the Portfolios for their clients.
PERFORMANCE INFORMATION
From time to time, the Portfolios may quote yield in advertising and other
types of sales literature. The current yield for each of these Portfolios will
be calculated by dividing the annualized net investment income earned by each
of the Portfolios during a recent 30-day period by the offering price per
share (net asset value) on the last day of the period. The yield information
provides for semi-annual compounding which assumes that net investment income
is earned and reinvested at a constant rate and annualized at the end of a
six-month period. Each Portfolio also may quote total return performance in
advertising and other types of literature. Total return will be based on a
hypothetical $1,000 investment, reflecting the reinvestment of all
distributions at net asset value at the beginning of the specific period. Each
presentation will include, as relevant, the average annual total return for
one-, five- and ten-year periods. Each Portfolio may also advertise aggregate
and average total return information over additional periods of time.
Yield and net asset value fluctuate and are not guaranteed. Past performance
is not an indication of future results.
GENERAL INFORMATION
Description of Common Stock
The Fund was organized as a Maryland corporation on May 30, 1991. The Articles
of Incorporation permit the Fund to issue two billion shares of common stock
with $.01 par value and fifty million shares have been allocated to each
Portfolio. The Board of Directors has the power to designate one or more
classes of shares of common stock and to classify and reclassify any unissued
shares with respect to such classes.
The shares of each Portfolio, when issued, will be fully paid, non-assessable,
fully transferable and redeemable at the option of the holder. The shares have
no preference as to the conversion, exchange, dividends, retirement or other
features and have no preemptive rights. The shares of each Portfolio have
noncumulative voting rights, which means that the holders of more than 50% of
the shares voting for the election of directors can elect 100% of the
directors if they choose to do so. Shares of each Portfolio entitled to vote
on a matter will vote in the aggregate and not by Portfolio, except when the
matter to be voted upon affects only the interests of shareholders of a
particular Portfolio or class of shares of a Portfolio when otherwise
expressly required by law. The Fund does not issue certificates for shares
unless a shareholder submits a specific request. Under Maryland law, the Fund
is not required, and does not intend, to hold annual meetings of its
shareholders unless, under certain circumstances, it is required to do so
under the 1940 Act.
Lincoln National Corporation Employees' Retirement Trust (the "Trust") made an
investment in The Emerging Markets Portfolio, which could result in the Trust
owning approximately 100% of the outstanding shares of The Emerging Markets
Portfolio. Subject to certain limited exceptions, there would be no limitation
on the Trust's ability to redeem its shares of the Portfolio and it may elect to
do so at any time.
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Lincoln National Life Insurance Company ("LNLIC") made an investment in each of
The Global Equity Portfolio, The Real Estate Investment Trust Portfolio and The
Real Estate Investment Trust Portfolio II, and will make an investment in each
of the Diversified Core Fixed Income Portfolios, The Aggregate Fixed Income
Portfolio and The Small/MidCap Value Equity Portfolio, which could result in
LNLIC owning approximately 100% of the outstanding shares of each Portfolio.
Subject to certain limited exceptions, there would be no limitation on LNLIC's
ability to redeem its shares of each Portfolio and it may elect to do so at any
time.
Custodian Banks
The Chase Manhattan Bank, 4 Chase Metrotech Center, Brooklyn, NY 11245 serves
as custodian for The Global Fixed Income, The International Equity, The Labor
Select International Equity, The Real Estate Investment Trust, The High-Yield
Bond, The International Fixed Income, The Global Equity , The Emerging
Markets, The Diversified Core Fixed Income, The Aggregate Fixed Income
Portfolios and The Real Estate Investment Trust Portfolio II. Bankers Trust
Company, One Bankers Trust Plaza, New York, NY 10006 serves as custodian for
The Large-Cap Value Equity, The Aggressive Growth, The Intermediate Fixed
Income, The Limited-Term Maturity and The Small/Mid-Cap Value Equity
Portfolios.
Independent Auditors
Ernst & Young LLP, Two Commerce Square, 2001 Market Street, Suite 4000,
Philadelphia, PA 19103, serves as independent auditors for the Fund.
Expenses
Each Portfolio is responsible for all its own expenses other than those borne
by its investment adviser under the relevant Investment Advisory Agreement and
the distributor under the Distribution Agreement.
Litigation
The Fund is not involved in any litigation.
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APPENDIX A--RATINGS
The High-Yield Bond Portfolio's assets are invested primarily
in securities rated B- or higher by S&P or B3 or higher by Moody's and in
unrated corporate bonds. These credit ratings evaluate only the safety of
principal and interest and do not consider the market value risk associated with
high-yield securities. The table set forth below shows the percentage of the
Portfolio's securities included in each of the specified rating categories and
shows the percentage of the Fund's assets held in U.S. government securities.
Certain securities may not be rated because the rating agencies were either not
asked to provide ratings (e.g., many issuers of privately placed bonds do not
seek ratings) or because the rating agencies declined to provide a rating for
some reason, such as insufficient data. The table below shows the percentage of
the Portfolio's securities which are not rated. The information contained in the
table was prepared based on a dollar weighted average of the Portfolio's
composition based on month end data for the Portfolio's fiscal year ended
October 31, 1997. The paragraphs following the table contain excerpts from
Moody's and S&P's rating descriptions.
Average Weighted
Rating Moody's and/or S&P Percentage of Portfolio
- ------------------------- -----------------------
United States Treasury Obligations 00.00%
Aaa/AAA 2.73
Aa/AA 00.00
A/A 00.00
Baa/BBB 00.00
Ba/BB 5.81
B/B 89.54
Caa/CCC 00.00
Not Rated/Other 1.92
General Rating Information
Bonds
Excerpts from Moody's description of its bond ratings: Aaa--judged to be the
best quality. They carry the smallest degree of investment risk; Aa--judged to
be of high quality by all standards; A--possess favorable attributes and are
considered "upper medium" grade obligations; Baa--considered as medium grade
obligations. Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time; Ba--judged to
have speculative elements; their future cannot be considered as well assured.
Often the protection of interest and principal payments may be very moderate
and thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class;
B--generally lack characteristics of the desirable investment. Assurance of
interest and principal payments or of maintenance of other terms of the
contract over any long period of time may be small; Caa--are of poor standing.
Such issues may be in default or there may be present elements of danger with
respect to principal or interest; Ca--represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings; C--the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.
Excerpts from S&P's description of its bond ratings: AAA--highest grade
obligations. They possess the ultimate degree of protection as to principal
and interest; AA--also qualify as high grade obligations, and in the majority
of instances differ from AAA issues only in a small degree; A--strong ability
to pay interest and repay principal although more susceptible to changes in
circumstances; BBB--regarded as having an adequate capacity to pay interest
and repay principal; BB, B, CCC, CC--regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the lowest degree of
speculation and CC the highest degree of speculation. While such debt will
likely have some quality and protective characteristics, these are outweighed
by large uncertainties or major risk exposures to adverse conditions;
C--reserved for income bonds on which no interest is being paid; D--in
default, and payment of interest and/or repayment of principal is in arrears.
Excerpts from Fitch's description of its bond ratings: AAA--Bonds considered
to be investment grade and of the highest credit quality. The obligor has an
exceptionally strong ability to pay interest and repay principal, which is
unlikely to be affected by reasonably foreseeable events; AA--Bonds considered
to be investment grade and of very high credit quality. The obligor's ability
to pay interest and repay principal is very strong, although not quite as
strong as bonds rated AAA. Because bonds rated in the AAA and AA categories
are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+; A--Bonds considered
to be investment grade and of high credit quality. The obligor's ability to
pay interest and repay principal is considered to be strong, but may be more
vulnerable to adverse changes in economic conditions and circumstances that
bonds with higher ratings; BBB--Bonds considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic conditions
and circumstances, however, are more likely to have adverse impact on these
bonds, and therefore impair timely payment. The likelihood that the ratings of
these bonds will fall below investment grade is higher than for bonds with
higher ratings; BB--Bonds are considered speculative. The obligor's ability to
pay interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified which
could assist the obligor in satisfying its debt service requirements; B--Bonds
are considered highly speculative. While bonds in this class are currently
meeting debt service requirements, the probability of continued timely payment
of principal and interest reflects the obligor's limited margin of safety and
the need for reasonable business and economic activity throughout the life of
the issue; CCC--Bonds have certain identifiable characteristics which, if not
remedied, may lead to
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default. The ability to meet obligations requires an advantageous business and
economic environment; CC--Bonds are minimally protected. Default in payment of
interest and/or principal seems probable over time; C--Bonds are in imminent
default in payment of interest or principal; and DDD, DD and D--Bonds are in
default on interest and/or principal payments. Such bonds are extremely
speculative and should be valued on the basis of their ultimate recovery value
in liquidation or reorganization of the obligor. "DDD" represents the highest
potential for recovery on these bonds, and "D" represents the lowest potential
for recovery.
Plus and minus signs are used with a rating symbol to indicate the relative
position of a credit within the rating category. Plus and minus signs,
however, are not used in the "AAA" category.
Commercial Paper
Excerpts from Moody's description of its two highest commercial paper ratings:
P-1--the highest grade possessing greatest relative strength; P-2--second
highest grade possessing less relative strength than the highest grade.
Excerpts from S&P's description of its two highest commercial paper ratings:
A-1--judged to be the highest investment grade category possessing the highest
relative strength; A-2--investment grade category possessing less relative
strength than the highest rating.
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REIT FUND PROSPECTUS
A CLASS SHARES DECEMBER 24, 1997
B CLASS SHARES
C CLASS SHARES
-------------------------------------------------------------
1818 Market Street, Philadelphia, PA 19103
For Prospectus and Performance: Nationwide 800-523-4640
Information on Existing Accounts: (SHAREHOLDERS ONLY)
Nationwide 800-523-1918
Dealer Services: (BROKER/DEALERS ONLY)
Nationwide 800-362-7500
Representatives of Financial Institutions: Nationwide 800-659-2265
This Prospectus describes REIT Fund A Class shares ("Class A Shares"),
REIT Fund B Class shares ("Class B Shares") and REIT Fund C Class shares
("Class C Shares") of The Real Estate Investment Trust Portfolio (the "Fund")
of Delaware Pooled Trust, Inc. ("Pooled Trust, Inc."), a
professionally-managed mutual fund. The Fund's objective is to seek to achieve
maximum long-term total return. Capital appreciation is a secondary objective.
It seeks to achieve its objectives by investing in securities of companies
primarily engaged in the real estate industry.
This Prospectus relates only to the classes listed above (individually,
a "Class" and collectively, the "Classes") and sets forth information that you
should read and consider before you invest. Please retain it for future
reference. The Fund's Statement of Additional Information ("Part B" of Pooled
Trust, Inc.'s registration statement), dated December 24, 1997, as it may be
amended from time to time, contains additional information about the Fund and
has been filed with the Securities and Exchange Commission. Part B is
incorporated by reference into this Prospectus and is available, without charge,
by writing to Delaware Distributors, L.P. at the above address or by calling the
above telephone numbers. The SEC also maintains a Website (http://www.sec.gov)
that contains Part B, material we incorporated by reference, and other
information regarding registrants that electronically file with the SEC.
The Fund also offers REIT Fund Institutional Class and The Real Estate
Investment Trust Portfolio class, which are available for purchase only by
certain investors. To obtain the Prospectus for The Real Estate Investment
Trust Portfolio class, please write to Delaware Pooled Trust, Inc. at One
Commerce Square, 2005 Market Street, Philadelphia, PA 19103, Attn: Client
Services or call 800-231-8002. To obtain the Prospectus for REIT Fund
Institutional Class, please write to the Distributor at 1818 Market Street,
Philadelphia, PA 19103 or call 800-828-5052.
<PAGE>
TABLE OF CONTENTS
COVER PAGE
SYNOPSIS
SUMMARY OF EXPENSES
FINANCIAL HIGHLIGHTS
SUITABILITY
INVESTMENT OBJECTIVE, POLICIES AND RISK FACTORS
THE DELAWARE DIFFERENCE
Plans and Services
CLASSES OF SHARES
HOW TO BUY SHARES
REDEMPTION AND EXCHANGE
DIVIDENDS AND DISTRIBUTIONS
TAXES
CALCULATION OF OFFERING PRICE
AND NET ASSET VALUE PER SHARE
MANAGEMENT OF THE FUND
ADDITIONAL INVESTMENT INFORMATION ON
POLICIES AND RISK CONSIDERATIONS
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
BE SURE TO CONSULT YOUR FINANCIAL ADVISER WHEN MAKING INVESTMENTS. MUTUAL
FUNDS CAN BE A VALUABLE PART OF YOUR FINANCIAL PLAN; HOWEVER, SHARES OF THE
FUND ARE NOT FDIC OR NCUSIF INSURED, ARE NOT GUARANTEED BY ANY BANK OR ANY
CREDIT UNION, ARE NOT OBLIGATIONS OF ANY BANK OR ANY CREDIT UNION, AND INVOLVE
INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
SHARES OF THE FUND ARE NOT BANK OR CREDIT UNION DEPOSITS.
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SYNOPSIS
Investment Objective
The investment objective of the Fund is to seek to achieve maximum
long-term total return. Capital appreciation is a secondary objective. It
seeks to achieve its objectives by investing in securities of companies
primarily engaged in the real estate industry. Under normal circumstances, at
least 65% of the Fund's total assets will be invested in equity securities of
real estate investment trusts ("REITs"). For further details, see Investment
Objective, Policies and Risk Factors and Additional Investment Information on
Policies and Risk Considerations.
Risk Factors and Special Considerations
The Fund concentrates its investments in the real estate industry, so
its net asset value can be expected to fluctuate in light of factors affecting
that industry and may fluctuate more widely than a portfolio that invests in a
broader range of industries. By investing primarily in securities of REITs,
the Fund is also subject to interest rate risk.
The Fund may invest up to 10% of its total assets in foreign
securities, including securities of issuers in emerging markets. Those new
securities pose special risks that do not typically arise in connection with
investments in U.S. securities.
The Fund may use futures contracts, options on futures contracts and
options on stock and may engage in foreign currency options and futures
transactions for hedging purposes. There are special risks that result from
the use of options and futures.
The Fund is considered a nondiversified investment company under the
Investment Company Act of 1940 (the "1940 Act") and may be subject to greater
risks than if the Fund were diversified. A nondiversified portfolio of
securities is believed to be subject to greater risk because adverse effects
on the portfolio's security holdings may affect a larger portion of its
overall assets.
See Investment Objective, Policies and Risk Factors concerning these
and other investment policies of the Fund.
Investment Manager, Distributor and Service Agent
Delaware Investment Advisers, a division of Delaware Management Company,
Inc., (the "Manager") furnishes investment management services to the Fund,
subject to the supervision and direction of the Board of Directors. The Manager
also provides investment management services to certain of the other funds in
the Delaware Group. Lincoln Investment Management, Inc. ("Lincoln" or
"Sub-Adviser"), a wholly owned subsidiary of Lincoln National Corporation, acts
as sub-adviser to the Manager with respect to the Fund. Delaware Distributors,
L.P. (the "Distributor") is the national distributor for the Fund and for all of
the other mutual funds in the Delaware Group. Delaware Service Company, Inc.
(the "Transfer Agent") is the shareholder servicing, dividend disbursing,
accounting services and transfer agent for the Fund and for all of the other
mutual funds in the Delaware Group. See Summary of Expenses and Management of
the Fund for further information regarding the Manager and the Sub-Adviser and
the fees payable under the Fund's Investment Management Agreement and
Sub-Advisory Agreement.
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Sales Charges
The price of the Class A Shares includes a maximum front-end sales
charge of 4.75% of the offering price. The sales charge is reduced on certain
transactions of at least $100,000 but under $1,000,000. For purchases of
$1,000,000 or more, the front-end sales charge is eliminated (subject to a
CDSC of 1% if in connection with such purchase a dealer commission was paid
and shares are redeemed within 12 months of purchase). Class A Shares are
subject to annual 12b-1 Plan expenses for the life of the investment.
The price of the Class B Shares is equal to the net asset value per
share. Class B Shares are subject to a contingent deferred sales charge
("CDSC") of: (i) 4% if shares are redeemed within two years of purchase; (ii)
3% if shares are redeemed during the third or fourth year following purchase;
(iii) 2% if shares are redeemed during the fifth year following purchase; and
(iv) 1% if shares are redeemed during the sixth year following purchase. Class
B Shares are subject to annual 12b-1 Plan expenses which are assessed against
the Class B Shares for approximately eight years after purchase. See Deferred
Sales Charge Alternative--Class B Shares and Automatic Conversion of Class B
Shares under Classes of Shares.
The price of the Class C Shares is equal to the net asset value per
share. Class C Shares are subject to a CDSC of 1% if shares are redeemed
within 12 months of purchase. Class C Shares are subject to annual 12b-1 Plan
expenses for the life of the investment.
See Classes of Shares and Distribution (12b-1) and Service under
Management of the Fund.
Purchase Amounts
Generally, the minimum initial investment in any Class is $1,000.
Subsequent investments must generally be at least $100.
Each purchase of Class B Shares is subject to a maximum purchase
limitation of $250,000. For Class C Shares, each purchase must be in an amount
that is less than $1,000,000. An investor may exceed the maximum purchase
limitations for Class B Shares and Class C Shares by making cumulative
purchases over a period of time. An investor should keep in mind, however,
that reduced front-end sales charges apply to investments of $100,000 or more
of Class A Shares, and that Class A Shares are subject to lower annual 12b-1
Plan expenses than Class B Shares and Class C Shares and generally are not
subject to a CDSC. The minimum and maximum purchase amounts for retirement
plans may vary. See How to Buy Shares.
Redemption and Exchange
Class A Shares of the Fund may be redeemed or exchanged at the net
asset value calculated after receipt of the redemption or exchange request.
Neither the Fund nor the Distributor assesses a charge for redemptions or
exchanges of Class A Shares, except for certain redemptions of shares
purchased at net asset value, which may be subject to a CDSC if a dealer's
commission was paid in connection with such purchases. See Front-End Sales
Charge Alternative - Class A Shares under Classes of Shares.
Class B Shares and Class C Shares may be redeemed or exchanged at the
net asset value calculated after receipt of the redemption or exchange request
subject, in the case of redemptions, to any applicable CDSC. Neither the Fund
nor the Distributor assesses any charges other than the CDSC for redemptions
or exchanges of Class B or Class C Shares. There are certain limitations on an
investor's ability to exchange shares between the various classes of shares
that are offered. See Redemption and Exchange.
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<PAGE>
Open-End Investment Company
The Fund is a series of Pooled Trust, Inc. Pooled Trust, Inc. was
organized as a Maryland corporation on May 30, 1991, and is an open-end
management investment company. See Shares under Management of the Fund.
-5-
<PAGE>
SUMMARY OF EXPENSES
A general comparison of the sales arrangements and other expenses
applicable to Class A, Class B and Class C Shares follows:
<TABLE>
<CAPTION>
Class A Class B Class C
Shareholder Transaction Expenses Shares Shares Shares
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)..............................4.75% None None
Maximum Sales Charge Imposed on Reinvested
Dividends (as a percentage of offering price)....................None None None
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price or
redemption proceeds, as applicable)..............................None* 4.00%** 1.00%***
Redemption Fees..................................................None**** None**** None****
</TABLE>
*Class A purchases of $1 million or more may be made at net asset
value. However, if in connection with any such purchase a dealer commission is
paid to the financial adviser through whom such purchase is effected, a CDSC
of 1% will be imposed on certain redemptions within 12 months of purchase
("Limited CDSC"). Additional Class A purchase options involving the imposition
of a CDSC may be permitted as described in the Prospectus from time to time.
See Contingent Deferred Sales Charge for Certain Redemptions of Class A Shares
Purchased at Net Asset Value under Redemption and Exchange.
**Class B Shares are subject to a CDSC of: (i) 4% if shares are
redeemed within two years of purchase; (ii) 3% if shares are redeemed during
the third or fourth year following purchase; (iii) 2% if shares are redeemed
during the fifth year following purchase; (iv) 1% if shares are redeemed
during the sixth year following purchase; and (v) 0% thereafter. See Deferred
Sales Charge Alternative - Class B Shares.
***Class C Shares are subject to a CDSC of 1% if the shares are
redeemed within 12 months of purchase. See Level Sales Charge Alternative -
Class C Shares under Classes of Shares.
****CoreStates Bank, N.A. currently charges $7.50 per redemption for
redemptions payable by wire.
-6-
<PAGE>
<TABLE>
<CAPTION>
Annual Operating Expenses Class A Class B Class C
(as a percentage of average daily net assets) Shares Shares Shares
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fees (after voluntary waivers)............................0.38% 0.38% 0.38 %
12b-1 Expenses (including service fees)..............................0.25%+ 1.00%+ 1.00%+
Other Operating Expenses (after
expense limitations)+...........................................0.48% 0.48% 0.48%
Total Operating Expenses (after voluntary
waivers and expense limitations)++.......................1.11% 1.86% 1.86%
===== ===== =====
</TABLE>
+Class A Shares, Class B Shares and Class C Shares are subject to
separate 12b-1 Plans. Long-term shareholders may pay more than the economic
equivalent of the maximum front-end sales charges permitted by rules of the
National Association of Securities Dealers, Inc. (the "NASD"). The annual
12b-1 Plan expenses for Class A Shares have been set by the Board of Directors
at 0.25% of the average daily net assets of such Class. The maximum annual
12b-1 Plan expenses permitted under the 12b-1 Plan for Class A Shares are
0.30% of the average daily net assets of such Class. See Distribution (12b-1)
and Service under Management of the Fund.
++"Other Operating Expenses" and "Total Operating Expenses" for
Class A Shares are based on the actual results of the Class (which prior to
October 14, 1997 was the only Class of the Fund and which on October 14, 1997
was redesignated REIT Fund A Class) for the Fund's fiscal year ended October 31,
1997. The actual results for that period have been restated to include the Rule
12b-1 distribution expenses which began to accrue only after the end of the
fiscal year. "Other Operating Expenses" for Class B Shares and Class C Shares
are estimates for the first full fiscal year of the Classes and are based on the
actual results for Class A Shares as of the Fund's fiscal year ended October 31,
1997. The Manager has elected voluntarily to waive that portion, if any, of the
annual management fees payable by the Fund and to pay certain expenses of the
Fund to the extent necessary to ensure that the Total Operating Expenses (after
voluntary waivers and payments) of each Class do not exceed 0.86% (in all cases
exclusive of taxes, interest, brokerage commissions, extraordinary expenses and
12b-1 fees) through April 30, 1998. If the voluntary fee waivers or payments
were not in effect, the Management Fees (as a percentage of average net assets)
would be 0.75% for each Class, and the Total Operating Expenses (as a percentage
of average daily net assets) would be 1.48%, 2.23% and 2.23%, respectively, of
Class A Shares, Class B Shares and Class C Shares; these ratios are based on
data for Class A prior to its redesignation, adjusted to reflect an anticipated
increase in shareholder service and other expenses.
Investors utilizing the Delaware Group Asset Planner asset
allocation service also typically incur an annual maintenance fee of $35 per
Strategy. However, effective November 1, 1996, the annual maintenance fee is
waived until further notice. Investors who utilize the Asset Planner for an
Individual Retirement Account ("IRA") will pay an annual IRA fee of $15 per
Social Security number. See Delaware Group Asset Planner in Part B.
For expense information about REIT Fund Institutional Class and
The Real Estate Investment Trust Portfolio class, see the separate
prospectuses relating to those classes.
-7-
<PAGE>
The following example illustrates the expenses that an investor
would pay on a $1,000 investment over various time periods, assuming (1) a 5%
annual rate of return, (2) redemption and no redemption at the end of each
time period and (3) for Class B Shares and Class C Shares, payment of a CDSC
at the time of redemption, if applicable. The example is based on the expenses
incurred by the original (and then only) class of shares offered by the Fund
for the Fund's fiscal year ended October 31, 1997, but consistent with the
presentation provided in the Summary of Expenses Table above, those expenses
have been restated to reflect the applicable Rule 12b-1 fee, to which each
Class is subject. See, Summary of Expenses for details concerning the waivers
and the differences in expenses borne by the Fund's original class and those
to be borne by Classes A, B, and C. The example assumes the voluntary waiver
of the management fee and/or payment of other expenses by the Manager.
<TABLE>
<CAPTION>
Assuming Redemption Assuming No Redemption
1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years
------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A Shares $58(1) $81 $106 $176 $58 $81 $106 $176
Class B Shares(2) $59 $88 $121 $198 $19 $58 $101 $198
Class C Shares $29 $58 $101 $218 $19 $58 $101 $218
</TABLE>
(1) Generally, no redemption charge is assessed upon redemption of Class A
Shares. Under certain circumstances, however, a Limited CDSC or other
CDSC, which has not been reflected in this calculation, may be imposed
in the event of certain redemptions . See Contingent Deferred Sales
Charge for Certain Redemptions of Class A Shares Purchased at Net Asset
Value under Redemption and Exchange.
(2) At the end of approximately eight years after purchase, Class B Shares
will be automatically converted into Class A Shares. The example above
assumes conversion of Class B Shares at the end of the eighth year.
However, the conversion may occur as late as three months after the
eighth anniversary of purchase, during which time the higher 12b-1 Plan
fees payable by Class B Shares will continue to be assessed.
The ten year expense numbers for Class B Shares reflect the expenses of
Class B Shares for year eight and the expenses of Class A Shares for
years nine and ten. See Automatic Conversion of Class B Shares under
Classes of Shares for a description of the automatic conversion
feature.
This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be greater or less than those
shown.
The purpose of the above tables is to assist the investor in
understanding the various costs and expenses that an investor in each Class
will bear directly or indirectly.
-8-
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights are derived from the financial
statements of the Fund incorporated by reference into Part B , which have
been audited by Ernst & Young LLP, independent auditors. The data should be
read in conjunction with the financial statements and related notes.
Further information about the performance of the Fund is contained in
Delaware Pooled Trust, Inc.'s Annual Report. The Annual Report (which
includes related notes and the report of Ernst & Young LLP) and Part B may be
obtained from the Fund upon request at no charge.
As of October 31, 1997, the Fund has sold no Class B or Class C Shares
to public investors.
-9-
<PAGE>
REIT FUND A CLASS
<TABLE>
<CAPTION>
Period Period
11/1/96 12/6/95(1)(2)
through through
10/31/97(1) 10/31/96
<S> <C> <C>
Net Asset Value, Beginning of Period............................... $12.4900 $10.0000
Income From Investment Operations
Net Investment Income.............................................. 0.6162 0.6515
========
Net Gains (Losses) on Securities
(both realized and unrealized).................................. 4.6638 1.9385
-------- ------
Total from Investment Operations............................. 5.2800 2.5900
-------- ------
Less Dividends and Distributions
Dividends (from net investment income)............................. (0.7200) (0.1000)
Distributions (from capital gains)................................. (0.7900) none
-------- ----
Total Dividends and Distributions............................ (1.5100) (0.1000)
-------- --------
Net Asset Value, End of Period..................................... $16.2600 $12.4900
========== ========
- ------------
Total Return....................................................... 46.50%(3) 26.12%(3)
=========== =========
- ------------
Ratios/Supplemental Data
Net Assets, End of Period (000's omitted).......................... $60,089 $26,468
=========
Ratio of Expenses to Average Daily Net Assets...................... 0.82% 0.89%
=======
Ratio of Expenses to Average Daily Net Assets
Prior to Expense Limitations.................................. 0.99% 1.02%
=======
Ratio of Net Investment Income to Average Daily Net Assets 4.25% 6.70%
=======
Ratio of Net Investment Income to Average Daily Net Assets
Prior to Expense Limitations.................................. 4.08% 6.57%
=======
Portfolio Turnover Rate............................................ 58% 109%
=====
Average Commission Rate Paid....................................... $0.0576 $0.0600
=========
</TABLE>
- ---------------
(1) The financial highlights appearing above are derived from data concerning
the original (and then only) class of shares offered by the Fund. That
original class has been redesignated REIT Fund A Class and, prior to its
redesignation, did not carry a front-end sales charge and was not subject
to Rule 12b-1 distribution expenses. The financial highlights appearing
above do not reflect the Rule 12b-1 distribution expenses.
(2) Date of initial sale (now REIT Fund A Class); ratios have been annualized,
but total return has not been annualized.
(3) Does not reflect the maximum sales charge that is in effect nor the 1%
Limited CDSC that would apply in the event of certain redemptions within
12 months of purchase. Total return = reflects the expense limitation of
0.89% applicable to the original class of shares offered by the Fund.
-10-
<PAGE>
SUITABILITY
The Fund may be suitable for the patient investor interested in long-term
capital appreciation with the potential for current income. Investors should
be willing to accept the risks associated with investments in a portfolio of
equity securities and convertible securities issued by domestic and foreign
issuers concentrated in the real estate industry. Because current income is a
secondary objective of the Fund, the Fund is not suitable as an investment
vehicle for investors whose primary investment goal is current income.
The risks associated with an investment in the Fund are discussed below
under Investment Objective, Policies and Risk Factors.
INVESTMENT OBJECTIVE, POLICIES AND RISK FACTORS
The investment objective of the Fund is described below, together with
the policies the Fund employs in its efforts to achieve its objective. There
is no assurance that the Fund will attain its objective. The investment
objective of the Fund is fundamental and may only be changed by a majority
approval of the Fund's shareholders. Unless otherwise noted, the investment
policies described below are not fundamental policies and may be changed
without shareholder approval.
Investment Objective and Policies
The investment objective of the Fund is to achieve maximum long-term
total return. Capital appreciation is a secondary objective. The Fund seeks to
achieve its objectives by investing in securities of companies principally
engaged in the real estate industry. Under normal circumstances, at least 65%
of the Fund's total assets will be invested in equity securities of real
estate investment trusts ("REITs"). The Fund will operate as a nondiversified
fund as defined by the 1940 Act.
The Fund invests in equity securities of REITs and other real estate
industry operating companies ("REOCs"). For purposes of the Fund's
investments, a REOC is a company that derives at least 50% of its gross
revenues or net profits from either (1) the ownership, development,
construction, financing, management or sale of commercial, industrial or
residential real estate, or (2) products or services related to the real
estate industry, such as building supplies or mortgage servicing. The Fund's
investments in equity securities of REITs and REOCs may include, from time to
time, sponsored or unsponsored American Depositary Receipts actively traded in
the United States. Equity securities for this purpose include common stocks,
securities convertible into common stocks and securities having common stock
characteristics, such as rights and warrants to purchase common stocks. The
Fund may also purchase preferred stock. The Fund may invest up to 10% of its
assets in foreign securities, and in convertible securities. See Foreign
Investment Information, Depositary Receipts and Convertible, Debt and
Non-Traditional Equity Securities under Additional Investment Information on
Policies and Risk Considerations for further discussion of these investment
policies. The Fund may also invest in mortgage-backed securities. See
Mortgage-Backed Securities under Additional Investment Information on Policies
and Risk Considerations for more detailed information about this investment
policy.
The Fund may hold cash or invest in short-term debt securities and other
money market instruments when, in the Manager's opinion, such holdings are
prudent given then prevailing market conditions. Except when the Manager
believes a temporary defensive approach is appropriate, the Fund will not hold
more than 5% of its total assets in cash or such short-term investments. All
these short-term investments will be of the highest quality as determined by a
nationally-recognized statistical rating organization (e.g. AAA by S&P or Aaa
by Moody's) or be of comparable quality as determined by the Manager. See
Additional Investment Information on Policies and Risk Considerations for
further details concerning these and other investment policies.
-11-
<PAGE>
Although the Fund does not invest directly in real estate, the Fund does
invest primarily in REITs, and may purchase equity securities of REOCs. Thus,
because the Fund concentrates its investments in the real estate industry, an
investment in the Fund may be subject to certain risks associated with direct
ownership of real estate and with the real estate industry in general. These
risks include, among others: possible declines in the value of real estate;
risks related to general and local economic conditions; possible lack of
availability of mortgage funds; overbuilding; extended vacancies of
properties; increases in competition; property taxes and operating expenses;
changes in zoning laws; costs resulting from the clean-up of, and liability to
third parties resulting from, environmental problems; casualty for
condemnation losses, uninsured damages from floods, earthquakes or other
natural disasters; limitations on and variations in rents; and changes in
interest rates.
The Fund may invest without limitation in shares of REITs. REITs are
pooled investment vehicles which invest primarily in income-producing real
estate or real estate related loans or interests. REITs are generally
classified as equity REITs, mortgage REITs or a combination of equity and
mortgage REITs. Equity REITs invest the majority of their assets directly in
real property and derive income primarily from the collection of rents. Equity
REITs can also realize capital gains by selling properties that have
appreciated in value. Mortgage REITs invest the majority of their assets in
real estate mortgages and derive income from the collection of interest
payments. Like investment companies such as the Fund, REITs are not taxed on
income distributed to shareholders provided they comply with several
requirements in the Internal Revenue Code of 1986, as amended (the "Code").
REITs are subject to substantial cash flow dependency, defaults by borrowers,
self-liquidation, and the risk of failing to qualify for tax-free pass-through
of income under the Code, and/or to maintain exemptions from the 1940 Act. By
investing in REITs indirectly the Fund, a shareholder bears not only a
proportionate share of the expenses of the Fund, but also, indirectly, similar
expenses of the REITs. For a further discussion of the risks presented by
investing in REITs, see Additional Investment Information on Policies and Risk
Considerations--REITs.
While the Fund does not intend to invest directly in real estate, the
Fund could, under certain circumstances, own real estate directly as a result
of a default on securities that it owns. In addition, if the Fund has rental
income or income from the direct disposition of real property, the receipt of
such income may adversely affect the Fund's ability to retain its tax status
as a regulated investment company.
The Fund may also, to a limited extent, enter into futures contracts on
stocks, purchase or sell options on such futures, engage in certain options
transactions on stocks and enter into closing transactions with respect to
those activities. However, these activities will not be entered into for
speculative purposes, but rather to facilitate the ability quickly to deploy
into the stock market the Fund's positions in cash, short-term debt securities
and other money market instruments, at times when the Fund's assets are not
fully invested in equity securities. Such positions will generally be
eliminated when it becomes possible to invest in securities that are
appropriate for the Fund. See Additional Investment Information on Policies
and Risk Considerations--Futures Contracts and Options on Futures Contracts
and Options for a further discussion of these investment policies.
In connection with the Fund's ability to invest up to 10% of its total
assets in the securities of foreign issuers, currency considerations may
present risks if the Fund holds international securities. Currency
considerations carry a special risk for a portfolio of international
securities. In this regard, the Fund may actively carry on hedging activities,
and may invest in forward foreign currency exchange contracts to hedge
currency risks associated with the purchase of individual securities
denominated in a particular currency. See Additional Investment Information on
Policies and Risk Considerations--Forward Foreign Currency Exchange Contracts.
The Manager does not normally intend to respond to short-term market
fluctuations or to acquire securities for the purpose of short-term trading;
however, the Manager may take advantage of short-term opportunities that are
consistent with the Fund's investment objectives. It is anticipated that the
annual turnover rate of the Fund, under normal circumstances, will generally
not exceed 100%. See Portfolio Transactions.
-12-
<PAGE>
Risk Factors
An investment in the Fund entails certain risks and considerations
about which an investor should be aware.
The Fund may invest up to 10% of its total assets in securities of
foreign issuers which normally are denominated in foreign currencies, and may
hold foreign currency directly. Investments in securities of non-United States
issuers which are generally denominated in foreign currencies involve certain
risk and opportunity considerations not typically associated with investing in
United States companies. Consequently, the Fund may be affected by changes in
currency rates and exchange control regulations and may incur costs in
connection with conversions between currencies. To hedge this currency risk
associated with investments in non-U.S. dollar denominated securities, a Fund
may invest in forward foreign currency contracts. Those activities pose
special risks which do not typically arise in connection with investments in
U.S. securities. In addition, the Fund may engage in foreign currency options
and futures transactions. For a discussion of the risks associated with
foreign securities see Foreign Investment Information and for those concerning
these hedging instruments see Risks of Transactions in Options, Futures and
Forward Contracts, both of which references appear under the heading
Additional Investment Information on Policies and Risk Considerations.
The Fund may commit its assets eligible for foreign investment to
securities of issuers located in emerging markets. Investments in securities
of companies in emerging markets present a greater degree of risk than tends
to be the case for foreign investments in Western Europe and other developed
markets. Among other things, there is a greater possibility of expropriation,
nationalization, confiscatory taxation, income earned or other special taxes,
foreign exchange restrictions, limitations on the repatriation of income and
capital from investments, defaults in foreign government debt, and economic,
political or social instability. In addition, in many emerging markets, there
is substantially less publicly available information about issuers and the
information that is available tends to be of a lesser quality. Economic
markets and structures tend to be less mature and diverse and the securities
markets which are subject to less government regulation or supervision may
also be smaller, less liquid and subject to greater price volatility. See
Additional Investment Information on Policies and Risk Considerations--Foreign
Investment Information for a more extensive discussion of these and other
factors.
The foreign securities in which the Fund may invest from time to time
may be listed primarily on foreign exchanges which trade on days when the New
York Stock Exchange is closed (such as Saturday). As a result, the net asset
value of the Fund may be significantly affected by such trading on days when
shareholders will have no access to the Fund. See Valuation of Shares.
The Fund also may, under certain circumstances, use certain futures
contracts and options on futures contracts, as well as options on stock. The
Fund will only enter into these transactions for hedging purposes. See Futures
Contracts and Options on Futures Contracts and Risks of Transactions in
Options, Futures and Forward Contracts, both of which references appear under
the heading Additional Investment Information on Policies and Risk
Considerations.
The Fund concentrates its investments in the real estate industry. As
a consequence, the net asset value of the Fund can be expected to fluctuate in
light of the factors affecting that industry, and may fluctuate more widely
than a portfolio that invests in a broader range of industries. The Fund may
be more susceptible to any single economic, political or regulatory occurrence
affecting the real estate industry.
The Fund, by investing primarily in securities of real estate
investment trusts, is subject to interest rate risk, in that as interest rates
decline, the value of the Fund's investments in REITs can be expected to rise.
-13-
<PAGE>
Conversely, when interest rates rise, the value of the Fund's investments in
REITs holding fixed rate obligations can be expected to decline. See
Additional Investment Information on Policies and Risk Considerations--REITS.
The Fund may lend its portfolio securities, may invest in repurchase
agreements and may purchase securities on a when-issued basis.
While the Fund intends to seek to qualify as a "diversified"
investment company under provisions of Subchapter M of the Code, it will not
be diversified under the 1940 Act. Thus, while at least 50% of the Fund's
total assets will be represented by cash, cash items, certain qualifying
securities and other securities limited in respect of any one issuer to an
amount not greater than 5% of the Fund's total assets, it will not satisfy the
1940 Act requirement in this respect, which applies that test to 75% of the
Fund's assets. A nondiversified portfolio is believed to be subject to greater
risk because adverse effects on the portfolio's security holdings may affect a
larger portion of the overall assets.
Each of the investment strategies identified above involves special
risks which are described under Additional Investment Information on Policies
and Risk Considerations in this Prospectus and Investment Policies, Portfolio
Techniques and Risk Considerations in Part B.
* * *
Part B sets forth other more specific investment restrictions and
descriptions of Moody's and S&P ratings.
-14-
<PAGE>
THE DELAWARE DIFFERENCE
PLANS AND SERVICES
The Delaware Difference is our commitment to provide you with
superior information and quality service on your investments in the Delaware
Group of funds.
SHAREHOLDER PHONE DIRECTORY
Investor Information Center
800-523-4640
Fund Information; Literature; Price; Yield and Performance Figures
Shareholder Service Center
800-523-1918
Information on Existing Regular Investment Accounts and
Retirement Plan Accounts; Wire Investments; Wire Liquidations;
Telephone Liquidations and Telephone Exchanges
Delaphone
800-362-FUND
(800-362-3863)
Performance Information
During business hours, you can call the Investor Information Center
for current performance information. Current performance information may also
be included in advertisements and information given to shareholders.
Shareholder Services
During business hours, you can call the Delaware Group's Shareholder
Service Center. Our representatives can answer any questions about your
account, the Fund, the various service features and other funds in the
Delaware Group.
Delaphone Service
Delaphone is an account inquiry service for investors with
Touch-Tone(R) phone service. It enables you to get information on your account
faster than the mailed statements and confirmations. Delaphone also provides
current performance information on the Fund, as well as other funds in the
Delaware Group. Delaphone is available seven days a week, 24 hours a day.
Statements and Confirmations
You will receive quarterly statements of your account summarizing all
transactions during the period. A confirmation statement will be sent
following all transactions other than those involving a reinvestment of
dividends. You should examine statements and confirmations immediately and
promptly report any discrepancy by calling the Shareholder Service Center.
Duplicate Confirmations
If your financial adviser or investment dealer is noted on your
investment application, we will send a duplicate confirmation to him or her.
This makes it easier for your adviser to help you manage your investments.
-15-
<PAGE>
Dividend Payments
Dividends, capital gains and other distributions are automatically
reinvested in your account, unless you elect to receive them in cash. You may
also elect to have the dividends earned in one fund automatically invested in
another Delaware Group fund with a different investment objective, subject to
certain exceptions and limitations.
For more information, see Additional Methods of Adding to Your
Investment - Dividend Reinvestment Plan under How to Buy Shares or call the
Shareholder Service Center.
MoneyLine(SM) Services
Delaware Group offers the following services for fast and convenient
transfer of funds between your personal bank account and your Delaware Group
fund account.
1. MoneyLine(SM) Direct Deposit Service
If you elect to have your dividends and distributions paid
in cash and such dividends and distributions are in an amount of $25
or more, you may choose the MoneyLine(SM) Direct Deposit Service and
have such payments transferred from your Fund account to your
predesignated bank account. See Dividends and Distributions. In
addition, you may elect to have your Systematic Withdrawal Plan
payments transferred from your Fund account to your predesignated
bank account through this service. See Systematic Withdrawal Plans
under Redemption and Exchange. This service is not available for
certain retirement plans.
2. MoneyLine(SM) On Demand
You or your investment dealer may request purchases and
redemptions of Fund shares by phone using MoneyLine(SM) On Demand.
When you authorize a Fund to accept such requests from you or your
investment dealer, funds will be withdrawn from (for share purchases)
or deposited to (for share redemptions) your predesignated bank
account. Your request will be processed the same day if you call
prior to 4 p.m., Eastern time. There is a $25 minimum and $50,000
maximum limit for MoneyLine(SM) On Demand transactions. With respect
to retirement plans, this service is only available for purchases
through an IRA.
For each MoneyLine(SM) Service, it may take up to four business days
for the transactions to be completed. You can initiate either service by
completing an Account Services form. If your name and address are not
identical to the name and address on your Fund account, you must have your
signature guaranteed. The Fund does not charge a fee for any MoneyLine(SM)
Service; however, your bank may charge a fee. Please call the Shareholder
Service Center for additional information about these services.
Retirement Planning
An investment in the Fund may be a suitable investment option for
tax-deferred retirement plans. Delaware Group offers a full spectrum of
qualified and non-qualified retirement plans, including the popular 401(k)
deferred compensation plans, IRA, and the new Roth IRA. Just call the Delaware
Group at 1-800-523-1918 for more information.
Right of Accumulation
With respect to Class A Shares, the Right of Accumulation feature
allows you to combine the value of your current holdings of Class A Shares,
Class B Shares and Class C Shares of the Fund with the dollar amount of new
purchases of Class A Shares to qualify for a reduced front-end sales charge on
such purchases of Class A Shares. Under the Combined Purchases Privilege, you
may also include certain shares that you own in other funds in the Delaware
Group. See Classes of Shares.
-16-
<PAGE>
Letter of Intention
The Letter of Intention feature permits you to obtain a reduced
front-end sales charge on purchases of Class A Shares by aggregating certain
of your purchases of Delaware Group fund shares over a 13-month period. See
Classes of Shares and Part B.
12-Month Reinvestment Privilege
The 12-Month Reinvestment Privilege permits you to reinvest proceeds
from a redemption of Class A Shares, within one year of the date of the
redemption, without paying a front-end sales charge. See Part B.
Exchange Privilege
The Exchange Privilege permits you to exchange all or part of your
shares into shares of other mutual funds in the Delaware Group, subject to
certain exceptions and limitations. For additional information on exchanges,
see Investing by Exchange under How to Buy Shares and Redemption and Exchange.
Wealth Builder Option
You may elect to invest in the Fund through regular liquidations of
shares in your accounts in other funds in the Delaware Group. Investments
under this feature are exchanges and are therefore subject to the same
conditions and limitations as other exchanges of the Fund. See Additional
Methods of Adding to Your Investment -- Wealth Builder Option and Investing by
Exchange under How to Buy Shares and Redemption and Exchange.
Financial Information about the Fund
Each fiscal year, you will receive an audited annual report and an
unaudited semi-annual report. These reports provide detailed information about
the Fund's investments and performance. Pooled Trust Inc.'s fiscal year ends
on October 31.
-17-
<PAGE>
CLASSES OF SHARES
Alternative Purchase Arrangements
Shares may be purchased at a price equal to the next determined net
asset value per share, subject to a sales charge which may be imposed, at the
election of the purchaser, at the time of purchase for Class A Shares
("front-end sales charge alternative"), or on a contingent deferred basis for
Class B Shares ("deferred sales charge alternative") or Class C Shares ("level
sales charge alternative").
Class A Shares. An investor who elects the front-end sales charge
alternative acquires Class A Shares. Class A Shares, which incur a sales
charge when they are purchased, but generally are not subject to any sales
charge when they are redeemed. Class A Shares are subject to annual 12b-1 Plan
expenses of up to a maximum of 0.30% (currently, no more than 0.25% pursuant
to Board action) of average daily net assets of such shares. Certain purchases
of Class A Shares qualify for reduced front-end sales charges. See Front-End
Sales Charge Alternative - Class A Shares, below. See also Contingent Deferred
Sales Charge for Certain Redemptions of Class A Shares Purchased at Net Asset
Value and Distribution (12b-1) and Service under Management of the Fund.
Class B Shares. An investor who elects the deferred sales charge
alternative acquires Class B Shares, which do not incur a front-end sales
charge when they are purchased, but are subject to a contingent deferred sales
charge if they are redeemed within six years of purchase. Class B Shares are
subject to annual 12b-1 Plan expenses of up to a maximum of 1% (0.25% of which
are service fees to be paid to the Distributor, dealers or others for
providing personal service and/or maintaining shareholder accounts) of average
daily net assets of such shares for approximately eight years after purchase.
Class B Shares permit all of the investor's dollars to work from the time the
investment is made. The higher 12b-1 Plan expenses paid by Class B Shares will
cause such shares to have a higher expense ratio and to pay lower dividends
than Class A Shares. At the end of approximately eight years after purchase,
Class B Shares are automatically converted into Class A Shares of the Fund
and, thereafter, for the remainder of the life of the investment, the annual
12b-1 Plan fee of up to 0.30% (currently, no more than 0.25% pursuant to Board
action) for the Class A Shares will apply. See Automatic Conversion of Class B
Shares, below.
Class C Shares. An investor who elects the level sales charge
alternative acquires Class C Shares, which do not incur a front-end sales
charge when they are purchased, but are subject to a contingent deferred sales
charge if they are redeemed within 12 months of purchase. Class C Shares are
subject to annual 12b-1 Plan expenses of up to a maximum of 1% (0.25% of which
are service fees to be paid to the Distributor, dealers or others for
providing personal service and/or maintaining shareholder accounts) of average
daily net assets of such shares for the life of the investment. The higher
12b-1 Plan expenses paid by Class C Shares will cause such shares to have a
higher expense ratio and to pay lower dividends than Class A Shares. Unlike
Class B Shares, Class C Shares do not convert to another class.
The alternative purchase arrangements described above permit
investors to choose the method of purchasing shares that is most suitable
given the amount of their purchase, the length of time they expect to hold
their shares and other relevant circumstances. Investors should determine
whether, given their particular circumstances, it is more advantageous to
purchase Class A Shares and incur a front-end sales charge, purchase Class B
Shares and have the entire initial purchase amount invested in the Fund with
their investment being subject to a CDSC if they redeem shares within six
years of purchase, or purchase Class C Shares and have the entire initial
purchase amount invested in the Fund with their investment being subject to a
CDSC if they redeem shares within 12 months of purchase. In addition,
investors should consider the level of annual 12b-1 Plan expenses applicable
to each Class. The higher 12b-1 Plan expenses on Class B Shares and Class C
Shares will be offset to the extent a return is realized on the additional
money initially invested upon the purchase of such shares. However, there can
be no assurance as to the return, if any, that will be realized on such
additional
-18-
<PAGE>
money and the effect of earning a return on such additional money will
diminish over time. In comparing Class B Shares to Class C Shares, investors
should also consider the duration of the annual 12b-1 Plan expenses to which
each of these classes is subject and the desirability of an automatic
conversion feature, which is available only for Class B Shares.
For the distribution and related services provided to, and the
expenses borne on behalf of, the Fund, the Distributor and others will be
paid, in the case of Class A Shares, from the proceeds of the front-end sales
charge and 12b-1 Plan fees and, in the case of Class B Shares and Class C
Shares, from the proceeds of the 12b-1 Plan fees and, if applicable, the CDSC
incurred upon redemption. Financial advisers may receive different
compensation for selling Class A, Class B and Class C Shares. Investors should
understand that the purpose and function of the respective 12b-1 Plans and the
CDSCs applicable to Class B Shares and Class C Shares are the same as those of
the 12b-1 Plan and the front-end sales charge applicable to Class A Shares in
that such fees and charges are used to finance the distribution of the
respective Classes. See Distribution (12b-1) and Service under Management of
the Fund.
Dividends, if any, paid on Class A, Class B and Class C Shares, to
the extent any dividends are paid, will be calculated in the same manner, at
the same time, on the same day and will be in the same amount, except that the
additional amount of 12b-1 Plan expenses relating to Class B Shares and Class
C Shares will be borne exclusively by such shares. See Calculation of Offering
Price and Net Asset Value Per Share.
The NASD has adopted certain rules relating to investment company sales
charges. Pooled Trust, Inc. and the Distributor intend to operate in
compliance with these rules.
-19-
<PAGE>
Front-End Sales Charge Alternative - Class A Shares
Class A Shares may be purchased at the offering price which reflects
a maximum front-end sales charge of 4.75%. See Calculation of Offering Price
and Net Asset Value Per Share.
Purchases of $100,000 or more carry a reduced front-end sales charge
as shown in the following table.
<TABLE>
<CAPTION>
REIT Fund A Class
- --------------------------------------------------------------------------------------------------------------------------
Dealer's
Front-End Sales Charge as % of Commission***
Amount of Purchase Offering Amount as % of
Price Invested** Offering Price
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Less than $100,000 4.75% 4.98% 4.00%
=======
$100,000 but under $250,000 3.75 3.87 3.00
======
$250,000 but under $500,000 2.50 2.58 2.00
======
$500,000 but under $1,000,000* 2.00 2.03 1.60
======
</TABLE>
* There is no front-end sales charge on purchases of Class A Shares of
$1,000,000 or more but, under certain limited circumstances, a 1%
Limited CDSC may apply upon redemption of such shares.
** Based on the net asset value per share of the original class of
shares (now the Class A Shares) as of the end of the Fund's fiscal
year ended October 31, 1997.
*** Financial institutions or their affiliated brokers may receive an
agency transaction fee in the percentages set forth above.
- --------------------------------------------------------------------------------
The Fund must be notified when a sale takes place which would qualify
for the reduced front-end sales charge on the basis of previous or current
purchases. The reduced front-end sales charge will be granted upon
confirmation of the shareholder's holdings by the Fund. Such reduced front-end
sales charges are not retroactive.
From time to time, upon written notice to all of its dealers, the
Distributor may hold special promotions for specified periods during which the
Distributor may reallow to dealers up to the full amount of the front-end
sales charge shown above. In addition, certain dealers who enter into an
agreement to provide extra training and information on Delaware Group products
and services and who increase sales of Delaware Group funds may receive an
additional commission of up to 0.15% of the offering price. Dealers who
receive 90% or more of the sales charge may be deemed to be underwriters under
the Securities Act of 1933.
- --------------------------------------------------------------------------------
For initial purchases of Class A Shares of $1,000,000 or more, a
dealer's commission may be paid by the Distributor to financial advisers
through whom such purchases are made in accordance with the following
schedule:
Dealer's Commission
-------------------
(as a percentage of
Amount of Purchase amount purchased)
------------------
Up to $2 million 1.00%
Next $1 million up to $3 million 0.75
Next $2 million up to $5 million 0.50
Amount over $5 million 0.25
-20-
<PAGE>
For accounts with assets over $1 million, the dealer commission resets
annually to the highest incremental commission rate on the anniversary of the
first purchase. In determining a financial adviser's eligibility for the
dealer's commission, purchases of Class A Shares of other Delaware Group funds
as to which a Limited CDSC applies may be aggregated with those of the Class A
Shares of the Fund. Financial advisers also may be eligible for a dealer's
commission in connection with certain purchases made under a Letter of Intention
or pursuant to an investor's Right of Accumulation. Financial advisers should
contact the Distributor concerning the applicability and calculation of the
dealer's commission in the case of combined purchases.
An exchange from other Delaware Group funds will not qualify for
payment of the dealer's commission, unless a dealer's commission or similar
payment has not been previously paid on the assets being exchanged. The
schedule and program for payment of the dealer's commission are subject to
change or termination at any time by the Distributor at its discretion.
Redemptions of Class A Shares purchased at net asset value may result
in the imposition of a Limited CDSC if the dealer's commission described above
was paid in connection with the purchase of those shares. See Contingent
Deferred Sales Charge for Certain Redemptions of Class A Shares Purchased at
Net Asset Value under Redemption and Exchange.
Combined Purchases Privilege
By combining your holdings of Class A Shares with your holdings of
Class B Shares and/or Class C Shares of the Fund and shares of other funds in
the Delaware Group, except those noted below, you can reduce the front-end
sales charges on any additional purchases of Class A Shares. Shares of
Delaware Group Premium Fund, Inc. beneficially owned in connection with
ownership of variable insurance products may be combined with other Delaware
Group fund holdings. Assets held by investment advisory clients of the Manager
or its affiliates in a stable value account may be combined with other
Delaware Group fund holdings. Shares of other funds that do not carry a
front-end sales charge or CDSC may not be included unless they were acquired
through an exchange from a Delaware Group fund that does carry a front-end
sales charge or CDSC.
This privilege permits you to combine your purchases and holdings with
those of your spouse, your children under 21 and any trust, fiduciary or
retirement account for the benefit of such family members.
It also permits you to use these combinations under a Letter of
Intention. A Letter of Intention allows you to make purchases over a 13-month
period and qualify the entire purchase for a reduction in front-end sales
charges on Class A Shares.
Combined purchases of $1,000,000 or more, including certain purchases
made at net asset value pursuant to a Right of Accumulation or under a Letter
of Intention, may result in the payment of a dealer's commission and the
applicability of a Limited CDSC. Investors should consult their financial
advisers or the Shareholder Service Center about the operation of these
features. See Front-End Sales Charge Alternative - Class A Shares, above.
Allied Plans
Class A Shares are available for purchase by participants in certain
401(k) Defined Contribution Plans ("Allied Plans") which are made available
under a joint venture agreement between the Distributor and another
institution through which mutual funds are marketed and which allow
investments in Class A Shares of designated Delaware Group funds ("eligible
Delaware Group fund shares"), as well as shares of designated classes of
non-Delaware Group funds ("eligible non-Delaware Group fund shares"). Class B
Shares and Class C Shares are not eligible for purchase by Allied Plans.
With respect to purchases made in connection with an Allied Plan, the
value of eligible Delaware Group and eligible non-Delaware Group fund shares
held by the Allied Plan may be combined with the
-21-
<PAGE>
dollar amount of new purchases by that Allied Plan to obtain a reduced
front-end sales charge on additional purchases of eligible Delaware Group fund
shares.
Participants in Allied Plans may exchange all or part of their eligible
Delaware Group fund shares for other eligible Delaware Group fund shares or
for eligible non-Delaware Group fund shares at net asset value without payment
of a front-end sales charge. However, exchanges of eligible fund shares, both
Delaware Group and non-Delaware Group, which were not subject to a front-end
sales charge, will be subject to the applicable sales charge if exchanged for
eligible Delaware Group fund shares to which a sales charge applies. No sales
charge will apply if the eligible fund shares were previously acquired through
the exchange of eligible shares on which a sales charge was already paid or
through the reinvestment of dividends. See Investing by Exchange.
A dealer's commission may be payable on purchases of eligible Delaware
Group fund shares under an Allied Plan. In determining a financial adviser's
eligibility for a dealer's commission on net asset value purchases of eligible
Delaware Group fund shares in connection with Allied Plans, all participant
holdings in the Allied Plan will be aggregated.
The Limited CDSC is applicable to redemptions of net asset value
purchases from an Allied Plan on which a dealer's commission has been paid.
Waivers of the Limited CDSC, as described under Waiver of Limited Contingent
Deferred Sales Charge - Class A Shares under Redemption and Exchange, apply to
redemptions by participants in Allied Plans except in the case of exchanges
between eligible Delaware Group and non-Delaware Group fund shares. When
eligible Delaware Group fund shares are exchanged into eligible non-Delaware
Group fund shares, the Limited CDSC will be imposed at the time of the
exchange, unless the joint venture agreement specifies that the amount of the
Limited CDSC will be paid by the financial adviser or selling dealer. See
Contingent Deferred Sales Charge for Certain Redemptions of Class A Shares
Purchased at Net Asset Value under Redemption and Exchange.
Buying Class A Shares at Net Asset Value
Class A Shares of the Fund may be purchased at net asset value under
the Delaware Group Dividend Reinvestment Plan and, under certain
circumstances, the Exchange Privilege and the 12-Month Reinvestment Privilege.
See The Delaware Difference and Redemption and Exchange for additional
information.
Purchases of Class A Shares may be made at net asset value by current
and former officers, trustees and employees (and members of their families) of
the Manager, any affiliate, any of the funds in the Delaware Group, certain of
their agents and registered representatives and employees of authorized
investment dealers and by employee benefit plans for such entities. Individual
purchases, including those in retirement accounts, must be for accounts in the
name of the individual or a qualifying family member.
Purchases of Class A Shares may also be made by clients of registered
representatives of an authorized investment dealer at net asset value within
12 months after the registered representative changes employment, if the
purchase is funded by proceeds from an investment where a front-end sales
charge, contingent deferred sales charge or other sales charge has been
assessed. Purchases of Class A Shares may also be made at net asset value by
bank employees who provide services in connection with agreements between the
bank and unaffiliated brokers or dealers concerning sales of shares of
Delaware Group funds. Officers, directors and key employees of institutional
clients of the Manager or any of its affiliates may purchase Class A Shares at
net asset value. Moreover, purchases may be effected at net asset value for
the benefit of the clients of brokers, dealers and registered investment
advisers affiliated with a broker or dealer, if such broker, dealer or
investment adviser has entered into an agreement with the Distributor
providing specifically for the purchase of Class A Shares in connection with
special investment products, such as wrap accounts or similar fee based
programs.
-22-
<PAGE>
Purchases of Class A Shares at net asset value may also be made by the
following: financial institutions investing for the account of their trust
customers if they are not eligible to purchase shares of the Institutional
Class of a Fund; any group retirement plan (excluding defined benefit pension
plans), or such plans of the same employer, for which plan participant records
are maintained on the Delaware Investment & Retirement Services, Inc.
("DIRSI") proprietary record keeping system that (i) has in excess of $500,000
of plan assets invested in Class A Shares of Delaware Group funds and any
stable value account available to investment advisory clients of the
Manager or its affiliates, or (ii) is sponsored by an employer that has at any
point after May 1, 1997 had more than 100 employees while such plan has held
Class A Shares of a Delaware Group fund and such employer has properly
represented to DIRSI in writing that it has the requisite number of employees
and has received written confirmation back from DIRSI. See Group Investment
Plans for information regarding the applicability of the Limited CDSC.
Investors in Delaware-Voyageur Unit Investment Trusts may reinvest
monthly dividend checks and/or repayment of invested capital into Class A
Shares of any of the funds in the Delaware Group at net asset value.
Investments in Class A Shares made by plan level and/or participant
retirement accounts that are for the purpose of repaying a loan taken from
such accounts will be made at net asset value. Loan repayments made to a
Delaware Group account in connection with loans originated from accounts
previously maintained by another investment firm will also be invested at net
asset value.
The Fund must be notified in advance that an investment qualifies for
purchase at net asset value.
Group Investment Plans
Group Investment Plans (e.g., SEP/IRA, SAR/SEP, SIMPLE IRA, SIMPLE
401(k), Profit Sharing, Money Purchase Pension, 401(k) Defined Contribution
Plans, and 403(b)(7) and 457 Deferred Compensation Plans) may benefit from the
reduced front-end sales charges available on Class A Shares based on total
plan assets. If a company has more than one plan investing in the Delaware
Group of funds, then the total amount invested in all plans will be aggregated
to determine the applicable front-end sales charge reduction on each purchase,
both initial and subsequent, if, at the time of each such purchase, the
company notifies the Fund that it qualifies for the reduction. Employees
participating in such Group Investment Plans may also combine the investments
held in their plan account to determine the front-end sales charge applicable
to purchases in non-retirement Delaware Group investment accounts if, at the
time of each such purchase, they notify the Fund that they are eligible to
combine purchase amounts held in their plan account.
The Limited CDSC is applicable to any redemptions of net asset value
purchases made on behalf of any group retirement plan on which a dealer's
commission has been paid only if such redemption is made pursuant to a
withdrawal of the entire plan from Delaware Group funds. See Contingent
Deferred Sales Charge for Certain Redemptions of Class A Shares Purchased at
Net Asset Value under Redemption and Exchange.
For additional information on retirement plans, including plan forms,
applications, minimum investments and any applicable account maintenance fees,
contact your investment dealer or the Distributor.
Deferred Sales Charge Alternative - Class B Shares
Class B Shares may be purchased at net asset value without a front-end
sales charge and, as a result, the full amount of the investor's purchase
payment will be invested in Fund shares. The Distributor currently anticipates
compensating dealers or brokers for selling Class B Shares at the time of
purchase from its own assets in an amount equal to no more than 4% of the
dollar amount purchased. In addition, from time to time,
-23-
<PAGE>
upon written notice to all of its dealers, the Distributor may hold special
promotions for specified periods during which the Distributor may pay
additional compensation to dealers or brokers for selling Class B Shares at
the time of purchase. As discussed below, however, Class B Shares are subject
to annual 12b-1 Plan expenses and, if redeemed within six years of purchase, a
CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to the
Distributor and others for providing distribution and related services, and
bearing related expenses, in connection with the sale of Class B Shares. These
payments support the compensation paid to dealers or brokers for selling Class
B Shares. Payments to the Distributor and others under the Class B 12b-1 Plan
may be in an amount equal to no more than 1% annually. The combination of the
CDSC and the proceeds of the 12b-1 Plan fees makes it possible for the Fund to
sell Class B Shares without deducting a front-end sales charge at the time of
purchase.
Holders of Class B Shares who exercise the exchange privilege described
below will continue to be subject to the CDSC schedule for the Class B Shares
described in this Prospectus, even after exchange. Such CDSC schedule may be
higher than the CDSC schedule relating to the Class B Shares acquired as a
result of the exchange. See Redemption and Exchange.
Automatic Conversion of Class B Shares
Class B Shares, other than shares acquired through reinvestment of
dividends, held for eight years after purchase are eligible for automatic
conversion into Class A Shares. Conversions of Class B Shares into Class A
Shares will occur only four times in any calendar year, on the last business
day of the second full week of March, June, September and December (each, a
"Conversion Date"). If the eighth anniversary after a purchase of Class B
Shares falls on a Conversion Date, an investor's Class B Shares will be
converted on that date. If the eighth anniversary occurs between Conversion
Dates, an investor's Class B Shares will be converted on the next Conversion
Date after such anniversary. Consequently, if a shareholder's eighth
anniversary falls on the day after a Conversion Date, that shareholder will
have to hold Class B Shares for as long as three additional months after the
eighth anniversary of purchase before the shares will automatically convert
into Class A Shares.
Class B Shares of a fund acquired through a reinvestment of dividends
will convert to the corresponding Class A Shares of that fund (or, in the case
of Delaware Group Cash Reserve, Inc., the Delaware Cash Reserve Consultant
Class) pro-rata with Class B Shares of that fund not acquired through dividend
reinvestment.
All such automatic conversions of Class B Shares will constitute tax-free
exchanges for federal income tax purposes. See Taxes.
Level Sales Charge Alternative - Class C Shares
Class C Shares may be purchased at net asset value without a front-end
sales charge and, as a result, the full amount of the investor's purchase
payment will be invested in Fund shares. The Distributor currently anticipates
compensating dealers or brokers for selling Class C Shares at the time of
purchase from its own assets in an amount equal to no more than 1% of the
dollar amount purchased. As discussed below, however, Class C Shares are
subject to annual 12b-1 Plan expenses and, if redeemed within 12 months of
purchase, a CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to the
Distributor and others for providing distribution and related services, and
bearing related expenses, in connection with the sale of Class C Shares.
These payments support the compensation paid to dealers or brokers for
selling Class C Shares. Payments to the Distributor and others under the Class
C 12b-1 Plan may be in an amount equal to no more than 1% annually.
-24-
<PAGE>
Holders of Class C Shares who exercise the exchange privilege described
below will continue to be subject to the CDSC schedule for the Class C Shares
as described in this Prospectus. See Redemption and Exchange.
Contingent Deferred Sales Charge - Class B Shares and Class C Shares
Class B Shares redeemed within six years of purchase may be subject to
a CDSC at the rates set forth below and Class C Shares redeemed within 12
months of purchase may be subject to a CDSC of 1%. CDSCs are charged as a
percentage of the dollar amount subject to the CDSC. The charge will be
assessed on an amount equal to the lesser of the net asset value at the time
of purchase of the shares being redeemed or the net asset value of those
shares at the time of redemption. No CDSC will be imposed on increases in net
asset value above the initial purchase price, nor will a CDSC be assessed on
redemptions of shares acquired through reinvestments of dividends or capital
gains distributions. For purposes of this formula, the "net asset value at the
time of purchase" will be the net asset value at purchase of Class B Shares or
Class C Shares of the Fund, even if those shares are later exchanged for
shares of another Delaware Group fund. In the event of an exchange of the
shares, the "net asset value of such shares at the time of redemption" will be
the net asset value of the shares that were acquired in the exchange.
The following table sets forth the rates of the CDSC for Class B Shares
of the Fund:
Contingent Deferred Sales
Charge (as a Percentage
of Dollar Amount
Year After Purchase Made Subject to Charge)
------------------------ ------------------
0-2 4%
3-4 3%
5 2%
6 1%
7 and thereafter None
During the seventh year after purchase and, thereafter, until converted
automatically into Class A Shares, Class B Shares will still be subject to the
annual 12b-1 Plan expenses of up to 1% of average daily net assets of those
shares. See Automatic Conversion of Class B Shares, above. Investors are
reminded that the Class A Shares into which the Class B Shares will convert
are subject to ongoing annual 12b-1 Plan expenses of up to a maximum of 0.30%
(currently, no more than 0.25% pursuant to Board action) of average daily net
assets of such shares.
In determining whether a CDSC applies to a redemption of Class B
Shares, it will be assumed that shares held for more than six years are
redeemed first, followed by shares acquired through the reinvestment of
dividends or distributions, and finally by shares held longest during the
six-year period. With respect to Class C Shares, it will be assumed that
shares held for more than 12 months are redeemed first followed by shares
acquired through the reinvestment of dividends or distributions, and finally
by shares held for 12 months or less.
All investments made during a calendar month, regardless of what day of
the month the investment occurred, will age one month on the last day of that
month and each subsequent month.
The CDSC is waived on certain redemptions of Class B Shares and Class C
Shares. See Waiver of Contingent Deferred Sales Charge - Class B Shares and
Class C Shares under Redemption and Exchange.
