<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
File No. 33-40991
File No. 811-6322
[x]
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. ____
Post-Effective Amendment No. _23_ [x]
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [x]
Amendment No. _23_ [x]
DELAWARE POOLED TRUST, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
1818 Market Street, Philadelphia, Pennsylvania 19103
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (215) 255-2923
--------------
George M. Chamberlain, Jr., 1818 Market Street, Philadelphia, PA 19103
- --------------------------------------------------------------------------------
(Name and Address of Agent for Service)
Approximate Date of Public Offering: August 31, 1998
---------------
It is proposed that this filing will become effective:
___ immediately upon filing pursuant to paragraph (b)
_X_ on August 31, 1998 pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)(1)
___ on (date) pursuant to paragraph (a)(1)
___ 75 days after filing pursuant to paragraph (a)(2)
___ on (date) pursuant to paragraph (a)(2) of Rule 485
<PAGE>
Title of Securities Being Registered
The Large-Cap Value Equity Portfolio
The Intermediate Fixed Income Portfolio
The Aggressive Growth Portfolio
The Limited-Term Maturity Portfolio
The International Equity Portfolio
The Global Fixed Income Portfolio
The Small/Mid-Cap Value Equity Portfolio
The International Fixed Income Portfolio
The Labor Select International Equity Portfolio
The High-Yield Bond Portfolio
The Real Estate Investment Trust Portfolio class
REIT Fund A Class
REIT Fund B Class
REIT Fund C Class
REIT Fund Institutional Class
The Real Estate Investment Trust Portfolio II
The Global Equity Portfolio
The Emerging Markets Portfolio
The Aggregate Fixed Income Portfolio
The Diversified Core Fixed Income Portfolio
The International Mid-Cap Sub Portfolio
The Small-Cap Growth Equity Portfolio
The Growth and Income Portfolio
<PAGE>
--- C O N T E N T S ---
This Post-Effective Amendment No. 23 to Registration File No. 33-40991 includes
the following:
1. Facing Page
2. Contents Page
3. Cross-Reference Sheet
4. Part A - Prospectuses
5. Part B - Statement of Additional Information
6. Part C - Other Information
7. Signatures
The Prospectus (Part A) and Statement of Additional Information (Part
B) contained in this Registration Statement relates to two Registrants: Delaware
Pooled Trust, Inc. and Delaware Group Foundation Funds. This Registration
Statement contains only one Part C, that of the Registrant.
A separate Registration Statement, which incorporates by reference the
combined Part A and Part B and includes its own Part C, is being filed for
Delaware Group Foundation Funds; however this Registration Statement contains
only those exhibits which relate to Delaware Pooled Trust, Inc.
<PAGE>
CROSS-REFERENCE SHEET
PART A
<TABLE>
<CAPTION>
Item No. Description Location in Prospectus*/**
- -------- ----------- --------------------------
<S> <C> <C>
1 Cover Page...................................................... Cover
2 Fund Expenses................................................... Fund Expenses
3 Condensed Financial Information................................. Financial Highlights
4 General Description of Registrant .............................. Investment Objectives,
Policies and Risk Considerations
5 Management of the Fund ......................................... Management of the Fund
6 Capital Stock and Other Securities ............................. Dividends and Capital Gains
Distributions; Taxes
7 Purchase of Securities Being Offered............................ Cover; Purchase of Shares;
Management of the Fund
8 Redemption or Repurchase........................................ Purchase of Shares;
Redemption of Shares
9 Legal Proceedings............................................... None
</TABLE>
* Relates to all Portfolios, except REIT Fund A Class, REIT Fund B Class, REIT
Fund C Class and REIT Fund Institutional Class of The Real Estate Investment
Trust Portfolio and The International Mid-Cap Sub Portfolio which are described
in separate prospectuses and are covered by separate cross-reference sheets,
which appear next in this filing.
** The Supplement to the Prospectus dated August 17, 1998 is incorporated into
this filing by reference to the electronic filing of that Supplement made
pursuant to Rule 497(e) on August 17, 1998.
<PAGE>
CROSS-REFERENCE SHEET
PART A
<TABLE>
<CAPTION>
Location in
Item No. Description Prospectuses*
- -------- ----------- -------------
<S> <C> <C> <C>
The Real Estate
Investment
Trust Portfolio
REIT Fund A Class/ REIT Fund
REIT Fund B Class/ Institutional
REIT Fund C Class Class
1 Cover Page..................................................... Cover Page Cover Page
2 Synopsis....................................................... Fund Expenses Fund Expenses
3 Condensed Financial Information................................ Financial Financial
Highlights Highlights
4 General Description of Registrant ............................. Investment Investment
Objective, Policies Objective, Policies
and Risk and Risk
Considerations Considerations
5 Management of the Fund ........................................ Management Management
of the Fund of the Fund
6 Capital Stock and Other Securities ............................ Dividends and Capital Dividends and Capital
Gains Distributions; Gains Distributions;
Taxes Taxes
7 Purchase of Securities Being Offered........................... Cover; Purchase of Cover; Purchase of
Shares; Management Shares; Management
of the Fund of the Fund
8 Redemption or Repurchase...................................... Purchase of Purchase of
Shares; Shares;
Redemption of Redemption of
Shares Shares
9 Legal Proceedings.............................................. None None
</TABLE>
- ---------------
* The Registrant's REIT Fund A Class, B Class and C Class Prospectus and REIT
Fund Institutional Class Prospectus dated December 24, 1997, are
incorporated into this filing by reference to the electronic filing of
those Prospectuses made pursuant to Rule 497(c) on January 2, 1998. In
addition, the Supplement to the REIT Fund A, B and C Class Prospectus dated
May 1, 1998 is incorporated into this filing by reference to the electronic
filing of that Supplement made pursuant to Rule 497(e) on May 1, 1998.
<PAGE>
CROSS-REFERENCE SHEET
PART A
<TABLE>
<CAPTION>
Item No. Description Location in Prospectus
- -------- ----------- ----------------------
<S> <C> <C>
The International Mid-Cap Sub Portfolio
1 Cover Page Cover
2 Fund Expenses Fund Expenses
3 Condensed Financial Information Financial Highlights
4 General Description of Registrant Investment Objectives,
Policies and Risk Considerations
5 Management of the Fund Management of the Fund
6 Capital Stock and Other Securities Dividends and Capital Gains
Distributions; Taxes
7 Purchase of Securities Being Offered Cover; Purchase of Shares;
Management of the Fund
8 Redemption or Repurchase Purchase of Shares;
Redemption of Shares
9 Legal Proceedings None
</TABLE>
The International Mid-Cap Sub Portfolio Prospectus dated December 24, 1997, is
incorporated into this filing by reference to the electronic filing of that
Prospectus made pursuant to Rule 497(c) on January 2, 1998.
<PAGE>
PART B
<TABLE>
<CAPTION>
Location in Statement
Item No. Description of Additional Information
- -------- ----------- -------------------------
<S> <C> <C>
All Portfolios
10 Cover Page Cover
11 Table of Contents Table of Contents
12 General Information and History General Information
13 Investment Objectives and Policies Investment Policies, Portfolio
Techniques and Risk Considerations
14 Management of the Registrant Officers and Directors
15 Control Persons and Principal Holders
of Securities Officers and Directors
16 Investment Advisory and Other Services Investment Management
Agreements; Officers and Directors;
General Information; Financial
Statements
17 Brokerage Allocation Trading Practices and
Brokerage
18 Capital Stock and Other Securities Capitalization and
Noncumulative Voting (under General
Information)
19 Purchase, Redemption and Pricing of
Securities Being Offered Purchasing Shares;
Determining Net Asset Value;
Redemption and Repurchase
20 Tax Status Accounting and Tax Issues;
Taxes
21 Underwriters Purchasing Shares
22 Calculation of Performance Data Performance Information
23 Financial Statements Financial Statements
</TABLE>
<PAGE>
PART C
Item No. Description Location in Part C
- -------- ----------- ------------------
All Portfolios
24 Financial Statements and Exhibits................ Item 24
25 Persons Controlled by or under Common
Control with Registrant.......................... Item 25
26 Number of Holders of Securities.................. Item 26
27 Indemnification.................................. Item 27
28 Business and Other Connections of
Investment Adviser............................... Item 28
29 Principal Underwriters........................... Item 29
30 Location of Accounts and Records................. Item 30
31 Management Services.............................. Item 31
32 Undertakings..................................... Item 32
<PAGE>
The Registrant's REIT Fund A Class, B Class and C Class Prospectus and REIT Fund
Institutional Class Prospectus dated December 24, 1997, are incorporated into
this filing by reference to the electronic filing of those Prospectuses made
pursuant to Rule 497(c) on January 2, 1998. In addition, the Supplement to the
REIT Fund A, B and C Class Prospectus dated May 1, 1998 is incorporated into
this filing by reference to the electronic filing of that Supplement made
pursuant to Rule 497(e) on May 1, 1998.
The Supplement to the Prospectus dated August 17, 1998 is incorporated into this
filing by reference to the electronic filing of that Supplement made pursuant to
Rule 497(e) on August 17, 1998.
The International Mid-Cap Sub Portfolio Prospectus dated December 24, 1997, is
incorporated into this filing by reference to the electronic filing of that
Prospectus made pursuant to Rule 497(c) on January 2, 1998.
<PAGE>
DELAWARE POOLED TRUST
Delaware Pooled Trust, Inc. ("Fund") is an open-end management investment
company. This Prospectus offers 19 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:
EQUITY ORIENTED
The Aggressive Growth Portfolio
The Large-Cap Value Equity Portfolio
(formerly named The Defensive Equity Portfolio)
The Emerging Markets Portfolio
The Global Equity Portfolio
The International Equity Portfolio
The Labor Select International Equity Portfolio
The Real Estate Investment Trust Portfolio
The Real Estate Investment Trust Portfolio II
The Small/Mid-Cap Value Equity Portfolio
(formerly named The Defensive Equity Small/Mid-Cap Portfolio)
The Small-Cap Growth Equity Portfolio
The Growth and Income Portfolio
FIXED-INCOME ORIENTED
The Aggregate Fixed Income Portfolio
The Diversified Core Fixed Income Portfolio
The Intermediate Fixed Income Portfolio
(formerly named The Fixed Income Portfolio)
The Global Fixed Income Portfolio
The High-Yield Bond Portfolio
The International Fixed Income Portfolio
The Limited-Term Maturity Portfolio
In addition, investors may make investments in The Asset Allocation Portfolio.
That Portfolio is a "fund of funds" which primarily invests in several of the
Portfolios of the Fund. The Asset Allocation Portfolio is a series of Delaware
Group Foundation Funds ("Foundation Funds") which is also an open-end
management investment company. Although The Asset Allocation Portfolio is
technically not a Portfolio of the Fund, all references herein to "Portfolio"
or "the Fund" shall be deemed to also include The Asset Allocation Portfolio,
where appropriate.
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 issued by U.S. companies, 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."
-2-
<PAGE>
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 August 31, 1998, as it
may be amended from time to time. That information is incorporated herein by
reference and is available without charge upon request from the Fund:
Delaware Pooled Trust, Inc.*
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
1-800-231-8002
*Correspondence relating to The Asset Allocation Portfolio will be forwarded to
Foundations Funds.
In addition, the Securities and Exchange Commission maintains a Web site
(http://www.sec.gov) that contains the Statement of Additional Information,
material we incorporated by reference, and other information regarding
registrants that electronically file with the Securities and Exchange
Commission.
The Real Estate Investment Trust Portfolio offers five classes of shares. This
Prospectus relates only to The Real Estate Investment Trust Portfolio class,
which was 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 1-800-523-1918 for Class A, B and C shares or 1-800-828-5052 for
institutional class shares. References to The Real Estate Investment Trust
Portfolio in this Prospectus shall mean The Real Estate Investment Trust
Portfolio class, unless otherwise noted.
TABLE OF CONTENTS
PAGE PAGE
---- ----
Fund Expenses Investment Limitations
Financial Highlights Management of the Fund
Delaware Pooled Trust Summary Shareholder Services
Fund Officers and Dividends and Capital Gains
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
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is: August 31, 1998
-3-
<PAGE>
FUND EXPENSES
The following tables illustrate all expenses and fees that a shareholder of the
Fund can expect to incur. The purpose of the tables is to assist the investor
in understanding the various expenses that an investor in the Fund will bear
directly or indirectly.
With respect to The Asset Allocation Portfolio, 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 Small-Cap Growth Equity Portfolio, The Growth and
Income 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
first full 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.
-4-
<PAGE>
<TABLE>
<CAPTION>
The
Large-Cap The
Value Aggressive The International
Shareholder Transaction Equity Growth Equity
Expenses Portfolio Portfolio Portfolio
- ----------------------------------- ----------- ------------ -------------------
<S> <C> <C> <C>
Sales Charge Imposed on Purchases None None None
Sales Charge Imposed on
Reinvested Dividends None None None
Redemption Fees None None None
Exchange Fees None None None
<CAPTION>
The The The
Intermediate Limited- Global The International
Fixed Term Fixed Fixed
Shareholder Transaction Income Maturity Income Income
Expenses Portfolio Portfolio Portfolio Portfolio
- ----------------------------------- -------------- ----------- ----------- ------------------
<S> <C> <C> <C> <C>
Sales Charge Imposed on Purchases None None None None
Sales Charge Imposed on
Reinvested Dividends None None None None
Redemption Fees None None None None
Exchange Fees None None None None
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
The
Large-Cap The The
Annual Fund Operating Value Aggressive International
Expenses (as a percentage Equity Growth Equity
of average net assets) Portfolio Portfolio Portfolio
- ------------------------------------ ----------- ------------ ---------------
<S> <C> <C> <C>
Investment Advisory Fees After
Voluntary Waiver and Payment 0.54%* 0.33%* 0.75%*
12b-1 Fees None None None
Other Expenses 0.12% 0.60% 0.18%
------ ------ ------
Total Fund Operating Expenses
After Voluntary Waiver and Payment 0.66%* 0.93%* 0.93%*
====== ====== ======
<CAPTION>
The The The
Intermediate The Limited- Global International
Annual Fund Operating Fixed Term Fixed Fixed
Expenses (as a percentage Income Maturity Income Income
of average net assets) Portfolio Portfolio Portfolio Portfolio
- ------------------------------------ -------------- -------------- ----------- --------------
<S> <C> <C> <C> <C>
Investment Advisory Fees After
Voluntary Waiver and Payment 0.09%* 0.22%* 0.45%* 0.24%*
12b-1 Fees None None None None
Other Expenses 0.44% 0.21% 0.15% 0.36%
------ ------ ------ ------
Total Fund Operating Expenses
After Voluntary Waiver and Payment 0.53%* 0.43%* 0.60%* 0.60%*
====== ====== ====== ======
</TABLE>
-5-
<PAGE>
* 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.
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 Management Company ("Delaware"), the
investment adviser for these Portfolios, 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 October 31, 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
October 31, 1998. In the absence of such voluntary waivers and payments,
"Investment Advisory Fees" (as a percentage of net assets) would have been
0.50% and 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.
-6-
<PAGE>
<TABLE>
<CAPTION>
The The The
The Labor Real Real
Small/ Select Estate Estate The
Mid-Cap Inter- Invest- Invest- High-
Shareholder Value national ment ment Yield
Transaction Equity Equity Trust Trust Bond
Expenses Portfolio Portfolio Portfolio Portfolio II Portfolio
- ------------------------- ----------- ----------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C>
Sales Charge Imposed
on Purchases None None None None None
Sales Charge Imposed
on Reinvested Dividends None None None None None
Purchase Reimbursement
Fees* None None None None None
Redemption Reimbursement
Fees* None None None None None
Exchange Fees None None None None None
<CAPTION>
The
Diver- The
The sified Small- The
The Aggregate The Core The Cap Growth
Shareholder Global Fixed Emerging Fixed Asset Growth and
Transaction Equity Income Markets Income Allocation Equity Income
Expenses Portfolio Portfolio Portfolio Portfolio Portfolio*** Portfolio Portfolio
- ------------------------- ----------- ----------- ----------- ----------- -------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales Charge Imposed
on Purchases None None None None None None None
Sales Charge Imposed
on Reinvested Dividends None None None None None None None
Purchase Reimbursement
Fees* 0.40% None 0.75% None None None None
Redemption Reimbursement
Fees* 0.30% None 0.75% None None None None
Exchange Fees None None None None None None None
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
The The The The
Small/ Labor Real Real
Annual Fund Mid- Select Estate Estate The
Operating Cap Inter- Invest- Invest- High-
Expenses (as Value national ment ment Yield
a percentage of Equity Equity Trust Trust Bond
average net assets) Portfolio Portfolio Portfolio Portfolio II Portfolio
- --------------------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Investment Advisory Fees
After Voluntary Waiver and
Payment 0.35%** 0.57%** 0.55%** 0.55%** 0.25%**
12b-1 Fees None None None None None
Other Expenses 0.54% 0.32% 0.31% 0.31% 0.34%
------ ------ ------ ------ ------
Total Fund Operating
Expenses After Voluntary
Waiver and Payment 0.89%** 0.89%** 0.86%** 0.86%** 0.59%**
====== ====== ====== ====== ======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
The
The Diver- The
Annual Fund Aggre- sified Small-
Operating The gate The Core The Cap
Expenses (as Global Fixed Emerging Fixed Asset Growth
a percentage of Equity Income Markets Income Allocation Equity
average net assets) Portfolio Portfolio Portfolio Portfolio Portfolio*** Portfolio
- --------------------------- -------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Investment Advisory Fees
After Voluntary Waiver and
Payment 0.00%** 0.03%** 0.72%** 0.22%** 0.00%** 0.64%**
12b-1 Fees None None None None None None
Other Expenses 0.96% 0.50% 0.83% 0.35% 0.15% 0.25%
------ ------ ------ ------ ------ ------
Total Fund Operating
Expenses After Voluntary
Waiver and Payment 0.96%** 0.53%** 1.55%** 0.57%** 0.15%** 0.89%**
====== ====== ====== ====== ====== ======
<CAPTION>
Annual Fund The
Operating Growth
Expenses (as and
a percentage of Income
average net assets) Portfolio
- --------------------------- --------------
<S> <C>
Investment Advisory Fees
After Voluntary Waiver and
Payment 0.34%**
12b-1 Fees None
Other Expenses 0.34%
------
Total Fund Operating
Expenses After Voluntary
Waiver and Payment 0.68%**
======
</TABLE>
-7-
<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."
** 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, The Diversified Core
Fixed Income Portfolio, The Asset Allocation Portfolio, The Small-Cap
Growth Equity Portfolio and The Growth and Income Portfolio had not
commenced operations as of October 31, 1997; the Fund did not commence
selling shares of The Real Estate Investment Trust Portfolio until November
4, 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, The Diversified Core
Fixed Income Portfolio, The Asset Allocation Portfolio, The Small-Cap
Growth Equity Portfolio and The Growth and Income Portfolio, Delaware, the
investment adviser to these Portfolios, 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%, 0.57%, 0.15%, 0.89% and 0.68%, respectively, during
the period from the commencement of the public offering of such Portfolio
through October 31, 1998 for The Small/Mid-Cap Value Equity Portfolio, The
High-Yield Bond Portfolio, The Aggregate Fixed Income Portfolio and The
Diversified Core Fixed Income Portfolio and during the commencement of the
public offering of such Portfolio through April 30, 1999 for The Asset
Allocation Portfolio, The Small-Cap Growth Equity Porfolio and The Growth
and Income Portfolio. With respect to The Real Estate Investment Trust
Portfolio and The Real Estate Investment Trust Portfolio II, the voluntary
waiver and commitment to
-8-
<PAGE>
pay expenses would limit the relevant expenses to 0.86% through October 31,
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%, 0.43%, 0.05%,
0.75% and 0.55% 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%, 0.78%, 0.28%, 1.00% and 0.89%, 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, The Diversified Core Fixed Income Portfolio, The Asset
Allocation Portfolio, The Small-Cap Growth Equity Portfolio and The Growth
and 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.
Similarly, Delaware International, the investment adviser to The Labor
Select International Equity Portfolio, The Global Equity Portfolio and The
Emerging Markets Portfolio, has elected voluntarily to waive that portion,
if any, of the annual Investment Advisory Fee payable by each such
Portfolio and to pay such Portfolio's expenses to the extent necessary to
ensure that "Total Operating Expenses" of that Portfolio (exclusive of
taxes, interest, brokerage commissions and extraordinary expenses) do not
exceed, as a percentage of average net assets, on an annualized basis,
0.96%, 0.96% and 1.55%, respectively, during the period from the
commencement of the public offering of the Portfolio through October 31,
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.
* * *
See "MANAGEMENT OF THE FUND" for additional information regarding expense caps
for each Portfolio.
-9-
<PAGE>
*** The Asset Allocation Portfolio, as a shareholder in the Portfolios of the
Fund, will indirectly bear its proportionate share of any management fees
and other expenses paid by the Portfolios of the Fund. These fees and
expenses, which are embedded in the prices of the Portfolios of the Fund
shares purchased by The Asset Allocation Portfolio, are in addition to the
fees and expenses of The Asset Allocation Portfolio set forth above. The
average aggregate total operating expenses of the Portfolios of the Fund
are estimated to be 0.73%, based on the actual operating expenses of the
Portfolios of the Fund for the most recent fiscal year and the following
static asset allocation assumptions: The Aggressive Growth Portfolio - 25%;
The Large-Cap Value Equity Portfolio - 25%; The International Equity
Portfolio - 15%; The High-Yield Bond Portfolio - 10%; and The Aggregate
Fixed Income Portfolio - 25%. Actual expenses will differ depending on the
actual asset allocations among the Portfolios of the Fund in effect from
time to time.
-10-
<PAGE>
The following example illustrates the expenses that you would incur on a $1,000
investment, assuming (1) a 5% annual rate of return, and (2) redemption at the
end of each time period. The following examples also assume the voluntary
waiver of the management fee and/or other payments of expenses by the
investment adviser as discussed in this Prospectus. For The Emerging Markets
and The Global Equity Portfolios, the expenses include the purchase
reimbursement and redemption reimbursement fees payable to the Portfolios. No
other Portfolio charges these fees.
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
--------- ---------- --------- ---------
<S> <C> <C> <C> <C>
The 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
1 year 3 years
--------- ---------
The Small/Mid-Cap Value Equity Portfolio* $ 9 $28
The Global Equity Portfolio* 17 37
The Real Estate Investment Trust Portfolio** 9 27
The Real Estate Investment Trust Portfolio II** 9 27
The Emerging Markets Portfolio* 31 64
The Aggregate Fixed Income Portfolio* 5 17
The Diversified Core Fixed Income Portfolio* 6 18
The Asset Allocation Portfolio* 2 5
The Small-Cap Growth Equity Portfolio* 9 28
The Growth and Income Portfolio* 7 22
</TABLE>
For The Emerging Markets and The Global Equity Portfolios, the only Portfolios
subject to a redemption reimbursement fee, you would pay the following expenses
on the same investment, assuming no redemption:
1 year 3 years
-------- --------
The Emerging Markets Portfolio $23 $56
The Global Equity Portfolio 14 34
* Assumes net assets of each Portfolio equal to $75 million.
** Based upon the expenses incurred by the original 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.
-11-
<PAGE>
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.
FINANCIAL HIGHLIGHTS
The following financial highlights for the periods ended on or before October
31, 1997 are derived from the financial statements of Delaware Pooled Trust,
Inc. for The Large-Cap Value Equity Portfolio (formerly known as 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 known as 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.
Unaudited financial highlights for the period ended April 30, 1998 are also
provided below for each Portfolio other than The Limited-Term Maturity, The
Asset Allocation Portfolio, The Small-Cap Growth Equity and The Growth and
Income Portfolios. The data should be read in conjunction with the financial
statements and related notes for the period ended April 30, 1998, all of which
are incorporated by reference into the Statement of Additional Information.
Further information about the performance of these Portfolios is contained in
their Semi-Annual Report.
The Annual Report (which includes related notes and the report of Ernst & Young
LLP), the Semi-Annual Report and the Statement of Additional Information may be
obtained from the Fund upon request at no charge.
As of the date of this Prospectus, The Limited-Term Maturity Portfolio, The
Asset Allocation Portfolio, The Small-Cap Growth Equity Portfolio and The
Growth and Income Portfolio have sold no shares to public investors and, thus,
financial highlights are not provided for these Portfolios.
-12-
<PAGE>
<TABLE>
<CAPTION>
The Large-Cap Value Equity Portfolio(1)
------------------------------------------------------------------------------------------------
Unaudited
Period Period
11/1/97 2/3/92(3)
through Year ended through
4/30/98(2) 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> <C>
Net Asset Value, Beginning
of Period .................... $ 18.530 $ 16.460 $ 14.660 $ 13.080 $ 12.730 $ 10.660 $ 10.000
-------- -------- -------- --------- --------- --------- ---------
Income From Investment Operations
- ---------------------------------
Net Investment Income ......... 0.163 0.381 0.440 0.430 0.320 0.284 0.229
Net Gains (Losses) on
Securities (both realized
and unrealized) .............. 2.967 3.599 2.960 1.980 0.653 2.316 0.511
-------- -------- -------- --------- --------- --------- ---------
Total from Investment
Operations ................. 3.130 3.980 3.400 2.410 0.973 2.600 0.740
-------- -------- -------- --------- --------- --------- ---------
Less Dividends and Distributions
- --------------------------------
Dividends (from net
investment income) ........... ( 0.300) ( 0.410) ( 0.440) ( 0.340) ( 0.280) ( 0.320) ( 0.080)
Distributions (from capital
gains) ....................... ( 2.700) ( 1.500) ( 1.160) ( 0.490) ( 0.343) ( 0.210) none
-------- -------- -------- --------- --------- --------- ---------
Total Dividends and
Distributions .............. ( 3.000) ( 1.910) ( 1.600) ( 0.830) ( 0.623) ( 0.530) ( 0.080)
-------- -------- -------- --------- --------- --------- ---------
Net Asset Value, End of
Period ....................... $ 18.660 $ 18.530 $ 16.460 $ 14.660 $ 13.080 $ 12.730 $ 10.660
======== ======== ======== ========= ========= ========= =========
- --------------------------
Total Return .................. 18.57%(4) 26.73%(4) 24.87%(4) 19.77%(4) 7.96%(4) 25.17%(4) 10.13%(4)
- ------------
- --------------------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period
(000's omitted) .............. $ 94,042 $ 81,102 $ 67,179 $ 51,947 $ 37,323 $ 13,418 $ 4,473
Ratio of Expenses to
Average Daily Net Assets...... 0.67% 0.66% 0.67% 0.68% 0.68% 0.68% 0.68%
Ratio of Expenses to
Average Daily Net Assets
Prior to Expense
Limitations .................. 0.69% 0.67% 0.70% 0.71% 0.82% 1.38% 2.38%
Ratio of Net Investment
Income to Average Daily
Net Assets ................... 1.85% 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 .......... 1.83% 2.14% 2.83% 3.30% 3.12% 2.20% 1.95%
Portfolio Turnover Rate ....... 92% 73% 74% 88% 73% 37% 28%
Average Commission Rate
Paid(5)....................... $ 0.0600 $ 0.0600 $ 0.0600 N/A N/A N/A N/A
</TABLE>
- --------------
(1) Formerly known as The Defensive Equity Portfolio.
(2) Ratios have been annualized but total return has not been annualized.
(3) Date of initial sale; ratios and total return have been annualized.
(4) Total return reflects the expense limitations referenced in Fund Expenses.
(5) Computed by dividing the total amount of commissions paid by the total
number of shares purchased and sold during the period for which there was a
commission charged.
-13-
<PAGE>
<TABLE>
<CAPTION>
The Aggressive Growth Portfolio
-------------------------------------------------
Unaudited
Period
11/1/97
through
4/30/98(1) 10/31/97 10/31/96
<S> <C> <C> <C>
Net Asset Value, Beginning
of Period .................... $ 13.680 $ 14.570 $ 12.860
--------- --------- ---------
Income From Investment Operations
- ---------------------------------
Net Investment Income
(Loss) ....................... ( 0.024) ( 0.117) ( 0.019)
Net Gains (Losses) on
Securities (both realized
and unrealized) .............. 0.974 1.607 2.392
---------- ---------- ----------
Total from Investment
Operations ................. 0.950 1.490 2.373
---------- ---------- ----------
Less Dividends and Distributions
- --------------------------------
Dividends (from net
investment income) ........... none none ( 0.043)
Distributions (from capital
gains) ....................... ( 6.240) ( 2.380) ( 0.620)
---------- ---------- ----------
Total Dividends and
Distributions .............. ( 6.240) ( 2.380) ( 0.663)
---------- ---------- ----------
Net Asset Value, End of
Period ....................... $ 8.390 $ 13.680 $ 14.570
========== ========== ==========
- --------------------------
Total Return .................. 14.12%(3) 11.84%(3) 19.19%(3)
- ------------
- --------------------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period
(000's omitted) .............. $ 5,629 $ 10,317 $ 28,526
Ratio of Expenses to
Average Daily Net Assets...... 0.93% 0.93% 0.90%
Ratio of Expenses to
Average Daily Net Assets
Prior to Expense
Limitations .................. 2.13% 1.40% 1.01%
Ratio of Net Investment
Income (Loss) to Average
Daily Net Assets ............. ( 0.13%) ( 0.29%) ( 0.18%)
Ratio of Net Investment
Income (Loss) to Average
Daily Net Assets Prior to
Expense Limitations .......... ( 1.33%) ( 0.76%) ( 0.29%)
Portfolio Turnover Rate ....... 163% 117% 95%
Average Commission Rate
Paid(4) ...................... $ 0.0600 $ 0.0600 $ 0.0600
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
The Aggressive Growth Portfolio
-----------------------------------------------------------------
Period
2/27/92(2)
Year ended through
10/31/95 10/31/94 10/31/93 10/31/92
<S> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period .................... $ 11.010 $ 11.200 $ 9.040 $ 10.000
--------- ---------- ---------- -----------
Income From Investment Operations
- ---------------------------------
Net Investment Income
(Loss) ....................... 0.043 0.008 0.018 0.017
Net Gains (Losses) on
Securities (both realized
and unrealized) .............. 2.055 0.032 2.159 ( 0.977)
--------- ---------- ---------- ------------
Total from Investment
Operations ................. 2.098 0.040 2.177 ( 0.960)
--------- ---------- ---------- ------------
Less Dividends and Distributions
- --------------------------------
Dividends (from net
investment income) ........... ( 0.012) ( 0.020) ( 0.017) none
Distributions (from capital
gains) ....................... ( 0.236) ( 0.210) none none
--------- ---------- ---------- ------------
Total Dividends and
Distributions .............. ( 0.248) ( 0.230) ( 0.017) none
--------- ---------- ---------- ------------
Net Asset Value, End of
Period ....................... $ 12.860 $ 11.010 $ 11.200 $ 9.040
========= ========== ========== ============
- --------------------------
Total Return .................. 19.61%(3) 0.34%(3) 24.10%(3) (13.89%)(3)
- ------------
- --------------------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period
(000's omitted) .............. $ 29,092 $ 22,640 $ 20,478 $ 4,538
Ratio of Expenses to
Average Daily Net Assets...... 0.93% 0.93% 0.93% 0.93%
Ratio of Expenses to
Average Daily Net Assets
Prior to Expense
Limitations .................. 1.08% 1.17% 1.40% 2.56%
Ratio of Net Investment
Income (Loss) to Average
Daily Net Assets ............. 0.37% 0.07% 0.23% 0.28%
Ratio of Net Investment
Income (Loss) to Average
Daily Net Assets Prior to
Expense Limitations .......... 0.22% (0.17%) (0.24%) (1.35%)
Portfolio Turnover Rate ....... 64% 43% 81% 34%
Average Commission Rate
Paid(4) ...................... N/A N/A N/A N/A
</TABLE>
- --------------
(1) Ratios have been annualized but total return has not been annualized.
(2) Date of initial sale; ratios and total return have been annualized.
(3) Total return reflects the expense limitations referenced in Fund Expenses.
(4) Computed by dividing the total amount of commissions paid by the total
number of shares purchased and sold during the period for which there was a
commission charged.
-14-
<PAGE>
<TABLE>
<CAPTION>
The International Equity Portfolio
-------------------------------------------
Unaudited
Period
11/1/97
through
4/30/98(1) 10/31/97 10/31/96
<S> <C> <C> <C>
Net Asset Value, Beginning
of Period .................. $ 15.860 $ 14.780 $ 13.120
-------- -------- --------
Income From Investment Operations
- ---------------------------------
Net Investment Income ....... 0.135 0.329 0.506
Net Gains (Losses) on
Securities (both realized
and unrealized) ............ 1.605 1.271 1.794
-------- -------- --------
Total from Investment
Operations ............... 1.740 1.600 2.300
-------- -------- --------
Less Dividends and Distributions
- --------------------------------
Dividends (from net
investment income) ......... (0.550) ( 0.520) (0.490)
Distributions (from capital
gains) ..................... (0.150) none (0.150)
-------- -------- --------
Total Dividends and
Distributions ............ (0.700) ( 0.520) (0.640)
-------- -------- --------
Net Asset Value, End of
Period ..................... $ 16.900 $ 15.860 $ 14.780
======== ======== ========
- --------------------------
Total Return ................ 11.33% 11.01% 18.12%
- ------------
- --------------------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period
(000's omitted) ............ $600,362 $ 500,196 $ 299,950
Ratio of Expenses to
Average Daily Net Assets.... 0.91% 0.93% 0.89%
Ratio of Expenses to
Average Daily Net Assets
Prior to Expense
Limitations ................ 0.91% 0.93% 0.89%
Ratio of Net Investment
Income to Average Daily
Net Assets ................. 1.70% 2.21% 4.36%
Ratio of Net Investment
Income to Average Daily
Net Assets Prior to
Expense Limitations ........ 1.70% 2.21% 4.36%
Portfolio Turnover Rate ..... 5% 8% 8%
Average Commission Rate
Paid(4)..................... $ 0.0076 $ 0.0217 $ 0.0198
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
The International Equity Portfolio
---------------------------------------------------------
Period
2/4/92(2)
Year ended through
10/31/95 10/31/94 10/31/93 10/31/92
<S> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period .................. $ 13.110 $ 11.990 $ 9.500 $ 10.000
-------- --------- --------- ---------
Income From Investment Operations
- ---------------------------------
Net Investment Income ....... 0.475 0.144 0.241 0.228
Net Gains (Losses) on
Securities (both realized
and unrealized) ............ 0.001 1.236 2.569 ( 0.628)
-------- --------- --------- ----------
Total from Investment
Operations ............... 0.476 1.380 2.810 ( 0.400)
-------- --------- --------- ----------
Less Dividends and Distributions
- --------------------------------
Dividends (from net
investment income) ......... ( 0.170) ( 0.160) ( 0.320) ( 0.100)
Distributions (from capital
gains) ..................... ( 0.296) ( 0.100) none none
-------- --------- --------- ----------
Total Dividends and
Distributions ............ ( 0.466) ( 0.260) ( 0.320) ( 0.100)
-------- --------- --------- ----------
Net Asset Value, End of
Period ..................... $ 13.120 $ 13.110 $ 11.990 $ 9.500
======== ========= ========= ==========
- --------------------------
Total Return ................ 3.91% 11.66%(3) 30.28%(3) ( 5.44%)(3)
- ------------
- --------------------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period
(000's omitted) ............ $156,467 $ 70,820 $ 24,288 $ 5,966
Ratio of Expenses to
Average Daily Net Assets.... 0.90% 0.94% 0.96% 0.96%
Ratio of Expenses to
Average Daily Net Assets
Prior to Expense
Limitations ................ 0.90% 0.97% 1.38% 2.94%
Ratio of Net Investment
Income to Average Daily
Net Assets ................. 4.81% 1.36% 2.98% 4.67%
Ratio of Net Investment
Income to Average Daily
Net Assets Prior to
Expense Limitations ........ 4.81% 1.33% 2.56% 2.69%
Portfolio Turnover Rate ..... 20% 22% 28% 2%
Average Commission Rate
Paid(4)..................... N/A N/A N/A N/A
</TABLE>
- --------------
(1) Ratios have been annualized but total return has not been annualized.
(2) Date of initial sale; ratios and total return have been annualized.
(3) Total return reflects the expense limitations referenced in Fund Expenses.
(4) Computed by dividing the total amount of commissions paid by the total
number of shares purchased and sold during the period for which there was a
commission charged.
-15-
<PAGE>
<TABLE>
<CAPTION>
The Global Fixed Income Portfolio
--------------------------------------------------------------------------------------
Unaudited
Period Period
11/1/97 11/30/92(2)
through Year ended through
4/30/98(1) 10/31/97 10/31/96 10/31/95 10/31/94 10/31/93
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period ................................ $ 11.220 $ 11.620 $ 11.040 $ 9.790 $ 11.090 $ 10.000
--------- -------- -------- --------- --------- ---------
Income From Investment Operations
- ---------------------------------
Net Investment Income .................. 0.303 0.721 0.777 0.736 0.419 0.955
Net Gains (Losses) on Securities
(both realized and unrealized) ........ ( 0.316) ( 0.116) 0.725 0.924 ( 0.193) 0.743
---------- -------- -------- --------- --------- ---------
Total from Investment Operations....... ( 0.013) 0.605 1.502 1.660 0.226 1.698
---------- -------- -------- --------- --------- ---------
Less Dividends and Distributions
- -----------------------------------------
Dividends (from net investment
income) ............................... ( 0.450) ( 0.835) ( 0.720) ( 0.410) ( 0.949) ( 0.608)
Distributions (from capital gains) ..... ( 0.177) ( 0.170) ( 0.202) none ( 0.577) none
---------- -------- -------- --------- --------- ---------
Total Dividends and Distributions...... ( 0.627) ( 1.005) ( 0.922) ( 0.410) ( 1.526) ( 0.608)
---------- -------- -------- --------- --------- ---------
Net Asset Value, End of Period ......... $ 10.580 $ 11.220 $ 11.620 $ 11.040 $ 9.790 $ 11.090
========== ======== ======== ========= ========= =========
- --------------------------
Total Return ........................... ( 0.04%)(3) 5.59%(3) 16.40%(3) 17.38%(3) 2.07%(3) 18.96%(3)
- ------------
- --------------------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period (000's
omitted) .............................. $ 534,418 $431,076 $252,068 $ 99,161 $ 42,266 $ 29,313
Ratio of Expenses to Average Daily
Net Assets ............................ 0.60% 0.60% 0.60% 0.60% 0.62% 0.62%
Ratio of Expenses to Average Daily
Net Assets Prior to Expense
Limitations ........................... 0.63% 0.65% 0.66% 0.68% 0.76% 0.88%
Ratio of Net Investment Income to
Average Daily Net Assets .............. 5.69% 6.28% 8.52% 6.73% 3.62% 10.68%
Ratio of Net Investment Income to
Average Daily Net Assets Prior to
Expense Limitations ................... 5.66% 6.23% 8.46% 6.65% 3.48% 10.42%
Portfolio Turnover Rate ................ 85% 114% 63% 77% 205% 198%
</TABLE>
- ----------------
(1) Ratios have been annualized but total return has not been annualized.
(2) Date of initial sale; ratios and total return have been annualized.
(3) Total return reflects the expense limitations referenced in Fund Expenses.
-16-
<PAGE>
<TABLE>
<CAPTION>
The Labor Select
International Equity Portfolio
------------------------------------------
Unaudited
Period Period
11/1/97 12/19/95(2)
through Year Ended through
4/30/98(1) 10/31/97 10/31/96
<S> <C> <C> <C>
Net Asset Value, Begin-
ning of Period .......... $ 12.990 $ 11.690 $ 10.000
-------- -------- --------
Income From Investment Operations
- ---------------------------------
Net Investment Income..... 0.225 0.474 0.479
Net Gains (Losses) on
Securities
(both realized and
unrealized) ............. 1.533 1.346 1.311
-------- -------- --------
Total from Investment
Operations .............. 1.758 1.820 1.790
-------- -------- --------
Less Dividends and Distributions
- --------------------------------
Dividends (from net
investment income) ...... ( 0.388) ( 0.520) ( 0.100)
Distributions (from
capital gains) .......... none none none
-------- -------- --------
Total Dividends and
Distributions ........... (0.388) ( 0.520) ( 0.100)
-------- -------- --------
Net Asset Value, End of
Period .................. $ 14.360 $ 12.990 $ 11.690
======== ======== ========
- -------------------------
Total Return ............. 13.95%(6) 16.01%(6) 17.97%(6)
- ------------
- -------------------------
Ratios/Supplemental Data
- -------------------------
Net Assets, End of
Period (000's
omitted) ................ $ 85,623 $ 50,896 $ 23,154
Ratio of Expenses to
Average Daily Net
Assets .................. 0.96% 0.89% 0.92%
Ratio of Expenses to
Average Daily Net
Assets Prior to
Expense Limitations...... 1.05% 1.06% 1.30%
Ratio of Net Investment
Income to Average
Daily Net Assets ........ 1.70% 2.37% 6.64%
Ratio of Net Investment
Income to Average
Daily Net Assets
Prior to Expense
Limitations ............. 1.61% 2.20% 6.26%
Portfolio Turnover Rate 2% 11% 7%
Average Commission
Rate Paid(7)............. $ 0.0181 $ 0.0263 $ 0.0330
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
The Real Estate The Intermediate Fixed
Investment Trust Portfolio Income Portfolio5
------------------------------------------------------------ ---------------------------
Unaudited Unaudited Unaudited
Period Period Period Period Period
11/4/97 11/1/97 Year 12/6/95(2) 11/1/97 Year 3/12/96(2)
through through Ended through through Ended through
4/30/98(1),(3) 4/30/98(1),(4) 10/31/97(4) 10/31/96(4) 4/30/98(1) 10/31/97 10/31/96
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Begin-
ning of Period .......... $ 16.340 $ 16.260 $ 12.490 $ 10.000 $ 10.090 $ 10.010 $ 10.000
-------- --------- -------- -------- --------- --------- ---------
Income From Investment Operations
- ---------------------------------
Net Investment Income..... 0.650 0.630 0.616 0.652 0.297 0.605 0.386
Net Gains (Losses) on
Securities
(both realized and
unrealized) ............. ( 0.445) ( 0.365) 4.664 1.938 ( 0.010) 0.080 0.010
-------- ---------- -------- -------- --------- --------- ---------
Total from Investment
Operations ............. 0.205 0.265 5.280 2.590 0.287 0.685 0.396
-------- ---------- -------- -------- --------- --------- ---------
Less Dividends and Distributions
- --------------------------------
Dividends (from net
investment income) ...... ( 0.695) (0.685) (0.720) ( 0.100) ( 0.297) ( 0.605) ( 0.386)
Distributions (from
capital gains) .......... ( 0.820) (0.820) (0.790) none ( 0.010) none none
-------- ---------- -------- -------- --------- --------- ---------
Total Dividends and
Distributions .......... ( 1.515) (1.505) (1.510) ( 0.100) ( 0.307) ( 0.605) ( 0.386)
-------- ---------- -------- -------- --------- --------- ---------
Net Asset Value, End of
Period .................. $ 15.030 $ 15.020 $ 16.260 $ 12.490 $ 10.070 $ 10.090 $ 10.010
======== ========== ======== ======== ========= ========= =========
Total Return ............. 6.60%(6) 1.68%(6),(8) 46.50%(6) 26.12%(6) 2.87%(6) 7.09%(6) 4.08%(6)
- -------------------------
Ratios/Supplemental Data
- --------------------------
Net Assets, End of
Period (000's
omitted) ................ $ 55,430 $ 10,214 $ 60,089 $ 26,468 $ 27,792 $ 30,366 $ 10,518
Ratio of Expenses to
Average Daily Net
Assets .................. 0.86% 1.11% 0.82% 0.89% 0.53% 0.53% 0.53%
Ratio of Expenses to
Average Daily Net
Assets Prior to
Expense Limitations...... 0.92% 1.17% 0.99% 1.02% 1.04% 0.84% 1.20%
Ratio of Net Investment
Income to Average
Daily Net Assets ........ 5.86% 5.61% 4.25% 6.70% 5.93% 6.05% 6.14%
Ratio of Net Investment
Income to Average
Daily Net Assets
Prior to Expense
Limitations ............. 5.80% 5.55% 4.08% 6.57% 5.42% 5.74% 5.47%
Portfolio Turnover Rate 58% 58% 58% 109% 167% 205% 232%
Average Commission
Rate Paid(7) ............ $ 0.0600 $ 0.0600 $ 0.0576 $ 0.0600 N/A N/A N/A
</TABLE>
- ----------------
(1) Ratios have been annualized but total return has not been annualized.