Other Payments to Dealers -- Class A, Class B and Class C Shares
-25-
<PAGE>
From time to time at the discretion of the Distributor, all registered
broker/dealers whose aggregate sales of the Classes exceed certain limits, as
set by the Distributor, may receive from the Distributor an additional payment
of up to 0.25% of the dollar amount of such sales. The Distributor may also
provide additional promotional incentives or payments to dealers that sell
shares of the Delaware Group of funds. In some instances, these incentives or
payments may be offered only to certain dealers who maintain, have sold or may
sell certain amounts of shares.
Subject to pending amendments to the NASD's Conduct Rules, in
connection with the promotion of Delaware Group fund shares, the Distributor
may, from time to time, pay to participate in dealer-sponsored seminars and
conferences, reimburse dealers for expenses incurred in connection with
preapproved seminars, conferences and advertising and may, from time to time,
pay or allow additional promotional incentives to dealers, which shall include
non-cash concessions, such as certain luxury merchandise or a trip to or
attendance at a business or investment seminar at a luxury resort, as part of
preapproved sales contests. Payment of non-cash compensation to dealers is
currently under review by the NASD and the Securities and Exchange Commission.
It is likely that the NASD's Conduct Rules will be amended such that the
ability of the Distributor to pay non-cash compensation as described above
will be restricted in some fashion. The Distributor intends to comply with the
NASD's Conduct Rules as they may be amended.
REIT Fund Institutional Class and The Real Estate Investment Trust Portfolio
class
In addition to offering the Class A, Class B and Class C Shares, the
Fund also offers shares of REIT Fund Institutional Class, which are described
in a separate prospectus and are available for purchase only by certain
investors. Shares of this class are generally distributed directly by the
Distributor and do not have a front-end sales charge, a CDSC or a Limited
CDSC, and are not subject to 12b-1 Plan distribution expenses. To obtain a
prospectus relating to such class, contact the Distributor by writing to the
address or by calling the phone number listed on page 1 of this Prospectus.
The Fund also offers shares of The Real Estate Investment Trust
Portfolio class, which are available for purchase only by certain investors.
To obtain a prospectus relating to such class, contact Pooled Trust, Inc. by
writing to the address or by calling the phone number listed on page 1 of this
Prospectus.
-26-
<PAGE>
HOW TO BUY SHARES
Purchase Amounts
Generally, the minimum initial purchase is generally $1,000 for Class A
Shares, Class B Shares and Class C Shares. Subsequent purchases of shares of
any Class generally must be $100 or more. For purchases under a Uniform Gifts
to Minors Act or Uniform Transfers to Minors Act or through an Automatic
Investing Plan, there is a minimum initial purchase of $250 and a minimum
subsequent purchase of $25.
There is a maximum purchase limitation of $250,000 on each purchase of
Class B Shares. For Class C Shares, each purchase must be in an amount that is
less than $1,000,000. An investor may exceed these maximum purchase
limitations by making cumulative purchases over a period of time. In doing so,
an investor should keep in mind that reduced front-end sales charges are
available on investments of $100,000 or more in Class A Shares, and that Class
A Shares (i) are subject to lower annual 12b-1 Plan expenses than Class B
Shares and Class C Shares and (ii) generally are not subject to a CDSC.
Minimum purchase requirements do not apply to retirement plans other than
IRAs, for which there is a minimum initial purchase of $250, and a minimum
subsequent purchase of $25, regardless of which Class is selected. For
retirement plans, the maximum purchase limitations apply only to the initial
purchase of Class B Shares or Class C Shares by the plan.
Investing through Your Investment Dealer
You can make a purchase of shares of the Fund through most investment
dealers who, as part of the service they provide, must transmit orders
promptly. They may charge for this service. If you want a dealer but do not
have one, the Delaware Group can refer you to one.
Investing by Mail
1. Initial Purchases--An Investment Application or, in the case of a
retirement account, an appropriate retirement plan application, must be
completed, signed and sent with a check payable to REIT Fund A Class, REIT
Fund B Class or REIT Fund C Class to Delaware Group at 1818 Market Street,
Philadelphia, PA 19103.
2. Subsequent Purchases--Additional purchases may be made at any time by
mailing a check payable to the specific Class selected. Your check should be
identified with your name(s) and account number. An investment slip (similar
to a deposit slip) is provided at the bottom of transaction confirmations and
dividend statements that you will receive from Pooled Trust, Inc. Use of this
investment slip can help expedite processing of your check when making
additional purchases. Your investment may be delayed if you send additional
purchases by certified mail.
Investing by Wire
You may purchase shares by requesting your bank to transmit funds by
wire to CoreStates Bank, N.A., ABA #031000011, account number 1412893401
(include your name(s) and your Fund account number in the wire).
1. Initial Purchases--Before you invest, telephone the Shareholder Service
Center to get an account number. If you do not call first, processing of your
investment may be delayed. In addition, you must promptly send your Investment
Application or, in the case of a retirement account, an appropriate retirement
plan application, to the specific Class selected, to Delaware Group at 1818
Market Street, Philadelphia, PA 19103.
2. Subsequent Purchases--You may make additional investments anytime by wiring
funds to CoreStates Bank, N.A., as described above. You should advise the
Shareholder Service Center by telephone of each wire you send.
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If you want to wire investments to a retirement plan account, call the
Shareholder Service Center for special wiring instructions.
Investing by Exchange
If you have an investment in another mutual fund in the Delaware Group,
you may write and authorize an exchange of part or all of your investment into
shares of the Fund. If you wish to open an account by exchange, call the
Shareholder Service Center for more information. All exchanges are subject to
the eligibility and minimum purchase requirements set forth in each fund's
prospectus. See Redemption and Exchange for more complete information
concerning your exchange privileges.
Holders of Class A Shares of the Fund may exchange all or part of their
shares for certain of the shares of other funds in the Delaware Group,
including other Class A Shares, but may not exchange their Class A Shares for
Class B Shares or Class C Shares of the Fund or of any other fund in the
Delaware Group. Holders of Class B Shares of the Fund are permitted to
exchange all or part of their Class B Shares only into Class B Shares of other
Delaware Group funds. Similarly, holders of Class C Shares of the Fund are
permitted to exchange all or part of their Class C Shares only into Class C
Shares of other Delaware Group funds. Class B Shares of the Fund and Class C
Shares of the Fund acquired by exchange will continue to carry the CDSC and,
in the case of Class B Shares, the automatic conversion schedule of the fund
from which the exchange is made. The holding period of Class B Shares of the
Fund acquired by exchange will be added to that of the shares that were
exchanged for purposes of determining the time of the automatic conversion
into Class A Shares of the Fund.
Permissible exchanges into Class A Shares of the Fund will be made
without a front-end sales charge, except for exchanges of shares that were not
previously subject to a front-end sales charge (unless such shares were
acquired through the reinvestment of dividends). Permissible exchanges into
Class B Shares or Class C Shares of the Fund will be made without the
imposition of a CDSC by the fund from which the exchange is being made at the
time of the exchange.
See Allied Plans under Classes of Shares for information on exchanges
by participants in an Allied Plan.
Additional Methods of Adding to Your Investment
Call the Shareholder Service Center for more information if you wish to
use the following services:
1. Automatic Investing Plan
The Automatic Investing Plan enables you to make regular monthly
investments without writing or mailing checks. You may authorize Pooled Trust,
Inc. to transfer a designated amount monthly from your checking account to
your Fund account. Many shareholders use this as an automatic savings plan.
Shareholders should allow a reasonable amount of time for initial purchases
and changes to these plans to become effective.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money Purchase
Pension Plans or 401(k) Defined Contribution Plans, 403(b)(7) or 457
Deferred Compensation Plans.
2. Direct Deposit
You may have your employer or bank make regular investments directly to
your account for you (for example: payroll deduction, pay by phone, annuity
payments). The Fund also accepts preauthorized recurring government and
private payments by Electronic Fund Transfer, which avoids mail time and check
clearing holds on payments such as social security, federal salaries, Railroad
Retirement benefits, etc.
* * *
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Should investments through an automatic investing plan or by direct
deposit be reclaimed or returned for some reason, Pooled Trust, Inc. has the
right to liquidate your shares to reimburse the government or transmitting
bank. If there are insufficient funds in your account, you are obligated to
reimburse the Fund.
3. MoneyLine (SM) On Demand
Through the MoneyLine (SM) On Demand service, you or your investment
dealer may call the Fund to request a transfer of funds from your
predesignated bank account to your Fund account. See MoneyLine (SM) Services
under The Delaware Difference for additional information about this service.
4. Wealth Builder Option
You can use the Wealth Builder Option to invest in the Fund through
regular liquidations of shares in your accounts in other funds in the Delaware
Group. You also may elect to invest in other mutual funds in the Delaware
Group through the Wealth Builder Option through exchanges from your Fund
account.
Under this automatic exchange program, you can authorize regular
monthly investments (minimum of $100 per fund) to be liquidated from your
account in one or more funds in the Delaware Group and invested automatically
into any other account in a Delaware Group mutual fund that you may specify.
If in connection with the election of the Wealth Builder Option, you wish to
open a new account to receive the automatic investment, such new account must
meet the minimum initial purchase requirements described in the prospectus of
the fund that you select. All investments under this option are exchanges and
are therefore subject to the same conditions and limitations as other
exchanges noted above. You can terminate your participation in Wealth Builder
at any time by giving written notice to the fund from which the exchanges are
made. See Redemption and Exchange.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money Purchase
Pension Plans, 401(k) Defined Contribution Plans, or 403(b)(7) or 457 Deferred
Compensation Plans.
5. Dividend Reinvestment Plan
You can elect to have your distributions (capital gains and/or dividend
income) paid to you by check or reinvested in your account. Or, you may invest
your distributions in certain other funds in the Delaware Group, subject to
the exceptions noted below as well as the eligibility and minimum purchase
requirements set forth in each fund's prospectus.
Reinvestments of distributions into Class A Shares of the Fund or of
other Delaware Group funds are made without a front-end sales charge.
Reinvestments of distributions into Class B Shares of the Fund or of other
Delaware Group funds or into Class C Shares of the Fund or of other Delaware
Group funds are also made without any sales charge and will not be subject to
a CDSC if later redeemed. See Automatic Conversion of Class B Shares under
Classes of Shares for information concerning the automatic conversion of Class
B Shares acquired by reinvesting dividends.
Holders of Class A Shares of the Fund may not reinvest their
distributions into Class B Shares or Class C Shares of any fund in the
Delaware Group, including the Fund. Holders of Class B Shares of the Fund may
reinvest their distributions only into Class B Shares of the funds in the
Delaware Group which offer that class of shares. Similarly, holders of Class C
Shares of the Fund may reinvest their distributions only into Class C Shares
of the funds in the Delaware Group which offer that class of shares. For more
information about reinvestments, call the Shareholder Service Center.
Capital gains and/or dividend distributions to participants in the
following retirement plans are automatically reinvested into the same Delaware
Group fund in which their investments are held: SAR/SEP,
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SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money Purchase Pension
Plans, 401(k) Defined Contribution Plans or 403(b)(7) or 457 Deferred
Compensation Plans.
Purchase Price and Effective Date
The offering price and net asset value of the Class A, Class B and
Class C Shares are determined as of the close of regular trading on the New
York Stock Exchange (ordinarily, 4 p.m., Eastern time) on days when the
Exchange is open.
The effective date of a purchase is the date the order is received by
the Fund, its agent or designee. The effective date of a direct purchase is
the day your wire, electronic transfer or check is received, unless it is
received after the time the offering price of shares is determined, as noted
above. Purchase orders received after such time will be effective the next
business day.
The Conditions of Your Purchase
The Fund reserves the right to reject any purchase order. If a purchase
is canceled because your check is returned unpaid, you are responsible for any
loss incurred. The Fund can redeem shares from your account(s) to reimburse
itself for any loss, and you may be restricted from making future purchases in
any of the funds in the Delaware Group. The Fund reserves the right to reject
purchase orders paid by third-party checks or checks that are not drawn on a
domestic branch of a United States financial institution. If a check drawn on
a foreign financial institution is accepted, you may be subject to additional
bank charges for clearance and currency conversion.
The Fund also reserves the right, following shareholder notification,
to charge a service fee on accounts that, as a result of a redemption, have
remained below the minimum stated account balance for a period of three or
more consecutive months. Holders of such accounts may be notified of their
insufficient account balance and advised that they have until the end of the
current calendar quarter to raise their balance to the stated minimum. If the
account has not reached the minimum balance requirement by that time, the Fund
will charge a $9 fee for that quarter and each subsequent calendar quarter
until the account is brought up to the minimum balance. The service fee will
be deducted from the account during the first week of each calendar quarter
for the previous quarter, and will be used to help defray the cost of
maintaining low-balance accounts. No fees will be charged without proper
notice, and no CDSC will apply to such assessments.
The Fund also reserves the right, upon 60 days' written notice, to
involuntarily redeem accounts that remain under the minimum initial purchase
amount as a result of redemptions. An investor making the minimum initial
investment may be subject to involuntary redemption without the imposition of
a CDSC or Limited CDSC if he or she redeems any portion of his or her account.
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REDEMPTION AND EXCHANGE
You can redeem or exchange your shares in a number of different ways.
The exchange service is useful if your investment requirements change and you
want an easy way to invest in other tax-advantaged funds, equity funds, bond
funds or money market funds. This service is also useful if you are
anticipating a major expenditure and want to move a portion of your investment
into a fund that has the checkwriting feature. Exchanges are subject to the
requirements of each fund and all exchanges of shares constitute taxable
events. See Taxes. Further, in order for an exchange to be processed, shares
of the fund being acquired must be registered in the state where the acquiring
shareholder resides. You may want to consult your financial adviser or
investment dealer to discuss which funds in the Delaware Group will best meet
your changing objectives and the consequences of any exchange transaction. You
may also call the Delaware Group directly for fund information.
All exchanges involve a purchase of shares of the fund into which the
exchange is made. As with any purchase, an investor should obtain and
carefully read that fund's prospectus before buying shares in an exchange. The
prospectus contains more complete information about the fund, including
charges and expenses.
Your shares will be redeemed or exchanged at a price based on the net
asset value next determined after the Fund receives your request in good
order, subject, in the case of a redemption, to any applicable CDSC or Limited
CDSC. For example, redemption or exchange requests received in good order
after the time the offering price of shares is determined, as noted above,
will be processed on the next business day. See Purchase Price and Effective
Date under How to Buy Shares. A shareholder submitting a redemption request
may indicate that he or she wishes to receive redemption proceeds of a
specific dollar amount. In the case of such a request, and in the case of
certain redemptions from retirement plan accounts, the Fund will redeem the
number of shares necessary to deduct the applicable CDSC in the case of Class
B and Class C Shares and, if applicable, the Limited CDSC in the case of Class
A Shares and tender to the shareholder the requested amount, assuming the
shareholder holds enough shares in his or her account for the redemption to be
processed in this manner. Otherwise, the amount tendered to the shareholder
upon redemption will be reduced by the amount of the applicable CDSC or
Limited CDSC. Redemption proceeds will be distributed promptly, as described
below, but not later than seven days after receipt of a redemption request.
Except as noted below, for a redemption request to be in "good order,"
you must provide your account number, account registration, and the total
number of shares or dollar amount of the transaction. For exchange requests,
you must also provide the name of the fund in which you want to invest the
proceeds. Exchange instructions and redemption requests must be signed by the
record owner(s) exactly as the shares are registered. You may request a
redemption or an exchange by calling the Shareholder Service Center at
800-523-1918. The Fund may suspend, terminate, or amend the terms of the
exchange privilege upon 60 days' written notice to shareholders.
The Fund will process written and telephone redemption requests to the
extent that the purchase orders for the shares being redeemed have already
settled. The Fund will honor redemption requests as to shares for which a
check was tendered as payment, but the Fund will not mail or wire the proceeds
until it is reasonably satisfied that the purchase check has cleared, which
may take up to 15 days from the purchase date. You can avoid this potential
delay if you purchase shares by wiring Federal Funds. The Fund reserves the
right to reject a written or telephone redemption request or delay payment of
redemption proceeds if there has been a recent change to the shareholder's
address of record.
There is no front-end sales charge or fee for exchanges made between
shares of funds which both carry a front-end sales charge. Any applicable
front-end sales charge will apply to exchanges from shares of funds not
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subject to a front-end sales charge, except for exchanges involving assets
that were previously invested in a fund with a front-end sales charge and/or
exchanges involving the reinvestment of dividends.
Holders of Class B Shares or Class C Shares that exchange their shares
("Original Shares") for shares of other funds in the Delaware Group (in each
case, "New Shares") in a permitted exchange, will not be subject to a CDSC
that might otherwise be due upon redemption of the Original Shares. However,
such shareholders will continue to be subject to the CDSC and, in the case of
Class B Shares, the automatic conversion schedule of the Original Shares as
described in this Prospectus and any CDSC assessed upon redemption will be
charged by the fund from which the Original Shares were exchanged. In an
exchange of Class B Shares from the Fund, the Fund's CDSC schedule may be
higher than the CDSC schedule relating to the New Shares acquired as a result
of the exchange. For purposes of computing the CDSC that may be payable upon a
disposition of the New Shares, the period of time that an investor held the
Original Shares is added to the period of time that an investor held the New
Shares. With respect to Class B Shares, the automatic conversion schedule of
the Original Shares may be longer than that of the New Shares. Consequently,
an investment in New Shares by exchange may subject an investor to the higher
12b-1 fees applicable to Class B Shares of the Fund for a longer period of
time than if the investment in New Shares were made directly.
Various redemption and exchange methods are outlined below. Except for
the CDSC applicable to certain redemptions of Class B and Class C Shares and
the Limited CDSC applicable to certain redemptions of Class A Shares purchased
at net asset value, there is no fee charged by the Fund or the Distributor for
redeeming or exchanging your shares, but such fees could be charged in the
future. You may have your investment dealer arrange to have your shares
redeemed or exchanged. Your investment dealer may charge for this service.
All authorizations given by shareholders, including selection of any of
the features described below, shall continue in effect until such time as a
written revocation or modification has been received by the Fund or its agent.
Written Redemption
You can write to the Fund at 1818 Market Street, Philadelphia, PA 19103
to redeem some or all of your shares. The request must be signed by all owners
of the account or your investment dealer of record. For redemptions of more
than $50,000, or when the proceeds are not sent to the shareholder(s) at the
address of record, the Fund requires a signature by all owners of the account
and a signature guarantee for each owner. Each signature guarantee must be
supplied by an eligible guarantor institution. The Fund reserves the right to
reject a signature guarantee supplied by an eligible institution based on its
creditworthiness. The Fund may require further documentation from
corporations, executors, retirement plans, administrators, trustees or
guardians.
Payment is normally mailed the next business day after receipt of your
redemption request. If your Class A Shares are in certificate form, the
certificate(s) must accompany your request and also be in good order.
Certificates are issued for Class A Shares only if a shareholder submits a
specific request. Certificates are not issued for Class B Shares or Class C
Shares.
Written Exchange
You may also write to the Fund (at 1818 Market Street, Philadelphia, PA
19103) to request an exchange of any or all of your shares into another mutual
fund in the Delaware Group subject to the same conditions and limitations as
other exchanges noted above.
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Telephone Redemption and Exchange
To get the added convenience of the telephone redemption and exchange
methods, you must have the Transfer Agent hold your shares (without charge)
for you. If you choose to have your Class A Shares in certificate form, you
may redeem or exchange only by written request and you must return your
certificates.
The Telephone Redemption--Check to Your Address of Record service and
the Telephone Exchange service, both of which are described below, are
automatically provided unless you notify the Fund in writing that you do not
wish to have such services available with respect to your account. The Fund
reserves the right to modify, terminate or suspend these procedures upon 60
days' written notice to shareholders. It may be difficult to reach the Fund by
telephone during periods when market or economic conditions lead to an
unusually large volume of telephone requests.
Neither the Fund nor its Transfer Agent is responsible for any
shareholder loss incurred in acting upon written or telephone instructions for
redemption or exchange of Fund shares which are reasonably believed to be
genuine. With respect to such telephone transactions, the Fund will follow
reasonable procedures to confirm that instructions communicated by telephone
are genuine (including verification of a form of personal identification) as,
if it does not, the Fund or the Transfer Agent may be liable for any losses
due to unauthorized or fraudulent transactions. Instructions received by
telephone are generally tape recorded, and a written confirmation will be
provided for all purchase, exchange and redemption transactions initiated by
telephone. By exchanging shares by telephone, you are acknowledging prior
receipt of a prospectus for the fund into which your shares are being
exchanged.
Telephone Redemption--Check to Your Address of Record
The Telephone Redemption feature is a quick and easy method to redeem
shares. You or your investment dealer of record can have redemption proceeds
of $50,000 or less mailed to you at your address of record. Checks will be
payable to the shareholder(s) of record. Payment is normally mailed the next
business day after receipt of the redemption request. This service is only
available to individual, joint and individual fiduciary-type accounts.
Telephone Redemption--Proceeds to Your Bank
Redemption proceeds of $1,000 or more can be transferred to your
predesignated bank account by wire or by check. You should authorize this
service when you open your account. If you change your predesignated bank
account, you must complete an Authorization Form and have your signature
guaranteed. For your protection, your authorization must be on file. If you
request a wire, your funds will normally be sent the next business day.
CoreStates Bank, N.A.'s fee (currently $7.50) will be deducted from your
redemption proceeds. If you ask for a check, it will normally be mailed the
next business day after receipt of your redemption request to your
predesignated bank account. There are no separate fees for this redemption
method, but the mail time may delay getting funds into your bank account.
Simply call the Shareholder Service Center prior to the time the offering
price and net asset value are determined, as noted above.
MoneyLine (SM) On Demand
Through the MoneyLine (SM) On Demand service, you or your investment
dealer may call the Fund to request a transfer of funds from your Fund account
to your predesignated bank account. See MoneyLine (SM) Services under The
Delaware Difference for additional information about this service.
Telephone Exchange
The Telephone Exchange feature is a convenient and efficient way to
adjust your investment holdings as your liquidity requirements and investment
objectives change. You or your investment dealer of record can exchange your
shares into other funds in the Delaware Group under the same registration,
subject to the same conditions and limitations as other exchanges noted above.
As with the written exchange service, telephone
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exchanges are subject to the requirements of each fund, as described above.
Telephone exchanges may be subject to limitations as to amounts or frequency.
Systematic Withdrawal Plans
1. Regular Plans
This plan provides shareholders with a consistent monthly (or
quarterly) payment. This is particularly useful to shareholders living on
fixed incomes, since it can provide them with a stable supplemental amount.
With accounts of at least $5,000, you may elect monthly withdrawals of $25
(quarterly $75) or more. The Fund does not recommend any particular monthly
amount, as each shareholder's situation and needs vary. Payments are normally
made by check. In the alternative, you may elect to have your payments
transferred from your Fund account to your predesignated bank account through
the MoneyLine (SM) Direct Deposit Service. Your funds will normally be
credited to your bank account up to four business days after the payment date.
There are no separate fees for this redemption method. See MoneyLine (SM)
Services under The Delaware Difference for more information about this
service.
2. Retirement Plans
For shareholders eligible under the applicable retirement plan to
receive benefits in periodic payments, the Systematic Withdrawal Plan provides
you with maximum flexibility. A number of formulas are available for
calculating your withdrawals depending upon whether the distributions are
required or optional. Withdrawals must be for $25 or more; however, no minimum
account balance is required. The MoneyLine (SM) Direct Deposit Service
described above is not available for certain retirement plans.
* * *
Shareholders should not purchase additional shares while participating
in a Systematic Withdrawal Plan.
Redemptions of Class A Shares via a Systematic Withdrawal Plan may be
subject to a Limited CDSC if the original purchase was made at net asset value
within the 12 months prior to the withdrawal and a dealer's commission has
been paid on that purchase. See Contingent Deferred Sales Charge for Certain
Redemptions of Class A Shares Purchased at Net Asset Value, below.
The applicable CDSC for Class B Shares and Class C Shares redeemed via
a Systematic Withdrawal Plan will be waived if, on the date that the Plan is
established, the annual amount selected to be withdrawn is less than 12% of
the account balance. If the annual amount selected to be withdrawn exceeds 12%
of the account balance on the date that the Systematic Withdrawal Plan is
established, all redemptions under the Plan will be subject to the applicable
CDSC. Whether a waiver of the CDSC is available or not, the first shares to be
redeemed for each Systematic Withdrawal Plan payment will be those not subject
to a CDSC because they have either satisfied the required holding period or
were acquired through the reinvestment of distributions. The 12% annual limit
will be reset on the date that any Systematic Withdrawal Plan is modified (for
example, a change in the amount selected to be withdrawn or the frequency or
date of withdrawals), based on the balance in the account on that date. See
Waiver of Contingent Deferred Sales Charge - Class B Shares and Class C
Shares, below.
For more information on Systematic Withdrawal Plans, call the
Shareholder Service Center.
Contingent Deferred Sales Charge for Certain Redemptions of Class A Shares
Purchased at Net Asset Value
A Limited CDSC will be imposed on certain redemptions of Class A Shares
(or shares into which such Class A Shares are exchanged) made within 12 months
of purchase, if such purchases were made at net asset value and triggered the
payment by the Distributor of the dealer's commission previously described.
See Classes of Shares.
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The Limited CDSC will be paid to the Distributor and will be equal to
the lesser of 1% of: (1) the net asset value at the time of purchase of the
Class A Shares being redeemed; or (2) the net asset value of such Class A
Shares at the time of redemption. For purposes of this formula, the "net asset
value at the time of purchase" will be the net asset value at purchase of the
Class A Shares even if those shares are later exchanged for shares of another
Delaware Group fund and, in the event of an exchange of Class A Shares, the
"net asset value of such shares at the time of redemption" will be the net
asset value of the shares acquired in the exchange.
Redemptions of such Class A Shares held for more than 12 months will
not be subjected to the Limited CDSC and an exchange of such Class A Shares
into another Delaware Group fund will not trigger the imposition of the
Limited CDSC at the time of such exchange. The period a shareholder owns
shares into which Class A Shares are exchanged will count towards satisfying
the 12-month holding period. The Limited CDSC is assessed if such 12-month
period is not satisfied irrespective of whether the redemption triggering its
payment is of Class A Shares of the Fund or Class A Shares acquired in the
exchange.
In determining whether a Limited CDSC is payable, it will be assumed
that shares not subject to the Limited CDSC are the first redeemed followed by
other shares held for the longest period of time. The Limited CDSC will not be
imposed upon shares representing reinvested dividends or capital gains
distributions, or upon amounts representing share appreciation. All
investments made during a calendar month, regardless of what day of the month
the investment occurred, will age one month on the last day of that month and
each subsequent month.
Waiver of Limited Contingent Deferred Sales Charge - Class A Shares
The Limited CDSC for Class A Shares on which a dealer's commission has
been paid will be waived in the following instances: (i) redemptions that
result from the Fund's right to liquidate a shareholder's account if the
aggregate net asset value of the shares held in the account is less than the
then-effective minimum account size; (ii) distributions to participants from a
retirement plan qualified under section 401(a) or 401(k) of the Internal
Revenue Code of 1986, as amended (the "Code"), or due to death of a
participant in such a plan; (iii) redemptions pursuant to the direction of a
participant or beneficiary of a retirement plan qualified under section 401(a)
or 401(k) of the Code with respect to that retirement plan; (iv) periodic
distributions from an IRA, SIMPLE IRA, or 403(b)(7) or 457 Deferred
Compensation Plan due to death, disability, or attainment of age 59 1/2, and
IRA distributions qualifying under Section 72(t) of the Internal Revenue Code;
(v) returns of excess contributions to an IRA; (vi) distributions by other
employee benefit plans to pay benefits; (vii) distributions described in (ii),
(iv), and (vi) above pursuant to a systematic withdrawal plan; and (viii)
redemptions by the classes of shareholders who are permitted to purchase
shares at net asset value, regardless of the size of the purchase (see Buying
Class A Shares at Net Asset Value under Classes of Shares).
Waiver of Contingent Deferred Sales Charge - Class B and Class C Shares
The CDSC is waived on certain redemptions of Class B Shares in
connection with the following redemptions: (i) redemptions that result from
the Fund's right to liquidate a shareholder's account if the aggregate net
asset value of the shares held in the account is less than the then-effective
minimum account size; (ii) returns of excess contributions to an IRA, SIMPLE
IRA, SEP/IRA or 403(b)(7) or 457 Deferred Compensation Plans; (iii) periodic
distributions from an IRA, SIMPLE IRA, SEP/IRA, 403(b)(7) or 457 Deferred
Compensation Plan due to death, disability or attainment of the age 59 1/2,
and IRA distributions qualifying under Section 72(t) of the Internal Revenue
Code; and (iv) distributions from an account if the redemption results from
the death of all registered owners of the account (in the case of accounts
established under the Uniform Gifts to Minors or Uniform Transfers to Minors
Acts or trust accounts, the waiver applies upon the death of all beneficial
owners) or a total and permanent disability (as defined in Section 72 of the
Code) of all registered owners occurring after the purchase of the shares
being redeemed.
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The CDSC on Class C Shares is waived in connection with the following
redemptions: (i) redemptions that result from the Fund's right to liquidate a
shareholder's account if the aggregate net asset value of the shares held in
the account is less than the then-effective minimum account size; (ii) returns
of excess contributions to an IRA, SIMPLE IRA, 403(b)(7) or 457 Deferred
Compensation Plan, Profit Sharing Plan, Money Purchase Pension Plan or 401(k)
Defined Contribution Plan; (iii) periodic distributions from a 403(b)(7) or
457 Deferred Compensation Plan upon attainment of age 59 1/2, Profit Sharing
Plan, Money Purchase Pension Plan, 401(k) Defined Contribution Plans upon
attainment of age 70 1/2, and IRA distributions qualifying under Section 72(t)
of the Internal Revenue Service; (iv) distributions from a 403(b)(7) Deferred
Compensation Plan, 457 Deferred Compensation Plan, Profit Sharing Plan, or
401(k) Defined Contribution Plan, under hardship provisions of the plan; (v)
distributions from a 403(b)(7) Deferred Compensation Plan, 457 Deferred
Compensation Plan, Profit Sharing Plan, Money Purchase Pension Plan or a
401(k) Defined Contribution Plan upon attainment of normal retirement age
under the plan or upon separation from service; (vi) periodic distributions
from an IRA or SIMPLE IRA on or after attainment of age 59 1/2; and (vii)
distributions from an account if the redemption results from the death of all
registered owners of the account (in the case of accounts established under
the Uniform Gifts to Minors or Uniform Transfers to Minors Acts or trust
accounts, the waiver applies upon the death of all beneficial owners) or a
total and permanent disability (as defined in Section 72 of the Code) of all
registered owners occurring after the purchase of the shares being redeemed.
In addition, the CDSC will be waived on Class B and Class C Shares
redeemed in accordance with a Systematic Withdrawal Plan if the annual amount
selected to be withdrawn under the Plan does not exceed 12% of the value of
the account on the date that the Systematic Withdrawal Plan was established or
modified.
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DIVIDENDS AND DISTRIBUTIONS
The Fund expects to declare and distribute all of its net investment
income to shareholders as dividends annually. Net capital gains, if any, will
be distributed annually.
In addition, in order to satisfy certain distribution requirements of
the Tax Reform Act of 1986, the Fund may declare special year-end dividend and
capital gains distributions during November or December to shareholders of
record on a date in such month. Such distributions, if received by
shareholders by January 31, are deemed to have been paid by the Fund and
received by shareholders on the earlier of the date paid or December 31 of the
prior year.
Each Class of the Fund will share proportionately in the investment
income and expenses of the Fund, except that the per share dividends from net
investment income on the Class A Shares, the Class B Shares and the Class C
Shares will vary due to the expenses under the 12b-1 Plan applicable to each
Class. Generally, the dividends per share on Class B Shares and Class C Shares
can be expected to be lower than the dividends per share on Class A Shares
because the expenses under the 12b-1 Plans relating to Class B and Class C
Shares will be higher than the expenses under the 12b-1 Plan relating to Class
A Shares. See Distribution (12b-1) and Service under Management of the Fund.
Both dividends and distributions, if any, are automatically reinvested
in your account at net asset value unless you elect otherwise. Any check in
payment of dividends or other distributions which cannot be delivered by the
United States Post Office or which remains uncashed for a period of more than
one year may be reinvested in your account at the then-current net asset value
and the dividend option may be changed from cash to reinvest. If you elect to
take your dividends and distributions in cash and such dividends and
distributions are in an amount of $25 or more, you may choose the MoneyLine
(SM) Direct Deposit Service and have such payments transferred from your Fund
account to your predesignated bank account. This service is not available for
certain retirement plans. See MoneyLine (SM) Services under The Delaware
Difference for more information about this service.
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TAXES
The tax discussion set forth below is included for general information
only. Investors should consult their own tax advisers concerning the federal,
state, local or foreign tax consequences of an investment in the Fund.
On August 5, 1997, President Clinton signed into law the Taxpayer
Relief Act of 1997 (the "1997 Act"). This new law makes sweeping changes in
the Internal Revenue Code (the "Code"). Because many of these changes are
complex, and only indirectly affect the Fund and its distributions to you,
they are discussed in Part B. Changes in the treatment of capital gains,
however, are discussed in this section.
The Fund has qualified, and intends to continue to qualify, as a
regulated investment company under Subchapter M of the Code. As such, the Fund
will not be subject to federal income tax, or to any excise tax, to the extent
its earnings are distributed as provided in the Code. The Fund intends to
distribute substantially all of its net investment income and net capital
gains, if any. Dividends from net investment income or net short-term capital
gains will be taxable to you as ordinary income, whether received in cash or
in additional shares.
Distributions paid by the Fund from long-term capital gains, whether
received in cash or in additional shares, are taxable to those investors who
are subject to income taxes as long-term capital gains, regardless of the
length of time an investor has owned shares in the Fund. The Fund does not
seek to realize any particular amount of capital gains during a year; rather,
realized gains are a by-product of Fund management activities. Consequently,
capital gains distributions may be expected to vary considerably from year to
year. Also, for those investors subject to tax, if purchases of shares in the
Fund are made shortly before the record date for a capital gains distribution,
a portion of the investment will be returned as taxable distribution.
The Treatment of Capital Gain Distributions under the Taxpayer Relief Act of
1997
The 1997 Act creates a category of long-term capital gain for
individuals that will be taxed at new lower tax rates. For investors who are
in the 28% or higher federal income tax brackets, these gains will be taxed at
a maximum of 20%. For investors who are in the 15% federal income tax bracket,
these gains will be taxed at a maximum of 10%. Capital gain distributions will
qualify for these new maximum tax rates, depending on when the Fund's
securities were sold and how long they were held by the Fund before they were
sold. Investors who want more information on holding periods and other
qualifying rules relating to these new rates should review the expanded
discussion in Part B, or should contact their own tax advisers.
Pooled Trust, Inc. will advise you in its annual information reporting at
calendar year end of the amount of its capital gain distributions which will
qualify for these maximum federal tax rates.
Dividends or capital gains which are declared in October, November or
December to shareholders of record in such a month but which, for operational
reasons, may not be paid to the shareholder until the following January, will
be treated for tax purposes as if paid by the Fund and received by the
shareholder on December 31 of the calendar year in which they are declared.
The sale of shares of the Fund is a taxable event and may result in a
capital gain or loss to shareholders subject to tax. Capital gain or loss may
be realized from an ordinary redemption of shares or an exchange of shares
between the Fund and any other fund in the Delaware Group. Any loss incurred
on a sale or exchange of Fund shares that had been held for six months or less
will be treated as a long-term capital loss to the extent of capital gain
dividends received with respect to such shares and will be disallowed to the
extent of exempt-interest dividends paid with respect to such shares. All or a
portion of the sales charge incurred in acquiring the Fund's shares will be
excluded from the federal tax basis of any of such shares sold or exchanged
within 90 days of their purchase (for purposes of determining gain or loss
upon sale of such shares) if the sale proceeds are reinvested in
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the Fund or in another fund in the Delaware Group of funds and a sales charge
that would otherwise apply to the reinvestment is reduced or eliminated. Any
portion of such sales charge excluded from the tax basis of the shares sold
will be added to the tax basis of the shares acquired in the reinvestment.
The automatic conversion of Class B Shares into Class A Shares at the
end of approximately eight years after purchase will be tax-free for federal
tax purposes. See Automatic Conversion of Class B Shares under Classes of
Shares.
In addition to the federal taxes described above, shareholders may or
may not be subject to various state and local taxes. For example, distributions
of interest income and capital gains realized from certain types of U.S.
government securities may be exempt from state personal income taxes. Because
investors' state and local taxes may be different than the federal taxes
described above, investors should consult their own tax advisers.
Each year, Pooled Trust, Inc. will mail to you information on the tax
status of the Fund's dividends and distributions.
Pooled Trust, Inc. is required to withhold 31% of taxable dividends,
capital gains distributions, and redemptions paid to shareholders who have not
complied with IRS taxpayer identification regulations. You may avoid this
withholding requirement by certifying on your Investment Application your
proper Taxpayer Identification Number and by certifying that you are not
subject to backup withholding.
See Taxes in Part B for additional information on tax matters relating
to the Fund and its shareholders.
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CALCULATION OF OFFERING PRICE AND NET ASSET VALUE PER SHARE
The net asset value ("NAV") per share is determined by dividing the
total market value of the Fund's investments and other assets, less any
liabilities, by the total outstanding shares of the Fund. NAV per share is
determined as of the close of regular trading on the New York Stock Exchange
on each day the Exchange is open for business.
Class A Shares are purchased at the offering price per share, while
Class B Shares and Class C Shares are purchased at the NAV per share. The
offering price per share of Class A Shares consists of the NAV per share next
computed after the order is received, plus any applicable front-end sales
charges.
The offering price and NAV are computed as of the close of regular
trading on the Exchange (ordinarily, 4 p.m., Eastern time) on days when the
Exchange is open.
Securities listed on a U.S. securities exchange for which market
quotations are available are valued at the last quoted sale price on the day
the valuation is made. Price information on listed securities is taken from
the exchange where the security is primarily traded. Securities listed on a
foreign exchange are valued at the last quoted sale price available before the
time when net assets are valued. Unlisted securities and listed securities not
traded on the valuation date for which market quotations are readily available
are valued at a price that is considered to best represent fair value within a
range not in excess of the current asked price nor less than the current bid
prices. Domestic equity securities traded over-the-counter, domestic equity
securities which are not traded on the valuation date and U.S. government
securities are priced at the mean of the bid and ask price.
Bonds and other fixed-income securities are valued according to the
broadest and most representative market, which will ordinarily be the
over-the-counter market. In addition, bonds and other fixed-income securities
may be valued on the basis of prices provided by a pricing service when such
prices are believed to reflect the fair market value of such securities. The
prices provided by a pricing service are determined without regard to bid or
last sale prices but take into account institutional size trading in similar
groups of securities and any developments related to the specific securities.
Securities not priced in this manner are valued at the most recent quoted mean
price, or, when stock exchange valuations are used, at the latest quoted sale
price on the day of valuation. If there is no such reported sale, the latest
quoted mean price will be used. Securities with remaining maturities of 60
days or less are valued at amortized cost, if it approximates market value. In
the event that amortized cost does not approximate market value, market prices
as determined above will be used.
Exchange-traded options are valued at the last reported sales price or,
if no sales are reported, at the mean between the last reported bid and ask
prices. Non-exchange traded options are valued at fair value using a
mathematical model. Futures contracts are valued at their daily quoted
settlement price.
The value of other assets and securities for which no quotations are
readily available (including restricted securities) are determined in good
faith at fair value using methods determined by the Fund's Board of Directors.
The securities in which the Fund may invest from time to time may be listed
primarily on foreign exchanges which trade on days when the Exchange is closed
(such as Saturday). As a result, the net asset value of the Fund may be
significantly affected by such trading on days when shareholders have no
access to the Fund.
For purposes of calculating NAV, all assets and liabilities initially
expressed in foreign currencies will be converted into U.S. dollars at the
mean between the bid and ask price of such currencies against the U.S. dollar
as provided by an independent pricing service or any major bank, including the
Custodian Bank. Forward foreign currency contracts are valued at the mean
price of the contracts. Interpolated values will be derived when the
settlement date of the contract is on an interim period for which quotations
are not available.
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The net asset values of all outstanding shares of each class of the
Fund will be computed on a pro-rata basis for each outstanding share based on
the proportionate participation in the Fund represented by the value of shares
of that class. All income earned and expenses incurred by the Fund will be
borne on a pro-rata basis by each outstanding share of a class, based on each
class' percentage in the Fund represented by the value of shares of such
class, except that REIT Fund Institutional Class and The Real Estate
Investment Trust Portfolio class will not incur any of the expenses under
Pooled Trust Inc.'s 12b-1 Plans and Class A, Class B and Class C Shares alone
will bear the 12b-1 Plan expenses payable under their respective 12b-1 Plans.
Due to the specific distribution expenses and other costs that will be
allocable to each class, the NAV of each class of the Fund will vary.
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MANAGEMENT OF THE FUND
Directors
The business and affairs of the Fund are managed under the direction of
the Pooled Trust, Inc.'s Board of Directors. Part B contains additional
information regarding Pooled Trust, Inc.'s directors and officers.
Investment Manager and Sub-Adviser
Delaware Investment Advisers (the "Manager"), a division of Delaware
Management Company, Inc ("Delaware"), furnishes investment advisory services
to the Fund. Lincoln Investment Management, Inc. ("Lincoln"), a wholly owned
subsidiary of Lincoln National Corporation, acts as sub-adviser to the Manager
with respect to Fund. In its capacity as sub-adviser, Lincoln furnishes the
Manager with investment recommendations, asset allocation advice, research,
economic analysis and other investment services with respect to the securities
in which the Fund may invest.
Delaware and its predecessors have been managing the funds in the
Delaware Group since 1938. On October 31, 1997, Delaware and its affiliates
within the Delaware Group including, Delaware International Advisers Ltd., were
managing in the aggregate more than $38 billion in assets in the various
institutional or separately managed (approximately $22,496,609,000) and
investment company (approximately $16,012,252,000) accounts. Lincoln (formerly
named Lincoln National Investment Management Company) was incorporated in 1930.
Lincoln's primary activity is institutional fixed-income investment management
and consulting. Such activity includes fixed-income portfolios, private
placements, real estate debt and equity, and asset/liability management. As of
October 31, 1997, Lincoln had over $38 billion in assets under management.
Lincoln provides investment management services to Lincoln National Corporation,
its principal subsidiaries and affiliated registered investment companies, and
acts as investment adviser to other unaffiliated clients.
Delaware is an indirect, wholly owned subsidiary of Delaware Management
Holdings, Inc. ("DMH"). On April 3, 1995, a merger between DMH and a wholly
owned subsidiary of Lincoln National Corporation ("Lincoln National") was
completed. DMH and Delaware are now indirect, wholly owned subsidiaries, and
subject to the ultimate control, of Lincoln National. Lincoln, the sub-adviser
to the Manager with respect to the Fund, is a wholly owned subsidiary of Lincoln
National. Delaware and Lincoln may be deemed to be affiliated persons under the
1940 Act, as the two companies are each under the ultimate control of Lincoln
National. Lincoln National, with headquarters in Fort Wayne, Indiana, is a
diversified organization with operations in many aspects of the financial
services industry, including insurance and investment management. Delaware's
address is One Commerce Square, 2005 Market Street, Philadelphia, PA 19103.
Lincoln's address is 200 E. Berry Street, Fort Wayne, IN 46802.
The Manager has entered into an Investment Advisory Agreement with
Pooled Trust, Inc. on behalf of the Fund. The Manager has also entered into a
Sub-Advisory Agreement with Lincoln with respect to the Fund. Under that
Agreement, the Manager, subject to the control and supervision of Pooled
Trust, Inc.'s Board of Directors and in conformance with the stated investment
objectives and policies of the Fund, manages the investment and reinvestment
of the assets of the Fund. In this regard, it is their responsibility to make
investment decisions for the Fund.
As compensation for the services to be rendered under the advisory
agreement, the Manager is entitled to an annual advisory fee equal to 0.75% of
the Fund's average daily net assets. Lincoln receives 30% of the advisory fee
paid to the Manager for acting as sub-adviser to the Manager with respect to
the Fund. The directors of Pooled Trust, Inc. annually review fees paid to the
Manager and the Sub-Adviser. The Manager has elected voluntarily to waive that
portion, if any, of the annual management fees payable by the Fund and to pay
expenses of the Fund to the extent necessary to ensure that the Total
Operating Expenses (exclusive of taxes,
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interest, brokerage commissions and extraordinary expenses) of Class A Shares,
Class B Shares and Class C Shares do not exceed 1.11%, 1.86% and 1.86%,
respectively through April 30, 1998.
Babak Zenouzi has primary responsibility for making day-to-day
investment decisions for the Fund and has had such responsibility since its
inception. Mr. Zenouzi holds a BS in Finance and Economics from Babson College
in Wellesley, Massachusetts, and an MS in Finance from Boston College. Prior
to joining the Manager in 1992, he was with The Boston Company where he held
the positions of assistant vice president, senior financial analyst, financial
analyst and portfolio accountant.
Portfolio Trading Practices
The Fund normally will not invest for short-term trading purposes.
However, the Fund may sell securities without regard to the length of time
they have been held. The degree of portfolio activity will affect brokerage
costs of the Fund and may affect taxes payable by the Fund's shareholders to
the extent that net capital gains are realized. Given the Fund's investment
objective, it is anticipated that the portfolio turnover rate of the Fund will
not exceed 100%.
The Manager and the Sub-Adviser use their best efforts to obtain the
best available price and most favorable execution for portfolio transactions.
Orders may be placed with brokers or dealers who provide brokerage and
research services to the Manager or the Sub-Adviser or their advisory clients.
These services may be used by the Manager and the Sub-Adviser in servicing any
of their respective accounts. Subject to best price and execution, the Manager
and the Sub-Adviser may consider a broker/dealer's sales of shares of the
funds in the Delaware Group of funds in placing portfolio orders and may place
orders with broker/dealers that have agreed to defray certain expenses of such
funds, such as custodian fees.
Performance Information
From time to time, the Fund may quote total return performance of its
Classes in advertising and other types of literature.
Total return will be based on a hypothetical $1,000 investment,
reflecting the reinvestment of all distributions at net asset value and: (i)
in the case of Class A Shares, the impact of the maximum front-end sales
charge at the beginning of each specified period; and (ii) in the case of
Class B Shares and Class C Shares, the deduction of any applicable CDSC at the
end of the relevant period. Each presentation will include the average annual
total return for one-, five- and ten-year or life-of-fund periods, as
relevant. The Fund may also advertise aggregate and average total return
information concerning a Class over additional periods of time. In addition,
the Fund may present total return information that does not reflect the
deduction of the maximum front-end sales charge or any applicable CDSC. In
this case, such total return information would be more favorable than total
return information that includes deductions of the maximum front-end sales
charge or any applicable CDSC.
Because securities prices fluctuate, investment results of the Classes
will fluctuate over time. Past performance is not a guarantee of future
results.
Distribution (12b-1) and Service
The Distributor, Delaware Distributors, L.P., serves as the national
distributor for the Fund's shares under a Distribution Agreement with Pooled
Trust, Inc. dated October 14, 1997.
Pooled Trust, Inc. has adopted a separate distribution plan under Rule
12b-1 for each of the Class A Shares, the Class B Shares and the Class C
Shares of the Fund (the "Plans"). Each Plan permits the Fund to pay the
Distributor from the assets of the respective Classes a monthly fee for the
Distributor's services and expenses in distributing and promoting sales of
shares.
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These expenses include, among other things, preparing and distributing
advertisements, sales literature, and prospectuses and reports used for sales
purposes, compensating sales and marketing personnel, holding special
promotions for specified periods of time, and paying distribution and
maintenance fees to brokers, dealers and others. In connection with the
promotion of shares of the Classes, the Distributor may, from time to time,
pay to participate in dealer-sponsored seminars and conferences, and reimburse
dealers for expenses incurred in connection with preapproved seminars,
conferences and advertising. The Distributor may pay or allow additional
promotional incentives to dealers as part of preapproved sales contests and/or
to dealers who provide extra training and information concerning a Class and
increase sales of the Class. In addition, the Fund may make payments from the
12b-1 Plan fees of its respective Classes directly to others, such as banks,
who aid in the distribution of Class shares or provide services in respect of
a Class, pursuant to service agreements with the Fund.
The 12b-1 Plan expenses relating to each of the Class B Shares and the
Class C Shares of the Fund are also used to pay the Distributor for advancing
the commission costs to dealers with respect to the initial sale of such
shares.
The aggregate fees paid by the Fund from the assets of the respective
Classes to the Distributor and others under the Plans may not exceed (i) 0.30%
of the Class A Shares' average daily net assets in any year, and (ii) 1%
(0.25% of which are service fees to be paid by the Fund to the Distributor,
dealers and others, for providing personal service and/or maintaining
shareholder accounts) of the Fund's Class B Shares' and the Class C Shares'
average daily net assets in any year. The Class A, Class B and Class C Shares
will not incur any distribution expenses beyond these limits, which may not be
increased without shareholder approval.
Although the maximum fee payable under the Plan relating to Class A
Shares is 0.30% of average daily net assets, the Board of Directors has
currently set the annual fee for the Class at 0.25% of the average daily net
assets. The Board of Directors may increase the fee to the full 0.30% on all
Class A Shares' assets at any time. See Shares.
While payments pursuant to the Plans may not exceed 0.30% annually with
respect to the Class A Shares and 1% annually with respect to each of the
Class B Shares and the Class C Shares, the Plans do not limit fees to amounts
actually expended by the Distributor. It is therefore possible that the
Distributor may realize a profit in any particular year. However, the
Distributor currently expects that its distribution expenses will likely equal
or exceed payments to it under the Plans. The Distributor may, however, incur
additional expenses and make additional payments to dealers from its own
resources to promote the distribution of shares of the Classes. The monthly
fees paid to the Distributor are subject to the review and approval of the
Pooled Trust, Inc.'s unaffiliated directors, who may reduce the fees or
terminate the Plans at any time
The Transfer Agent, Delaware Service Company, Inc., serves as the
shareholder servicing, dividend disbursing and transfer agent for the Fund
under a Shareholders Services Agreement. The Transfer Agent also provides
accounting services to the Fund pursuant to the terms of a separate Fund
Accounting Agreement.
The directors annually review fees paid to the Distributor and the
Transfer Agent. The Distributor and the Transfer Agent are also indirect,
wholly owned subsidiaries of DMH.
Expenses
The Fund is responsible for all of its own expenses other than those
borne by the Manager under the Investment Management Agreement and those borne
by the Distributor under its Distribution Agreement. The expense ratio of each
Class will reflect the impact of its 12b-1 Plan and the voluntary waiver of
fees by the Manager.
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<PAGE>
Shares
Pooled Trust, Inc. is an open-end management investment company. The
Fund's portfolio of assets is nondiversified as defined by the 1940 Act.
Commonly known as a mutual fund, Pooled Trust, Inc. was organized as a
Maryland corporation on May 30, 1991. In addition to the Fund, Pooled Trust,
Inc. presently offers 15 other series of shares. The Articles of Incorporation
permit the Fund to issue two billion shares of common stock with $.01 par
value and fifty million shares have been allocated to each series. The Board
of Directors has the power to designate one or more classes of shares of
common stock and to classify and reclassify any unissued shares with respect
to such classes.
The shares of each series, when issued, will be fully paid,
non-assessable, fully transferable and redeemable at the option of the holder.
The shares have no preference as to the conversion, exchange, dividends,
retirement or other features and have no preemptive rights. The shares of each
series have noncumulative voting rights, which means that the holders of more
than 50% of the shares voting for the election of directors can elect 100% of
the directors if they choose to do so. Shares of each series entitled to vote
on a matter will vote in the aggregate and not by series, except when the
matter to be voted upon affects only the interests of shareholders of a
particular Portfolio or class or when otherwise expressly required by law.
Under Maryland law, Pooled Trust, Inc. is not required, and does not intend,
to hold annual meetings of its shareholders unless, under certain
circumstances, it is required to do so under the 1940 Act.
In addition to Class A Shares, Class B Shares and Class C Shares, the
Fund also offers REIT Fund Institutional Class and The Real Estate Investment
Trust Portfolio class. Shares of each class represent proportionate interests
in the assets of the Fund and have the same voting and other rights and
preferences as the other classes of the Fund, except that shares of REIT Fund
Institutional Class and The Real Estate Investment Trust Portfolio class are
not subject to, and may not vote on matters affecting, the Distribution Plans
under Rule 12b-1 relating to Class A, Class B and Class C Shares. Similarly,
as a general matter, the shareholders of Class A Shares, Class B Shares and
Class C Shares may vote only on matters affecting the 12b-1 Plan that relates
to the class of shares that they hold. However, Class B Shares may vote on any
proposal to increase materially the fees to be paid by the Fund under the Rule
12b-1 Plan relating to Class A Shares.
Separate and General Account assets of The Lincoln National Life
Insurance Company ("LNLIC") made an investment in The Real Estate Investment
Trust Portfolio, which could result in LNLIC owning approximately 100% of the
outstanding shares of the Fund. Subject to certain limited exceptions, there
would be no limitation on LNLIC's ability to redeem its shares of the Fund and
it may elect to do so at any time.
Litigation
The Fund is not involved in any litigation.
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ADDITIONAL INVESTMENT INFORMATION ON POLICIES AND RISK CONSIDERATIONS
U.S. Government Securities
The U.S. government securities in which the Fund may invest for temporary
purposes and otherwise (see Investment Objective, Policies and Risk Factors),
include a variety of securities which are issued or guaranteed as to the payment
of principal and interest by the U.S. government, and by various agencies or
instrumentalities which have been established or sponsored by the U.S.
government.
U.S. Treasury securities are backed by the "full faith and credit" of
the United States. Securities issued or guaranteed by federal agencies and
U.S. government sponsored instrumentalities may or may not be backed by the
full faith and credit of the United States. In the case of securities not
backed by the full faith and credit of the United States, investors in such
securities look principally to the agency or instrumentality issuing or
guaranteeing the obligation for ultimate repayment, and may not be able to
assert a claim against the United States itself in the event the agency or
instrumentality does not meet its commitment. Agencies which are backed by the
full faith and credit of the United States include the Export-Import Bank,
Farmers Home Administration, Federal Financing Bank, and others. Certain
agencies and instrumentalities, such as the Government National Mortgage
Association ("GNMA"), are, in effect, backed by the full faith and credit of
the United States through provisions in their charters that they may make
"indefinite and unlimited" drawings on the Treasury, if needed to service its
debt. Debt from certain other agencies and instrumentalities, including the
Federal Home Loan Bank and Federal National Mortgage Association, are not
guaranteed by the United States, but those institutions are protected by the
discretionary authority for the U.S. Treasury to purchase certain amounts of
their securities to assist the institutions in meeting their debt obligations.
Finally, other agencies and instrumentalities, such as the Farm Credit System
and the Federal Home Loan Mortgage Corporation, are federally chartered
institutions under U.S. government supervision, but their debt securities are
backed only by the creditworthiness of those institutions, not the U.S.
government.
Some of the U.S. government agencies that issue or guarantee securities
include the Export-Import Bank of the United States, Farmers Home
Administration, Federal Housing Administration, Maritime Administration, Small
Business Administration, and the Tennessee Valley Authority.
An instrumentality of a U.S. government agency is a government agency
organized under Federal charter with government supervision. Instrumentalities
issuing or guaranteeing securities include, among others, Federal Home Loan
Banks, the Federal Land Banks, Central Bank for Cooperatives, Federal
Immediate Credit Banks and the Federal National Mortgage Association.
Mortgage-Backed Securities
The Fund may invest in mortgage-backed securities issued or guaranteed
by the U.S. government, its agencies or instrumentalities or by government
sponsored corporations. Those securities include, but are not limited to, GNMA
certificates. Such securities differ from other fixed-income securities in
that principal is paid back by the borrower over the length of the loan rather
than returned in a lump sum at maturity. When prevailing interest rates rise,
the value of a GNMA security may decrease as do other debt securities. When
prevailing interest rates decline, however, the value of GNMA securities may
not rise on a comparable basis with other debt securities because of the
prepayment feature of GNMA securities. Additionally, if a GNMA certificate is
purchased at a premium above its principal value because its fixed rate of
interest exceeds the prevailing level of yields, the decline in price to par
may result in a loss of the premium in the event of prepayment. Funds received
from prepayments may be reinvested at the prevailing interest rates which may
be lower than the rate of interest that had previously been earned.
The Fund also may invest in collateralized mortgage obligations
("CMOs") and real estate mortgage investment conduits ("REMICs"). CMOs are
debt securities issued by U.S. government agencies or by financial
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institutions and other mortgage lenders and collateralized by a pool of
mortgages held under an indenture. CMOs are issued in a number of classes or
series with different maturities. The classes or series are retired in
sequence as the underlying mortgages are repaid. REMICs, which were authorized
under the Tax Reform Act of 1986, are private entities formed for the purpose
of holding a fixed pool of mortgages secured by an interest in real property.
REMICs are similar to CMOs in that they issue multiple classes of securities.
To the extent any privately-issued CMOs or REMICs in which the Fund may invest
are considered by the U.S. Securities and Exchange Commission (the
"Commission") to be investment companies, the Fund will limit its investments
in such securities in a manner consistent with the provisions of the 1940 Act.
The mortgages backing these securities include conventional 30-year
fixed rate mortgages, graduated payment mortgages and adjustable rate
mortgages. These mortgages may be supported by various types of insurance, may
be backed by GNMA certificates or other mortgage pass-throughs issued or
guaranteed by the U.S. government, its agencies or instrumentalities. However,
the guarantees do not extend to the mortgage-backed securities' value, which
is likely to vary inversely with fluctuations in interest rates. These
certificates are in most cases "pass-through" instruments, through which the
holder receives a share of all interest and principal payments from the
mortgages underlying the certificate. Because the prepayment characteristics
of the underlying mortgages vary, it is not possible to predict accurately the
average life or realized yield of a particular issue of pass-through
certificates. During periods of declining interest rates, prepayment of
mortgages underlying mortgage-backed securities can be expected to accelerate.
When the mortgage obligations are prepaid, the Fund may reinvest the prepaid
amounts in securities, the yield of which reflects interest rates prevailing
at the time. Moreover, prepayments of mortgages which underlie securities
purchased at a premium could result in capital losses.
Certain CMOs and REMICs may have variable or floating interest rates
and others may be stripped. Stripped mortgage securities have greater market
volatility than other types of mortgage securities in which the Portfolios may
invest.
Stripped mortgage securities are usually structured with two classes
that receive different proportions of the interest and principal distributions
on a pool of mortgage assets. A common type of stripped mortgage security will
have one class receiving some of the interest and most of the principal from
the mortgage assets, while the other class will receive most of the interest
and the remainder of the principal. In the most extreme case, one class will
receive all of the interest (the "interest-only" class), while the other class
will receive all of the principal (the "principal-only" class). The yield to
maturity on an interest-only class is extremely sensitive not only to changes
in prevailing interest rates but also to the rate of principal payments
(including prepayments) on the related underlying mortgage assets, and a rapid
rate of principal payments may have a material adverse effect on the Fund's
yield to maturity. If the underlying mortgage assets experience greater than
anticipated prepayments of principal, the Fund may fail to fully recoup its
initial investment in these securities even if the securities are rated in the
highest rating categories.
Although stripped mortgage securities are purchased and sold by
institutional investors through several investment banking firms acting as
brokers or dealers, these securities were only recently developed. As a
result, established trading markets have not yet been fully developed and,
accordingly, these securities are generally illiquid and to such extent,
together with any other illiquid investments, will not exceed 10% of a
Portfolio's net assets.
CMOs and REMICs issued by private entities are not government
securities and are not directly guaranteed by any government agency. They are
secured by the underlying collateral of the private issuer. The Fund may
invest in such private-backed securities but, the Fund will do so (i) only if
the securities are 100% collateralized at the time of issuance by securities
issued or guaranteed by the U.S. government, its agencies or
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instrumentalities and (ii) currently, only if they are rated at the time of
purchase in the two highest grades by a nationally-recognized statistical
rating agency.
Short-Term Investments
The short-term investments in which the Fund may invest consistent with
the limits recited above (see Investment Objective, Policies and Risk Factors)
are:
(1) Time deposits, certificates of deposit (including marketable
variable rate certificates of deposit) and bankers' acceptances issued by a
U.S. commercial bank. Time deposits are non-negotiable deposits maintained in
a banking institution for a specified period of time at a stated interest
rate. Time deposits maturing in more than seven days will not be purchased by
the Fund, and time deposits maturing from two business days through seven
calendar days will not exceed 15% of the total assets of the Fund.
Certificates of deposit are negotiable short-term obligations issued by
commercial banks against funds deposited in the issuing institution. Variable
rate certificates of deposit are certificates of deposit on which the interest
rate is periodically adjusted prior to their stated maturity based upon a
specified market rate. A bankers' acceptance is a time draft drawn on a
commercial bank by a borrower usually in connection with an international
commercial transaction (to finance the import, export, transfer or storage of
goods).
The Fund will not invest in any security issued by a commercial bank
unless (i) the bank has total assets of at least $1 billion or, in the case of
a bank which does not have total assets of at least $1 billion, the aggregate
investment made in any one such bank is limited to $100,000 and the principal
amount of such investment is insured in full by the Federal Deposit Insurance
Corporation, (ii) it is a member of the Federal Deposit Insurance Corporation,
and (iii) the bank or its securities have received the highest quality rating
by a nationally-recognized statistical rating organization;
(2) Commercial paper with the highest quality rating by a
nationally-recognized statistical rating organization (e.g., A-1 by S&P or
Prime-1 by Moody's) or, if not so rated, of comparable quality as determined
by the Manager;
(3) Short-term corporate obligations with the highest quality rating by
a nationally-recognized statistical rating organization (e.g., AAA by S&P or
Aaa by Moody's) or, if not so rated, of comparable quality as determined by
the Manager;
(4) U.S. government securities (see U.S. Government Securities); and
(5) Repurchase agreements collateralized by securities listed above.
When-Issued and Delayed Delivery Securities
The Fund may purchase securities on a when-issued or delayed delivery
basis. In such transactions, instruments are purchased with payment and
delivery taking place in the future in order to secure what is considered to
be an advantageous yield or price at the time of the transaction. Delivery of
and payment for these securities may take as long as a month or more after the
date of the purchase commitment. The Fund will maintain with its Custodian
Bank a separate account with a segregated portfolio of securities in an amount
at least equal to these commitments. The payment obligation and the interest
rates that will be received are each fixed at the time the Fund enters into
the commitment and no interest accrues to the Fund until settlement. Thus, it
is possible that the market value at the time of settlement could be higher or
lower than the purchase price if the general level of interest rates has
changed. It is a current policy of the Fund not to enter into when-issued
commitments exceeding in the aggregate 15% of the market value of the Fund's
total assets less liabilities other than the obligations created by these
commitments.
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Repurchase Agreements
The Fund may enter into repurchase agreements with brokers, dealers or
banks deemed to be creditworthy by the Manager under guidelines of Pooled
Trust, Inc.'s directors. In a repurchase agreement, a Portfolio buys
securities from a seller that has agreed to repurchase it at a mutually agreed
upon date and price, reflecting the interest rate effective for the term of
the agreement. The term of these agreements is usually from overnight to one
week and never exceeds one year. Not more than 15% of the Fund's assets may be
invested in repurchase agreements having a maturity in excess of seven days.
Repurchase agreements may be viewed as a fully collateralized loan of money by
the Fund to the seller. The Fund always receives securities as collateral with
a market value at least equal to the purchase price and this value is
maintained during the term of the agreement. If the seller defaults and the
collateral value declines, the Fund might incur a loss. If bankruptcy
proceedings are commenced with respect to the seller, the Fund's realization
upon the collateral may be delayed or limited. The Fund may invest cash
balances in a joint repurchase agreement in accordance with an Order the
Delaware Group has obtained from the Commission under Section 17(d) of the
1940 Act.
Securities Lending Activities
The Fund may loan up to 25% of its assets to qualified broker/dealers
or institutional investors for their use relating to short sales or other
security transactions.
The major risk to which the Fund would be exposed on a loan transaction
is the risk that the borrower would go bankrupt at a time when the value of
the security goes up. Therefore, the Fund will only enter into loan
arrangements after a review of all pertinent facts by the Manager, subject to
overall supervision by the Board of Directors, including the creditworthiness
of the borrowing broker, dealer or institution and then only if the
consideration to be received from such loans would justify the risk.
Creditworthiness will be monitored on an ongoing basis by the investment
adviser.
Borrowing from Banks
The Fund may borrow money as a temporary measure or to facilitate
redemptions. The Fund has no intention of increasing its net income through
borrowing. Any borrowing will be done from a bank and, consistent with
Commission rules, immediately after any borrowing is in an amount which
exceeds 5% of its net assets, there must be asset coverage of at least 300%.
In the event the asset coverage declines below 300%, the Fund would take steps
to reduce the amount of its borrowings so that asset coverage would equal at
least 300%. Securities will not be purchased while the Fund has an outstanding
borrowing.
Foreign Investment Information
Up to 10% of the total assets of the Fund may be invested in securities
of foreign issuers and foreign currency. The Fund has the right to purchase
securities in any developed, underdeveloped or emerging country. Investors
should consider carefully the substantial risks involved in investing in
securities issued by companies and governments of foreign nations. These risks
are in addition to the usual risks inherent in domestic investments. There is
the possibility of expropriation, nationalization or confiscatory taxation,
taxation of income earned in foreign nations or other taxes imposed with
respect to investments in foreign nations, foreign exchange control (which may
include suspension of the ability to transfer currency from a given country),
default in foreign government securities, political or social instability or
diplomatic developments which could affect investments in securities of
issuers in those nations.
In addition, in many countries, there is substantially less publicly
available information about issuers than is available in reports about
companies in the United States and this information tends to be of a lesser
quality. Foreign companies are not subject to uniform accounting, auditing and
financial reporting standards, and auditing practices and requirements may not
be comparable to those applicable to United States companies. In particular,
the assets and profits appearing on the financial statements of a developing
or emerging country issuer may not reflect its financial position or results
of operations in the way they would be reflected had the financial
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statements been prepared in accordance with United States generally accepted
accounting principles. Also, for an issuer that keeps accounting records in
local currency, inflation accounting rules may require for both tax and
accounting purposes, that certain assets and liabilities be restated on the
issuer's balance sheet in order to express items in terms of currency or
constant purchasing power. Inflation accounting may indirectly generate losses
or profits. Consequently, financial data may be materially affected by
restatements for inflation and may not accurately reflect the real condition
of those issuers and securities markets.
It is also expected that the expenses for custodial arrangements of the
Fund's foreign securities will be somewhat greater than the expenses for the
custodial arrangements for U.S. securities of equal value. Dividends and
interest paid by foreign issuers may be subject to withholding and other
foreign taxes. Although in some countries a portion of these taxes is
recoverable, the non-recovered portion of foreign withholding taxes will
reduce the income the Fund receives from the companies comprising the Fund's
investments.
Further, the Fund may encounter difficulty or be unable to pursue legal
remedies and obtain judgments in foreign courts. Commission rates on
securities transactions in foreign countries, which are sometimes fixed rather
than subject to negotiation as in the United States, are likely to be higher.
Further, the settlement period of securities transactions in foreign markets
may be longer than in domestic markets, and may be subject to administrative
uncertainties. In many foreign countries, there is less government supervision
and regulation of business and industry practices, stock exchanges, brokers
and listed companies than in the United States, and capital requirements for
brokerage firms are generally lower. The foreign securities markets of many of
the countries in which the Fund may invest may also be smaller, less liquid
and subject to greater price volatility than those in the United States.