(2) Date of initial sale; ratios have been annualized, but total return has not
been annualized.
(3) The data presented above is for The Real Estate Investment Trust Portfolio
class, which is the class of shares offered in this Prospectus and which
commenced operations on November 4, 1997. Like the original class prior to
its redesignation (see footnote 4), 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) 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", became subject to Rule 12b-1
Distribution Plan fees and is offered in a separate prospectus. 5 Formerly
known as The Fixed Income Portfolio.
(6) Total return reflects the expense limitations referenced in Fund Expenses.
(7) Computed by dividing the total amount of commissions paid by the total
number of shares purchased and sold during the period for which there was a
commission charged.
(8) Does not reflect front-end or contingent deferred sales charges.
-17-
<PAGE>
<TABLE>
<CAPTION>
The High-Yield The International
Bond Portfolio Fixed Income Portfolio
--------------------------- ----------------------------
Unaudited Unaudited
Period Period Period Period
11/1/97 12/2/96(2) 11/1/97 4/11/97(2)
through through through through
4/30/98(1) 10/31/97 4/30/98(1) 10/31/97
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period ............................ $ 11.180 $ 10.000 $ 10.660 $ 10.000
--------- --------- ---------- ---------
Income From Investment Operations
- ---------------------------------
Net Investment Income .............. 0.482 0.788 0.289 0.236
Net Gains (Losses) on Securities
(both realized and unrealized)..... 0.396 0.957 ( 0.426) 0.474
--------- --------- ---------- ---------
Total from Investment
Operations ....................... 0.878 1.745 ( 0.137) 0.710
--------- --------- ---------- ---------
Less Dividends and Distributions
- --------------------------------
Dividends (from net investment
income) ........................... ( 0.590) ( 0.565) ( 0.392) ( 0.050)
Distributions (from capital gains) ( 0.288) none ( 0.021) none
--------- --------- ---------- ---------
Total Dividends and
Distributions .................... ( 0.878) ( 0.565) ( 0.413) ( 0.050)
--------- --------- ---------- ---------
Net Asset Value, End of Period ..... $ 11.180 $ 11.180 $ 10.110 $ 10.660
========= ========= ========== =========
- -----------------------------
Total Return ....................... 8.23%(3) 17.92%(3) ( 1.23%)(3) 7.11%(3)
- ------------
- -----------------------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period (000's
omitted) .......................... $ 19,261 $ 11,348 $ 46,148 $ 33,734
Ratio of Expenses to Average
Daily Net Assets .................. 0.59% 0.59% 0.60% 0.60%
Ratio of Expenses to Average
Daily Net Assets Prior to
Expense Limitations ............... 0.64% 0.79% 0.76% 0.86%
Ratio of Net Investment Income
to Average Daily Net Assets ....... 8.98% 9.05% 5.71% 6.05%
Ratio of Net Investment Income
to Average Daily Net Assets
Prior to Expense Limitations....... 8.93% 8.85% 5.55% 5.79%
Portfolio Turnover Rate ............ 381% 281% 43% 145%
Average Commission Rate Paid(4)..... N/A N/A N/A N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
The Emerging The Global
Markets Portfolio Equity Portfolio
----------------------------- -----------------------------
Unaudited Unaudited
Period Period Period Period
11/1/97 4/14/97(2) 11/1/97 10/15/97(2)
through through through through
4/30/98(1) 10/31/97 4/30/98(1) 10/31/97
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period ............................ $ 9.200 $ 10.000 $ 8.120 $ 8.500
Income From Investment Operations
- ---------------------------------
Net Investment Income .............. 0.064 0.028 0.073 0.009
Net Gains (Losses) on Securities
(both realized and unrealized)..... 0.371 ( 0.828) 1.057 (0.389)
------- ---------- ------- ----------
Total from Investment
Operations ....................... 0.435 ( 0.800) 1.130 (0.380)
------- ---------- ------- ----------
Less Dividends and Distributions
- --------------------------------
Dividends (from net investment
income) ........................... (0.025) none (0.070) none
Distributions (from capital gains) (0.140) none none none
-------- ---------- -------- ----------
Total Dividends and
Distributions .................... (0.165) none (0.070) none
-------- ---------- -------- ----------
Net Asset Value, End of Period ..... $ 9.470 $ 9.200 $ 9.180 $ 8.120
======== ========== ======== ==========
- ----------------------
Total Return ....................... 4.92%(3) ( 8.00%)(3) 14.03%(3) (4.47%)(3)
- ------------ -------- ---------- -------- ----------
- ----------------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period (000's
omitted) .......................... $ 51,191 $ 18,565 $ 3,258 $ 2,855
Ratio of Expenses to Average
Daily Net Assets .................. 1.55% 1.55% 0.96% 0.96%
Ratio of Expenses to Average
Daily Net Assets Prior to
Expense Limitations ............... 1.70% 2.02% 2.21% 2.95%
Ratio of Net Investment Income
to Average Daily Net Assets ....... 1.41% 0.74% 1.71% 2.54%
Ratio of Net Investment Income
to Average Daily Net Assets
Prior to Expense Limitations....... 1.26% 0.27% 0.46% 0.55%
Portfolio Turnover Rate ............ 25% 46% 49% 0%
Average Commission Rate Paid(4)..... $ 0.0020 $ 0.0049 $ 0.0062 $ 0.0169
</TABLE>
- ----------------
(1) Ratios have been annualized, but total return has not been annualized.
(2) Date of initial sale; ratios have been annualized, but total return has not
been annualized.
(3) Total return reflects the expense limitations referenced in Fund Expenses.
(4) Computed by dividing the total amount of commissions paid by the total
number of shares purchased and sold during the period for which there was a
commission charged.
-18-
<PAGE>
<TABLE>
<CAPTION>
The Small/ Mid-Cap The Real Estate The Aggregate The Diversified Core
Value Equity Portfolio Investment Trust Portfolio II Fixed Income Portfolio Fixed Income Portfolio
------------------------ ------------------------------- --------------------- ----------------------
Unaudited Unaudited Unaudited Unaudited
Period Period Period Period
12/29/97(1) 11/04/97(1) 12/29/97(1) 12/29/97(1)
through through through through
4/30/98 4/30/98 4/30/98 4/30/98
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period ..... $ 8.500 $ 16.340 $ 8.500 $ 8.500
Income From Investment Operations
- ---------------------------------
Net Investment Income .... 0.046 0.429 0.158 0.302
Net Gains (Losses) on
Securities (both
realized and
unrealized) ............. 0.794 ( 0.319) 0.022 0.098
------- -------- -------- --------
Total from Investment
Operations ............. 0.840 0.110 0.180 0.400
------- -------- -------- --------
Less Dividends and Distributions
- --------------------------------
Dividends (from net
investment income) ...... none ( 0.120) none none
Distributions (from
capital gains) .......... none none none none
------- -------- -------- --------
Total Dividends and
Distributions .......... none ( 0.120) none none
------- -------- -------- --------
Net Asset Value, End of
Period .................. $ 9.340 $ 16.330 $ 8.680 $ 8.900
======= ======== ======== ========
- -------------------------
Total Return ............. 9.88%(2) 1.17%(2) 2.12%(2) 4.71%(2)
- ------------
- -------------------------
Ratios/Supplemental Data
- -------------------------
Net Assets, End of
Period (000's omitted)... $ 3,295 $ 5,440 $ 2,042 $ 3,143
Ratio of Expenses to
Average Daily Net
Assets .................. 0.89% 0.84% 0.53% 0.57%
Ratio of Expenses to
Average Daily Net
Assets Prior to
Expense Limitations ..... 1.41% 1.41% 2.19% 2.13%
Ratio of Net Investment
Income to Average
Daily Net Assets ........ 1.56% 5.41% 5.48% 6.98%
Ratio of Net Investment
Income to Average
Daily Net Assets
Prior to Expense
Limitations ............. 1.04% 4.84% 3.82% 5.42%
Portfolio Turnover Rate... 98% 55% 784% 415%
Average Commission
Rate Paid(3)............. $ 0.0600 $ 0.0600 N/A N/A
</TABLE>
- ----------------
(1) Date of initial sale; ratios have been annualized, but total return has not
been annualized.
(2) Total return reflects the expense limitations referenced in Fund Expenses.
(3) Computed by dividing the total amount of commissions paid by the total
number of shares purchased and sold during the period for which there was a
commission charged.
-19-
<PAGE>
DELAWARE POOLED TRUST SUMMARY
THE FUND
This Prospectus offers 19 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 Delaware Investments 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, The Emerging Markets Portfolio and The Asset Allocation 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, The Emerging Markets Portfolio and The Asset Allocation
Portfolio are nondiversified funds as defined by the 1940 Act. The investment
objectives and principal policies of each of the 19 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, 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, 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
-20-
<PAGE>
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.
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's 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;
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.
-21-
<PAGE>
The Limited-Term Maturity Portfolio--seeks to provide a high level of current
income, consistent with the preservation of principal and reasonable risk. The
Portfolio will include U.S. government securities, mortgage-backed securities,
corporate bonds and other fixed-income securities. At no time will the average
maturity of the Portfolio exceed five years.
The Asset Allocation Portfolio--seeks capital appreciation with current income
as a secondary objective. The Portfolio seeks to achieve its objective by
investing primarily in domestic equity and fixed income securities, including
domestic equity and fixed income Portfolios of the Fund. The Portfolio may also
invest in international and fixed income securities, including international
and fixed income Portfolios of the Fund. The Portfolios will generally invest
at least 20% of its net assets in fixed income securities, including
fixed-income Portfolios of the Fund.
The Small-Cap Growth Equity Portfolio--seeks to realize long-term capital
growth. The Portfolio seeks to achieve its objective by investing primarily in
equity securities of companies which Delaware believes have potential for high
earnings growth and which generally represent the smallest 25% in terms of
market capitalization of U.S. equity securities listed on a national securities
exchange or NASDAQ.
The Growth and Income Portfolio--seeks to realize capital appreciation and
income. The Portfolio seeks to achieve these objectives by investing primarily
in income-producing common stocks, with a focus on common stocks that Delaware
believes have potential for above average dividend increases over time.
For further information, see "INVESTMENT OBJECTIVES, POLICIES AND RISK
CONSIDERATIONS" and "ADDITIONAL INVESTMENT INFORMATION."
INVESTMENT MANAGEMENT
Delaware acts as investment adviser to The Asset Allocation, The Small-Cap
Growth Equity, The Growth and Income, 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 by these
Portfolios are, respectively, 0.05%, 0.75%, 0.55%, 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 Portfolios, 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
-22-
<PAGE>
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, The High-Yield Bond, The Asset
Allocation, The Small-Cap Growth Equity and The Growth and Income Portfolios and
Delaware International will make no such payments out of the fees it receives
for managing The International Fixed Income, The Labor Select International
Equity and The Emerging Markets Portfolios.
See "MANAGEMENT OF THE FUND."
-23-
<PAGE>
FUND OFFICERS AND PORTFOLIO MANAGERS
Wayne A. Stork
Chairman
A graduate of Brown University, Mr. Stork also attended the NYU Graduate School
of Business Administration while a senior transportation analyst at the Irving
Trust Company. He joined Delaware in 1962 as a security analyst covering a wide
range of industry groups. He is Chairman, President, Chief Executive Officer
and Chief Investment Officer of Delaware. Mr. Stork is a Director of Delaware
Management Company, Inc. and its affiliates, and is Chairman of the Delaware
Investments funds. He is a member of the Institute of Chartered Financial
Analysts and the Financial Analysts Federation.
Jeffrey J. Nick
President and Chief Executive Officer
Mr. Nick is a graduate of Princeton University with a BA in English Literature.
While pursuing his baccalaureate degree from Princeton, Mr. Nick had the
opportunity to study in Germany at Bonn University. This was followed by
studies at the University of Chicago, which led to an MBA in Finance and
Marketing. Mr. Nick joined Lincoln National Corporation in its US headquarters
in 1989 as Senior Vice President responsible for corporate planning and
development for Lincoln National Corporation. He held this position until 1992.
From 1992 to 1996, Mr. Nick was Managing Director of Lincoln National UK plc.
Before joining Lincoln, his career included assignments in management
consultancy (with Arthur D. Little, Inc.) and merchant banking (Chase
Investment Bank). Mr. Nick is President, Chief Executive Officer and Director
of the funds in Delaware Investments, Delaware Management Holdings, Inc. and
Lincoln National Investment Companies, Inc.
David G. Tilles
Managing Director and Chief Investment Officer -- Delaware International
Advisers Ltd.
Mr. Tilles was educated at the Sorbonne, Warwick University and Heidelberg
University. Prior to joining Delaware 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 Investments 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 and
The Small-Cap Growth Equity 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 Delaware Investments 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 and will
manage The Small-Cap Growth Equity Portfolio when it commences operations.
-24-
<PAGE>
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 in 1990 as Senior Portfolio Manager and Director, he was
an analyst and senior portfolio manager for Hill Samuel where, since 1987, he
had responsibility for Pacific Basin research and the management of
international institutional portfolios. Mr. Sanderson has managed The
International Equity Portfolio since its inception.
Clive A. Gillmore
Director/Senior Portfolio Manager -- Delaware International Advisers Ltd. (The
Labor Select International Equity Portfolio and The Emerging Markets Portfolio)
A graduate of the Warwick University, England, and the London Business School
Investment Program, Mr. Gillmore joined Delaware International in 1990 after
eight years of investment experience. His most recent position prior to joining
Delaware International 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 International 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 Investments 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 and The Aggregate Fixed Income Portfolio
Mr. Reed holds an AB in Economics from the University of Chicago and an MA in
Economics from Columbia University. He began his investment career in 1978 with
The Equitable Life Assurance Society, specializing in credit analysis. Prior to
joining Delaware Investments 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 and The Aggregate Fixed Income Portfolio since their
respective dates of inception.
-25-
<PAGE>
Elizabeth Desmond
Director/Head of Pacific Basin Group -- 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.
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
Investments, he was a financial analyst focusing on the financial services
industry, including banks, thrifts, insurance companies and consumer finance
companies. Prior to joining Delaware Investments 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. Delaware acts as
sub-adviser to The Global Equity Portfolio, managing the U.S. securities
portion of the Portfolio. In that capacity, Mr. Arnold furnishes 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/Deputy Managing Director/Chief Investment Officer/Global Fixed
Income -- Delaware International Advisers Ltd. (The Global Fixed Income
Portfolio, The International Fixed Income Portfolio and The Diversified Core
Fixed Income Portfolio)
Mr. Sims is a graduate of the University of Leicester and holds a postgraduate
degree in statistics from the University of Newcastle-Upon-Tyne. He joined
Delaware International in 1990 as a senior international fixed-income and
currency manager. Mr. Sims began his investment career with the Standard Life
Assurance Co., and subsequently moved to the Royal Bank of Canada Investment
Management International Company, where he was an international fixed-income
manager. Prior to joining Delaware International, he was a senior fixed-income
and currency portfolio manager with Hill Samuel Investment Advisers Ltd. Mr.
Sims has managed The Global Fixed Income Portfolio, The International Fixed
Income Portfolio and the foreign component of The Diversified Core Fixed Income
Portfolio since their respective dates of inception.
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 Investments in 1989.
He is a CFA charterholder. Mr. Matlack has managed The High-Yield Bond
Portfolio and the U.S. high-yield component of The Diversified Core Fixed
Income Portfolio since their respective dates of inception.
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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
Investments 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 and The Limited-Term Maturity 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 Delaware Investments, Mr. Early was a portfolio manager for Federated
Investment Counseling's fixed-income group, with over $1 billion in assets. Mr.
Early has managed The Diversified Core Fixed Income Portfolio since its date of
inception and will manage The Limited-Term Maturity 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 Investments 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 has
managed The Small/Mid-Cap Value Equity Portfolio since its date of inception.
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 Investments 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 has managed The Small/Mid-Cap
Value Equity Portfolio since its date of inception.
J. Paul Dokas
Vice President/Portfolio Manager -- The Small/Mid-Cap Value Equity Portfolio
and The Asset Allocation Portfolio
Mr. Dokas holds a BBA in Business from Loyola College and an MBA in Business
from the University of Maryland. Prior to joining Delaware Investments in 1997,
he was a Director of Trust Investments for Bell Atlantic Corporation in
Philadelphia. Mr. Dokas is a CFA charterholder. Mr. Dokas has managed The
Small/Mid-Cap Value Equity Portfolio since its date of inception and will
manage The Asset Allocation Portfolio when it commences operations.
George H. Burwell
Vice President/Senior Portfolio Manager -- The Growth and Income Portfolio
Mr. Burwell holds a BA from the University of Virginia. Prior to joining
Delaware Investments in 1992, Mr. Burwell was a portfolio manager for Midlantic
Bank in Edison, New Jersey, where he managed an equity
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mutual fund and three commingled funds. Mr. Burwell is a CFA charterholder. Mr.
Burwell will manage The Growth and Income Portfolio when it commences
operations.
ADMINISTRATIVE SERVICES
Delaware Service Company, Inc., an affiliate of Delaware Management Company and
Delaware International Advisers Ltd., provides the Fund with administrative,
dividend disbursing, accounting and transfer agency services. See "MANAGEMENT
OF THE FUND."
SPECIAL REPORTS AND OTHER SERVICES
The Fund provides client shareholders with annual audited financial reports and
unaudited semi-annual financial reports. In addition, the investment advisers'
dedicated service staff may also provide client shareholders detailed monthly
appraisals of the status of their account and complete reviews of portfolio
assets, performance results and other pertinent data. Finally, the investment
advisers' service staff expects to conduct personal reviews no less than
annually with each shareholder, with interim telephone updates and other
communications, as appropriate. The Fund's dedicated telephone number
(1-800-231-8002) is available for shareholder inquiries during normal business
hours. The net asset values for the Portfolios are also available by using the
above "800" telephone number. Written correspondence should be addressed to:
Delaware Pooled Trust, Inc.*
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
Attn: Client Services
*Correspondence relating to The Asset Allocation Portfolio will be forwarded to
Foundation Funds.
From time to time, certain institutional separate accounts advised by Delaware
International and an affiliate of Delaware, 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 and Delaware International, representing the
interests of the Portfolios, are committed to minimizing the impact of such
transactions on the Portfolios. In addition, the 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, Delaware
International or their affiliates, Delaware or Delaware International may, at
its discretion, reduce the shareholder's investment counseling fees by an
amount equal to the pro-rata advisory fees paid by the respective Portfolio.
This procedure would be utilized with clients having
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contractual relationships based on total assets managed by Delaware, Delaware
International or their affiliates to avoid situations where excess advisory fees
might be paid to Delaware or Delaware International. In no event will a client
pay higher total advisory fees as a result of the client's investment in a
Portfolio. Such reductions would not apply to The Asset Allocation Portfolio to
the extent that management fees of the Portfolios are indirectly charged to
shareholders of The Asset Allocation Portfolio.
See "SHAREHOLDER SERVICES."
CUSTODIAL SERVICES
The Chase Manhattan Bank, 4 Chase Metrotech Center, Brooklyn, NY 11245 serves
as custodian for each Portfolio.
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 International or an affiliate
of Delaware to make investments in any of the Fund's Portfolios by a
contribution of securities in-kind to such Portfolios. See "PURCHASE OF
SHARES."
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HOW TO REDEEM
Shares of each Portfolio, except The Emerging Markets and The Global Equity
Portfolios, may be redeemed at any time, without cost, at the net asset value
per share of the relevant Portfolio next determined after receipt of the
redemption request. For The Emerging Markets and The Global Equity Portfolios,
shares may be redeemed at any time at the net asset value per share of the
relevant Portfolio next determined after receipt of the redemption request,
less a redemption reimbursement fee equal to 0.75% of such value in the case of
The Emerging Markets Portfolio and 0.30% in the case of The Global Equity
Portfolio. The fee is deducted automatically from the redemption proceeds. The
fee also applies in the case of an exchange of shares of The Emerging Markets
Portfolio or The Global Equity Portfolio for shares of another Portfolio. See
"EXCHANGE PRIVILEGE" under "SHAREHOLDER SERVICES" and "PURPOSE OF REIMBURSEMENT
FEES--THE EMERGING MARKETS AND THE GLOBAL EQUITY PORTFOLIOS." The redemption
price may be more or less than the purchase price and the redemption may be in
cash or, under certain circumstances, in-kind. If a shareholder reduces their
investment in a Portfolio below $500,000, their investment in that Portfolio
may be subject to redemption. In addition, investors in The International
Equity, The Labor Select International Equity, The Global Fixed Income, The
International Fixed Income, The Global Equity and The Emerging Markets
Portfolios may, under certain circumstances, be required to accept their
redemption, pursuant to instructions from the Fund, in-kind in portfolio
securities or, at the election of the investor, by following another procedure
that will have the same economic effect as an 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."
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RISK FACTORS
An investment in the Fund entails certain risks and considerations about which
an investor should be aware.
Because each of The Aggressive Growth Portfolio and The Small-Cap Growth Equity
Portfolio (both of which seek long-term capital growth) as well as 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 Growth and Income Portfolio may invest up to 5% of its assets, The
Real Estate Investment Trust, The High-Yield Bond and The Small-Cap Growth
Equity Portfolios may invest up to 10% of their respective 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 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.
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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, The Diversified Core Fixed Income, The
Small-Cap Growth Equity and The Growth and Income Portfolios, up to 10%, 10%,
10%, 20%, 10% and 5% 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 Small-Cap Growth Equity, The Growth and Income, 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 and The Growth and Income 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
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commissions, for equity transactions, and other transaction costs and may affect
the taxes payable by the Portfolios' shareholders that are subject to federal
income tax. See "INVESTMENT OBJECTIVES, POLICIES AND RISK CONSIDERATIONS,"
"PORTFOLIO TRANSACTIONS" and "TAXES."
The Aggregate Fixed Income, The Diversified Core Fixed Income, The Intermediate
Fixed Income, The Limited-Term Maturity, The Growth and Income 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 19 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, The Emerging Markets
Portfolio and The Asset Allocation 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.
The Asset Allocation Portfolio's assets may be primarily invested in a
combination of the Portfolios. As a result, the Asset Allocation Portfolio is
subject to the same risks as any of the Portfolios in the Fund in which it
invests. Moreover, The Asset Allocation Portfolio's investment performance may
be directly related to the investment performance of the Portfolios of the Fund
held by it. The ability of The Asset Allocation Portfolio to meet its
investment objective may thus be directly related to the ability of the
Portfolios of the Fund to meet their objectives as well as the allocation among
those Portfolios of the Fund by Delaware. There can be no assurance that the
investment objective of The Asset Allocation Portfolio or any of the Portfolios
of the Fund will be achieved.
Because The Asset Allocation Portfolio and the other Portfolios of the Fund are
separately managed, it is possible that certain Portfolios of the Fund in which
The Asset Allocation Portfolio invests may be acquiring securities at the same
time that other Portfolios of the Fund in which that Portfolio invests are
selling the same security. Similarly, it is possible that The Asset Allocation
Portfolio may directly acquire a security at the same time that a Portfolio of
the Fund in which it invests is selling the same security, or vice versa. This
practice could result in higher indirect transactions costs for The Asset
Allocation Portfolio, and thus adversely affect The Asset Allocation
Portfolio's returns, than would be the case if it were only investing directly
in securities.
Delaware has adopted Asset Allocation Guidelines (the "Guidelines") which
govern The Asset Allocation Portfolio's purchases and redemptions of shares of
the Portfolios of the Fund. Pursuant to these Guidelines, if the Manager
anticipates that The Asset Allocation Portfolio's allocation transaction will
disrupt the investment activities of a Portfolio of the Fund, the portfolio
managers of the relevant Portfolios will confer on steps to minimize adverse
effects on both The Asset Allocation Portfolio and the Portfolio of the Fund,
such as staggering the timing and amounts of such allocation transactions. In
addition, Delaware will attempt to minimize the number and size of allocation
transactions taking place at any one time while attempting to avoid losing
investment opportunities for The Asset Allocation Portfolio. As a result, The
Asset Allocation Portfolio may, on occasion, be unable to purchase or redeem
shares of a Portfolio of the Fund as quickly or in such amounts as they
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otherwise would in the absence of such Guidelines. Such delays or changes in
amounts may decrease the total return and/or increase the volatility of The
Asset Allocation Portfolio.
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.
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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, other than The Asset Allocation,
The Small-Cap Growth Equity and the Growth and Income Portfolios is fundamental
and may only be changed by a majority approval of that Portfolio's
shareholders. With respect to the The Asset Allocation, The Small-Cap Growth
Equity and the Growth and Income Portfolios, it is the Board of Directors or
Trustees policy to notify shareholders prior to a material change in a
Portfolio's objective. Unless otherwise noted, the investment policies
described below are not fundamental policies and may be changed without
shareholder approval. The Asset Allocation Portfolio may invest in the
Portfolios of the Fund. The Asset Allocation Portfolio may also invest directly
in the same kinds of securities, and may use the same investment techniques, as
any of the Portfolios of the Fund.
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 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.
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The investment adviser takes a long-term investment approach by placing a
strong emphasis on its ability to determine attractive values and, generally,
does not seek to respond to short-term changes in the market. It is anticipated
that the annual turnover rate of the Portfolio will not exceed 100% under
normal circumstances. See "PORTFOLIO TRANSACTIONS." The Portfolio will maintain
diversity among economic sectors and industries and will not invest 25% or more
of its total assets in the stocks of issuers in any one industry, nor,
ordinarily, more than 5%, at the time of purchase, of any one company.
THE AGGRESSIVE GROWTH PORTFOLIO
The Aggressive Growth Portfolio's investment goal is to realize maximum
long-term capital growth. The Portfolio seeks to attain this objective by
investing in equity securities of smaller and medium-sized companies which, in
the opinion of the investment adviser, present, at the time of purchase,
significant long-term growth potential. In pursuing this objective, current
income is expected to be incidental.
Under normal market conditions, the Portfolio invests at least 65% of its total
assets in growth-oriented common stocks of domestic corporations. Such
companies, in the investment adviser's view, generally are those companies that
currently have total market capitalization between $100 million and $2.5
billion at the time of purchase. The Portfolio may invest in securities issued
by companies having a capitalization outside that range when, in the investment
adviser's opinion, such a company exhibits the same characteristics and growth
potential as companies within the range. Equity securities for this purpose
include, but are not to be limited to, common stocks, securities convertible
into common stocks and securities having common stock characteristics, such as
rights and warrants to purchase common stocks. The Portfolio also may purchase
preferred stock. Although the investment adviser does not pursue a market
timing approach to investing, the Portfolio may hold cash or invest in
short-term debt securities or other money market instruments when, in the
investment adviser's opinion, such holdings are prudent given the prevailing
market conditions. Except when the investment adviser believes a temporary
defensive approach is appropriate, the Portfolio, normally, will not hold more
than 10% of its total assets in cash or such short-term investments, but, on
occasion, may hold as much as 30% of its total assets in cash or such
short-term investments. All such holdings will be of the highest quality as
determined by a nationally-recognized statistical rating organization (e.g.,
AAA by S&P or Aaa by Moody's) or be of comparable quality as determined by the
investment adviser. See "ADDITIONAL INVESTMENT INFORMATION" for further details
concerning these and other investment policies.
The Portfolio may also, to a limited extent, enter into futures contracts on
stocks, purchase or sell options on such futures, engage in certain options
transactions on stocks and enter into closing transactions with respect to those
activities. However, these activities will not be entered into for speculative
purposes, but rather to facilitate the ability quickly to deploy into the stock
market the Portfolio's positions in cash, short-term debt securities and other
money market instruments, at times when the Portfolio's assets are not fully
invested in 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
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investments in promising emerging growth companies that are expected to benefit
from new technology, new products or services, research discoveries,
rejuvenated management and the like. However, the Portfolio may invest in any
equity security which, in the investment adviser's judgment, provides the
potential for significant capital appreciation.
The investment adviser believes that consistent earnings per share growth is
just as important as high absolute growth. Because the Portfolio seeks
long-term capital growth by investing primarily in small- to medium-sized
companies, its investments are likely to involve a higher degree of liquidity
risk and price volatility than larger capitalization securities.
The investment adviser does not normally intend to respond to short-term market
fluctuations or to acquire securities for the purpose of short-term trading;
however, the investment adviser may take advantage of short-term opportunities
that are consistent with its investment objective. It is anticipated that the
annual turnover rate of the Portfolio, under normal circumstances, will not
exceed 100%. See "PORTFOLIO TRANSACTIONS."
THE INTERNATIONAL EQUITY PORTFOLIO
The investment objective of The International Equity Portfolio is to achieve
maximum long-term total return. The Portfolio seeks to achieve its objective by
investing, under normal market conditions, at least 65% of its total assets in
equity securities of issuers organized or having a majority of their assets or
deriving a majority of their operating income outside the United States, and
which, in the investment adviser's opinion, are undervalued at the time of
purchase based on fundamental analysis employed by the investment adviser.
In selecting portfolio securities the investment adviser emphasizes strong
performance in falling markets relative to other mutual funds focusing on
international equity investments. Equity securities in which the Portfolio may
invest include, but are not limited to, common stocks and securities convertible
into common stock and securities having common stock characteristics, such as
rights and warrants to purchase common stocks. Additionally, the Portfolio may
from time to time, hold its assets in cash (which may be U.S. dollars or foreign
currency, including European Currency Units ("ECU")) or may invest in short-term
debt securities or other money market instruments. Except when the investment
adviser believes a temporary defensive approach is appropriate, the Portfolio
generally will not hold more than 5% of its assets in cash or such short-term
instruments. All such holdings will be of the highest quality as determined by a
nationally-recognized 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
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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."
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
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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 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.
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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 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.
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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 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.
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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 Portfolios 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."
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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, 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."
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The Portfolio may invest in Depositary Receipts. See "DEPOSITARY RECEIPTS" and
"INVESTMENT COMPANY SECURITIES" under "ADDITIONAL INVESTMENT INFORMATION."
The Portfolio also may invest in convertible preferred stocks that offer
enhanced yield features, such as Preferred Equity Redemption Cumulative Stock,
and certain other non-traditional equity securities. See "ADDITIONAL INVESTMENT
INFORMATION--CONVERTIBLE, DEBT AND NON-TRADITIONAL EQUITY SECURITIES."
Up to 35% of the Portfolio's net assets may be invested in fixed-income
securities issued by emerging country companies, and foreign governments, their
agencies, instrumentalities or political subdivisions, all of which may be
high-yield, high risk fixed-income securities rated lower than BBB by S&P and
Baa by Moody's or, if unrated, are considered by Delaware International to be
of equivalent quality and which present special investment risks. The Portfolio
may also invest in Brady Bonds and zero coupon bonds. See "HIGH-YIELD, HIGH
RISK SECURITIES" and "ZERO COUPON AND PAY-IN-KIND BONDS" under "ADDITIONAL
INVESTMENT INFORMATION." The Portfolio may invest in securities issued in any
currency and may hold foreign currency. Securities of issuers within a given
country may be dominated in the currency of another country or in multinational
currency units, including ECU. See "ADDITIONAL INVESTMENT INFORMATION--FORWARD
FOREIGN CURRENCY EXCHANGE CONTRACTS."
For temporary defensive purposes, the Portfolio may invest all or a substantial
portion of its assets in the high quality debt instruments in which The
International Equity Portfolio may invest. See "INVESTMENT OBJECTIVES, POLICIES
AND RISK CONSIDERATIONS--THE INTERNATIONAL EQUITY PORTFOLIO."
See "ADDITIONAL INVESTMENT INFORMATION" for a further discussion about the
above and other securities and investment practices.
It is anticipated that the annual portfolio turnover rate, under normal
circumstances, will not exceed 100%. See "PORTFOLIO TRANSACTIONS."
THE 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.
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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 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
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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-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
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countries' fixed-income markets which it believes will provide the United
States' domiciled investor the highest yield over a market cycle while also
offering the opportunity for capital gain and currency appreciation. The
investment adviser conducts extensive fundamental research on a global basis,
and it is through this effort that attractive fixed-income markets are selected
for investment. The core of the fundamental research effort is a value oriented
discounted income stream methodology which isolates value across country
boundaries. This approach focuses on future coupon and redemption payments and
discounts the value of those payments back to what they would be worth if they
were to be paid today. Comparisons of the values of different possible
investments are then made. The investment adviser's management approach is
long-term in orientation, and it is therefore expected that the annual turnover
of the portfolio will not exceed 200% under normal circumstances. See "PORTFOLIO
TRANSACTIONS" and "TAXES."
The Portfolio will attempt to achieve its objective by investing in a broad
range of fixed-income securities, including debt obligations of foreign and
U.S. companies which are generally rated A or better by S&P or Moody's or, if
unrated, are deemed to be of comparable quality by Delaware International, as
well as foreign and U.S. government securities with the limitation noted below.
The Portfolio may invest up to 5% of its assets in fixed-income securities
rated below investment grade, including foreign government securities as
discussed below. See "ADDITIONAL INVESTMENT INFORMATION--HIGH-YIELD, HIGH RISK
SECURITIES."
The Portfolio may also invest in zero coupon bonds, and in the debt securities
of supranational entities denominated in any currency. Zero coupon bonds are
debt obligations which do not entitle the holder to any periodic payments of
interest prior to maturity or a specified date when the securities begin paying
current interest, and therefore are issued and traded at a discount from their
face amounts or par value. A supranational entity is an entity established or
financially supported by the national governments of one or more countries to
promote reconstruction or development. Examples of supranational entities
include, among others, the World Bank, the European Economic Community, the
European Coal and Steel Community, the European Investment 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
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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.
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
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made. The investment adviser's management approach is long-term in orientation,
but, it is expected that the annual turnover of the portfolio will be
approximately 200% under normal circumstances. See "PORTFOLIO TRANSACTIONS" and
"TAXES."
The Portfolio will attempt to achieve its objective by investing in a broad
range of fixed-income securities, including debt obligations of foreign
companies which are generally rated A or better by S&P or Moody's or, if
unrated, are deemed to be of comparable quality by Delaware International, as
well as, foreign government securities with the limitation noted below. The
Portfolio may invest up to 5% of its assets in fixed-income securities rated
below investment grade, including foreign government securities as discussed
below. See "ADDITIONAL INVESTMENT INFORMATION--HIGH-YIELD, HIGH RISK
SECURITIES."
The Portfolio may also invest in zero coupon bonds, and in the debt securities
of supranational entities denominated in any currency. Zero coupon bonds are
debt obligations which do not entitle the holder to any periodic payments of
interest prior to maturity or a specified date when the securities begin paying
current interest, and therefore are issued and traded at a discount from their
face amounts or par value. A supranational entity is an entity established or
financially supported by the national governments of one or more countries to
promote reconstruction or development. Examples of supranational entities
include, among others, the World Bank, the European Economic Community, the
European Coal and Steel Community, the European Investment Bank, the
Inter-Development Bank, the Export-Import Bank and the Asian Development Bank.
For increased safety, the Portfolio currently anticipates that a large
percentage of its assets will be invested in foreign government securities and
securities of supranational entities. See "ADDITIONAL INVESTMENT INFORMATION"
for further details about these and other investment policies.
With respect to U.S. government securities, the Portfolio may invest only in
securities issued or guaranteed as to the payment of principal and interest by
the U.S. government, and those of its agencies or instrumentalities which are
backed by the full faith and credit of the United States. Direct obligations of
the U.S. government which are available for purchase by the Portfolio include
bills, notes, bonds and other debt securities issued by the U.S. Treasury.
These obligations differ mainly in interest rates, maturities and dates of
issuance. Agencies whose obligations are backed by the full faith and credit of
the United States include the Farmers Home Administration, Federal Financing
Bank and others. When the Portfolio's investment adviser believes a temporary
defensive approach is appropriate, the Portfolio may hold up to 100% of its
assets in such U.S. government securities and certain other short-term
instruments. See "ADDITIONAL INVESTMENT INFORMATION--U.S. GOVERNMENT
SECURITIES" and "SHORT-TERM INVESTMENTS."
With respect to securities issued by foreign governments, their agencies,
instrumentalities or political subdivisions, the Portfolio will generally invest
in such securities if they have been rated AAA or AA by S&P or Aaa or Aa by
Moody's or if unrated, have been determined by the investment adviser to be of
comparable quality. As noted above, the Portfolio may invest up to 5% of its
assets in non-investment grade fixed-income securities. These investments may
include foreign government securities, some of which may be so-called Brady
Bonds. See "ADDITIONAL INFORMATION--HIGH-YIELD, HIGH RISK SECURITIES." The
Portfolio may also invest in sponsored or unsponsored American Depositary
Receipts or European Depositary 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
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Portfolio may make in other investment companies is limited in amount by the
1940 Act and would involve the indirect payment of a portion of the expenses,
including advisory fees, of such other investment companies. See "ADDITIONAL
INVESTMENT INFORMATION--FOREIGN INVESTMENT INFORMATION" and "DEPOSITARY
RECEIPTS."
Currency considerations carry a special risk for a portfolio of international
securities and the investment adviser employs a purchasing power parity
approach to evaluate currency risk. In this regard, the Portfolio will actively
carry on hedging activities, and may utilize a wide range of hedging
instruments, including options, futures contracts, and related options, and
forward foreign currency exchange contracts to hedge currency risks associated
with its portfolios of securities. See "ADDITIONAL INVESTMENT
INFORMATION--FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS, FUTURES CONTRACTS AND
OPTIONS ON FUTURES CONTRACTS" and "OPTIONS."
It is anticipated that the average weighted maturity of the Portfolio will be
in the five-to-ten year range. If, however, the investment adviser anticipates
a declining interest rate environment, the average weighted maturity may be
extended beyond ten years. Conversely, if the investment adviser anticipates a
rising rate environment, the average weighted maturity may be shortened to less
than five years. The Portfolio will not invest 25% or more of its total assets
in the securities of issuers all of which conduct their principal business
activities in the same industry.
THE HIGH-YIELD BOND PORTFOLIO
The High-Yield Bond Portfolio's investment objective is to seek high total
return. The Portfolio seeks to achieve its objective by investing primarily in
bonds rated B- or higher by S&P or B3 or higher by Moody's or, if unrated,
judged to be of comparable quality by the investment adviser.
The Portfolio will invest at least 80% of its assets at the time of purchase in:
(1) corporate bonds that may be rated B- or higher by S&P or B3 or higher by
Moody's, or that may be unrated (which may be more speculative in nature than
rated bonds); (2) securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities; or (3) commercial paper of companies rated A-1 or
A-2 by S&P or rated P-1 or P-2 by Moody's or, if unrated, judged to be of
comparable quality by the investment adviser. The Portfolio may also invest in
income-producing securities, including common stocks and preferred stocks, some
of which may have convertible features or attached warrants and which may be
speculative. See "ADDITIONAL INVESTMENT INFORMATION--CONVERTIBLE, DEBT AND
NON-TRADITIONAL EQUITY SECURITIES" for a further discussion of these investment
policies. The Portfolio may invest up to 10% of its total assets in securities
of issuers domiciled in foreign countries. The Portfolio may hold cash or invest
in short-term debt securities and other money market instruments when, in the
investment adviser's opinion, such holdings are 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.
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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.
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
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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.
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:
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(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 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
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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, 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,
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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.
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.
THE GROWTH AND INCOME PORTFOLIO
The Portfolio's investment objective is capital appreciation and income. The
Portfolio will seek to achieve its objectives by investing primarily in
income-producing common stocks, with a focus on common stocks that the
investment adviser believes have the potential for above average dividend
increases over time. Under normal circumstances, the Portfolio will generally
invest at least 65% of its total assets in dividend paying common stocks.
In selecting stocks for the Portfolio, the investment adviser will focus
primarily on dividend paying common stock issued by companies with market
capitalization in excess of $100 million but is not precluded from purchasing
shares of companies with market capitalizations of less than $100 million. In
seeking stocks with potential for above average dividend increases, the
investment adviser will consider such factors as the historical growth rate of
a company's dividend, the frequency of prior dividend increases, the issuing
company's potential to generate cash flows and the price/earnings multiple of
the stock relative to the market. The investment adviser will generally avoid
stocks that it believes are overvalued and may select stocks with current
dividend yields that are lower than the current yield of the Standard & Poor's
500 Stock Index ("S&P 500") in exchange for anticipated dividend growth.
While management believes that the Portfolio's objectives may best be attained
by investing in common stocks, the Portfolio may also invest in other
securities including, but not limited to, convertible and preferred securities,
shares or convertible bonds issued by real estate investment trust (REITS),
rights and warrants to purchase common stock and various types of fixed-income
securities, such as U.S. government and government agency securities, corporate
debt securities, and bank obligations, and may also engage in options and
futures transactions. See "CONVERTIBLE, DEBT AND NON-TRADITIONAL EQUITY
SECURITIES", "MORTGAGE-BACKED SECURITIES", "REITS", "OPTIONS" AND "FUTURES
CONTRACTS AND OPTIONS ON FUTURES
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CONTRACTS" under "ADDITIONAL INVESTMENT INFORMATION". The Portfolio may invest
up to 5% of its assets in foreign securities and, without limitation in
sponsored and unsponsored ADRs that are actively traded in the U.S. See
"DEPOSITARY RECEIPTS" under "ADDITIONAL INVESTMENT INFORMATION".