Compared to the United States and other developed countries, emerging
countries may have volatile social conditions, relatively unstable governments
and political systems, economies based on only a few industries and economic
structures that are less diverse and mature, and securities markets that trade
a small number of securities, which can result in a low or nonexistent volume
of trading. Prices in these securities markets tend to be volatile and, in the
past, securities in these countries have offered greater potential for gain
(as well as loss) than securities of companies located in developed countries.
Until recently, there has been an absence of a capital market structure or
market-oriented economy in certain emerging countries. Further, investments
and opportunities for investments by foreign investors are subject to a
variety of national policies and restrictions in many emerging countries.
These restrictions may take the form of prior governmental approval, limits on
the amount or type of securities held by foreigners, limits on the types of
companies in which foreigners may invest and prohibitions on foreign
investments in issuers or industries deemed sensitive to national interests.
Additional restrictions may be imposed at any time by these or other countries
in which the Fund invests. Also, the repatriation of both investment income
and capital from several foreign countries is restricted and controlled under
certain regulations, including, in some cases, the need for certain
governmental consents. Although these restrictions may in the future make it
undesirable to invest in emerging countries, the Manager does not believe that
any current repatriation restrictions would affect their decision to invest in
such countries. Countries such as those in which the Fund may invest have
historically experienced and may continue to experience, substantial, and in
some periods extremely high rates of inflation for many years, high interest
rates, exchange rate fluctuations or currency depreciation, large amounts of
external debt, balance of payments and trade difficulties and extreme poverty
and unemployment. Other factors which may influence the ability or willingness
to service debt include, but are not limited to, a country's cash flow
situation, the availability of sufficient foreign exchange on the date a
payment is due, the relative size of its debt service burden to the economy as
a whole, its government's policy towards the International Monetary Fund, the
World Bank and other international agencies and the political constraints to
which a government debtor may be subject.
With respect to investment in debt issues of foreign governments, the
ability of a foreign government or government-related issuer to make timely
and ultimate payments on its external debt obligations will also be
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strongly influenced by the issuer's balance of payments, including export
performance, its access to international credits and investments, fluctuations
in interest rates and the extent of its foreign reserves. A country whose
exports are concentrated in a few commodities or whose economy depends on
certain strategic imports could be vulnerable to fluctuations in international
prices of these commodities or imports. To the extent that a country receives
payment for its exports in currencies other than dollars, its ability to make
debt payments denominated in dollars could be adversely affected. If a foreign
government or government-related issuer cannot generate sufficient earnings
from foreign trade to service its external debt, it may need to depend on
continuing loans and aid from foreign governments, commercial banks and
multilateral organizations, and inflows of foreign investment. The commitment
on the part of these foreign governments, multilateral organizations and
others to make such disbursements may be conditioned on the government's
implementation of economic reforms and/or economic performance and the timely
service of its obligations. Failure to implement such reforms, achieve such
levels of economic performance or repay principal or interest when due may
curtail the willingness of such third parties to lend funds, which may further
impair the issuer's ability or willingness to service its debts in a timely
manner. The cost of servicing external debt will also generally be adversely
affected by rising international interest rates because many external debt
obligations bear interest at rates which are adjusted based upon international
interest rates. The ability to service external debt will also depend on the
level of the relevant government's international currency reserves and its
access to foreign exchange. Currency devaluations may affect the ability of a
government issuer to obtain sufficient foreign exchange to service its
external debt.
As a result of the foregoing, a foreign governmental issuer may default
on its obligations. If such a default occurs, the Fund may have limited
effective legal recourse against the issuer and/or guarantor. Remedies must,
in some cases, be pursued in the courts of the defaulting party itself, and
the ability of the holder of foreign government and government-related debt
securities to obtain recourse may be subject to the political climate in the
relevant country. In addition, no assurance can be given that the holders of
commercial bank debt will not contest payments to the holders of other foreign
government and government-related debt obligations in the event of default
under their commercial bank loan agreements.
With respect to forward foreign currency exchange, the precise matching
of forward contract amounts and the value of the securities involved is
generally not possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the value of
those securities between the date the forward contract is entered into and the
date it matures. The projection of short-term currency strategy is highly
uncertain. See Forward Foreign Currency Exchange Contracts, below.
Forward Foreign Currency Exchange Contracts
As noted above, the foreign investments made by the Fund present
currency considerations which pose special risks. The Manager uses a
purchasing power parity approach to evaluate currency risk. A purchasing power
parity approach attempts to identify the amount of goods and services that a
dollar will buy in the United States and compares that to the amount of a
foreign currency required to buy the same amount of goods and services in
another country. When the dollar buys less abroad, the foreign currency may be
considered to be overvalued. When the dollar buys more abroad, the foreign
currency may be considered to be undervalued. Eventually, currencies should
trade at levels that should make it possible for the dollar to buy the same
amount of goods and services overseas as in the United States.
Although the Fund values its assets daily in terms of U.S. dollars, it
does not intend to convert its holdings of foreign currencies into U.S.
dollars on a daily basis. The Fund will, however, from time to time, purchase
or sell foreign currencies and/or engage in forward foreign currency
transactions in order to expedite settlement of transactions and to minimize
currency value fluctuations. The Fund may conduct its foreign currency
exchange transactions on a spot (i.e., cash) basis at the spot rate prevailing
in the foreign currency exchange market or through entering into contracts to
purchase or sell foreign currencies at a future date (i.e., a "forward foreign
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currency" contract or "forward" contract). The Fund will convert currency on a
spot basis from time to time, and investors should be aware of the costs of
currency conversion.
A forward contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days from
the date of the contract, agreed upon by the parties, at a price set at the
time of the contract.
The Fund may enter into forward contracts to "lock in" the price of a
security it has agreed to purchase or sell, in terms of U.S. dollars or other
currencies in which the transaction will be consummated. By entering into a
forward contract for the purchase or sale, for a fixed amount of U.S. dollars
or foreign currency, of the amount of foreign currency involved in the
underlying security transaction, the Fund will be able to protect itself
against a possible loss resulting from an adverse change in currency exchange
rates during the period between the date the security is purchased or sold and
the date on which payment is made or received.
For example, when the Manager believes that the currency of a
particular foreign country may suffer a significant decline against the U.S.
dollar or against another currency, the Fund may enter into a forward contract
to sell, for a fixed amount of U.S. dollars or other appropriate currency, the
amount of foreign currency approximating the value of some or all of the
Fund's securities denominated in such foreign currency. The Fund will not
enter into forward contracts or maintain a net exposure to such contracts
where the consummation of the contracts would obligate the Portfolio to
deliver an amount of foreign currency in excess of the value of the Fund's
securities or other assets denominated in that currency.
The Fund may enter into forward contracts to hedge the currency risk
associated with the purchase of individual securities denominated in
particular currencies. In the alternative, the Fund may also engage in
currency "cross hedging" when, in the opinion of the Manager, as appropriate,
the historical relationship among foreign currencies suggests that the Fund
may achieve the same protection for a foreign security at reduced cost and/or
administrative burden through the use of a forward contract relating to a
currency other than the U.S. dollar or the foreign currency in which the
security is denominated.
At the maturity of a forward contract, the Fund may either sell the
portfolio security and make delivery of the foreign currency, or it may retain
the security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract with the same currency trader
obligating it to purchase, on the same maturity date, the same amount of the
foreign currency. The Fund may realize gain or loss from currency
transactions.
With respect to forward foreign currency contracts, the precise
matching of forward contract amounts and the value of the securities involved
is generally not possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the value of
those securities between the date the forward contract is entered into and the
date it matures. The projection of short-term currency strategy is highly
uncertain.
It is impossible to forecast the market value of the Fund securities at
the expiration of the contract. Accordingly, it may be necessary for the Fund
to purchase additional foreign currency on the spot market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a decision
is made to sell the security and make delivery of the foreign currency.
Conversely, it may be necessary to sell on the spot market some of the foreign
currency received upon the sale of a security if its market value exceeds the
amount of foreign currency the Fund is obligated to deliver.
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Futures Contracts and Options on Futures Contracts
In order to remain fully invested, to facilitate investments in equity
securities and to reduce transaction costs, the Fund may, to a limited extent,
enter into futures contracts, purchase or sell options on futures contracts
and engage in certain transactions in options on securities, and may enter
into closing transactions with respect to such activities. The Fund will only
enter into these transactions for hedging purposes if it is consistent with
the Fund's investment objectives and policies and the Fund will not engage in
such transactions to the extent that obligations relating to futures
contracts, options on futures contracts and options on securities (see Futures
Contracts and Options on Futures Contracts --Options on Securities), in the
aggregate, exceed 25% of the Fund's assets.
The Fund may enter into contracts for the purchase or sale for future
delivery of securities. When a futures contract is sold, the Fund incur a
contractual obligation to deliver the securities underlying the contract at a
specified price on a specified date during a specified future month. A
purchase of a futures contract means the acquisition of a contractual right to
obtain delivery to the Fund of the securities called for by the contract at a
specified price during a specified future month. Because futures contracts
require only a small initial margin deposit, the Fund would then be able to
keep a cash reserve applicable to meet potential redemptions while at the same
time being effectively fully invested.
The Fund may also purchase and write options to buy or sell futures
contracts. Options on futures are similar to options except that options on
futures give the purchaser the right, in return for the premium paid, to
assume a position in a futures contract, rather than actually to purchase or
sell the futures contract, at a specified exercise price at any time during
the period of the option. The Fund will not enter into futures contracts and
options thereon to the extent that more than 5% of its assets are required as
futures contract margin deposits and premiums on options and only to the
extent that obligations under such futures contracts and options thereon would
not exceed 20% of the Fund's total assets. In the case of an option that is
in-the-money at the time of purchase, the in-the-money amount may be excluded
in calculating the 5%.
To the extent that interest or exchange rates move in an unexpected
direction, the Fund may not achieve the anticipated benefits of investing in
futures contracts and options thereon, or may realize a loss. To the extent
that the Fund purchases an option on a futures contract and fails to exercise
the option prior to the exercise date, it will suffer a loss of the premium
paid. Further, the possible lack of a secondary market would prevent the Fund
from closing out its positions relating to futures.
Options
Options on Securities
The Fund may write covered call options on U.S. securities, purchase
call options on such securities and enter into closing transactions related
thereto. The Fund may also purchase put options on U.S. securities, may write
secured put options on such securities and enter into closing transactions
related thereto.
A covered call option obligates the writer, in return for the premium
received, to sell one of its securities to the purchaser of the option for an
agreed price up to an agreed date. The advantage is that the writer receives
premium income and the purchaser may hedge against an increase in the price of
securities it ultimately wishes to buy. The Fund will only purchase call
options to the extent that premiums paid on all outstanding call options do
not exceed 2% of the Fund's total assets.
A put option obligates the writer, in return for the premium received,
to buy the security underlying the option at the exercise price during the
option period, and the purchaser of the option has the right to sell the
security to the writer. The Fund will only write put options on a secured
basis which means that the Portfolio will maintain, in a segregated account
with its Custodian Bank, cash or U.S. government securities in an amount
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not less than the exercise price of the option at all times during the option
period. The Fund will only purchase put options if the Portfolio owns the
security covered by the put option at the time of purchase and to the extent
that the premiums on all outstanding put options do not exceed 2% of the
Fund's total assets. The advantage is that the writer receives premium income
while the purchaser can be protected should the market value of the security
decline.
Closing transactions essentially let the Fund offset put options or
call options prior to exercise or expiration. If the Fund cannot effect
closing transactions, it may have to hold a security it would otherwise sell
or deliver a security it might want to hold.
The Fund may use both exchange-traded and over-the-counter options.
Certain over-the-counter options may be illiquid. The Fund will only invest in
such options to the extent consistent with their 15% limit on investments in
illiquid securities.
With respect to writing covered call options, the Portfolios may lose
the potential market appreciation of the securities subject to the option, if
the Manager's judgment is wrong and the price of the security moves in the
opposite direction from what was anticipated. In purchasing put and call
options, the premium paid by the Fund plus any transaction costs will reduce
any benefit realized by the Fund upon exercise of the option. When writing put
options, the Fund may be required, when the put is exercised, to purchase
securities at higher prices than current market prices.
Risks of Transactions in Options, Futures and Forward Contracts
The use of futures contracts, options on futures contracts, forward
contracts and certain options for hedging and other non-speculative purposes
as described above involves certain risks. For example, a lack of correlation
between price changes of an option or futures contract and the assets being
hedged could render the Fund's hedging strategy unsuccessful and could result
in losses. The same results could occur if movements of foreign currencies do
not correlate as expected by the investment adviser at a time when the Fund is
using a hedging instrument denominated in one foreign currency to protect the
value of a security denominated in a second foreign currency against changes
caused by fluctuations in the exchange rate for the dollar and the second
currency. If the direction of securities prices, interest rates or foreign
currency prices is incorrectly predicted, the Fund will be in a worse position
than if such transactions had not been entered into. In addition, since there
can be no assurance that a liquid secondary market will exist for any contract
purchased or sold, the Fund may be required to maintain a position (and in the
case of written options may be required to continue to hold the securities
used as cover) until exercise or expiration, which could result in losses.
Further, options and futures contracts on foreign currencies, and forward
contracts, entail particular risks related to conditions affecting the
underlying currency. Over-the-counter transactions in options and forward
contracts also involve risks arising from the lack of an organized exchange
trading environment.
Restricted/Illiquid Securities
The Fund may invest in restricted securities, including securities
eligible for resale without registration pursuant to Rule 144A ("Rule 144A
Securities") under the Securities Act of 1933 ("1933 Act"). Rule 144A exempts
many privately placed and legally restricted securities from the registration
requirements of the 1933 Act and permits such securities to be freely traded
among certain institutional buyers such as the Fund.
The Fund may invest no more than 15% of the value of its net assets in
illiquid securities. Illiquid securities, for purposes of this policy, include
repurchase agreements maturing in more than seven days.
While maintaining oversight, the Board of Directors has delegated to
the Manager the day-to-day functions of determining whether or not individual
Rule 144A Securities are liquid for purposes of the Fund's limitation on
investments in illiquid assets. The Board has instructed the Manager to
consider the following factors in
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determining the liquidity of a Rule 144A Security: (i) the frequency of trades
and trading volume for the security; (ii) whether at least three dealers are
willing to purchase or sell the security and the number of potential
purchasers; (iii) whether at least two dealers are making a market in the
security; and (iv) the nature of the security and the nature of the
marketplace trades (e.g., the time needed to dispose of the security, the
method of soliciting offers, and the mechanics of transfer).
If the Manager determines that a Rule 144A Security which was
previously determined to be liquid is no longer liquid and, as a result, the
Fund's holdings of illiquid securities exceed the Fund's 15% limit on
investment in such securities, the investment adviser will determine what
action shall be taken to ensure that the Fund continues to adhere to such
limitation.
Convertible, Debt and Non-Traditional Equity Securities
A portion of the Fund's assets may be invested in convertible
securities of issuers in the real estate industry. A convertible security is a
security which may be converted at a stated price within a specified period of
time into a certain quantity of the common stock of the same or a different
issuer. Convertible and debt securities are senior to common stocks in a
corporation's capital structure, although convertible securities are usually
subordinated to similar nonconvertible securities. Convertible and debt
securities provide a fixed-income stream and the opportunity, through its
conversion feature, to participate in the capital appreciation resulting from
a market price advance in the convertible security's underlying common stock.
Just as with debt securities, convertible securities tend to increase in
market value when interest rates decline and tend to decrease in value when
interest rates rise. However, the price of a convertible security is also
influenced by the market value of the security's underlying common stock and
tends to increase as the market value of the underlying stock rises, whereas
it tends to decrease as the market value of the underlying stock declines.
Convertible and debt securities acquired by the Fund may be rated below
investment grade, or unrated. These lower rated convertible and debt
securities are subject to credit risk considerations substantially similar to
such considerations affecting high risk, high-yield bonds, commonly referred
to as "junk bonds."
The Fund may invest in convertible preferred stocks that offer enhanced
yield features, such as Preferred Equity Redemption Cumulative Stock
("PERCS"), which provide an investor, such as the Fund, with the opportunity
to earn higher dividend income than is available on a company's common stock.
A PERCS is a preferred stock which generally features a mandatory conversion
date, as well as a capital appreciation limit which is usually expressed in
terms of a stated price. Upon the conversion date, most PERCS convert into
common stock of the issuer (PERCS are generally not convertible into cash at
maturity). Under a typical arrangement, if after a predetermined number of
years the issuer's common stock is trading at a price below that set by the
capital appreciation limit, each PERCS would convert to one share of common
stock. If, however, the issuer's common stock is trading at a price above that
set by the capital appreciation limit, the holder of the PERCS would receive
less than one full share of common stock. The amount of that fractional share
of common stock received by the PERCS holder is determined by dividing the
price set by the capital appreciation limit of the PERCS by the market price
of the issuer's common stock. PERCS can be called at any time prior to
maturity, and hence do not provide call protection. However, if called early,
the issuer may pay a call premium over the market price to the investor. This
call premium declines at a preset rate daily, up to the maturity date of the
PERCS.
The Fund may also invest in other enhanced convertible securities.
These include but are not limited to ACES (Automatically Convertible Equity
Securities), PEPS (Participating Equity Preferred Stock), PRIDES (Preferred
Redeemable Increased Dividend Equity Securities), SAILS (Stock Appreciation
Income Linked Securities), TECONS (Term Convertible Notes), QICS (Quarterly
Income Cumulative Securities) and DECS (Dividend Enhanced Convertible
Securities). ACES, PEPS, PRIDES, SAILS, TECONS, QICS and DECS all have the
following features: they are company-issued convertible preferred stock;
unlike PERCS, they do not have capital appreciation limits; they seek to
provide the investor with high current income, with some prospect
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of future capital appreciation; they are typically issued with three to
four-year maturities; they typically have some built-in call protection for
the first two to three years; investors have the right to convert them into
shares of common stock at a preset conversion ratio or hold them until
maturity; and upon maturity, they will automatically convert to either cash or
a specified number of shares of common stock.
REITS
The Fund's investment in REITs presents certain further risks that are
unique and in addition to the risks associated with investing in the real
estate industry in general. Equity REITs may be affected by changes in the
value of the underlying property owned by the REITs, while mortgage REITs may
be affected by the quality of any credit extended. REITs are dependent on
management skills, are not diversified, and are subject to the risks of
financing projects. REITs whose underlying assets include long-term health
care properties, such as nursing, retirement and assisted living homes, may be
impacted by federal regulations concerning the health care industry.
REITs (especially mortgage REITs) are also subject to interest rate
risks - when interest rates decline, the value of a REIT's investment in fixed
rate obligations can be expected to rise. Conversely, when interest rates
rise, the value of a REIT's investment in fixed rate obligations can be
expected to decline. In contrast, as interest rates on adjustable rate
mortgage loans are reset periodically, yields on a REIT's investments in such
loans will gradually align themselves to reflect changes in market interest
rates, causing the value of such investments to fluctuate less dramatically in
response to interest rate fluctuations than would investments in fixed rate
obligations.
REITs may have limited financial resources, may trade less frequently
and in a limited volume, and may be subject to more abrupt or erratic price
movements than other securities.
Depositary Receipts
The Fund may invest in sponsored and unsponsored American Depositary
Receipts ("ADRs") that are actively traded in the United States. ADRs are
receipts typically issued by a U.S. bank or trust company which evidence
ownership of underlying securities issued by a foreign corporation.
"Sponsored" ADRs are issued jointly by the issuer of the underlying security
and a Depositary, and "unsponsored" ADRs are issued without the participation
of the issuer of the deposited security. Holders of unsponsored ADRs generally
bear all the costs of such facilities and the Depositary of an unsponsored ADR
facility frequently is under no obligation to distribute shareholder
communications received from the issuer of the deposited security or to pass
through voting rights to the holders of such receipts in respect of the
deposited securities. Therefore, there may not be a correlation between
information concerning the issuer of the security and the market value of an
unsponsored ADR. ADRs may be listed on a national securities exchange or may
be traded in the over-the-counter market. ADR prices are denominated in U.S.
dollars although the underlying securities are denominated in a foreign
currency. Investments in ADRs involve risks similar to those accompanying
direct investments in foreign securities.
-56-
<PAGE>
Zero Coupon Securities
The market prices of zero coupon securities are generally more volatile
than the market prices of securities that pay interest periodically and are
likely to respond to changes in interest rates to a greater degree than do
non-zero coupon securities having similar maturities and credit quality.
Current federal income tax law requires that a holder of a taxable zero coupon
security report as income each year the portion of the original issue discount
of such security that accrues that year, even though the holder receives no
cash payments of interest during the year. The Fund intends to qualify as a
regulated investment company under the Code. Accordingly, during periods when
the Fund receives no interest payments on its zero coupon securities, it will
be required, in order to maintain its desired tax treatment, to distribute
cash approximating the income attributable to such securities. Such
distribution may require the sale of portfolio securities to meet the
distribution requirements and such sales may be subject to the risk factor
discussed above.
-57-
<PAGE>
The Delaware Group includes funds with a wide range of investment
objectives. Stock funds, income funds, national and state specific tax-exempt
funds, money market funds, global and international funds and closed-end funds
give investors the ability to create a portfolio that fits their personal
financial goals. For more information, contact your financial adviser or call
Delaware Group at 800-523-4640.
INVESTMENT MANAGER
Delaware Management Company, Inc.
One Commerce Square
Philadelphia, PA 19103
SUB-ADVISER
Lincoln Investment Management, Inc.
200 E. Berry Street
Fort Wayne, IN 46802
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING,
ACCOUNTING SERVICES
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
One Commerce Square
Philadelphia, PA 19103
INDEPENDENT AUDITORS
Ernst & Young LLP
Two Commerce Square
Philadelphia, PA 19103
CUSTODIAN
The Chase Manhattan Bank
4 Chase Metrotech Center
Brooklyn, NY 11245
<PAGE>
THE REAL ESTATE INVESTMENT TRUST
PORTFOLIO
A CLASS
B CLASS
C CLASS
P R O S P E C T U S
DECEMBER 24, 1997
DELAWARE
GROUP
-----
<PAGE>
REIT FUND PROSPECTUS
INSTITUTIONAL CLASS DECEMBER 24, 1997
------------------------------------------------------------
1818 Market Street, Philadelphia, PA 19103
For more information about REIT Fund Institutional Class
call Delaware Group at 800-828-5052
This Prospectus describes REIT Fund Institutional Class (the "Class")
of The Real Estate Investment Trust Portfolio series (the "Fund") of Delaware
Pooled Trust, Inc. ("Pooled Trust, Inc."), a professionally-managed mutual
fund. The Fund's objective is to seek to achieve maximum long-term total
return. Capital appreciation is a secondary objective. It seeks to achieve its
objectives by investing in securities of companies primarily engaged in the
real estate industry.
This Prospectus relates only to the Class and sets forth information
that you should read and consider before you invest. Please retain it for future
reference. The Fund's Statement of Additional Information ("Part B" of Pooled
Trust, Inc.'s registration statement), dated December 24, 1997, as it may be
amended from time to time, contains additional information about the Fund and
has been filed with the Securities and Exchange Commission. Part B is
incorporated by reference into this Prospectus and is available, without charge,
by writing to Delaware Distributors, L.P. at the above address or by calling the
above telephone number. The SEC also maintains a Website (http://www.sec.gov)
that contains Part B, material we incorporated by reference, and other
information regarding registrants that electronically file with the SEC.
The Fund also offers REIT Fund A Class, REIT Fund B Class and REIT
Fund C Class, which are subject to sales charges and other expenses that may
affect their performance, and The Real Estate Investment Trust Portfolio
class, which is available for purchase only by certain investors. To obtain
the Prospectus for the REIT Fund A, B and C Classes, please write to the
Distributor at 1818 Market Street, Philadelphia, PA 19103 or call
800-523-4640. To obtain the Prospectus for The Real Estate Investment Trust
Portfolio class, please write to Delaware Pooled Trust, Inc. at One Commerce
Square, 2005 Market Street, Philadelphia, PA 19103, Attn:
Client Services or call 800-231-8002.
<PAGE>
TABLE OF CONTENTS
COVER PAGE
SYNOPSIS
SUMMARY OF EXPENSES
SUITABILITY
INVESTMENT OBJECTIVE, POLICIES AND RISK FACTORS
CLASSES OF SHARES
HOW TO BUY SHARES
REDEMPTION AND EXCHANGE
DIVIDENDS AND DISTRIBUTIONS
TAXES
CALCULATION OF NET ASSET VALUE PER SHARE
MANAGEMENT OF THE FUND
ADDITIONAL INVESTMENT INFORMATION ON
POLICIES AND RISK CONSIDERATIONS
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
BE SURE TO CONSULT YOUR FINANCIAL ADVISER WHEN MAKING INVESTMENTS. MUTUAL
FUNDS CAN BE A VALUABLE PART OF YOUR FINANCIAL PLAN; HOWEVER, SHARES OF THE
FUND ARE NOT FDIC OR NCUSIF INSURED, ARE NOT GUARANTEED BY ANY BANK OR ANY
CREDIT UNION, ARE NOT OBLIGATIONS OF ANY BANK OR ANY CREDIT UNION, AND INVOLVE
INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
SHARES OF THE FUND ARE NOT BANK OR CREDIT UNION DEPOSITS.
-2-
<PAGE>
SYNOPSIS
Investment Objective
The investment objective of the Fund is to seek to achieve maximum
long-term total return. Capital appreciation is a secondary objective. It
seeks to achieve its objectives by investing in securities of companies
primarily engaged in the real estate industry. Under normal circumstances, at
least 65% of the Fund's total assets will be invested in equity securities of
real estate investment trusts ("REITs"). For further details, see Investment
Objective, Policies and Risk Factors and Additional Investment Information on
Policies and Risk Considerations.
Risk Factors and Special Considerations
The Fund concentrates its investments in the real estate industry, so
its net asset value can be expected to fluctuate in light of factors affecting
that industry and may fluctuate more widely than a portfolio that invests in a
broader range of industries. By investing primarily in securities of REITs,
the Fund is also subject to interest rate risk.
The Fund may invest up to 10% of its total assets in foreign
securities, including securities of issuers in emerging markets. Those new
securities pose special risks that do not typically arise in connection with
investments in U.S. securities.
The Fund may use futures contracts, options on futures contracts and
options on stock and may engage in foreign currency options and futures
transactions for hedging purposes. There are special risks that result from
the use of options and futures.
The Fund is considered a nondiversified investment company under the
Investment Company Act of 1940 (the "1940 Act") and may be subject to greater
risks than if the Fund were diversified. A nondiversified portfolio of
securities is believed to be subject to greater risk because adverse effects
on the portfolio's security holdings may affect a larger portion of its
overall assets.
See Investment Objective, Policies and Risk Factors concerning these
and other investment policies of the Fund.
Investment Manager, Distributor and Service Agent
Delaware Investment Advisers, a division of Delaware Management Company,
Inc., (the "Manager") furnishes investment management services to the Fund,
subject to the supervision and direction of the Board of Directors. The Manager
also provides investment management services to certain of the other funds in
the Delaware Group. Lincoln Investment Management, Inc. ("Lincoln" or
"Sub-Adviser"), a wholly owned subsidiary of Lincoln National Corporation, acts
as sub-adviser to the Manager with respect to the Fund. Delaware Distributors,
L.P. (the "Distributor") is the national distributor for the Fund and for all of
the other mutual funds in the Delaware Group. Delaware Service Company, Inc.
(the "Transfer Agent") is the shareholder servicing, dividend disbursing,
accounting services and transfer agent for the Fund and for all of the other
mutual funds in the Delaware Group. See Summary of Expenses and Management of
the Fund for further information regarding the Manager and the Sub-Adviser and
the fees payable under the Fund's Investment Management Agreement and
Sub-Advisory Agreement.
Purchase Price
Shares of the Class may be purchased at net asset value, without a
front-end or contingent deferred sales charge and are not subject to
distribution fees under a Rule 12b-1 distribution plan.
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<PAGE>
Redemption and Exchange
Shares of the Class may be redeemed or exchanged at the net asset value
calculated after receipt of the redemption or exchange request. See Redemption
and Exchange.
Open-End Investment Company
The Fund is a series of Pooled Trust, Inc. Pooled Trust, Inc. was
organized as a Maryland corporation on May 30, 1991, and is an open-end
management investment company. See Shares under Management of the Fund.
SUMMARY OF EXPENSES
A general comparison of the sales arrangements and other expenses
applicable to shares of the Class follows:
Shareholder Transaction Expenses
- --------------------------------------------------------------------------------
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)...............................None
Maximum Sales Charge Imposed on Reinvested
Dividends (as a percentage of offering price).....................None
Exchange Fees.....................................................None*
*Exchanges are subject to the requirements of each Fund;
a front-end sales charge may apply.
Annual Operating Expenses
(as a percentage of average daily net assets)
- --------------------------------------------------------------------------------
Management Fees (after voluntary waivers).........................0.38%
12b-1 Expenses ...................................................None
Other Operating Expenses (after
expense limitations)+........................................0.48%
Total Operating Expenses (after voluntary
waivers and expense limitations)+.....................0.86%
=====
+"Other Operating Expenses" and "Total Operating Expenses" for the
Class are estimated amounts for the first full fiscal year of the Class and are
based on the actual results for the Class A Shares of the Fund (which prior to
October 14, 1997 was the only Class of the Fund and which on October 14, 1997
was redesignated REIT Fund A Class) for the Fund's fiscal year ended October 31,
1997. Like the REIT Fund Institutional Class, the REIT Fund A Class, prior to
November 3, 1997, carried no front-end sales charge and was not subject to Rule
12b-1 distribution expenses. The Manager has elected voluntarily to waive that
portion, if any, of the annual management fees payable by the Fund and to pay
certain expenses of the Fund to the extent necessary to ensure that the Total
-4-
<PAGE>
Operating Expenses (after voluntary waivers and payments) of the REIT Fund
Institutional Class does not exceed 0.86% during the commencement of the
public offering of the Class through April 30, 1998. If the voluntary fee
waivers or payments were not in effect, the Management Fees (as a percentage
of average net assets) would be 0.75% and the Total Operating Expenses (as a
percentage of average daily net assets) would be 1.23%; this ratio is based on
data for the original class, adjusted to reflect an anticipated increase in
shareholder service and other expenses.
For expense information about REIT Fund A Class, REIT Fund B
Class, REIT Fund C Class and The Real Estate Investment Trust Portfolio class,
see the separate prospectuses relating to those classes.
The following example illustrates the expenses that an investor
would pay on a $1,000 investment over various time periods, assuming (1) a 5%
annual rate of return and (2) redemption at the end of each time period. As
noted in the above table, the Fund does not charge any redemption fee. The
following example is based on expenses incurred by the original (and then
only) class of shares offered by the Fund for the Fund's fiscal year ended
October 31, 1997. It assumes the voluntary waiver of the management fee
and/or other payments of expenses as described in this Prospectus. See Summary
of Expenses for details concerning waivers and the differences in the expenses
borne by the Fund's original class and those to be borne by REIT Fund
Institutional Class.
Assuming Redemption
1 year 3 years 5 years 10 years
------ ------- ------- --------
$9 $27 $48 $106
This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be greater or less than those
shown.
The purpose of the above tables is to assist the investor in understanding the
various costs and expenses that an investor in the Class will bear directly or
indirectly.
-5-
<PAGE>
SUITABILITY
The Fund may be suitable for the patient investor interested in
long-term capital appreciation with the potential for current income.
Investors should be willing to accept the risks associated with investments in
a portfolio of equity securities and convertible securities issued by domestic
and foreign issuers concentrated in the real estate industry. Because current
income is a secondary objective of the Fund, the Fund is not suitable as an
investment vehicle for investors whose primary investment goal is current
income.
The risks associated with an investment in the Fund are discussed below
under Investment Objective, Policies and Risk Factors.
INVESTMENT OBJECTIVE, POLICIES AND RISK FACTORS
The investment objective of the Fund is described below, together with
the policies the Fund employs in its efforts to achieve its objective. There
is no assurance that the Fund will attain its objective. The investment
objective of the Fund is fundamental and may only be changed by a majority
approval of the Fund's shareholders. Unless otherwise noted, the investment
policies described below are not fundamental policies and may be changed
without shareholder approval.
Investment Objective and Policies
The investment objective of the Fund is to achieve maximum long-term
total return. Capital appreciation is a secondary objective. The Fund seeks to
achieve its objectives by investing in securities of companies principally
engaged in the real estate industry. Under normal circumstances, at least 65%
of the Fund's total assets will be invested in equity securities of real
estate investment trusts ("REITs"). The Fund will operate as a nondiversified
fund as defined by the 1940 Act.
The Fund invests in equity securities of REITs and other real estate
industry operating companies ("REOCs"). For purposes of the Fund's
investments, a REOC is a company that derives at least 50% of its gross
revenues or net profits from either (1) the ownership, development,
construction, financing, management or sale of commercial, industrial or
residential real estate, or (2) products or services related to the real
estate industry, such as building supplies or mortgage servicing. The Fund's
investments in equity securities of REITs and REOCs may include, from time to
time, sponsored or unsponsored American Depositary Receipts actively traded in
the United States. Equity securities for this purpose include common stocks,
securities convertible into common stocks and securities having common stock
characteristics, such as rights and warrants to purchase common stocks. The
Fund may also purchase preferred stock. The Fund may invest up to 10% of its
assets in foreign securities, and in convertible securities. See Foreign
Investment Information, Depositary Receipts and Convertible, Debt and
Non-Traditional Equity Securities under Additional Investment Information on
Policies and Risk Considerations for further discussion of these investment
policies. The Fund may also invest in mortgage-backed securities. See
Mortgage-Backed Securities under Additional Investment Information on Policies
and Risk Considerations for more detailed information about this investment
policy.
The Fund may hold cash or invest in short-term debt securities and
other money market instruments when, in the Manager's opinion, such holdings
are prudent given then prevailing market conditions. Except when the Manager
believes a temporary defensive approach is appropriate, the Fund will not hold
more than 5% of its total assets in cash or such short-term investments. All
these short-term investments will be of the highest quality as determined by a
nationally-recognized statistical rating organization (e.g. AAA by S&P or Aaa
by
-6-
<PAGE>
Moody's) or be of comparable quality as determined by the Manager. See
Additional Investment Information on Policies and Risk Considerations for
further details concerning these and other investment policies.
Although the Fund does not invest directly in real estate, the Fund
does invest primarily in REITs, and may purchase equity securities of REOCs.
Thus, because the Fund concentrates its investments in the real estate
industry, an investment in the Fund may be subject to certain risks associated
with direct ownership of real estate and with the real estate industry in
general. These risks include, among others: possible declines in the value of
real estate; risks related to general and local economic conditions; possible
lack of availability of mortgage funds; overbuilding; extended vacancies of
properties; increases in competition; property taxes and operating expenses;
changes in zoning laws; costs resulting from the clean-up of, and liability to
third parties resulting from, environmental problems; casualty for
condemnation losses, uninsured damages from floods, earthquakes or other
natural disasters; limitations on and variations in rents; and changes in
interest rates.
The Fund may invest without limitation in shares of REITs. REITs are
pooled investment vehicles which invest primarily in income-producing real
estate or real estate related loans or interests. REITs are generally
classified as equity REITs, mortgage REITs or a combination of equity and
mortgage REITs. Equity REITs invest the majority of their assets directly in
real property and derive income primarily from the collection of rents. Equity
REITs can also realize capital gains by selling properties that have
appreciated in value. Mortgage REITs invest the majority of their assets in
real estate mortgages and derive income from the collection of interest
payments. Like investment companies such as the Fund, REITs are not taxed on
income distributed to shareholders provided they comply with several
requirements in the Internal Revenue Code of 1986, as amended (the "Code").
REITs are subject to substantial cash flow dependency, defaults by borrowers,
self-liquidation, and the risk of failing to qualify for tax-free pass-through
of income under the Code, and/or to maintain exemptions from the 1940 Act. By
investing in REITs indirectly through the Fund, a shareholder bears not only a
proportionate share of the expenses of the Fund, but also, indirectly, similar
expenses of the REITs. For a further discussion of the risks presented by
investing in REITs, see Additional Investment Information on Policies and Risk
Considerations--REITs.
While the Fund does not intend to invest directly in real estate, the
Fund could, under certain circumstances, own real estate directly as a result
of a default on securities that it owns. In addition, if the Fund has rental
income or income from the direct disposition of real property, the receipt of
such income may adversely affect the Fund's ability to retain its tax status
as a regulated investment company.
The Fund may also, to a limited extent, enter into futures contracts on
stocks, purchase or sell options on such futures, engage in certain options
transactions on stocks and enter into closing transactions with respect to
those activities. However, these activities will not be entered into for
speculative purposes, but rather to facilitate the ability quickly to deploy
into the stock market the Fund's positions in cash, short-term debt securities
and other money market instruments, at times when the Fund's assets are not
fully invested in equity securities. Such positions will generally be
eliminated when it becomes possible to invest in securities that are
appropriate for the Fund. See Additional Investment Information on Policies
and Risk Considerations--Futures Contracts and Options on Futures Contracts
and Options for a further discussion of these investment policies.
In connection with the Fund's ability to invest up to 10% of its total
assets in the securities of foreign issuers, currency considerations may
present risks if the Fund holds international securities. Currency
considerations carry a special risk for a portfolio of international
securities. In this regard, the Fund may actively carry on hedging activities,
and may invest in forward foreign currency exchange contracts to hedge
currency risks associated with the purchase of individual securities
denominated in a particular currency. See
-7-
<PAGE>
Additional Investment Information on Policies and Risk Considerations--Forward
Foreign Currency Exchange Contracts.
The Manager does not normally intend to respond to short-term market
fluctuations or to acquire securities for the purpose of short-term trading;
however, the Manager may take advantage of short-term opportunities that are
consistent with the Fund's investment objectives. It is anticipated that the
annual turnover rate of the Fund, under normal circumstances, will generally
not exceed 100%. See Portfolio Transactions.
Risk Factors
An investment in the Fund entails certain risks and considerations
about which an investor should be aware.
The Fund may invest up to 10% of its total assets in securities of
foreign issuers which normally are denominated in foreign currencies, and may
hold foreign currency directly. Investments in securities of non-United States
issuers which are generally denominated in foreign currencies involve certain
risk and opportunity considerations not typically associated with investing in
United States companies. Consequently, the Fund may be affected by changes in
currency rates and exchange control regulations and may incur costs in
connection with conversions between currencies. To hedge this currency risk
associated with investments in non-U.S. dollar denominated securities, a Fund
may invest in forward foreign currency contracts. Those activities pose
special risks which do not typically arise in connection with investments in
U.S. securities. In addition, the Fund may engage in foreign currency options
and futures transactions. For a discussion of the risks associated with
foreign securities see Foreign Investment Information and for those concerning
these hedging instruments see Risks of Transactions in Options, Futures and
Forward Contracts, both of which references appear under the heading
Additional Investment Information on Policies and Risk Considerations.
The Fund may commit its assets eligible for foreign investment to
securities of issuers located in emerging markets. Investments in securities
of companies in emerging markets present a greater degree of risk than tends
to be the case for foreign investments in Western Europe and other developed
markets. Among other things, there is a greater possibility of expropriation,
nationalization, confiscatory taxation, income earned or other special taxes,
foreign exchange restrictions, limitations on the repatriation of income and
capital from investments, defaults in foreign government debt, and economic,
political or social instability. In addition, in many emerging markets, there
is substantially less publicly available information about issuers and the
information that is available tends to be of a lesser quality. Economic
markets and structures tend to be less mature and diverse and the securities
markets which are subject to less government regulation or supervision may
also be smaller, less liquid and subject to greater price volatility. See
Additional Investment Information on Policies and Risk Considerations--Foreign
Investment Information for a more extensive discussion of these and other
factors.
The foreign securities in which the Fund may invest from time to time
may be listed primarily on foreign exchanges which trade on days when the New
York Stock Exchange is closed (such as Saturday). As a result, the net asset
value of the Fund may be significantly affected by such trading on days when
shareholders will have no access to the Fund. See Valuation of Shares.
The Fund also may, under certain circumstances, use certain futures
contracts and options on futures contracts, as well as options on stock. The
Fund will only enter into these transactions for hedging purposes. See Futures
Contracts and Options on Futures Contracts and Risks of Transactions in
Options, Futures and
-8-
<PAGE>
Forward Contracts, both of which references appear under the heading
Additional Investment Information on Policies and Risk Considerations.
The Fund concentrates its investments in the real estate industry. As
a consequence, the net asset value of the Fund can be expected to fluctuate in
light of the factors affecting that industry, and may fluctuate more widely
than a portfolio that invests in a broader range of industries. The Fund may
be more susceptible to any single economic, political or regulatory occurrence
affecting the real estate industry.
The Fund, by investing primarily in securities of real estate
investment trusts, is subject to interest rate risk, in that as interest rates
decline, the value of the Fund's investments in REITs can be expected to rise.
Conversely, when interest rates rise, the value of the Fund's investments in
REITs holding fixed rate obligations can be expected to decline. See
Additional Investment Information on Policies and Risk Considerations--REITs.
The Fund may lend its portfolio securities, may invest in repurchase
agreements and may purchase securities on a when-issued basis.
While the Fund intends to seek to qualify as a "diversified"
investment company under provisions of Subchapter M of the Code, it will not
be diversified under the 1940 Act. Thus, while at least 50% of the Fund's
total assets will be represented by cash, cash items, certain qualifying
securities and other securities limited in respect of any one issuer to an
amount not greater than 5% of the Fund's total assets, it will not satisfy the
1940 Act requirement in this respect, which applies that test to 75% of the
Fund's assets. A nondiversified portfolio is believed to be subject to greater
risk because adverse effects on the portfolio's security holdings may affect a
larger portion of the overall assets.
Each of the investment strategies identified above involves special
risks which are described under Additional Investment Information on Policies
and Risk Considerations in this Prospectus and Investment Policies, Portfolio
Techniques and Risk Considerations in Part B.
* * *
Part B sets forth other more specific investment restrictions and
descriptions of Moody's and S&P ratings.
-9-
<PAGE>
CLASSES OF SHARES
The Distributor serves as the national distributor for the Fund.
Shares of the Class may be purchased directly by contacting a Fund or its
agent or through authorized investment dealers. All purchases of shares of the
Class are made at net asset value. There is no front-end or contingent
deferred sales charge.
Investment instructions given on behalf of participants in an
employer-sponsored retirement plan are made in accordance with directions
provided by the employer. Employees considering purchasing shares of the Class
as part of their retirement program should contact their employer for details.
Shares of the Class are available for purchase only by: (a)
retirement plans introduced by persons not associated with brokers or dealers
that are primarily engaged in the retail securities business and rollover
individual retirement accounts from such plans; (b) tax-exempt employee
benefit plans of the Manager or its affiliates and securities dealer firms
with a selling agreement with the Distributor; (c) institutional advisory
accounts of the Manager or its affiliates and those having client
relationships with Delaware Investment Advisers, a division of the Manager or
its affiliates and their corporate sponsors, as well as subsidiaries and
related employee benefit plans and rollover individual retirement accounts
from such institutional advisory accounts; (d) a bank, trust company and
similar financial institution investing for its own account or for the account
of its trust customers for whom such financial institution is exercising
investment discretion in purchasing shares of the Class, except where the
investment is part of a program that requires payment to the financial
institution of a Rule 12b-1 Plan fee; and (e) registered investment advisers
investing on behalf of clients that consist solely of institutions and high
net-worth individuals having at least $1,000,000 entrusted to the adviser for
investment purposes, but only if the adviser is not affiliated or associated
with a broker or dealer and derives compensation for its services exclusively
from its clients for such advisory services.
REIT Fund A Class, REIT Fund B Class, REIT Fund C Class and The Real Estate
Investment Trust Portfolio Class
In addition to offering shares of the Class, the Fund also offers
shares of The REIT Fund A Class, REIT Fund B Class and REIT Fund C Class
which are described in a separate prospectus. Shares of such classes may be
purchased through authorized investment dealers or directly by contacting the
Fund or its Distributor. Class A Shares carry a front-end sales charge and
have annual 12b-1 expenses equal to a maximum of 0.30%. The maximum front-end
sales charge as a percentage of the offering price of Class A Shares is 4.75%
and is reduced on certain transactions of $100,000 or more. Class B Shares and
Class C Shares have no front-end sales charge but are subject to annual 12b-1
expenses equal to a maximum of 1%. Class B Shares and Class C Shares and
certain Class A Shares may be subject to a contingent deferred sales charge
upon redemption. To obtain a prospectus relating to such classes, contact the
Distributor by writing to the address or by calling the phone number listed on
page 1 of this Prospectus.
The Fund also offers shares of The Real Estate Investment Trust
Portfolio class, which are available for purchase only by certain investors.
To obtain a prospectus relating to such class, contact Pooled Trust, Inc. by
writing to the address or by calling the phone number listed on page 1 of this
Prospectus.
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<PAGE>
HOW TO BUY SHARES
The Fund makes it easy to invest by mail, by wire, by exchange and by
arrangement with your investment dealer. In all instances, investors must
qualify to purchase shares of the Class.
Investing by Mail
1. Initial Purchases--An Investment Application or, in the case of a
retirement account, an appropriate retirement plan application must be
completed, signed and sent with a check, payable to the Class, to Delaware
Group at 1818 Market Street, Philadelphia, PA 19103.
2. Subsequent Purchases--Additional purchases may be made at any time by
mailing a check payable to the Class. Your check should be identified with
your name(s) and account number.
Investing by Wire
You may purchase shares by requesting your bank to transmit funds by
wire to CoreStates Bank, N.A., ABA #031000011, account number 1412893401
(include your name(s) and your Fund account number in the wire).
1. Initial Purchases--Before you invest, telephone the Client Services Center
at 800-828-5052 to get an account number. If you do not call first, processing
of your investment may be delayed. In addition, you must promptly send your
Investment Application or, in the case of a retirement account, an appropriate
retirement plan application, to the Class, to Delaware Group at 1818 Market
Street, Philadelphia, PA 19103.
2. Subsequent Purchases--You may make additional investments anytime by wiring
funds to CoreStates Bank, N.A., as described above. You should advise your
Client Services Representative by telephone at 800- 828-5052 prior to sending
your wire.
Investing by Exchange
If you have an investment in another mutual fund in the Delaware
Group and you qualify to purchase shares of the Class, you may write and
authorize an exchange of part or all of your investment into the Fund.
However, Class B Shares and Class C Shares of the Fund and Class B Shares and
Class C Shares of the other funds in the Delaware Group offering such a class
of shares may not be exchanged into the Class. If you wish to open an account
by exchange, call your Client Services Representative at 800-828-5052 for more
information. See Redemption and Exchange for more complete information
concerning your exchange privileges.
Investing through Your Investment Dealer
You can make a purchase of shares of the Class through most
investment dealers who, as part of the service they provide, must transmit
orders promptly to the Fund. They may charge for this service.
Purchase Price and Effective Date
The purchase price (net asset value) of the Class is determined as of
the close of regular trading on the New York Stock Exchange (ordinarily, 4
p.m., Eastern time) on days when the Exchange is open.
The effective date of a purchase made through an investment dealer is
the date the order is received by the Fund, its agent or designee. The
effective date of a direct purchase is the day your wire, electronic transfer
or check is received, unless it is received after the time the share price is
determined, as noted above. Purchase orders received after such time will be
effective the next business day.
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The Conditions of Your Purchase
The Fund reserves the right to reject any purchase order. If a
purchase is canceled because your check is returned unpaid, you are
responsible for any loss incurred. The Fund can redeem shares from your
account(s) to reimburse itself for any loss, and you may be restricted from
making future purchases in any of the funds in the Delaware Group. The Fund
reserves the right to reject purchases by third-party checks or checks that
are not drawn on a domestic branch of a United States financial institution.
If a check drawn on a foreign financial institution is accepted, you may be
subject to additional bank charges for clearance and currency conversion.
The Fund also reserves the right, upon 60 days' written notice, to
involuntarily redeem accounts that remain under $250 as a result of
redemptions.
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REDEMPTION AND EXCHANGE
Redemption and exchange requests made on behalf of participants in an
employer-sponsored retirement plan are made in accordance with directions
provided by the employer. Employees should therefore contact their employer
for details.
Your shares will be redeemed or exchanged at a price based on the net
asset value next determined after the Fund receives your request in good
order. For example, redemption or exchange requests received in good order
after the time the net asset value of shares is determined, will be processed
on the next business day. See Purchase Price and Effective Date under How to
Buy Shares. Except as otherwise noted below, for a redemption request to be in
"good order," you must provide your account number, account registration, and
the total number of shares or dollar amount of the transaction. With regard to
exchanges, you must also provide the name of the fund in which you want to
invest the proceeds. Exchange instructions and redemption requests must be
signed by the record owner(s) exactly as the shares are registered. You may
request a redemption or an exchange by calling a Fund at 800-828-5052.
Redemption proceeds will be distributed promptly, as described below, but not
later than seven days after receipt of a redemption request.
All exchanges involve a purchase of shares of the fund into which the
exchange is made. As with any purchase, an investor should obtain and
carefully read that fund's prospectus before buying shares in an exchange. The
prospectus contains more complete information about the fund, including
charges and expenses.
The Fund will process written and telephone redemption requests to
the extent that the purchase orders for the shares being redeemed have already
settled. The Fund will not honor redemption requests as to shares for which a
check was tendered as payment until the Fund is reasonably satisfied that the
check has cleared, which may take up to 15 days from the purchase date. You
can avoid this potential delay if you purchase shares by wiring Federal Funds.
The Fund reserves the right to reject a written or telephone redemption
request or delay payment of redemption proceeds if there has been a recent
change to the shareholder's address of record.
Shares of the Class may be exchanged into any other Delaware Group
mutual fund provided (1) the investment satisfies the eligibility and other
requirements set forth in the prospectus of the fund being acquired, including
the payment of any applicable front-end sales charge and (2) the shares of the
fund being acquired are in a state where that fund is registered. If exchanges
are made into other shares that are eligible for purchase only by those
permitted to purchase shares of the Class, such shares will be exchanged at
net asset value. Shares of the Class may not be exchanged into the Class B
Shares or Class C Shares of the funds in the Delaware Group. Each Fund may
suspend, terminate or amend the terms of the exchange privilege upon 60 days'
written notice to shareholders.
Various redemption and exchange methods are outlined below. No fee is
charged by the Fund or the Distributor for redeeming or exchanging your
shares, although in the case of an exchange, a sales charge may apply. You may
also have your investment dealer arrange to have your shares redeemed or
exchanged. Your investment dealer may charge for this service.
All authorizations given by shareholders, including selection of any
of the features described below, shall continue in effect until such time as a
written revocation or modification has been received by the Fund or its agent.
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Written Redemption and Exchange
You can write to a Fund at 1818 Market Street, Philadelphia, PA 19103
to redeem some or all of your shares or to request an exchange of any or all
your shares into another mutual fund in the Delaware Group, subject to the
same conditions and limitations as other exchanges noted above. The request
must be signed by all owners of the account or your investment dealer of
record.
For redemptions of more than $50,000, or when the proceeds are not
sent to the shareholder(s) at the address of record, the Fund requires a
signature by all owners of the account and may require a signature guarantee.
Each signature guarantee must be supplied by an eligible guarantor
institution. The Fund reserves the right to reject a signature guarantee
supplied by an eligible institution based on its creditworthiness. The Fund
may require further documentation from corporations, executors, retirement
plans, administrators, trustees or guardians.
Payment is normally mailed the next business day after receipt of
your redemption request. Certificates are issued for shares only if you submit
a specific request. If your shares are in certificate form, the certificate(s)
must accompany your request and also be in good order.
You also may submit your written request for redemption or exchange by
facsimile transmission at the following number: 215-255-8864.
Telephone Redemption and Exchange
To get the added convenience of the telephone redemption and exchange
methods, you must have the Transfer Agent hold your shares (without charge)
for you. If you choose to have your shares in certificate form, you may redeem
or exchange only by written request and you must return your certificates.
The Telephone Redemption - Check to Your Address of Record service
and the Telephone Exchange service, both of which are described below, are
automatically provided unless you notify the Fund in writing that you do not
wish to have such services available with respect to your account. The Fund
reserves the right to modify, terminate or suspend these procedures upon 60
days' written notice to shareholders. It may be difficult to reach the Fund by
telephone during periods when market or economic conditions lead to an
unusually large volume of telephone requests.
Neither the Fund nor its Transfer Agent is responsible for any
shareholder loss incurred in acting upon written or telephone instructions for
redemption or exchange of Fund shares which are reasonably believed to be
genuine. With respect to such telephone transactions, the Fund will follow
reasonable procedures to confirm that instructions communicated by telephone
are genuine (including verification of a form of personal identification) as,
if it does not, the Fund or the Transfer Agent may be liable for any losses
due to unauthorized or fraudulent transactions. A written confirmation will be
provided for all purchase, exchange and redemption transactions initiated by
telephone. By exchanging shares by telephone, you are acknowledging prior
receipt of a prospectus for the fund into which your shares are being
exchanged.
Telephone Redemption-Check to Your Address of Record
You or your investment dealer of record can have redemption proceeds
of $50,000 or less mailed to you at your address of record. Checks will be
payable to the shareholder(s) of record. Payment is normally mailed the next
business day after receipt of the redemption request.
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Telephone Redemption-Proceeds to Your Bank
Redemption proceeds of $1,000 or more can be transferred to your
predesignated bank account by wire or by check. You should authorize this
service when you open your account. If you change your predesignated bank
account, you must submit a written authorization and you may need to have your
signature guaranteed. For your protection, your authorization must be on file.
If you request a wire, your funds will normally be sent the next business day.
If you ask for a check, it will normally be mailed the next business day after
receipt of your redemption request to your predesignated bank account. There
are no fees for this redemption method, but the mail time may delay getting
funds into your bank account. Simply call your Client Services Representative
prior to the time the net asset value is determined, as noted above.
Telephone Exchange
You or your investment dealer of record can exchange shares into any
fund in the Delaware Group under the same registration. As with the written
exchange service, telephone exchanges are subject to the same conditions and
limitations as other exchanges noted above. Telephone exchanges may be subject
to limitations as to amounts or frequency.
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DIVIDENDS AND DISTRIBUTIONS
The Fund expects to declare and distribute all of its net investment
income to shareholders as dividends annually. Net capital gains, if any, will
be distributed annually. Both dividends and distributions, if any, are
automatically reinvested in your account at net asset value.
In addition, in order to satisfy certain distribution requirements of
the Tax Reform Act of 1986, the Fund may declare special year-end dividend and
capital gains distributions during November or December to shareholders of
record on a date in such month. Such distributions, if received by
shareholders by January 31, are deemed to have been paid by the Fund and
received by shareholders on the earlier of the date paid or December 31 of the
prior year.
Each class of the Fund will share proportionately in the investment
income and expenses of the Fund, except that the Class will not incur any
distribution fee under the Fund's 12-1 Plans, which apply to the REIT Fund A
Class, REIT Fund B Class and REIT Fund C Class.
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TAXES
The tax discussion set forth below is included for general
information only. Investors should consult their own tax advisers concerning
the federal, state, local or foreign tax consequences of an investment in the
Fund.
On August 5, 1997, President Clinton signed into law the Taxpayer
Relief Act of 1997 (the "1997 Act"). This new law makes sweeping changes in
the Internal Revenue Code (the "Code"). Because many of these changes are
complex, and only indirectly affect the Fund and its distributions to you,
they are discussed in Part B. Changes in the treatment of capital gains,
however, are discussed in this section.
The Fund has qualified, and intends to continue to qualify, as a
regulated investment company under Subchapter M of the Code. As such, the Fund
will not be subject to federal income tax, or to any excise tax, to the extent
its earnings are distributed as provided in the Code. The Fund intends to
distribute substantially all of its net investment income and net capital gains,
if any. Dividends from net investment income or net short-term capital gains
will be taxable to those investors who are subject to income taxes as ordinary
income, whether received in cash or in additional shares.
Distributions paid by the Fund from long-term capital gains, whether
received in cash or in additional shares, are taxable to those investors who
are subject to income taxes as long-term capital gains, regardless of the
length of time an investor has owned shares in the Fund. The Fund does not
seek to realize any particular amount of capital gains during a year; rather,
realized gains are a by-product of Fund management activities. Consequently,
capital gains distributions may be expected to vary considerably from year to
year. Also, for those investors subject to tax, if purchases of shares in the
Fund are made shortly before the record date for a capital gains distribution,
a portion of the investment will be returned as taxable distribution.
The Treatment of Capital Gain Distributions under the Taxpayer Relief Act of
1997
The 1997 Act creates a category of long-term capital gain for
individuals that will be taxed at new lower tax rates. For investors who are
in the 28% or higher federal income tax brackets, these gains will be taxed at
a maximum of 20%. For investors who are in the 15% federal income tax bracket,
these gains will be taxed at a maximum of 10%. Capital gain distributions will
qualify for these new maximum tax rates, depending on when the Fund's
securities were sold and how long they were held by the Fund before they were
sold. Investors who want more information on holding periods and other
qualifying rules relating to these new rates should review the expanded
discussion in Part B, or should contact their own tax advisers.
Pooled Trust, Inc. will advise you in its annual information reporting at
calendar year end of the amount of its capital gain distributions which will
qualify for these maximum federal tax rates.
Although dividends generally will be treated as distributed when
paid, dividends which are declared in October, November or December to
shareholders of record in such a month but which, for operational reasons, may
not be paid to the shareholder until the following January, will be treated
for tax purposes as if paid by the Fund and received by the shareholder on
December 31 of the calendar year in which they are declared.
The sale of shares of the Fund is a taxable event and may result in a
capital gain or loss to shareholders subject to tax. Capital gain or loss may
be realized from an ordinary redemption of shares or an exchange of shares
between the Fund and any other fund in the Delaware Group. Any loss incurred
on a sale or exchange of Fund shares that had been held for six months or less
will be treated as a long-term capital loss to the extent of
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capital gain dividends received with respect to such shares and will be
disallowed to the extent of exempt-interest dividends paid with respect to
such shares.
In addition to the federal taxes described above, shareholders may or
may not be subject to various state and local taxes. For example, distributions
of interest income and capital gains realized from certain types of U.S.
government securities may be exempt from state personal income taxes. Because
investors' state and local taxes may be different than the federal taxes
described above, investors should consult their own tax advisers.
Each year, Pooled Trust, Inc. will mail to you information on the tax
status of the Fund's dividends and distributions.
Pooled Trust, Inc. is required to withhold 31% of taxable dividends,
capital gains distributions, and redemptions paid to shareholders who have not
complied with IRS taxpayer identification regulations. You may avoid this
withholding requirement by certifying on your Investment Application your
proper Taxpayer Identification Number and by certifying that you are not
subject to backup withholding.
See Taxes in Part B for additional information on tax matters
relating to the Fund and its shareholders.
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CALCULATION OF NET ASSET VALUE PER SHARE
The net asset value ("NAV") per share is determined by dividing the
total market value of the Fund's investments and other assets, less any
liabilities, by the total outstanding shares of the Fund. NAV per share is
determined as of the close of regular trading on the New York Stock Exchange
(ordinarily, 4 p.m., Eastern time) on each day the Exchange is open for
business.
Securities listed on a U.S. securities exchange for which market
quotations are available are valued at the last quoted sale price on the day
the valuation is made. Price information on listed securities is taken from
the exchange where the security is primarily traded. Securities listed on a
foreign exchange are valued at the last quoted sale price available before the
time when net assets are valued. Unlisted securities and listed securities not
traded on the valuation date for which market quotations are readily available
are valued at a price that is considered to best represent fair value within a
range not in excess of the current asked price nor less than the current bid
prices. Domestic equity securities traded over-the-counter, domestic equity
securities which are not traded on the valuation date and U.S. government
securities are priced at the mean of the bid and ask price.
Bonds and other fixed-income securities are valued according to the
broadest and most representative market, which will ordinarily be the
over-the-counter market. In addition, bonds and other fixed-income securities
may be valued on the basis of prices provided by a pricing service when such
prices are believed to reflect the fair market value of such securities. The
prices provided by a pricing service are determined without regard to bid or
last sale prices but take into account institutional size trading in similar
groups of securities and any developments related to the specific securities.
Securities not priced in this manner are valued at the most recent quoted mean
price, or, when stock exchange valuations are used, at the latest quoted sale
price on the day of valuation. If there is no such reported sale, the latest
quoted mean price will be used. Securities with remaining maturities of 60
days or less are valued at amortized cost, if it approximates market value. In
the event that amortized cost does not approximate market value, market prices
as determined above will be used.
Exchange-traded options are valued at the last reported sales price
or, if no sales are reported, at the mean between the last reported bid and
ask prices. Non-exchange traded options are valued at fair value using a
mathematical model. Futures contracts are valued at their daily quoted
settlement price.
The value of other assets and securities for which no quotations are
readily available (including restricted securities) are determined in good
faith at fair value using methods determined by the Fund's Board of Directors.
The securities in which the Fund may invest from time to time may be listed
primarily on foreign exchanges which trade on days when the Exchange is closed
(such as Saturday). As a result, the net asset value of the Fund may be
significantly affected by such trading on days when shareholders have no
access to the Fund.
For purposes of calculating NAV, all assets and liabilities initially
expressed in foreign currencies will be converted into U.S. dollars at the
mean between the bid and ask price of such currencies against the U.S. dollar
as provided by an independent pricing service or any major bank, including the
Custodian Bank. Forward foreign currency contracts are valued at the mean
price of the contracts. Interpolated values will be derived when the
settlement date of the contract is on an interim period for which quotations
are not available.
The net asset values of all outstanding shares of each class of the
Fund will be computed on a pro-rata basis for each outstanding share based on
the proportionate participation in the Fund represented by the value of shares
of that class. All income earned and expenses incurred by the Fund will be
borne on a pro-rata basis by each outstanding share of a class, based on each
class' percentage in the Fund represented by the value of shares
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of such Classes, except that shares of the Class will not incur any of the
expenses under the Fund's 12b-1 Plans and Class A, B and C shares alone bear
only those 12b-1 Plan expenses payable under their respective Plans. Due to
the specific distribution expenses and other costs that will be allocable to
each class, the dividends paid to each class and the NAV per share of each
class of the Fund will vary.
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MANAGEMENT OF THE FUND
Directors
The business and affairs of the Fund are managed under the direction
of Pooled Trust, Inc.'s Board of Directors. Part B contains additional
information regarding Pooled Trust, Inc.'s directors and officers.
Investment Advisers
Delaware Investment Advisers (the "Manager"), a division of Delaware
Management Company, Inc. ("Delaware"), furnishes investment advisory services to
the Fund. Lincoln Investment Management, Inc. ("Lincoln"), a wholly owned
subsidiary of Lincoln National Corporation, acts as sub-adviser to the Manager
with respect to Fund. In its capacity as sub-adviser, Lincoln furnishes the
Manager with investment recommendations, asset allocation advice, research,
economic analysis and other investment services with respect to the securities
in which the Fund may invest.
Delaware and its predecessors have been managing the funds in the
Delaware Group since 1938. On October 31, 1997, Delaware and its affiliates
within the Delaware Group including, Delaware International Advisers Ltd., were
managing in the aggregate more than $38 billion in assets in the various
institutional or separately managed (approximately $22,496,609,000) and
investment company (approximately $16,012,252,000) accounts. Lincoln (formerly
named Lincoln National Investment Management Company) was incorporated in 1930.
Lincoln's primary activity is institutional fixed-income investment management
and consulting. Such activity includes fixed-income portfolios, private
placements, real estate debt and equity, and asset/liability management. As of
October 31, 1997, Lincoln had over $38 billion in assets under management.
Lincoln provides investment management services to Lincoln National Corporation,
its principal subsidiaries and affiliated registered investment companies, and
acts as investment adviser to other unaffiliated clients.
Delaware is an indirect, wholly owned subsidiary of Delaware Management
Holdings, Inc. ("DMH"). On April 3, 1995, a merger between DMH and a wholly
owned subsidiary of Lincoln National Corporation ("Lincoln National") was
completed. DMH and Delaware are now indirect, wholly owned subsidiaries, and
subject to the ultimate control, of Lincoln National. Lincoln, the sub-adviser
to the Manager with respect to the Fund, is a wholly owned subsidiary of Lincoln
National. Delaware and Lincoln may be deemed to be affiliated persons under the
1940 Act, as the two companies are each under the ultimate control of Lincoln
National. Lincoln National, with headquarters in Fort Wayne, Indiana, is a
diversified organization with operations in many aspects of the financial
services industry, including insurance and investment management. Delaware's
address is One Commerce Square, 2005 Market Street, Philadelphia, PA 19103.
Lincoln's address is 200 E. Berry Street, Fort Wayne, IN 46802.
The Manager has entered into an Investment Advisory Agreement with
Pooled Trust, Inc. on behalf of the Fund. The Manager has also entered into a
Sub-Advisory Agreement with Lincoln with respect to the Fund. Under that
Agreement, the Manager, subject to the control and supervision of Pooled
Trust, Inc.'s Board of Directors and in conformance with the stated investment
objectives and policies of the Fund, manages the investment and reinvestment
of the assets of the Fund. In this regard, it is their responsibility to make
investment decisions for the Fund.
As compensation for the services to be rendered under the advisory
agreement, the Manager is entitled to an annual advisory fee equal to 0.75% of
the Fund's average daily net assets. Lincoln receives 30% of the advisory fee
paid to the Manager for acting as sub-adviser to the Manager with respect to
the Fund. The directors of Pooled Trust, Inc. annually review fees paid to the
Manager and the Sub-Adviser. The Manager has
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elected voluntarily to waive that portion, if any, of the annual management
fees payable by the Fund and to pay expenses of the Fund to the extent
necessary to ensure that the Total Operating Expenses (exclusive of taxes,
interest, brokerage commissions and extraordinary expenses) of the Class do
not exceed 0.86%.
Babak Zenouzi has primary responsibility for making day-to-day
investment decisions for the Fund and has had such responsibility since its
inception. Mr. Zenouzi holds a BS in Finance and Economics from Babson College
in Wellesley, Massachusetts, and an MS in Finance from Boston College. Prior
to joining the Manager in 1992, he was with The Boston Company where he held
the positions of assistant vice president, senior financial analyst, financial
analyst and portfolio accountant.
Portfolio Trading Practices
The Fund normally will not invest for short-term trading purposes.
However, the Fund may sell securities without regard to the length of time
they have been held. The degree of portfolio activity will affect brokerage
costs of the Fund and may affect taxes payable by the Fund's shareholders to
the extent that net capital gains are realized. Given the Fund's investment
objective, it is anticipated that the portfolio turnover rate of the Fund will
not exceed 100%.
The Manager and the Sub-Adviser use their best efforts to obtain the
best available price and most favorable execution for portfolio transactions.
Orders may be placed with brokers or dealers who provide brokerage and
research services to the Manager or the Sub-Adviser or their advisory clients.
These services may be used by the Manager and the Sub-Adviser in servicing any
of their respective accounts. Subject to best price and execution, the Manager
and the Sub-Adviser may consider a broker/dealer's sales of shares of the
funds in the Delaware Group of funds in placing portfolio orders and may place
orders with broker/dealers that have agreed to defray certain expenses of such
funds, such as custodian fees.
Performance Information
From time to time, the Fund may quote total return performance of the
Class in advertising and other types of literature.
Total return will be based on a hypothetical $1,000 investment,
reflecting the reinvestment of all distributions. Each presentation will
include the average annual total return for one-, five- and ten-year or
life-of-fund periods, as relevant. The Fund may also advertise aggregate and
average total return information concerning the Class over additional periods
of time.
Because securities prices fluctuate, investment results of the Class
will fluctuate over time. Past performance is not a guarantee of future
results.
Statements and Confirmations
You will receive quarterly statements of your account summarizing all
transactions during the period. A confirmation statement will be sent
following all transactions other than those involving a reinvestment of
dividends. You should examine statements and confirmations immediately and
promptly report any discrepancy by calling your Client Services
Representative.