In addition, 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 "SHORT-TERM INVESTMENTS" under "ADDITIONAL
INVESTMENT INFORMATION" for a discussion of this and other investment policies.
THE SMALL-CAP GROWTH EQUITY PORTFOLIO
The Portfolio's investment objective is long-term capital appreciation. The
Portfolio seeks to achieve its investment objective by investing primarily (at
least 65% of its total assets) in equity securities (including convertible
securities) of companies which the investment adviser believes have the
potential for high earnings growth and which generally represent the smallest
25% in terms of market capitalization of U.S. equity securities listed on a
national securities exchange or NASDAQ. The Portfolio has been designed to
provide investors with potentially greater long-term rewards than provided by
an investment in a fund that seeks capital appreciation from common stocks of
companies with more established earnings histories.
The Portfolio will invest in equity securities of companies the investment
adviser believes to be undervalued and to have the potential for high earnings
growth. Companies in which the Portfolio invests generally will meet one or
more of the following criteria: high historical earnings-per-share ("EPS")
growth; high projected future EPS growth; an increase in research analyst
earnings estimates; attractive relative price to earning ratios; and high
relative discounted cash flows. In selecting the Portfolio's investments, the
investment adviser also focuses on companies with capable management teams,
strong industry positions, sound capital structures, high returns on equity,
high reinvestment rates and conservative financial accounting policies.
In pursuing its objective, the Portfolio anticipates that it will invest
substantially all, and under normal conditions not less than 65%, of its assets
in common stocks, preferred stocks, convertible bonds, convertible debentures,
convertible notes, convertible preferred stocks and warrants or rights. To the
extent that the Portfolio invests in convertible debt securities, those
securities will be purchased on the basis of their equity characteristics, and
ratings, if any, of those securities will not be an important factor in their
selection. In addition, under normal market conditions, no more than 35% of the
Portfolio's total assets may be invested in debt securities of corporate and
governmental issues. See "CONVERTIBLE, DEBT AND NON-TRADITIONAL EQUITY
SECURITIES" under "ADDITIONAL INVESTMENT INFORMATION".
At no time will the investments of the Portfolio in bank obligations, including
time deposits, exceed 25% of the value of the Portfolio's assets.
The Portfolio may engage in options and futures transactions. See "OPTIONS" and
"FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS" under "ADDITIONAL
INVESTMENT INFORMATION." The Portfolio may also invest up to 10% of its assets
in foreign securities which may include Global Depositary Receipts and, without
limitation, in sponsored and unsponsored ADRs that are actively traded in the
U.S. See "DEPOSITARY RECEIPTS" under "ADDITIONAL INVESTMENT INFORMATION."
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In addition, 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 "SHORT-TERM INVESTMENTS" under "ADDITIONAL
INVESTMENT INFORMATION" for a discussion of these and other investment
policies.
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THE ASSET ALLOCATION PORTFOLIO
The investment objective of the Portfolio is to seek capital appreciation with
current income as a secondary objective. The Portfolio seeks to achieve its
objective by investing primarily in domestic equity and fixed income
securities, including domestic equity and fixed income Portfolios of the Fund.
The Portfolio may also invest in international equity and fixed income
securities, including international equity and fixed income Portfolios of the
Fund. The Portfolio will generally invest at least 20% of its net assets in
fixed income securities, including fixed-income Portfolios of the Fund.
The Portfolio will pursue its investment objective through active asset
allocation implemented primarily with investments in a combination of the
Portfolios of the Fund. The Portfolio may also separately invest directly in
the same securities and employ the same investment strategies as any of the
Portfolios of the Fund, to the extent consistent with the Portfolio's
investment objectives. The Portfolio will invest directly in securities or
other investment instruments for such purposes as avoiding undue disruption of
the activities of the Portfolios of the Fund, hedging of the Portfolios'
investment positions, or to make investments in asset classes not available in
the Portfolios of the Fund. While it is anticipated that at most times the
Portfolio will be primarily invested in the Portfolios of the Fund, it is
possible, from time to time, for the Portfolio to be substantially invested
directly in securities. The investment objective of the Portfolio is considered
a "non-fundamental policy," which means that it may be changed without approval
of the Portfolio's shareholders. There is no assurance that the Portfolio will
achieve its objective.
As described above, the Portfolios of the Fund include funds investing in U.S.
and foreign stocks, bonds, and money market instruments. At any point in time,
it can be expected that the Portfolio will invest in a different combination of
securities and Portfolios of the Fund. In allocating the Portfolio's assets,
Delaware will evaluate the expected return of the Portfolios of the Fund, the
volatility of the Portfolios of the Fund (i.e., the variability of returns from
one period to the next), and the correlation of the Portfolios of the Fund
(i.e. the degree to which the Portfolios of the Fund move together).
The allocation of the assets of the Portfolio will be determined by Delaware.
Delaware is the investment manager for the Portfolio. Delaware or its
affiliates also serve as the investment manager to each Portfolio of the Fund.
In determining the asset allocation of the Portfolio, Delaware will establish
an allocation according to asset classes and will implement such allocation
through investment in an appropriate combination of securities and Portfolios
of the Fund.
The Portfolios of the Fund that will currently be considered for investment by
The Asset Allocation Portfolio are listed below, grouped within broad asset
classes. The asset class headings below are provided for convenience and are
approximate in nature. For more detailed information on the investment policies
of each Portfolio of the Fund, see the discussion of each such Portfolio in
this section. The list of Portfolios of the Fund may change from time to time,
and Portfolios of the Fund may be added or deleted upon the recommendation of
Delaware without shareholder approval.
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Asset Class Portfolio of the Fund
- ------------------------- ------------------------------------------------
U.S. Equity The Aggressive Growth Portfolio
The Large-Cap Value Equity Portfolio
The Growth and Income Portfolio
The Small-Cap Growth Equity Portfolio
The Global Equity Portfolio
The Real Estate Investment Trust Portfolio II
The Small/Mid-Cap Value Equity Portfolio
International Equity The Emerging Markets Portfolio
The Global Equity Portfolio
The International Equity Portfolio
The Labor Select International Equity Portfolio
Fixed Income The Aggregate Fixed Income Portfolio
The Diversified Core Fixed Income Portfolio
The Intermediate Fixed Income Portfolio
The Global Fixed Income Portfolio
The High-Yield Bond Portfolio
The International Fixed Income Portfolio
The Limited-Term Maturity Portfolio
The percentage ranges targeted for the Portfolio by broad asset class are set
forth below. The percentage ranges applicable to each asset class for the
Portfolio may be changed from time to time by Delaware without the approval of
shareholders.
Percentage Ranges
of Investment
Asset Class in Asset Classes
- ------------------------ ------------------
U.S. Equity 30%-70%
International Equity 5%-30%
Fixed Income 20%-65%
Cash 0%-35%
The Portfolio will generally at all times be invested in at least three
Portfolios of the Funds, consistent with the table above. The Portfolio may
invest up to 100% of its total assets in cash or other money market instruments
for temporary, defensive purposes.
The Portfolio will indirectly bear its pro rata share of the fees and expenses
incurred by the Portfolios of the Fund that are applicable to direct
shareholders of such Portfolios of the Fund. The investment returns of the
Portfolio, therefore, will be net of the expenses of the Portfolios of the Fund
in which it is invested.
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The Portfolio is subject to an exemptive order from the SEC which permits the
Portfolio to invest directly in the same securities which the Portfolios of the
Fund may invest. Pursuant to the order, the Portfolio may, to the extent
consistent with its investment objective, invest its assets directly in the same
types of securities as those in which the Portfolios of the Fund invest. In
addition, pursuant to the order, the Portfolio may, to the extent consistent
with its investment objective, engage directly in the same types of investment
strategies as those in which each Portfolio of the Fund may engage. The
Portfolio uses such investment strategies to hedge investment positions,
including investments directly in securities and investments in the Portfolios
of the Fund, to protect the Portfolio against a decline in the value of the
Portfolios of the Fund. The Portfolio does not intend to engage in these
investment strategies for non-hedging purposes such that more than 5% of its
assets will be exposed.
The value of the Portfolio's shares will increase as the value of the
securities owned by the Portfolio increases and will decrease as the value of
the Portfolio's investments decrease. In addition, the Portfolio's share prices
and yields will fluctuate in response to movements in the securities markets as
a whole.
The Portfolio's assets may be primarily invested in a combination of the
Portfolios of the Fund. As a result, the Portfolio's investment performance may
be directly related to the investment performance of the Portfolios of the Fund
held by it. The ability of the Portfolio to meet its investment objective may
thus be directly related to the ability of the Portfolios of the Fund to meet
their objectives as well as the allocation among those Portfolios of the Fund
by the Manager. There can be no assurance that the investment objective of the
Portfolio or any Portfolio of the Fund will be achieved.
As described in this section, the Portfolios of the Fund may engage in a
variety of investment strategies which involve certain risks. Moreover, the
Portfolio may, pursuant to an exemptive order granted by the SEC, to the extent
consistent with its investment objectives, invest in the same securities and
employ the same investment strategies as any of the Portfolios of the Fund. The
Portfolio may therefore be subject to some of the risks resulting from these
strategies. The Portfolio, to the extent consistent with its investment
objectives, and certain of the Portfolios of the Fund, may purchase foreign
securities; purchase high yielding, high risk debt securities (commonly
referred to as "junk bonds"); enter into foreign currency transactions; engage
in options transactions; engage in futures contracts and options on futures;
purchase zero coupon bonds and pay-in-kind bonds; purchase restricted and
illiquid securities; enter into forward roll transactions; purchase securities
on a when-issued or delayed delivery basis; enter into repurchase agreements;
borrow money; loan portfolio securities and engage in various other investment
strategies. Further information on these investment strategies can be found
under "ADDITIONAL INVESTMENT INFORMATION" and in the Statement of Additional
Information.
Because the Portfolios of the Fund are separately managed, it is possible that
certain Portfolios of the Fund in which the Portfolio invests may be acquiring
securities at the same time that other Portfolios of the Fund in which the
Portfolio invests are selling the same security. Similarly, it is possible that
the Portfolio may directly acquire a security at the same time that a Portfolio
of the Fund in which it invests is selling the same security, or vice versa.
This practice could result in higher indirect transactions costs for the
Portfolio, and thus adversely effect the Portfolio's returns, than would be the
case if the Portfolio were only investing directly in securities.
The Portfolio is considered a nondiversified investment company under the
regulations which govern mutual funds because it may invest in a limited number
of securities and Portfolios of the Fund. As a result, the Portfolio may be
subject to greater risk with respect to its individual portfolio than a fund
that is more broadly diversified among a number of issuers. However, most of
the Portfolios of the Fund themselves are diversified investment companies. The
Portfolio may not concentrate in any particular industry, sector or foreign
government security (except for investment companies, to the extent that it is
considered an industry or sector).
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Delaware has adopted Asset Allocation Guidelines (the "Guidelines") which
govern the Portfolio's purchases and redemptions of shares of the Portfolios of
the Fund. Pursuant to these Guidelines, if the Asset Allocation Portfolio's
manager anticipates that the Portfolio's allocation transaction will disrupt
the investment activities of an Portfolio of the Fund, the Asset Allocation
Portfolio's manager and the manager of the relevant Portfolio of the Fund will
confer on steps to minimize adverse effects on both the Portfolio and the
Portfolio of the Fund, such as staggering the timing and amounts of such
allocation transactions. In addition, the Asset Allocation Portfolio's manager
will attempt to minimize the number and size of allocation transactions taking
place at any one time while attempting to avoid losing investment opportunities
for the Portfolio. As a result, the Portfolio may, on occasion, be unable to
purchase or redeem shares of a Portfolio of the Fund as quickly or in such
amounts as they otherwise would in the absence of such Guidelines. Such delays
or changes in amounts may decrease the total return and/or increase the
volatility of the Portfolio.
* * *
For a description of the Portfolios' other investment policies and a further
discussion of some of the policies described above, see "ADDITIONAL INVESTMENT
INFORMATION."
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PURCHASE OF SHARES
Shares of each Portfolio may be purchased without a sales commission, at net
asset value per share next determined after (i) the Fund has been notified by
telephone of your purchase order and (ii) Federal Funds have been delivered to
the Fund's bank account maintained with The Chase Manhattan Bank ("Custodian
Bank"). In addition, a purchase reimbursement fee equal to 0.75% of the dollar
amount invested is charged to investors in shares of The Emerging Markets
Portfolio and paid to the Portfolio; for The Global Equity Portfolio, the
reimbursement fee paid to the Portfolio is equal to 0.40% of the dollar amount
invested. See "HOW TO INVEST" and "PURPOSE OF REIMBURSEMENT FEES--THE EMERGING
MARKETS AND THE GLOBAL EQUITY PORTFOLIOS."
Shares of The International Equity Portfolio may, under certain circumstances,
be required to be purchased in-kind, as noted below. Eligible investors in The
Global Equity Portfolio may elect to follow these procedures in lieu of paying
a purchase reimbursement fee. At such time as the Fund receives appropriate
regulatory approvals to do so in the future, under certain circumstances, the
Fund may, at its sole discretion, allow eligible investors who have an existing
investment counseling relationship with Delaware, Delaware International, or
their affiliates, 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 Bank are open for business.
3. Complete the Account Registration Form within two days and mail it to:
Delaware Pooled Trust, Inc.*
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
Attn: Client Services
*Account registrations for The Asset Allocation Portfolio will be forwarded to
Foundation Funds.
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By Mail
Purchases of shares of a Portfolio may also be made by mailing a check payable
to the specific Portfolio selected to the above address (be sure to complete an
Investment Application before sending your check).
Purchase Price
In order for share purchases to be priced at the end of a given business day,
the Fund must be notified by telephone and Federal Funds must be received no
later than the close of regular trading on the New York Stock Exchange ("NYSE")
(ordinarily, 4 p.m., Eastern time) on days when the Exchange is open. If notice
is given or Federal Funds are delivered after that time, the purchase order
will be priced on the following business day.
In-Kind Purchases or Similar Procedures (The International Equity and The Global
Equity Portfolios)
Institutions proposing to invest an amount which at the time they telephone the
Fund (as required above), would constitute 5% or more of the assets of The
International Equity Portfolio will, under normal circumstances, be required to
make purchases by tendering securities in which the Portfolio otherwise would
invest or, by following another procedure that will have the same economic
effect as an in-kind purchase. In either case, an investor that is required to
purchase shares pursuant to those procedures will be required to pay the
brokerage or other transaction costs of acquiring the subject securities.
Prospective investors will be notified when they telephone the Fund whether
their investment must be made in-kind or by such other procedure and, if
in-kind, what securities must be tendered. The purchase price per share for
such investors shall be the net asset value next determined after, as the case
may be, (1) delivery of cash or securities to the Custodian Bank 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.
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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 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 Bank are open for business, the net asset value of the Fund's
Portfolios are determined as of the close of regular trading of the NYSE
(ordinarily, 4 p.m., Eastern time). See "VALUATION OF SHARES."
Shares of the Fund may be redeemed by mail, FAX message, or telephone. No
charge is made for redemption, except the reimbursement fee assessed to
investors in The Emerging Markets Portfolio and The Global Equity Portfolio.
The proceeds of any redemption may be more or less than the purchase price of
your shares depending on the market value of the investment securities held by
the Portfolio. Shares of The International Equity Portfolio, The Labor Select
International Equity Portfolio, The Global Fixed Income Portfolio, The
International Fixed Income Portfolio, The Global Equity Portfolio and The
Emerging Markets Portfolio may, under certain circumstances, be required to be
redeemed in-kind in portfolio securities, as noted below.
By Mail or FAX Message
Each Portfolio will redeem its shares at the net asset value next determined on
the date the request is received in "good order." Your request should be
addressed to:
Delaware Pooled Trust, Inc.*
Attn: Client Services
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
FAX # 215-255-8864
*Requests relating to The Asset Allocation Portfolio will be forwarded to
Foundation Funds.
"Good order" for purposes of mail or FAX message redemptions means that the
request to redeem must include the following documentation:
a. A letter of instruction specifying the number of shares or dollar amount to
be redeemed signed by the appropriate corporate or organizational officer(s)
exactly as it appears on the Account Registration Form.
b. If you wish to change the name of the commercial bank or account designation
to receive the redemption proceeds as provided in the Account Registration
Form, then a separate written request must be submitted to the Fund at the
above address and copies of this request sent to both the current commercial
bank and the new designee bank. Prior to redemption, the Fund will
telephonically confirm the change with both the current and the new designee
banks. Further clarification of these procedures can be obtained by calling the
Fund.
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By Telephone
If you have previously elected the Telephone Redemption Option on the Account
Registration Form, you can request a redemption of your shares by calling the
Fund and requesting the redemption proceeds be wired to the commercial bank or
account designation identified in the Account Registration Form. Shares cannot
be redeemed by telephone if stock certificates are held for those shares or, in
the case of The International Equity Portfolio, The Labor Select International
Equity Portfolio, The Global Fixed Income Portfolio, The International Fixed
Income Portfolio, The Global Equity Portfolio or The Emerging Markets
Portfolio, in instances when the special in-kind redemption procedures are
triggered, as described below. Please contact the Fund for further details. In
times of drastic market conditions, the telephone redemption option may be
difficult to implement. If you experience difficulty in making a telephone
redemption, your request may be made by mail or FAX message, pursuant to the
procedures described above. It will be priced at the net asset value next
determined after it is received. Neither the Fund, the Portfolios nor the
Fund's transfer agent, Delaware Service Company, Inc., is responsible for any
losses incurred in acting upon written or telephone instructions for redemption
or exchange of Portfolio shares which are reasonably believed to be genuine.
With respect to such telephone transactions, the Fund will ensure that
reasonable procedures are used to confirm that instructions communicated by
telephone are genuine (including verification of a form of personal
identification) as, if it does not, the Fund or Delaware Service Company, Inc.
may be liable for any losses due to unauthorized or fraudulent transactions. A
written confirmation will be provided for all purchase, exchange and redemption
transactions initiated by telephone.
To change the name of the commercial bank or account designated to receive the
redemption proceeds, a written request must be sent to the Fund at the address
above. Requests to change the bank or account designation must be signed by the
appropriate person(s) authorized to act on behalf of the shareholder.
The Fund's telephone redemption privileges and procedures may be modified or
terminated by the Fund only upon written notice to the Fund's client
shareholders.
Redemptions In-Kind or Similar Procedures (The International Equity, The Labor
Select International Equity, The Global Fixed Income, The International Fixed
Income, The Global Equity and the Emerging Markets Portfolios)
Institutions proposing to redeem an amount which, at the time they notify the
Fund of their intention to redeem (as described below), would constitute 5% or
more of the assets of The International Equity Portfolio, The Labor Select
International Equity Portfolio, The Global Fixed Income Portfolio, The
International Fixed Income Portfolio, The Global Equity Portfolio or The
Emerging Markets Portfolio will, under normal circumstances, and if applicable
law permits, be required to accept their redemption proceeds in-kind in
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, Delaware International, or their affiliates, will not be subject to
the Fund's in-kind redemption requirements until such time as the Fund receives
appropriate regulatory approvals to permit such redemptions for the account of
such eligible investors.
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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 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
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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.
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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.
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,
The Global Fixed Income, The Asset Allocation and The Growth and 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
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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.
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.
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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 (and, in the case of The Growth and Income
Portfolio, the four) highest grades by a nationally-recognized statistical
rating agency.
The Intermediate Fixed Income Portfolio, The Aggregate Fixed Income Portfolio,
The Diversified Core Fixed Income Portfolio and The Asset Allocation 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, The Limited-Term Maturity, The Asset Allocation and The Growth
and Income Portfolios may also invest in securities which are backed by assets
such as receivables on home equity and credit card loans, receivables regarding
automobile, mobile home and recreational vehicle loans, wholesale dealer floor
plans and leases or other loans or financial receivables currently available or
which may be developed in the future. All such securities must be rated in one
of the four highest rating categories by a reputable credit rating agency
(e.g., BBB by S&P or Baa by Moody's). Such receivables are securitized in
either a pass-through or a pay-through structure. Pass-through securities
provide investors with an income stream consisting of both principal and
interest payments in respect of the receivables in the underlying pool.
Pay-through asset-backed securities are debt obligations issued usually by a
special purpose entity, which are collateralized by the various receivables and
in which the payments on the underlying receivables provide the funds to pay
the debt service on the debt obligations issued.
The rate of principal payment on asset-backed securities generally depends upon
the rate of principal payments received on the underlying assets. Such rate of
payments may be affected by economic and various other factors such as changes
in interest rates or the concentration of collateral in a particular geographic
area. Therefore, the yield may be difficult to predict and actual yield to
maturity may be more or less than the anticipated yield to maturity. Due to the
shorter maturity of the collateral backing such securities, there tends to be
less of a risk of substantial prepayment than with mortgage-backed securities
but the risk of
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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, The Emerging Markets, The Asset
Allocation, The Small-Cap Growth Equity and The Growth and Income 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, The
High-Yield Bond, The Asset Allocation, The Small-Cap Growth Equity and The
Growth and Income Portfolios. Certificates of deposit are negotiable short-term
obligations issued by commercial banks against funds deposited in the issuing
institution. Variable rate certificates of deposit are certificates of deposit
on which the interest rate is periodically adjusted prior to their stated
maturity based upon a specified market rate. A bankers' acceptance is a time
draft drawn on a commercial bank by a borrower usually in connection with an
international commercial transaction (to finance the import, export, transfer
or storage of goods).
A Portfolio will not invest in any security issued by a commercial bank unless
(i) the bank has total assets of at least $1 billion or, in the case of a bank
which does not have total assets of at least $1 billion, the aggregate
investment made in any one such bank is limited to $100,000 and the principal
amount of such investment is insured in full by the Federal Deposit Insurance
Corporation, (ii) it is a member of the Federal Deposit Insurance Corporation,
and (iii) the bank or its securities have received the highest quality rating
by a nationally-recognized statistical rating organization;
(2) Commercial paper with the highest quality rating by a nationally-recognized
statistical rating organization (e.g., A-1 by S&P or Prime-1 by Moody's) or, if
not so rated, of comparable quality as determined by a Portfolio's investment
adviser;
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(3) Short-term corporate obligations with the highest quality rating by a
nationally-recognized statistical rating organization (e.g., AAA by S&P or Aaa
by Moody's) or, if not so rated, of comparable quality as determined by a
Portfolio's investment adviser;
(4) U.S. government securities (see "U.S. GOVERNMENT SECURITIES"); and
(5) Repurchase agreements collateralized by securities listed above.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES
Each Portfolio of the Fund may purchase securities on a when-issued or delayed
delivery basis. In such transactions, instruments are purchased with payment and
delivery taking place in the future in order to secure what is considered to be
an advantageous yield or price at the time of the transaction. Delivery of and
payment for these securities may take as long as a month or more after the date
of the purchase commitment. Each Portfolio will maintain with the 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.
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 Delaware Investments has obtained from the Commission under Section 17(d)
of the 1940 Act.
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SECURITIES LENDING ACTIVITIES
Each Portfolio may loan up to 25% of its assets to qualified broker/dealers or
institutional investors for their use relating to short sales or other security
transactions.
The major risk to which a Portfolio would be exposed on a loan transaction is
the risk that the borrower would go bankrupt at a time when the value of the
security goes up. Therefore, a Portfolio will only enter into loan arrangements
after a review of all pertinent facts by the investment adviser, subject to
overall supervision by the Board of Directors, including the creditworthiness
of the borrowing broker, dealer or institution and then only if the
consideration to be received from such loans would justify the risk.
Creditworthiness will be monitored on an ongoing basis by the investment
adviser.
BORROWING FROM BANKS
Each Portfolio may borrow money as a temporary measure or to facilitate
redemptions. No Portfolio has the intention of increasing its net income
through borrowing. Any borrowing will be done from a bank and, consistent with
Commission rules. 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, The Diversified Core
Fixed Income, The Asset Allocation, The Small-Cap Growth Equity and The Growth
and Income Portfolios, up to 10%, 10%, 20%, 10% and 5% 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.
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Consequently, financial data may be materially affected by restatements for
inflation and may not accurately reflect the real condition of those issuers and
securities markets.
It is also expected that the expenses for custodial arrangements of The
International Equity, The Labor Select International Equity, The Real Estate
Investment Trust, The Diversified Core Fixed Income, The Global Fixed Income,
The International Fixed Income, The High-Yield Bond, The Global Equity, The
Emerging Markets, The Asset Allocation, The Small-Cap Growth Equity and The
Growth and Income 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.
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With respect to investment in debt issues of foreign governments, the ability of
a foreign government or government-related issuer to make timely and ultimate
payments on its external debt obligations will also be strongly influenced by
the issuer's balance of payments, including export performance, its access to
international credits and investments, fluctuations in interest rates and the
extent of its foreign reserves. A country whose exports are concentrated in a
few commodities or whose economy depends on certain strategic imports could be
vulnerable to fluctuations in international prices of these commodities or
imports. To the extent that a country receives payment for its exports in
currencies other than dollars, its ability to make debt payments denominated in
dollars could be adversely affected. If a foreign government or
government-related issuer cannot generate sufficient earnings from foreign trade
to service its external debt, it may need to depend on continuing loans and aid
from foreign governments, commercial banks and multilateral organizations, and
inflows of foreign investment. The commitment on the part of these foreign
governments, multilateral organizations and others to make such disbursements
may be conditioned on the government's implementation of economic reforms and/or
economic performance and the timely service of its obligations. Failure to
implement such reforms, achieve such levels of economic performance or repay
principal or interest when due may curtail the willingness of such third parties
to lend funds, which may further impair the issuer's ability or willingness to
service its debts in a timely manner. The cost of servicing external debt will
also generally be adversely affected by rising international interest rates
because many external debt obligations bear interest at rates which are adjusted
based upon international interest rates. The ability to service external debt
will also depend on the level of the relevant government's international
currency reserves and its access to foreign exchange. Currency devaluations may
affect the ability of a government issuer to obtain sufficient foreign exchange
to service its external debt.
As a result of the foregoing, a foreign governmental issuer may default on its
obligations. If such a default occurs, a Portfolio may have limited effective
legal recourse against the issuer and/or guarantor. Remedies must, in some
cases, be pursued in the courts of the defaulting party itself, and the ability
of the holder of foreign government and government-related debt securities to
obtain recourse may be subject to the political climate in the relevant
country. In addition, no assurance can be given that the holders of commercial
bank debt will not contest payments to the holders of other foreign government
and government-related debt obligations in the event of default under their
commercial bank loan agreements.
Among the foreign government and government related issuers in which The
Emerging Markets, The International Fixed Income, The Global Fixed Income, The
Diversified Core Fixed Income and The Asset Allocation 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, The Diversified Core
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Fixed Income and The Asset Allocation 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, The Diversified Core Fixed
Income and The Asset Allocation 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, The Emerging Markets, The Asset Allocation, The
Small-Cap Growth Equity and The Growth and Income 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, The Emerging
Markets, The Asset Allocation, The Small-Cap Growth Equity and The Growth and
Income 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.
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A forward contract involves an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days from the date
of the contract, agreed upon by the parties, at a price set at the time of the
contract.
A Portfolio may enter into forward contracts to "lock in" the price of a
security it has agreed to purchase or sell, in terms of U.S. dollars or other
currencies in which the transaction will be consummated. By entering into a
forward contract for the purchase or sale, for a fixed amount of U.S. dollars
or foreign currency, of the amount of foreign currency involved in the
underlying security transaction, a Portfolio will be able to protect itself
against a possible loss resulting from an adverse change in currency exchange
rates during the period between the date the security is purchased or sold and
the date on which payment is made or received.
For example, when the investment adviser believes that the currency of a
particular foreign country may suffer a significant decline against the U.S.
dollar or against another currency, a Portfolio may enter into a forward
contract to sell, for a fixed amount of U.S. dollars or other appropriate
currency, the amount of foreign currency approximating the value of some or all
of the Portfolio's securities denominated in such foreign currency. A Portfolio
will not enter into forward contracts or maintain a net exposure to such
contracts where the consummation of the contracts would obligate the Portfolio
to deliver an amount of foreign currency in excess of the value of the
Portfolio's securities or other assets denominated in that currency.
The Portfolios may enter into forward contracts to hedge the currency risk
associated with the purchase of individual securities denominated in particular
currencies. In the alternative, the Portfolios may also engage in currency
"cross hedging" when, in the opinion of the investment advisers, as
appropriate, the historical relationship among foreign currencies suggests that
the Portfolios may achieve the same protection for a foreign security at
reduced cost and/or administrative burden through the use of a forward contract
relating to a currency other than the U.S. dollar or the foreign currency in
which the security is denominated.
At the maturity of a forward contract, a Portfolio may either sell the
portfolio security and make delivery of the foreign currency, or it may retain
the security and terminate its contractual obligation to deliver the foreign
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.
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HIGH-YIELD, HIGH RISK SECURITIES
The International Fixed Income Portfolio, The Global Fixed Income, The
Diversified Core Fixed Income and The Asset Allocation Portfolios may invest up
to 5%, 5%, 20%, and 55%, 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 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.
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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, The Emerging Markets, The Asset
Allocation, The Small-Cap Growth Equity and The Growth and Income 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. For the same purposes, The Growth and Income Portfolio may also
enter into futures contracts on stock indices and purchases or sell options on
stock index futures and stock indices and may enter into closing transactions
with respect to these 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, The Diversified Core Fixed Income and The Asset Allocation 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, The
Emerging Markets, The Asset Allocation, The Small-Cap Growth Equity and The
Growth and Income Portfolios may enter into contracts for the purchase or sale
for future delivery of securities. A futures contract is a bilateral agreement
providing for the purchase and sale of a specified type and amount of a
financial instrument, or for the making and acceptance of a cash settlement, at
a stated time in the future for a fixed price. By its terms, a futures contract
provides for a specified settlement date on which the securities underlying the
contracts are delivered, or in the case of securities index 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 the 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 transaction. 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. This amount is
generally maintained in a segregated account at the custodian bank. Subsequent
payments to and from the broker, referred to as "variation margin," are made on
a daily basis as the value of the index or instrument underlying the futures
contract fluctuates, making positions in the futures contract more or less
valuable, a process known as "marking to the market."
Foreign currency futures contracts operate similarly to futures contracts
concerning securities. When The International Fixed Income, The Global Equity,
The Emerging Markets, The Diversified Core Fixed Income or The Asset Allocation
Portfolios 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.
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The Portfolios may also purchase and write options to buy or sell futures
contracts in which the Portfolio's may invest and enter into related closing
transactions. 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, The Emerging Markets, The Asset Allocation,
The Small-Cap Growth Equity and The Growth and Income 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 the
Custodian Bank, cash or U.S. government securities in an amount not less than
the exercise price of the option at all times during the option period. A
Portfolio will only purchase put options if the Portfolio owns the security
covered by the put option at the time of purchase and to the extent that the
premiums on all outstanding put options do not exceed 2% of the Portfolio's
total assets. The advantage is that the writer receives premium income while
the purchaser can be protected should the market value of the security decline.
Closing transactions essentially let the Portfolios offset put options or call
options prior to exercise or expiration. If a Portfolio cannot effect closing
transactions, it may have to hold a security it would otherwise sell or deliver
a security it might want to hold.
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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, The Emerging
Markets, The Asset Allocation, The Small-Cap Growth Equity and The Growth and
Income 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, The
Emerging Markets, The Asset Allocation, The Small-Cap Growth Equity and The
Growth and Income 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. The Growth and Income and The Small-Cap Growth
Equity Portfolios may write call options on stock indices. 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, The
Diversified Core Fixed Income and The Asset Allocation 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, The
International Fixed Income, The Asset Allocation, The Small-Cap Growth Equity
and The Growth and 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, The Emerging Markets, The
Asset Allocation, The Small-Cap Growth Equity and The Growth and Income
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,
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as applicable, on investment in such securities, the investment adviser will
determine what action shall be taken to ensure that the Portfolio continues to
adhere to such limitation.
CONVERTIBLE, DEBT AND NON-TRADITIONAL EQUITY SECURITIES
A portion of The Small/Mid-Cap Value Equity, The High-Yield Bond, The Asset
Allocation, The Small-Cap Growth Equity and The Growth and Income 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. Investments in debt securities by The Small-Cap Growth Equity
Portfolio will be limited to those that are, at the time of investment, within
the four highest grades assigned by a nationally recognized statistical rating
agency (e.g., Baa or higher by Moody's or BBB or higher by Standard & Poor's) or
deemed to be of comparable quality by the investment adviser. Convertible and
debt securities acquired by The Small/Mid-Cap Value Equity, The Real Estate
Investment Trust, The High-Yield Bond, The Asset Allocation and The Growth and
Income (as to no more than 5% of its assets) 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, The Emerging Markets and The Asset Allocation 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.
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The Small/Mid-Cap Value Equity, The Real Estate Investment Trust, The High-Yield
Bond, The Emerging Markets and The Asset Allocation Portfolios may also invest
in other enhanced convertible securities. These include but are not limited to
ACES (Automatically Convertible Equity Securities), PEPS (Participating Equity
Preferred Stock), PRIDES (Preferred Redeemable Increased Dividend Equity
Securities), SAILS (Stock Appreciation Income Linked Securities), TECONS (Term
Convertible Notes), QICS (Quarterly Income Cumulative Securities) and DECS
(Dividend Enhanced Convertible Securities). ACES, PEPS, PRIDES, SAILS, TECONS,
QICS and DECS all have the following features: they are company-issued
convertible preferred stock; unlike PERCS, they do not have capital appreciation
limits; they seek to provide the investor with high current income, with some
prospect of future capital appreciation; they are typically issued with three to
four-year maturities; they typically have some built-in call protection for the
first two to three years; investors have the right to convert them into shares
of common stock at a preset conversion ratio or hold them until maturity; and
upon maturity, they will automatically convert to either cash or a specified
number of shares of common stock.
REITS
The Real Estate Investment Trust Portfolios', The Asset Allocation Portfolio's
and The Growth and Income Portfolio'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 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, The
Emerging Markets, The Asset Allocation, The Small-Cap Growth Equity and The
Growth and Income Portfolios may invest in sponsored and unsponsored American
Depositary Receipts ("ADRs") that are actively traded in the United States. The
Global Fixed Income, The International Fixed Income and The Asset Allocation
Portfolios may also invest in sponsored and unsponsored European Depositary
Receipts ("EDRs") and The International Equity, The Global Equity, The Emerging
Markets and The Asset Allocation Portfolios may also invest in sponsored and
unsponsored EDRs and Global Depositary Receipts ("GDRs"). The Small-Cap Growth
Equity Portfolio may also invest in sponsored and unsponsored GDRs. Subject to
its 10% limit on investments in foreign securities.
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ADRs are receipts typically issued by a U.S. bank or trust company which
evidence ownership of underlying securities issued by a foreign corporation.
EDRs and GDRs are receipts issued by non-U.S. Banks or trust companies and
foreign branches of U.S. banks that evidence ownership of the underlying foreign
or U.S. securities. "Sponsored" ADRs, EDRs or GDRs are issued jointly by the
issuer of the underlying security and a Depositary, and "unsponsored" ADRs, EDRs
or GDRs are issued without the participation of the issuer of the deposited
security. Holders of unsponsored ADRs, EDRs or GDRs generally bear all the costs
of such facilities and the Depositary of an unsponsored ADR, EDR or GDR facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited security or to pass through voting
rights to the holders of such receipts in respect of the deposited securities.
Therefore, there may not be a correlation between information concerning the
issuer of the security and the market value of an unsponsored ADR, EDR or GDR.
ADRs may be listed on a national securities exchange or may be traded in the
over-the-counter market. EDRs and GDRs traded in the over-the-counter market
which do not have an active or substantial secondary market will be considered
illiquid and therefore will be subject to a Portfolio's limitation with respect
to such securities. ADR prices are denominated in U.S. dollars although the
underlying securities are denominated in a foreign currency. Investments in
ADRs, EDRs and GDRs involve risks similar to those accompanying direct
investments in foreign securities.
INVESTMENT COMPANY SECURITIES
Any investments that The Emerging Markets Portfolio, The Global Equity
Portfolio, The Diversified Core Fixed Income Portfolio, The Asset Allocation
Portfolio, The Small-Cap Growth Equity Portfolio and The Growth and 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 current limitations, the Portfolios may not (1) own more
than 3% of the voting stock of another investment company; and (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. Each Portfolio in
which The Asset Allocation Portfolio invests may not operate as a "fund of
funds" by investing in other registered open-end investment companies or
registered unit investment trusts that are part of the Delaware Investments
family of funds.
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ZERO COUPON AND PAY-IN-KIND BONDS
Zero coupon bonds are debt obligations which do not entitle the holder to any
periodic payments of interest prior to maturity or a specified date when the
securities begin paying current interest, and therefore are issued and traded
at a discount from their face amounts or par value. PIK bonds pay interest
through the issuance to holders of additional securities. Zero coupon bonds and
PIK bonds are generally considered to be more interest-sensitive than income
bearing bonds, to be more speculative than interest-bearing bonds, and to have
certain tax consequences which could, under certain circumstances, be adverse
to the Portfolio's authorized to invest in them. For example, with zero coupon
bonds, the Portfolio accrues, and is required to distribute to shareholders,
income on such bonds. However, the Portfolio may not receive the cash
associated with this income until the bonds are sold or mature. If the
Portfolio did not have sufficient cash to make the required distribution of
accrued income, the Portfolio could be required to sell other securities in its
portfolio or to borrow to generate the cash required.
INVESTMENT LIMITATIONS
Each Portfolio's investment objectives (except for The Asset Allocation, The
Small-Cap Growth Equity and The Growth and Income Portfolios), their designation
as a diversified portfolio or, in the case of The Global Fixed Income, The
Emerging Markets and The Asset Allocation 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 (trustees in the case of The Asset Allocation
Portfolio) 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. The business and affairs of
Foundation Funds and its series, The Asset Allocation Portfolio, are managed
under the direction of Foundation Funds' Board of Trustees. 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 and Foundation Funds' officers and
directors/trustees.
Investment Advisers
Delaware Management Company ("Delaware"), a series of Delaware Management
Business Trust, 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, The High-Yield
Bond, The Asset Allocation, The Small-Cap Growth Equity and The Growth and
Income 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 Delaware
Investments since 1938. On July 31, 1998, Delaware and its affiliates within
Delaware Investments, including Delaware International, were supervising in the
aggregate more than $43 billion in assets in various institutional or
separately managed (approximately $25,873,990,000) and investment company
(approximately $17,929,500,000) accounts. Lincoln (formerly named Lincoln
National Investment Management Company) was incorporated in 1930. Lincoln's
primary activity is institutional fixed-income investment management and
consulting. Such activity includes fixed-income portfolios, private placements,
real estate debt and equity, and asset/liability management. As of July 31,
1998, Lincoln had approximately $39 billion in assets under management. Lincoln
provides investment management services to Lincoln National Corporation, its
principal subsidiaries and affiliated registered investment companies, and acts
as investment adviser to other unaffiliated clients.
Delaware International Advisers Ltd. ("Delaware International") furnishes
investment advisory services to The International Equity, The Labor Select
International Equity, The Global Fixed Income, The International Fixed Income,
The Global Equity and The Emerging Markets Portfolios and furnishes sub-advisory
services to The Diversified Core Fixed Income Portfolio related to the foreign
securities portion of that Portfolio. Several of the principals of Delaware
International were previously associated with a registered investment adviser
which managed the assets of a registered investment company. Delaware
International commenced operations as a registered investment adviser in
December 1990.
Delaware has entered into Investment Advisory Agreements with the Fund on
behalf of The 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, The High-Yield Bond, The Asset Allocation, The Small-Cap
Growth Equity and The Growth and Income
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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 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%
The Asset Allocation Portfolio 0.05%
The Small-Cap Growth Equity Portfolio 0.75%
The Growth and Income Portfolio 0.55%
* 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. This means that as long as the voluntary expense
caps are in place, the Portfolio expenses may be as much as, but will not
exceed, the expense cap amounts set forth in the footnotes to the fee tables.
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, The High-Yield Bond, The Asset
Allocation, The Small-Cap Growth Equity and The Growth and Income 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.
For the fiscal year ended October 31, 1997, the investment management fees paid
by the Portfolios (as a percentage of average daily net assets) were as
follows:
Investment
Management
Fees Paid After
Voluntary
Portfolio Waivers
----------------
The Large-Cap Value Equity Portfolio 0.54%
The Aggressive Growth Portfolio 0.33%
The Global Fixed Income Portfolio 0.45%
The Intermediate Fixed Income Portfolio 0.09%
The Labor Select International Equity Portfolio 0.57%
The High-Yield Bond Portfolio(1) 0.19%(5)
The International Fixed Income Portfolio(2) 0.24%(5)
The Emerging Markets Portfolio(3) 0.72%(5)
The Global Equity Portfolio(4) none
(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.
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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. Delaware's address is
One Commerce Square, 2005 Market Street, Philadelphia, PA 19103. Delaware
International's address is 3rd Floor, 80 Cheapside, London, England EC2V 6EE.
Lincoln's address is 200 E. Berry Street, Fort Wayne, IN 46802.
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The Real Estate Investment Trust Portfolio II - Past Performance of Previous
Fund
The investment objectives, policies and strategies of The Real Estate
Investment Trust Portfolio and The Real Estate Investment Trust Portfolio II
are identical. Mr. Zenouzi makes comparable selections of securities for each
Portfolio. The table below presents total return performance as of 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.
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Distributor
Delaware Distributors, L.P. ("DDLP"), 1818 Market Street, Philadelphia, PA
19103, serves as the exclusive Distributor of the shares of the 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.
* * *
As with other mutual funds, financial and business organizations and
individuals around the world, each Portfolio could be adversely affected if the
computer systems used by its service providers do not properly process and
calculate date-related information from and after January 1, 2000. This is
commonly known as the "Year 2000 Problem." The Fund is taking steps to obtain
satisfactory assurances that the Portfolio's major service providers are taking
steps reasonably designed to address the Year 2000 Problem with respect to the
computer systems that such service providers use. There can be no assurance
that these steps will be sufficient to avoid any adverse impact on the business
of any of the Portfolios.
Several European countries are participating in the European Economic and
Monetary Union, which will establish a common European currency for
participating countries. This currency will commonly be known as the "Euro." It
is anticipated that each such participating country will replace its existing
currency on January 1, 1999. Additional European countries may elect to
participate after that date. Each Portfolio investing in securities of
participating countries could be adversely affected if the computer systems used
by its major service providers are not properly prepared to handle the
implementation of this single currency or the adoption of the Euro by additional
countries in the future. The Fund is taking steps to obtain satisfactory
assurances that the major service providers of affected Portfolios are taking
steps reasonably designed to address these matters with respect to the computer
systems that such service providers use. There can be no assurances that these
steps will be sufficient to avoid any adverse impact on the business of any
Portfolio.