Financial Information about the Fund
Each fiscal year, you will receive an audited annual report and an
unaudited semi-annual report. These reports provide detailed information about
the Fund's investments and performance. Pooled Trust Inc.'s fiscal year ends
on October 31.
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Distribution and Service
The Distributor, Delaware Distributors, L.P., serves as the national
distributor for the Fund's shares under a Distribution Agreement dated October
14, 1997.
The Transfer Agent, Delaware Service Company, Inc., serves as the
shareholder servicing, dividend disbursing and transfer agent for the Fund
under a Shareholders Services Agreement. The Transfer Agent also provides
accounting services to the Fund pursuant to the terms of a separate Fund
Accounting Agreement. The directors annually review service fees paid to the
Transfer Agent. Certain recordkeeping services and other shareholder services
that otherwise would be performed by the Transfer Agent may be performed by
certain other entities and the Transfer Agent may elect to enter into an
agreement to pay such other entities for those services. In addition,
participant account maintenance fees may be assessed for certain recordkeeping
services provided as part of retirement plan and administration service
packages. These fees are based on the number of participants in the plan and
the various services selected by the employer. Fees will be quoted upon
request and are subject to change.
The directors annually review fees paid to the Distributor and the
Transfer Agent. The Distributor and the Transfer Agent are indirect, wholly
owned subsidiaries of DMH.
Expenses
The Fund is responsible for all of its own expenses other than those
borne by the Manager under the Investment Management Agreements and those
borne by the Distributor under the Distribution Agreement.
Shares
Pooled Trust, Inc. is an open-end management investment company. The
Fund's portfolio of assets is nondiversified as defined by the 1940 Act.
Commonly known as a mutual fund, Pooled Trust, Inc. was organized as a
Maryland corporation on May 30, 1991. In addition to the Fund, Pooled Trust,
Inc. presently offers 15 other series of shares. The Articles of
Incorporation permit the Fund to issue two billion shares of common stock with
$.01 par value and fifty million shares have been allocated to each series.
The Board of Directors has the power to designate one or more classes of
shares of common stock and to classify and reclassify any unissued shares with
respect to such classes.
The shares of each series, when issued, will be fully paid,
non-assessable, fully transferable and redeemable at the option of the holder.
The shares have no preference as to the conversion, exchange, dividends,
retirement or other features and have no preemptive rights. The shares of each
series have noncumulative voting rights, which means that the holders of more
than 50% of the shares voting for the election of directors can elect 100% of
the directors if they choose to do so. Shares of each series entitled to vote
on a matter will vote in the aggregate and not by series, except when the
matter to be voted upon affects only the interests of shareholders of a
particular Portfolio or class or when otherwise expressly required by law.
Under Maryland law, Pooled Trust, Inc. is not required, and does not intend,
to hold annual meetings of its shareholders unless, under certain
circumstances, it is required to do so under the 1940 Act.
In addition to the Class, the Fund also offers REIT Fund A Class, REIT
Fund B Class, REIT Fund C Class and The Real Estate Investment Trust Portfolio
class. Shares of each class represent proportionate interests in the assets of
the Fund and have the same voting and other rights and preferences as the
other classes of the Fund, except that shares of the Class are not subject to,
and may not vote on matters affecting, the Fund's Distribution Plans under
Rule 12b-1 relating to REIT Fund A Class, REIT Fund B Class and REIT Fund C
Class.
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Separate and General Account assets of The Lincoln National Life Insurance
Company ("LNLIC") made an investment in The Real Estate Investment Trust
Portfolio, which could result in LNLIC owning approximately 100% of the
outstanding shares of the Fund. Subject to certain limited exceptions, there
would be no limitation on LNLIC's ability to redeem its shares of the Fund and
it may elect to do so at any time.
Litigation
The Fund is not involved in any litigation.
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ADDITIONAL INVESTMENT INFORMATION ON POLICIES AND RISK CONSIDERATIONS
U.S. Government Securities
The U.S. government securities in which the Fund may invest for
temporary purposes and otherwise (see Investment Objective, Policies and Risk
Factors), include a variety of securities which are issued or guaranteed as to
the payment of principal and interest by the U.S. government, and by various
agencies or instrumentalities which have been established or sponsored by the
U.S. government.
U.S. Treasury securities are backed by the "full faith and credit" of
the United States. Securities issued or guaranteed by federal agencies and
U.S. government sponsored instrumentalities may or may not be backed by the
full faith and credit of the United States. In the case of securities not
backed by the full faith and credit of the United States, investors in such
securities look principally to the agency or instrumentality issuing or
guaranteeing the obligation for ultimate repayment, and may not be able to
assert a claim against the United States itself in the event the agency or
instrumentality does not meet its commitment. Agencies which are backed by the
full faith and credit of the United States include the Export-Import Bank,
Farmers Home Administration, Federal Financing Bank, and others. Certain
agencies and instrumentalities, such as the Government National Mortgage
Association ("GNMA"), are, in effect, backed by the full faith and credit of
the United States through provisions in their charters that they may make
"indefinite and unlimited" drawings on the Treasury, if needed to service its
debt. Debt from certain other agencies and instrumentalities, including the
Federal Home Loan Bank and Federal National Mortgage Association, are not
guaranteed by the United States, but those institutions are protected by the
discretionary authority for the U.S. Treasury to purchase certain amounts of
their securities to assist the institutions in meeting their debt obligations.
Finally, other agencies and instrumentalities, such as the Farm Credit System
and the Federal Home Loan Mortgage Corporation, are federally chartered
institutions under U.S. government supervision, but their debt securities are
backed only by the creditworthiness of those institutions, not the U.S.
government.
Some of the U.S. government agencies that issue or guarantee
securities include the Export-Import Bank of the United States, Farmers Home
Administration, Federal Housing Administration, Maritime Administration, Small
Business Administration, and the Tennessee Valley Authority.
An instrumentality of a U.S. government agency is a government agency
organized under Federal charter with government supervision. Instrumentalities
issuing or guaranteeing securities include, among others, Federal Home Loan
Banks, the Federal Land Banks, Central Bank for Cooperatives, Federal
Immediate Credit Banks and the Federal National Mortgage Association.
Mortgage-Backed Securities
The Fund may invest in mortgage-backed securities issued or guaranteed
by the U.S. government, its agencies or instrumentalities or by government
sponsored corporations. Those securities include, but are not limited to, GNMA
certificates. Such securities differ from other fixed-income securities in
that principal is paid back by the borrower over the length of the loan rather
than returned in a lump sum at maturity. When prevailing interest rates rise,
the value of a GNMA security may decrease as do other debt securities. When
prevailing interest rates decline, however, the value of GNMA securities may
not rise on a comparable basis with other debt securities because of the
prepayment feature of GNMA securities. Additionally, if a GNMA certificate is
purchased at a premium above its principal value because its fixed rate of
interest exceeds the prevailing level of yields, the decline in price to par
may result in a loss of the premium in the event of prepayment. Funds received
from prepayments may be reinvested at the prevailing interest rates which may
be lower than the rate of interest that had previously been earned.
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The Fund also may invest in collateralized mortgage obligations
("CMOs") and real estate mortgage investment conduits ("REMICs"). CMOs are
debt securities issued by U.S. government agencies or by financial
institutions and other mortgage lenders and collateralized by a pool of
mortgages held under an indenture. CMOs are issued in a number of classes or
series with different maturities. The classes or series are retired in
sequence as the underlying mortgages are repaid. REMICs, which were authorized
under the Tax Reform Act of 1986, are private entities formed for the purpose
of holding a fixed pool of mortgages secured by an interest in real property.
REMICs are similar to CMOs in that they issue multiple classes of securities.
To the extent any privately-issued CMOs or REMICs in which the Fund may invest
are considered by the U.S. Securities and Exchange Commission (the
"Commission") to be investment companies, the Fund will limit its investments
in such securities in a manner consistent with the provisions of the 1940 Act.
The mortgages backing these securities include conventional 30-year
fixed rate mortgages, graduated payment mortgages and adjustable rate
mortgages. These mortgages may be supported by various types of insurance, may
be backed by GNMA certificates or other mortgage pass-throughs issued or
guaranteed by the U.S. government, its agencies or instrumentalities. However,
the guarantees do not extend to the mortgage-backed securities' value, which
is likely to vary inversely with fluctuations in interest rates. These
certificates are in most cases "pass-through" instruments, through which the
holder receives a share of all interest and principal payments from the
mortgages underlying the certificate. Because the prepayment characteristics
of the underlying mortgages vary, it is not possible to predict accurately the
average life or realized yield of a particular issue of pass-through
certificates. During periods of declining interest rates, prepayment of
mortgages underlying mortgage-backed securities can be expected to accelerate.
When the mortgage obligations are prepaid, the Fund may reinvest the prepaid
amounts in securities, the yield of which reflects interest rates prevailing
at the time. Moreover, prepayments of mortgages which underlie securities
purchased at a premium could result in capital losses.
Certain CMOs and REMICs may have variable or floating interest rates
and others may be stripped. Stripped mortgage securities have greater market
volatility than other types of mortgage securities in which the Portfolios may
invest.
Stripped mortgage securities are usually structured with two classes
that receive different proportions of the interest and principal distributions
on a pool of mortgage assets. A common type of stripped mortgage security will
have one class receiving some of the interest and most of the principal from
the mortgage assets, while the other class will receive most of the interest
and the remainder of the principal. In the most extreme case, one class will
receive all of the interest (the "interest-only" class), while the other class
will receive all of the principal (the "principal-only" class). The yield to
maturity on an interest-only class is extremely sensitive not only to changes
in prevailing interest rates but also to the rate of principal payments
(including prepayments) on the related underlying mortgage assets, and a rapid
rate of principal payments may have a material adverse effect on the Fund's
yield to maturity. If the underlying mortgage assets experience greater than
anticipated prepayments of principal, the Fund may fail to fully recoup its
initial investment in these securities even if the securities are rated in the
highest rating categories.
Although stripped mortgage securities are purchased and sold by
institutional investors through several investment banking firms acting as
brokers or dealers, these securities were only recently developed. As a
result, established trading markets have not yet been fully developed and,
accordingly, these securities are generally illiquid and to such extent,
together with any other illiquid investments, will not exceed 10% of a
Portfolio's net assets.
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CMOs and REMICs issued by private entities are not government
securities and are not directly guaranteed by any government agency. They are
secured by the underlying collateral of the private issuer. The Fund may
invest in such private-backed securities but, the Fund will do so (i) only if
the securities are 100% collateralized at the time of issuance by securities
issued or guaranteed by the U.S. government, its agencies or instrumentalities
and (ii) currently, only if they are rated at the time of purchase in the two
highest grades by a nationally-recognized statistical rating agency.
Short-Term Investments
The short-term investments in which the Fund may invest consistent
with the limits recited above (see Investment Objective, Policies and Risk
Factors) are:
(1) Time deposits, certificates of deposit (including marketable
variable rate certificates of deposit) and bankers' acceptances issued by a
U.S. commercial bank. Time deposits are non-negotiable deposits maintained in
a banking institution for a specified period of time at a stated interest
rate. Time deposits maturing in more than seven days will not be purchased by
the Fund, and time deposits maturing from two business days through seven
calendar days will not exceed 15% of the total assets of the Fund.
Certificates of deposit are negotiable short-term obligations issued by
commercial banks against funds deposited in the issuing institution. Variable
rate certificates of deposit are certificates of deposit on which the interest
rate is periodically adjusted prior to their stated maturity based upon a
specified market rate. A bankers' acceptance is a time draft drawn on a
commercial bank by a borrower usually in connection with an international
commercial transaction (to finance the import, export, transfer or storage of
goods).
The Fund will not invest in any security issued by a commercial bank
unless (i) the bank has total assets of at least $1 billion or, in the case of
a bank which does not have total assets of at least $1 billion, the aggregate
investment made in any one such bank is limited to $100,000 and the principal
amount of such investment is insured in full by the Federal Deposit Insurance
Corporation, (ii) it is a member of the Federal Deposit Insurance Corporation,
and (iii) the bank or its securities have received the highest quality rating
by a nationally-recognized statistical rating organization;
(2) Commercial paper with the highest quality rating by a
nationally-recognized statistical rating organization (e.g., A-1 by S&P or
Prime-1 by Moody's) or, if not so rated, of comparable quality as determined
by the Manager;
(3) Short-term corporate obligations with the highest quality rating
by a nationally-recognized statistical rating organization (e.g., AAA by S&P
or Aaa by Moody's) or, if not so rated, of comparable quality as determined by
the Manager;
(4) U.S. government securities (see U.S. Government Securities); and
(5) Repurchase agreements collateralized by securities listed above.
When-Issued and Delayed Delivery Securities
The Fund may purchase securities on a when-issued or delayed delivery
basis. In such transactions, instruments are purchased with payment and
delivery taking place in the future in order to secure what is considered to
be an advantageous yield or price at the time of the transaction. Delivery of
and payment for these securities may take as long as a month or more after the
date of the purchase commitment. The Fund will maintain with its Custodian
Bank a separate account with a segregated portfolio of securities in an amount
at least equal to these commitments. The payment obligation and the interest
rates that will be received are each
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fixed at the time the Fund enters into the commitment and no interest accrues
to the Fund until settlement. Thus, it is possible that the market value at
the time of settlement could be higher or lower than the purchase price if the
general level of interest rates has changed. It is a current policy of the
Fund not to enter into when-issued commitments exceeding in the aggregate 15%
of the market value of the Fund's total assets less liabilities other than the
obligations created by these commitments.
Repurchase Agreements
The Fund may enter into repurchase agreements with brokers, dealers or
banks deemed to be creditworthy by the Manager under guidelines of Pooled
Trust, Inc.'s directors. In a repurchase agreement, a Portfolio buys
securities from a seller that has agreed to repurchase it at a mutually agreed
upon date and price, reflecting the interest rate effective for the term of
the agreement. The term of these agreements is usually from overnight to one
week and never exceeds one year. Not more than 15% of the Fund's assets may be
invested in repurchase agreements having a maturity in excess of seven days.
Repurchase agreements may be viewed as a fully collateralized loan of money by
the Fund to the seller. The Fund always receives securities as collateral with
a market value at least equal to the purchase price and this value is
maintained during the term of the agreement. If the seller defaults and the
collateral value declines, the Fund might incur a loss. If bankruptcy
proceedings are commenced with respect to the seller, the Fund's realization
upon the collateral may be delayed or limited. The Fund may invest cash
balances in a joint repurchase agreement in accordance with an Order the
Delaware Group has obtained from the Commission under Section 17(d) of the
1940 Act.
Securities Lending Activities
The Fund may loan up to 25% of its assets to qualified broker/dealers
or institutional investors for their use relating to short sales or other
security transactions.
The major risk to which the Fund would be exposed on a loan
transaction is the risk that the borrower would go bankrupt at a time when the
value of the security goes up. Therefore, the Fund will only enter into loan
arrangements after a review of all pertinent facts by the Manager, subject to
overall supervision by the Board of Directors, including the creditworthiness
of the borrowing broker, dealer or institution and then only if the
consideration to be received from such loans would justify the risk.
Creditworthiness will be monitored on an ongoing basis by the investment
adviser.
Borrowing from Banks
The Fund may borrow money as a temporary measure or to facilitate
redemptions. The Fund has no intention of increasing its net income through
borrowing. Any borrowing will be done from a bank and, consistent with
Commission rules, immediately after any borrowing is in an amount which
exceeds 5% of its net assets, there must be asset coverage of at least 300%.
In the event the asset coverage declines below 300%, the Fund would take steps
to reduce the amount of its borrowings so that asset coverage would equal at
least 300%. Securities will not be purchased while the Fund has an outstanding
borrowing.
Foreign Investment Information
Up to 10% of the total assets of the Fund may be invested in
securities of foreign issuers and foreign currency. The Fund has the right to
purchase securities in any developed, underdeveloped or emerging country.
Investors should consider carefully the substantial risks involved in
investing in securities issued by companies and governments of foreign
nations. These risks are in addition to the usual risks inherent in domestic
investments. There is the possibility of expropriation, nationalization or
confiscatory taxation, taxation of income earned in foreign nations or other
taxes imposed with respect to investments in foreign nations, foreign exchange
control (which may include suspension of the ability to transfer currency from
a given country),
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default in foreign government securities, political or social instability or
diplomatic developments which could affect investments in securities of
issuers in those nations.
In addition, in many countries, there is substantially less publicly
available information about issuers than is available in reports about
companies in the United States and this information tends to be of a lesser
quality. Foreign companies are not subject to uniform accounting, auditing and
financial reporting standards, and auditing practices and requirements may not
be comparable to those applicable to United States companies. In particular,
the assets and profits appearing on the financial statements of a developing
or emerging country issuer may not reflect its financial position or results
of operations in the way they would be reflected had the financial statements
been prepared in accordance with United States generally accepted accounting
principles. Also, for an issuer that keeps accounting records in local
currency, inflation accounting rules may require for both tax and accounting
purposes, that certain assets and liabilities be restated on the issuer's
balance sheet in order to express items in terms of currency or constant
purchasing power. Inflation accounting may indirectly generate losses or
profits. Consequently, financial data may be materially affected by
restatements for inflation and may not accurately reflect the real condition
of those issuers and securities markets.
It is also expected that the expenses for custodial arrangements of
the Fund's foreign securities will be somewhat greater than the expenses for
the custodial arrangements for U.S. securities of equal value. Dividends and
interest paid by foreign issuers may be subject to withholding and other
foreign taxes. Although in some countries a portion of these taxes is
recoverable, the non-recovered portion of foreign withholding taxes will
reduce the income the Fund receives from the companies comprising the Fund's
investments.
Further, the Fund may encounter difficulty or be unable to pursue
legal remedies and obtain judgments in foreign courts. Commission rates on
securities transactions in foreign countries, which are sometimes fixed rather
than subject to negotiation as in the United States, are likely to be higher.
Further, the settlement period of securities transactions in foreign markets
may be longer than in domestic markets, and may be subject to administrative
uncertainties. In many foreign countries, there is less government supervision
and regulation of business and industry practices, stock exchanges, brokers
and listed companies than in the United States, and capital requirements for
brokerage firms are generally lower. The foreign securities markets of many of
the countries in which the Fund may invest may also be smaller, less liquid
and subject to greater price volatility than those in the United States.
Compared to the United States and other developed countries, emerging
countries may have volatile social conditions, relatively unstable governments
and political systems, economies based on only a few industries and economic
structures that are less diverse and mature, and securities markets that trade
a small number of securities, which can result in a low or nonexistent volume
of trading. Prices in these securities markets tend to be volatile and, in the
past, securities in these countries have offered greater potential for gain
(as well as loss) than securities of companies located in developed countries.
Until recently, there has been an absence of a capital market structure or
market-oriented economy in certain emerging countries. Further, investments
and opportunities for investments by foreign investors are subject to a
variety of national policies and restrictions in many emerging countries.
These restrictions may take the form of prior governmental approval, limits on
the amount or type of securities held by foreigners, limits on the types of
companies in which foreigners may invest and prohibitions on foreign
investments in issuers or industries deemed sensitive to national interests.
Additional restrictions may be imposed at any time by these or other countries
in which the Fund invests. Also, the repatriation of both investment income
and capital from several foreign countries is restricted and controlled under
certain regulations, including, in some cases, the need for certain
governmental consents. Although these restrictions may in the future make it
undesirable to invest in emerging countries, the Manager does not believe that
any current repatriation restrictions would affect their decision to invest in
such
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countries. Countries such as those in which the Fund may invest have
historically experienced and may continue to experience, substantial, and in
some periods extremely high rates of inflation for many years, high interest
rates, exchange rate fluctuations or currency depreciation, large amounts of
external debt, balance of payments and trade difficulties and extreme poverty
and unemployment. Other factors which may influence the ability or willingness
to service debt include, but are not limited to, a country's cash flow
situation, the availability of sufficient foreign exchange on the date a
payment is due, the relative size of its debt service burden to the economy as
a whole, its government's policy towards the International Monetary Fund, the
World Bank and other international agencies and the political constraints to
which a government debtor may be subject.
With respect to investment in debt issues of foreign governments, the
ability of a foreign government or government-related issuer to make timely
and ultimate payments on its external debt obligations will also be strongly
influenced by the issuer's balance of payments, including export performance,
its access to international credits and investments, fluctuations in interest
rates and the extent of its foreign reserves. A country whose exports are
concentrated in a few commodities or whose economy depends on certain
strategic imports could be vulnerable to fluctuations in international prices
of these commodities or imports. To the extent that a country receives payment
for its exports in currencies other than dollars, its ability to make debt
payments denominated in dollars could be adversely affected. If a foreign
government or government-related issuer cannot generate sufficient earnings
from foreign trade to service its external debt, it may need to depend on
continuing loans and aid from foreign governments, commercial banks and
multilateral organizations, and inflows of foreign investment. The commitment
on the part of these foreign governments, multilateral organizations and
others to make such disbursements may be conditioned on the government's
implementation of economic reforms and/or economic performance and the timely
service of its obligations. Failure to implement such reforms, achieve such
levels of economic performance or repay principal or interest when due may
curtail the willingness of such third parties to lend funds, which may further
impair the issuer's ability or willingness to service its debts in a timely
manner. The cost of servicing external debt will also generally be adversely
affected by rising international interest rates because many external debt
obligations bear interest at rates which are adjusted based upon international
interest rates. The ability to service external debt will also depend on the
level of the relevant government's international currency reserves and its
access to foreign exchange. Currency devaluations may affect the ability of a
government issuer to obtain sufficient foreign exchange to service its
external debt.
As a result of the foregoing, a foreign governmental issuer may
default on its obligations. If such a default occurs, the Fund may have
limited effective legal recourse against the issuer and/or guarantor. Remedies
must, in some cases, be pursued in the courts of the defaulting party itself,
and the ability of the holder of foreign government and government-related
debt securities to obtain recourse may be subject to the political climate in
the relevant country. In addition, no assurance can be given that the holders
of commercial bank debt will not contest payments to the holders of other
foreign government and government-related debt obligations in the event of
default under their commercial bank loan agreements.
With respect to forward foreign currency exchange, the precise
matching of forward contract amounts and the value of the securities involved
is generally not possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the value of
those securities between the date the forward contract is entered into and the
date it matures. The projection of short-term currency strategy is highly
uncertain. See Forward Foreign Currency Exchange Contracts, below.
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Forward Foreign Currency Exchange Contracts
As noted above, the foreign investments made by the Fund present
currency considerations which pose special risks. The Manager uses a
purchasing power parity approach to evaluate currency risk. A purchasing power
parity approach attempts to identify the amount of goods and services that a
dollar will buy in the United States and compares that to the amount of a
foreign currency required to buy the same amount of goods and services in
another country. When the dollar buys less abroad, the foreign currency may be
considered to be overvalued. When the dollar buys more abroad, the foreign
currency may be considered to be undervalued. Eventually, currencies should
trade at levels that should make it possible for the dollar to buy the same
amount of goods and services overseas as in the United States.
Although the Fund values its assets daily in terms of U.S. dollars, it
does not intend to convert its holdings of foreign currencies into U.S.
dollars on a daily basis. The Fund will, however, from time to time, purchase
or sell foreign currencies and/or engage in forward foreign currency
transactions in order to expedite settlement of transactions and to minimize
currency value fluctuations. The Fund may conduct its foreign currency
exchange transactions on a spot (i.e., cash) basis at the spot rate prevailing
in the foreign currency exchange market or through entering into contracts to
purchase or sell foreign currencies at a future date (i.e., a "forward foreign
currency" contract or "forward" contract). The Fund will convert currency on a
spot basis from time to time, and investors should be aware of the costs of
currency conversion.
A forward contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days from
the date of the contract, agreed upon by the parties, at a price set at the
time of the contract.
The Fund may enter into forward contracts to "lock in" the price of a
security it has agreed to purchase or sell, in terms of U.S. dollars or other
currencies in which the transaction will be consummated. By entering into a
forward contract for the purchase or sale, for a fixed amount of U.S. dollars
or foreign currency, of the amount of foreign currency involved in the
underlying security transaction, the Fund will be able to protect itself
against a possible loss resulting from an adverse change in currency exchange
rates during the period between the date the security is purchased or sold and
the date on which payment is made or received.
For example, when the Manager believes that the currency of a
particular foreign country may suffer a significant decline against the U.S.
dollar or against another currency, the Fund may enter into a forward contract
to sell, for a fixed amount of U.S. dollars or other appropriate currency, the
amount of foreign currency approximating the value of some or all of the
Fund's securities denominated in such foreign currency. The Fund will not
enter into forward contracts or maintain a net exposure to such contracts
where the consummation of the contracts would obligate the Portfolio to
deliver an amount of foreign currency in excess of the value of the Fund's
securities or other assets denominated in that currency.
The Fund may enter into forward contracts to hedge the currency risk
associated with the purchase of individual securities denominated in
particular currencies. In the alternative, the Fund may also engage in
currency "cross hedging" when, in the opinion of the Manager, as appropriate,
the historical relationship among foreign currencies suggests that the Fund
may achieve the same protection for a foreign security at reduced cost and/or
administrative burden through the use of a forward contract relating to a
currency other than the U.S. dollar or the foreign currency in which the
security is denominated.
At the maturity of a forward contract, the Fund may either sell the
portfolio security and make delivery of the foreign currency, or it may retain
the security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract with the same currency trader
obligating it to purchase,
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on the same maturity date, the same amount of the foreign currency. The Fund
may realize gain or loss from currency transactions.
With respect to forward foreign currency contracts, the precise
matching of forward contract amounts and the value of the securities involved
is generally not possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the value of
those securities between the date the forward contract is entered into and the
date it matures. The projection of short-term currency strategy is highly
uncertain.
It is impossible to forecast the market value of the Fund securities
at the expiration of the contract. Accordingly, it may be necessary for the
Fund to purchase additional foreign currency on the spot market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a decision
is made to sell the security and make delivery of the foreign currency.
Conversely, it may be necessary to sell on the spot market some of the foreign
currency received upon the sale of a security if its market value exceeds the
amount of foreign currency the Fund is obligated to deliver.
Futures Contracts and Options on Futures Contracts
In order to remain fully invested, to facilitate investments in equity
securities and to reduce transaction costs, the Fund may, to a limited extent,
enter into futures contracts, purchase or sell options on futures contracts
and engage in certain transactions in options on securities, and may enter
into closing transactions with respect to such activities. The Fund will only
enter into these transactions for hedging purposes if it is consistent with
the Fund's investment objectives and policies and the Fund will not engage in
such transactions to the extent that obligations relating to futures
contracts, options on futures contracts and options on securities (see Futures
Contracts and Options on Futures Contracts --Options on Securities), in the
aggregate, exceed 25% of the Fund's assets.
The Fund may enter into contracts for the purchase or sale for future
delivery of securities. When a futures contract is sold, the Fund incur a
contractual obligation to deliver the securities underlying the contract at a
specified price on a specified date during a specified future month. A
purchase of a futures contract means the acquisition of a contractual right to
obtain delivery to the Fund of the securities called for by the contract at a
specified price during a specified future month. Because futures contracts
require only a small initial margin deposit, the Fund would then be able to
keep a cash reserve applicable to meet potential redemptions while at the same
time being effectively fully invested.
The Fund may also purchase and write options to buy or sell futures
contracts. Options on futures are similar to options except that options on
futures give the purchaser the right, in return for the premium paid, to
assume a position in a futures contract, rather than actually to purchase or
sell the futures contract, at a specified exercise price at any time during
the period of the option. The Fund will not enter into futures contracts and
options thereon to the extent that more than 5% of its assets are required as
futures contract margin deposits and premiums on options and only to the
extent that obligations under such futures contracts and options thereon would
not exceed 20% of the Fund's total assets. In the case of an option that is
in-the-money at the time of purchase, the in-the-money amount may be excluded
in calculating the 5%.
To the extent that interest or exchange rates move in an unexpected
direction, the Fund may not achieve the anticipated benefits of investing in
futures contracts and options thereon, or may realize a loss. To the extent
that the Fund purchases an option on a futures contract and fails to exercise
the option prior to the
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exercise date, it will suffer a loss of the premium paid. Further, the
possible lack of a secondary market would prevent the Fund from closing out
its positions relating to futures.
Options
Options on Securities
The Fund may write covered call options on U.S. securities, purchase
call options on such securities and enter into closing transactions related
thereto. The Fund may also purchase put options on U.S. securities, may write
secured put options on such securities and enter into closing transactions
related thereto.
A covered call option obligates the writer, in return for the premium
received, to sell one of its securities to the purchaser of the option for an
agreed price up to an agreed date. The advantage is that the writer receives
premium income and the purchaser may hedge against an increase in the price of
securities it ultimately wishes to buy. The Fund will only purchase call
options to the extent that premiums paid on all outstanding call options do
not exceed 2% of the Fund's total assets.
A put option obligates the writer, in return for the premium received,
to buy the security underlying the option at the exercise price during the
option period, and the purchaser of the option has the right to sell the
security to the writer. The Fund will only write put options on a secured
basis which means that the Portfolio will maintain, in a segregated account
with its Custodian Bank, cash or U.S. government securities in an amount not
less than the exercise price of the option at all times during the option
period. The Fund will only purchase put options if the Portfolio owns the
security covered by the put option at the time of purchase and to the extent
that the premiums on all outstanding put options do not exceed 2% of the
Fund's total assets. The advantage is that the writer receives premium income
while the purchaser can be protected should the market value of the security
decline.
Closing transactions essentially let the Fund offset put options or
call options prior to exercise or expiration. If the Fund cannot effect
closing transactions, it may have to hold a security it would otherwise sell
or deliver a security it might want to hold.
The Fund may use both exchange-traded and over-the-counter options.
Certain over-the-counter options may be illiquid. The Fund will only invest in
such options to the extent consistent with their 15% limit on investments in
illiquid securities.
With respect to writing covered call options, the Portfolios may lose
the potential market appreciation of the securities subject to the option, if
the Manager's judgment is wrong and the price of the security moves in the
opposite direction from what was anticipated. In purchasing put and call
options, the premium paid by the Fund plus any transaction costs will reduce
any benefit realized by the Fund upon exercise of the option. When writing put
options, the Fund may be required, when the put is exercised, to purchase
securities at higher prices than current market prices.
Risks of Transactions in Options, Futures and Forward Contracts
The use of futures contracts, options on futures contracts, forward
contracts and certain options for hedging and other non-speculative purposes
as described above involves certain risks. For example, a lack of correlation
between price changes of an option or futures contract and the assets being
hedged could render the Fund's hedging strategy unsuccessful and could result
in losses. The same results could occur if movements of foreign currencies do
not correlate as expected by the investment adviser at a time when the Fund is
using a hedging instrument denominated in one foreign currency to protect the
value of a security denominated in a
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second foreign currency against changes caused by fluctuations in the exchange
rate for the dollar and the second currency. If the direction of securities
prices, interest rates or foreign currency prices is incorrectly predicted,
the Fund will be in a worse position than if such transactions had not been
entered into. In addition, since there can be no assurance that a liquid
secondary market will exist for any contract purchased or sold, the Fund may
be required to maintain a position (and in the case of written options may be
required to continue to hold the securities used as cover) until exercise or
expiration, which could result in losses. Further, options and futures
contracts on foreign currencies, and forward contracts, entail particular
risks related to conditions affecting the underlying currency.
Over-the-counter transactions in options and forward contracts also involve
risks arising from the lack of an organized exchange trading environment.
Restricted/Illiquid Securities
The Fund may invest in restricted securities, including securities
eligible for resale without registration pursuant to Rule 144A ("Rule 144A
Securities") under the Securities Act of 1933 ("1933 Act"). Rule 144A exempts
many privately placed and legally restricted securities from the registration
requirements of the 1933 Act and permits such securities to be freely traded
among certain institutional buyers such as the Fund.
The Fund may invest no more than 15% of the value of its net assets in
illiquid securities. Illiquid securities, for purposes of this policy, include
repurchase agreements maturing in more than seven days.
While maintaining oversight, the Board of Directors has delegated to
the Manager the day-to-day functions of determining whether or not individual
Rule 144A Securities are liquid for purposes of the Fund's limitation on
investments in illiquid assets. The Board has instructed the Manager to
consider the following factors in determining the liquidity of a Rule 144A
Security: (i) the frequency of trades and trading volume for the security;
(ii) whether at least three dealers are willing to purchase or sell the
security and the number of potential purchasers; (iii) whether at least two
dealers are making a market in the security; and (iv) the nature of the
security and the nature of the marketplace trades (e.g., the time needed to
dispose of the security, the method of soliciting offers, and the mechanics of
transfer).
If the Manager determines that a Rule 144A Security which was
previously determined to be liquid is no longer liquid and, as a result, the
Fund's holdings of illiquid securities exceed the Fund's 15% limit on
investment in such securities, the investment adviser will determine what
action shall be taken to ensure that the Fund continues to adhere to such
limitation.
Convertible, Debt and Non-Traditional Equity Securities
A portion of the Fund's assets may be invested in convertible
securities of issuers in the real estate industry. A convertible security is a
security which may be converted at a stated price within a specified period of
time into a certain quantity of the common stock of the same or a different
issuer. Convertible and debt securities are senior to common stocks in a
corporation's capital structure, although convertible securities are usually
subordinated to similar nonconvertible securities. Convertible and debt
securities provide a fixed-income stream and the opportunity, through its
conversion feature, to participate in the capital appreciation resulting from
a market price advance in the convertible security's underlying common stock.
Just as with debt securities, convertible securities tend to increase in
market value when interest rates decline and tend to decrease in value when
interest rates rise. However, the price of a convertible security is also
influenced by the market value of the security's underlying common stock and
tends to increase as the market value of the underlying stock rises, whereas
it tends to decrease as the market value of the underlying stock declines.
Convertible and debt securities acquired by the Fund may be rated below
investment grade, or unrated. These lower rated convertible and debt
securities are subject to credit risk considerations substantially similar to
such considerations affecting high risk, high-yield bonds, commonly referred
to as "junk bonds."
-34-
<PAGE>
The Fund may invest in convertible preferred stocks that offer
enhanced yield features, such as Preferred Equity Redemption Cumulative Stock
("PERCS"), which provide an investor, such as the Fund, with the opportunity
to earn higher dividend income than is available on a company's common stock.
A PERCS is a preferred stock which generally features a mandatory conversion
date, as well as a capital appreciation limit which is usually expressed in
terms of a stated price. Upon the conversion date, most PERCS convert into
common stock of the issuer (PERCS are generally not convertible into cash at
maturity). Under a typical arrangement, if after a predetermined number of
years the issuer's common stock is trading at a price below that set by the
capital appreciation limit, each PERCS would convert to one share of common
stock. If, however, the issuer's common stock is trading at a price above that
set by the capital appreciation limit, the holder of the PERCS would receive
less than one full share of common stock. The amount of that fractional share
of common stock received by the PERCS holder is determined by dividing the
price set by the capital appreciation limit of the PERCS by the market price
of the issuer's common stock. PERCS can be called at any time prior to
maturity, and hence do not provide call protection. However, if called early,
the issuer may pay a call premium over the market price to the investor. This
call premium declines at a preset rate daily, up to the maturity date of the
PERCS.
The Fund may also invest in other enhanced convertible securities.
These include but are not limited to ACES (Automatically Convertible Equity
Securities), PEPS (Participating Equity Preferred Stock), PRIDES (Preferred
Redeemable Increased Dividend Equity Securities), SAILS (Stock Appreciation
Income Linked Securities), TECONS (Term Convertible Notes), QICS (Quarterly
Income Cumulative Securities) and DECS (Dividend Enhanced Convertible
Securities). ACES, PEPS, PRIDES, SAILS, TECONS, QICS and DECS all have the
following features: they are company-issued convertible preferred stock;
unlike PERCS, they do not have capital appreciation limits; they seek to
provide the investor with high current income, with some prospect of future
capital appreciation; they are typically issued with three to four-year
maturities; they typically have some built-in call protection for the first
two to three years; investors have the right to convert them into shares of
common stock at a preset conversion ratio or hold them until maturity; and
upon maturity, they will automatically convert to either cash or a specified
number of shares of common stock.
REITS
The Fund's investment in REITs presents certain further risks that are
unique and in addition to the risks associated with investing in the real
estate industry in general. Equity REITs may be affected by changes in the
value of the underlying property owned by the REITs, while mortgage REITs may
be affected by the quality of any credit extended. REITs are dependent on
management skills, are not diversified, and are subject to the risks of
financing projects. REITs whose underlying assets include long-term health
care properties, such as nursing, retirement and assisted living homes, may be
impacted by federal regulations concerning the health care industry.
REITs (especially mortgage REITs) are also subject to interest rate
risks - when interest rates decline, the value of a REIT's investment in fixed
rate obligations can be expected to rise. Conversely, when interest rates
rise, the value of a REIT's investment in fixed rate obligations can be
expected to decline. In contrast, as interest rates on adjustable rate
mortgage loans are reset periodically, yields on a REIT's investments in such
loans will gradually align themselves to reflect changes in market interest
rates, causing the value of such investments to fluctuate less dramatically in
response to interest rate fluctuations than would investments in fixed rate
obligations.
REITs may have limited financial resources, may trade less frequently
and in a limited volume, and may be subject to more abrupt or erratic price
movements than other securities.
-35-
<PAGE>
Depositary Receipts
The Fund may invest in sponsored and unsponsored American Depositary
Receipts ("ADRs") that are actively traded in the United States. ADRs are
receipts typically issued by a U.S. bank or trust company which evidence
ownership of underlying securities issued by a foreign corporation.
"Sponsored" ADRs are issued jointly by the issuer of the underlying security
and a Depositary, and "unsponsored" ADRs are issued without the participation
of the issuer of the deposited security. Holders of unsponsored ADRs generally
bear all the costs of such facilities and the Depositary of an unsponsored ADR
facility frequently is under no obligation to distribute shareholder
communications received from the issuer of the deposited security or to pass
through voting rights to the holders of such receipts in respect of the
deposited securities. Therefore, there may not be a correlation between
information concerning the issuer of the security and the market value of an
unsponsored ADR. ADRs may be listed on a national securities exchange or may
be traded in the over-the-counter market. ADR prices are denominated in U.S.
dollars although the underlying securities are denominated in a foreign
currency. Investments in ADRs involve risks similar to those accompanying
direct investments in foreign securities.
Zero Coupon Securities
The market prices of zero coupon securities are generally more
volatile than the market prices of securities that pay interest periodically
and are likely to respond to changes in interest rates to a greater degree
than do non-zero coupon securities having similar maturities and credit
quality. Current federal income tax law requires that a holder of a taxable
zero coupon security report as income each year the portion of the original
issue discount of such security that accrues that year, even though the holder
receives no cash payments of interest during the year. The Fund intends to
qualify as a regulated investment company under the Code. Accordingly, during
periods when the Fund receives no interest payments on its zero coupon
securities, it will be required, in order to maintain its desired tax
treatment, to distribute cash approximating the income attributable to such
securities. Such distribution may require the sale of portfolio securities to
meet the distribution requirements and such sales may be subject to the risk
factor discussed above.
-36-
<PAGE>
For more information, contact REIT FUND
Delaware Group at 800-828-5052.
INVESTMENT MANAGER INSTITUTIONAL CLASS
Delaware Management Company, Inc.
One Commerce Square
Philadelphia, PA 19103
SUB-ADVISER
Lincoln Investment Management, Inc.
200 E. Berry Street
Fort Wayne, IN 46802
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING,
ACCOUNTING SERVICES
AND TRANSFER AGENT P R O S P E C T U S
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
LEGAL COUNSEL DECEMBER 24, 1997
Stradley, Ronon, Stevens & Young, LLP
One Commerce Square
Philadelphia, PA 19103
INDEPENDENT AUDITORS
Ernst & Young LLP
Two Commerce Square
Philadelphia, PA 19103
CUSTODIAN
The Chase Manhattan Bank
4 Chase Metrotech Center DELAWARE
Brooklyn, NY 11245 GROUP
--------
<PAGE>
DELAWARE POOLED TRUST
Delaware Pooled Trust, Inc. (the "Fund") is a no-load, open-end management
investment company. The Fund consists of 17 portfolios offering investment
alternatives for institutional clients and high net-worth individuals. This
Prospectus describes The International Mid-Cap Sub Portfolio ("The
Portfolio"), which is available only to investors who have or are concurrently
establishing an investment advisory relationship with Delaware International
Advisers Limited ("DIA Ltd.") with respect to equity securities and who have
authorized DIA Ltd. to allocate a portion of those assets to The Portfolio.
The objective of The Portfolio is to achieve long-term total return. The
Portfolio seeks to achieve its objective primarily by investing in equity
securities of mid-sized non-U.S. companies, which may include companies
located or operating in established or emerging countries.
This Prospectus is designed to set forth concisely the information about the
Fund that a prospective client should know before investing and it should be
retained for future reference. Additional information about the Fund is
contained in a Statement of Additional Information dated December 24, 1997,
as it may be amended from time to time. That information is incorporated
herein by reference and is available without charge upon request from the
Fund:
Delaware Pooled Trust, Inc.
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
1-800-231-8002
The SEC also maintains a Website (http://www.sec.gov) that contains the
Statement of Additional Information, material that we incorporated by reference,
and other information regarding registrants that electronically file with the
SEC.
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
TABLE OF CONTENTS
Page Page
<S> <C> <C>
Fund Expenses Management of the Fund
Financial Highlights Shareholder Services
Delaware Pooled Trust Summary Dividends and Capital Gains
Fund Officers and Portfolio Managers Distributions
Risk Factors Taxes
Investment Objectives, Policies Valuation of Shares
and Risk Considerations Portfolio Transactions
Purchase of Shares Performance Information
Redemption of Shares General Information
Additional Investment Information Appendix A--Ratings
</TABLE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is:
December 24, 1997
2
<PAGE>
FUND EXPENSES
The following tables illustrate all expenses and fees that a shareholder of
The Portfolio can expect to incur. The purpose of the tables is to assist the
investor in understanding the various expenses that an investor in The
Portfolio will bear directly or indirectly. The amount set forth below
corresponding to the caption "Other Expenses" is based on estimates for the
initial fiscal year in which The Portfolio conducts operations.
<TABLE>
<CAPTION>
===============================================================================
Shareholder The International
Transaction Expenses Mid-Cap Sub Portfolio
- -------------------------------------------------------------------------------
<S> <C>
Sales Charge Imposed on Purchases None
- -------------------------------------------------------------------------------
Sales Charge Imposed on Reinvested
Dividends None
- -------------------------------------------------------------------------------
Purchase Reimbursement Fees1 0.60%
- -------------------------------------------------------------------------------
Redemption Reimbursement Fees1 0.50%
- -------------------------------------------------------------------------------
Exchange Fees None
===============================================================================
===============================================================================
Annual Fund
Operating Expenses The International
(as a percentage of Mid-Cap Sub Portfolio
average net assets)
- -------------------------------------------------------------------------------
Management Fee(2) 0.70%
- -------------------------------------------------------------------------------
12b-1 Fees None
- -------------------------------------------------------------------------------
Other Expenses(3) None
- -------------------------------------------------------------------------------
Total Operating Expenses 0.70%
===============================================================================
</TABLE>
3
<PAGE>
(1) A purchase reimbursement fee and a redemption reimbursement fee equal
to 0.60% for purchases and 0.50% for redemptions (as a
percentage of the dollar amount purchased or redeemed, as the case
may be) are assessed against investors in shares of The Portfolio and
paid to The Portfolio. These fees are designed to reflect an
approximation of the brokerage and related transaction costs
associated with the investment of an investor's purchase amount or
the disposition of assets to meet an investor's redemption request,
and to limit the extent to which The Portfolio (and, indirectly, The
Portfolio's existing shareholders) would have to bear such costs. In
lieu of the purchase and redemption reimbursement fees, The Portfolio
may, in its sole discretion, permit alternative purchase and
redemption methods designed to accomplish the same purposes as the
reimbursement fees, such as purchases or redemptions in-kind. See
"HOW TO INVEST," "PURCHASE OF SHARES," "HOW TO REDEEM," "REDEMPTION
OF SHARES" and "PURPOSE OF REIMBURSEMENT FEES."
(2) The Portfolio is charged a comprehensive management fee of 0.70%
per annum of its average net assets for both advisory and ordinary
operating expenses. However, The Portfolio may be charged for certain
non-recurring extraordinary expenses. See "MANAGEMENT OF THE FUND."
(3) "Other Expenses" are based on the estimated amount for the current
fiscal year, assuming that The Portfolio has average net assets of
$150 million.
The following example illustrates the expenses that you would incur on a
$1,000 investment, assuming (1) a 5% annual rate of return, and (2) redemption
at the end of each time period. The expenses include the purchase
reimbursement and redemption reimbursement fees payable to The Portfolio.
1 year* 3 years*
------- --------
$18 $33
You would pay the following expenses on the same investment, assuming no
redemption:
1 year* 3 years*
------- --------
$13 $28
*Assumes net assets equal to $150 million.
This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be greater or less than those
shown.
4
<PAGE>
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The Fund's Annual Report (which includes related notes and the report of Ernst
& Young LLP) and the Statement of Additional Information may be obtained from
the Fund upon request at no charge.
As of the date of this Prospectus, The Portfolio had sold no shares to public
investors and, thus, had not commenced operations. Therefore, no financial
highlights have been included.
- -------------------------------------------------------------------------------
5
<PAGE>
DELAWARE POOLED TRUST SUMMARY
THE FUND
This Prospectus describes the Fund's International Mid-Cap Sub Portfolio ("The
Portfolio"), which is available only to investors who have or are concurrently
establishing an investment advisory relationship with Delaware International
Advisers Limited ("DIA Ltd.") with respect to equity securities and who have
authorized DIA Ltd.
to allocate a portion of those assets to The Portfolio.
The objective of the Portfolio is to achieve long-term total return. The
Portfolio seeks to achieve its objective primarily by investing in equity
securities of mid-sized non-U.S. companies, which may include companies
located in established or emerging countries. The Portfolio is a
non-diversified fund as defined by the Investment Company Act of 1940 (the
"1940 Act").
For further information, see "INVESTMENT OBJECTIVES, POLICIES AND RISK
CONSIDERATIONS" and "ADDITIONAL INVESTMENT INFORMATION."
The Fund also has available 16 additional portfolios offering eligible
investors a broad range of investment choices. Those other portfolios are
described in a separate prospectus, which is available from the Fund without
charge. To obtain such prospectus, call the Fund at 1-800-231-8002.
INVESTMENT MANAGEMENT
DIA Ltd., acts as investment adviser to The Portfolio. The Portfolio pays DIA
Ltd. a comprehensive management fee in an amount equal to 0.70% of The
Portfolio's average net assets. Under the terms of the Investment Management
Agreement with respect to The Portfolio, DIA Ltd. pays all ordinary operating
expenses of The Portfolio. Excluded from the definition of ordinary operating
expenses are interest, taxes, dues, brokerage fees, extraordinary legal and
accounting fees and expenses, and fees or other charges of governments and
their agencies, including the cost of registering The Portfolio's shares with
the Securities and Exchange Commission (the "Commission") and qualifying The
Portfolio's shares for sale in any other jurisdiction.
DIA Ltd. may make such advertising and promotional expenditures, using its own
resources, as it from time to time deems appropriate.
See "MANAGEMENT OF THE FUND."
6
<PAGE>
FUND OFFICERS AND PORTFOLIO MANAGERS
Wayne A. Stork
Chairman
A graduate of Brown University, Mr. Stork also attended the NYU Graduate
School of Business Administration while a senior transportation analyst at the
Irving Trust Company. He joined the Delaware organization in 1962 as a
security analyst covering a wide range of industry groups. In 1975, he became
Chief Investment Officer of Delaware Investment Advisers, President in 1984,
and in 1990 was named Chairman. Mr. Stork is a Director of Delaware Management
Company, Inc. and its affiliates, and is Chairman of the Delaware Group of
funds. He is a member of the Institute of Chartered Financial Analysts and the
Financial Analysts Federation.
Jeffrey J. Nick
President and Chief Executive Officer
While pursuing a baccalaureate degree in English Literature from Princeton
University, Mr. Nick had the opportunity to study in Germany at Bonn University.
This was followed by studies at the University of Chicago, which led to an MBA
in Finance and Marketing. Mr. Nick joined Lincoln National Corporation in its US
headquarters in 1989 as Senior Vice President responsible for corporate planning
and development for Lincoln National Corporation. He held this position until
1992. From 1992 to 1996, Mr. Nick was Managing Director of Lincoln National UK
plc. Before joining Lincoln, his career included assignments in management
consultancy (with Arthur D. Little, Inc.) and merchant banking (Chase Investment
Bank). Mr. Nick is President, Chief Executive Officer and Director of the
Delaware Group of Funds, Delaware Management Holdings, Inc. and Lincoln National
Investment Companies, Inc.
David G. Tilles
Managing Director and Chief Investment Officer - Delaware International Advisers
Ltd. Mr. Tilles was educated at the Sorbonne, Warwick University and Heidelberg
University. Prior to joining the Delaware organization in 1990 as Managing
Principal and Chief Investment Officer of DIA Ltd., he spent 16 years with Hill
Samuel Investment Management Group in London, serving in a number of investment
capacities. His most recent position prior to joining Delaware was Chief
Investment Officer of Hill Samuel Investment Advisers Ltd.
Timothy W. Sanderson
Director/Senior Portfolio Manager - Delaware International Advisers Ltd.
A graduate of University College, Oxford, Mr. Sanderson began his investment
career in 1979 with Hill Samuel Investment Management Group. Prior to joining
DIA Ltd. in 1990 as Senior Portfolio Manager and Director, he was an analyst
and senior portfolio manager for Hill Samuel where, since 1987, he had
responsibility for Pacific Basin research and the management of international
institutional portfolios. Mr. Sanderson has managed The Portfolio since its
inception.
ADMINISTRATIVE SERVICES
Delaware Service Company, Inc., an affiliate of DIA Ltd., provides the Fund with
administrative, dividend disbursing, accounting and transfer agency services.
See "MANAGEMENT OF THE FUND."
7
<PAGE>
SPECIAL REPORTS AND OTHER SERVICES
The Fund provides client shareholders with annual audited financial reports
and unaudited semi-annual financial reports. In addition, DIA Ltd.'s dedicated
service staff may also provide client shareholders detailed monthly appraisals
of the status of their account and complete reviews of portfolio assets,
performance results and other pertinent data. Finally, DIA Ltd.'s service
staff expects to conduct personal reviews no less frequently than annually
with each shareholder, with interim telephone updates and other
communications, as appropriate. The Fund's dedicated telephone number
(1-800-231-8002) is available for shareholder inquiries during normal business
hours.
See "SHAREHOLDER SERVICES."
CUSTODIAL SERVICES
The Chase Manhattan Bank serves as custodian for The Portfolio.
HOW TO INVEST
Shares of The Portfolio are offered only to investors who currently have or
concurrently with their investment establish an investment advisory
relationship with DIA Ltd. with respect to equity securities and who have
authorized DIA Ltd. to allocate a portion of those assets to The Portfolio.
Shares are sold at net asset value with no sales commissions or 12b-1 charges.
There is a purchase reimbursement fee that applies to all purchases. That fee,
which is paid by investors to The Portfolio, equals 0.60% of the dollar
amount invested. The purchase reimbursement fee is deducted automatically from
the amount invested; it cannot be paid separately. The purchase reimbursement
fee does not apply to investments in The Portfolio that are made by securities
in-kind or by an alternative method agreed to by The Portfolio or to
reinvestments of dividends or other distributions. See "PURPOSE OF
REIMBURSEMENT FEES" and "EXCHANGE PRIVILEGE" under "SHAREHOLDER SERVICES", and
"PURCHASE OF SHARES."
8
<PAGE>
HOW TO REDEEM
Shares of The Portfolio may be redeemed at any time, at the net asset value
per share of The Portfolio next determined after receipt of the redemption
request, less a redemption reimbursement fee equal to 0.50% of such value.
The fee is deducted automatically from the redemption proceeds. See "PURPOSE
OF REIMBURSEMENT FEES." The redemption price may be more or less than the
purchase price and the redemption may be in cash or, under certain
circumstances, in-kind. If a redemption of shares is made in-kind, the
redemption reimbursement fee that is otherwise applicable will not be
assessed. See "REDEMPTION OF SHARES."
9
<PAGE>
RISK FACTORS
An investment in The Portfolio entails certain risks and considerations about
which an investor should be aware.
The Portfolio will invest in securities of foreign issuers which normally are
denominated in foreign currencies, and may hold foreign currency directly.
Investments in securities of non-United States issuers which are generally
denominated in foreign currencies involve certain risk and opportunity
considerations not typically associated with investing in United States
companies. Consequently, The Portfolio may be affected by changes in currency
rates and exchange control regulations and may incur costs in connection with
conversions between currencies. To hedge this currency risk associated with
investments in non-U.S. dollar denominated securities, The Portfolio may
invest in forward foreign currency contracts. Such activities pose special
risks which do not typically arise in connection with investments in U.S.
securities. For a discussion of the risks associated with foreign securities
see "FOREIGN INVESTMENT INFORMATION" and for those concerning these hedging
instruments see "FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS," both of which
references appear under the heading "ADDITIONAL INVESTMENT INFORMATION."
The Portfolio invests primarily in medium-sized companies, based on market
capitalization. Therefore, The Portfolio's investments are likely to involve a
higher degree of liquidity risk and price volatility than if investments were
made in larger capitalization securities. Investors in The Portfolio should be
willing to accept the risks, associated with mid-sized companies, some of the
securities of which may subject The Portfolio to additional risk.
The Portfolio may commit a portion of its assets to securities of issuers
located in emerging markets. Investments in securities of companies in
emerging markets present a greater degree of risk than tends to be the case
for foreign investments in Western Europe and other developed markets. Among
other things, there is a greater possibility of expropriation,
nationalization, confiscatory taxation, income earned or other special taxes,
foreign exchange restrictions, limitations on the repatriation of income and
capital from investments, defaults in foreign government debt, and economic,
political or social instability. In addition, in many emerging markets, there
is substantially less publicly available information about issuers and the
information that is available tends to be of a lesser quality. Economic
markets and structures tend to be less mature and diverse and the securities
markets which are subject to less government regulation or supervision may
also be smaller, less liquid and subject to greater price volatility. See
"ADDITIONAL INVESTMENT INFORMATION--FOREIGN INVESTMENT INFORMATION" for a more
extensive discussion of these and other factors.
The foreign securities in which The Portfolio may invest from time to time may
be listed primarily on foreign exchanges which trade on days when the New York
Stock Exchange is closed (such as certain holidays and Saturday). As a result,
the net asset value of The Portfolio may be significantly affected by such
trading on days when shareholders will have no access to The Portfolio. See
"VALUATION OF SHARES."
The Portfolio may lend its portfolio securities, may invest in repurchase
agreements and may purchase securities on a when-issued basis.
The Portfolio intends to seek to qualify as a "diversified" investment company
under provisions of Subchapter M of the Internal Revenue Code. Thus, at least
50% of The Portfolio's total assets will be represented by cash,
10
<PAGE>
cash items, certain qualifying securities and other securities limited in
respect of any one issuer to an amount not greater than 5% of The Portfolio's
total assets as of the end of each calendar quarter. In contrast, The
Portfolio may not satisfy the 1940 Act provisions relating to diversification
and will be designated as "non-diversified" as defined in the 1940 Act. A
"non-diversified" investment company is not required to satisfy the 1940 Act's
provisions relating to diversification, which provide that at least 75% of a
diversified company's total assets must be represented by cash items, U.S.
Government securities, certain qualifying securities and other securities
limited in value with respect to any one issuer to not more than 5% of the
value of the total assets of such investment company. A "non-diversified"
portfolio is believed to be subject to greater risk because adverse effects on
The Portfolio's security holdings may affect a larger portion of the overall
assets.
Each of the investment strategies identified above involves special risks
which are described under "INVESTMENT OBJECTIVES, POLICIES AND RISK
CONSIDERATIONS" and "ADDITIONAL INVESTMENT INFORMATION" in this Prospectus and
"INVESTMENT POLICIES, PORTFOLIO TECHNIQUES AND RISK CONSIDERATIONS" in the
Statement of Additional Information.
11
<PAGE>
INVESTMENT OBJECTIVES, POLICIES
AND RISK CONSIDERATIONS
The investment objective of The Portfolio is described below, together with
the policies that The Portfolio employs in its efforts to achieve its
objective. There is no assurance that The Portfolio will attain its objective.
The investment objective of The Portfolio is fundamental and may only be
changed by a majority approval of The Portfolio's shareholders. Unless
otherwise noted, the investment policies described below are not fundamental
policies and may be changed without shareholder approval.
The investment objective of The Portfolio is to achieve long-term total
return. The Portfolio seeks to achieve its objective by investing primarily in
equity securities of mid-sized non-U.S. companies, which may include companies
located or operating in established or emerging countries. The Portfolio is an
international fund. Under normal market conditions, at least 65% of The
Portfolio's total assets will be invested in equity securities of companies
organized or having a majority of their assets in or deriving a majority of
their operating income in at least three different countries outside of the
United States. The current market capitalization of companies in which The
Portfolio primarily intends to invest can generally be expected to range from
$500 million to $4 billion.
The equity securities in which The Portfolio may invest include common stocks,
preferred stocks, rights or warrants to purchase common stocks and securities
convertible into common stock. The Portfolio may also invest in foreign
companies through sponsored or unsponsored American Depositary Receipts,
European Depositary Receipts or Global Depositary Receipts ("Depositary
Receipts"), which are receipts typically issued by a bank or trust company
evidencing ownership of underlying securities issued by a foreign company. In
making investment decisions, DIA Ltd. will consider the financial strength of
the company, the nature of its management, and any developments affecting the
company or its industry. DIA Ltd. may invest in mid- and small-capitalization
companies that may be temporarily out of favor or overlooked by securities
analysts and whose value, therefore, may not yet be fully recognized by the
market. Up to 20% of The Portfolio's assets may be invested in
small-capitalization companies, which may be more speculative than
mid-capitalization companies. See ADDITIONAL INVESTMENT INFORMATION."
While The Portfolio may purchase securities in any foreign country, developed
and underdeveloped, or emerging market countries, it is currently anticipated
that the countries in which The Portfolio may invest will include, but not be
limited to, Australia, Belgium, Canada, France, Germany, Hong Kong, Indonesia,
Italy, Japan, Korea, Malaysia, the Netherlands, New Zealand, Philippines,
Singapore, Spain, Sweden, Switzerland, Taiwan, Thailand, and the United
Kingdom. With respect to certain countries, investments by an investment
company may only be made through investments in closed-end investment
companies that in turn are authorized to invest in the securities of such
countries. See "INVESTMENT COMPANY SECURITIES."
In selecting investments for The Portfolio, DIA Ltd. will employ a dividend
discount analysis across country boundaries and will also use a purchasing
power parity approach to identify currencies and markets that are overvalued
or undervalued relative to the U.S. dollar. DIA Ltd. uses the dividend
discount analysis to compare the value of different investments. Using this
technique, DIA Ltd. looks at future anticipated dividends and discounts the
value of those dividends back to what they would be worth if they were being
paid today. With a purchasing parity approach, DIA Ltd. attempts to identify
the amount of goods and services that a dollar will buy in the United States
and compare that to the amount of a foreign currency required to buy the same
amount
12
<PAGE>
of goods and services in another country. Eventually, currencies should trade
at levels that should make it possible for the dollar to buy the same amount
of goods and services overseas as in the United States. When the dollar buys
less, the foreign currency may be considered to be overvalued. When the dollar
buys more, the currency may be considered to be undervalued.
The Portfolio may invest in both open-end and listed or unlisted closed-end
investment companies as well as unregistered investment companies. See
"INVESTMENT COMPANY SECURITIES." The Portfolio may also invest in convertible
preferred stocks that offer enhanced yield features, such as Preferred Equity
Redemption Cumulative Stock, and certain other non-traditional equity
securities. See "CONVERTIBLE, DEBT AND NON-TRADITIONAL EQUITY SECURITIES."
The Portfolio may invest in fixed-income securities issued by foreign
companies, foreign governments, their agencies, instrumentalities or political
sub-divisions, or by supranational organizations. Such investments will
generally be limited to 5% of The Portfolio's assets and will typically be
rated AA or higher by Standard & Poor's Ratings Group ("S&P") or Aa or higher
by Moody's Investors Service, Inc. ("Moody's") or, if unrated, are considered
by DIA Ltd. to be of equivalent quality.
For temporary defensive purposes, The Portfolio may invest all or a
substantial portion of its assets in such fixed income securities as well as
high quality debt instruments issued by the U.S. government, its agencies or
instrumentalities, or by U.S. companies. For example, The Portfolio may invest
in U.S. fixed-income markets when DIA Ltd. believes that the international
equity markets are excessively volatile or overvalued so that The Portfolio's
objective cannot be achieved in such markets. Any corporate debt obligations
will be rated AA or better by S&P, or Aa or better by Moody's, or if unrated,
will be determined to be of comparable quality by DIA Ltd. The Portfolio may
also invest in the securities listed above pending investment of proceeds from
new sales of shares of the Portfolio and to maintain sufficient cash to meet
redemption requests. In addition, The Portfolio may invest in certain
short-term instruments. See "ADDITIONAL INVESTMENT INFORMATION."
The Portfolio may invest in securities issued in any currency and may hold
foreign currency. Securities of issuers within a given country may be
denominated in the currency of another country or in multinational currency
units such as the European Currency Unit ("ECU"). For purposes of the 1940
Act, The Portfolio will operate as a non-diversified fund. The Portfolio will
not concentrate its investments in any particular industry, which means that
The Portfolio will invest less than 25% of its total assets in any one
industry.
The Portfolio may invest in restricted securities, including securities
eligible for resale without registration pursuant to Rule 144A ("Rule 144A
Securities") under the Securities Act of 1933 (the "1933 Act"). Rule 144A
permits many privately placed and legally restricted securities to be freely
traded among certain institutional buyers, such as The Portfolio. See
"RESTRICTED/ILLIQUID SECURITIES." The Portfolio may invest up to 15% of the
value of its net assets in illiquid securities, meaning securities which may
not be disposed of within seven days at the price at which they are carried on
The Portfolio's books. In the event this percentage limitation is exceeded,
whether due to changes in the market value of The Portfolio's illiquid
holdings or because a particular security is deemed to have become illiquid,
DIA Ltd. will take steps to remedy the circumstances in an orderly fashion.
It is anticipated that the annual portfolio turnover rate, under normal
circumstances, will not exceed 50%.
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The Portfolio's investment objective, designation as an open-investment
company and policies concerning portfolio lending, borrowing and concentration
are "fundamental" and may not be changed unless authorized by the vote of a
majority of The Portfolio's outstanding voting securities. A vote of a
"majority of the outstanding voting securities" is the vote by the holders of
the lesser of a) 67% or more of The Portfolio's voting securities present in
person or represented by proxy if the holders of more than 50% of the
outstanding voting securities of The Portfolio are present or represented by
proxy; or b) more than 50% of the outstanding voting securities of The
Portfolio. The Statement of Additional Information lists other more specific
investment restrictions of The Portfolio which may not be changed without a
majority shareholder vote. A brief discussion of those factors that materially
affect The Portfolio's performance will appear each year in The Fund's Annual
Report.
The investment policies of The Portfolio not identified above as "fundamental"
may be changed by the Board of Directors of the Fund without a shareholder
vote.
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PURCHASE OF SHARES
Shares of The Portfolio may be purchased only by investors who currently have
or are concurrently with their investment establishing an investment advisory
relationship with DIA Ltd. with respect to equity securities and who have
authorized DIA Ltd. to allocate a portion of those assets to The Portfolio.
Shares of The Portfolio may be purchased without a sales commission, at net
asset value per share next determined after (i) the Fund has been notified by
telephone of your purchase order and (ii) Federal Funds have been delivered to
the Fund's bank account maintained with The Chase Manhattan Bank ("Custodian
Bank"). In addition, a purchase reimbursement fee equal to 0.60% of the
dollar amount invested is charged to investors and paid to The Portfolio. See
"HOW TO INVEST" and "PURPOSE OF REIMBURSEMENT FEES."
By Federal Funds Wire
Purchases of shares of The Portfolio may be made by wiring Federal Funds to
CoreStates Bank, N.A. as described below. In order to ensure prompt receipt of
Federal Funds Wires and prompt processing of your purchase orders, it is
important that the following steps be taken:
1. Telephone the Fund (Toll Free: 1-800-231-8002) to provide the account name,
address, telephone number, Tax Identification Number, the amount being wired
and by which bank and which specific branch, if applicable. We will provide
new investors with a Fund account number.
2. The investor's bank should be instructed to wire the specified amount of
Federal Funds to CoreStates Bank, N.A., Philadelphia, PA, ABA #031000011, DSC
Wire Purchase Bank Account #1412893401. The funds should be sent to the
attention of Delaware Pooled Trust, Inc. (be sure to have the bank include the
name of The Portfolio, the account number assigned to the investor and the
investor's account name). Federal Funds purchase orders will be accepted only
on a day on which the Fund, the NYSE and the Custodian Bank is open for
business.
3. Complete the Account Registration Form within two days and mail it to:
Delaware Pooled Trust, Inc.
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
Attn: Client Services
By Mail
Purchases of shares of The Portfolio may also be made by mailing a check
payable to The Portfolio selected to the above address (be sure to complete an
Investment Application before sending a check).
Purchase Price
In order for share purchases to be priced at the end of a given business day,
the Fund must be notified by telephone and Federal Funds must be received no
later than the close of regular trading on the New York Stock Exchange
("NYSE") (ordinarily, 4 p.m., Eastern time) on days when the NYSE is open. If
notice is given or Federal Funds are delivered after that time, the purchase
order will be priced on the following business day.
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In-Kind Purchases or Similar Procedures
The Fund may agree, on behalf of The Portfolio, to accept as payment for a
purchase of shares securities in which The Portfolio otherwise would invest,
or to follow another procedure that would have the same economic effect as an
in-kind purchase. In either case, an investor purchasing shares pursuant to
those procedures will be required to pay the brokerage or other transaction
costs of acquiring the subject securities. The purchase price per share for
such investors shall be the net asset value next determined after, as the case
may be, (1) delivery of cash or securities to the Custodian Banks and/or (2)
the assignment to The Portfolio by a prospective purchaser on trade date of
the investor's right to delivery of securities as to which brokerage orders
have been placed (but, as to which settlement is yet to occur) and delivery of
cash in an amount necessary to pay for those securities on settlement date.
The assets provided to The Portfolio pursuant to these procedures shall be
valued consistent with the same valuation procedures used to calculate The
Portfolio's net asset value. See "VALUATION OF SHARES." Such investors should
contact the Fund at (1-800-231-8002) for further information. The purchase
reimbursement fee does not apply to in-kind purchases.
ADDITIONAL INVESTMENTS
Shareholders may add to their accounts at any time and in any amount.
Procedures are the same as those to be followed for a new account, in as much
as it is very important to notify the Fund of each impending purchase by first
calling the Fund (1-800-231-8002). Then the shareholder's bank should be
instructed to follow the same procedures as described above with respect to
the wiring of Federal Funds to CoreStates Bank, N.A. Additional investments
are subject to the same procedures and requirements (including the in-kind or
similar procedures) set forth above.
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REDEMPTION OF SHARES
You may withdraw all or any portion of the amount in your account by redeeming
shares at any time by submitting a request in accordance with the instructions
provided below. The Fund will redeem shares of The Portfolio at its net asset
value next determined after receipt of your redemption request. A redemption
reimbursement fee equal to 0.50% of the amount redeemed is deducted
automatically and paid to The Portfolio. See "HOW TO REDEEM" and "PURPOSE OF
REIMBURSEMENT FEES." On days that the Fund, the NYSE and the Custodian Bank
are open for business, the net asset value of The Portfolio is determined as
of the close of regular trading of the NYSE (ordinarily, 4 p.m., Eastern
time). See "VALUATION OF SHARES."
Shares of The Portfolio may be redeemed by mail, FAX message, or telephone. No
charge is made for redemption, except the reimbursement fee noted in the
previous paragraph. The proceeds of any redemption may be more or less than
the purchase price of your shares depending on the market value of the
investment securities held by The Portfolio.
By Mail or FAX Message
The Portfolio will redeem its shares at the net asset value next determined on
the date the request is received in "good order." Your request should be
addressed to:
Delaware Pooled Trust, Inc.
Attn: Client Services
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
FAX # 215-255-8864
"Good order" for purposes of mail or FAX message redemptions means that the
request to redeem must include the following documentation:
a. A letter of instruction specifying the number of shares or dollar amount to
be redeemed signed by the appropriate corporate or organizational officer(s)
exactly as it appears on the Account Registration Form or by another
authorized person.
b. If you wish to change the name of the commercial bank or account
designation to receive the redemption proceeds as provided in the Account
Registration Form, then a separate written request must be submitted to the
Fund at the above address and copies of this request sent to both the current
commercial bank and the new designee bank. Prior to redemption, the Fund will
telephonically confirm the change with both the current and the new designee
banks. Further clarification of these procedures can be obtained by calling
the Fund.
By Telephone
If you have previously elected the Telephone Redemption Option on the Account
Registration Form, you can request a redemption of your shares by calling the
Fund and requesting the redemption proceeds be
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wired to the commercial bank or account designation identified in the Account
Registration Form. In times of drastic market conditions, the telephone
redemption option may be difficult to implement. If you experience difficulty
in making a telephone redemption, your request may be made by mail or FAX
message, pursuant to the procedures described above. It will be priced at the
net asset value next determined after it is received. Neither the Fund, The
Portfolio nor the Fund's transfer agent, Delaware Service Company, Inc., is
responsible for any losses incurred in acting upon written or telephone
instructions for redemption or exchange of shares of The Portfolio which are
reasonably believed to be genuine. With respect to such telephone
transactions, the Fund will ensure that reasonable procedures are used to
confirm that instructions communicated by telephone are genuine (including
verification of a form of personal identification) as, if it does not, the
Fund or Delaware Service Company, Inc. may be liable for any losses due to
unauthorized or fraudulent transactions. A written confirmation will be
provided for all purchase, exchange and redemption transactions initiated by
telephone.
To change the name of the commercial bank or account designated to receive the
redemption proceeds, a written request must be sent to the Fund at the address
above. Requests to change the bank or account designation must be signed by
the appropriate person(s) authorized to act on behalf of the shareholder.
The Fund's telephone redemption privileges and procedures may be modified or
terminated by the Fund only upon written notice to the Fund's client
shareholders.
Redemptions In-Kind or Similar Procedures
Payment for shares redeemed may be made either in cash or in-kind, or partly
in cash and partly in-kind, or pursuant to another procedure which will have
the same economic effect as an in-kind redemption. An investor that receives
payment in-kind will bear the brokerage or other transaction costs of selling
the portfolio securities representing the value of their redeemed shares. Any
portfolio securities delivered upon redemption will be valued as described in
"VALUATION OF SHARES." Investors in The Portfolio should contact the Fund at
(1-800-231-8002) for further information. The reimbursement redemption fee
does not apply to in-kind redemptions.
IMPORTANT REDEMPTION INFORMATION
Because The Portfolio's shares are sold to institutions and high net-worth
individual investors, shareholders likely will hold a significant number of
shares of The Portfolio. For this reason, the Fund requests that shareholders
proposing to make a large redemption order from The Portfolio give the Fund at
least ten days advanced notice of any such order. This request can easily be
satisfied by calling the Fund at (1-800-231-8002), and giving notification of
future intentions. Once a formal redemption order is received, the Fund, in
the case of redemptions to be made in cash, normally will make payment for all
shares redeemed under this procedure within three business days of receipt of
the order. In no event, however, will payment be made more than seven days
after receipt of a redemption request in good order. The Fund may suspend the
right of redemption or postpone the date at times when the NYSE is closed, or
under any emergency circumstances as determined by the Commission .
As noted above, or if the Fund otherwise determines that it would be
detrimental to the best interests of the remaining shareholders of The
Portfolio to make payment wholly or partly in cash, the Fund may pay
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the redemption proceeds in whole or in part by a distribution in-kind of
securities held by The Portfolio in lieu of cash in conformity with applicable
rules of the Commission.
PURPOSE OF REIMBURSEMENT FEES
The purchase and redemption reimbursement fees are designed to reflect an
approximation of the brokerage and related transaction costs associated with
the investment of an investor's purchase amount or the disposition of assets
to meet an investor's redemption request, and to limit the extent to which The
Portfolio (and, indirectly, the Portfolio's existing shareholders) would have
to bear such costs. These costs include: (1) brokerage costs; (2) market
impact costs, i.e., the increase in market prices which may result when The
Portfolio purchases or sells thinly traded stocks; and (3) the effect of the
"bid-asked" spread in international markets.
The fees represent DIA Ltd.'s estimate of the brokerage and other transaction
costs incurred by The Portfolio in purchasing and selling international
stocks. Without the fee, The Portfolio would incur these costs directly,
resulting in reduced investment performance for all shareholders of The
Portfolio. With the fee, the extent to which the transaction costs of
purchasing and selling international stocks will be borne by existing
shareholders is limited, and the approximate amount of such costs is paid by
those investors triggering the transactions. Transaction costs incurred when
purchasing or selling stocks of companies in emerging market countries are
extremely high. There are three components of transaction costs - brokerage
fees, the difference between the bid/asked spread, and market impact. Each one
of these factors is significantly more expensive in emerging market countries
than in the United States, because of less competition among brokers, lower
utilization of technology on the part of the exchanges and brokers, the lack
of derivative instruments and generally less liquid markets. Consequently,
brokerage commissions are high, bid/asked spreads are wide, and the market
impact is significant. In addition to these customary costs, most foreign
countries have exchange fees or stamp taxes.
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ADDITIONAL INVESTMENT INFORMATION
FOREIGN INVESTMENT INFORMATION
The Portfolio will invest in securities of foreign issuers and may hold
foreign currency. The Portfolio has the right to purchase securities in any
developed, underdeveloped or emerging country. Investors should consider
carefully the risks involved in investing in securities issued by companies
and governments of foreign nations. These risks are in addition to the usual
risks inherent in domestic investments. There is the possibility of
expropriation, nationalization or confiscatory taxation, taxation of income
earned in foreign nations or other taxes imposed with respect to investments
in foreign nations, foreign exchange control (which may include suspension of
the ability to transfer currency from a given country), default in foreign
government securities, political or social instability or diplomatic
developments which could affect investments in securities of issuers in those
nations.
In addition, in many countries, there is substantially less publicly available
information about issuers than is available in reports about companies in the
United States and this information tends to be of a lesser quality. Foreign
companies are not subject to uniform accounting, auditing and financial
reporting standards, and auditing practices and requirements may not be
comparable to those applicable to United States companies. In particular, the
assets and profits appearing on the financial statements of a developing or
emerging country issuer may not reflect its financial position or results of
operations in the way they would be reflected had the financial statements
been prepared in accordance with United States generally accepted accounting
principles. Also, for an issuer that keeps accounting records in local
currency, inflation accounting rules may require for both tax and accounting
purposes, that certain assets and liabilities be restated on the issuer's
balance sheet in order to express items in terms of currency or constant
purchasing power. Inflation accounting may indirectly generate losses or
profits. Consequently, financial data may be materially affected by
restatements for inflation and may not accurately reflect the real condition
of those issuers and securities markets.
Dividends and interest paid by foreign issuers may be subject to withholding
and other foreign taxes. Although in some countries a portion of these taxes
is recoverable, the non-recovered portion of foreign withholding taxes will
reduce the income The Portfolio receives from the companies comprising The
Portfolio's investments. See "TAXES."
Further, The Portfolio may encounter difficulty or be unable to pursue legal
remedies and obtain judgments in foreign courts. Commission rates on
securities transactions in foreign countries, which are sometimes fixed rather
than subject to negotiation as in the United States, are likely to be higher.
Further, the settlement period of securities transactions in foreign markets
may be longer than in domestic markets, and may be subject to administrative
uncertainties. In many foreign countries, there is less government supervision
and regulation of business and industry practices, stock exchanges, brokers
and listed companies than in the United States, and capital requirements for
brokerage firms are generally lower. The foreign securities markets of many of
the countries in which The Portfolio may invest may also be smaller, less
liquid and subject to greater price volatility than those in the United
States.
Compared to the United States and other developed countries, emerging
countries may have volatile social conditions, relatively unstable governments
and political systems, economies based on only a few industries and economic
structures that are less diverse and mature, and securities markets that trade
a
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small number of securities, which can result in a low or nonexistent volume of
trading. Prices in these securities markets tend to be volatile and, in the
past, securities in these countries have offered greater potential for gain
(as well as loss) than securities of companies located in developed countries.
Until recently, there has been an absence of a capital market structure or
market-oriented economy in certain emerging countries. Further, investments
and opportunities for investments by foreign investors are subject to a
variety of national policies and restrictions in many emerging countries.
These restrictions may take the form of prior governmental approval, limits on
the amount or type of securities held by foreigners, limits on the types of
companies in which foreigners may invest and prohibitions on foreign
investments in issuers or industries deemed sensitive to national interests.
Additional restrictions may be imposed at any time by these or other countries
in which The Portfolio invests. Also, the repatriation of both investment
income and capital from several foreign countries is restricted and controlled
under certain regulations, including, in some cases, the need for certain
governmental consents. Although these restrictions may in the future make it
undesirable to invest in emerging countries, DIA Ltd. does not believe that
any current repatriation restrictions would affect its decision to invest in
such countries.
With respect to investment in debt issues of foreign governments, the ability
of a foreign government or government-related issuer to make timely and
ultimate payments on its external debt obligations will be strongly influenced
by the issuer's balance of payments, including export performance, its access
to international credits and investments, fluctuations in interest rates and
the extent of its foreign reserves. If a foreign government or
government-related issuer cannot generate sufficient earnings from foreign
trade to service its external debt, it may need to depend on continuing loans
and aid from foreign governments, commercial banks and multilateral
organizations, and inflows of foreign investment. The commitment on the part
of these foreign governments, multilateral organizations and others to make
such disbursements may be conditioned on the government's implementation of
economic reforms and/or economic performance and the timely service of its
obligations. The cost of servicing external debt will also generally be
adversely affected by rising international interest rates because many
external debt obligations bear interest at rates which are adjusted based upon
international interest rates. The ability to service external debt will also
depend on the level of the relevant government's international currency
reserves and its access to foreign exchange. Currency devaluations may affect
the ability of a government issuer to obtain sufficient foreign exchange to
service its external debt.
As a result of the foregoing, a foreign governmental issuer may default on its
obligations. If such a default occurs, The Portfolio may have limited effective
legal recourse against the issuer and/or guarantor.
With respect to forward foreign currency exchange, the precise matching of
forward contract amounts and the value of the securities involved is generally
not possible since the future value of such securities in foreign currencies
will change as a consequence of market movements in the value of those
securities between the date the forward contract is entered into and the date
it matures. The projection of short-term currency strategy is highly
uncertain. See "FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS," below.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
As noted above, the foreign investments made by The Portfolio present currency
considerations which pose special risks. DIA Ltd. uses a purchasing power parity
approach to evaluate currency risk. A
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purchasing power parity approach attempts to identify the amount of goods and
services that a dollar will buy in the United States and compares that to the
amount of a foreign currency required to buy the same amount of goods and
services in another country. When the dollar buys less abroad, the foreign
currency may be considered to be overvalued. When the dollar buys more abroad,
the foreign currency may be considered to be undervalued. Eventually,
currencies should trade at levels that should make it possible for the dollar
to buy the same amount of goods and services overseas as in the United States.
Although The Portfolio values its assets daily in terms of U.S. dollars, it
does not intend to convert its holdings of foreign currencies into U.S.
dollars on a daily basis. The Portfolio will, however, from time to time,
purchase or sell foreign currencies and/or engage in forward foreign currency
transactions in order to expedite settlement of portfolio transactions and to
minimize currency value fluctuations. The Portfolio may conduct its foreign
currency exchange transactions on a spot (i.e., cash) basis at the spot rate
prevailing in the foreign currency exchange market or through entering into
contracts to purchase or sell foreign currencies at a future date (i.e., a
"forward foreign currency" contract or "forward" contract). The Portfolio will
convert currency on a spot basis from time to time, and investors should be
aware of the costs of currency conversion.
A forward contract involves an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days from the date
of the contract, agreed upon by the parties, at a price set at the time of the
contract.
The Portfolio may enter into forward contracts to "lock in" the price of a
security it has agreed to purchase or sell, in terms of U.S. dollars or other
currencies in which the transaction will be consummated. By entering into a
forward contract for the purchase or sale, for a fixed amount of U.S. dollars
or foreign currency, of the amount of foreign currency involved in the
underlying security transaction, The Portfolio will be able to protect itself
against a possible loss resulting from an adverse change in currency exchange
rates during the period between the date the security is purchased or sold and
the date on which payment is made or received.
For example, when the investment adviser believes that the currency of a
particular foreign country may suffer a significant decline against the U.S.
dollar or against another currency, The Portfolio may enter into a forward
contract to sell, for a fixed amount of U.S. dollars or other appropriate
currency, the amount of foreign currency approximating the value of some or
all of The Portfolio's securities denominated in such foreign currency. The
Portfolio will not enter into forward contracts or maintain a net exposure to
such contracts where the consummation of the contracts would obligate The
Portfolio to deliver an amount of foreign currency in excess of the value of
The Portfolio's securities or other assets denominated in that currency.
The Portfolio may enter into forward contracts to hedge the currency risk
associated with the purchase of individual securities denominated in
particular currencies. In the alternative, The Portfolio may also engage in
currency "cross hedging" when, in the opinion of DIA Ltd. the historical
relationship among foreign currencies suggests that The Portfolio may achieve
the same protection for a foreign security at reduced cost and/or
administrative burden through the use of a forward contract relating to a
currency other than the U.S. dollar or the foreign currency in which the
security is denominated.
At the maturity of a forward contract, The Portfolio may either sell the
portfolio security and make delivery of the foreign currency, or it may retain
the security and terminate its contractual obligation to
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deliver the foreign currency by purchasing an "offsetting" contract with the
same currency trader obligating it to purchase, on the same maturity date, the
same amount of the foreign currency. The Portfolio may realize gain or loss from
currency transactions.
With respect to forward foreign currency contracts, the precise matching of
forward contract amounts and the value of the securities involved is generally
not possible since the future value of such securities in foreign currencies
will change as a consequence of market movements in the value of those
securities between the date the forward contract is entered into and the date
it matures. The projection of short-term currency strategy is highly
uncertain.
It is impossible to forecast the market value of portfolio securities at the
expiration of the contract. Accordingly, it may be necessary for The Portfolio
to purchase additional foreign currency on the spot market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency The Portfolio is obligated to deliver and if a
decision is made to sell the security and make delivery of the foreign
currency. Conversely, it may be necessary to sell on the spot market some of
the foreign currency received upon the sale of a portfolio security if its
market value exceeds the amount of foreign currency The Portfolio is obligated
to deliver.
SMALL COMPANY INVESTMENTS
Investments in common stocks in general are subject to market, economic and
business risks that will cause their price to fluctuate over time. The
securities of companies with smaller revenues and capitalizations in which The
Portfolio may invest may offer greater opportunity for capital appreciation
than larger companies, but investment in such companies presents greater risks
than securities of larger, more established companies. Historically, smaller
capitalization stocks have been more volatile in price than larger
capitalization stocks. Among the reasons for the greater price volatility of
these securities are the lower degree of liquidity in the markets for such
stocks, and the potentially greater sensitivity of such small companies to
changes in or failure of management, and in many other changes in competitive,
business, industry and economic conditions, including risks associated with
limited production, markets, management depth, or financial resources.
Investors should therefore expect that the value of The Portfolio's shares may
be more volatile than the shares of a fund that invests in larger
capitalization stocks.
SHORT-TERM INVESTMENTS
The short-term investments in which The Portfolio may invest consistent with
the limits recited above (see "INVESTMENT OBJECTIVES, POLICIES AND RISK
CONSIDERATIONS") are:
(1) Time deposits, certificates of deposit (including marketable variable rate
certificates of deposit) and bankers' acceptances issued by a U.S. commercial
bank. Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate. Time
deposits maturing in more than seven days will not be purchased by The
Portfolio, and time deposits maturing from two business days through seven
calendar days will not exceed 15% of the total assets of The Portfolio.
Certificates of deposit are negotiable short-term obligations issued by
commercial banks
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against funds deposited in the issuing institution. Variable rate certificates
of deposit are certificates of deposit on which the interest rate is
periodically adjusted prior to their stated maturity based upon a specified
market rate. A bankers' acceptance is a time draft drawn on a commercial bank
by a borrower usually in connection with an international commercial
transaction (to finance the import, export, transfer or storage of goods).
The Portfolio will not invest in any security issued by a commercial bank
unless (i) the bank has total assets of at least $1 billion or, in the case of
a bank which does not have total assets of at least $1 billion, the aggregate
investment made in any one such bank is limited to $100,000 and the principal
amount of such investment is insured in full by the Federal Deposit Insurance
Corporation, (ii) it is a member of the Federal Deposit Insurance Corporation,
and (iii) the bank or its securities have received the highest quality rating
by a nationally-recognized statistical rating organization;
(2) Commercial paper with the highest quality rating by a nationally-recognized
statistical rating organization (e.g., A-1 by S&P or Prime-1 by Moody's) or, if
not so rated, of comparable quality as determined by DIA Ltd.;
(3) Short-term corporate obligations with the highest quality rating by a
nationally-recognized statistical rating organization (e.g., AAA by S&P or Aaa
by Moody's) or, if not so rated, of comparable quality as determined by DIA
Ltd.;
(4) Securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities;
(5) Repurchase agreements collateralized by securities listed above; and
(6) Bank deposits held by or at The Portfolio's Custodian Bank or one of its
sub-custodians.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES
The Portfolio may purchase securities on a when-issued or delayed delivery
basis. In such transactions, instruments are purchased with payment and delivery
taking place in the future in order to secure what is considered to be an
advantageous yield or price at the time of the transaction. Delivery of and
payment for these securities may take as long as a month or more after the date
of the purchase commitment. The Portfolio will maintain with its Custodian Bank
a separate account with a segregated portfolio of securities in an amount at
least equal to these commitments. The payment obligation and the interest rates
that will be received are each fixed at the time The Portfolio enters into the
commitment and no interest accrues to The Portfolio until settlement. Thus, it
is possible that the market value at the time of settlement could be higher or
lower than the purchase price if the general level of interest rates has
changed. It is a current policy of The Portfolio not to enter into when-issued
commitments exceeding in the aggregate 15% of the market value of The
Portfolio's total assets less liabilities other than the obligations created by
these commitments.
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REPURCHASE AGREEMENTS
The Portfolio may enter into repurchase agreements with brokers, dealers or
banks deemed to be creditworthy by DIA Ltd. under guidelines of the Fund's
directors. In a repurchase agreement, The Portfolio buys securities from a
seller who, at the time of the purchase, agrees to repurchase the securities
at a mutually agreed upon date and price, reflecting the interest rate
effective for the term of the agreement. The term of these agreements is
usually from overnight to one week and never exceeds one year. Not more than
15% of the total assets of The Portfolio may be invested in repurchase
agreements having a maturity in excess of seven days. Repurchase agreements
may be viewed as a fully collateralized loan of money by The Portfolio to the
seller. The Portfolio always receives securities as collateral with a market
value at least equal to the purchase price and this value is maintained during
the term of the agreement. If the seller defaults and the collateral value
declines, The Portfolio might incur a loss. If bankruptcy proceedings are
commenced with respect to the seller, The Portfolio's realization upon the
collateral may be delayed or limited. The Portfolio may invest cash balances
in a joint repurchase agreement in accordance with an Order the Delaware Group
has obtained from the Commission under Section 17(d) of the 1940 Act.
SECURITIES LENDING ACTIVITIES
The Portfolio may loan up to 25% of its assets to qualified broker/dealers or
institutional investors for their use relating to short sales or other
security transactions.
The major risk to which The Portfolio would be exposed on a loan transaction
is the risk that the borrower would go bankrupt at a time when the value of
the security goes up. Therefore, The Portfolio will only enter into loan
arrangements after a review of all pertinent facts by DIA Ltd., subject to
overall supervision by the Board of Directors, including the creditworthiness
of the borrowing broker, dealer or institution and then only if the
consideration to be received from such loans would justify the risk.
Creditworthiness will be monitored on an ongoing basis by DIA Ltd.
BORROWING FROM BANKS
The Portfolio may borrow money as a temporary measure or to facilitate
redemptions. The Portfolio does not intend to increase its net income through
borrowing. Any borrowing will be done from a bank and, consistent with
Commission rules, immediately after any borrowing is in an amount which
exceeds 5% of its net assets, there must be asset coverage of at least 300%.
In the event the asset coverage declines below 300%, The Portfolio would take
steps to reduce the amount of its borrowings so that asset coverage would
equal at least 300%. Securities will not be purchased while The Portfolio has
an outstanding borrowing.
RESTRICTED/ILLIQUID SECURITIES
The Portfolio may invest in restricted securities, including securities
eligible for resale without registration pursuant to Rule 144A ("Rule 144A
Securities") under the Securities Act of 1933 ("1933 Act"). Rule 144A exempts
many privately placed and legally restricted securities from the registration
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requirements of the 1933 Act and permits such securities to be freely traded
among certain institutional buyers such as The Portfolio.
The Portfolio may invest no more than 15% of the value of its net assets in
illiquid securities. Illiquid securities, for purposes of this policy, include
repurchase agreements maturing in more than seven days.
While maintaining oversight, the Board of Directors has delegated to DIA Ltd.
the day-to-day function of determining whether or not individual Rule 144A
Securities are liquid for purposes of The Portfolio's limitation on
investments in illiquid assets. The Board has instructed DIA Ltd. to consider
the following factors in determining the liquidity of a Rule 144A Security:
(i) the frequency of trades and trading volume for the security; (ii) whether
at least three dealers are willing to purchase or sell the security and the
number of potential purchasers; (iii) whether at least two dealers are making
a market in the security; and (iv) the nature of the security and the nature
of the marketplace trades (e.g., the time needed to dispose of the security,
the method of soliciting offers, and the mechanics of transfer).
If DIA Ltd. determines that a Rule 144A Security which was previously
determined to be liquid is no longer liquid and, as a result, The Portfolio's
holdings of illiquid securities exceed the 15% limit on investment in such
securities, DIA Ltd. will determine what action shall be taken to ensure that
The Portfolio continues to adhere to such limitation.
CONVERTIBLE, DEBT AND NON-TRADITIONAL EQUITY SECURITIES
A portion of The Portfolio's assets may be invested in convertible and debt
securities. A convertible security is a security which may be converted at a
stated price within a specified period of time into a certain quantity of the
common stock of the same or a different issuer. Convertible and debt securities
are senior to common stocks in a corporation's capital structure, although
convertible securities are usually subordinated to similar nonconvertible
securities. Convertible and debt securities provide a fixed-income stream and
the opportunity, through its conversion feature, to participate in the capital
appreciation resulting from a market price advance in the convertible security's
underlying common stock. Just as with debt securities, convertible securities
tend to increase in market value when interest rates decline and tend to
decrease in value when interest rates rise. However, the price of a convertible
security is also influenced by the market value of the security's underlying
common stock and tends to increase as the market value of the underlying stock
rises, whereas it tends to decrease as the market value of the underlying stock
declines.
The Portfolio may invest in convertible preferred stocks that offer enhanced
yield features, such as Preferred Equity Redemption Cumulative Stock
("PERCS"), which provide an investor, such as The Portfolio, with the
opportunity to earn higher dividend income than is available on a company's
common stock. A PERCS is a preferred stock which generally features a
mandatory conversion date, as well as a capital appreciation limit which is
usually expressed in terms of a stated price. Upon the conversion date, most
PERCS convert into common stock of the issuer (PERCS are generally not
convertible into cash at maturity). Under a typical arrangement, if after a
predetermined number of years the issuer's common stock is trading at a price
below that set by the capital appreciation limit, each PERCS would convert to
one share of common stock. If, however, the issuer's common stock is trading
at a price above that set by the capital appreciation limit, the holder of the
PERCS would receive less than one full share of common
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stock. The amount of that fractional share of common stock received by the PERCS
holder is determined by dividing the price set by the capital appreciation limit
of the PERCS by the market price of the issuer's common stock. PERCS can be
called at any time prior to maturity, and hence do not provide call protection.
However, if called early, the issuer may pay a call premium over the market
price to the investor. This call premium declines at a preset rate daily, up to
the maturity date of the PERCS.
The Portfolio may also invest in other enhanced convertible securities. These
include but are not limited to ACES (Automatically Convertible Equity
Securities), PEPS (Participating Equity Preferred Stock), PRIDES (Preferred
Redeemable Increased Dividend Equity Securities), SAILS (Stock Appreciation
Income Linked Securities), TECONS (Term Convertible Notes), QICS (Quarterly
Income Cumulative Securities) and DECS (Dividend Enhanced Convertible
Securities). ACES, PEPS, PRIDES, SAILS, TECONS, QICS and DECS all have the
following features: they are company-issued convertible preferred stock; unlike
PERCS, they do not have capital appreciation limits; they seek to provide the
investor with high current income, with some prospect of future capital
appreciation; they are typically issued with three to four-year maturities; they
typically have some built-in call protection for the first two to three years;
investors have the right to convert them into shares of common stock at a preset
conversion ratio or hold them until maturity; and upon maturity, they will
automatically convert to either cash or a specified number of shares of common
stock.
DEPOSITARY RECEIPTS
The Portfolio may invest in sponsored and unsponsored American Depositary
Receipts ("ADRs") that are actively traded in the United States. The Portfolio
may also invest in sponsored and unsponsored European Depositary Receipts
("EDRs") and Global Depository Receipts ("GDRs"). ADRs are receipts typically
issued by a U.S. bank or trust company which evidence ownership of underlying
securities issued by a foreign corporation. EDRs and GDRs are receipts issued by
non-U.S. Banks or trust companies and foreign branches of U.S. banks that
evidence ownership of the underlying foreign or U.S. securities. "Sponsored"
ADRs, EDRs or GDRs are issued jointly by the issuer of the underlying security
and a depositary, and "unsponsored" ADRs, EDRs or GDRs are issued without the
participation of the issuer of the deposited security. Holders of unsponsored
ADRs, EDRs or GDRs generally bear all the costs of such facilities and the
depositary of an unsponsored ADR, EDR or GDR facility frequently is under no
obligation to distribute shareholder communications received from the issuer of
the deposited security or to pass through voting rights to the holders of such
receipts in respect of the deposited securities. Therefore, there may not be a
correlation between information concerning the issuer of the security and the
market value of an unsponsored ADR, EDR or GDR. ADRs may be listed on a national
securities exchange or may be traded in the over-the-counter market. EDRs and
GDRs traded in the over-the-counter market which do not have an active or
substantial secondary market will be considered illiquid and therefore will be
subject to The Portfolio's limitation with respect to such securities. ADR
prices are denominated in U.S. dollars although the underlying securities are
denominated in a foreign currency. Investments in ADRs, EDRs and GDRs involve
risks similar to those accompanying direct investments in foreign securities.
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INVESTMENT COMPANY SECURITIES
Any investments that The Portfolio makes in either closed-end or open-end
investment companies will be limited by the 1940 Act, and would involve an
indirect payment of a portion of the expenses, including advisory fees, of
such other investment companies. The 1940 Act places limits on the extent to
which one investment company may invest in the shares of another investment
company. These limitations also apply to The Portfolio's investments in
unregistered investment companies.
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MANAGEMENT OF THE FUND
Directors
The business and affairs of the Fund and The Portfolio are managed under the
direction of the Fund's Board of Directors. See "FUND OFFICERS AND PORTFOLIO
MANAGERS" under "DELAWARE POOLED TRUST SUMMARY" in this Prospectus and the
Fund's Statement of Additional Information for additional information about
the Fund's officers and directors.
Investment Adviser
DIA Ltd. furnishes investment advisory services to The Portfolio. DIA Ltd.
commenced operations as a registered investment adviser in December 1990.
Delaware Management Company, Inc. ("DMC"), an affiliate of DIA Ltd., and its
predecessors have been managing the funds in the Delaware Group since 1938. On
October 31, 1997, DIA Ltd. and its affiliates within the Delaware Group,
including DMC, supervising in the aggregate more than $38 billion in
assets in various institutional or separately managed (approximately
$22,496,609,000) and investment company (approximately $16,012,252,000)
accounts.
DIA Ltd. has entered into an Investment Management Agreement with the Fund on
behalf of The Portfolio. Under the Investment Management Agreement, DIA Ltd.,
subject to the control and supervision of the Fund's Board of Directors and in
conformance with the stated investment objectives and policies of The
Portfolio, manages the investment and reinvestment of the assets of The
Portfolio. In this regard, it is DIA Ltd.'s responsibility to make investment
decisions for The Portfolio.
As compensation for the services to be rendered under the Investment
Management Agreement, DIA Ltd. is entitled to a comprehensive management fee
of 0.70% per annum of The Portfolio's average daily net assets, calculated
and payable quarterly. Under the terms of the Investment Management Agreement,
DIA Ltd. pays all employee and ordinary operating costs of The Portfolio. Such
costs include, for example, investment advisory fees, rent, shareholder
services, transfer agency and accounting services, custody fees, and ordinary
fees of independent accountants and legal counsel. Excluded from the
definition of ordinary operating costs are interest, taxes, dues, brokerage
fees, extraordinary legal and accounting fees and expenses, and fees or other
charges of governments and their agencies, including the cost of registering
The Portfolio's shares with the Commission and qualifying The Portfolio's
shares for sale in any jurisdiction.
DIA Ltd. is an indirect, wholly owned subsidiary of Delaware Management
Holdings, Inc. ("DMH"). DMH and DIA Ltd. are indirect, wholly owned
subsidiaries, and subject to the ultimate control of Lincoln National
Corporation ("Lincoln National"). Lincoln National, with headquarters in Fort
Wayne, Indiana, is a diversified organization with operations in many aspects
of the financial services industry, including insurance and investment
management. DIA Ltd.'s address is Third Floor, 80 Cheapside, London, England
EC2V 6EE.
Administrator
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Delaware Service Company, Inc., an affiliate of DIA Ltd. and an indirect,
wholly owned subsidiary of DMH, provides the Fund with administrative services
pursuant to the Amended and Restated Shareholders Services Agreement with the
Fund, on behalf of The Portfolio, and DIA Ltd. The services provided under the
Amended and Restated Shareholders Services Agreement are subject to the
supervision of the officers and directors of the Fund, and include day-to-day
administration of matters related to the corporate existence of the Fund,
maintenance of its records, preparation of reports, supervision of The
Portfolio's arrangements with its Custodian Bank, and assistance in the
preparation of the Fund's registration statements under Federal and State
laws. The Amended and Restated Shareholders Services Agreement also provides
that Delaware Service Company, Inc. will provide The Portfolio with dividend
disbursing and transfer agent services. Delaware Service Company, Inc. is
located at 1818 Market Street, Philadelphia, PA 19103. For its services to The
Portfolio under the Amended and Restated Shareholders Services Agreement, an
annual fixed fee is allocated to The Portfolio based on the percentage of
assets of The Portfolio relative to the other portfolios of the Fund. The fee,
which is allocated and payable monthly, is paid by DIA Ltd. to Delaware
Service Company, Inc. Delaware Service Company, Inc. also provides accounting
services to The Portfolio pursuant to the terms of a separate Fund Accounting
Agreement.
Distributor
Delaware Distributors, L.P. ("DDLP"), 1818 Market Street, Philadelphia, PA
19103, serves as the exclusive Distributor of the shares of The Portfolio.
Under its Distribution Agreement with the Fund on behalf of The Portfolio,
DDLP sells shares of The Portfolio upon the terms and at the current offering
price described in this Prospectus. DDLP is not obligated to sell any certain
number of shares of The Portfolio. DDLP is an indirect, wholly owned
subsidiary of DMH.
Expenses
The Portfolio is responsible for payment of certain other fees and expenses
(including interest, taxes, dues, brokerage fees, and extraordinary legal and
accounting fees, and fees or other charges of governments and their agencies)
specified in the Investment Management Agreement. For the fiscal year ending
October 31, 1998, the ratio of expenses to average daily net assets for The
Portfolio is expected to be 0.70% annualized.
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SHAREHOLDER SERVICES
Special Reports and Other Services
The Fund provides client shareholders with annual audited financial reports
and unaudited semi-annual financial reports. In addition, DIA Ltd.'s dedicated
service staff may also provide client shareholders with a detailed monthly
appraisal of the status of their account and a complete review of portfolio
assets, performance results and other pertinent data. Finally, DIA Ltd.
expects to conduct personal reviews no less frequently than annually with each
client shareholder, with interim telephone updates and other communication, as
appropriate. The Fund's dedicated telephone number (1-800-231-8002) is
available for shareholder inquiries during normal business hours. The net
asset value of The Portfolio is also available by using the above "800"
telephone number. Written correspondence may be directed to The Portfolio at
the following address:
Delaware Pooled Trust, Inc.
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
Attn: Client Services
Exchange Privilege
Shares of The Portfolio may be exchanged for shares of the Fund's other
portfolios or the institutional class shares of the other funds in the
Delaware Group based on the respective net asset values of the shares
involved, subject to minimum investment and other eligibility requirements.
However, shareholders will be assessed a purchase reimbursement fee by The
Portfolio when exchanging into The Portfolio from another portfolio and will
be assessed a redemption reimbursement fee by The Portfolio when exchanging
out of The Portfolio into another portfolio. See "HOW TO INVEST," "HOW TO
REDEEM" and "PURPOSE OF REIMBURSEMENT FEES." There are no minimum purchase
requirements for the institutional class shares of the other Delaware Group
funds, but certain eligibility requirements must be satisfied. Exchange
requests should be sent to Delaware Pooled Trust, Inc., One Commerce Square,
2005 Market Street, Philadelphia, PA 19103, Attn: Client Services. Such an
exchange would be considered a taxable event in instances where an
institutional shareholder is subject to tax. The exchange privilege is only
available with respect to portfolios that are registered for sale in a
shareholder's state of residence. The Fund reserves the right to suspend or
terminate, or amend the terms of, the exchange privilege upon 60 days' written
notice to client shareholders.
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DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The Portfolio expects to declare and distribute all of its net investment
income to shareholders as dividends quarterly. Net capital gains, if any, will
be distributed annually. Unless a shareholder elects to receive dividends and
capital gains distributions in cash, all dividends and capital gains
distributions shall be automatically paid in additional shares at the net
asset value of The Portfolio.
In addition, in order to satisfy certain distribution requirements of the Tax
Reform Act of 1986, The Portfolio may declare special year-end dividend and
capital gains distributions during November or December to shareholders of
record on a date in such month. Such distributions, if received by
shareholders by January 31, are deemed to have been paid by The Portfolio and
received by shareholders on the earlier of the date paid or December 31 of the
prior year.
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TAXES
General
The Portfolio intends to qualify, and intends to continue to qualify, as a
regulated investment company under the Internal Revenue Code (the "Code"). As
such, The Portfolio will not be subject to federal income or excise tax to the
extent its earnings are distributed to its shareholders as provided in the
Code.
The Portfolio intends to distribute substantially all of its net investment
income and net capital gains. Dividends from net investment income or net
short-term capital gains will be taxable to you as ordinary income, whether
received in cash or in additional shares. For corporate investors, dividends
paid by The Portfolio from net investment income are not expected to qualify
for the intercorporate dividends-received deduction.
Distributions paid by The Portfolio from long-term capital gains, whether
received in cash or in additional shares, are taxable to those investors who
are subject to income taxes as long-term capital gains, regardless of the
length of time an investor has owned shares in The Portfolio. The Portfolio
does not seek to realize any particular amount of capital gains during a year;
rather, realized gains are a by-product of portfolio management activities.
Consequently, capital gains distributions may be expected to vary considerably
from year to year. Also, for those investors subject to tax, if purchases of
shares in The Portfolio are made shortly before the record date for a dividend
or capital gains distribution, a portion of the investment will be returned as
a taxable distribution.
The sale of shares of The Portfolio is a taxable event and may result in a
capital gain or loss to shareholders subject to tax. Capital gain or loss may
be realized from an ordinary redemption of shares or an exchange of shares
between two mutual funds (or two portfolios of a mutual fund). Any loss
incurred on the sale or exchange of shares of The Portfolio held for six
months or less will be treated as a long-term capital loss to the extent of
capital gain dividends received with respect to such shares.
Each year, the Fund will mail to you information on the amount and tax status
of The Portfolio's dividends and distributions. Shareholders should consult
their own tax advisers regarding specific questions as to federal, state,
local or foreign taxes.
The Fund is required to withhold 31% of taxable dividends capital gains
distributions, and redemptions paid to shareholders who have not complied with
IRS taxpayer identification regulations. You may avoid this withholding
requirement by certifying on your Account Registration Form your proper
Taxpayer Identification Number and by certifying that you are not subject to
backup withholding.
The Portfolio may elect to "pass-through" to its shareholders the amount of
foreign income taxes paid by The Portfolio. The Portfolio will make such an
election only if it deems it to be in the best interests of its shareholders.
If this election is made, shareholders of The Portfolio will be required to
include in their gross income their pro-rata share of foreign taxes paid by
The Portfolio. However, shareholders will be able to treat their pro-rata
share of foreign taxes as either an itemized deduction or a foreign tax credit
(but not both) against U.S. income taxes on their tax return.
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The tax discussion set forth above is included for general information only.
Prospective investors should consult their own tax advisers concerning the
federal, state, local or foreign tax consequences of an investment in the
Fund. Additional information on tax matters is included in the Statement of
Additional Information.
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VALUATION OF SHARES
The net asset value per share of The Portfolio is determined by dividing the
total market value of The Portfolio's investments and other assets, less any
liabilities, by the total outstanding shares of The Portfolio. Net asset value
per share is determined as of the close of regular trading on the NYSE on each
day the NYSE is open for business. Securities listed on a foreign exchange are
valued at the last quoted sale price available before the time when net assets
are valued. Securities listed on a U.S. securities exchange for which market
quotations are available are valued at the last quoted sale price on the day
the valuation is made. Price information on listed securities is taken from
the exchange where the security is primarily traded. Unlisted securities and
listed securities not traded on the valuation date for which market quotations
are readily available are valued at a price that is considered to best
represent fair value within a range not in excess of the current asked price
nor less than the current bid prices.
Bonds and other fixed-income securities are valued according to the broadest
and most representative market, which will ordinarily be the over-the-counter
market. In addition, bonds and other fixed-income securities may be valued on
the basis of prices provided by a pricing service when such prices are
believed to reflect the fair market value of such securities. The prices
provided by a pricing service are determined without regard to bid or last
sale prices but take into account institutional size trading in similar groups
of securities and any developments related to the specific securities.
Securities not priced in this manner are valued at the most recent quoted mean
price, or, when stock exchange valuations are used, at the latest quoted sale
price on the day of valuation. If there is no such reported sale, the latest
quoted mean price will be used. Securities with remaining maturities of 60
days or less are valued at amortized cost, if it approximates market value. In
the event that amortized cost does not approximate market value, market prices
as determined above will be used.
The value of other assets and securities for which no quotations are readily
available (including restricted securities) are determined in good faith at
fair value using methods determined by the Fund's Board of Directors.
The securities in which The Portfolio may invest from time to time may be
listed primarily on foreign exchanges which trade on days when the NYSE is
closed (such as U.S. holidays or Saturdays). As a result, the net asset value
of The Portfolio may be significantly affected by such trading on days when
shareholders have no access to The Portfolio.
For purposes of calculating net asset value per share, all assets and
liabilities initially expressed in foreign currencies will be converted into
U.S. dollars at the mean between the bid and ask price of such currencies
against the U.S. dollar as provided by an independent pricing service or any
major bank, including the Custodian Bank. Forward foreign currency contracts
are valued at the mean price of the contracts. Interpolated values will be
derived when the settlement date of the contract is on an interim period for
which quotations are not available.
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PORTFOLIO TRANSACTIONS
In purchasing and selling securities for The Portfolio, DIA Ltd. uses its best
efforts to obtain the best available price and most favorable execution and may,
where relevant, pay higher commissions in recognition of brokerage services
which in the opinion of DIA Ltd. are necessary and in the best interest of the
Fund's shareholders. In selecting broker/dealers to execute the securities
transactions for The Portfolio, consideration will be given to such factors as
the price of the security, the rate of any commission, the size and difficulty
of the order, the reliability, integrity, financial condition, general execution
and operational capabilities of competing broker/dealers, and any brokerage and
research services which they provide to The Portfolio. These services may be
used by DIA Ltd. in servicing any of its other accounts. Some securities
considered for investment by The Portfolio may also be appropriate for other
clients served by DIA Ltd. If a purchase or sale of securities consistent with
the investment policies of The Portfolio and one or more of these other clients
served by DIA Ltd. is considered at or about the same time, transactions in such
securities will be allocated among The Portfolio and such other clients in a
manner deemed fair and reasonable. Although there is no specified formula for
allocating such transactions, the various allocation methods used and the
results of such allocations are subject to periodic review by the Fund's
directors.
Subject to best price and execution, portfolio orders may be placed with
qualified broker/dealers who recommend The Portfolio or who act as agents in the
purchase of shares of The Portfolio for their clients.
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PERFORMANCE INFORMATION
The Portfolio may quote total return performance in advertising and other
types of literature. Total return will be based on a hypothetical $1,000
investment, reflecting the reinvestment of all distributions at net asset
value at the beginning of the specific period. Each presentation will include,
as relevant, the average annual total return for one-, five- and ten-year
periods. The Portfolio may also advertise aggregate and average total return
information over additional periods of time.
Net asset value and total returns fluctuate and are not guaranteed. Past
performance is not an indication of future results.
GENERAL INFORMATION
Description of Common Stock
The Fund was organized as a Maryland corporation on May 30, 1991. The Articles
of Incorporation permit the Fund to issue one billion shares of common stock
with $.01 par value and fifty million shares have been allocated to The
Portfolio. The Board of Directors has the power to designate one or more
classes of shares of common stock and to classify and reclassify any unissued
shares with respect to such classes.
The shares of The Portfolio, when issued, will be fully paid, non-assessable,
fully transferable and redeemable at the option of the holder. The shares have
no preference as to the conversion, exchange, dividends, retirement or other
features and have no preemptive rights. Shares of the Fund have noncumulative
voting rights, which means that the holders of more than 50% of the Fund's
shares voting for the election of directors can elect 100% of the directors if
they choose to do so. Shares of each of the Fund's 17 portfolios entitled to
vote on a matter will vote in the aggregate and not by portfolio, except when
the matter to be voted upon affects only the interests of shareholders of a
particular portfolio or when otherwise expressly required by law. The Fund
does not issue certificates for shares of The Portfolio. Under Maryland law,
the Fund is not required, and does not intend, to hold annual meetings of its
shareholders unless, under certain circumstances, it is required to do so
under the 1940 Act.
Custodian Banks
The Chase Manhattan Bank serves as custodian for The Portfolio.
Independent Auditors
Ernst & Young LLP, Two Commerce Square, 2001 Market Street, Suite 4000,
Philadelphia, PA 19103, serves as independent auditors for the Fund.
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Expenses
The Portfolio is responsible for all its own expenses other than those borne by
DIA Ltd. under the Investment Management Agreement. See "MANAGEMENT OF THE
FUND."
Litigation
The Fund is not involved in any litigation.
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APPENDIX A--RATINGS
Bonds
Excerpts from Moody's description of its bond ratings: Aaa--judged to be the
best quality. They carry the smallest degree of investment risk; Aa--judged to
be of high quality by all standards; A--possess favorable attributes and are
considered "upper medium" grade obligations; Baa--considered as medium grade
obligations. Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time; Ba--judged to have
speculative elements; their future cannot be considered as well assured. Often
the protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class; B--generally lack
characteristics of the desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over any long period
of time may be small; Caa--are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest; Ca--represent obligations which are speculative in a high degree. Such
issues are often in default or have other marked shortcomings; C--the lowest
rated class of bonds and issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.
Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa to B. The modifier 1 indicates that company ranks in the
higher end of its generic category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the company ranks in the lower end of
its generic rating category.
Excerpts from S&P's description of its bond ratings: AAA--highest grade
obligations. They possess the ultimate degree of protection as to principal and
interest; AA--also qualify as high grade obligations, and in the majority of
instances differ from AAA issues only in a small degree; A--strong ability to
pay interest and repay principal although more susceptible to changes in
circumstances; BBB--regarded as having an adequate capacity to pay interest and
repay principal; BB, B, CCC, CC--regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the lowest degree of
speculation and CC the highest degree of speculation. While such debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions; C--reserved
for income bonds on which no interest is being paid; D--in default, and payment
of interest and/or repayment of principal is in arrears.
Plus (+) or minus (-) Ratings may be modified by a plus or minus sign,
reflecting the relative standing within the major rating categories.
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Commercial Paper
Excerpts from Moody's description of its two highest commercial paper ratings:
P-1--the highest grade possessing greatest relative strength; P-2--second
highest grade possessing less relative strength than the highest grade.
Excerpts from S&P's description of its two highest commercial paper ratings:
A-1--judged to be the highest investment grade category possessing the highest
relative strength; A-2--investment grade category possessing less relative
strength than the highest rating.
40
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PART B
DELAWARE POOLED TRUST, INC.
STATEMENT OF ADDITIONAL INFORMATION
DECEMBER 24, 1997
-----------------------------------
Delaware Pooled Trust, Inc. ("Pooled Trust, Inc.") is an open-end
management investment company. Pooled Trust, Inc. consists of 17 series
("Portfolios") offering a broad range of investment choices. Pooled Trust, Inc.
is designed to provide clients with attractive alternatives for meeting their
investment needs. This Statement of Additional Information (Part B of Pooled
Trust, Inc.'s registration statement) addresses information of Pooled Trust,
Inc. applicable to each of the 17 Portfolios.
This Statement of Additional Information is not a prospectus but should
be read in conjunction with the related Prospectus of Pooled Trust, Inc. for
each Portfolio. To obtain the proper Prospectus for the Portfolios, please write
to the Delaware Pooled Trust, Inc. at One Commerce Square, 2005 Market Street,
Philadelphia, PA 19103, Attn: Client Services or call Pooled Trust, Inc. at
1-800-231-8002. To obtain the Prospectus for the Class A, B and C Shares or the
Institutional Class of The Real Estate Investment Trust Portfolio, write to the
Distributor at 1818 Market Street, Philadelphia, PA 19103 or call
1 -800 -523 -4640 for the Class A, B and C Shares or 1 -800-828-5052 for the
Institutional Class.
TABLE OF CONTENTS
Page
----
Investment Policies, Portfolio Techniques and Risk Considerations
Accounting and Tax Issues
Performance Information Trading Practices and Brokerage
Purchasing Shares
Determining 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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INVESTMENT POLICIES, PORTFOLIO TECHNIQUES AND RISK CONSIDERATIONS
Investment Restrictions
Pooled Trust, Inc. has adopted the following restrictions for each of
the Portfolios (except where otherwise noted) which, along with its respective
investment objective, cannot be changed without approval by the holders of a
"majority" of the respective Portfolio's outstanding shares, which is a vote
by the holders of the lesser of a) 67% or more of the voting securities
present in person or by proxy at a meeting, if the holders of more than 50% of
the outstanding voting securities are present or represented by proxy; or b)
more than 50% of the outstanding voting securities. The percentage limitations
contained in the restrictions and policies set forth herein apply at the time
a Portfolio purchases securities.
Each Portfolio (other than The International Mid-Cap Sub Portfolio
, The Small/Mid-Cap Value Equity Portfolio, The Global Equity Portfolio, The
Emerging Markets Portfolio, The Aggregate Fixed Income Portfolio and The
Diversified Core Fixed Income Portfolio) shall not:
1. Make loans, except to the extent that purchases of debt
obligations (including repurchase agreements), in accordance with a
Portfolio's investment objective and policies, are considered loans, and
except that each Portfolio may loan up to 25% of its respective assets to
qualified broker/dealers or institutional investors for their use relating to
short sales or other security transactions.
2. Purchase or sell real estate or real estate limited partnerships,
but this shall not otherwise prevent a Portfolio from investing in securities
secured by real estate or interests therein and except that The Real Estate
Investment Trust Portfolio and The Real Estate Investment Trust Portfolio II
(collectively, "The Real Estate Investment Trust Portfolios") may each own
real estate directly as a result of a default on securities the Portfolio
owns.
3. Engage in the underwriting of securities of other issuers, except
that in connection with the disposition of a security, a Portfolio may be
deemed to be an "underwriter" as that term is defined in the Securities Act of
1933.
4. Make any investment which would cause more than 25% of the market
or other fair value of its respective total assets to be invested in the
securities of issuers all of which conduct their principal business activities
in the same industry, except that each of The Real Estate Investment Trust
Portfolios shall invest in excess of 25% of its total assets in the securities
of issuers in the real estate industry. This restriction does not apply to
obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities.
5. Purchase or sell commodities or commodity contracts, except that
The Aggressive Growth Portfolio, The Real Estate Investment Trust Portfolios
and The International Fixed Income Portfolio may enter into futures contracts
and may purchase and sell options on futures contracts in accordance with the
related Prospectus, subject to investment restriction 6 below.
6. Enter into futures contracts or options thereon, except that The
Aggressive Growth Portfolio, The Real Estate Investment Trust Portfolios and
The International Fixed Income Portfolio may each enter into futures contracts
and options thereon to the extent that not more than 5% of its assets are
required as futures contract margin deposits and premiums on options and only
to the extent that obligations under such contracts and transactions represent
not more than 20% of its total assets.
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7. Make short sales of securities, or purchase securities on margin,
except that The Aggressive Growth Portfolio, The Real Estate Investment Trust
Portfolios and The International Fixed Income Portfolio may satisfy margin
requirements with respect to futures transactions.
8. Purchase or retain the securities of any issuer which has an
officer, director or security holder who is a director or officer of Pooled
Trust, Inc. or of either of the investment advisers if or so long as the
directors and officers of Pooled Trust, Inc. and of the investment advisers
together own beneficially more than 5% of any class of securities of such
issuer.
9. Invest in interests in oil, gas and other mineral leases or other
mineral exploration or development programs.
10. Borrow money, except as a temporary measure for extraordinary
purposes or to facilitate redemptions. Any borrowing will be done from a bank
and to the extent that such borrowing exceeds 5% of the value of its
respective net assets, asset coverage of at least 300% is required. In the
event that such asset coverage shall at any time fall below 300%, a Portfolio
shall, within three days thereafter (not including Sunday or holidays) or such
longer period as the Securities and Exchange Commission ("Commission") may
prescribe by rules and regulations, reduce the amount of its borrowings to
such an extent that the asset coverage of such borrowings shall be at least
300%. No investment securities will be purchased while a Portfolio has an
outstanding borrowing. A Portfolio will not pledge more than 10% of its
respective net assets. A Portfolio will not issue senior securities as defined
in the Investment Company Act of 1940 (the "1940 Act"), except for notes to
banks.
In addition to the restrictions set forth above, in connection with
the qualification of a Portfolio's shares for sale in certain states, a
Portfolio may not invest in warrants if such warrants, valued at the lower of
cost or market, would exceed 5% of the value of a Portfolio's net assets.
Included within such amount, but not to exceed 2% of a Portfolio's net assets
may be warrants which are not listed on the New York Stock Exchange or
American Stock Exchange. Warrants acquired by a Portfolio in units or attached
to securities may be deemed to be without value.
Additional Fundamental Investment Restrictions
The following additional investment restrictions apply to each of the
Portfolios, except The International Mid-Cap Sub Portfolio, The
Small/Mid-Cap Value Equity Portfolio, The Labor Select International Equity
Portfolio, The Real Estate Investment Trust Portfolios, The International
Fixed Income Portfolio, The High-Yield Bond Portfolio , The Emerging Markets
Portfolio, The Aggregate Fixed Income Portfolio and The Diversified Core Fixed
Income Portfolio, or as otherwise noted. They cannot be changed without
approval by the holders of a "majority" of the respective Portfolio's
outstanding shares, as described above.
Each Portfolio (other than The International Mid-Cap Sub Portfolio,
The Small/Mid-Cap Value Equity Portfolio, The Labor Select International
Equity Portfolio, The Real Estate Investment Trust Portfolios, The
International Fixed Income Portfolio, The High-Yield Bond Portfolio, The
Emerging Markets Portfolio, The Aggregate Fixed Income Portfolio and The
Diversified Core Fixed Income Portfolio shall not:
1. As to 75% of its respective total assets, invest more than 5% of
its respective total assets in the securities of any one issuer (other than
obligations issued or guaranteed by the U.S. government, its agencies or
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instrumentalities). This restriction shall also apply to The Labor Select
International Equity Portfolio and The High-Yield Bond Portfolio. This
restriction shall apply to only 50% of the total assets of The Global Fixed
Income Portfolio.
2. Invest in securities of other investment companies, except by
purchase in the open market involving only customary brokers' commissions or
in connection with a merger, consolidation or other acquisition or as may
otherwise be permitted by the 1940 Act.
3. Purchase more than 10% of the outstanding voting securities of any
issuer, or invest in companies for the purpose of exercising control or
management.
4. Write, purchase or sell options, puts, calls or combinations
thereof with respect to securities, except that The Aggressive Growth
Portfolio may: (a) write covered call options with respect to any or all parts
of its portfolio securities; (b) purchase call options to the extent that the
premiums paid on all outstanding call options do not exceed 2% of the
Portfolio's total assets; (c) write secured put options; and (d) purchase put
options, if the Portfolio owns the security covered by the put option at the
time of purchase, and provided that premiums paid on all put options
outstanding do not exceed 2% of its total assets. The Portfolio may sell call
or put options previously purchased and enter into closing transactions with
respect to the activities noted above.
5. Invest more than 5% of the value of its respective total assets in
securities of companies less than three years old. Such three-year period
shall include the operation of any predecessor company or companies.
6. Invest more than 10% of its respective total assets in repurchase
agreements maturing in more than seven days and other illiquid assets.
For purposes of investment restriction 6, it is Pooled Trust, Inc.'s
policy, changeable without shareholder vote, that "illiquid assets" include
securities of foreign issuers which are not listed on a recognized U.S. or
foreign exchange and for which a bona fide market does not exist at the time
of purchase or subsequent valuation.
The Labor Select International Equity Portfolio, The Real Estate Investment
Trust Portfolios, The International Fixed Income Portfolio and The High-Yield
Bond Portfolio
The following additional investment restrictions apply to The Labor
Select International Equity Portfolio, The Real Estate Investment Trust
Portfolios, The International Fixed Income Portfolio and The High-Yield Bond
Portfolio. Unlike the investment restrictions listed above, these are
non-fundamental investment restrictions and may be changed by Pooled Trust,
Inc.'s Board of Directors without shareholder approval.
Except as noted below, each of The Labor Select International
Equity Portfolio, The Real Estate Investment Trust Portfolios, The
International Fixed Income Portfolio and The High-Yield Bond Portfolio shall
not:
1. As to 50% of the respective total assets of The Real Estate
Investment Trust Portfolios and The International Fixed Income Portfolio,
invest more than 5% of its respective total assets in the securities of any
one issuer (other than obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities).
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2. Invest in securities of other investment companies, except by
purchase in the open market involving only customary brokers' commissions or
in connection with a merger, consolidation or other acquisition or as may
otherwise be permitted by the 1940 Act.
3. Invest more than 5% of the value of its respective total assets in
securities of companies less than three years old. Such three-year old period
shall include the operation of any predecessor company or companies. This
restriction shall not apply to The Real Estate Investment Trust Portfolios and
their investments in the securities of real estate investment trusts.
4. Purchase more than 10% of the outstanding voting securities of any
issuer, or invest in companies for the purpose of exercising control or
management.
5. Write, purchase or sell options, puts, calls or combinations
thereof with respect to securities, except that each of The Real Estate
Investment Trust Portfolios may: (a) write covered call options with respect
to any or all parts of its portfolio securities; (b) purchase call options to
the extent that the premiums paid on all outstanding call options do not
exceed 2% of the Portfolio's total assets; (c) write secured put options; and
(d) purchase put options, if the Portfolio owns the security covered by the
put option at the time of purchase, and provided that premiums paid on all put
options outstanding do not exceed 2% of its total assets. Each Portfolio may
sell call or put options previously purchased and enter into closing
transactions with respect to the activities noted above.
6. Invest more than 15% of its respective total assets, determined at
the time of purchase, in repurchase agreements maturing in more than seven
days and other illiquid assets.
For purposes of investment restriction 6, it is Pooled Trust, Inc.'s
policy that "illiquid assets" include securities of foreign issuers which are
not listed on a recognized U.S. or foreign exchange and for which no bona fide
market exists at the time of purchase.
The International Mid-Cap Sub Portfolio, The Small/Mid-Cap Value Equity
Portfolio, The Global Equity Portfolio, The Emerging Markets Portfolio, The
Aggregate Fixed Income Portfolio and The Diversified Core Fixed Income Portfolio
Pooled Trust, Inc. has adopted the following restrictions for The
International Mid-Cap Sub Portfolio, The Small/Mid-Cap Value Equity Portfolio,
The Global Equity Portfolio, The Emerging Markets Portfolio, The Aggregate
Fixed Income Portfolio and The Diversified Core Fixed Income Portfolio (except
where otherwise noted) which, along with each such Portfolio's investment
objective, cannot be changed without approval by a "majority" of the
Portfolio's outstanding shares, as described above. The percentage limitations
contained in these restrictions and policies apply at the time a Portfolio
purchases securities.
Except as noted below, each of The International Mid-Cap Sub Portfolio, The
Small/Mid-Cap Value Equity Portfolio, The Global Equity Portfolio, The
Emerging Markets Portfolio, The Aggregate Fixed Income Portfolio and The
Diversified Core Fixed Income Portfolio shall not:
1. As to 75% of its total assets, invest more than 5% of its total
assets in the securities of any one issuer (other than obligations issued, or
guaranteed by, the U.S. government, its agencies or instrumentalities). This
restriction shall not apply to The International Mid-Cap Sub Portfolio and The
Emerging Markets Portfolio.
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2. Invest 25% or more of its total assets in any one industry
provided that there is no limitation with respect to investments in
obligations issued or guaranteed as to principal or interest by the U.S.
Government, its agencies or instrumentalities.
3. Make loans other than by the purchase of all or a portion of a
publicly or privately distributed issue of bonds, debentures or other debt
securities of the types commonly offered publicly or privately and purchased
by financial institutions (including repurchase agreements), whether or not
the purchase was made upon the original issuance of the securities, and except
that the Portfolio may loan its assets to qualified broker/dealers or
institutional investors.
4. Engage in underwriting of securities of other issuers, except
that portfolio securities, including securities purchased in private
placements, may be acquired under circumstances where, if sold, the Portfolio
might be deemed to be an underwriter under the Securities Act of 1933. No
limit is placed on the proportion of the Portfolio's assets which may be
invested in such securities.
5. Borrow money or issue senior securities, except to the extent
permitted by the 1940 Act or any rule or order thereunder or interpretation
thereof. Subject to the foregoing, the Portfolio may engage in short sales,
purchase securities on margin, and write put and call options.
6. Purchase or sell physical commodities or physical commodity
contracts, including physical commodity options or futures contracts in a
contract market or other futures market.
7. Purchase or sell real estate; provided that the Portfolio may
invest in securities secured by real estate or interests therein or issued by
companies which invest in real estate or interests therein.
Foreign Investment Information (The International Mid-Cap Sub Portfolio, The
International Equity Portfolio, The Labor Select International Equity
Portfolio, The Real Estate Investment Trust Portfolios, The Global Fixed
Income Portfolio, The International Fixed Income Portfolio, The High-Yield
Bond Portfolio, The Diversified Core Fixed Income Portfolio, The Emerging
Markets Portfolio and The Global Equity Portfolio)
Investors in The International Mid-Cap Sub Portfolio, The
International Equity Portfolio, The Labor Select International Equity
Portfolio, The Global Fixed Income Portfolio, The International Fixed Income
Portfolio, The Emerging Markets Portfolio and The Global Equity Portfolio (as
well as in The Real Estate Investment Trust Portfolios, The Diversified Core
Fixed Income Portfolio and The High-Yield Bond Portfolio, each of which
possesses a limited ability to invest in foreign securities) should recognize
that investing in securities issued by foreign corporations and foreign
governments involves certain considerations, including those set forth in the
related Prospectus, which are not typically associated with investments in
United States issuers. Since the securities of foreign issuers are frequently
denominated in foreign currencies, and since each Portfolio may temporarily
hold uninvested reserves in bank deposits in foreign currencies, these
Portfolios will be affected favorably or unfavorably by changes in currency
rates and in exchange control regulations, and may incur costs in connection
with conversions between various currencies. The investment policies of each
Portfolio, except The High-Yield Bond Portfolio, permit each to enter into
forward foreign currency exchange contracts and permit The International Fixed
Income Portfolio, The Diversified Core Fixed Income Portfolio, The Emerging
Markets Portfolio and The Global Equity Portfolio to engage in certain options
and futures activities, in order to hedge holdings and commitments against
changes in the level of future
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currency rates. See Foreign Currency Transactions (The International Equity
Portfolio, The International Mid-Cap Sub Portfolio, The Labor Select
International Equity Portfolio, The Real Estate Investment Trust Portfolios,
The Global Fixed Income Portfolio, The International Fixed Income Portfolio,
The Emerging Markets Portfolio , The Global Equity Portfolio and The
Diversified Core Fixed Income Portfolio), below.
There has been in the past, and there may be again in the future, an
interest equalization tax levied by the United States in connection with the
purchase of foreign securities such as those purchased by the Portfolios.
Payment of such interest equalization tax, if imposed, would reduce a
Portfolio's rate of return on its investment. Dividends paid by foreign issuers
may be subject to withholding and other foreign taxes which may decrease the net
return on such investments as compared to dividends paid to a Portfolio by
United States issuers. Special rules govern the federal income tax treatment of
certain transactions denominated in terms of a currency other than the U.S.
dollar or determined by reference to the value of one or more currencies other
than the U.S. dollar. The types of transactions covered by the special rules
include, as relevant, the following: (i) the acquisition of, or becoming the
obligor under, a bond or other debt instrument (including, to the extent
provided in Treasury Regulations, preferred stock); (ii) the accruing of certain
trade receivables and payables; and (iii) the entering into or acquisition of
any forward contract and similar financial instrument if such instrument is not
"marked to market." The disposition of a currency other than the U.S. dollar by
a U.S. taxpayer is also treated as a transaction subject to the special currency
rules. With respect to transactions covered by the special rules, foreign
currency gain or loss is calculated separately from any gain or loss on the
underlying transaction and is normally taxable as ordinary gain or loss. A
taxpayer may elect to treat as capital gain or loss foreign currency gain or
loss arising from certain identified forward contracts that are capital assets
in the hands of the taxpayer and which are not part of a straddle. The Treasury
Department has authority to issue regulations under which certain transactions
subject to the special currency rules that are part of a "section 988 hedging
transaction" (as defined in the Internal Revenue Code of 1986, as amended (the
"Code"), and the Treasury Regulations) will be integrated and treated as a
single transaction or otherwise treated consistently for purposes of the Code.
Any gain or loss attributable to the foreign currency component of a transaction
engaged in by a Portfolio which is not subject to the special currency rules
(such as foreign equity investments other than certain preferred stocks) will be
treated as capital gain or loss and will not be segregated from the gain or loss
on the underlying transaction. It is anticipated that some of the non-U.S.
dollar denominated investments and foreign currency contracts the Portfolios may
make or enter into will be subject to the special currency rules described
above.
As disclosed in the related Prospectus, there are a number of risks
involved in investing in foreign securities, including securities of issuers in
emerging market countries in which The Emerging Markets, The International
Mid-Cap Sub, The International Equity, The Labor Select International Equity,
The Global Equity, The International Fixed Income, The Global Fixed Income (and
with respect to The Real Estate Investment Trust, The High Yield Bond and The
Diversified Core Fixed Income Portfolios as to 10%, 10%, 10% and 5% 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
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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 fixed-income securities in which the Portfolio may invest may be
U.S. dollar or foreign currency denominated, including ECU. Such securities
must have a government or government agency backed credit status which would
include, but not be limited to, supranational entities. A supranational entity
is an entity established or financially supported by the national governments
of one or more countries to promote development or reconstruction. They
include: The Work Bank, European Investment Bank, Asian Development Bank,
European Economic Community and the Inter-American Development Bank. Such
fixed-income securities will be typically rated, at the time of purchase, AA
or higher by Standard & Poors, Inc. or Aa or higher by Moodys Investor
Services or of comparable quality as determined by the Portfolio's investment
adviser.
Foreign Currency Transactions (The International Equity Portfolio, The
International Mid-Cap Sub Portfolio, The Labor Select International Equity
Portfolio, The Real Estate Investment Trust Portfolios, The Global Fixed
Income Portfolio, The International Fixed Income Portfolio, The Emerging
Markets Portfolio , The Global Equity Portfolio and The Diversified Core
Portfolio)
The International Equity Portfolio, The International Mid-Cap Sub
Portfolio, The Labor Select International Equity Portfolio, The Global Fixed
Income Portfolio, The International Fixed Income Portfolio, The Emerging
Markets Portfolio and The Global Equity Portfolio (as well as The Real Estate
Investment Trust
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Portfolios and The Diversified Core Fixed Income Portfolio, consistent with
their limited ability to invest in foreign securities) may purchase or sell
currencies and/or engage in forward foreign currency transactions in order to
expedite settlement of portfolio transactions and to minimize currency value
fluctuations.
Forward foreign currency contracts are traded in the interbank market
conducted directly between currency traders (usually large commercial banks)
and their customers. A forward contract generally has no deposit requirement,
and no commissions are charged at any stage for trades. A Portfolio will
account for forward contracts by marking to market each day at daily exchange
rates.
When a Portfolio enters into a forward contract to sell, for a fixed
amount of U.S. dollars or other appropriate currency, the amount of foreign
currency approximating the value of some or all of its assets denominated in
such foreign currency, its Custodian Bank will place or will cause to be
placed cash or liquid equity or debt securities in a separate account of that
Portfolio in an amount not less than the value of that Portfolio's total
assets committed to the consummation of such forward contracts. If the
additional cash or securities placed in the
separate account declines, additional cash or securities will be placed in the
account on a daily basis so that the value of the account will equal the
amount of that Portfolio's commitments with respect to such contracts.
As noted in the related Prospectus, The International Fixed Income
Portfolio, The Emerging Markets Portfolio , The Global Equity Portfolio and
the Diversified Core Fixed Income Portfolio may also enter into transactions
involving foreign currency options, futures contracts and options on futures
contracts, in order to minimize the currency risk in its investment portfolio.
Foreign currency options are traded in a manner substantially similar
to options on securities. In particular, an option on foreign currency
provides the holder with the right to purchase, in the case of a call option,
or to sell, in the case of a put option, a stated quantity of a particular
currency for a fixed price up to a stated expiration date. The writer of the
option undertakes the obligation to deliver, in the case of a call option, or
to purchase, in the case of a put option, the quantity of the currency called
for in the option, upon exercise of the option by the holder.
As in the case of other types of options, the holder of an option on
foreign currency is required to pay a one-time, non-refundable premium, which
represents the cost of purchasing the option. The holder can lose the entire
amount of this premium, as well as related transaction costs, but not more
than this amount. The writer of the option, in contrast, generally is required
to make initial and variation margin payments, similar to margin deposits
required in the trading of futures contacts and the writing of other types of
options. The writer is therefore subject to risk of loss beyond the amount
originally invested and above the value of the option at the time it is
entered into.