Expenses
Each Portfolio is responsible for payment of certain other fees and expenses
(including legal fees, accountants' fees, custodial fees and printing and
mailing costs) specified in the Amended and Restated Shareholders Services
Agreement and each of the respective Distribution Agreements. For the fiscal
year ended October 31, 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.
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SHAREHOLDER SERVICES
Special Reports and Other Services
The Fund provides client shareholders with annual audited financial reports and
unaudited semi-annual financial reports. In addition, the investment 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.
Exchange Privilege
Each Portfolio's shares may be exchanged for shares of the other Portfolios or
the institutional class shares of the other funds in Delaware Investments based
on the respective net asset values of the shares involved and as long as 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 Investments funds, but
certain eligibility requirements must be satisfied. Exchange requests should be
sent to Delaware Pooled Trust, Inc., One Commerce Square, 2005 Market Street,
Philadelphia, PA 19103, Attn: Client Services (exchanges involving The Asset
Allocation Portfolio will be forwarded to Foundation Funds). 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 Fund maintains the following dividend and capital gains policies for its 19
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 and The Real
Estate Investment Trust Portfolio 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 Global Equity, The Small-Cap Growth
Equity, The Asset Allocation, The Growth and Income and The Emerging Markets
Portfolios and The Real Estate Investment Trust Portfolio II 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 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 the Statement of Additional Information. Changes in the treatment of capital
gains, however, are discussed in this section.
The Treatment of Capital Gain Distributions under the Taxpayer Relief Act of
1997
The 1997 Act creates a category of long-term capital gain for individuals that
will be taxed at new lower tax rates. For investors who are in the 28% or higher
federal income tax brackets, these gains will be taxed at a maximum of 20%. For
investors who are in the 15% federal income tax bracket, these gains will be
taxed at a maximum of 10%. Capital gain distributions will qualify for these new
maximum tax rates, depending on when a Portfolio's securities were sold and how
long they were held by a Portfolio before they were sold. The holding periods
for which new rates apply were revised by the Internal Revenue Service
Restructuring and Reform Act of 1998. Investors who want more information on
holding periods and other qualifying rules relating to these new rates should
review the expanded discussion in the Statement of Additional Information, or
should contact their own tax advisers.
The Fund will advise you in its annual information reporting at calendar year
end of the amount of its capital gain distributions which will qualify for
these maximum federal tax rates.
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.
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The sale of shares of a Portfolio is a taxable event and may result in a
capital gain or loss to shareholders subject to tax. Capital gain or loss may
be realized from an ordinary redemption of shares or an exchange of shares
between two mutual funds (or two portfolios of a mutual fund). Any loss
incurred on the sale or exchange of the shares of a Portfolio, held for six
months or less, will be treated as a long-term capital loss to the extent of
capital gain dividends received with respect to such shares.
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.
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VALUATION OF SHARES
The net asset value per share of each Portfolio is determined by dividing the
total market value of the Portfolio's investments and other assets, less any
liabilities, by the total outstanding shares of the Portfolio. Net asset value
per share is determined as of the close of regular trading on the NYSE on each
day the NYSE is open for business. Securities listed on a U.S. securities
exchange for which market quotations are available are valued at the last
quoted sale price on the day the valuation is made. Price information on listed
securities is taken from the exchange where the security is primarily traded.
Securities listed on a foreign exchange are valued at the last quoted sale
price available before the time when net assets are valued. Unlisted securities
and listed securities not traded on the valuation date for which market
quotations are readily available are valued at a price that is considered to
best represent fair value within a range not in excess of the current asked
price nor less than the current bid prices. Domestic equity securities traded
over-the-counter, domestic equity securities which are not traded on the
valuation date and U.S. government securities are priced at the mean of the bid
and ask price.
Bonds and other fixed-income securities are valued according to the broadest and
most representative market, which will ordinarily be the over-the-counter
market. In addition, bonds and other fixed-income securities may be valued on
the basis of prices provided by a pricing service when such prices are believed
to reflect the fair market value of such securities. The prices provided by a
pricing service are determined without regard to bid or last sale prices but
take into account institutional size trading in similar groups of securities and
any developments related to the specific securities. Securities not priced in
this manner are valued at the most recent quoted mean price, or, when stock
exchange valuations are used, at the latest quoted sale price on the day of
valuation. If there is no such reported sale, the latest quoted mean price will
be used. Securities with remaining maturities of 60 days or less are valued at
amortized cost, if it approximates market value. In the event that amortized
cost does not approximate market value, market prices as determined above will
be used.
Exchange-traded options are valued at the last reported sales price or, if no
sales are reported, at the mean 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, The High-Yield
Bond, The Asset Allocation, The Small-Cap Growth Equity and The Growth and
Income 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.
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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, The Emerging Markets and The Asset Allocation,
The Small-Cap Growth Equity and The Growth and Income 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, The Emerging Markets, The
Small-Cap Growth Equity, The Growth and Income and The Asset Allocation
Portfolios, the investment adviser) are necessary and in the best interest of
the Fund's shareholders. In selecting broker/dealers to execute the securities
transactions for the Portfolios, consideration will be given to such factors as
the price of the security, the rate of any commission, the size and difficulty
of the order, the reliability, integrity, financial condition, general execution
and operational capabilities of competing broker/dealers, and any brokerage and
research services which they provide to the Fund. These services may be used by
the investment advisers in servicing any of their other accounts. Some
securities considered for investment by each of the Fund's Portfolios may also
be appropriate for other clients served by the investment advisers. If a
purchase or sale of securities consistent with the investment policies of a
Portfolio and one or more of these other clients served by the investment
advisers is considered at or about the same time, transactions in such
securities will be allocated among the Portfolio and clients in a manner deemed
fair and reasonable. Although there is no specified formula for allocating such
transactions, the various allocation methods used and the results of such
allocations are subject to periodic review by the Fund's directors.
Subject to best price and execution, Portfolio orders may be placed with
qualified broker/dealers who recommend the Fund's Portfolios or who act as
agents in the purchase of shares of the Portfolios for their clients.
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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.
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GENERAL INFORMATION
Description of Common Stock
The Fund was organized as a Maryland corporation on May 30, 1991. The Articles
of Incorporation permit the Fund to issue two billion shares of common stock
with $.01 par value and fifty million shares have been allocated to 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. Foundation Funds was organized as a
Delaware business trust on October 24, 1997.
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/trustees can elect 100% of the
directors/trustees 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. Neither the Fund nor Foundation Funds 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. Under Foundation Funds' Declaration of
Trust and By-Laws, it is also not required, and does not intend, to hold annual
meetings unless required to do so by the 1940 Act.
The Asset Allocation, The Small-Cap Growth Equity Portfolio and The Growth and
Income Portfolio reserves the right to operate in a "master-feeder" structure,
that is, to invest its assets in another mutual fund with the same investment
objective and substantially similar investment policies as those of the
respective Portfolio. Each Portfolio has no present intention to operate in a
master-feeder structure; however, should the Board of Directors or Trustees
approve the implementation of a master-feeder structure for a Portfolio,
shareholders will be notified prior to the implementation of the new structure.
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 Portfolios and it may elect
to do so at any time.
Lincoln National Life Insurance Company ("LNLIC") made an investment in each of
The Global Equity Portfolio, The Real Estate Investment Trust Portfolio, The
Real Estate Investment Trust Portfolio II, The Diversified Core Fixed Income
Portfolio, The Aggregate Fixed Income Portfolio and The Small/Mid-Cap Value
Equity Portfolio, and will make an investment in each of The Asset Allocation,
The Small-Cap Growth Equity Portfolio and The Growth and Income Portfolio,
which could result in LNLIC owning approximately 100% of the outstanding shares
of the respective Portfolios. Subject to certain limited exceptions, there
would be no limitation on LNLIC's ability to redeem its shares of the Portfolio
and it may elect to do so at any time.
Custodian Bank
The Chase Manhattan Bank, 4 Chase Metrotech Center, Brooklyn, NY 11245 serves
as custodian each Portfolio.
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Independent Auditors
Ernst & Young LLP, Two Commerce Square, 2001 Market Street, Suite 4000,
Philadelphia, PA 19103, serves as independent auditors for the Fund and for the
Foundations Funds.
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
Neither the Fund nor Foundation Funds is 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 0.00%
Aaa/AAA 2.73
Aa/AA 0.00
A/A 0.00
Baa/BBB 0.00
Ba/BB 5.81
B/B 89.54
Caa/CCC 0.00
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.
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Excerpts from S&P's description of its bond ratings: AAA--highest grade
obligations. They possess the ultimate degree of protection as to principal and
interest; AA--also qualify as high grade obligations, and in the majority of
instances differ from AAA issues only in a small degree; A--strong ability to
pay interest and repay principal although more susceptible to changes in
circumstances; BBB--regarded as having an adequate capacity to pay interest and
repay principal; BB, B, CCC, CC--regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the lowest degree of
speculation and CC the highest degree of speculation. While such debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions; C--reserved
for income bonds on which no interest is being paid; D--in default, and payment
of interest and/or repayment of principal is in arrears.
Excerpts from Fitch's description of its bond ratings: AAA--Bonds considered to
be investment grade and of the highest credit quality. The obligor has an
exceptionally strong ability to pay interest and repay principal, which is
unlikely to be affected by reasonably foreseeable events; AA--Bonds considered
to be investment grade and of very high credit quality. The obligor's ability
to pay interest and repay principal is very strong, although not quite as
strong as bonds rated AAA. Because bonds rated in the AAA and AA categories are
not significantly vulnerable to foreseeable future developments, short-term
debt of these issuers is generally rated F-1+; A--Bonds considered to be
investment grade and of high credit quality. The obligor's ability to pay
interest and repay principal is considered to be strong, but may be more
vulnerable to adverse changes in economic conditions and circumstances that
bonds with higher ratings; BBB--Bonds considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic conditions
and circumstances, however, are more likely to have adverse impact on these
bonds, and therefore impair timely payment. The likelihood that the ratings of
these bonds will fall below investment grade is higher than for bonds with
higher ratings; BB--Bonds are considered speculative. The obligor's ability to
pay interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified which
could assist the obligor in satisfying its debt service requirements; B--Bonds
are considered highly speculative. While bonds in this class are currently
meeting debt service requirements, the probability of continued timely payment
of principal and interest reflects the obligor's limited margin of safety and
the need for reasonable business and economic activity throughout the life of
the issue; CCC--Bonds have certain identifiable characteristics which, if not
remedied, may lead to default. The ability to meet obligations requires an
advantageous business and economic environment; CC--Bonds are minimally
protected. Default in payment of interest and/or principal seems probable over
time; C--Bonds are in imminent default in payment of interest or principal; and
DDD, DD and D--Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. "DDD"
represents the highest potential for recovery on these bonds, and "D"
represents the lowest potential for recovery.
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.
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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.
-106-
<PAGE>
AUGUST 31, 1998
REIT FUND
CLASS A SHARES, CLASS B SHARES AND CLASS C SHARES
SUPPLEMENT TO PROSPECTUS DATED DECEMBER 24, 1997
The following supplements the Prospectus.
Financial Highlights
The following unaudited financial highlights for Delaware Pooled Trust,
Inc. - The Real Estate Investment Trust Portfolio are derived from the unaudited
financial statements of the Portfolio for the period ended April 30, 1998. The
data should be read in conjunction with the financial statements, financial
highlights and related notes which are incorporated into the Statement of
Additional Information by reference to the Semi-Annual Report of Delaware Pooled
Trust, Inc. - The Real Estate Investment Portfolio for the period ended April
30, 1998. A copy of the Semi-Annual Report may be obtained from the Fund upon
request at no charge.
<PAGE>
<TABLE>
<CAPTION>
REIT FUND REIT FUND REIT FUND
A CLASS B CLASS C CLASS
Period 11/11/97(1) 11/11/97(1)
11/1/97 through through
through 4/30/98 4/30/98
4/30/98(2) Unaudited Unaudited
Unaudited --------- ---------
---------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period ..................... $ 16.260 $ 16.130 $ 16.130
Income From Investment Operations
- ---------------------------------
Net Investment Income .................................... 0.630 0.579 0.614
Net realized and unrealized gain
(loss) on investments ................................. (0.365) (0.224) (0.259)
---------- ------- -------
Total From Investment Operations ................... 0.265 0.355 0.355
---------- ------- -------
Less Dividends and Distributions
- --------------------------------
Dividends from Net Investment Income ..................... (0.685) (0.655) (0.655)
Distributions from net realized gains on
investment transactions ............................... (0.820) (0.820) (0.820)
---------- ------- -------
Total Dividends and Distributions ..................... (1.505) (1.475) (1.475)
---------- ------- -------
Net Asset Value, End of Period ........................... $ 15.020 $ 15.010 $ 15.010
========== ======= =======
- -----------------------
Total Return ............................................. 1.68%(3)(4) 2.23%(3)(5) 2.23%(3)(5)
- ------------
- -----------------------
Ratios and Supplemental Data
- ----------------------------
Net Assets, End of Period (000's omitted) ................ $ 10,214 $ 10,454 $ 1,817
Ratio of Expenses to Average Daily Net Assets ............ 1.11% 1.86% 1.86%
Ratio of Expenses to Average Daily Net Assets
Prior to Expense Limitation ........................... 1.17% 1.92% 1.92%
Ratio of Net Investment Income to Average
Daily Net Assets ...................................... 5.61% 4.86% 4.86%
Ratio of Net Investment Income to Average Daily Net Assets
Prior to Expense Limitation ........................... 5.55% 4.80% 4.80%
Portfolio Turnover ....................................... 58% 58% 58%
Average Commission Rate Paid(6) .......................... $ 0.0600 $ 0.0600 $ 0.0600
</TABLE>
- ----------
(1) Date of commencement of operations; ratios have been annualized but total
return has not been annualized.
(2) Ratios have been annualized but total return has not been annualized.
(3) Reflects expense limitations in effect for the Fund.
(4) Does not reflect any front-end or contingent deferred sales charge.
(5) Does not reflect any contingent deferred sales charge.
(6) Computed by dividing the total amount of commissions paid by the total
number of shares purchased and sold during the period for which there was a
commission charge.
<PAGE>
AUGUST 31, 1998
REIT FUND
INSTITUTIONAL CLASS SHARES
SUPPLEMENT TO PROSPECTUS DATED DECEMBER 24, 1997
The following supplements the Prospectus.
Financial Highlights
The following unaudited financial highlights for Delaware Pooled Trust,
Inc. - The Real Estate Investment Trust Portfolio are derived from the unaudited
financial statements of the Portfolio for the period November 11, 1997 (date of
commencent of operations) through April 30, 1998. The data should be read in
conjunction with the financial statements, financial highlights and related
notes which are incorporated into the Statement of Additional Information by
reference to the Semi-Annual Report of Delaware Pooled Trust, Inc. - The Real
Estate Investment Portfolio for the period ended April 30, 1998. A copy of the
Semi-Annual Report may be obtained from the Fund upon request at no charge.
<PAGE>
REIT FUND
INSTITUTIONAL
CLASS
Period
11/11/97(1)
through
4/30/98
Unaudited
-------------
Net Asset Value, Beginning of Period ..................... $ 16.130
Income From Investment Operations
- ---------------------------------
Net Investment Income .................................... 0.650
Net realized and unrealized gain
(loss) on investments ................................. (0.235)
---------
Total From Investment Operations ................... 0.415
---------
Less Dividends and Distributions
- --------------------------------
Dividends from Net Investment Income ..................... (0.695)
Distributions from net realized gains on
investment transactions ............................... (0.820)
---------
Total Dividends and Distributions ..................... (1.515)
---------
Net Asset Value, End of Period ........................... $ 15.030
=========
- --------------------
Total Return ............................................. 2.63%
- ------------
- --------------------
Ratios and Supplemental Data
- ----------------------------
Net Assets, End of Period (000's omitted) ................ $ 1,809
Ratio of Expenses to Average Daily Net Assets ............ 0.86%
Ratio of Expenses to Average Daily Net Assets
Prior to Expense Limitation ........................... 0.92%
Ratio of Net Investment Income to Average
Daily Net Assets ...................................... 5.86%
Ratio of Net Investment Income to Average Daily Net Assets
Prior to Expense Limitation ........................... 5.80%
Portfolio Turnover ....................................... 58%
Average Commission Rate Paid(2) .......................... $ 0.0600
(1) Date of commencement of operations; ratios have been annualized but total
return has not been annualized.
(2) Computed by dividing the total amount of commissions paid by the total
number of shares purchased and sold during the period for which there was a
commission charge.
<PAGE>
PART B
DELAWARE POOLED TRUST, INC.
STATEMENT OF ADDITIONAL INFORMATION
AUGUST 31, 1998
-----------------------------------
Delaware Pooled Trust, Inc. ("Pooled Trust, Inc.") is an open-end
management investment company. Pooled Trust, Inc. consists of 19 series
("Portfolios") offering a broad range of investment choices. Pooled Trust, Inc.
is designed to provide clients with attractive alternatives for meeting their
investment needs. This Statement of Additional Information (Part B of Pooled
Trust, Inc.'s registration statement) addresses information of Pooled Trust,
Inc. applicable to each of the 19 Portfolios. In addition, investors may make
investments in The Asset Allocation Portfolio. That Portfolio is a "fund of
funds" which primarily invests in several of the Portfolios of Pooled Trust,
Inc. The Asset Allocation Portfolio is a series of Delaware Group Foundation
Funds ("Foundation Funds") which is also an open-end management investment
company. Although the Asset Allocation Portfolio is technically not a Portfolio
of the Fund, all references herein to "Portfolio" or "the Fund" shall be deemed
to also include The Asset Allocation Portfolio, where appropriate.
This Statement of Additional Information is not a prospectus but should
be read in conjunction with the related Prospectus for each Portfolio. To obtain
the proper Prospectus for the Portfolios, please write to the Delaware Pooled
Trust, Inc. at One Commerce Square, 2005 Market Street, Philadelphia, PA 19103,
Attn: Client Services or call Pooled Trust, Inc. at 1-800-231-8002.
Correspondence relating to The Asset Allocation Portfolio will be forwarded to
Foundation Funds. To obtain the Prospectus for the Class A, B and C Shares or
the Institutional Class of The Real Estate Investment Trust Portfolio, write to
the Distributor at 1818 Market Street, Philadelphia, PA 19103 or call
1-800-523-1918 for the Class A, B and C Shares or 1-800-828-5052 for the
Institutional Class.
-1-
<PAGE>
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
-2-
<PAGE>
INVESTMENT POLICIES, PORTFOLIO TECHNIQUES AND RISK CONSIDERATIONS
Investment Restrictions
Pooled Trust, Inc. has adopted the following restrictions for each of
the Portfolios (except where otherwise noted) which, along with its respective
investment objective, cannot be changed without approval by the holders of a
"majority" of the respective Portfolio's outstanding shares, which is a vote by
the holders of the lesser of a) 67% or more of the voting securities present in
person or by proxy at a meeting, if the holders of more than 50% of the
outstanding voting securities are present or represented by proxy; or b) more
than 50% of the outstanding voting securities. The percentage limitations
contained in the restrictions and policies set forth herein apply at the time a
Portfolio purchases securities.
Each Portfolio (other than The 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.
-3-
<PAGE>
7. Make short sales of securities, or purchase securities on margin,
except that The Aggressive Growth Portfolio, The Real Estate Investment Trust
Portfolios and The International Fixed Income Portfolio may satisfy margin
requirements with respect to futures transactions.
8. Purchase or retain the securities of any issuer which has an
officer, director or security holder who is a director or officer of Pooled
Trust, Inc. or of either of the investment advisers if or so long as the
directors and officers of Pooled Trust, Inc. and of the investment advisers
together own beneficially more than 5% of any class of securities of such
issuer.
9. Invest in interests in oil, gas and other mineral leases or other
mineral exploration or development programs.
10. Borrow money, except as a temporary measure for extraordinary
purposes or to facilitate redemptions. Any borrowing will be done from a bank
and to the extent that such borrowing exceeds 5% of the value of its respective
net assets, asset coverage of at least 300% is required. In the event that such
asset coverage shall at any time fall below 300%, a Portfolio shall, within
three days thereafter (not including Sunday or holidays) or such longer period
as the Securities and Exchange Commission ("Commission") may prescribe by rules
and regulations, reduce the amount of its borrowings to such an extent that the
asset coverage of such borrowings shall be at least 300%. No investment
securities will be purchased while a Portfolio has an outstanding borrowing. A
Portfolio will not pledge more than 10% of its respective net assets. A
Portfolio will not issue senior securities as defined in the Investment Company
Act of 1940 (the "1940 Act"), except for notes to banks.
In addition to the restrictions set forth above, in connection with the
qualification of a Portfolio's shares for sale in certain states, a Portfolio
may not invest in warrants if such warrants, valued at the lower of cost or
market, would exceed 5% of the value of a Portfolio's net assets. Included
within such amount, but not to exceed 2% of a Portfolio's net assets may be
warrants which are not listed on the New York Stock Exchange or American Stock
Exchange. Warrants acquired by a Portfolio in units or attached to securities
may be deemed to be without value.
Additional Fundamental Investment Restrictions
The following additional investment restrictions apply to each of the
Portfolios, except The International Mid-Cap Sub Portfolio, The Small/Mid-Cap
Value Equity Portfolio, The Labor Select International Equity Portfolio, The
Real Estate Investment Trust Portfolios, The International Fixed Income
Portfolio, The High-Yield Bond Portfolio, The Emerging Markets Portfolio, The
Aggregate Fixed Income Portfolio and The Diversified Core Fixed Income
Portfolio, or as otherwise noted. They cannot be changed without approval by the
holders of a "majority" of the respective Portfolio's outstanding shares, as
described above.