Certain options on foreign currencies, like forward contracts, are
traded over-the-counter through financial institutions acting as market-makers
in such options and the underlying currencies. Such transactions therefore
involve risks not generally associated with exchange-traded instruments.
Options on foreign currencies may also be traded on national securities
exchanges regulated by the Commission or commodities exchanges regulated by
the Commodity Futures Trading Commission.
A foreign currency futures contract is a bilateral agreement
providing for the purchase and sale of a specified type and amount of a
foreign currency. By its terms, a futures contract provides for a specified
settlement date on which, in the case of the majority of foreign currency
futures contracts, the currency
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underlying the contract is delivered by the seller and paid for by the
purchaser, or on which, in the case of certain futures contracts, the difference
between the price at which the contract was entered into and the contract's
closing value is settled between the purchaser and seller in cash. Futures
contracts differ from options in that they are bilateral agreements, with both
the purchaser and the seller equally obligated to complete the transactions. In
addition, futures contracts call for settlement only on the expiration date, and
cannot be "exercised" at any other time during their term.
The purchase or sale of a futures contract also differs from the
purchase or sale of a security or the purchase of an option in that no
purchase price is paid or received. Instead, an amount of cash or cash
equivalents, which varies but may be as low as 5% or less of the value of the
contract, must be deposited with the broker as "initial margin" as a good
faith deposit. Subsequent payments to and from the broker referred to as
"variation margin" are made on a daily basis as the value of the currency
underlying the futures contract fluctuates, making positions in the futures
contract more or less valuable, a process known as "marking to the market."
A futures contract may be purchased or sold only on an exchange, known
as a "contract market," designated by the Commodity Futures Trading Commission
for the trading of such contract, and only through a registered futures
commission merchant which is a member of such contract market. A commission must
be paid on each completed purchase and sale transaction. The contract market
clearinghouse guarantees the performance of each party to a futures contract by
in effect taking the opposite side of such contract. At any time prior to the
expiration of a futures contract, a trader may elect to close out its position
by taking an opposite position on the contract market on which the position was
entered into, subject to the availability of a secondary market, which will
operate to terminate the initial position. At that time, a final determination
of variation margin is made and any loss experienced by the trader is required
to be paid to the contract market clearing house while any profit due to the
trader must be delivered to it.
A call option on a futures contract provides the holder with the
right to purchase, or enter into a "long" position in, the underlying futures
contract. A put option on a futures contract provides the holder with the
right to sell, or enter into a "short" position, in the underlying futures
contract. In both cases, the option provides for a fixed exercise price up to
a stated expiration date. Upon exercise of the option by the holder, the
contract market clearinghouse establishes a corresponding short position for
the writer of the option, in the case of a call option, or a corresponding
long position in the case of a put option and the writer delivers to the
holder the accumulated balance in the writer's margin account which represents
the amount by which the market price of the futures contract at exercise
exceeds, in the case of a call, or is less than, in the case of a put, the
exercise price of the option on the futures contract. In the event that an
option written by the Portfolio is exercised, the Portfolio will be subject to
all the risks associated with the trading of futures contracts, such as
payment of variation margin deposits. In addition, the writer of an option on
a futures contract, unlike the holder, is subject to initial and variation
margin requirements on the option position.
A position in an option on a futures contract may be terminated by
the purchaser or seller prior to expiration by effecting a closing purchase or
sale transaction, subject to the availability of a liquid secondary market,
which is the purchase or sale of an option of the same series (i.e., the same
exercise price and expiration date) as the option previously purchased or
sold. The difference between the premiums paid and received represents the
trader's profit or loss on the transaction.
An option becomes worthless to the holder when it expires. Upon
exercise of an option, the exchange or contract market clearinghouse assigns
exercise notices on a random basis to those of its members which have
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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 and The Emerging Markets
Portfolio)
The Global Fixed Income Portfolio, The International Fixed Income
Portfolio, The Diversified Core Fixed Income Portfolio and The Emerging Markets
Portfolio may invest, within the limits specified in the related Prospectus, in
Brady Bonds and other sovereign debt securities of countries that have
restructured or are in the process of restructuring sovereign debt pursuant to
the Brady Plan. Brady Bonds are debt securities issued under the framework of
the Brady Plan, an initiative announced by then U.S. Treasury Secretary Nicholas
F. Brady in 1989, as a mechanism for debtor nations to restructure their
outstanding external indebtedness (generally, commercial bank debt). In
restructuring its external debt under the Brady Plan framework, a debtor nation
negotiates with its existing bank lenders as well as multilateral institutions
such as the World Bank and the International Monetary Fund (the "IMF"). The
Brady Plan framework, as it has developed, contemplates the exchange of
commercial bank debt for newly issued bonds (Brady Bonds). The World Bank and/or
the IMF support the restructuring by providing funds pursuant to loan agreements
or other arrangements which enable the debtor nation to collateralize the new
Brady Bonds or to repurchase outstanding bank debt at a discount. Under these
arrangements with the World Bank and/or the IMF, debtor nations have been
required to agree to the implementation of certain domestic monetary and fiscal
reforms. Such reforms have included the liberalization of trade and foreign
investment, the privatization of state-owned enterprises and the setting of
targets for public spending and borrowing. These policies and programs seek to
promote the debtor country's ability to service its external obligations and
promote its economic growth and development. Investors should recognize that the
Brady Plan only sets forth general guiding principles for economic reform and
debt reduction, emphasizing that solutions must be negotiated on a case-by-case
basis between debtor nations and their creditors. The investment adviser to the
Portfolios believes that economic reforms undertaken by countries in connection
with the issuance of Brady Bonds make the debt of countries which have issued or
have announced plans to issue Brady Bonds an attractive opportunity for
investment.
To date, Mexico, Costa Rica, Venezuela, Uruguay and Nigeria have
issued approximately $50 billion of Brady Bonds, and Argentina, Brazil and the
Philippines have announced plans to issue approximately $90 billion, based on
current estimates, of Brady Bonds. Investors should recognize that Brady Bonds
have been issued only recently, and accordingly do not have a long payment
history. Agreements implemented under the Brady Plan to date are designed to
achieve debt and debt-service reduction through specific options negotiated by
a debtor nation with its creditors. As a result, the financial packages
offered by each country differ. The types of options have included the
exchange of outstanding commercial bank debt for bonds issued at 100% of face
value of such debt, bonds issued at a discount of face value of such debt,
bonds bearing an interest rate which increases over time and bonds issued in
exchange for the advancement of new money by existing lenders. Certain Brady
Bonds have been collateralized as to principal due at maturity by U.S.
Treasury zero coupon bonds with a maturity equal to the final maturity of such
Brady Bonds, although the collateral is not available to investors until the
final maturity of the Brady Bonds. Collateral purchases are financed by the
IMF, the World Bank and the debtor nations' reserves. In addition, the first
two or three interest payments on certain types of Brady Bonds may be
collateralized by cash or securities agreed upon by creditors.
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Options on Securities, Futures Contracts and Options on Futures Contracts (The
Aggressive Growth Portfolio, The Real Estate Investment Trust Portfolios, The
Diversified Core Fixed Income Portfolio, The Emerging Markets Portfolio and The
Global Equity Portfolio)
In order to remain fully invested, and to reduce transaction costs,
The Aggressive Growth Portfolio, The Real Estate Investment Trust Portfolios,
The Diversified Core Fixed Income Portfolio, The Emerging Markets Portfolio
and The Global Equity Portfolio may, to the limited extent identified in the
related Prospectus, use futures contracts, options on futures contracts and
options on securities and may enter into closing transactions with respect to
such activities. The Portfolios may only enter into these transactions for
hedging purposes, if it is consistent with the Portfolios' investment
objectives and policies. The Portfolios will not engage in such transactions
to the extent that obligations resulting from these activities in the
aggregate exceed 25% of the Portfolios' assets.
Options
The Aggressive Growth Portfolio, The Real Estate Investment Trust
Portfolios, The Emerging Markets Portfolio and The Global Equity Portfolio may
purchase call options, write call options on a covered basis, write secured
put options, which put options for The Aggressive Growth Portfolio , The Real
Estate Investment Trust Portfolios and The Diversified Core Fixed Income
Portfolio will be on a covered basis only.
The Portfolios may invest in options that are either exchange-listed
or traded over-the-counter. Certain over-the-counter options may be illiquid.
Thus, it may not be possible to close options positions and this may have an
adverse impact on the Portfolios' ability to effectively hedge their
securities. The Aggressive Growth Portfolio will not invest more than 10% of
its assets in illiquid securities, and The Real Estate Investment Trust
Portfolios, The Diversified Core Fixed Income Portfolio, The Emerging Markets
Portfolio and The Global Equity Portfolio will not invest more than 15% of
their respective assets in illiquid securities.
A. Covered Call Writing--The Portfolios may write covered call
options from time to time on such portion of their securities as the
investment adviser determines is appropriate given the limited circumstances
under which the Portfolios intend to engage in this activity. A call option
gives the purchaser of such option the right to buy and the writer (in this
case a Portfolio) the obligation to sell the underlying security at the
exercise price during the option period. If the security rises in value,
however, the Portfolio may not fully participate in the market appreciation.
During the option period, a covered call option writer may be
assigned an exercise notice by the broker/dealer through whom such call option
was sold requiring the writer to deliver the underlying security against
payment of the exercise price. This obligation is terminated upon the
expiration of the option period or at such earlier time in which the writer
effects a closing purchase transaction. A closing purchase transaction cannot
be effected with respect to an option once the option writer has received an
exercise notice for such option.
With respect to options on actual portfolio securities owned by the
Portfolios, a Portfolio may enter into closing purchase transactions. A
closing purchase transaction is one in which the Portfolio, when obligated as
a writer of an option, terminates its obligation by purchasing an option of
the same series as the option previously written.
Consistent with the limited purposes for which the Portfolios intend
to engage in the writing of covered calls, closing purchase transactions will
ordinarily be effected to realize a profit on an outstanding call option, to
prevent an underlying security from being called, to permit the sale of the
underlying security or to enable the
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Portfolios to write another call option on the underlying security with either a
different exercise price or expiration date or both.
The Portfolios may realize a net gain or loss from a closing purchase
transaction depending upon whether the net amount of the original premium
received on the call option is more or less than the cost of effecting the
closing purchase transaction. Any loss incurred in a closing purchase
transaction may be partially or entirely offset by the premium received from a
sale of a different call option on the same underlying security. Such a loss
may also be wholly or partially offset by unrealized appreciation in the
market value of the underlying security. Conversely, a gain resulting from a
closing purchase transaction could be offset in whole or in part by a decline
in the market value of the underlying security.
If a call option expires unexercised, a Portfolio will realize a
short-term capital gain in the amount of the premium on the option, less the
commission paid. Such a gain, however, may be offset by depreciation in the
market value of the underlying security during the option period. If a call
option is exercised, a Portfolio will realize a gain or loss from the sale of
the underlying security equal to the difference between the cost of the
underlying security, and the proceeds of the sale of the security plus the
amount of the premium on the option, less the commission paid.
The market value of a call option generally reflects the market price
of an underlying security. Other principal factors affecting market value
include supply and demand, interest rates, the price volatility of the
underlying security and the time remaining until the expiration date.
The Portfolios will write call options only on a covered basis, which
means that the Portfolios will own the underlying security subject to a call
option at all times during the option period. Unless a closing purchase
transaction is effected, the Portfolios would be required to continue to hold a
security which they might otherwise wish to sell, or deliver a security it would
want to hold. Options written by the Portfolios will normally have expiration
dates between one and nine months from the date written. The exercise price of a
call option may be below, equal to, or above the current market value of the
underlying security at the time the option is written.
B. Purchasing Call Options--The Portfolios may purchase call options
to the extent that premiums paid by the Portfolios do not aggregate more than
2% of their total assets. When a Portfolio purchases a call option, in return
for a premium paid by the Portfolio to the writer of the option, the Portfolio
obtains the right to buy the security underlying the option at a specified
exercise price at any time during the term of the option. The writer of the
call option, who receives the premium upon writing the option, has the
obligation, upon exercise of the option, to deliver the underlying security
against payment of the exercise price. The advantage of purchasing call
options is that the Portfolios may alter portfolio characteristics and modify
portfolio maturities without incurring the cost associated with portfolio
transactions.
The Portfolios may, following the purchase of a call option,
liquidate their positions by effecting a closing sale transaction. This is
accomplished by selling an option of the same series as the option previously
purchased. The Portfolios will realize a profit from a closing sale
transaction if the price received on the transaction is more than the premium
paid to purchase the original call option; the Portfolios will realize a loss
from a closing sale transaction if the price received on the transaction is
less than the premium paid to purchase the original call option.
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
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particular option, or at any particular time, and for some options no
secondary market on an exchange may exist. In such event, it may not be
possible to effect closing transactions in particular options, with the result
that the Portfolios would have to exercise their options in order to realize
any profit and would incur brokerage commissions upon the exercise of such
options and upon the subsequent disposition of the underlying securities
acquired through the exercise of such options. Further, unless the price of
the underlying security changes sufficiently, a call option purchased by a
Portfolio may expire without any value to the Portfolio.
C. Purchasing Put Options--The Portfolios may purchase put options to
the extent premiums paid by the Portfolios do not aggregate more than 2% of
their total assets. The Aggressive Growth , The Real Estate Investment Trust
and The Diversified Core Fixed Income Portfolios will, at all times during
which they hold a put option, own the security covered by such option.
A put option purchased by the Portfolios gives them the right to sell
one of their securities for an agreed price up to an agreed date. Consistent
with the limited purposes for which the Portfolios intend to purchase put
options, the Portfolios intend to purchase put options in order to protect
against a decline in the market value of the underlying security below the
exercise price less the premium paid for the option ("protective puts"). The
ability to purchase put options will allow a Portfolio to protect unrealized
gain in an appreciated security in its portfolio without actually selling the
security. If the security does not drop in value, the Portfolio will lose the
value of the premium paid. The Portfolio may sell a put option which it has
previously purchased prior to the sale of the securities underlying such
option. Such sales will result in a net gain or loss depending on whether the
amount received on the sale is more or less than the premium and other
transaction costs paid on the put option which is sold.
The Portfolios may sell a put option purchased on individual
portfolio securities. Additionally, the Portfolios may enter into closing sale
transactions. A closing sale transaction is one in which a Portfolio, when it
is the holder of an outstanding option, liquidates its position by selling an
option of the same series as the option previously purchased.
D. Writing Put Options--A put option written by a Portfolio obligates
it to buy the security underlying the option at the exercise price during the
option period and the purchaser of the option has the right to sell the
security to the Portfolio. During the option period, the Portfolio, as writer
of the put option, may be assigned an exercise notice by the broker/dealer
through whom the option was sold requiring the Portfolio to make payment of
the exercise price against delivery of the underlying security. The obligation
terminates upon expiration of the put option or at such earlier time at which
the writer effects a closing purchase transaction. A Portfolio may write put
options on a secured basis which means that the Portfolio will maintain in a
segregated account with its Custodian Bank, cash or U.S. government securities
in an amount not less than the exercise price of the option at all times
during the option period. The amount of cash or U.S. government securities
held in the segregated account will be adjusted on a daily basis to reflect
changes in the market value of the securities covered by the put option
written by the Portfolios. Consistent with the limited purposes for which the
Portfolios intend to engage in the writing of put options, secured put options
will generally be written in circumstances where the investment adviser wishes
to purchase the underlying security for the Portfolios at a price lower than
the current market price of the security. In such event, a Portfolio would
write a secured put option at an exercise price which, reduced by the premium
received on the option, reflects the lower price it is willing to pay.
Following the writing of a put option, the Portfolios may wish to
terminate the obligation to buy the security underlying the option by
effecting a closing purchase transaction. This is accomplished by buying an
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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 and The
Diversified Core Fixed Income Portfolio may acquire option on stock indices. A
stock index assigns relative values to the common stocks included in the index
with the index fluctuating with changes in the market values of the underlying
common stock.
Options on stock indices are similar to options on stocks but have
different delivery requirements. Stock options provide the right to take or
make delivery of the underlying stock at a specified price. A stock index
option gives the holder the right to receive a cash "exercise settlement
amount" equal to (i) the amount by which the fixed exercise price of the
option exceeds (in the case of a put) or is less than (in the case of a call)
the closing value of the underlying index on the date of exercise, multiplied
by (ii) a fixed "index multiplier." Receipt of this cash amount will depend
upon the closing level of the stock index upon which the option is based being
greater than (in the case of a call) or less than (in the case of a put) the
exercise price of the option. The amount of cash received will be equal to
such difference between the closing price of the index and exercise price of
the option expressed in dollars times a specified multiple. The writer of the
option is obligated, in return for the premium received to make delivery of
this amount. Gain or loss to a Portfolio on transactions in stock index
options will depend on price movements in the stock market generally (or in a
particular industry or segment of the market) rather than price movements of
individual securities. As with stock options, a Portfolio may offset its
position in stock index options prior to expiration by entering into a closing
transaction on an Exchange or it may let the option expire unexercised.
A stock index fluctuates with changes in the market values of the
stock so included. Some stock index options are based on a broad market index
such as the Standard & Poor's 500 or the New York Stock Exchange Composite
Index, or a narrower market index such as the Standard & Poor's 100. Indices
are also based on an industry or market segment such as the AMEX Oil and Gas
Index or the Computer and Business Equipment Index. Options on stock indices
are currently traded on domestic exchanges such as: The Chicago Board Options
Exchange, the New York Stock Exchange and American Stock Exchange as well as
on foreign exchanges.
A Portfolio's ability to hedge effectively all or a portion of its
securities through transactions in options on stock indices depends on the
degree to which price movements in the Portfolio's securities. Since a
Portfolio will not duplicate the components of an index, the correlation will
not be exact. Consequently, a Portfolio bears the risk that the prices of the
securities being hedged will not move in the same amount as the hedging
instrument. It is also possible that there may be a negative correlation
between the index or other securities which would result in a loss on both
such securities and the hedging instrument.
Positions in stock index options may be closed out only on an
Exchange which provides a secondary market. There can be no assurance that a
liquid secondary market will exist for any particular stock index option.
Thus, it may not be possible to close such an option. The inability to close
options positions could have an adverse impact on a Portfolio's ability
effectively to hedge its securities. A Portfolio will enter into an option
position only if there appears to be a liquid secondary market for such
options.
A Portfolio will not engage in transactions in options on stock
indices for speculative purposes but only to protect appreciation attained and
to take advantage of the liquidity available in the option markets.
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Futures and Options on Futures
Consistent with the limited circumstances under which The Aggressive
Growth Portfolio, The Real Estate Investment Trust Portfolios, The Diversified
Core Fixed Income Portfolio, The Emerging Markets Portfolio and The Global
Equity Portfolio will use futures, the Portfolios may enter into contracts for
the purchase or sale for future delivery of securities. While futures
contracts provide for the delivery of securities, deliveries usually do not
occur. Contracts are generally terminated by entering into an offsetting
transaction. When a Portfolio enters into a futures transaction, it must
deliver to the futures commission merchant selected by the Portfolio an amount
referred to as "initial margin." This amount is maintained by the futures
commission merchant in an account at the Portfolio's Custodian Bank.
Thereafter, a "variation margin" may be paid by the Portfolio to, or drawn by
the Portfolio from, such account in accordance with controls set for such
account, depending upon changes in the price of the underlying securities
subject to the futures contract.
Consistent with the limited purposes for which the Portfolios may
engage in these transactions, a Portfolio may enter into such futures
contracts to protect against the adverse effects of fluctuations in interest
rates without actually buying or selling the securities. For example, if
interest rates are expected to increase, a Portfolio might enter into futures
contracts for the sale of debt securities. Such a sale would have much the
same effect as selling an equivalent value of the debt securities owned by the
Portfolio. If interest rates did increase, the value of the debt securities in
the portfolio would decline, but the value of the futures contracts to the
Portfolio would increase at approximately the same rate, thereby keeping the
net asset value of the Portfolio from declining as much as it otherwise would
have. Similarly, when it is expected that interest rates may decline, futures
contracts may be purchased to hedge in anticipation of subsequent purchases of
securities at higher prices. Because the fluctuations in the value of futures
contracts should be similar to those of debt securities, a Portfolio could
take advantage of the anticipated rise in value of debt securities without
actually buying them until the market had stabilized. At that time, the
futures contracts could be liquidated and the Portfolio could then buy debt
securities on the cash market.
With respect to options on futures contracts, when a Portfolio is not
fully invested, it may purchase a call option on a futures contract to hedge
against a market advance due to declining interest rates. The purchase of a
call option on a futures contract is similar in some respects to the purchase
of a call option on an individual security. Depending on the pricing of the
option compared to either the price of the futures contract upon which it is
based, or the price of the underlying debt securities, it may or may not be
less risky than ownership of the futures contract or underlying debt
securities.
The writing of a call option on a futures contract constitutes a
partial hedge against the declining price of the security which is deliverable
upon exercise of the futures contract. If the futures price at the expiration
of the option is below the exercise price, the Portfolio will retain the full
amount of the option premium which provides a partial hedge against any
decline that may have occurred in the Portfolio's holdings. The writing of a
put option on a futures contract constitutes a partial hedge against the
increasing price of the security which is deliverable upon exercise of the
futures contract. If the futures price at the expiration of the option is
higher than the exercise price, the Portfolio will retain the full amount of
option premium which provides a partial hedge against any increase in the
price of securities which the Portfolio intends to purchase.
If a put or call option that a Portfolio has written is exercised,
the Portfolio will incur a loss which will be reduced by the amount of the
premium it receives. Depending on the degree of correlation between changes in
the value of its portfolio securities and changes in the value of its futures
positions, a Portfolio's losses from existing options on futures may, to some
extent, be reduced or increased by changes in the value of portfolio
securities. The purchase of a put option on a futures contract is similar in
some respects to the purchase of
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protective puts on portfolio securities. For example, consistent with the
limited purposes for which the Portfolios will engage in these activities, a
Portfolio will purchase a put option on a futures contract to hedge the
Portfolio's securities against the risk of rising interest rates.
To the extent that interest rates move in an unexpected direction,
the Portfolios may not achieve the anticipated benefits of futures contracts
or options on futures contracts or may realize a loss. For example, if a
Portfolio is hedged against the possibility of an increase in interest rates
which would adversely affect the price of securities held in its portfolio and
interest rates decrease instead, the Portfolio will lose part or all of the
benefit of the increased value of its securities which it has because it will
have offsetting losses in its futures position. In addition, in such
situations, if the Portfolio had insufficient cash, it may be required to sell
securities from its portfolio to meet daily variation margin requirements.
Such sales of securities may, but will not necessarily, be at increased prices
which reflect the rising market. The Portfolios may be required to sell
securities at a time when it may be disadvantageous to do so.
Further, with respect to options on futures contracts, the Portfolios
may seek to close out an option position by writing or buying an offsetting
position covering the same securities or contracts and have the same exercise
price and expiration date. The ability to establish and close out positions on
options will be subject to the maintenance of a liquid secondary market, which
cannot be assured.
* * *
From time to time, the Portfolios may also, as noted below, engage in
the following investment techniques:
Asset-Backed Securities (The Intermediate Fixed Income Portfolio , The
Limited-Term Maturity Portfolio, The Aggregate Fixed Income Portfolio and The
Diversified Core Fixed Income Portfolio)
The Intermediate Fixed Income Portfolio, The Limited-Term Maturity
Portfolio, The Aggregate Fixed Income Portfolio and The Diversified Core
Fixed Income Portfolio may each invest a portion of their assets in
asset-backed securities. The rate of principal payment on asset-backed
securities generally depends on the rate of principal payments received on the
underlying assets. Such rate of payments may be affected by economic and
various other factors such as changes in interest rates or the concentration
of collateral in a particular geographic area. Therefore, the yield may be
difficult to predict and actual yield to maturity may be more or less than the
anticipated yield to maturity. The credit quality of most asset-backed
securities depends primarily on the credit quality of the assets underlying
such securities, how well the entities issuing the securities are insulated
from the credit risk of the originator or affiliated entities, and the amount
of credit support provided to the securities.
Asset-backed securities are often backed by a pool of assets
representing the obligations of a number of different parties. To lessen the
effect of failures by obligors on underlying assets to make payments, such
securities may contain elements of credit support. Such credit support falls
into two categories: (i) liquidity protection, and (ii) protection against
losses resulting from ultimate default by an obligor on the underlying assets.
Liquidity protection refers to the provision of advances, generally by the
entity administering the pool of assets, to ensure that the receipt of
payments due on the underlying pool is timely. Protection against losses
resulting from ultimate default enhances the likelihood of payments of the
obligations on at least some of the assets in the pool. Such protection may be
provided through guarantees, insurance policies or letters of credit obtained
by the issuer or sponsor from third parties, through various means of
structuring the transaction or
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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)
The High Yield Bond Portfolio and The Diversified Core Fixed Income
Portfolio may invest their assets in high-yielding, lower rated or unrated
fixed-income securities (commonly known as "junk bonds") issued by U.S.
companies or, in the case of The Diversified Core Fixed Income Portfolio, also
in foreign companies. Among the possible risks of investing in high-yield
securities are the possibility of legislative and regulatory action and
proposals. There are a variety of legislative actions which have been taken or
which are considered from time to time by the United States Congress which could
adversely affect the market for high-yield securities. For example,
Congressional legislation limited the deductibility of interest paid on certain
high-yield securities used to finance corporate acquisitions. Also,
Congressional legislation has, with some exceptions, generally prohibited
federally-insured savings and loan institutions from investing in high-yield
securities. Regulatory actions have also affected the high-yield market. For
example, many insurance companies have restricted or eliminated their purchases
of high-yield securities as a result of, among other factors, actions taken by
the National Association of Insurance Commissioners. If similar legislative and
regulatory actions are taken in the future, they could result in further
tightening of the secondary market for high-yield issues, could reduce the
number of new high-yield securities being issued and could make it more
difficult for the Portfolios to attain their investment objective.
Repurchase Agreements
While each Portfolio is permitted to do so, it normally does not
invest in repurchase agreements, except to invest cash balances or for
temporary defensive purposes.
The funds in the Delaware Group, including Pooled Trust, Inc., have
obtained an exemption from the joint-transaction prohibitions of Section 17(d)
of the 1940 Act to allow the Delaware Group funds jointly to invest cash
balances. Each Portfolio may invest cash balances in a joint repurchase
agreement in accordance with the terms of the Order and subject generally to
the conditions described below.
A repurchase agreement is a short-term investment by which the
purchaser acquires ownership of a debt security and the seller agrees to
repurchase the obligation at a future time and set price, thereby determining
the yield during the purchaser's holding period. Should an issuer of a
repurchase agreement fail to repurchase the underlying security, the loss to a
Portfolio, if any, would be the difference between the repurchase price and
the market value of the security. Each Portfolio will limit its investments in
repurchase agreements to those which its respective investment adviser, under
the guidelines of the Board of Directors, determines to present minimal
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credit risks and which are of high quality. In addition, a Portfolio must have
collateral of at least 100% of the repurchase price, including the portion
representing the Portfolio's yield under such agreements which is monitored on a
daily basis.
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Portfolio Loan Transactions
Each Portfolio may loan up to 25% of its assets to qualified
broker/dealers or institutional investors for their use relating to short
sales or other security transactions.
It is the understanding of Pooled Trust, Inc. that the staff of the
Commission permits portfolio lending by registered investment companies if
certain conditions are met. These conditions are as follows: 1) each
transaction must have 100% collateral in the form of cash, short-term U.S.
government securities, or irrevocable letters of credit payable by banks
acceptable to Pooled Trust, Inc. from the borrower; 2) this collateral must be
valued daily and should the market value of the loaned securities increase,
the borrower must furnish additional collateral to a Portfolio; 3) a Portfolio
must be able to terminate the loan after notice, at any time; 4) a Portfolio
must receive reasonable interest on any loan, and any dividends, interest or
other distributions on the lent securities, and any increase in the market
value of such securities; 5) a Portfolio may pay reasonable custodian fees in
connection with the loan; and 6) the voting rights on the lent securities may
pass to the borrower; however, if the Board of Directors of Pooled Trust, Inc.
know that a material event will occur affecting an investment loan, they must
either terminate the loan in order to vote the proxy or enter into an
alternative arrangement with the borrower to enable the directors to vote the
proxy.
The major risk to which a Portfolio would be exposed on a loan
transaction is the risk that the borrower would go bankrupt at a time when the
value of the security goes up. Therefore, a Portfolio will only enter into
loan arrangements after a review of all pertinent facts by the respective
investment adviser, under the supervision of the Board of Directors, including
the creditworthiness of the borrowing broker, dealer or institution and then
only if the consideration to be received from such loans would justify the
risk. Creditworthiness will be monitored on an ongoing basis by the respective
investment adviser.
Restricted and Rule 144A Securities
Each Portfolio may invest in restricted securities, including
securities eligible for resale without registration pursuant to Rule 144A
("Rule 144A Securities") under the Securities Act of 1933. Rule 144A
Securities are traded among qualified institutional investors. While
maintaining oversight, the Board of Directors has delegated to the respective
investment adviser the day-to-day function of determining whether or not
individual Rule 144A Securities are liquid for purposes of each Portfolio's
limitation (whether 15% or 10% of total assets) on investments in illiquid
assets. The Board has instructed the respective investment adviser to consider
the following factors in determining the liquidity of a Rule 144A Security:
(i) the frequency of trades and trading volume for the security; (ii) whether
at least three dealers are willing to purchase or sell the security and the
number of other potential purchasers; (iii) whether at least two dealers are
making a market in the security; and (iv) the nature of the security and the
nature of the marketplace trades (e.g., the time needed to dispose of the
security, the method of soliciting offers, and the mechanics of transfer).
Investing in Rule 144A Securities could have the effect of increasing
the level of a Portfolio's illiquidity to the extent that qualified
institutional buyers become, for a time, uninterested in purchasing these
securities. After the purchase of a Rule 144A Security, however, the Board of
Directors and the respective investment adviser will continue to monitor the
liquidity of that security to ensure that a Portfolio has no more than 10% or
15%, as appropriate, of its total assets in illiquid securities.
The International Mid-Cap Sub Portfolio and The Diversified Core Fixed
Income Portfolio may purchase privately-placed securities whose resale is
restricted under applicable securities laws. Such restricted securities
generally offer a higher return potential than comparable registered securities
but involve some additional risk since they can be resold only in
privately-negotiated transactions or after
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<PAGE>
registration under applicable securities laws. The registration process may
involve delays which would result in the Portfolio obtaining a less favorable
price on a resale. The International Mid-Cap Sub Portfolio and Diversified Core
Fixed Income Portfolio will not purchase illiquid assets if more than 15% of its
net assets would then consist of such illiquid securities.
Non-Traditional Equity Securities (The International Mid-Cap Sub Portfolio and
The Emerging Markets Portfolio)
The International Mid-Cap Sub Portfolio and The Emerging Markets
Portfolio may invest in convertible preferred stocks that offer enhanced yield
features, such as Preferred Equity Redemption Cumulative Stock ("PERCS"), which
provide an investor, such as a Portfolio, with the opportunity to earn higher
dividend income than is available on a company's common stock. A PERCS is a
preferred stock which generally features a mandatory conversion date, as well as
a capital appreciation limit which is usually expressed in terms of a stated
price. Upon the conversion date, most PERCS convert into common stock of the
issuer (PERCS are generally not convertible into cash at maturity). Under a
typical arrangement, if after a predetermined number of years the issuer's
common stock is trading at a price below that set by the capital appreciation
limit, each PERCS would convert to one share of common stock. If, however, the
issuer's common stock is trading at a price above that set by the capital
appreciation limit, the holder of the PERCS would receive less than one full
share of common stock. If, however, the issuer's common stock is trading at a
price above that set by the capital appreciation limit, the holder of the PERCS
would receive less than one full share of common stock. The amount of that
fractional share of common stock received by the PERCS holder is determined by
dividing the price set by the capital appreciation limit of the PERCS by the
market price of the issuer's common stock. PERCS can be called at any time prior
to maturity, and hence do not provide call protection. However, if called early,
the issuer may pay a call premium over the market price to the investor. This
call premium declines at a preset rate daily, up to the maturity date of the
PERCS.
The International Mid-Cap Sub Portfolio and The Emerging Markets
Portfolio may also invest in other enhanced convertible securities. These
include but are not limited to ACES (Automatically Convertible Equity
Securities), PEPS (participating Equity Preferred Stock), PRIDES (Preferred
Redeemable Increased Dividend Equity Securities), SAILS (Stocks Appreciation
Income Linked Securities), TECONS (Term Convertible Notes), QICS (Quarterly
Income Cumulative Securities) and DECS (Dividend Enhanced Convertible
Securities). ACES, PEPS, PRIDES, SAILS, TECONS, QICS, and DECS all have the
following features: They are company-issued convertible preferred stock; unlike
PERCS, they do not have capital appreciation limits; they seek to provide the
investor with high current income, with some prospect of future capital
appreciation; they are typically issued with three to four-year maturities; they
typically have some built-in call protection for the first two to three years;
investors have the right to convert them into shares of common stock at a preset
conversion ratio or hold them until maturity; and upon maturity, they will
automatically convert to either cash or a specified number of shares of common
stock.
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.
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<PAGE>
U.S. Treasury securities are backed by the "full faith and credit" of the United
States. Securities issued or guaranteed by federal agencies and U.S. government
sponsored instrumentalities may or may not be backed by the full faith and
credit of the United States. In the case of securities not backed by the full
faith and credit of the United States, investors in such securities look
principally to the agency or instrumentality issuing or guaranteeing the
obligation for ultimate repayment, and may not be able to assert a claim against
the United States itself in the event the agency or instrumentality does not
meet its commitment. Agencies which are backed by the full faith and credit of
the United States include the Export-Import Bank, Farmers Home Administration,
Federal Financing Bank, and others. Certain agencies and instrumentalities, such
as the Government National Mortgage Association ("GNMA"), are, in effect, backed
by the full faith and credit of the United States through provisions in their
charters that they may make "indefinite and unlimited" drawings on the Treasury,
if needed to service its debt. Debt from certain other agencies and
instrumentalities, including the Federal Home Loan Bank and Federal National
Mortgage Association, are not guaranteed by the United States, but those
institutions are protected by the discretionary authority for the U.S. Treasury
to purchase certain amounts of their securities to assist the institutions in
meeting their debt obligations. Finally, other agencies and instrumentalities,
such as the Farm Credit System and the Federal Home Loan Mortgage Corporation,
are federally chartered institutions under U.S. government supervision, but
their debt securities are backed only by the creditworthiness of those
institutions, not the U.S. government.
Some of the U.S. government agencies that issue or guarantee securities
include the Export-Import Bank of the United States, Farmers Home
Administration, Federal Housing Administration, Maritime Administration, Small
Business Administration, and the Tennessee Valley Authority.
An instrumentality of a U.S. government agency is a government agency organized
under Federal charter with government supervision. Instrumentalities issuing or
guaranteeing securities include, among others, Federal Home Loan Banks, the
Federal Land Banks, Central Bank for Cooperatives, Federal Immediate Credit
Banks and the Federal National Mortgage Association.
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ACCOUNTING AND TAX ISSUES
When The Aggressive Growth Portfolio, either of The Real Estate
Investment Trust Portfolios, The International Fixed Income Portfolio, The
Emerging Markets Portfolio , The Global Equity Portfolio or The Diversified
Core Fixed Income Portfolio writes a call, or purchases a put option, an
amount equal to the premium received or paid by it is included in the section
of the Portfolio's assets and liabilities as an asset and as an equivalent
liability.
In writing a call, the amount of the liability is subsequently
"marked to market" to reflect the current market value of the option written.
The current market value of a written option is the last sale price on the
principal exchange on which such option is traded or, in the absence of a
sale, the mean between the last bid and ask prices. If an option which a
Portfolio has written expires on its stipulated expiration date, the Portfolio
recognizes a short-term capital gain. If a Portfolio enters into a closing
purchase transaction with respect to an option which the Portfolio has
written, the Portfolio realizes a short-term gain (or loss if the cost of the
closing transaction exceeds the premium received when the option was sold)
without regard to any unrealized gain or loss on the underlying security, and
the liability related to such option is extinguished. If a call option which a
Portfolio has written is exercised, the Portfolio realizes a capital gain or
loss from the sale of the underlying security on foreign currency and the
proceeds from such sale are increased by the premium originally received.
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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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;
(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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<PAGE>
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
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<PAGE>
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 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
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<PAGE>
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 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.
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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 Aggressive Growth
Portfolio, The International Equity Portfolio, The Global Fixed Income
Portfolio, The Labor Select International Equity Portfolio, The Intermediate
Fixed Income Portfolio and The Real Estate Investment Trust Portfolio through
October 31, 1997. Securities prices fluctuated during the period covered and
the past results should not be considered as representative of future
performance.
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Average Annual Total Return(1)
The The
Large-Cap Aggressive
Value Equity Growth
Portfolio Portfolio
1 year ended 1 year ended
10/31/97 26.73% 10/31/97 11.84%
3 years ended 3 years ended
10/31/97 23.75% 10/31/97 16.82%
5 years ended 5 years ended
10/31/97 20.69% 10/31/97 14.70%
Period 2/3/92(2) Period 2/27/92(2)
through 10/31/97 19.27% through 10/31/97 10.85%
The
The Global
International Fixed
Equity Income
Portfolio Portfolio
1 year ended 1 year ended
10/31/97 11.01% 10/31/97 5.59%
3 years ended 3 years ended
10/31/97 10.86% 10/31/97 12.99%
5 years ended Period 11/30/92(2)
10/31/97 14.66% through 10/31/97 11.75%
Period 2/4/92(2)
through 10/31/97 11.85%
(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.
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Average Annual Total Return(1)
The
Labor The
Select Intermediate
International Fixed
Equity Income
Portfolio Portfolio
1 year ended 1 year ended
10/31/97 16.01% 10/31/97 7.09%
Period Period
12/19/95(2) 3/12/96(2)
through through
10/31/97 18.28% 10/31/97 6.84%
(1) Certain expenses of the Portfolios have been waived and paid by the
respective investment adviser. In the absence of such waiver and
payment, performance would have been affected negatively.
(2) Date of initial sale.
Average Annual Total Return(1)
The Real Estate Investment Trust Portfolio
The Real Estate
Investment Trust
Portfolio Class (2)
1 year ended
10/31/97 46.50%
Period
12/6/95(3)
through
10/31/97 38.04%
(1) Certain expenses of the Portfolios have been waived and paid by the
investment adviser. In the absence of such waiver and payment,
performance would have been affected negatively.
(2) Shares of The Real Estate Investment Trust Portfolio class were made
available for sale beginning October 14, 1997. Pursuant to applicable
regulation, total return shown for the class is that of the original
(and then only) class of shares offered by The Real Estate Investment
Trust Portfolio. That original class has been redesignated REIT Fund A
Class. Like The Real Estate Investment Trust Portfolio class, the
original class, prior to its redesignation, did not carry a front -end
sales charge and was not subject to Rule WP-1 distribution expenses.
(3) Date of initial sale of the original class (now REIT Fund A Class).
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<PAGE>
Average Annual Total Return(1)
The Real Estate Investment Trust Portfolio
REIT Fund REIT Fund REIT Fund
A Class A Class Institutional Class(3)
(at Offer)(2) (at NAV)
1 year ended
10/31/97 39.57% 46.50% 46.50%
Period
12/6/95(4)
through
10/31/97 34.54% 38.04% 38.04%
(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. These performance numbers are calculated giving effect to the sales
charge. No adjustment has been made to reflect the effect of 12b -1
payments, but future performance will be affected by 12b -1 payments. REIT
Fund A Class is also subject to other expenses (at a higher rate than
applicable to the original class) which may affect performance of the
Class.
(3) Shares of REIT Fund Institutional Class were made available for sale
beginning October 14, 1997. Pursuant to applicable regulation, total
return shown for the class is that of the original (and then only) class
of shares offered by The Real Estate Investment Trust Portfolio. That
original class has been redesignated REIT Fund A Class. Like REIT Fund
Institutional Class, the original class, prior to its redesignation, did
not carry a front -end sales charge and was not subject to Rule 12b -1
distribution expenses. REIT Fund Institutional Class is also subject to
other expenses (at a higher rate than applicable to the original class)
which may affect performance of the Class.
(4) Date of initial sale of the original class (now REIT Fund A Class).
Information regarding performance of REIT Fund B Class and REIT Fund C
Class is not shown because such shares were not offered prior to October 31,
1997.
Pooled Trust, Inc. may also quote each Portfolio's current yield,
calculated as described below, in advertisements and investor communications.
-31-
<PAGE>
The yield computation is determined by dividing the net investment
income per share earned during the period by the maximum offering price per
share on the last day of the period and annualizing the resulting figure,
according to the following formula:
a--b 6
YIELD = 2[(-------- + 1) -- 1]
cd
Where: a = dividends and interest earned during the period;
b = expenses accrued for the period (net of
reimbursements);
c = the average daily number
of shares outstanding during
the period that were
entitled to receive
dividends;
d = the maximum offering price per share on the last
day of the period.
The above formula will be used in calculating quotations of yield, based
on specific 30-day periods identified in advertising by a Portfolio. Yield
quotations are based on the Portfolio's net asset value on the last day of the
period and will fluctuate depending on the period covered. The yields for The
Global Fixed Income Portfolio, The Intermediate Fixed Income Portfolio and The
High-Yield Bond Portfolio as of October 31, 1997 were 6.71% and 7.99%
and 9.14%, 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.
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<PAGE>
From time to time, performance of each Portfolio in Pooled Trust, Inc.
may be compared to various industry indices. For example, Pooled Trust, Inc.
may quote actual total return performance, dividend results and other
performance information of The Large-Cap Value Equity Portfolio, that
invests primarily in domestic equities, in advertising and other types of
literature and may compare that information to, or may separately illustrate
similar information reported by the Standard & Poor's 500 Stock Index and the
Dow Jones Industrial Average, and other unmanaged indices. The Standard &
Poor's 500 Stock Index and the Dow Jones Industrial Average are
industry-accepted unmanaged indices of generally-conservative securities used
for measuring general market performance. The total return performance
reported will reflect the reinvestment of all distributions on a quarterly
basis and market price fluctuations. The indices do not take into account any
management expenses or other fees. In seeking a particular investment objective,
the Portfolios that invest primarily in equities may include common stocks
considered by the investment adviser to be more aggressive than those tracked by
these indices.
From time to time, Pooled Trust, Inc. may quote actual total return
and/or yield performance for each Portfolio in advertising and other types of
literature compared to indices or averages of alternative financial products
available to prospective investors. For example, the performance comparisons
may include the average return of various bank instruments, some of which may
carry certain return guarantees, offered by leading banks and thrifts as
monitored by Bank Rate Monitor, and those of generally-accepted corporate bond
and government security price indices of various durations prepared by Lehman
Brothers and Solomon Brothers, Inc. These indices are not managed for any
investment goal.
Current interest rate and yield information on government debt
obligations of various durations, as reported weekly by the Federal Reserve
(Bulletin H.15), may also be used. Current industry rate and yield information
on all industry available fixed-income securities, as reported weekly by The
Bond Buyer, may also be used in preparing comparative illustrations. In
addition, the Consumer Price Index, the most commonly used measure of
inflation, may be used in preparing performance comparisons. The Consumer
Price Index, as prepared by the U.S. Bureau of Labor Statistics, indicates the
cost fluctuations of a representative group of consumer goods. It does not
represent a return from an investment.
Statistical and/or performance information and various indices compiled and
maintained by organizations such as the following may also be used in preparing
exhibits comparing certain industry trends to comparable Fund activity and
performance. Any indices used are not managed for any investment goal, and a
direct investment in an index is not possible.
CDA Technologies, Inc. is a performance evaluation service that maintains a
statistical database of performance, as reported by a diverse universe of
independently-managed mutual funds.
Ibbotson Associates, Inc. is a consulting firm that provides a variety of
historical data including total return, capital appreciation and income on the
stock market as well as other investment asset classes, and inflation. With its
permission, this information will be used primarily for comparative purposes and
to illustrate general financial planning principles.
Interactive Data Corporation is a statistical access service that
maintains a database of various industry indicators, such as historical and
current price/earnings information and individual equity and fixed-income price
and return information.
-33-
<PAGE>
Compustat Industrial Databases, a service of Standard & Poor's Ratings
Group, may also be used in preparing performance and historical stock and bond
market exhibits. This firm maintains fundamental databases that provide
financial, statistical and market information covering more than 7,000
industrial and non-industrial companies.
Russell Indexes is an investment analysis service that provides both
current and historical stock performance information, focusing on the business
fundamentals of those firms issuing the security.
Morgan Stanley Capital International is a research firm that maintains a
statistical database of international securities. It also compiles and maintains
a number of unmanaged indices of international securities. These indices are
designed to measure the performance of the stock markets outside of the USA.
Primary coverage of Europe, Canada, Mexico, Australia and the Far Eastern
markets, and that of international industry groups are included.
Lehman Brothers is a statistical research firm that maintains databases of
U.S. and international bond markets and corporate and government-backed
securities of various maturities. This information, as well as unmanaged indices
compiled and maintained by Lehman Brothers, will be used in preparing
comparative illustrations. In addition, the performance of multiple indices
compiled and maintained by this firm may be combined to create a blended
performance result for comparative purposes. Generally, the indices selected
will be representative of the types of securities in which the Portfolios may
invest and the assumptions that were used in calculating the blended performance
will be described.
Wellesley Group Inc. is an investment management consulting firm
specializing in investment and market research for endowments and pension plans.
Wellesley Group will be maintaining, on behalf of Pooled Trust, Inc., peer group
comparison composites for each Portfolio of Pooled Trust, Inc. The peer group
composites will be constructed by selecting publicly-offered mutual funds that
have investment objectives that are similar to those maintained by each
Portfolio in Pooled Trust, Inc. Wellesley Group will also be preparing
performance analyses of actual Fund performance, and benchmark index exhibits,
for inclusion in client quarterly review packages.
FT-Actuaries World Indices are jointly compiled by The Financial Times,
Ltd.; Goldman, Sachs & Co.; and Wood Mackenzie & Co., Ltd. in conjunction with
the Institute of Actuaries and the Faculty of Actuaries. Indices maintained by
this group primarily focus on compiling statistical information on international
financial markets and industry sectors, stock and bond issues and certain
fundamental information about the companies issuing the securities. Statistical
information on international currencies is also maintained.
Salomon Brothers is a statistical research firm that maintains databases
of international markets and bond markets (corporate and government-issued
securities). This information, as well as unmanaged indices compiled and
maintained by Salomon, will be used in preparing comparative illustrations. In
addition, the performance of multiple indices compiled and maintained by this
firm may be combined to create a blended performance result for comparative
performances. Generally, the indices selected will be representative of the
types of securities in which the Portfolios may invest and the assumptions that
were used in calculating the blended performance will be described.
Pooled Trust, Inc. may also promote each Portfolio's yield and/or
total return performance and use comparative performance information computed
by and available from certain industry and general market
-34-
<PAGE>
research publications, such as Lipper Analytical Services, Inc. In addition,
Pooled Trust, Inc. may also promote the total return performance of The Real
Estate Investment Trust Portfolio II by comparison to the original class (prior
to its redesignation as REIT Fund A Class) of The Real Estate Investment Trust
Portfolio.
The following tables are an example, for purposes of illustration
only, of cumulative total return performance through October 31, 1997 for
The Large-Cap Value Equity Portfolio, The Aggressive Growth Portfolio, The
International Equity Portfolio, The Global Fixed Income Portfolio, The Labor
Select International Equity Portfolio, The Intermediate Fixed Income
Portfolio, The High-Yield Bond Portfolio and The Real Estate Investment Trust
Portfolio. Cumulative total return performance through October 31, 1997 is
also shown below for The International Fixed Income and The Emerging Markets
Portfolios. For these purposes, the calculations assume the reinvestment of
any capital gains distributions and income dividends paid during the indicated
periods.
Cumulative Total Return(1)
The The
Large-Cap Aggressive
Value Equity Growth
Portfolio Portfolio
3 months ended 3 months ended
=
10/31/97 (3.59%) 10/31/97 1.33%
6 months ended 6 months ended
=
10/31/97 14.31% 10/31/97 22.36%
9 months ended 9 months ended
=
10/31/97 16.61% 10/31/97 8.31%
1 year ended 1 year ended
=
10/31/97 26.73% 10/31/97 11.84%
3 years ended 3 years ended
=
10/31/97 89.53% 10/31/97 59.44%
5 years ended 5 years ended
=
10/31/97 156.12% 10/31/97 98.53%
Period 2/3/92(2) Period 2/27/92(2)
through 10/31/97 175.10% through 10/31/97 79.47%
(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.
-35-
<PAGE>
Cumulative Total Return(1)
The The
International Global Fixed
Equity Income
Portfolio Portfolio
3 months ended 3 months ended
=
10/31/97 (9.58%) 10/31/97 3.30%
6 months ended 6 months ended
=
10/31/97 1.63% 10/31/97 6.09%
9 months ended 9 months ended
=
10/31/97 5.39% 10/31/97 5.60%
1 year ended 1 year ended
=
10/31/97 11.01% 10/31/97 5.59%
3 years ended 3 years ended
=
10/31/97 36.25% 10/31/97 44.26%
5 years ended Period 11/30/92(2)
10/31/97 98.32% through 10/31/97 72.77%
Period 2/4/92(2)
through 10/31/97 90.21%
(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.
-36-
<PAGE>
Cumulative Total Return(1)
The
Intermediate
Fixed The High-
Income Yield Bond
Portfolio Portfolio
3 months ended 3 months ended
10/31/97 1.51% 10/31/97 4.16%
6 months ended 6 months ended
10/31/97 5.36% 10/31/97 12.01%
9 months ended 9 months ended
10/31/97 5.89% 10/31/97 14.20%
1 year ended Period 12/2/96(3)
10/31/97 7.09% through 10/31/97 17.92%
Period 3/12/96(2)
through 10/31/97 11.45%
(1) Certain expenses of the Portfolios have been waived and paid by the
respective investment adviser. In the absence of such waiver and
payment, performance would have been affected negatively.
(2) Date of initial sale.
(3) Date of initial sale; total return for this short of a time period may
not be representative of longer term results.
-37-
<PAGE>
Cumulative Total Return(1)
The Real Estate Investment Trust Portfolio
The Real Estate
Investment Trust
Portfolio Class (2)
3 months ended 10/31/97 7.33%
6 months ended 10/31/97 23.56%
9 months ended 10/31/97 22.90%
1 year ended 10/31/97 46.50%
Period 12/6/95(3) through 10/31/97 84.77%
(1) Certain expenses of the Portfolio have been waived and paid by the
investment adviser. In the absence of such waiver and payment,
performance would have been affected negatively.
(2) Shares of The Real Estate Investment Trust Portfolio class were made
available for sale beginning October 14, 1997. Pursuant to applicable
regulation, total return shown for the class is that of the original
(and then only) class of shares offered by The Real Estate Investment
Trust Portfolio. That original class has been redesignated REIT Fund
A Class. Like The Real Estate Investment Trust Portfolio class, the
original class, prior to its redesignation, did not carry a
front -end sales charge and was not subject to Rule 12b-1
distribution expenses.
(3) Date of initial sale of the original class (now REIT Fund A Class).
-38-
<PAGE>
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
10/31/97 2.20% 7.33%
6 months ended
10/31/97 17.66%(5) 23.56%
9 months ended
10/31/97 17.06% 22.90%
1 year ended
10/31/97 39.57% 46.50%
Period 12/6/95(4)
through 10/31/97 75.97% 84.77%
(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. No adjustment has been
made to reflect the effect of 12b -1 payments, but future performance
will be affected by 12b -1 payments. REIT Fund A Class is also subject
to other expenses (at a higher rate than applicable to the original
class) which may affect performance of the Class.
(3) Shares of REIT Fund Institutional Class were made available for sale
beginning October 14, 1997. Pursuant to applicable regulation, total
return shown for the class is that of the original (and then only)
class of shares offered by The Real Estate Investment Trust Portfolio.
That original class has been redesignated REIT Fund A Class. Like REIT
Fund Institutional Class, the original class, prior to its
redesignation, did not carry a front -end sales charge and was not
subject to Rule 12b -1 distribution expenses. REIT Institutional
Class is also subject to other expenses (at a higher rate than
applicable to the original class) which may affect performance of the
Class.
(4) Date of initial sale of the original class (now REIT Fund A Class).
(5) Cumulative total return at net asset value was 23.56% for the six
months ended October 31, 1997.
-39-
<PAGE>
Cumulative Total Return(1)
<TABLE>
<CAPTION>
The
Labor The
Select International
International Fixed
Equity Income
Portfolio Portfolio
<S> <C> <C> <C>
3 months ended 3 months ended
10/31/97 (4.91%) 10/31/97 5.21%
6 months ended 6 months ended
10/31/97 5.65% 10/31/97 6.89%
9 months ended Period 4/11/97(3)
10/31/97 10.75% through 10/31/97 7.11%
1 year ended
10/31/97 16.01%
Period 12/19/95(2)
through 10/31/97 36.86%
The The
Emerging Global
Markets Equity
Portfolio Portfolio
3 months ended Period 10/15/97(3)
10/31/97 (18.08%) through 10/31/97 (4.47%)
6 months ended
10/31/97 (9.00%)
Period 4/14/97(3)
through 10/31/97 (8.00%)
</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.
-40-
<PAGE>
In addition, information will be provided that discusses the
overriding investment philosophies of Delaware Investment Advisers, a division
of Delaware Management Company, Inc. ("Delaware"), the investment adviser to
The Large-Cap Value Equity, The Aggressive Growth, 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 and
The Diversified Core Fixed 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. employs in seeking Portfolio objectives. Since the investment
disciplines being employed for each Portfolio in Pooled Trust, Inc. are based
on the disciplines and strategies employed by Delaware and Delaware
International to manage institutional separate accounts, investment strategies
and disciplines of these entities may also be discussed.
The 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.
-41-
<PAGE>
TRADING PRACTICES AND BROKERAGE
Pooled Trust, Inc. (and, in the case of The International Equity, The
International Mid-Cap Sub, The Labor Select International Equity, The Global
Fixed Income, The International Fixed Income, The Emerging Markets , The
Global Equity and The Diversified Core Fixed Income Portfolios, their
investment adviser or sub-adviser) selects brokers or dealers to execute
transactions for the purchase or sale of portfolio securities on the basis of
its judgment of their professional capability to provide the service. The
primary consideration is to have brokers or dealers execute transactions at
best price and execution. Best price and execution refers to many factors,
including the price paid or received for a security, the commission charged,
the promptness and reliability of execution, the confidentiality and placement
accorded the order and other factors affecting the overall benefit obtained by
the account on the transaction. A number of trades are made on a net basis
where securities either are purchased directly from the dealer or are sold to
the dealer. In these instances, there is no direct commission charged but
there is a spread (the difference between the buy and sell price) which is the
equivalent of a commission. When a commission is paid, Pooled Trust, Inc. pays
reasonably competitive brokerage commission rates based upon the professional
knowledge of its trading department (and, in the case of The International
Equity, The International Mid-Cap Sub, The Labor Select International Equity,
The Global Fixed Income, The International Fixed Income, The Emerging Markets
, The Global Equity and The Diversified Core Fixed Income Portfolios, their
investment adviser) as to rates paid and charged for similar transactions
throughout the securities industry. In some instances, Pooled Trust, Inc. pays
a minimal share transaction cost when the transaction presents no difficulty.
Securities transactions for The International Equity, The
International Mid-Cap Sub, The Labor Select International Equity, The Global
Equity, The Emerging Markets, The Global Fixed Income, The International Fixed
Income, The High Yield Bond, The Real Estate Investment Trust and The
Diversified Core Fixed Income Portfolios may be effected in foreign markets
which may not allow negotiation of commissions or where it is customary to pay
fixed rates.
During the fiscal years ended October 31, 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 Aggressive Growth 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 Intermediate Fixed Income Portfolio(3) --- --- N/A
The Emerging Markets Portfolio(4) $92,535 N/A N/A
The Global Equity Portfolio(5) $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 March 12, 1996.
(4) Commenced operations on April 14, 1997.
(5) Commenced operations on October 15, 1997.
-42-
<PAGE>
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:
Portfolio Brokerage
Transactions Commissions
Amounts Amounts
The Large-Cap Value Equity Portfolio $10,302,300 $11,904
The Aggressive Growth 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
The Global Equity Portfolio(2) 0 0
(1) Commenced operations on April 14, 1997.
(2) Commenced operations on October 15, 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
-43-
<PAGE>
broker/dealers who provide daily portfolio pricing services to Pooled Trust,
Inc. and to other funds in the Delaware Group. Subject to best price and
execution, commissions allocated to brokers providing such pricing services may
or may not be generated by the funds receiving the pricing service.
Combined orders for two or more accounts or funds engaged in the
purchase or sale of the same security may be placed if the judgment is made
that joint execution is in the best interest of each participant and will
result in best price and execution. Transactions involving commingled orders
are allocated in a manner deemed equitable to each account or fund. When a
combined order is executed in a series of transactions at different prices,
each account participating in the order may be allocated an average price
obtained from the executing broker. It is believed that the ability of the
accounts to participate in volume transactions will generally be beneficial to
the accounts and funds. Although it is recognized that, in some cases, the
joint execution of orders could adversely affect the price or volume of the
security that a particular account or fund may obtain, it is the opinion of
the investment advisers and Pooled Trust, Inc.'s Board of Directors that the
advantages of combined orders outweigh the possible disadvantages of separate
transactions.
Consistent with the Conduct Rules of the National Association of
Securities Dealers, Inc., and subject to seeking best price and execution,
orders may be placed with broker/dealers that have agreed to defray certain
Portfolio expenses, such as custodian fees.
Portfolio Turnover
Portfolio trading will be undertaken principally to accomplish each
Portfolio's objective in relation to anticipated movements in the general
level of interest rates. A Portfolio is free to dispose of portfolio
securities at any time, subject to complying with the Code and the 1940 Act,
when changes in circumstances or conditions make such a move desirable in
light of the investment objective. A Portfolio will not attempt to achieve or
be limited to a predetermined rate of portfolio turnover. Such a turnover
always will be incidental to transactions undertaken with a view to achieving
a Portfolio's investment objective.
The degree of portfolio activity may affect brokerage costs of a
Portfolio and taxes payable by a Portfolio's shareholders. A turnover rate of
100% would occur, for example, if all the investments in a Portfolio's
securities at the beginning of the year were replaced by the end of the year.
In investing for capital appreciation, a relevant Portfolio may hold
securities for any period of time. Portfolio turnover will also be increased
by The Aggressive Growth Portfolio, either of The Real Estate Investment Trust
Portfolios, The International Equity Portfolio, The Emerging Markets Portfolio
, The Global Equity Portfolio and The Diversified Core Fixed Income Portfolio
if the Portfolio writes a large number of call options which are subsequently
exercised. To the extent a Portfolio realizes gains on securities held for
less than six months, such gains are taxable to the shareholder subject to tax
or to a Portfolio at ordinary income tax rates. The turnover rate also may be
affected by cash requirements from redemptions and repurchases of Portfolio
shares. Total brokerage costs generally increase with higher portfolio
turnover rates.
Under normal circumstances: (1) the annual portfolio turnover rate of
The International Equity Portfolio is not expected to exceed 50%; (2) the
annual portfolio turnover rate of The Global Fixed Income Portfolio, The
International Fixed Income Portfolio and The Limited-Term Maturity Portfolio
is not expected to exceed 200%; (3) the annual portfolio turnover rate of The
Large-Cap Value Equity Portfolio, The Aggressive Growth Portfolio, The
Small/Mid-Cap Value Equity Portfolio, The Labor Select International Equity
Portfolio, The Real Estate Investment Trust Portfolios, The Emerging Markets
Portfolio, The Global Equity Portfolio and The High-Yield Bond Portfolio is
not expected to exceed 100%; (4) the annual portfolio turnover rate of The
Intermediate Fixed Income Portfolio and The Aggregate Fixed Income Portfolio
is not expected to exceed
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<PAGE>
250%; (5) the annual portfolio turnover rate of The International Mid-Cap Sub
Portfolio is not expected to exceed 50%; and (6) the annual portfolio turnover
rate of the Diversified Core Fixed Income Portfolio is not expected to exceed
50%. 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 Aggressive Growth 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.
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PURCHASING SHARES
The following supplements the disclosure provided in Pooled Trust,
Inc.'s Prospectuses.
Delaware Distributors, L.P. serves as the national distributor for each
Portfolio's shares. See the related Prospectus for information on how to invest.
Pooled Trust, Inc. reserves the right to suspend sales of Portfolio shares, and
reject any order for the purchase of Portfolio shares if in the opinion of
management such rejection is in the Portfolio's best interest.
Certificates representing shares purchased are not ordinarily issued
unless a shareholder submits a specific request. Certificates are not issued
in the case of Class B Shares or Class C Shares of The Real Estate Investment
Trust Portfolio or The International Mid-Cap Sub Portfolio shares or in the
case of any retirement plan account including self -directed IRAs. However,
purchases not involving the issuance of certificates are confirmed to the
investor and credited to the shareholder's account on the books maintained on
behalf of Pooled Trust, Inc. The investor will have the same rights of
ownership with respect to such shares as if certificates had been issued. An
investor that is permitted to obtain a certificate may receive a certificate
representing full share denominations purchased by sending a letter signed by
each owner of the account to the Transfer Agent requesting the certificate. No
charge is assessed by Pooled Trust, Inc. for any certificate issued. A
shareholder may be subject to fees for replacement of a lost or stolen
certificate, under certain conditions, including the cost of obtaining a bond
covering the lost or stolen certificate. Please contact the Portfolios for
further information. Investors who hold certificates representing any of their
shares may only redeem those shares by written request. The investor's
certificate(s) must accompany such request.
Purchasing Shares (The Real Estate Investment Trust Portfolio class of The Real
Estate Investment Trust Portfolio and all other Portfolios except The
International Mid-Cap Sub Portfolio)
Shares of each Portfolio are sold on a continuous basis directly to
institutions and high net-worth individuals at the net asset value next
determined after the receipt of a purchase order and a Federal Funds wire as
described more fully in the related Prospectus. In addition, for purchases of
shares in The Emerging Markets Portfolio, a purchase reimbursement fee of
0.75% of the dollar amount invested is charged to investors and paid to the
Portfolio to help defray expenses of investing purchase proceeds. For The
Global Equity Portfolio, the purchase reimbursement fee is equal to 0.40% of
the dollar amount invested. In lieu of paying that fee, an investor in The
Global Equity Portfolio may elect to invest by a contribution of in -kind
securities or may follow another procedure that has the same economic impact
on the Portfolio and its shareholders. See "DETERMINING OFFERING PRICE AND NET
ASSET VALUE." The minimum for initial investments is $1,000,000 for each
Portfolio. There are no minimums for subsequent investments. See the related
Prospectus for special purchase procedures and requirements that may be
applicable to prospective investors in The International Equity Portfolio and
The Global Equity Portfolio. At such time as Pooled Trust, Inc. receives
appropriate regulatory approvals to do so in the future, under certain
circumstances, Pooled Trust, Inc. may, at its sole discretion, allow eligible
investors who have an existing investment counseling relationship with
Delaware Investment Advisers or Delaware International to make investments in
the Portfolios by a contribution of securities in-kind to such Portfolios.
Purchasing Shares (The International Mid-Cap Sub Portfolio)
Shares of The International Mid-Cap Sub Portfolio are offered and
sold on a continuous basis to investors who currently have, or concurrently
with their investment establish, an investment advisory relationship with
Delaware International with respect to equity securities and who have
authorized Delaware International to allocate a portion of those assets to the
Portfolio. Shares are sold at the net
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<PAGE>
asset value next determined after the receipt of a purchase order as described
more fully in the related Prospectus. In addition, a purchase reimbursement fee
of 0.60% of the dollar amount invested is charged to investors and paid to the
Portfolio to help defray expenses of investing purchase proceeds. The purchase
reimbursement fee does not apply to investments that are made by securities
in-kind or by an alternative method agreed to by the Portfolio that will have
the same economic effect as an in-kind purchase or to reinvestments of dividends
or other distributions. See "DETERMINING OFFERING PRICE AND NET ASSET VALUE."
There are no minimum initial or subsequent investment amounts for The
International Mid-Cap Sub Portfolio.
Purchasing Shares (REIT Fund A, B, C and Institutional Classes of The Real
Estate Investment Trust Portfolio)
The minimum initial purchase is generally $1,000 for REIT Fund A
Class ("Class A Shares"), REIT Fund B Class ("Class B Shares") and REIT Fund C
Class ("Class C Shares"). Subsequent purchases must generally be at least
$100. The initial and subsequent investment minimums for Class A Shares will
be waived for purchases by officers, directors and employees of any Delaware
Group fund, the Manager or any of the Manager's affiliates if the purchases
are made pursuant to a payroll deduction program. Shares purchased pursuant to
the Uniform Gifts to Minors Act or the Uniform Transfers to Minors Act and
shares purchased in connection with an Automatic Investing Plan are subject to
a minimum initial purchase of $250 and a minimum subsequent purchase of $25.
Accounts opened under a Delaware Group Asset Planner Service are subject to a
minimum initial investment of $2,000 per Asset Planner strategy selected.
There are no minimum purchase requirements for REIT Fund Institutional Class
("Institutional Class Shares").
Each purchase of Class B Shares is subject to a maximum purchase
limitation of $250,000. For Class C Shares, each purchase must be in an amount
that does not exceed $1,000,000. See Investment Plans for purchase limitations
applicable to retirement plans. Pooled Trust, Inc. will reject any purchase
order for more than $250,000 of Class B Shares and $1,000,000 or more of Class
C Shares. An investor may exceed these limitations by making cumulative
purchases over a period of time. In doing so, an investor should keep in mind,
however, that reduced front-end sales charges apply to investments of $100,000
or more in Class A Shares, and that Class A Shares are subject to lower annual
12b-1 Plan expenses than Class B Shares and Class C Shares and generally are
not subject to a CDSC.
The NASD has adopted Conduct Rules, as amended, relating to investment
company sales charges. Pooled Trust, Inc. and the Distributor intend to operate
in compliance with these rules.
Class A Shares are purchased at the offering price, which reflects a
maximum front-end sales charge of 4.75%; however, lower front-end sales
charges apply for larger purchases. See the table below. Class A Shares are
also subject to annual 12b-1 Plan expenses for the life of the investment.
Class B Shares are purchased at net asset value and are subject to a
CDSC of: (i) 4% if shares are redeemed within two years of purchase; (ii) 3%
if shares are redeemed during the third or fourth year following purchase;
(iii) 2% if shares are redeemed during the fifth year following purchase; and
(iv) 1% if shares are redeemed during the sixth year following purchase. Class
B Shares are also subject to annual 12b-1 Plan expenses which are higher than
those to which Class A Shares are subject and are assessed against the Class B
Shares for approximately eight years after purchase. See Automatic Conversion
of Class B Shares under Classes of Shares in the related Prospectus.
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<PAGE>
Class C Shares are purchased at net asset value and are subject to a
CDSC of 1% if shares are redeemed within 12 months following purchase. Class C
Shares are also subject to annual 12b-1 Plan expenses for the life of the
investment which are equal to those to which Class B Shares are subject.
Institutional Class Shares are purchased at net asset value per share
without the imposition of a front -end or contingent deferred sales charge or
12b -1 Plan expenses.
Class A Shares, Class B Shares, Class C Shares and Institutional
Class Shares represent a proportionate interest in the Portfolio's assets and
will receive a proportionate interest in the Portfolio's income, before
application, as to the Class A, Class B and Class C Shares, of any expenses
under Pooled Trust, Inc.'s 12b-1 Plans.
Alternative Purchase Arrangements
The alternative purchase arrangements of Class A, Class B and Class C
Shares permit investors to choose the method of purchasing shares that is most
suitable for their needs given the amount of their purchase, the length of
time they expect to hold their shares and other relevant circumstances.
Investors should determine whether, given their particular circumstances, it
is more advantageous to purchase Class A Shares and incur a front-end sales
charge and annual 12b-1 Plan expenses of up to a maximum of 0.30% of average
daily net assets of Class A Shares (currently, no more than 0.25% of the
average daily net assets of Class A Shares, pursuant to Board action) or to
purchase either Class B or Class C Shares and have the entire initial purchase
amount invested in the Portfolio with the investment thereafter subject to a
CDSC and annual 12b-1 Plan expenses. Class B Shares are subject to a CDSC if
the shares are redeemed within six years of purchase, and Class C Shares are
subject to a CDSC if the shares are redeemed within 12 months of purchase.
Class B and Class C Shares are each subject to annual 12b-1 Plan expenses of
up to a maximum of 1% (0.25% of which are service fees to be paid to the
Distributor, dealers or others for providing personal service and/or
maintaining shareholder accounts) of average daily net assets of the
respective Class. Class B Shares will automatically convert to Class A Shares
at the end of approximately eight years after purchase and, thereafter, be
subject to annual 12b-1 Plan expenses of up to a maximum of 0.30% of average
daily net assets of such shares (currently, no more than 0.25% of the average
daily net assets of Class A Shares, pursuant to Board action). Unlike Class B
Shares, Class C Shares do not convert into another class.
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<PAGE>
Class A Shares
Purchases of $100,000 or more of Class A Shares at the offering price
carry reduced front-end sales charges as shown in the accompanying table, and
may include a series of purchases over a 13-month period under a Letter of
Intention signed by the purchaser. See Special Purchase Features - Class A
Shares, below, for more information on ways in which investors can avail
themselves of reduced front-end sales charges and other purchase features.
Class A Shares
<TABLE>
<CAPTION>
Dealer's
Front -End Sales Charge as a % of Commission***
Amount of Purchase Offering Amount as a % of
Price Invested** Offering Price
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $100,000 4.75% 4.98% 4.00%
$100,000 but under $250,000 3.75 3.87 3.00
= ====
$250,000 but under $500,000 2.50 2.58 2.00
= ====
$500,000 but under $1,000,000* 2.00 2.03 1.60
= ====
</TABLE>
* There is no front-end sales charge on purchases of $1 million or more
of Class A Shares but, under certain limited circumstances, a 1%
contingent deferred sales charge may apply upon redemption of such
shares. The contingent deferred sales charge ("Limited CDSC") that may
be applicable arises only in the case of certain shares that were
purchased at net asset value and triggered the payment of a dealer's
commission.
** Based upon the net asset value per share of Class A Shares as of the end
of Pooled Trust, Inc.'s most recent fiscal year.
*** Financial institutions or their affiliated brokers may receive an
agency transaction fee in the percentages set forth above.
- --------------------------------------------------------------------------------
The Portfolio must be notified when a sale takes place which would qualify for
the reduced front-end sales charge on the basis of previous or current
purchases. The reduced front-end sales charge will be granted upon
confirmation of the shareholder's holdings by the Portfolio. Such reduced
front-end sales charges are not retroactive.
From time to time, upon written notice to all of its dealers, the Distributor
may hold special promotions for specified periods during which the Distributor
may reallow to dealers up to the full amount of the front-end sales charge
shown above. Dealers who receive 90% or more of the sales charge may be deemed
to be underwriters under the 1933 Act.
- --------------------------------------------------------------------------------
Certain dealers who enter into an agreement to provide extra training
and information on Delaware Group products and services and who increase sales
of Delaware Group funds may receive an additional commission of up to 0.15% of
the offering price in connection with sales of Class A Shares. Such dealers
must meet certain requirements in terms of organization and distribution
capabilities and their ability to increase sales. The Distributor should be
contacted for further information on these requirements as well as the basis
and circumstances upon which the additional commission will be paid.
Participating dealers may be deemed to have additional responsibilities under
the securities laws.
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<PAGE>
Dealer's Commission
For initial purchases of Class A Shares of $1,000,000 or more, a
dealer's commission may be paid by the Distributor to financial advisers
through whom such purchases are effected in accordance with the following
schedule:
Dealer's Commission
-------------------
(as a percentage of
Amount of Purchase amount purchased)
------------------
Up to $2 million 1.00%
Next $1 million up to $3 million 0.75
Next $2 million up to $5 million 0.50
Amount over $5 million 0.25
In determining a financial adviser's eligibility for the dealer's
commission, purchases of Class A Shares of other Delaware Group funds, as to
which a Limited CDSC applies (see Contingent Deferred Sales Charge for Certain
Redemptions of Class A Shares Purchased at Net Asset Value under Redemption
and Exchange in the related Prospectus) may be aggregated with those of the
Class A Shares of The Real Estate Investment Trust Portfolio. Financial
advisers also may be eligible for a dealer's commission in connection with
certain purchases made under a Letter of Intention or pursuant to an
investor's Right of Accumulation. Financial advisers should contact the
Distributor concerning the applicability and calculation of the dealer's
commission in the case of combined purchases.
An exchange from other Delaware Group funds will not qualify for
payment of the dealer's commission, unless a dealer's commission or similar
payment has not been previously paid on the assets being exchanged. The
schedule and program for payment of the dealer's commission are subject to
change or termination at any time by the Distributor at its discretion.
Contingent Deferred Sales Charge - Class B Shares and Class C Shares
Class B and Class C Shares are purchased without a front-end sales
charge. Class B Shares redeemed within six years of purchase may be subject to
a CDSC at the rates set forth below and Class C Shares redeemed within 12
months of purchase may be subject to a CDSC of 1%. CDSCs are charged as a
percentage of the dollar amount subject to the CDSC. The charge will be
assessed on an amount equal to the lesser of the net asset value at the time
of purchase of the shares being redeemed or the net asset value of those
shares at the time of redemption. No CDSC will be imposed on increases in net
asset value above the initial purchase price, nor will a CDSC be assessed on
redemptions of shares acquired through reinvestment of dividends or capital
gains distributions. See Waiver of Contingent Deferred Sales Charge - Class B
Shares and Class C Shares under Redemption and Exchange in the related
Prospectus for a list of the instances in which the CDSC is waived.
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<PAGE>
The following table sets forth the rates of the CDSC for Class B Shares
of The Real Estate Investment Trust Portfolio:
Contingent Deferred Sales Charge
(as a Percentage of Dollar
Year After Purchase Made Amount Subject to Charge)
------------------------ --------------------------------
0-2 4%
3-4 3%
5 2%
6 1%
7 and thereafter None
During the seventh year after purchase, and thereafter, until converted
automatically into Class A Shares, Class B Shares will still be subject to the
annual 12b-1 Plan expenses of up to 1% of average daily net assets of those
shares. At the end of approximately eight years after purchase, the investor's
Class B Shares will be automatically converted into Class A Shares of the
Portfolio. See Automatic Conversion of Class B Shares under Classes of Shares
in the related Prospectus. Such conversion will constitute a tax-free exchange
for federal income tax purposes. See Taxes in the related Prospectus.
Plans Under Rule 12b-1
Pursuant to Rule 12b-1 under the 1940 Act, Pooled Trust, Inc. has
adopted a separate plan for each of Class A Shares, the Class B Shares and the
Class C Shares of The Real Estate Investment Trust Portfolio (the "Plans").
Each Plan permits the Portfolio to pay for certain distribution, promotional
and related expenses involved in the marketing of only the Class to which the
Plan applies.
The Plans permit the Portfolio, pursuant to the Distribution Agreement,
to pay out of the assets of Class A Shares, Class B Shares and Class C Shares
monthly fees to the Distributor for its services and expenses in distributing
and promoting sales of shares of such classes. These expenses include, among
other things, preparing and distributing advertisements, sales literature and
prospectuses and reports used for sales purposes, compensating sales and
marketing personnel, and paying distribution and maintenance fees to
securities brokers and dealers who enter into agreements with the Distributor.
The Plan expenses relating to Class B and Class C Shares are also used to pay
the Distributor for advancing the commission costs to dealers with respect to
the initial sale of such shares.
In addition, the Portfolio may make payments out of the assets of Class
A, Class B and Class C Shares directly to other unaffiliated parties, such as
banks, who either aid in the distribution of shares of, or provide services
to, such classes.
The maximum aggregate fee payable by the Portfolio under the Plans, and
the Portfolio's Distribution Agreement, is on an annual basis up to 0.30% of
Class A Shares' average daily net assets for the year, and up to 1% (0.25% of
which are service fees to be paid to the Distributor, dealers and others for
providing personal service and/or maintaining shareholder accounts) of each of
Class B Shares' and Class C Shares' average daily net assets for the year.
Pooled Trust, Inc.'s Board of Directors may reduce these amounts at any time.
Pursuant to Board action, the maximum aggregate fee payable by Class A Shares
is 0.25%.
All of the distribution expenses incurred by the Distributor and
others, such as broker/dealers, in excess of the amount paid on behalf of
Class A, Class B and Class C Shares would be borne by such persons without any
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<PAGE>
reimbursement from such Classes. Subject to seeking best price and execution,
the Classes may, from time to time, buy or sell portfolio securities from or to
firms which receive payments under the Plans.
From time to time, the Distributor may pay additional amounts from its
own resources to dealers for aid in distribution or for aid in providing
administrative services to shareholders.
The Plans and the Distribution Agreement, as amended, have been
approved by the Board of Directors of Pooled Trust, Inc., including a majority
of the directors who are not "interested persons" (as defined in the 1940 Act)
of Pooled Trust, Inc. and who have no direct or indirect financial interest in
the Plans by vote cast in person at a meeting duly called for the purpose of
voting on the Plans and such Agreement. Continuation of the Plans and the
Distribution Agreement, as amended, must be approved annually by the Board of
Directors in the same manner, as specified above.
Each year, the directors must determine whether continuation of the
Plans is in the best interest of shareholders of, respectively, the Class A
Shares, Class B Shares and Class C Shares and that there is a reasonable
likelihood of the Plan relating to a Class providing a benefit to that Class.
The Plans and the Distribution Agreement, as amended, may be terminated at any
time without penalty by a majority of those directors who are not "interested
persons" or by a majority vote of the outstanding voting securities of the
relevant Class. Any amendment materially increasing the maximum percentage
payable under the Plans must likewise be approved by a majority vote of the
outstanding voting securities of the relevant Class, as well as by a majority
vote of those directors who are not "interested persons." With respect to the
Class A Share Plan, any material increase in the maximum percentage payable
thereunder must also be approved by a majority of the outstanding voting
securities of the Class B Shares. Also, any other material amendment to the
Plans must be approved by a majority vote of the directors including a
majority of the noninterested directors of Pooled Trust, Inc. having no
interest in the Plans. In addition, in order for the Plans to remain
effective, the selection and nomination of directors who are not "interested
persons" of Pooled Trust, Inc. must be effected by the directors who
themselves are not "interested persons" and who have no direct or indirect
financial interest in the Plans. Persons authorized to make payments under the
Plans must provide written reports at least quarterly to the Board of
Directors for their review.
Other Payments to Dealers - Class A, Class B and Class C Shares
From time to time, at the discretion of the Distributor, all registered
broker/dealers whose aggregate sales of the Class A, B and C Shares exceed
certain limits as set by the Distributor, may receive from the Distributor an
additional payment of up to 0.25% of the dollar amount of such sales. The
Distributor may also provide additional promotional incentives or payments to
dealers that sell shares of the Delaware Group of funds. In some instances,
these incentives or payments may be offered only to certain dealers who
maintain, have sold or may sell certain amounts of shares. The Distributor may
also pay a portion of the expense of preapproved dealer advertisements
promoting the sale of Delaware Group fund shares.
Special Purchase Features - Class A Shares
Buying Class A Shares at Net Asset Value
Class A Shares may be purchased without a front-end sales charge under
the Dividend Reinvestment Plan and, under certain circumstances, the Exchange
Privilege and the 12-Month Reinvestment Privilege.
Current and former officers, trustees and employees of Pooled Trust,
Inc., any other fund in the Delaware Group, the Manager, the Manager's
affiliates or any of the Manager's affiliates that may in the future be
created, legal counsel to the funds and registered representatives and
employees of broker/dealers who have entered into Dealer's
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<PAGE>
Agreements with the Distributor may purchase Class A Shares of the Portfolio and
any of the funds in the Delaware Group, including any fund that may be created,
at net asset value per share. Family members of such persons at their direction,
and any employee benefit plan established by any of the foregoing funds,
corporations, counsel or broker/dealers may also purchase Class A Shares at net
asset value. Class A Shares may also be purchased at net asset value by current
and former officers, directors and employees (and members of their families) of
the Dougherty Financial Group LLC. Purchases of Class A Shares may also be made
by clients of registered representatives of an authorized investment dealer at
net asset value within 12 months after the registered representative changes
employment, if the purchase is funded by proceeds from an investment where a
front-end sales charge, contingent deferred sales charge or other sales charge
has been assessed.
Purchases of Class A Shares may also be made at net asset value by bank
employees who provide services in connection with agreements between the bank
and unaffiliated brokers or dealers concerning sales of shares of Delaware
Group funds. Officers, directors and key employees of institutional clients of
the Manager, or any of its affiliates, may purchase Class A Shares at net
asset value. Moreover, purchases may be effected at net asset value for the
benefit of the clients of brokers, dealers and registered investment advisers
affiliated with a broker or dealer, if such broker, dealer or investment
adviser has entered into an agreement with the Distributor providing
specifically for the purchase of Class A Shares in connection with special
investment products, such as wrap accounts or similar fee based programs. Such
purchasers are required to sign a letter stating that the purchase is for
investment only and that the securities may not be resold except to the
issuer. Such purchasers may also be required to sign or deliver such other
documents as The Real Estate Investment Trust Portfolio may reasonably require
to establish eligibility for purchase at net asset value.
Investors in Delaware -Voyageur Unit Investment Trusts may reinvest
monthly dividend checks and/or repayment of invested capital into Class A
Shares of any of the Funds in the Delaware Group at net asset value.
Purchases of Class A Shares at net asset value may also be made by the
following: financial institutions investing for the account of their trust
customers if they are not eligible to purchase shares of the Institutional
Class; any group retirement plan (excluding defined benefit pension plans), or
such plans of the same employer, for which plan participant records are
maintained on the Delaware Investment & Retirement Services, Inc. ("DIRSI")
proprietary record keeping system that (i) has in excess of $500,000 of plan
assets invested in Class A Shares of Delaware Group funds and any stable value
product available through the Delaware Group, or (ii) is sponsored by an
employer that has at any point after May 1, 1997 had more than 100 employees
while such plan has held Class A Shares of a Delaware Group fund and such
employer has properly represented to DIRSI in writing that it has the
requisite number of employees and has received written confirmation back from
DIRSI.
Investments in Class A Shares made by plan level and/or participant
retirement accounts that are for the purpose of repaying a loan taken from
such accounts will be made at net asset value. Loan repayments made to a
Delaware Group account in connection with loans originated from accounts
previously maintained by another investment firm will also be invested at net
asset value.
The Portfolio must be notified in advance that the trade qualifies for
purchase at net asset value.
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
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<PAGE>
the total amount of Class A Shares intended to be purchased until such purchase
is completed within the 13-month period. A Letter of Intention may be dated to
include shares purchased up to 90 days prior to the date the Letter is signed.
The 13-month period begins on the date of the earliest purchase. If the intended
investment is not completed, except as noted below, the purchaser will be asked
to pay an amount equal to the difference between the front-end sales charge on
the Class A Shares purchased at the reduced rate and the front-end sales charge
otherwise applicable to the total shares purchased. If such payment is not made
within 20 days following the expiration of the 13-month period, the Transfer
Agent will surrender an appropriate number of the escrowed shares for redemption
in order to realize the difference. Such purchasers may include the value (at
offering price at the level designated in their Letter of Intention) of all
their shares of the Portfolio and of any class of any of the other mutual funds
in the Delaware Group (except shares of any Delaware Group fund which do not
carry a front-end sales charge, CDSC or Limited CDSC, other than shares of
Delaware Group Premium Fund, Inc. beneficially owned in connection with the
ownership of variable insurance products, unless they were acquired through an
exchange from a Delaware Group fund which carried a front-end sales charge, CDSC
or Limited CDSC) previously purchased and still held as of the date of their
Letter of Intention toward the completion of such Letter.
Employers offering a Delaware Group retirement plan may also complete a
Letter of Intention to obtain a reduced front -end sales charge on investments
of Class A Shares made by the plan. The aggregate investment level of the
Letter of Intention will be determined and accepted by the Transfer Agent at
the point of plan establishment. The level and any reduction in front -end
sales charge will be based on actual plan participation and the projected
investments in Delaware Group funds that are offered with a front -end sales
charge, CDSC or Limited CDSC for a 13 -month period. The Transfer Agent
reserves the right to adjust the signed Letter of Intention based on this
acceptance criteria. The 13 -month period will begin on the date this Letter
of Intention is accepted by the Transfer Agent. If actual investments exceed
the anticipated level and equal an amount that would qualify the plan for
further discounts, any front -end sales charges will be automatically
adjusted. In the event this Letter of Intention is not fulfilled within the
13 -month period, the plan level will be adjusted (without completing another
Letter of Intention) and the employer will be billed for the difference in
front -end sales charges due, based on the plan's assets under management at
that time. Employers may also include the value (at offering price at the
level designated in their Letter of Intention) of all their shares intended
for purchase that are offered with a front -end sales charge, CDSC or Limited
CDSC of any class. Class B Shares and Class C Shares of the Portfolio and
other Delaware Group funds which offer corresponding classes of shares may
also be aggregated for this purpose.
Combined Purchases Privilege
In determining the availability of the reduced front-end sales charge
previously set forth with respect to Class A Shares, purchasers may combine
the total amount of any combination of Class A Shares, Class B Shares and/or
Class C Shares of the Portfolio, as well as shares of any other class of any
of the other Delaware Group funds (except shares of any Delaware Group fund
which do not carry a front-end sales charge, CDSC or Limited CDSC, other than
shares of Delaware Group Premium Fund, Inc. beneficially owned in connection
with the ownership of variable insurance products, unless they were acquired
through an exchange from a Delaware Group fund which carried a front-end sales
charge, CDSC or Limited CDSC). In addition, assets held by investment advisory
clients of the Manager or its affiliates in a stable value account may be
combined with other Delaware Group fund holdings.
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).
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Right of Accumulation
In determining the availability of the reduced front-end sales charge
with respect to Class A Shares, purchasers may also combine any subsequent
purchases of Class A Shares, Class B Shares and Class C Shares of the
Portfolio, as well as shares of any other class of any of the other Delaware
Group funds which offer such classes (except shares of any Delaware Group fund
which do not carry a front-end sales charge, CDSC or Limited CDSC, other than
shares of Delaware Group Premium Fund, Inc. beneficially owned in connection
with the ownership of variable insurance products, unless they were acquired
through an exchange from shares from a Delaware Group fund which carried a
front-end sales charge, CDSC or Limited CDSC). If, for example, any such
purchaser has previously purchased and still holds Class A Shares and/or
shares of any other of the classes described in the previous sentence with a
value of $40,000 and subsequently purchases $60,000 at offering price of
additional shares of Class A Shares, the charge applicable to the $60,000
purchase would be 3.75%. For the purpose of this calculation, the shares
presently held shall be valued at the public offering price that would have
been in effect were the shares purchased simultaneously with the current
purchase. Investors should refer to the table of sales charges for Class A
Shares to determine the applicability of the Right of Accumulation to their
particular circumstances.
12-Month Reinvestment Privilege
Holders of Class A Shares (and of the Institutional Class holding
shares which were acquired through an exchange from one of the other mutual
funds in the Delaware Group offered with a front -end sales charge) who redeem
such shares of the Portfolio have one year from the date of redemption to
reinvest all or part of their redemption proceeds in Class A Shares of the
Portfolio or in Class A Shares of any of the other funds in the Delaware
Group, subject to applicable eligibility and minimum purchase requirements, in
states where shares of such other funds may be sold, at net asset value
without the payment of a front -end sales charge. This privilege does not
extend to Class A Shares where the redemption of the shares triggered the
payment of a Limited CDSC. Persons investing redemption proceeds from direct
investments in mutual funds in the Delaware Group offered without a front-end
sales charge will be required to pay the applicable sales charge when
purchasing Class A Shares. The reinvestment privilege does not extend to a
redemption of either Class B Shares or Class C Shares.
Any such reinvestment cannot exceed the redemption proceeds (plus any
amount necessary to purchase a full share). The reinvestment will be made at
the net asset value next determined after receipt of remittance. A redemption
and reinvestment could have income tax consequences. It is recommended that a
tax adviser be consulted with respect to such transactions. Any reinvestment
directed to a fund in which the investor does not then have an account will be
treated like all other initial purchases of a fund's shares. Consequently, an
investor should obtain and read carefully the prospectus for the fund in which
the investment is intended to be made before investing or sending money. The
prospectus contains more complete information about the fund, including
charges and expenses.
Investors should consult their financial advisers or the Transfer
Agent, which also serves as the Portfolio's shareholder servicing agent, about
the applicability of the Limited CDSC (see Contingent Deferred Sales Charge
for Certain Redemptions of Class A Shares Purchased at Net Asset Value under
Redemption and Exchange in the related Prospectus) in connection with the
features described above.
Group Investment Plans
Group Investment Plans which are not eligible to purchase shares of the
Institutional Class may also benefit from the reduced front -end sales charges
for investments in Class A Shares set forth in the table on page [00], based
on total plan assets. If a company has more than one plan investing in the
Delaware Group of funds, then the total amount invested in all plans would be
used in determining the applicable front -end sales charge reduction upon each
purchase, both initial and subsequent, upon notification to the Portfolio at
the time of each such purchase.
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Employees participating in such Group Investment Plans may also combine the
investments made in their plan account when determining the applicable
front -end sales charge on purchases to non -retirement Delaware Group
investment accounts if they so notify the Portfolio in connection with each
purchase. For other retirement plans and special services, see Retirement Plans
for the Fund Classes under Investment Plans for information about Retirement
Plans.
Institutional Class Shares
Institutional Class Shares are available for purchase only by: (a)
retirement plans introduced by persons not associated with brokers or dealers
that are primarily engaged in the retail securities business and rollover
individual retirement accounts from such plans; (b) tax -exempt employee
benefit plans of Delaware, Delaware International or their affiliates and
securities dealer firms with a selling agreement with the Distributor; (c)
institutional advisory accounts of Delaware, Delaware International or their
affiliates and those having client relationships with the DMC, DIA, Ltd. or
their affiliates and their corporate sponsors, as well as subsidiaries and
related employee benefit plans and rollover individual retirement accounts
from such institutional advisory accounts; (d) a bank, trust company and
similar financial institution investing for its own account or for the account
of its trust customers for whom such financial institution is exercising
investment discretion in purchasing Institutional Class Shares, except where
the investment is part of a program that requires payment to the financial
institution of a Rule 12b -1 Plan fee; and (e) registered investment advisers
investing on behalf of clients that consist solely of institutions and high
net -worth individuals having at least $1,000,000 entrusted to the adviser for
investment purposes, but only if the adviser is not affiliated or associated
with a broker or dealer and derives compensation for its services exclusively
from its clients for such advisory services.
Institutional Class Shares are available for purchase at net asset
value, without the imposition of a front -end or contingent deferred sales
charge and are not subject to Rule 12b -1 expenses.
Investment Plans
Reinvestment Plan/Open Account
Unless otherwise designated by shareholders in writing, dividends from
net investment income and distributions from realized securities profits, if
any, will be automatically reinvested in additional shares of the respective
Class (based on the net asset value in effect on the payable date) and will be
credited to the shareholder's account on that date. All dividends and
distributions of the Institutional Class Shares are reinvested in the accounts
of the holders of such shares (based on the net asset value in effect on the
reinvestment date). A confirmation of each dividend payment from net
investment income will be mailed to shareholders quarterly. A confirmation of
any distributions from realized securities profits will be mailed to
shareholders in the first quarter of the fiscal year.
Under the Reinvestment Plan/Open Account, shareholders may purchase and
add full and fractional shares to their plan accounts at any time either
through their investment dealers or by sending a check or money order to The
Portfolio. Such purchases, which must meet the minimum subsequent purchase
requirements stated in the related Prospectus and this Statement of Additional
Information, are made for Class A Shares at the public offering price and for
Class B Shares, Class C Shares and Institutional Class Shares at the net asset
value, at the end of the day of receipt. A reinvestment plan may be terminated
at any time. This plan does not assure a profit nor protect against
depreciation in a declining market.
Reinvestment of Dividends in Other Delaware Group Funds
Subject to applicable eligibility and minimum initial purchase
requirements of each fund and the limitations set forth below, holders of
Class A, Class B and Class C Shares may automatically reinvest their dividends
and/or
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distributions in any of the mutual funds in the Delaware Group, including the
Portfolio, in states where their shares may be sold. Such investments will be at
net asset value at the close of business on the reinvestment date without any
front-end sales charge or service fee. The shareholder must notify the Transfer
Agent in writing and must have established an account in the fund into which the
dividends and/or distributions are to be invested. Any reinvestment directed to
a fund in which the investor does not then have an account, will be treated like
all other initial purchases of a fund's shares. Consequently, an investor should
obtain and read carefully the prospectus for the fund in which the investment is
intended to be made before investing or sending money. The prospectus contains
more complete information about the fund, including charges and expenses. See
also Additional Methods of Adding to Your Investment - Dividend Reinvestment
Plan under How to Buy Shares in the related Prospectus.
Subject to the following limitations, dividends and/or distributions
from other funds in the Delaware Group may be invested in shares of the
Portfolio, provided an account has been established. Dividends from Class A
Shares may not be directed to Class B Shares or Class C Shares. Dividends from
Class B Shares may only be directed to other Class B Shares and dividends from
Class C Shares may only be directed to other Class C Shares. See Appendix
B-Classes Offered in the related Prospectus for the funds in the Delaware
Group that are eligible for investment by holders of Portfolio shares.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money Purchase
Pension Plans, 401(k) Defined Contribution Plans, 403(b)(7) Deferred
Compensation Plans or 457 Deferred Compensation Plans.
Investing by Electronic Fund Transfer
Direct Deposit Purchase Plan --Investors may arrange for the Portfolio
to accept for investment in Class A, Class B or Class C Shares, through an
agent bank, preauthorized government or private recurring payments. This
method of investment assures the timely credit to the shareholder's account of
payments such as social security, veterans' pension or compensation benefits,
federal salaries, Railroad Retirement benefits, private payroll checks,
dividends, and disability or pension fund benefits. It also eliminates lost,
stolen and delayed checks.
Automatic Investing Plan--Shareholders of Class A, Class B and Class C
Shares may make automatic investments by authorizing, in advance, monthly
payments directly from their checking account for deposit into their Portfolio
account. This type of investment will be handled in either of the following
ways. (1) If the shareholder's bank is a member of the National Automated
Clearing House Association ("NACHA"), the amount of the investment will be
electronically deducted from his or her account by Electronic Fund Transfer
("EFT"). The shareholder's checking account will reflect a debit each month at
a specified date although no check is required to initiate the transaction.
(2) If the shareholder's bank is not a member of NACHA, deductions will be
made by preauthorized checks, known as Depository Transfer Checks. Should the
shareholder's bank become a member of NACHA in the future, his or her
investments would be handled electronically through EFT.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money Purchase
Pension Plans, 401(k) Defined Contribution Plans, 403(b)(7) Deferred
Compensation Plans or 457 Deferred Compensation Plans.
* * *
Initial investments under the Direct Deposit Purchase Plan and the
Automatic Investing Plan must be for $250 or more and subsequent investments
under such plans must be for $25 or more. An investor wishing to take
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advantage of either service must complete an authorization form. Either
service can be discontinued by the shareholder at any time without penalty by
giving written notice.
Payments to the Portfolio from the federal government or its agencies on
behalf of a shareholder may be credited to the shareholder's account after such
payments should have been terminated by reason of death or otherwise. Any such
payments are subject to reclamation by the federal government or its agencies.
Similarly, under certain circumstances, investments from private sources may be
subject to reclamation by the transmitting bank. In the event of a reclamation,
the Portfolio may liquidate sufficient shares from a shareholder's account to
reimburse the government or the private source. In the event there are
insufficient shares in the shareholder's account, the shareholder is expected to
reimburse the Portfolio.
Direct Deposit Purchases by Mail
Shareholders may authorize a third party, such as a bank or employer,
to make investments directly to their Portfolio accounts. The Portfolio will
accept these investments, such as bank-by-phone, annuity payments and payroll
allotments, by mail directly from the third party. Investors should contact
their employers or financial institutions who in turn should contact the
Portfolio for proper instructions.
Wealth Builder Option
Shareholders can use the Wealth Builder Option to invest in Class A
Shares, Class B Shares or Class C Shares through regular liquidations of
shares in their accounts in other mutual funds in the Delaware Group.
Shareholders of the Classes may elect to invest in one or more of the other
mutual funds in the Delaware Group through the Wealth Builder Option. See
Wealth Builder Option and Redemption and Exchange in the related Prospectus.
Under this automatic exchange program, shareholders can authorize
regular monthly investments (minimum of $100 per fund) to be liquidated from
their account and invested automatically into other mutual funds in the
Delaware Group, subject to the conditions and limitations set forth in the
related Prospectus. The investment will be made on the 20th day of each month
(or, if the fund selected is not open that day, the next business day) at the
public offering price or net asset value, as applicable, of the fund selected
on the date of investment. No investment will be made for any month if the
value of the shareholder's account is less than the amount specified for
investment.
Periodic investment through the Wealth Builder Option does not insure
profits or protect against losses in a declining market. The price of the fund
into which investments are made could fluctuate. Since this program involves
continuous investment regardless of such fluctuating value, investors
selecting this option should consider their financial ability to continue to
participate in the program through periods of low fund share prices. This
program involves automatic exchanges between two or more fund accounts and is
treated as a purchase of shares of the fund into which investments are made
through the program. See Exchange Privilege for a brief summary of the tax
consequences of exchanges. Shareholders can terminate their participation at
any time by giving written notice to the fund from which exchanges are made.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money Purchase
Pension Plans, 401(k) Defined Contribution Plans, 403(b)(7) Deferred
Compensation Plans or 457 Deferred Compensation Plans. This option also is not
available to shareholders of the Institutional Class.
Delaware Group Asset Planner
To invest in Delaware Group funds using the Delaware Group Asset
Planner asset allocation service, you should complete a Delaware Group Asset
Planner Account Registration Form, which is available only from a
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financial adviser or investment dealer. Effective as of September 1, 1997, the
Delaware Group Asset Planner Service is only available to financial advisers or
investment dealers who have previously used this service.
The Delaware Group Asset Planner service offers a choice of four
predesigned asset allocation strategies (each with a different risk/reward
profile) in predetermined percentages in Delaware Group funds. With the help
of a financial adviser, you may also design a customized asset allocation
strategy.
The sales charge on an investment through the Asset Planner service is
determined by the individual sales charges of the underlying funds and their
percentage allocation in the selected Strategy. Exchanges from existing
Delaware Group accounts into the Asset Planner service may be made at net
asset value under the circumstances described under Investing by Exchange in
the Prospectus. The minimum initial investment per Strategy is $2,000;
subsequent investments must be at least $100. Individual fund minimums do not
apply to investments made using the Asset Planner service. Generally, only
shares within the same class may be used within the same Strategy. However,
Class A Shares of The Real Estate Investment Trust Portfolio and of other
funds in the Delaware Group may be used in the same Strategy with consultant
class shares that are offered by certain other Delaware Group funds. See
Appendix B--Classes Offered in the Prospectus for the funds in the Delaware
Group that offer consultant class shares.
An annual maintenance fee, currently $35 per Strategy, is due at the
time of initial investment and by September 30th of each subsequent year. The
fee, payable to Delaware Service Company, Inc. to defray extra costs
associated with administering the Asset Planner service, will be deducted
automatically from one of the funds within your Asset Planner account if not
paid by September 30th. However, effective November 1, 1996, the annual
maintenance fee is waived until further notice. Investors who utilize the
Asset Planner for an IRA will continue to pay an annual IRA fee of $15 per
Social Security number.
Investors will receive a customized quarterly Strategy Report
summarizing all Delaware Group Asset Planner investment performance and
account activity during the prior period. Confirmation statements will be sent
following all transactions other than those involving a reinvestment of
distributions.
Certain shareholder services are not available to investors using the
Asset Planner service, due to its special design. These include Delaphone,
Checkwriting, Wealth Builder Option and Letter of Intention. Systematic
Withdrawal Plans are available after the account has been open for two years.
Retirement Plans for the Fund Classes
An investment in a Portfolio may be suitable for tax -deferred
retirement plans. Delaware Group offers a full spectrum of qualified and
non-qualified retirement plans , including the 401(k) deferred compensation
plan, Individual Retirement Account ("IRA"), and the new Roth IRA. See
Appendix A for additional information on IRAs.
The CDSC may be waived on certain redemptions of Class B Shares and
Class C Shares. See Waiver of Contingent Deferred Sales Charge - Class B and
Class C Shares under Redemption and Exchange in the Prospectuses for the
Fund Classes for a list of the instances in which the CDSC is waived.
Purchases of Class B Shares are subject to a maximum purchase
limitation of $250,000 for retirement plans. Purchases of Class C Shares must
be in an amount that is less than $1,000,000 for such plans. The maximum
purchase limitations apply only to the initial purchase of shares by the
retirement plan.
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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 Classes.
See Institutional Class Shares, above. For additional information on any of the
plans and Delaware's retirement services, call the Shareholder Service Center
telephone number.
It is advisable for an investor considering any one of the retirement
plans described below to consult with an attorney, accountant or a qualified
retirement plan consultant. For further details, including applications for
any of these plans, contact your investment dealer or the Distributor.
Taxable distributions from the retirement plans 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 and corporations. These plans can be maintained as Section
401(k), profit sharing or money purchase pension plans. Contributions may be
invested only in Class A and Class C Shares.
Individual Retirement Account ("IRA")
A document is available for an individual who wants to establish an IRA
and make contributions which may be tax -deductible, even if the individual is
already participating in an employer -sponsored retirement plan. Even if
contributions are not deductible for tax purposes, as indicated below,
earnings will be tax -deferred. In addition, an individual may make
contributions on behalf of a spouse who has no compensation for the year or,
for years prior to 1997, elects to be treated as having no compensation for
the year. Investments in each of the Classes are permissible.
An individual can contribute up to $2,000 to his or her IRA each year.
Contributions may or may not be deductible depending upon the taxpayers
adjusted gross income and whether the taxpayer or his or her spouse is an
active participant in an employer -sponsored retirement plan. Even if a
taxpayer (or his or her spouse) is an active participant in an
employer -sponsored retirement plan, the full $2,000 deduction is still
available if the taxpayer's adjusted gross income is below $25,000 ($40,000
for taxpayers filing joint returns). A partial deduction is allowed for
married couples with incomes between $40,000 and $50,000, and for single
individuals with incomes between $25,000 and $35,000. No deductions are
available for contributions to IRAs by taxpayers whose adjusted gross income
before IRA deductions exceeds $50,000 ($35,000 for singles) and who are active
participants in an employer -sponsored retirement plan. Taxpayers who are not
allowed deductions on IRA contributions still can make nondeductible IRA
contributions of as much as $2,000 for each working spouse ($2,250 for
one -income couples for years prior to 1997), and defer taxes on interest or
other earnings from the IRAs. Special rules apply for determining the
deductibility of contributions made by married individuals filing separate
returns.
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Effective for tax years beginning after 1996, one -income couples can
contribute up to $2,000 to each spouse's IRA provided the combined
compensation of both spouses is at least equal to the total contributions for
both spouses. If the working spouse is an active participant in an
employer -sponsored retirement plan and earns over $40,000, the maximum
deduction limit is reduced in the same way that the limit is reduced for
contributions to a non -spousal IRA.
A company or association may establish a Group IRA for employees or
members who want to purchase shares of a Fund. Purchases of $1 million or more
of Class A Shares qualify for purchase at net asset value but may, under
certain circumstances, be subject to a Limited CDSC.
Investments generally must be held in the IRA until age 59 1/2 in order
to avoid premature distribution penalties, but distributions generally must
commence no later than April 1 of the calendar year following the year in which
the participant reaches age 70 1/2. Individuals are entitled to revoke the
account, for any reason and without penalty, by mailing written notice of
revocation to Delaware Management Trust Company within seven days after the
receipt of the IRA Disclosure Statement or within seven days after the
establishment of the IRA, except, if the IRA is established more than seven days
after receipt of the IRA Disclosure Statement, the account may not be revoked.
Distributions from the account (except for the pro -rata portion of any
nondeductible contributions) are fully taxable as ordinary income in the year
received. Excess contributions removed after the tax filing deadline, plus
extensions, for the year in which the excess contributions were made are subject
to a 6% excise tax on the amount of excess. Premature distributions
(distributions made before age 59 1/2, except for death, disability and certain
other limited circumstances) will be subject to a 10% excise tax on the amount
prematurely distributed, in addition to the income tax resulting from the
distribution. See Alternative Purchase Arrangements - Class B Shares and Class
C Shares under Classes of Shares, Contingent Deferred Sales Charge - Class B
Shares and Class C Shares under Classes of Shares, and Waiver of Contingent
Deferred Sales Charge - Class B and Class C Shares under Redemption and
Exchange in the related Prospectus concerning the applicability of a CDSC upon
redemption.
Effective January 1, 1997, the 10% premature distribution penalty will
not apply to distributions from an IRA that are used to pay medical expenses
in excess of 7.5% of adjusted gross income or to pay health insurance premiums
by an individual who has received unemployment compensation for 12 consecutive
weeks.
See Appendix A --IRA Information for additional IRA information.
Simplified Employee Pension Plan ("SEP/IRA")
A SEP/IRA may be established by an employer who wishes to sponsor a
tax -sheltered retirement program by making contributions on behalf of all
eligible employees. Class A Shares, Class B Shares and Class C Shares are
available for investment by a SEP/IRA.
Salary Reduction Simplified Employee Pension Plan ("SAR/SEP")
Although new SAR/SEP plans may not be established after December 31,
1996, existing plans may be maintained by employers having 25 or fewer
employees. An employer may elect to make additional contributions to such
existing plans.
Prototype 401(k) Defined Contribution Plan
Section 401(k) of the Code permits employers to establish qualified
plans based on salary deferral contributions. Plan documents are available to
enable employers to establish a plan. An employer may also elect to make
profit sharing contributions and/or matching contributions with investments in
only Class A Shares and Class C
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Shares or certain other funds in the Delaware Group. Purchases under the plan
may be combined for purposes of computing the reduced front -end sales charge
applicable to Class A Shares.
Deferred Compensation Plan for Public Schools and Non -Profit Organizations
("403(b)(7)")
Section 403(b)(7) of the Code permits public school systems and certain
non -profit organizations to use mutual fund shares held in a custodial
account to fund deferred compensation arrangements for their employees. A
custodial account agreement is available for those employers who wish to
purchase Class A, B or C Shares in conjunction with such an arrangement.
Deferred Compensation Plan for State and Local Government Employees ("457")
Section 457 of the Code permits state and local governments, their
agencies and certain other entities to establish a deferred compensation plan
for their employees who wish to participate. This enables employees to defer a
portion of their salaries and any federal (and possibly state) taxes thereon.
Such plans may invest in shares Class A, B and C Shares. Although investors
may use their own plan, there is available a Delaware Group 457 Deferred
Compensation Plan. Interested investors should contact the Distributor or
their investment dealers to obtain further information.
SIMPLE IRA
A SIMPLE IRA combines many of the features of an Individual Retirement
Account (IRA) and a 401(k) Plan but is easier to administer than a typical
401(k) Plan. It requires employers to make contributions on behalf of their
employees and also has a salary deferral feature that permits employees to
defer a portion of their salary into the plan on a pre -tax basis.
SIMPLE 401(k)
A SIMPLE 401(k) is like a regular 401(k) except that plan sponsors are
limited to 100 employees and, in exchange for mandatory plan sponsor
contributions, discrimination testing is no longer required. Class B Shares
are not available for purchase by such plans.
The Limited CDSC is applicable to any redemptions of net asset value
purchases made on behalf of any group retirement plan on which a dealer's
commission has been paid if such redemption is made pursuant to a withdrawal
of the entire plan from Delaware Group funds.
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DETERMINING OFFERING PRICE AND NET ASSET VALUE
The Real Estate Investment Trust Portfolio Class of The Real Estate Investment
Trust Portfolio and all other Portfolios
Orders for purchases of shares of a Portfolio are effected at the net
asset value of that Portfolio next calculated after receipt of the order by
Pooled Trust, Inc. and Federal Funds wire by the Portfolio's Custodian Bank,
plus in the case of The International Mid-Cap Sub Portfolio, The Emerging
Markets Portfolio and the Global Equity Portfolio, any applicable purchase
reimbursement fee equal to 0.60%, 0.75% and 0.40%, respectively, of the dollar
amount invested.
Net asset value is computed at the close of regular trading on the New
York Stock Exchange, generally 4 p.m., Eastern time, on days when the New York
Stock Exchange is open and an order to purchase or sell shares of a Portfolio
has been received or is on hand, having been received since the last previous
computation of net asset value. The New York Stock Exchange is scheduled to be
open Monday through Friday throughout the year except for New Year's Day,
Martin Luther King, Jr.'s Birthday, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving and Christmas. When the New
York Stock Exchange is closed, Pooled Trust, Inc. will generally be closed,
pricing calculations will not be made and purchase and redemption orders will
not be processed.
Class A, B and C Shares and Institutional Class Shares of The Real Estate
Investment Trust Portfolio
Orders for purchases of Class A Shares are effected at the offering
price next calculated after receipt of the order by Pooled Trust, Inc., its
agent or designee. Orders for purchases of Class B Shares, Class C Shares and
Institutional Class Shares are effected at the net asset value per share next
calculated by Pooled Trust, Inc. after receipt of the order by Pooled Trust,
Inc., its agent or designee. Selling dealers are responsible for transmitting
orders promptly.
The offering price for Class A Shares consists of the net asset value
per share plus any applicable front-end sales charges. Offering price and net
asset value are computed as of the close of regular trading on the New York
Stock Exchange (ordinarily, 4 p.m., Eastern time) on days when the Exchange is
open. The New York Stock Exchange is scheduled to be open Monday through
Friday throughout the year except for New Year's Day, Martin Luther King,
Jr.'s Birthday, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving and Christmas. When the New York Stock Exchange is
closed, Pooled Trust, Inc. will generally be closed, pricing calculations will
not be made and purchase and redemption orders will not be processed.
Each Class will bear, pro-rata, all of the common expenses of the
Portfolio. The net asset values of all outstanding shares of each Class will
be computed on a pro-rata basis for each outstanding share based on the
proportionate participation in the Portfolio represented by the value of
shares of that Class. All income earned and expenses incurred by the Portfolio
will be borne on a pro-rata basis by each outstanding share of a Class, based
on each Class' percentage in the Portfolio represented by the value of shares
of such Classes, except that the Class A, Class B and Class C Shares alone
will bear the 12b-1 Plan expenses payable under their respective Plans. Due to
the specific distribution expenses and other costs that would be allocable to
each Class, the dividends paid to each Class of The Real Estate Investment
Trust Portfolio may vary. However, the net asset value per share of each Class
is expected to be equivalent.
* * *
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
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listed on a foreign exchange are valued at the last quoted sale price available
before the time when net assets are valued. Unlisted securities and listed
securities not traded on the valuation date for which market quotations are
readily available are valued at a price that is considered to best represent
fair value within a range not in excess of the current ask prices nor less
than the current bid prices. Domestic over-the-counter equities, domestic
equity securities that are not traded and U.S. government securities (and
those of its agencies and instrumentalities) are priced at the mean of the bid
and ask price.
Bonds and other fixed-income securities are valued according to the
broadest and most representative market, which will ordinarily be the
over-the-counter market. Net asset value includes interest on fixed-income
securities, which is accrued daily. In addition, bonds and other fixed-income
securities may be valued on the basis of prices provided by a pricing service
when such prices are believed to reflect the fair market value of such
securities. The prices provided by a pricing service are determined without
regard to bid or last sale prices but take into account institutional size
trading in similar groups of securities and any developments related to the
specific securities. Securities not priced in this manner are valued at the
most recent quoted mean price or, when stock exchange valuations are used, at
the latest quoted sale price on the day of valuation. If there is no such
reported sale, the latest quoted mean price will be used. Securities with
remaining maturities of 60 days or less are valued at amortized cost, if it
approximates market value. In the event that amortized cost does not
approximate market value, market prices as determined above will be used.
Exchange-traded options are valued at the last reported sales price or,
if no sales are reported, at the mean between the last reported bid and ask
prices. Non-exchange traded options are valued at fair value using a
mathematical model. Futures contracts are valued at their daily quoted
settlement price. The value of other assets and securities for which no
quotations are readily available (including restricted securities) are
determined in good faith at fair value using methods determined by Pooled
Trust, Inc.'s Board of Directors.
The securities in which The International Equity Portfolio, The
International Mid-Cap Sub Portfolio, The Labor Select International Equity
Portfolio, The Global Fixed Income Portfolio, The International Fixed Income
Portfolio, The Emerging Markets Portfolio and The Global Equity Portfolio (as
well as The Real Estate Investment Trust Portfolios , The High-Yield Bond
Portfolio and The Diversified Core Fixed Income Portfolio, to the limited
extent described in the Prospectus) may invest from time to time may be listed
primarily on foreign exchanges which trade on days when the New York Stock
Exchange is closed (such as holidays or Saturday). As a result, the net asset
value of those Portfolios may be significantly affected by such trading on
days when shareholders have no access to the Portfolios.
For purposes of calculating net asset value per share, all assets and
liabilities initially expressed in foreign currencies will be converted into
U.S. dollars at the mean between the bid and ask prices of such currencies
against the U.S. dollar as provided by an independent pricing service or any
major bank, including the Custodian Banks. Forward foreign currency contracts
are valued at the mean price of the contract. Interpolated values will be
derived when the settlement date of the contract is on an interim period for
which quotations are not available. Foreign currencies and the prices of
foreign securities denominated in foreign currencies are translated to U.S.
dollars based on rates in effect as of 12 p.m., Eastern time.
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REDEMPTION AND REPURCHASE
The following supplements the disclosure provided in Pooled Trust,
Inc.'s Prospectuses.
The Real Estate Investment Trust Portfolio Class of The Real Estate Investment
Trust Portfolio and all other Portfolios
Each Portfolio may suspend redemption privileges or postpone the date of
payment (i) during any period that the New York Stock Exchange is closed, or
trading on the New York Stock Exchange is restricted as determined by the
Commission, (ii) during any period when an emergency exists as defined by the
rules of the Commission as a result of which it is not reasonably practicable
for a Portfolio to dispose of securities owned by it, or fairly to determine the
value of its assets, and (iii) for such other periods as the Commission may
permit.
No charge is made by any Portfolio for redemptions, except that
shareholders that redeem shares of The International Mid-Cap Sub-Portfolio,
The Emerging Markets Portfolio and The Global Equity Portfolio are assessed by
the relevant Portfolio a redemption reimbursement fee of 0.50%, 0.75% and
0.30%, 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 International Mid-Cap
Sub Portfolio, The Labor Select International Equity Portfolio, The Global
Fixed Income Portfolio, The International Fixed Income Portfolio and The
Global Equity Portfolio. Under certain circumstances, eligible investors who
have an existing investment counseling relationship with Delaware Investment
Advisers or Delaware International will not be subject to Pooled Trust, Inc.'s
in-kind redemption requirements until such time as Pooled Trust, Inc. receives
appropriate regulatory approvals to permit such redemptions for the account of
such investors.
Pooled Trust, Inc. has elected to be governed by Rule 18f-1 under the
1940 Act pursuant to which Pooled Trust, Inc. is obligated to redeem shares
solely in cash up to the lesser of $250,000 or 1% of the net asset value of each
Portfolio during any 90-day period for any one shareholder.
The value of a Portfolio's investments is subject to changing market
prices. Redemption proceeds may be more or less than the shareholder's cost
depending upon the market value of the Portfolio's securities. Thus, a
shareholder redeeming shares of a Portfolio may, if such shareholder is
subject to federal income tax, sustain either a gain or loss, depending upon
the price paid and the price received for such shares.
Small Accounts
For all Portfolios except The International Mid-Cap Sub Portfolio,
due to the relatively higher cost of maintaining small accounts, Pooled Trust,
Inc. reserves the right to redeem Portfolio shares in any of its accounts at
the then-current net asset value if as a result of redemption or transfer a
shareholder's investment in a Portfolio has a value of less than $500,000.
However, before Pooled Trust, Inc. redeems such shares and sends the proceeds
to the shareholder, the shareholder will be notified in writing that the value
of the shares in the account is less than $500,000 and will be allowed 90 days
from that date of notice to make an additional investment to meet the required
minimum. Any redemption in an inactive account established with a minimum
investment may trigger mandatory redemption.
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* * *
Pooled Trust, Inc. has available certain redemption privileges, as
described below. They are unavailable to shareholders of The International
Equity Portfolio, The International Mid-Cap Sub Portfolio, The Labor Select
International Equity Portfolio, The Global Fixed Income Portfolio, The
International Fixed Income Portfolio and The Global Equity Portfolio whose
redemptions trigger the special in-kind redemption procedures. See the related
Prospectus. The Portfolios reserve the right to suspend or terminate these
expedited payment procedures at any time in the future.
Expedited Telephone Redemptions
Shareholders wishing to redeem shares for which certificates have not
been issued may call Pooled Trust, Inc. at (1-800-231-8002) prior to 4 p.m.,
Eastern time, and have the proceeds mailed to them at the record address.
Checks payable to the shareholder(s) of record will normally be mailed three
business days, but no later than seven days, after receipt of the redemption
request.
In addition, redemption proceeds can be transferred to your
predesignated bank account by wire or by check by calling Pooled Trust, Inc.,
as described above. The Telephone Redemption Option on the Account
Registration Form must have been elected by the shareholder and filed with
Pooled Trust, Inc. before the request is received. Payment will be made by
wire or check to the bank account designated on the authorization form as
follows:
1. Payment By Wire: Request that Federal Funds be wired to the bank
account designated on the Account Registration Form. Redemption proceeds will
normally be wired on the next business day following receipt of the redemption
request. There is no charge for this service. If the proceeds are wired to the
shareholder's account at a bank which is not a member of the Federal Reserve
System, there could be a delay in the crediting of the funds to the
shareholder's bank account.
2. Payment by Check: Request a check be mailed to the bank account
designated on the Account Registration Form. Redemption proceeds will normally
be mailed three business days, but no later than seven days, from the date of
the telephone request. This procedure will take longer than the Payment by
Wire option (1 above) because of the extra time necessary for the mailing and
clearing of the check after the bank receives it. If expedited payment under
these procedures could adversely affect a Portfolio, Pooled Trust, Inc. may
take up to seven days to pay the shareholder.
To reduce the risk of attempted fraudulent use of the telephone
redemption procedure, payment will be made only to the bank account designated
on the Account Registration Form. If a shareholder wishes to change the bank
account designated for such redemption, a written request in accordance with
the instructions set forth in the Prospectus will be required.
Exchange Privilege
Shares of each Portfolio of Pooled Trust, Inc. may be exchanged for
shares of any other Portfolio or for the institutional classes of the other
funds in the Delaware Group. Exchange requests should be sent to Delaware Pooled
Trust, Inc., One Commerce Square, 2005 Market Street, Philadelphia, PA 19103
Attn: Client Services.
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
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Exchange Privilege under Shareholder Services in the related Prospectus. The
shares of a Portfolio into which an exchange is made, if necessary, must be
authorized for sale in the state in which the investor is domiciled. Before
making an exchange, a shareholder should consider the investment objectives of
the Portfolio to be purchased.
Exchange requests may be made either by mail, FAX message or by
telephone. Telephone exchanges will be accepted only if the certificates for the
shares to be exchanged are held by Pooled Trust, Inc. for the account of the
shareholder and the registration of the two accounts will be identical. Requests
for exchanges received prior to 4 p.m., Eastern time, for the Portfolios will be
processed as of the close of business on the same day. Requests received after
this time will be processed on the next business day. Exchanges may also be
subject to limitations as to amounts or frequency, and to other restrictions
established by the Board of Directors to assure that such exchanges do not
disadvantage a Portfolio and its shareholders. Exchanges into and out of The
International Equity Portfolio, The Labor Select International Equity Portfolio,
The Global Fixed Income Portfolio, The International Fixed Income Portfolio and
The Global Equity Portfolio shall be subject to the special purchase and
redemption procedures identified in sections of the related Prospectus entitled
Purchase of Shares and Redemption of Shares.
For federal income tax purposes, an exchange between Portfolios is a
taxable event for shareholders subject to federal income tax, and,
accordingly, a gain or loss may be realized. Pooled Trust, Inc. reserves the
right to suspend or terminate or amend the terms of the exchange privilege
upon 60 days' written notice to client shareholders.
* * *
Neither Pooled Trust, Inc., the Portfolios nor the Portfolios' transfer
agent, Delaware Service Company, Inc., is responsible for any losses incurred
in acting upon written or telephone instructions for redemption or exchange of
Portfolio shares which are reasonably believed to be genuine. With respect to
such telephone transactions, Pooled Trust, Inc. will ensure that reasonable
procedures are used to confirm that instructions communicated by telephone are
genuine (including verification of a form of personal identification) as if it
does not, Pooled Trust, Inc. or Delaware Service Company, Inc. may be liable
for any losses due to unauthorized or fraudulent transactions. A written
confirmation will be provided for all purchase, exchange and redemption
transactions initiated by telephone.
Class A, B and C Shares and Institutional Class Shares of The Real Estate
Investment Trust Portfolio Any shareholder may require The Real Estate nvestment
Trust Portfolio to redeem shares by sending a written
request, signed by the record owner or owners exactly as the shares are
registered, to the Portfolio, at 1818 Market Street, Philadelphia, PA 19103.
In addition, certain expedited redemption methods described below are
available when stock certificates have not been issued. Certificates are
issued for the Class A Shares and Institutional Class Shares only if a
shareholder specifically requests them. Certificates are not issued for Class
B Shares or Class C Shares. If stock certificates have been issued for shares
being redeemed, they must accompany the written request. For redemptions of
$50,000 or less paid to the shareholder at the address of record, the request
must be signed by all owners of the shares or the investment dealer of record,
but a signature guarantee is not required. When the redemption is for more
than $50,000, or if payment is made to someone else or to another address,
signatures of all record owners are required and a signature guarantee is
required. Each signature guarantee must be supplied by an eligible guarantor
institution. The Portfolio reserves the right to reject a signature guarantee
supplied by an eligible institution based on its creditworthiness. The
Portfolio may request further documentation from corporations, retirement
plans, executors, administrators, trustees or guardians.
In addition to redemption of Portfolio shares, the Distributor, acting
as agent of The Real Estate Investment Trust Portfolio, offers to repurchase
Portfolio shares from broker/dealers acting on behalf of shareholders. The
redemption or repurchase price, which may be more or less than the
shareholder's cost, is the net asset value per
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share next determined after receipt of the request in good order by the
Portfolio or its agent, subject to any applicable CDSC or Limited CDSC. This is
computed and effective at the time the offering price and net asset value are
determined. See Determining Offering Price and Net Asset Value. The Portfolio
and the Distributor end their business days at 5 p.m., Eastern time. This offer
is discretionary and may be completely withdrawn without further notice by the
Distributor.
Orders for the repurchase of Portfolio shares which are submitted to
the Distributor prior to the close of its business day will be executed at the
net asset value per share computed that day (subject to any applicable CDSC or
Limited CDSC), if the repurchase order was received by the broker/dealer from
the shareholder prior to the time the offering price and net asset value are
determined on such day. The selling dealer has the responsibility of
transmitting orders to the Distributor promptly. Such repurchase is then
settled as an ordinary transaction with the broker/dealer (who may make a
charge to the shareholder for this service) delivering the shares repurchased.
Certain redemptions of Class A Shares purchased at net asset value may
result in the imposition of a Limited CDSC. See Contingent Deferred Sales
Charge for Certain Redemptions of Class A Shares Purchased at Net Asset Value
under Redemption and Exchange in the related Prospectus. Redemptions of Class
B Shares are subject to the following CDSC: (i) 4% if shares are redeemed
within two years of purchase; (ii) 3% if shares are redeemed during the third
or fourth year following purchase; (iii) 2% if shares are redeemed during the
fifth year following purchase; and (iv) 1% if shares are redeemed during the
sixth year following purchase. Class C Shares are subject to a CDSC of 1% if
shares are redeemed within 12 months following purchase. See Contingent
Deferred Sales Charge under Classes of Shares in the related Prospectus.
Except for the applicable CDSC or Limited CDSC, and with respect to the
expedited payment by wire described below, for which there is currently a
$7.50 bank wiring cost, neither The Portfolio nor its Distributor charges a
fee for redemptions or repurchases, but such fees could be charged at any time
in the future.
Payment for shares redeemed will ordinarily be mailed the next business
day, but in no case later than seven days, after receipt of a redemption
request in good order; provided, however, that each commitment to mail or wire
redemption proceeds by a certain time, as described below, is modified by the
qualifications described in the next paragraph.
The Portfolio will process written or telephone redemption requests to
the extent that the purchase orders for the shares being redeemed have already
been settled. The Portfolio will honor the redemption requests as to shares
for which a check was tendered as payment, but the Portfolio will not mail or
wire the proceeds until it is reasonably satisfied that the check has cleared.
This potential delay can be avoided by making investments by wiring Federal
Funds.
If a shareholder has been credited with a purchase by a check which is
subsequently returned unpaid for insufficient funds or for any other reason,
the Portfolio will automatically redeem from the shareholder's account the
shares purchased by the check plus any dividends earned thereon. Shareholders
may be responsible for any losses to the Portfolio or to the Distributor.
In case of a suspension of the determination of the net asset value
because the New York Stock Exchange is closed for other than weekends or
holidays, or trading thereon is restricted or an emergency exists as a result
of which disposal by the Portfolio of securities owned by it is not reasonably
practical, or it is not reasonably practical for the Portfolio fairly to value
its assets, or in the event that the Securities and Exchange Commission has
provided for such suspension for the protection of shareholders, the Portfolio
may postpone payment or suspend the right of
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redemption or repurchase. In such case, the shareholder may withdraw the request
for redemption or leave it standing as a request for redemption at the net asset
value next determined after the suspension has been terminated.
Payment for shares redeemed or repurchased may be made either in cash or
kind, or partly in cash and partly in kind. Any portfolio securities paid or
distributed in kind would be valued as described in Determining Offering Price
and Net Asset Value. Subsequent sale by an investor receiving a distribution in
kind could result in the payment of brokerage commissions. However, Pooled
Trust, Inc. has elected to be governed by Rule 18f-1 under the 1940 Act pursuant
to which the Portfolio is obligated to redeem shares solely in cash up to the
lesser of $250,000 or 1% of the net asset value of the Portfolio during any
90-day period for any one shareholder.
The value of the Portfolio's investments is subject to changing market
prices. Thus, a shareholder reselling shares to the Portfolio may sustain
either a gain or loss, depending upon the price paid and the price received
for such shares.
Small Accounts
Before the Portfolio involuntarily redeems shares from an account that,
under the circumstances listed in the related Prospectus, has remained below the
minimum amounts required by the Portfolio's Prospectus and sends the proceeds to
the shareholder, the shareholder will be notified in writing that the value of
the shares in the account is less than $1,000 and will be allowed 60 days from
that date of notice to make an additional investment to meet the required
minimum of $1,000. See The Conditions of Your Purchase under How to Buy Shares
in the related Prospectus. Any redemption in an inactive account established
with a minimum investment may trigger mandatory redemption. No CDSC or Limited
CDSC will apply to the redemptions described in this paragraph.
* * *
The Portfolio has made available certain redemption privileges, as
described below. The Portfolio reserves the right to suspend or terminate
these expedited payment procedures upon 60 days' written notice to
shareholders.
Expedited Telephone Redemptions
Holders of Class A Shares, Class B Shares and Class C Shares or their
investment dealers of record wishing to redeem any amount of shares of $50,000
or less for which certificates have not been issued may call the Shareholder
Service Center at 800 -523 -1918 or, in the case of shareholders of the
Institutional Class, their Client Services Representative at 800 -828 -5052
prior to the time the offering price and net asset value are determined, as
noted above, and have the proceeds mailed to them at the record address.
Checks payable to the shareholder(s) of record will normally be mailed the
next business day, but no later than seven days, after the receipt of the
redemption request. This option is only available to individual, joint and
individual fiduciary-type accounts.
In addition, redemption proceeds of $1,000 or more can be transferred
to your predesignated bank account by wire or by check by calling the phone
number listed above. An authorization form must have been completed by the
shareholder and filed with the Portfolio before the request is received.
Payment will be made by wire or check to the bank account designated on the
authorization form as follows:
1. Payment by Wire: Request that Federal Funds be wired to the bank
account designated on the authorization form. Redemption proceeds will
normally be wired on the next business day following receipt of the redemption
request. There is a $7.50 wiring fee (subject to change) charged by CoreStates
Bank, N.A. which will be deducted from the withdrawal proceeds each time the
shareholder requests a redemption from Class A Shares, Class B Shares or Class
C Shares. If the proceeds are wired to the shareholder's account at a bank
which is not a member of the Federal Reserve System, there could be a delay in
the crediting of the funds to the shareholder's bank account.
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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 instruction communicated by telephone are
genuine (including verification of a form of personal identification) as, if it
does not, the Portfolio or the Transfer Agent may be liable for any losses due
to unauthorized or fraudulent transactions. Telephone instructions received by
Class A, B and C shareholders are generally tape recorded. A written
confirmation will be provided for all purchase, exchange and redemption
transactions initiated by telephone.
Systematic Withdrawal Plans
Shareholders of Class A Shares, Class B Shares and Class C Shares who
own or purchase $5,000 or more of shares at the offering price or net asset
value, as applicable for which certificates have not been issued may establish
a Systematic Withdrawal Plan for monthly withdrawals of $25 or more, or
quarterly withdrawals of $75 or more, although the Fund does not recommend any
specific amount of withdrawal. This $5,000 minimum does not apply for the
Portfolio's prototype retirement plans. Shares purchased with the initial
investment and through reinvestment of cash dividends and realized securities
profits distributions will be credited to the shareholder's account and
sufficient full and fractional shares will be redeemed at the net asset value
calculated on the third business day preceding the mailing date.
Checks are dated either the 1st or the 15th of the month, as selected
by the shareholder (unless such date falls on a holiday or a weekend), and are
normally mailed within two business days. Both ordinary income dividends and
realized securities profits distributions will be automatically reinvested in
additional shares of the Class at net asset value. This plan is not
recommended for all investors and should be started only after careful
consideration of its operation and effect upon the investor's savings and
investment program. To the extent that withdrawal payments from the plan
exceed any dividends and/or realized securities profits distributions paid on
shares held under the plan, the withdrawal payments will represent a return of
capital and the share balance may in time be depleted, particularly in a
declining market.
The sale of shares for withdrawal payments constitutes a taxable event
and a shareholder may incur a capital gain or loss for federal income tax
purposes. This gain or loss may be long-term or short-term depending on the
holding period for the specific shares liquidated. Premature withdrawals from
retirement plans may have adverse tax consequences.
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Withdrawals under this plan made concurrently with the purchases of
additional shares may be disadvantageous to the shareholder. Purchases of
Class A Shares through a periodic investment program in a fund managed by the
Manager must be terminated before a Systematic Withdrawal Plan with respect to
such shares can take effect, except if the shareholder is a participant in one
of our retirement plans or is investing in Delaware Group funds which do not
carry a sales charge. Redemptions of Class A Shares pursuant to a Systematic
Withdrawal Plan may be subject to a Limited CDSC if the purchase was made at
net asset value and a dealer's commission has been paid on that purchase.
Redemptions of Class B Shares or Class C Shares pursuant to a Systematic
Withdrawal Plan may be subject to a CDSC, unless the annual amount selected to
be withdrawn is less than 12% of the account balance on the date that the
Systematic Withdrawal Plan was established. See Waiver of Contingent Deferred
Sales Charge - Class B and Class C Shares and Waiver of Limited Contingent
Deferred Sales Charge - Class A Shares under Redemption and Exchange in the
related Prospectus. Shareholders should consult their financial adviser to
determine whether a Systematic Withdrawal Plan would be suitable for them.
An investor wishing to start a Systematic Withdrawal Plan must complete
an authorization form. If the recipient of Systematic Withdrawal Plan payments
is other than the registered shareholder, the shareholder's signature on this
authorization must be guaranteed. Each signature guarantee must be supplied by
an eligible guarantor institution. The Fund reserves the right to reject a
signature guarantee supplied by an eligible institution based on its
creditworthiness. This plan may be terminated by the shareholder or the
Transfer Agent at any time by giving written notice.
The Systematic Withdrawal Plan is not available for the Institutional
Class Shares.
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DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
Each Portfolio has qualified or intends to qualify, and each that has
qualified intends to continue to qualify, as a regulated investment company
under Subchapter M of the Code. As such, 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.
Pooled Trust, Inc.'s policy is to distribute substantially all of each
Portfolio's net investment income and any net realized capital gains in the
amount and at the times that will avoid any federal income or excise taxes.
Unless a shareholder elects to receive dividends and capital gains
distributions in cash, all dividends and capital gains distributions shall be
automatically reinvested in the Portfolios of Pooled Trust, Inc. The amounts
of any dividend or capital gains distributions cannot be predicted.
All dividends out of net investment income, together with distributions
from short-term capital gains, will be taxable to those shareholders who are
subject to income taxes as ordinary income. (These distributions may be
eligible for the dividends-received deductions for corporations.) Any net
long-term capital gains distributed to those shareholders who are subject to
income tax will be taxable as such, regardless of the length of time a
shareholder has owned their shares. Of the dividends paid by The 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
Aggressive Growth 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 of Pooled Trust, Inc. is treated as a separate entity
(and hence as a separate "regulated investment company") for federal tax
purposes. Any net capital gains recognized by a Portfolio are distributed to
its investors without need to offset (for federal income tax purposes) such
gains against any net capital losses of another Portfolio.
Each year, Pooled Trust, Inc. will mail information to investors on
the amount and tax status of each Portfolio's dividends and distributions.
Shareholders should consult their own tax advisers regarding specific
questions as to federal, state or local taxes.
Each class of shares of The Real Estate Investment Trust Portfolio will
share proportionately in the investment income and expenses of the Portfolio,
except that Class A Shares, Class B Shares and Class C Shares alone will incur
distribution fees under their respective 12b -1 plans.
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TAXES
The following supplements the tax disclosure provided in Pooled Trust,
Inc.'s Prospectuses.
Under the Taxpayer Relief act of 1997 (the "1997 Act"), a Portfolio 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 a Portfolio between May 7, 1997 and July 28, 1997
that were held for more than 12 months, and securities sold by the
Portfolio after July 28, 1997 that were held for more than 18 months.
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 individual 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 in order to qualify such shares as
qualified 5-year property. 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.
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
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<PAGE>
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 Aggressive Growth Portfolio, The Real Estate Investment Trust Portfolios,
The Emerging Markets Portfolio , The Global Equity Portfolio and The
Diversified Core Fixed Income Portfolio)
The Aggressive Growth Portfolio's, The Real Estate Investment Trust
Portfolios', The Emerging Markets Portfolio's , The Global Equity Portfolio's
and The Diversified Core Fixed Income Portfolio's transactions in options and
futures contracts will be subject to special tax rules that may affect the
amount, timing and character of distributions to shareholders. For example,
certain positions held by a Portfolio on the last business day of each taxable
year will be marked to market (i.e., treated as if closed out) on such day,
and any gain or loss associated with such positions will be treated as 60%
long-term and 40% short-term capital gain or loss. Certain positions held by a
Portfolio that substantially diminish its risk of loss with respect to other
positions in a Portfolio will constitute "straddles," which are subject to
special tax rules that may cause deferral of the Portfolio's losses,
adjustments in the holding periods of Portfolio securities and conversion of
short-term into long-term capital losses. Certain tax elections exist for
straddles which could alter the effects of these rules. The Portfolios will
limit their activities in options and futures contracts to the extent
necessary to meet the requirements of Subchapter M of the Code.
Forward Currency Contracts
(The International Equity Portfolio, The International Mid-Cap Sub Portfolio,
The Labor Select International Equity Portfolio, The Real Estate Investment
Trust Portfolios, The Global Fixed Income Portfolio, The Emerging Markets
Portfolio, The International Fixed Income Portfolio , The Global Equity
Portfolio and The Diversified Core Fixed Income Portfolio)
The International Equity Portfolio, The International Mid-Cap Sub
Portfolio, The Labor Select International Equity Portfolio, The Real Estate
Investment Trust Portfolios, The Global Fixed Income Portfolio, The
International Fixed Income Portfolio, The Emerging Markets Portfolio , The
Global Equity Portfolio and The Diversified Core Fixed Income Portfolio will
be required for federal income tax purposes to recognize any gains and losses
on forward currency contracts as of the end of each taxable year as well as
those actually realized during the year. In most cases, any such gain or loss
recognized with respect to a forward currency contract is considered to be
ordinary income or loss. Furthermore, forward currency futures contracts which
are intended to hedge against a change in the value of securities held by
these Portfolios may affect the holding period of such securities and,
consequently, the nature of the gain or loss on such securities upon
disposition.
Special tax considerations also apply with respect to foreign
investments of these Portfolios. For example, certain foreign exchange gains
and losses (including exchange gains and losses on forward currency contracts)
realized by the Portfolio will be treated as ordinary income or losses.
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<PAGE>
State and Local Taxes
Shares of Pooled Trust, Inc. are exempt from Pennsylvania county personal
property tax.
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<PAGE>
INVESTMENT MANAGEMENT AGREEMENTS
Delaware Investment Advisers, a division of Delaware Management
Company, Inc. ("Delaware"), One Commerce Square, Philadelphia, PA 19103,
furnishes investment management services to The Large-Cap Value Equity, The
Aggressive Growth, 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 , and The Diversified Core Fixed
Income Portfolios, subject to the supervision and direction of Pooled Trust,
Inc.'s Board of Directors. Delaware International Advisers Ltd. ("Delaware
International"), Third Floor, 80 Cheapside, London, England EC2V 6EE,
furnishes similar services to The International Equity, The International
Mid-Cap 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 Group since 1938. On October 31, 1997, Delaware and its affiliates
within the Delaware Group, including Delaware International Advisers Ltd., were
managing in the aggregate more than $38 billion in assets in the various
institutional or separately managed (approximately $22,496,609,000) and
investment company ($16,012,252,000) accounts.
Lincoln (formerly Lincoln National Investment Management Company) was
incorporated in 1930. As of October 31, 1997, Lincoln had over $38 billion
in assets under management.
The Investment Management Agreements for The Large-Cap Value Equity, The
Aggressive Growth, 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 International Mid-Cap Sub Portfolio, 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.
Each such Agreement has an initial term of two years and may be renewed
after its initial term only so long as such renewal and continuance are
specifically approved at least annually by the Board of Directors or by vote
of a majority of the outstanding voting securities of the Portfolio, and only
if the terms of the renewal thereof have been approved by the vote of a
majority of the directors of Pooled Trust, Inc. who are not parties thereto or
interested persons of any such party, cast in person at a meeting called for
the purpose of voting on such approval. Each
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<PAGE>
Agreement is terminable without penalty on 60 days' notice by the directors of
Pooled Trust, Inc. or by the investment adviser. Each Agreement will terminate
automatically in the event of its assignment.
As compensation for the services to be rendered under their advisory
agreements, Delaware or, as relevant, Delaware International is entitled to an
advisory fee (or, in the case of The International Mid-Cap Sub Portfolio, a
comprehensive management fee) calculated by applying a quarterly rate, based
on the following annual percentage rates, to the Portfolio's average daily net
assets for the quarter:
Portfolio Rate
The Large-Cap Value Equity Portfolio 0.55%
The Aggressive Growth Portfolio 0.80%
The International Equity Portfolio 0.75%
The International Mid-Cap Sub Portfolio 0.70%*
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%****
* Under The Investment Management Agreement between Pooled Trust, Inc. on
behalf of The International Mid-Cap Sub Portfolio and Delaware
International, Delaware International provides both investment advisory
services and pays for all of the ordinary operating expenses of the
Portfolio; and the Portfolio pays Delaware International a comprehensive
management fee to cover all such services and expenses as described
below.
** Delaware has entered into a sub-advisory agreement with Lincoln with
respect to The Real Estate Investment Trust Portfolios. As compensation
for its services as sub-adviser to Delaware, Lincoln is entitled to
receive a sub-advisory fee equal to 30% of the investment management fee
under Delaware's Investment Management Agreement with Pooled Trust, Inc.
on behalf of the Portfolio.
*** Delaware International has elected voluntarily to limit its annual
= Investment Advisory Fee to no more than 1.00% of The Emerging Markets
Portfolio's average daily net assets during the period from October 1,
1997 through October 31, 1998. The effect of the current fee waiver 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
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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.
Under the terms of the Investment Management Agreement for The
International Mid-Cap Sub Portfolio, Delaware International pays the
Portfolio's proportionate share of the fees paid to unaffiliated directors by
Pooled Trust, Inc. Out of the investment advisory fees to which they are
otherwise entitled, Delaware and Delaware International pay their
proportionate share of the fees paid to unaffiliated directors by Pooled
Trust, Inc., except that Delaware International will make no such payments out
of the fees it receives from managing The International Fixed Income, The
Emerging Markets, The Labor Select International Equity and The Global Equity
Portfolios, and Delaware will make no such payments out of the fees it
receives from managing The Small/Mid-Cap Value Equity, The Real Estate
Investment Trust , The High-Yield Bond and The Diversified Core Fixed Income
Portfolios.
Delaware, or as applicable Delaware International, has elected
voluntarily to waive that portion, if any of the annual investment advisory
fees payable by a particular Portfolio and to pay a Portfolio for its expenses
to the extent necessary to ensure that the expenses of that Portfolio
(exclusive of taxes, interest, brokerage commissions and extraordinary
expenses) did not exceed, on an annualized basis, the following percentages of
average daily net assets from the commencement of operations (unless otherwise
noted) through April 30, 1998:
Portfolio
---------
The Large-Cap Value Equity Portfolio 0.68%
The Aggressive Growth Portfolio 0.93%
The International Equity Portfolio 0.96%
The International Mid-Cap Sub Portfolio 0.00%
The Small/Mid-Cap Value Equity Portfolio 0.89%
The Labor Select International Equity Portfolio 0.92%
The Real Estate Investment Trust Portfolio 0.86%*
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%
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<PAGE>
* With respect to REIT Fund A Class, REIT Fund B Class, REIT Fund C
Class and REIT Fund Institutional Class of The Real Estate Investment
Trust Portfolio, Delaware has elected voluntarily to waive that portion,
if any, of the annual Investment Advisory Fee payable by such classes
and to reimburse each class for its expenses to the extent necessary to
ensure that the expenses of each class (exclusive of taxes, interest,
brokerage commissions, extraordinary expenses) do not exceed, as a
percentage of average net assets, on an annualized basis, 1.11% for
Class A Shares, 1.86% for each of the Class B and C Shares and 0.86%
for each of the Institutional Class shares and The Real Estate
Investment Trust class during the period from the commencement of the
public offering of such classes through April 30, 1998. The expense cap
for The Real Estate Investment Trust Portfolio that was in effect from
the commencement of operations through October 14, 1997 was 0.89%.
** Delaware International voluntarily elected to waive that portion, if
any, of its annual investment advisory fees and to pay The Global
Fixed Income Portfolio for its expenses to the extent necessary to
ensure that the expenses of that Portfolio (exclusive of taxes,
interest, brokerage commissions and extraordinary expenses) did not
exceed, on an annualized basis, 0.62% as a percentage of average net
assets for the period from the commencement of the public offering for
the Portfolio through October 31, 1994. Such waiver was modified
effective November 1, 1994 to provide that such expenses of the
Portfolio do not exceed, on an annualized basis, 0.60%.
*** Delaware International voluntarily elected to waive that portion, if
any, of its annual investment advisory fees and to pay The
International Fixed Income Portfolio for its respective expenses to
the extent necessary to ensure that the expenses of that Portfolio
(exclusive of taxes, interest, brokerage commissions and extraordinary
expenses) did not exceed, on an annualized basis, 0.62% as a
percentage of average net assets for the period from the commencement
of the public offering for the Portfolio through April 30, 1994. Such
waiver for The International Fixed Income Portfolio was modified
effective May 1, 1994 to provide that such expenses of the Portfolio
do not exceed, on an annual basis, 0.60%.
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<PAGE>
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 $255,586 earned $441,785 earned $343,114 earned
$433,247 paid $328,126 paid $237,776 paid
$8,538 waived $14,988 waived $17,810 waived
The Aggressive Growth 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>
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<PAGE>
<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 Aggressive Growth 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 is an indirect, wholly owned subsidiary of Delaware Management
Holdings, Inc. ("DMH").
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<PAGE>
Except for the expenses borne by the investment advisers under their
respective Investment Management Agreements and the distributor under the
Distribution Agreements, each Portfolio, except for The International Mid-Cap
Sub Portfolio as described below, is responsible for all of its own expenses.
Among others, these expenses include each Portfolio's proportionate share of
rent and certain other administrative expenses; the investment management
fees; transfer and dividend disbursing agent fees and costs; custodian
expenses; federal and state securities registration fees; proxy costs; and the
costs of preparing prospectuses and reports sent to shareholders. Under the
terms of The International Mid-Cap Sub Portfolio's Investment Management
Agreement, Delaware International pays all employee and ordinary operating
costs of the Portfolio including, for example, investment advisory fees, rent,
shareholder services, transfer agency and accounting services, custody fees,
and ordinary fees of independent accountants and legal counsel. Excluded from
the definition of ordinary operating costs are interest, taxes, dues,
brokerage fees, extraordinary legal and accounting fees and expenses, and fees
or other charges of governments and their agencies, including the cost of
registering the Portfolio's shares with the Commission and qualifying the
Portfolio's shares for sale in any jurisdiction, all of which are borne by the
Portfolio.
Distribution and Service
Delaware Distributors, L.P. , located at 1818 Market Street,
Philadelphia, PA 19103, serves as the national distributor for The Large-Cap
Value Equity, The Aggressive Growth, The Intermediate Fixed Income, The
Limited-Term Maturity, The International Equity, The Global Fixed Income and
The International Fixed Income Portfolios under separate Distribution
Agreements dated April 3, 1995. Delaware Distributors, L.P. is the national
distributor for The Real Estate Investment Trust Portfolio and The
Small/Mid-Cap Value Equity, The Labor Select International Equity and The
High-Yield Bond Portfolios under separate Distribution Agreements dated
November 29, 1995. It is the national distributor for The Emerging Markets
Portfolio under a Distribution Agreement dated April 14, 1997. It is the
national distributor for The Global Equity Portfolio and The Real Estate
Investment Trust Portfolio II under separate Distribution Agreements dated
October 14, 1997. It is the national distributor for The International
Mid-Cap Sub Portfolio, The Aggregate Fixed Income Portfolio and The
Diversified Core Fixed Income Portfolio under separate Distribution Agreements
dated December 24, 1997. 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 December 24, 1997. Delaware Service Company, Inc. also
provides accounting services to the Portfolio pursuant to the terms of a
separate Fund Accounting Agreement. Delaware Service Company, Inc.'s principal
business address is 1818 Market Street, Philadelphia, PA 19103. It is also an
indirect, wholly owned subsidiary of DMH.
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<PAGE>
OFFICERS AND DIRECTORS
The business and affairs of Pooled Trust, Inc. are managed under the
direction of its Board of Directors.
As of October 31, 1997, no one account held 25% or more of the outstanding
shares of any of Pooled Trust, Inc.'s Portfolios. As of October 31, 1997,
the directors and officers, as a group, owned less than 1% of the outstanding
shares of The Real Estate Investment Trust Portfolio; they did not hold shares
of any of the other Portfolios.
As of October 31, 1997, management believes the following accounts
held 5% or more of the outstanding shares of a Portfolio:
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
- --------- --------------------------- ------------ ----------
<S> <C> <C> <C>
The Defensive
Equity Portfolio Northern Trust
TRST PHH Group
P.O. Box 92956
Chicago, IL 60675 571,287 13.21%
Commerce Bank of Kansas City
Trust Burns & McDonnell
Employee Stock Ownership Plan
P.O. Box 419248
Kansas City, MO 64141 309,930 7.16%
Lasalle National Bank Trustee
FBO Metz Baking Company
P.O. Box 1443
Chicago, IL 60690 301,089 6.96%
Strafe & Co.
For Consolidated Products
Profit Sharing Plan
P.O. Box 160
Westerville, OH 43086 297,029 6.86%
Cherrytrust & Co.
FBO Colorado Open Shop
Employers Pension Trust
C/O The Bank of Cherry Creek NA
3033 E. First Ave
Denver, CO 80206 290,753 6.72%
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
- --------- --------------------------- ------------ ----------
<S> <C> <C> <C>
The Defensive The Northern Trust Company
Equity Portfolio TRST Children's Memorial
Pension Trust
P.O. Box 92956
Chicago, IL 60675 281,372 6.50%
Mac & Co.
A/C LNFF5033902
Mutual Funds Operations
P.O. Box 3198
Pittsburgh, PA 15230 252,178 5.83%
The Aggressive
Growth Portfolio St. Elizabeth Hospital Medical Center
1044 Belmont Ave.
Youngstown, OH 44504 394,130 52.27%
Crestar Bank
Cust the College of William and Mary
P.O. Box 8795
Blow Memorial Hall
Williamsburg, VA 23187 112,336 14.90%
The City of Groton
295 Meridian Street
Groton, CT 06340 67,993 9.01%
NCSC Staff Pension Plan
Defined Benefit
8403 Colesville Rd. Ste 1200
Silver Spring, MD 20910 60,869 8.07%
Philadelphia Association of Zeta Psi
Fraternity U/T/A E W Weil
613 Kirsch Avenue
Wayne, PA 19087 56,419 7.48%
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
- --------- --------------------------- ------------ ----------
<S> <C> <C> <C>
The International
Equity Portfolio Father Flanagan's Foundation Fund
14100 Crawford St.
Boys Town, NE 68010 2,928,202 9.26%
The Salvation Army
Eastern Territory
440 West Nyack Road
West Nyack, NY 10994 2,711,245 8.57%
The Salvation Army
Central Territory
10 West Algonquin Road
Des Plaines, IL 60016 2,088,806 6.60%
Mac & Co.
A/C LCPF0763222
Mutual Fund Operations
P.O. Box 3198
Pittsburgh, PA 15230 1,502,955 4.75%
The Intermediate
Fixed Income
Portfolio Northumberland City
Employees Retirement Fund
Cust. Northern Central Bank
c/o Keystone Financial Trust Operation
P.O. Box 2450
Altoona, PA 16603 636,886 21.12%
Patterson & Co.
c/o CoreStates Bank
P.O. Box 7829
Philadelphia, PA 19101 423,831 14.05%
Crestar Bank
Cust The College of William and Mary
Room 224 Private Funds Office
Blow Memorial Hall
P.O. Box 8795
Williamsburg, VA 23187 339,768 11.26%
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
- --------- --------------------------- ------------ ----------
<S> <C> <C> <C>
The Intermediate Delaware Management Company
Fixed Income Attn. Joe Hastings
Portfolio 1818 Market Street
Philadelphia, PA 19103 334,860 11.10%
The City of Groton
295 Meridian Street
Groton, CT 06340 327,732 10.86%
NCSC Staff Pension Plan
Defined Benefit
8403 Colesville Rd. Ste 1200
Silver Spring, MD 20910 301,861 10.01%
Our Sunday Visitor Inc.
200 Noll Plaza
Huntington, IN 46750 196,297 6.50%
The Global
Fixed Income
Portfolio Saxon & Co.
FBO Western Pennsylvania Teamsters
& Employers Pension Fund
P.O. Box 7780-1888
Philadelphia, PA 19183 4,086,122 10.33%
Bost & Co.
Mutual Funds Operations
P.O. Box 3198
Pittsburgh, PA 15230 3,778,259 9.55%
Bankers Trust Co
FBO SLU Delaware Fund
Attn: Tom DeAngelo
34 Exchange Place MS 3029
Jersey City, NJ 07302 3,293,630 8.33%
Washington Suburban Sanitary Commission
Employees Retirement Plan
14501 Sweitzer Ln.
Laurel, MD 20707 3,009,346 7.61%
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
- --------- --------------------------- ------------ ----------
<S> <C> <C> <C>
The Global Wachovia Bank Trustee
Fixed Income BFI Employee Benefit Plan
Portfolio 301 N. Main St.
P.O. Box 3073
Winston Salem, NC 27150 2,018,724 5.10%
The Labor Select
International Equity
Portfolio Operating Engineers
LCL 101 Pension
301 E. Armour Blvd. Suite 203
Kansas City, MO 64111 1,069,050 27.23%
Operating Engineers Pension Trust Fund
8401 Corporate Drive Suite 200
Landover, MD 20785 417,445 10.63%
Keystone District Council of Carpenters
Pension Fund
524 S. 22nd Street
Harrisburg, PA 17104 407,993 10.39%
First of America Trust Company
Cust Plumbers and Steamfitters
Local 137 Pension Trust
International Portfolio
P.O. Box 4042
Kalamazoo, MI 49002 369,671 9.41%
Inland Boatmen's Union of the
Pacific National Pension Plan
1220 SW Morrison St., Ste 300
Portland, OR 97205 227,248 5.79%
Carpenters 626 Pension Fund
P.O. Box 740
Davis Road and Oakwood Lane
Valley Forge, PA 19482 226,663 5.77%
</TABLE>
-87-
<PAGE>
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
- --------- --------------------------- ------------ ----------
<S> <C> <C> <C>
The Labor Select
International Equity Bot Hudson County Carpenters Pension Fund
Portfolio c/o I.E. Shaffer & Co.
P.O. Box 1025
West Trenton, NJ 08628 212,601 5.41%
The Real Estate
Investment
Trust Portfolio Delaware Management Company, Inc.
A Class Attn: Joseph H. Hastings
1818 Market St., 17th floor
Philadelphia, PA 19103 2,998 23.64%
DMTC C/F the 403(b)(7) Plan of
Joanne Marriot
5 Viewside Dr.
Ellington, CT 06029 1,21055 9.54%
NFSC FEBO Richard P. Privette
3907 Brandon Park Dr.
Garland, TX 75044 1,191 9.39%
DMTC C/F the 403(b)(7) Plan of
John S. Watts
P.O.Box 341
12 Laurel Rd.
Ellington, CT 06029 849 6.69%
The High-Yield
Bond Portfolio Schwartz 1996 Charitable Remainder Unitrust
c/o TCS Group, L.L.C.
1200 Shermer Road Suite 212
Northbrook, IL 60062 314,652 31.26%
Chicago Trust Co.
FBO Lincoln National Corp.
Employees Retirement Plan
c/o Marshall & Ilsley Trust Co.
P.O. Box 2977
Milwaukee, WI 53201 17,850 31.18%
Mac & Co LCWF
Mutual Funds Operations
P.O. Box 3198
Pittsburgh PA 15320 127,944 12.55%
</TABLE>
-88-
<PAGE>
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
- --------- --------------------------- ------------ ----------
<S> <C> <C> <C>
The High -Yield Trust Seven 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 114,515 11.23%
Trust Four Hundred Thirty
U/A/D 4/2/94
c/o TCS Group, L.L.C.
1200 Shermer Road Suite 212
Northbrook, IL 60062 114,515 11.23%
The International
Fixed Income
Portfolio Montgomery County Public Schools
Employee's Pension & Retirement System
850 Hungerford Dr. Rm 154
Rockville, MD 20850 1,751,894 55.34%
Adventist Health System Sunbelt
Healthcare Corp.- Core
111 N. Orlando Ave.
Winter Park, FL 32789 1,188,200 37.53%
The Emerging
Markets
Portfolio Father Flanagan's Trust Fund
14100 Crawford St.
Boys Town, NE 68010 887,311 43.95%
Burlington Northern Santa Fe
Retirement Plan
1700 E. Golf Rd.
Schaumburg, IL 60173 548,947 27.19%
Chicago Trust Company
FBO Lincoln National Corp.
Employees Retirement Trust
1000 N. Water St. TR 4
Milwaukee, WI 53202 538,808 26.69%
</TABLE>
-89-
<PAGE>
DMH Corp., Delvoy, Inc., Delaware Management Company, Inc., Delaware
Distributors, L.P., Delaware Distributors, Inc., Delaware Service Company,
Inc., Delaware Management Trust Company, Delaware International Holdings Ltd.,
Founders Holdings, Inc., Delaware International Advisers Ltd., Delaware
Capital Management, Inc. and Delaware Investment & Retirement Services, Inc.
are direct or indirect, wholly owned subsidiaries of DMH. On April 3, 1995, a
merger between DMH and a wholly owned subsidiary of Lincoln National
Corporation ("Lincoln National") was completed. In connection with the merger,
new Investment Management Agreements between Pooled Trust, Inc. on behalf of
The Large-Cap Value Equity Portfolio, The Aggressive Growth Portfolio, The
Intermediate Fixed Income Portfolio and The Limited-Term Maturity Portfolio
and Delaware, and new Investment Management Agreements between Pooled Trust,
Inc. on behalf of The International Equity Portfolio, The Global Fixed Income
Portfolio and The International Fixed Income Portfolio and Delaware
International were executed following shareholder approval. DMH, Delaware and
Delaware International are now indirect, wholly owned subsidiaries, and
subject to the ultimate control, of Lincoln National. Lincoln National, with
headquarters in Fort Wayne, Indiana, is a diversified organization with
operations in many aspects of the financial services industry, including
insurance and investment management.
Certain officers and directors of Pooled Trust, Inc. hold identical
positions in each of the other funds in the Delaware Group. Directors and
principal officers of Pooled Trust, Inc. are noted below along with their ages
and their business experience for the past five years. Unless otherwise noted,
the address of each officer and director is One Commerce Square, Philadelphia,
PA 19103.
*Wayne A. Stork (60)
Chairman and Director and/or Trustee of Pooled Trust, Inc. , each of the
other 32 investment companies in the Delaware Group, Delaware
Management Holdings, Inc. and Delaware Capital Management, Inc.
Chairman, President, Chief Executive Officer, Director and/or Trustee of
DMH Corp. , Delaware Distributors, Inc. and Founders Holdings, Inc.
Chairman, President, Chief Executive Officer, Chief Investment Officer and
Director of Delaware Management Company, Inc.
Chairman, Chief Executive Officer and Director of Delaware International
Advisers Ltd. , Delaware International Holdings Ltd.
President and Chief Executive Officer of Delvoy, Inc.
Chairman of Delaware Distributors, L.P.
Director of Delaware Service Company, Inc. and Delaware Investment &
Retirement Services, Inc.
During the past five years, Mr. Stork has served in various executive
capacities at different times within the Delaware organization.
* Jeffrey J. Nick (44)
President, Chief Executive Officer and Director and/or Trustee of Pooled
Trust, Inc., 32 other investment companies in the Delaware Group and
Delaware Management Holdings, Inc. President, Chief Executive Officer
and Director of Lincoln National Investment Companies, Inc. President of
Lincoln Funds Corporation.
From 1992 to 1996, Mr. Nick was Managing Director of Lincoln National
UK plc and from 1989 to 1992, he was Senior Vice President responsible
for corporate planning and development for Lincoln National Corporation.
Richard G. Unruh, Jr. (58)
Executive Vice President of Pooled Trust, Inc. and each of the other 32
investment companies in the Delaware Group,, Delaware Management
Holdings, Inc. and Delaware Capital Management, Inc.
Executive Vice President and Director of Delaware Management Company, Inc.
Director of Delaware International Advisers Ltd.
During the past five years, Mr. Unruh has served in various executive
capacities at different times within the Delaware organization.
- --------------------
*Director affiliated with the Portfolio's investment manager and considered an
"interested person" as defined in the 1940 Act.
-90-
<PAGE>
Paul E. Suckow (50)
Executive Vice President/Chief Investment Officer, Fixed Income of Pooled
Trust, Inc., each of the other 32 investment companies in the Delaware
Group, Delaware Management Company, Inc. and Delaware Management
Holdings, Inc.
Executive Vice President and Director of Founders Holdings, Inc.
Executive Vice President of Delaware Capital Management, Inc.
Director of Founders CBO Corporation.
Director of HYPPCO Finance Company Ltd.
Before returning to the Delaware Group in 1993, Mr. Suckow was Executive
Vice President and Director of Fixed Income for Oppenheimer Management
Corporation, New York, NY from 1985 to 1992. Prior to that, Mr. Suckow
was a fixed -income portfolio manager for the Delaware Group.
Walter P. Babich (70)
Director and/or Trustee of Pooled Trust, Inc. and each of the other 32
investment companies in the Delaware Group. 460 North Gulph Road, King
of Prussia, PA 19406.
Board Chairman, Citadel Constructors, Inc.
From 1986 to 1988, Mr. Babich was a partner of Irwin & Leighton and from
1988 to 1991, he was a partner of I&L Investors.
Anthony D. Knerr (59)
Director and/or Trustee of Pooled Trust, Inc. and each of the other 32
investment companies in the Delaware Group. 500 Fifth Avenue, New York,
NY 10110.
Founder and Managing Director, Anthony Knerr & Associates.
From 1982 to 1988, Mr. Knerr was Executive Vice President/Finance and
Treasurer of Columbia Universit
Ann R. Leven (57)
Director and/or Trustee of Pooled Trust, Inc. and each of the other 32
investment companies in the Delaware Group. 785 Park Avenue, New York,
NY 10021.
Treasurer, National Gallery of Art.
From 1984 to 1990, Ms. Leven was Treasurer and Chief Fiscal Officer of the
Smithsonian Institution, Washington, DC, and from 1975 to 1992, she was
Adjunct Professor of Columbia Business School.
W. Thacher Longstreth (77)
Director and/or Trustee of Pooled Trust, Inc. and each of the other 32
investment companies in the Delaware Group. City Hall, Philadelphia,
PA 19107.
Philadelphia City Councilman.
-91-
<PAGE>
Thomas F. Madison (61)
Director and/or Trustee of Pooled Trust, Inc. and each of the other 32
investment companies in the Delaware Group.
President and Chief Executive Officer, MLM Partners, Inc.
200 South Fifth Street, Suite 2100, Minneapolis, Minnesota 55402.
Mr. Madison has also been Chairman of the Board of Communications
Holdings, Inc. since 1996. From February to September 1994, Mr. Madison
served as Vice Chairman--Office of the CEO of The Minnesota Mutual Life
Insurance Company and from 1988 to 1993, he was President of U.S. WEST
Communications--Markets.
Charles E. Peck (72)
Director and/or Trustee of Pooled Trust, Inc. and each of the other 32
investment companies in the Delaware Group.
P.O. Box 1102, Columbia, MD 21044.
Secretary/Treasurer, Enterprise Homes, Inc.
From 1981 to 1990, Mr. Peck was Chairman and Chief Executive
Officer of The Ryland Group, Inc., Columbia, MD.
- ----------------------
*Director affiliated with the Portfolio's investment manager and considered an
"interested person" as defined in the 1940 Act.
-92-
<PAGE>
David K. Downes (57)
Executive Vice President, Chief Operating Officer, Chief Financial
Officer of Pooled Trust, Inc., each of the other 32 investment
companies in the Delaware Group, Delaware Management Holdings, Inc.,
Founders CBO Corporation, Delaware Capital Management, Inc. and
Delaware Distributors, L.P.
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 Delaware
Director of Delaware International Advisers Ltd. and Delaware Voyageur
Holding, Inc.
Vice President of Lincoln Funds Corporation
Before joining the Delaware Group in 1992, Mr. Downes was Chief
Administrative Officer, Chief Financial Officer and Treasurer of
Equitable Capital Management Corporation, New York, from December 1985
through August 1992, Executive Vice President from December 1985
through March 1992, and Vice Chairman from March 1992 through August
1992.
George M. Chamberlain, Jr. (50)
Senior Vice President, Secretary and General Counsel of Pooled Trust,
Inc., each of the other 32 investment companies in the
Delaware Group, Delaware Distributors, L.P. and Delaware Management
Holdings, Inc.
Senior Vice President, Secretary, General Counsel and Director of DMH
Corp., Delaware Management Company, Inc., Delaware Distributors, Inc.,
Delaware Service Company, Inc., Founders Holdings, Inc., Delaware
Investment & Retirement Services, Inc. , Delaware Capital Management,
Inc. and Delvoy, Inc.
Executive Vice President, Secretary, General Counsel and Director of
Delaware Management Trust Company.
Senior Vice President and Director of Delaware International Holdings Ltd.
Director of Delaware International Advisers Ltd. and Delaware Voyageur
Holding, Inc.
Secretary of Lincoln Funds Corporation
Attorney.
During the past five years, Mr. Chamberlain has served in various
capacities at different times within the Delaware organization.
-93-
<PAGE>
Joseph H. Hastings (48)
Senior Vice President/Corporate Controller of Pooled Trust, Inc., each of
the other 32 investment companies in the Delaware Group and Founders
Holdings, Inc.
Senior Vice President/Corporate Controller and Treasurer of Delaware
Management Holdings, Inc., DMH Corp., Delaware Management Company,
Inc., Delaware Distributors, L.P., Delaware Distributors, Inc.,
Delaware Service Company, Inc., Delaware Capital Management, Inc.,
Delaware International Holdings Ltd. and Delvoy, Inc.
Chief Financial Officer/Treasurer of Delaware Investment & Retirement
Services, Inc.
Executive Vice President/Chief Financial Officer/Treasurer of Delaware
Management Trust Company.
Senior Vice President/Assistant Treasurer of Founders CBO Corporation.
Treasurer of Lincoln Funds Corporation
1818 Market Street, Philadelphia, PA 19103.
Before joining the Delaware Group in 1992, Mr. Hastings was Chief
Financial Officer for Prudential Residential Services, L.P., New York,
NY from 1989 to 1992. Prior to that, Mr. Hastings served as Controller
and Treasurer for Fine Homes International, L.P., Stamford, CT from
1987 to 1989.
Michael P. Bishof (35)
Senior Vice President/Treasurer of Pooled Trust, Inc., each of the other
32 investment companies in the Delaware Group and Founders Holdings,
Inc.
Senior Vice President/Investment Accounting of Delaware Management
Company, Inc. and Delaware Service Company, Inc.
Senior Vice President and Treasurer/Manager of Investment Accounting of
Delaware Distributors, L.P.
Senior Vice President and Manager of Investment Accounting of Delaware
International Holdings Ltd.
Assistant Treasurer of Founders CBO Corporation.
Before joining the Delaware Group in 1995, Mr. Bishof was a Vice President
for Bankers Trust, New York, NY from 1994 to 1995, a Vice President
for CS First Boston Investment Management, New York, NY from 1993 to
1994 and an Assistant Vice President for Equitable Capital Management
Corporation, New York, NY from 1987 to 1993.
George E. Deming (56)
Vice President/Senior Portfolio Manager of The Large-Cap Value Equity
Portfolio.
Vice President/Senior Portfolio Manager of Delaware Investment Advisers.
Before joining the Delaware Group in 1978, Mr. Deming was responsible for
portfolio management and institutional sales at White Weld & Co., Inc.
He is a member of the Financial Analysts of Philadelphia. During the
past five years, Mr. Deming has served in various capacities at
different times within the Delaware organization.
Gerald S. Frey (51)
Vice President/Senior Portfolio Manager of Pooled Trust, Inc., of seven
other investment companies in the Delaware Group and of Delaware
Management Company, Inc.
Before joining the Delaware Group in 1996, Mr. Frey was a Senior Director
with Morgan Grenfell Capital Management, New York, NY from 1986 to
1995.
-94-
<PAGE>
Gary A. Reed (43)
Vice President/Senior Portfolio Manager of Pooled Trust, Inc., of nine
other investment companies in the Delaware Group, of Delaware
Management Company, Inc. and Delaware Capital Management, Inc.
Vice President/Senior Portfolio Manager of Delaware Capital Management,
Inc.
During the past five years, Mr. Reed has served in such capacities within
the Delaware organization.
Gerald T. Nichols (39)
Vice President/Senior Portfolio Manager of Pooled Trust, Inc., of 11 other
investment companies in the Delaware Group and of Delaware Management
Company, Inc. Vice President of Founders Holdings, Inc.
Treasurer/Assistant Secretary and Director of Founders CBO
Corporation.
During the past five years, Mr. Nichols has served in various capacities
at different times within the Delaware organization.
Paul A. Matlack (38)
Vice President/Senior Portfolio Manager of Pooled Trust, Inc., of 11 other
investment companies in the Delaware Group and of Delaware Management
Company, Inc.
Vice President of Founders Holdings, Inc.
President and Director of Founders CBO Corporation.
During the past five years, Mr. Matlack has served in various capacities
at different times within the Delaware organization.
Babak Zenouzi (34)
Vice President/Senior Portfolio Manager of Pooled Trust, Inc., of nine
other investment companies in the Delaware Group and of Delaware
Management Company, Inc.
Vice President/Assistant Portfolio Manager of Delaware Investment
Advisers.
Before joining the Delaware Group in 1992, Mr. Zenouzi held positions of
Assistant Vice President, Senior Financial Analyst and Portfolio
Accountant for The Boston Company, Boston, MA from 1986 to 1991.
Roger A. Early (43)
Vice President/Senior Portfolio Manager of Pooled Trust, Inc. and each of
the tax-exempt and the fixed income funds in the Delaware Group and
Delaware Management Company, Inc.
Before joining the Delaware Group, Mr. Early was a portfolio manager for
Federated Investment Counseling's fixed-income group, with over $1
billion in assets.
Frank X. Morris (36)
Vice President/Portfolio Manager of Pooled Trust, Inc.
Before joining the Delaware Group 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.
-95-
<PAGE>
James F. Stanley (30)
Vice President/Portfolio Manager of Pooled Trust, Inc.
Before joining the Delaware Group 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.
Before joining the Delaware Group in 1997, he was a Director of Trust
Investments for Bell Atlantic Corporation in Philadelphia.
The following is a compensation table listing for each director entitled
to receive compensation, the aggregate compensation received from Pooled
Trust, Inc. and the total compensation received from all Delaware Group funds
for the fiscal year ended October 31, 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.
<TABLE>
<CAPTION>
Pension or Total
Retirement Estimated Compensation
Aggregate Benefits Annual from all 33
Compensation Accrued Benefits Delaware Group
from Pooled as Part of Upon Investment
Name Trust, Inc. Fund Expenses Retirement* Companies
<S> <C> <C> <C> <C>
W. Thacher Longstreth $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** $1,680 None $38,000 $30,913
</TABLE>
* Under the terms of the Delaware Group Retirement Plan for Directors/Trustees,
each disinterested director who, at the time of his or her retirement from
the Board, has attained the age of 70 and served on the Board for at least
five continuous years, is entitled to receive payments from each fund in the
Delaware Group for a period equal to the lesser of the number of years that
such person served as a director or the remainder of such person's life. The
amount of such payments will be equal, on an annual basis, to the amount of
the annual retainer that is paid to directors of each fund at the time of
such person's retirement. If an eligible director retired as of October 31,
1997, he or she would be entitled to annual payments totaling $38,000, in the
aggregate, from all of the funds in the Delaware Group, based on the number
of funds in the Delaware Group as of that date.
** Mr. Madison joined Pooled Trust, Inc.'s Board of Directors on April 30, 1997.
-96-
<PAGE>
EXCHANGE PRIVILEGE
The Real Estate Investment Trust Portfolio
(Class A Shares, Class B Shares, Class C Shares and Institutional Class Shares)
The exchange privileges available for shareholders of the Class A
Shares, Class B Shares, Class C Shares and Institutional Class Shares of The
Real Estate Investment Trust Portfolio and for shareholders of the classes of
the other funds in the Delaware Group are set forth in the relevant
prospectuses for such classes. The following supplements that information. The
Portfolio may modify, terminate or suspend the exchange privilege upon 60
days' notice to shareholders.
All exchanges involve a purchase of shares of the fund into which the
exchange is made. As with any purchase, an investor should obtain and
carefully read that fund's prospectus before buying shares in an exchange. The
prospectus contains more complete information about the fund, including
charges and expenses. A shareholder requesting such an exchange will be sent a
current prospectus and an authorization form for any of the other mutual funds
in the Delaware Group. Exchange instructions must be signed by the record
owner(s) exactly as the shares are registered.
An exchange constitutes, for tax purposes, the sale of one fund or
series and the purchase of another. The sale may involve either a capital gain
or loss to the shareholder for federal income tax purposes.
In addition, investment advisers and dealers may make exchanges
between funds in the Delaware Group on behalf of their clients by telephone or
other expedited means. This service may be discontinued or revised at any time
by the Transfer Agent. Such exchange requests may be rejected if it is
determined that a particular request or the total requests at any time could
have an adverse effect on any of the funds. Requests for expedited exchanges
may be submitted with a properly completed exchange authorization form, as
described above.
Telephone Exchange Privilege
Shareholders owning shares for which certificates have not been
issued or their investment dealers of record may exchange shares by telephone
for shares in other mutual funds in the Delaware Group. This service is
automatically provided unless the Portfolio receives written notice from the
shareholder to the contrary.
Shareholders or their investment dealers of record may contact the
Shareholder Service Center at 800 -523 -1918 or, in the case of shareholders
of the Institutional Class, their Client Services Representative at
800 -828 -5052 to effect an exchange. The shareholder's current Fund account
number must be identified, as well as the registration of the account, the
share or dollar amount to be exchanged and the fund into which the exchange is
to be made. Requests received on any day after the time the offering price and
net asset value are determined will be processed the following day. See
Determining Offering Price and Net Asset Value. Any new account established
through the exchange will automatically carry the same registration,
shareholder information and dividend option as the account from which the
shares were exchanged. The exchange requirements of the fund into which the
exchange is being made, such as sales charges, eligibility and investment
minimums, must be met. (See the prospectus of the fund desired or inquire by
calling the Transfer Agent or, as relevant, your Client Services
Representative.) Certain funds are not available for retirement plans.
-97-
<PAGE>
The telephone exchange privilege is intended as a convenience to
shareholders and is not intended to be a vehicle to speculate on short -term
swings in the securities market through frequent transactions in and out of
the funds in the Delaware Group. Telephone exchanges may be subject to
limitations as to amounts or frequency. The Transfer Agent and the Portfolio
reserve the right to record exchange instructions received by telephone and to
reject exchange requests at any time in the future.
As described in the Portfolio's Prospectuses, neither the Portfolio
nor the Transfer Agent is responsible for any shareholder loss incurred in
acting upon written or telephone instructions for redemption or exchange of
Portfolio shares which are reasonably believed to be genuine.
Right to Refuse Timing Accounts
With regard to accounts that are administered by market timing
services ("Timing Firms") to purchase or redeem shares based on changing
economic and market conditions ("Timing Accounts"), the Portfolio will refuse
any new timing arrangements, as well as any new purchases (as opposed to
exchanges) in Delaware Group funds from Timing Firms. The Portfolio reserves
the right to temporarily or permanently terminate the exchange privilege or
reject any specific purchase order for any person whose transactions seem to
follow a timing pattern who: (i) makes an exchange request out of the
Portfolio within two weeks of an earlier exchange request out of the
Portfolio, or (ii) makes more than two exchanges out of the Portfolio per
calendar quarter, or (iii) exchanges shares equal in value to at least $5
million, or more than 1/4 of 1% of the Portfolio's net assets. Accounts under
common ownership or control, including accounts administered so as to redeem
or purchase shares based upon certain predetermined market indicators, will be
aggregated for purposes of the exchange limits.
Restrictions on Timed Exchanges
Timing Accounts operating under existing timing agreements may only
execute exchanges between the following eight Delaware Group funds: (1)
Decatur Income Fund, (2) Decatur Total Return Fund, (3) Delaware Fund, (4)
Limited -Term Government Fund, (5) Tax -Free USA Fund, (6) Delaware Cash
Reserve, (7) Delchester Fund and (8) Tax -Free Pennsylvania Fund. No other
Delaware Group funds are available for timed exchanges. Assets redeemed or
exchanged out of Timing Accounts in Delaware Group funds not listed above may
not be reinvested back into that Timing Account. The Portfolio reserves the
right to apply these same restrictions to the account(s) of any person whose
transactions seem to follow a timing pattern (as described above).
The Portfolio also reserves the right to refuse the purchase side of
an exchange request by any Timing Account, person, or group if, in the
Manager's judgment, the Portfolio would be unable to invest effectively in
accordance with its investment objectives and policies, or would otherwise
potentially be adversely affected. A shareholder's purchase exchanges may be
restricted or refused if the Portfolio receives or anticipates simultaneous
orders affecting significant portions of the Portfolio's assets. In
particular, a pattern of exchanges that coincide with a "market timing"
strategy may be disruptive to the Portfolio and therefore may be refused.
Except as noted above, only shareholders and their authorized brokers
of record will be permitted to make exchanges or redemptions.
* * *
Following is a summary of the investment objectives of the other
Delaware Group funds:
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<PAGE>
Delaware Fund seeks long -term growth by a balance of capital
appreciation, income and preservation of capital. It uses a dividend -oriented
valuation strategy to select securities issued by established companies that are
believed to demonstrate potential for income and capital growth. Devon Fund
seeks current income and capital appreciation by investing primarily in
income -producing common stocks, with a focus on common stocks the Manager
believes have the potential for above average dividend increases over time.
Trend Fund seeks long -term growth by investing in common stocks
issued by emerging growth companies exhibiting strong capital appreciation
potential.
Small Cap Value Fund seeks capital appreciation by investing
primarily in common stocks whose market values appear low relative to their
underlying value or future potential.
DelCap Fund seeks long -term capital growth by investing in common
stocks and securities convertible into common stocks of companies that have a
demonstrated history of growth and have the potential to support continued
growth.
Decatur Income Fund seeks the highest possible current income by
investing primarily in common stocks that provide the potential for income and
capital appreciation without undue risk to principal. Decatur Total Return
Fund seeks long -term growth by investing primarily in securities that provide
the potential for income and capital appreciation without undue risk to
principal. Blue Chip Fund seeks to achieve long -term capital appreciation.
Current income is a secondary objective. It seeks to achieve these objectives
by investing primarily in equity securities and any securities that are
convertible into equity securities. Quantum Fund seeks to achieve long -term
capital appreciation. It seeks to achieve this objective by investing
primarily in equity securities of medium - to large -sized companies expected
to grow over time that meet the Fund's "Social Criteria" strategy.
Delchester Fund seeks as high a current income as possible by
investing principally in high yield, high risk corporate bonds, and also in
U.S. government securities and commercial paper. Strategic Income Fund seeks
to provide investors with high current income and total return by using a
multi -sector investment approach, investing principally in three sectors of
the fixed -income securities markets: high yield, higher risk securities,
investment grade fixed -income securities and foreign government and other
foreign fixed -income securities.
U.S. Government Fund seeks high current income by investing primarily
in long -term U.S. government debt obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
Limited -Term Government Fund seeks high, stable income by investing
primarily in a portfolio of short - and intermediate -term securities issued
or guaranteed by the U.S. government, its agencies or instrumentalities and
instruments secured by such securities. U.S. Government Money Fund seeks
maximum current income with preservation of principal and maintenance of
liquidity by investing only in short -term securities issued or guaranteed as
to principal and interest by the U.S. government, its agencies or
instrumentalities, and repurchase agreements collateralized by such
securities, while maintaining a stable net asset value.
Delaware Cash Reserve seeks the highest level of income consistent
with the preservation of capital and liquidity through investments in
short -term money market instruments, while maintaining a stable net asset
value.
-99-
<PAGE>
Tax -Free USA Fund seeks high current income exempt from federal
income tax by investing in municipal bonds of geographically -diverse issuers.
Tax -Free Insured Fund invests in these same types of securities but with an
emphasis on municipal bonds protected by insurance guaranteeing principal and
interest are paid when due. Tax -Free USA Intermediate Fund seeks a high level
of current interest income exempt from federal income tax, consistent with the
preservation of capital by investing primarily in municipal bonds.
Tax -Free Money Fund seeks high current income, exempt from federal
income tax, by investing in short -term municipal obligations, while
maintaining a stable net asset value.
Tax -Free New Jersey Fund seeks a high level of current interest
income exempt from federal income tax and New Jersey state and local taxes,
consistent with preservation of capital. Tax -Free Ohio Fund seeks a high
level of current interest income exempt from federal income tax and Ohio state
and local taxes, consistent with preservation of capital. Tax -Free
Pennsylvania Fund seeks a high level of current interest income exempt from
federal income tax and Pennsylvania state and local taxes, consistent with the
preservation of capital.
International Equity Fund seeks to achieve long -term growth without
undue risk to principal by investing primarily in international securities
that provide the potential for capital appreciation and income. Global Bond
Fund seeks to achieve current income consistent with the preservation of
principal by investing primarily in global fixed -income securities that may
also provide the potential for capital appreciation. Global Assets Fund seeks
to achieve long -term total return by investing in global securities which
will provide higher current income than a portfolio comprised exclusively of
equity securities, along with the potential for capital growth. Emerging
Markets Fund seeks long -term capital appreciation by investing primarily in
equity securities of issuers located or operating in emerging countries.
U.S. Growth Fund seeks to maximize capital appreciation by investing
in companies of all sizes which have low dividend yields, strong balance
sheets and high expected earnings growth rates relative to their industry.
Overseas Equity Fund seeks to maximize total return (capital appreciation and
income), principally through investments in an internationally diversified
portfolio of equity securities. New Pacific Fund seeks long -term capital
appreciation by investing primarily in companies which are domiciled in or
have their principal business activities in the Pacific Basin.
Delaware Group Premium Fund, Inc. offers 15 funds available
exclusively as funding vehicles for certain insurance company separate
accounts. Decatur Total Return Series seeks the highest possible total rate of
return by selecting issues that exhibit the potential for capital appreciation
while providing higher than average dividend income. Delchester Series seeks
as high a current income as possible by investing in rated and unrated
corporate bonds, U.S. government securities and commercial paper. Capital
Reserves Series seeks a high stable level of current income while minimizing
fluctuations in principal by investing in a diversified portfolio of short -
and intermediate -term securities. Cash Reserve Series seeks the highest level
of income consistent with preservation of capital and liquidity through
investments in short -term money market instruments. DelCap Series seeks
long -term capital appreciation by investing its assets in a diversified
portfolio of securities exhibiting the potential for significant growth.
Delaware Series seeks a balance of capital appreciation, income and
preservation of capital. It uses a dividend -oriented valuation strategy to
select securities issued by established companies that are believed to
demonstrate potential for income and capital growth. International Equity
Series seeks long -term growth without undue risk to principal by investing
primarily in equity securities of foreign issuers that provide the potential
for capital appreciation and income. Value Series seeks capital appreciation
by investing in small - to mid -cap common stocks whose
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market values appear low relative to their underlying value or future earnings
and growth potential. Emphasis will also be placed on securities of companies
that may be temporarily out of favor or whose value is not yet recognized by the
market. Trend Series seeks long -term capital appreciation by investing
primarily in small -cap common stocks and convertible securities of emerging and
other growth -oriented companies. These securities will have been judged to be
responsive to changes in the market place and to have fundamental
characteristics to support growth. Income is not an objective. Global Bond
Series seeks to achieve current income consistent with the preservation of
principal by investing primarily in global fixed -income securities that may
also provide the potential for capital appreciation. Strategic Income Series
seeks high current income and total return by using a multi -sector investment
approach, investing primarily in three sectors of the fixed -income securities
markets: high -yield, higher risk securities; investment grade fixed -income
securities; and foreign government and other foreign fixed -income securities.
Devon Series seeks current income and capital appreciation by investing
primarily in income -producing common stocks, with a focus on common stocks that
the investment manager believes have the potential for above -average dividend
increases over time. Emerging Markets Series seeks to achieve long -term capital
appreciation by investing primarily in equity securities of issuers located or
operating in emerging countries. Convertible Securities Series seeks a high
level of total return on its assets through a combination of capital
appreciation and current income by investing primarily in convertible
securities. Quantum Series seeks to achieve long -term capital appreciation by
investing primarily in equity securities of medium to large -sized companies
expected to grow over time that meet the Series' "Social Criteria" strategy.
Delaware -Voyageur US Government Securities Fund seeks to provide a
high level of current income consistent with the prudent investment risk by
investing in U.S. Treasury bills, notes, bonds, and other obligations issued
or unconditionally guaranteed by the full faith and credit of the U.S.
Treasury, and repurchase agreements fully secured by such obligations.
Delaware -Voyageur Tax -Free Arizona Insured Fund seeks to provide a
high level of current income exempt from federal income tax and the Arizona
personal income tax, consistent with the preservation of capital.
Delaware -Voyageur Minnesota Insured Fund seeks to provide a high level of
current income exempt from federal income tax and the Minnesota personal
income tax, consistent with the preservation of capital.
Delaware -Voyageur Tax -Free Minnesota Intermediate Fund seeks to
provide a high level of current income exempt from federal income tax and the
Minnesota personal income tax, consistent with preservation of capital. The
Fund seeks to reduce market risk by maintaining an average weighted maturity
from five to ten years.
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
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income exempt from federal income tax, consistent with the preservation of
capital. The Fund will seek to select investments that will enable its shares to
be exempt from the Florida intangible personal property tax. Delaware -Voyageur
Tax -Free Kansas Fund seeks to provide a high level of current income exempt
from federal income tax, the Kansas personal income tax and the Kansas
Intangible personal property tax, consistent with the preservation of capital.
Delaware -Voyageur Tax -Free Missouri Insured Fund seeks to provide a high level
of current income exempt from federal income tax and the Missouri personal
income tax, consistent with the preservation of capital. Delaware -Voyageur
Tax -Free New Mexico Fund seeks to provide a high level of current income exempt
from federal income tax and the New Mexico personal income tax, consistent with
the preservation of capital. Delaware -Voyageur Tax -Free Oregon Insured Fund
seeks to provide a high level of current income exempt from federal income tax
and the Oregon personal income tax, consistent with the preservation of capital.
Delaware -Voyageur Tax -Free Utah Fund seeks to provide a high level of current
income exempt from federal income tax, consistent with the preservation of
capital. Delaware -Voyageur Tax -Free Washington Insured Fund seeks to provide a
high level of current income exempt from federal income tax, consistent with the
preservation of capital.
Delaware -Voyageur Tax -Free Florida Intermediate Fund seeks to
provide a high level of current income exempt from federal income tax,
consistent with the preservation of capital. The Fund will seek to select
investments that will enable its shares to be exempt from the Florida
intangible personal property tax. The Fund seeks to reduce market risk by
maintaining an average weighted maturity from five to ten years.
Delaware -Voyageur Tax -Free Arizona Fund seeks to provide a high
level of current income exempt from federal income tax and the Arizona
personal income tax, consistent with the preservation of capital.
Delaware -Voyageur Tax -Free California Fund seeks to provide a high level of
current income exempt from federal income tax and the California personal
income tax, consistent with the preservation of capital. Delaware -Voyageur
Tax -Free Iowa Fund seeks to provide a high level of current income exempt
from federal income tax and the Iowa personal income tax, consistent with the
preservation of capital. Delaware -Voyageur Tax -Free Idaho Fund seeks to
provide a high level of current income exempt from federal income tax and the
Idaho personal income tax, consistent with the preservation of capital.
Delaware -Voyageur Minnesota High Yield Municipal Bond Fund seeks to provide a
high level of current income exempt from federal income tax and the Minnesota
personal income tax primarily through investment in medium and lower grade
municipal obligations. National High Yield Municipal Fund seeks to provide a
high level of income exempt from federal income tax, primarily through
investment in medium and lower grade municipal obligations. Delaware -Voyageur
Tax -Free New York Fund seeks to provide a high level of current income exempt
from federal income tax and the personal income tax of the state of New York
and the city of New York, consistent with the preservation of capital.
Delaware -Voyageur Tax -Free Wisconsin Fund seeks to provide a high level of
current income exempt from federal income tax and the Wisconsin personal
income tax, consistent with the preservation of capital.
Delaware -Voyageur Tax -Free Colorado Fund seeks to provide a high
level of current income exempt from federal income tax and the Colorado
personal income tax, consistent with the preservation of capital.
Aggressive Growth Fund seeks long -term capital appreciation, which
the Fund attempts to achieve by investing primarily in equity securities
believed to have the potential for high earnings growth. Although the Fund, in
seeking its objective, may receive current income from dividends and interest,
income is only an incidental consideration in the selection of the Fund's
investments. Growth Stock Fund has an objective of long -term capital
appreciation. The Fund seeks to achieve its objective from equity securities
diversified among individual companies and industries. Tax -Efficient Equity
Fund seeks to obtain for taxable investors a high total return on an
after -tax basis. The Fund will attempt to achieve this objective by seeking
to provide a high long -term after -tax total return through managing its
portfolio in a manner that will defer the realization of accrued capital gains
and minimize dividend income.
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Delaware -Voyageur Tax -Free Minnesota Fund seeks to provide a high
level of current income exempt from federal income tax and the Minnesota
personal income tax, consistent with the preservation of capital.
Delaware -Voyageur Tax -Free North Dakota Fund seeks to provide a high level
of current income exempt from federal income tax and the North Dakota personal
income tax, consistent with the preservation of capital.
For more complete information about any of the Delaware Group funds,
including charges and expenses, you can obtain a prospectus from the
Distributor. Read it carefully before you invest or forward funds.
Each of the summaries above is qualified in its entirety by the
information contained in each fund's prospectus(es).
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GENERAL INFORMATION
Delaware Investment Advisers, a division of Delaware, furnishes
investment management services to The Large-Cap Value Equity, The Aggressive
Growth, 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 and The Diversified Core Fixed Income
Portfolios. Delaware International furnishes similar services to The
International Equity, The International Mid-Cap Sub, The Labor Select
International Equity, The Global Fixed Income, The International Fixed Income,
The Emerging Markets and The Global Equity Portfolios and also serves as
sub-adviser to The Diversified Core Fixed Income Portfolio. Delaware and
Delaware International also provide investment management services to certain
of the other funds in the Delaware Group. Delaware Investment Advisers also
manages private investment accounts. While investment decisions of the
Portfolios are made independently from those of the other funds and accounts,
investment decisions for such other funds and accounts may be made at the same
time as investment decisions for the Portfolios.
Delaware or Delaware International also manages the investment
options for Delaware Medallion (SM) III Variable Annuity. Medallion is issued
by Allmerica Financial Life Insurance and Annuity Company (First Allmerica
Financial Life Insurance Company in New York and Hawaii). Delaware Medallion
offers 15 different investment series ranging from domestic equity funds,
international equity and bond funds and domestic fixed income funds. Each
investment series available through Medallion utilizes an investment strategy
and discipline the same as or similar to one of the Delaware Group mutual
funds available outside the annuity. See Delaware Group Premium Fund, Inc.,
above.
Access persons and advisory persons of the Delaware Group of funds,
as those terms are defined in SEC Rule 17j -1 under the 1940 Act, who provide
services to Delaware, Delaware Investment Advisers, Delaware International or
their affiliates, are permitted to engage in personal securities transactions
subject to the exceptions set forth in Rule 17j -1 and the following general
restrictions and procedures: (1) certain blackout periods apply to personal
securities transactions of those persons; (2) transactions must receive
advance clearance and must be completed on the same day as the clearance is
received; (3) certain persons are prohibited from investing in initial public
offerings of securities and other restrictions apply to investments in private
placements of securities; (4) opening positions may only be closed -out at a
profit after a 60 -day holding period has elapsed; and (5) the Compliance
Officer must be informed periodically of all securities transactions and
duplicate copies of brokerage confirmations and account statements must be
supplied to the Compliance Officer.
The Distributor acts as national distributor for each Portfolio and
for the other mutual funds in the Delaware Group. As previously described,
prior to January 3, 1995, DDI served as the national distributor for the
Portfolios' shares.
The Transfer Agent, an affiliate of Delaware and Delaware
International, acts as shareholder servicing, dividend disbursing and transfer
agent for the Portfolios and for the other mutual funds in the Delaware Group.
The Transfer Agent's compensation for providing services to the Portfolios
(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
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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 charges for particular services
according to a schedule. Compensation is fixed each year and approved by the
Board of Directors, including a majority of the disinterested directors. The
Transfer Agent also provides accounting services to the Portfolios. Those
services include performing all functions related to calculating each
Portfolio's net asset value and providing all financial reporting services,
regulatory compliance testing and other related accounting services. For its
services, the Transfer Agent is paid a fee based on total assets of all funds in
the Delaware Group for which it provides such accounting services. Such fee is
equal to 0.25% multiplied by the total amount of assets in the complex for which
the Transfer Agent furnishes accounting services, where such aggregate complex
assets are $10 billion or less, and 0.20% of assets if such aggregate complex
assets exceed $10 billion. The fees are charged to each fund, including the
Portfolios, on an aggregate pro -rata basis. The asset -based fee payable to the
Transfer Agent is subject to a minimum fee calculated by determining the total
number of investment portfolios and associated classes.
Custody Arrangements
The Chase Manhattan Bank, 4 Chase Metrotech Center, Brooklyn, NY
11245 serves as custodian for The Global Fixed Income, The International
Equity, The International Mid-Cap Sub, The Labor Select International Equity,
The Real Estate Investment Trust, The High-Yield Bond, The Emerging Markets,
The International Fixed Income, The Aggregate Fixed Income, The Diversified
Core Fixed Income and The Global Equity Portfolios. Bankers Trust Company, One
Bankers Trust Plaza, New York, NY 10006 serves as custodian for The
Large-Cap Value Equity, The Aggressive Growth, The Intermediate Fixed Income,
The Limited-Term Maturity and The Small/Mid-Cap Value Equity Portfolios. The
Chase Manhattan Bank serves as custodian for all Portfolios with respect to
foreign securities.
With respect to foreign securities, The Chase Manhattan Bank makes
arrangements with subcustodians who were approved by the directors of Pooled
Trust, Inc. in accordance with Rule 17f-5 of the 1940 Act. In the selection of
foreign subcustodians, the directors consider a number of factors, including,
but not limited to, the reliability and financial stability of the
institution, the ability of the institution to provide efficiently the
custodial services required for the Portfolios, and the reputation of the
institutions in the particular country or region.
Capitalization
Pooled Trust, Inc. has a present authorized capitalization of 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. While all
shares have equal voting rights on matters affecting the entire Fund, each
Portfolio would vote separately on any matter which affects only that
Portfolio, such as any change in its own investment objective and policy or
action to dissolve a Portfolio and as otherwise prescribed by the 1940 Act.
Shares of each Portfolio have a priority in that Portfolios' assets, and in
gains on and income from the portfolio of that Portfolio. Shares have no
preemptive rights, are fully transferable and, when issued, are fully paid and
nonassessable.
Effective December 24, 1997, the name of The Defensive Equity
Small/Mid-Cap Portfolio was changed to The Small/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.
The legality of the issuance of the shares offered hereby, pursuant
to registration under the 1940 Act Rule 24f-2, has been passed upon for Pooled
Trust, Inc. by Stradley, Ronon, Stevens & Young, LLP, Philadelphia,
Pennsylvania.
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<PAGE>
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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APPENDIX A --IRA INFORMATION
The Real Estate Investment Trust Portfolio
(Class A Shares, Class B Shares, Class C Shares)
An individual can contribute up to $2,000 to his or her IRA each
year. Contributions may or may not be deductible depending upon the taxpayers
adjusted gross income and whether the taxpayer or his or her spouse is an
active participant in an employer -sponsored retirement plan. Even if a
taxpayer (or his or her spouse) is an active participant in an
employer -sponsored retirement plan, the full $2,000 deduction is still
available if the taxpayer's adjusted gross income is below $25,000 ($40,000
for taxpayers filing joint returns). A partial deduction is allowed for
married couples with incomes between $40,000 and $50,000, and for single
individuals with incomes between $25,000 and $35,000. No deductions are
available for contributions to IRAs by taxpayers whose adjusted gross income
before IRA deductions exceeds $50,000 ($35,000 for singles) and who are active
participants in an employer -sponsored retirement plan. Taxpayers who were not
allowed deductions on IRA contributions still can make nondeductible IRA
contributions of as much as $2,000 for each working spouse ($2,250 for
one -income couples for years prior to 1997), and defer taxes on interest or
other earnings from the IRAs. Special rules apply for determining the
deductibility of contributions made by married individuals filing separate
returns.
Effective for tax years beginning after 1996, one -income couples can
contribute up to $2,000 to each spouse's IRA provided the combined
compensation of both spouses is at least equal to the total contributions for
both spouses. If the working spouse is an active participant in an
employer -sponsored retirement plan and earns over $40,000, the maximum
deduction limit is reduced in the same way that the limit is reduced for
contributions to a non -spousal IRA.
As illustrated in the following tables, maintaining an IRA remains a
valuable opportunity.
For many, an IRA will continue to offer both an up -front tax break
with its tax deduction each year and the real benefit that comes with
tax -deferred compounding. For others, losing the tax deduction will impact
their taxable income status each year. Over the long term, however, being able
to defer taxes on earnings still provides an impressive investment
opportunity --a way to have money grow faster due to tax -deferred
compounding.
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Even if your IRA contribution is no longer deductible, the benefits
of saving on a tax -deferred basis can be substantial. The following tables
illustrate the benefits of tax -deferred versus taxable compounding. Each
reflects a constant 10% rate of return, compounded annually, with the
reinvestment of all proceeds. The tables do not take into account any sales
charges or fees. Of course, earnings accumulated in your IRA will be subject
to tax upon withdrawal. If you choose a mutual fund with a fluctuating net
asset value, your bottom line at retirement could be lower or it could
also be much higher.
$2,000 Invested Annually Assuming a 10% Annualized Return
15% Tax Bracket Single
- $0 - $24,650
Joint
- $0 - $41,200
How Much You
End of Cumulative How Much You Have With Full
Year Investment Amount Have Without IRA IRA Deduction
1 $ 2,000 $ 1,844 $ 2,200
5 10,000 10,929 13,431
10 20,000 27,363 35,062
15 30,000 52,074 69,899
20 40,000 89,231 126,005
25 50,000 145,103 216,364
30 60,000 229,114 361,887
35 70,000 355,438 596,254
40 80,000 545,386 973,704
[Without IRA --investment of $1,700 ($2,000 less 15%) earning 8.5% (10% less
15%)]
28% Tax Bracket Single
- $24,651 - $59,750
Joint
- $41,201 - $99,600
<TABLE>
<CAPTION>
End of Cumulative How Much You How Much You Have with Full IRA
Year Investment Amount Have Without IRA No Deduction Deduction
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,544 $ 1,584 $ 2,200
5 10,000 8,913 9,670 13,431
10 20,000 21,531 25,245 35,062
15 30,000 39,394 50,328 69,899
20 40,000 64,683 90,724 126,005
25 50,000 100,485 155,782 216,364
30 60,000 151,171 260,559 361,887
35 70,000 222,927 429,303 596,254
40 80,000 324,512 701,067 973,704
</TABLE>
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<PAGE>
[Without IRA --investment of $1,440 ($2,000 less 28%) earning 7.2% (10% less
28%)]
[With IRA --No Deduction --investment of $1,440 ($2,000 less 28%)
earning 10%]
31% Tax Bracket Single - $59,751 - $124,650
--------------- == ==
Joint - $99,601 - $151,750
== ==
<TABLE>
<CAPTION>
End of Cumulative How Much You How Much You Have with Full IRA
Year Investment Amount Have Without IRA No Deduction Deduction
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,475 $ 1,518 $ 2,200
5 10,000 8,467 9,268 13,431
10 20,000 20,286 24,193 35,062
15 30,000 36,787 48,231 69,899
20 40,000 59,821 86,943 126,005
25 50,000 91,978 149,291 216,364
30 60,000 136,868 249,702 361,887
35 70,000 199,536 411,415 596,254
40 80,000 287,021 671,855 973,704
</TABLE>
[Without IRA --investment of $1,380 ($2,000 less 31%) earning 6.9% (10% less
31%)]
[With IRA --No Deduction --investment of $1,380 ($2,000 less 31%)
earning 10%]
36% Tax Bracket* Single - $124,651 - $271,050
--------------- == ==
Joint - $151,751 - $271,050
== ==
<TABLE>
<CAPTION>
End of Cumulative How Much You How Much You Have with Full IRA
Year Investment Amount Have Without IRA No Deduction Deduction
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,362 $ 1,408 $ 2,200
5 10,000 7,739 8,596 13,431
10 20,000 18,292 22,440 35,062
15 30,000 32,683 44,736 69,899
20 40,000 52,308 80,643 126,005
25 50,000 79,069 138,473 216,364
30 60,000 115,562 231,608 361,887
35 70,000 165,327 381,602 596,254
40 80,000 233,190 623,170 973,704
</TABLE>
[Without IRA --investment of $1,280 ($2,000 less 36%) earning 6.4% (10% less
36%)]
[With IRA --No Deduction --investment of $1,280 ($2,000 less 36%)
earning 10%]
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<PAGE>
39.6% Tax Bracket* Single - over $271,050
----------------- ==
Joint - over $271,050
==
<TABLE>
<CAPTION>
End of Cumulative How Much You How Much You Have with Full IRA
Year Investment Amount Have Without IRA No Deduction Deduction
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,281 $ 1,329 $ 2,200
5 10,000 7,227 8,112 13,431
10 20,000 16,916 21,178 35,062
15 30,000 29,907 42,219 69,899
20 40,000 47,324 76,107 126,005
25 50,000 70,677 130,684 216,364
30 60,000 101,986 218,580 361,887
35 70,000 143,965 360,137 596,254
40 80,000 200,249 588,117 973,704
</TABLE>
[Without IRA --investment of $1,208 ($2,000 less 39.6%) earning 6.04% (10%
less 39.6%)]
[With IRA --No Deduction --investment of $1,208 ($2,000 less
39.6%) earning 10%]
* For tax years beginning after 1992, a 36% tax rate applies to all taxable
income in excess of the maximum dollar amounts subject to the 31% tax rate.
In addition, a 10% surtax (not applicable to capital gains) applies to
certain high -income taxpayers. It is computed by applying a 39.6% rate to
taxable income in excess of $271,050. The above tables do not reflect the
personal exemption phaseout nor the limitations of itemized deductions that
may apply.
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THE VALUE OF STARTING YOUR IRA EARLY
The following illustrates how much more you would have contributing
$2,000 each January --the earliest opportunity --compared to contributing on
April 15th of the following year --the latest, for each tax year.
After 5 years $3,528 more
10 years $6,113
20 years $17,228
30 years $47,295
Compounded returns for the longest period of time is the key. The
above illustration assumes a 10% rate of return and the reinvestment of all
proceeds.
THE POWER OF TAX-DEFERRED COMPOUNDING
Over time, tax-deferred investing has the potential to double your
investment earnings. The following examples are based on a $2000 invested
on January 1 each year and assumes an 8% fixed rate of return, with no
fluctuation in the value of principal. The figures do not reflect the impact
of any fees or sales charges. These figures are for illustration only and
are not intended to represent any future investment results.
Accumulated Value
Over 10 years Tax Bracket
$26,403 39.6%
$26,881 36%
$27,516 31%
$27,905 28%
$31,828 Tax-deferred
Over 20 years
$69,544 39.6%
$71,986 36%
$75,540 31%
$77,767 28%
$102,476 Tax-deferred
Over 40 years
$254,528 39.6%
$274,662 36%
$305,626 31%
$326,046 28%
$607,355 Tax-deferred
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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 (formerly known as The
Defensive Equity), The Aggressive Growth, 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 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, 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.
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