Each Portfolio (other than The International Mid-Cap Sub Portfolio, The
Small/Mid-Cap Value Equity Portfolio, The Labor Select International Equity
Portfolio, The Real Estate Investment Trust Portfolios, The International Fixed
Income Portfolio, The High-Yield Bond Portfolio, The Emerging Markets Portfolio,
The Aggregate Fixed Income Portfolio and The Diversified Core Fixed Income
Portfolio shall not:
1. As to 75% of its respective total assets, invest more than 5% of its
respective total assets in the securities of any one issuer (other than
obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities). This restriction shall also apply to The Labor Select
International Equity Portfolio and The
-4-
<PAGE>
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).
-5-
<PAGE>
2. Invest in securities of other investment companies, except by
purchase in the open market involving only customary brokers' commissions or in
connection with a merger, consolidation or other acquisition or as may otherwise
be permitted by the 1940 Act.
3. 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.
-6-
<PAGE>
2. Invest 25% or more of its total assets in any one industry provided
that there is no limitation with respect to investments in obligations issued or
guaranteed as to principal or interest by the U.S.
Government, its agencies or instrumentalities.
3. Make loans other than by the purchase of all or a portion of a
publicly or privately distributed issue of bonds, debentures or other debt
securities of the types commonly offered publicly or privately and purchased by
financial institutions (including repurchase agreements), whether or not the
purchase was made upon the original issuance of the securities, and except that
the Portfolio may loan its assets to qualified broker/dealers or institutional
investors.
4. Engage in underwriting of securities of other issuers, except that
portfolio securities, including securities purchased in private placements, may
be acquired under circumstances where, if sold, the Portfolio might be deemed to
be an underwriter under the Securities Act of 1933. No limit is placed on the
proportion of the Portfolio's assets which may be invested in such securities.
5. Borrow money or issue senior securities, except to the extent
permitted by the 1940 Act or any rule or order thereunder or interpretation
thereof. Subject to the foregoing, the Portfolio may engage in short sales,
purchase securities on margin, and write put and call options.
6. Purchase or sell physical commodities or physical commodity
contracts, including physical commodity options or futures contracts in a
contract market or other futures market.
7. Purchase or sell real estate; provided that the Portfolio may invest
in securities secured by real estate or interests therein or issued by companies
which invest in real estate or interests therein.
The Small-Cap Growth Equity Portfolio, The Growth and Income Portfolio and The
Asset Allocation Portfolio
Pooled Trust, Inc. has adopted the following restrictions for The
Small-Cap Growth Equity Portfolio and The Growth and Income Portfolio and
Foundation Funds has adopted the following restrictions for The Asset Allocation
Portfolio. These restrictions cannot be changed without approval by a "majority"
of the Portfolio's outstanding shares, as described above. Except with respect
to borrowing, the percentage limitations contained in these restrictions and
policies apply at the time a Portfolio purchases securities.
Each of The Small-Cap Growth Equity Portfolio, The Growth and Income Portfolio
and The Asset Allocation Portfolio shall not:
1. Make investments that will result in the concentration (as that term
may be defined in the 1940 Act, any rule or order thereunder, or U.S. Securities
and Exchange Commission ("SEC") staff interpretation thereof) of its investments
in the securities of issuers primarily engaged in the same industry, provided
that this restriction does not prevent a Portfolio from investing in obligations
issued or guaranteed by the U.S.
government, its agencies or instrumentalities, or in certificates of deposit.
2. Borrow money or issue senior securities, except as the 1940 Act, any
rule or order thereunder, or SEC staff interpretation thereof, may permit.
-7-
<PAGE>
3. Underwrite the securities of other issuers, except that a Portfolio
may engage in transactions involving the acquisition, disposition or resale of
its portfolio securities, under circumstances where it may be considered to be
an underwriter under the Securities Act of 1933.
4. Purchase or sell real estate, unless acquired as a result of
ownership of securities or other instruments and provided that this restriction
does not prevent a Portfolio from investing in issuers which invest, deal or
otherwise engage in transactions in real estate or interests therein, or
investing in securities that are secured by real estate or interests therein.
5. Purchase or sell physical commodities, unless acquired as a result
of ownership of securities or other instruments and provided that this
restriction does not prevent a Portfolio from engaging in transactions involving
futures contracts and options thereon or investing in securities that are
secured by physical commodities.
6. Make loans, provided that this restriction does not prevent a
Portfolio from purchasing debt obligations, entering into repurchase agreements,
loaning its assets to broker/dealers or institutional investors and investing in
loans, including assignments and participation interests.
In addition to the fundamental policies and investment restrictions
described above, and the various general investment policies described in the
Prospectus, The Small-Cap Growth Equity Portfolio, The Growth and Income
Portfolio and The Asset Allocation Portfolio will be subject to the following
investment restrictions (except as otherwise noted), which are considered
non-fundamental and may be changed by the Board of Directors or Trustees, as
applicable, without shareholder approval.
1. The Small-Cap Growth Equity Portfolio, The Growth and Income
Portfolio and The Asset Allocation Portfolio are permitted to invest in other
investment companies, including open-end, closed-end or unregistered investment
companies, either within the percentage limits set forth in the 1940 Act , any
rule or order thereunder or SEC staff interpretation thereof, or without regard
to percentage limits in connection with a merger, reorganization, consolidation
or other similar transaction. However, neither The Small-Cap Growth Equity
Portfolio or The Growth and Income Portfolio may operate as a "fund of funds"
which invests primarily in the shares of other investment companies as permitted
by Section 12(d)(1)(F) or (G) of the 1940 Act, if its own shares are utilized as
investments by such a "fund of funds."
2. A Portfolio may not invest more than 15% of its net assets in
securities which it can not sell or dispose of in the ordinary course of
business within seven days at approximately the value at which the Fund has
valued the investment.
Foreign Investment Information (The International Mid-Cap Sub Portfolio, The
International Equity Portfolio, The Labor Select International Equity Portfolio,
The Real Estate Investment Trust Portfolios, The Global Fixed Income Portfolio,
The International Fixed Income Portfolio, The High-Yield Bond Portfolio, The
Diversified Core Fixed Income Portfolio, The Emerging Markets Portfolio, The
Global Equity Portfolio, The Asset Allocation Portfolio, The Small-Cap Growth
Equity Portfolio and The Growth and Income Portfolio)
Investors in The International Mid-Cap Sub Portfolio, The International
Equity Portfolio, The Labor Select International Equity Portfolio, The Global
Fixed Income Portfolio, The International Fixed Income Portfolio, The Emerging
Markets Portfolio and The Global Equity Portfolio (as well as in The Real Estate
Investment Trust Portfolios, The Diversified Core Fixed Income Portfolio, The
High-Yield Bond Portfolio, The
-8-
<PAGE>
Asset Allocation Portfolio, The Small-Cap Growth Equity Portfolio and The Growth
and Income Portfolio, each of which possesses a limited ability to invest in
foreign securities) should recognize that investing in securities issued by
foreign corporations and foreign governments involves certain considerations,
including those set forth in the related Prospectus, which are not typically
associated with investments in United States issuers. Since the securities of
foreign issuers are frequently denominated in foreign currencies, and since each
Portfolio may temporarily hold uninvested reserves in bank deposits in foreign
currencies, these Portfolios will be affected favorably or unfavorably by
changes in currency rates and in exchange control regulations, and may incur
costs in connection with conversions between various currencies. The investment
policies of each Portfolio, except The High-Yield Bond Portfolio, permit each to
enter into forward foreign currency exchange contracts and permit The
International Fixed Income Portfolio, The Diversified Core Fixed Income
Portfolio, The Emerging Markets Portfolio, The Global Equity Portfolio, The
Asset Allocation Portfolio, The Small-Cap Growth Equity Portfolio and The Growth
and Income Portfolio to engage in certain options and futures activities, in
order to hedge holdings and commitments against changes in the level of future
currency rates. See Foreign Currency Transactions (The International Equity
Portfolio, The International Mid-Cap Sub Portfolio, The Labor Select
International Equity Portfolio, The Real Estate Investment Trust Portfolios, The
Global Fixed Income Portfolio, The International Fixed Income Portfolio, The
Emerging Markets Portfolio, The Global Equity Portfolio, The Diversified Core
Fixed Income Portfolio, The Asset Allocation Portfolio, The Small-Cap Growth
Equity Portfolio and The Growth and Income Portfolio), below.
There has been in the past, and there may be again in the future, an
interest equalization tax levied by the United States in connection with the
purchase of foreign securities such as those purchased by the Portfolios.
Payment of such interest equalization tax, if imposed, would reduce a
Portfolio's rate of return on its investment. Dividends paid by foreign issuers
may be subject to withholding and other foreign taxes which may decrease the net
return on such investments as compared to dividends paid to a Portfolio by
United States issuers. Special rules govern the federal income tax treatment of
certain transactions denominated in terms of a currency other than the U.S.
dollar or determined by reference to the value of one or more currencies other
than the U.S. dollar. The types of transactions covered by the special rules
include, as relevant, the following: (i) the acquisition of, or becoming the
obligor under, a bond or other debt instrument (including, to the extent
provided in Treasury Regulations, preferred stock); (ii) the accruing of certain
trade receivables and payables; and (iii) the entering into or acquisition of
any forward contract and similar financial instrument if such instrument is not
"marked to market." The disposition of a currency other than the U.S. dollar by
a U.S. taxpayer is also treated as a transaction subject to the special currency
rules. With respect to transactions covered by the special rules, foreign
currency gain or loss is calculated separately from any gain or loss on the
underlying transaction and is normally taxable as ordinary gain or loss. A
taxpayer may elect to treat as capital gain or loss foreign currency gain or
loss arising from certain identified forward contracts that are capital assets
in the hands of the taxpayer and which are not part of a straddle. The Treasury
Department has authority to issue regulations under which certain transactions
subject to the special currency rules that are part of a "section 988 hedging
transaction" (as defined in the Internal Revenue Code of 1986, as amended (the
"Code"), and the Treasury Regulations) will be integrated and treated as a
single transaction or otherwise treated consistently for purposes of the Code.
Any gain or loss attributable to the foreign currency component of a transaction
engaged in by a Portfolio which is not subject to the special currency rules
(such as foreign equity investments other than certain preferred stocks) will be
treated as capital gain or loss and will not be segregated from the gain or loss
on the underlying transaction. It is anticipated that some of the non-U.S.
dollar denominated investments and foreign currency contracts the Portfolios may
make or enter into will be subject to the special currency rules described
above.
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
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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, The Diversified Core Fixed Income Portfolios, The Asset
Allocation Portfolio, The Small-Cap Growth Equity Portfolio and The Growth and
Income Portfolio as to 10%, 10%, 10%, 5%, 10%, 5% and 20% of their assets,
respectively) Portfolios may invest. For example, the assets and profits
appearing on the financial statements of a developing or emerging country issuer
may not reflect its financial position or results of operations in the way they
would be reflected had the financial statements been prepared in accordance with
United States generally accepted accounting principles. Also, for an issuer that
keeps accounting records in a local currency, inflation accounting rules may
require both tax and accounting purposes, that certain assets and liabilities be
restated on the issuer's balance sheet in order to express items in terms of
currency or constant purchasing power. Inflation accounting may indirectly
generate losses on profits.
With reference to the Portfolios' investments in foreign government
securities, there is the risk that a foreign governmental issuer may default on
its obligations. If such a default occurs, a Portfolio may have limited
effective legal recourse against the issuer and/or guarantor. Remedies must, in
some cases, be pursued in the courts of the defaulting party itself, and the
ability of the holder of foreign government and government-related debt
securities to obtain recourse may be subject to the political climate in the
relevant country. In addition, no assurance can be given that the holders of
commercial bank debt will not contest payments to the holders of other foreign
government and government-related debt obligations in the event of default under
their commercial bank loan agreements.
The issuers of foreign government and government-related debt
securities have in the past experienced substantial difficulties in servicing
their external debt obligations, which have led to defaults on certain
obligations and the restructuring of certain indebtedness. Restructuring
arrangements have included, among other things, reducing and rescheduling
interest and principal payments by negotiating new or amended credit agreements
or converting outstanding principal and unpaid interest to Brady Bonds, and
obtaining new credit to finance interest payments. Holders of certain foreign
government and government-related high-yield securities may be requested to
participate in the restructuring of such obligations and to extend further loans
to their issuers. There can be no assurance that Brady Bonds and other foreign
government and government-related securities will not be subject to similar
defaults or restructuring arrangements which may adversely affect the value of
such investments. Furthermore, certain participants in the secondary market for
such debt may be directly involved in negotiating the terms of these
arrangements and may therefore have access to information not available to other
market participants.
Investments and opportunities for investments by foreign investors in
emerging market countries are subject to a variety of national policies and
restrictions. These restrictions may take the form of prior governmental
approval, limits on the amount or type of securities held by foreigners, limits
on the types of companies in which foreigners may invest and prohibitions on
foreign investments in issuers or industries deemed sensitive to national
interests. Additional restrictions may be imposed at any time by these or other
countries in which the Portfolios' invest. Although these restrictions may in
the future make it undesirable to invest in emerging countries, a Portfolio's
adviser or sub-adviser, as relevant, does not believe that any current
registration restrictions would affect its decision to invest in such countries.
As disclosed in the Prospectus for The International Mid-Cap Sub
Portfolio, the foreign 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
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supported by the national governments of one or more countries to promote
development or reconstruction. They include: The Work Bank, European Investment
Bank, Asian Development Bank, European Economic Community and the Inter-American
Development Bank. Such fixed-income securities will be typically rated, at the
time of purchase, AA or higher by Standard & Poor's Ratings Group or Aa or
higher by Moody's Investor Service, Inc. or of comparable quality as determined
by the Portfolio's investment adviser.
Foreign Currency Transactions (The International Equity Portfolio, The
International Mid-Cap Sub Portfolio, The Labor Select International Equity
Portfolio, The Real Estate Investment Trust Portfolios, The Global Fixed Income
Portfolio, The International Fixed Income Portfolio, The Emerging Markets
Portfolio, The Global Equity Portfolio, The Diversified Core Fixed Income
Portfolio, The Asset Allocation Portfolio, The Small-Cap Growth Equity Portfolio
and The Growth and Income Portfolio)
The International Equity Portfolio, The International Mid-Cap Sub
Portfolio, The Labor Select International Equity Portfolio, The Global Fixed
Income Portfolio, The International Fixed Income Portfolio, The Emerging Markets
Portfolio and The Global Equity Portfolio (as well as The Real Estate Investment
Trust Portfolios, The Diversified Core Fixed Income Portfolio, The Asset
Allocation Portfolio, The Small-Cap Growth Equity Portfolio and The Growth and
Income Portfolio, consistent with their limited ability to invest in foreign
securities) may purchase or sell currencies and/or engage in forward foreign
currency transactions in order to expedite settlement of portfolio transactions
and to minimize currency value fluctuations.
Forward foreign currency contracts are traded in the interbank market
conducted directly between currency traders (usually large commercial banks) and
their customers. A forward contract generally has no deposit requirement, and no
commissions are charged at any stage for trades. A Portfolio will account for
forward contracts by marking to market each day at daily exchange rates.
When a Portfolio enters into a forward contract to sell, for a fixed
amount of U.S. dollars or other appropriate currency, the amount of foreign
currency approximating the value of some or all of its assets denominated in
such foreign currency, its Custodian Bank will place or will cause to be placed
cash or liquid equity or debt securities in a separate account of that Portfolio
in an amount not less than the value of that Portfolio's total assets committed
to the consummation of such forward contracts. If the additional cash or
securities placed in the separate account declines, additional cash or
securities will be placed in the account on a daily basis so that the value of
the account will equal the amount of that Portfolio's commitments with respect
to such contracts.
As noted in the related Prospectus, The International Fixed Income
Portfolio, The Emerging Markets Portfolio, The Global Equity Portfolio, The
Diversified Core Fixed Income Portfolio and The Asset Allocation Portfolio may
also enter into transactions involving foreign currency options, futures
contracts and options on futures contracts, in order to minimize the currency
risk in its investment portfolio.
Foreign currency options are traded in a manner substantially similar
to options on securities. In particular, an option on foreign currency provides
the holder with the right to purchase, in the case of a call option, or to sell,
in the case of a put option, a stated quantity of a particular currency for a
fixed price up to a stated expiration date. The writer of the option undertakes
the obligation to deliver, in the case of a call option, or to purchase, in the
case of a put option, the quantity of the currency called for in the option,
upon exercise of the option by the holder.
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
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entire amount of this premium, as well as related transaction costs, but not
more than this amount. The writer of the option, in contrast, generally is
required to make initial and variation margin payments, similar to margin
deposits required in the trading of futures contacts and the writing of other
types of options. The writer is therefore subject to risk of loss beyond the
amount originally invested and above the value of the option at the time it is
entered into.
Certain options on foreign currencies, like forward contracts, are
traded over-the-counter through financial institutions acting as market-makers
in such options and the underlying currencies. Such transactions therefore
involve risks not generally associated with exchange-traded instruments. Options
on foreign currencies may also be traded on national securities exchanges
regulated by the Commission or commodities exchanges regulated by the Commodity
Futures Trading Commission.
A foreign currency futures contract is a bilateral agreement providing
for the purchase and sale of a specified type and amount of a foreign currency.
By its terms, a futures contract provides for a specified settlement date on
which, in the case of the majority of foreign currency futures contracts, the
currency underlying the contract is delivered by the seller and paid for by the
purchaser, or on which, in the case of certain futures contracts, the difference
between the price at which the contract was entered into and the contract's
closing value is settled between the purchaser and seller in cash. Futures
contracts differ from options in that they are bilateral agreements, with both
the purchaser and the seller equally obligated to complete the transactions. In
addition, futures contracts call for settlement only on the expiration date, and
cannot be "exercised" at any other time during their term.
The purchase or sale of a futures contract also differs from the
purchase or sale of a security or the purchase of an option in that no purchase
price is paid or received. Instead, an amount of cash or cash equivalents, which
varies but may be as low as 5% or less of the value of the contract, must be
deposited with the broker as "initial margin" as a good faith deposit.
Subsequent payments to and from the broker referred to as "variation margin" are
made on a daily basis as the value of the currency underlying the futures
contract fluctuates, making positions in the futures contract more or less
valuable, a process known as "marking to the market."
A futures contract may be purchased or sold only on an exchange, known
as a "contract market," designated by the Commodity Futures Trading Commission
for the trading of such contract, and only through a registered futures
commission merchant which is a member of such contract market. A commission must
be paid on each completed purchase and sale transaction. The contract market
clearinghouse guarantees the performance of each party to a futures contract by
in effect taking the opposite side of such contract. At any time prior to the
expiration of a futures contract, a trader may elect to close out its position
by taking an opposite position on the contract market on which the position was
entered into, subject to the availability of a secondary market, which will
operate to terminate the initial position. At that time, a final determination
of variation margin is made and any loss experienced by the trader is required
to be paid to the contract market clearing house while any profit due to the
trader must be delivered to it.
A call option on a futures contract provides the holder with the right
to purchase, or enter into a "long" position in, the underlying futures
contract. A put option on a futures contract provides the holder with the right
to sell, or enter into a "short" position, in the underlying futures contract.
In both cases, the option provides for a fixed exercise price up to a stated
expiration date. Upon exercise of the option by the holder, the contract 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
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accumulated balance in the writer's margin account which represents the amount
by which the market price of the futures contract at exercise exceeds, in the
case of a call, or is less than, in the case of a put, the exercise price of the
option on the futures contract. In the event that an option written by the
Portfolio is exercised, the Portfolio will be subject to all the risks
associated with the trading of futures contracts, such as payment of variation
margin deposits. In addition, the writer of an option on a futures contract,
unlike the holder, is subject to initial and variation margin requirements on
the option position.
A position in an option on a futures contract may be terminated by the
purchaser or seller prior to expiration by effecting a closing purchase or sale
transaction, subject to the availability of a liquid secondary market, which is
the purchase or sale of an option of the same series (i.e., the same exercise
price and expiration date) as the option previously purchased or sold. The
difference between the premiums paid and received represents the trader's profit
or loss on the transaction.
An option becomes worthless to the holder when it expires. Upon
exercise of an option, the exchange or contract market clearinghouse assigns
exercise notices on a random basis to those of its members which have written
options of the same series and with the same expiration date. A brokerage firm
receiving such notices then assigns them on a random basis to those of its
customers which have written options of the same series and expiration date. A
writer therefore has no control over whether an option will be exercised against
it, nor over the timing of such exercise.
Brady Bonds (The Global Fixed Income Portfolio, The International Fixed Income
Portfolio, The Diversified Core Fixed Income Portfolio, The Emerging Markets
Portfolio and The Asset Allocation Portfolio)
The Global Fixed Income Portfolio, The International Fixed Income
Portfolio, The Diversified Core Fixed Income Portfolio, The Emerging Markets
Portfolio and The Asset Allocation Portfolio may invest, within the limits
specified in the related Prospectus, in Brady Bonds and other sovereign debt
securities of countries that have restructured or are in the process of
restructuring sovereign debt pursuant to the Brady Plan. Brady Bonds are debt
securities issued under the framework of the Brady Plan, an initiative announced
by then U.S. Treasury Secretary Nicholas F. Brady in 1989, as a mechanism for
debtor nations to restructure their outstanding external indebtedness
(generally, commercial bank debt). In restructuring its external debt under the
Brady Plan framework, a debtor nation negotiates with its existing bank lenders
as well as multilateral institutions such as the World Bank and the
International Monetary Fund (the "IMF"). The Brady Plan framework, as it has
developed, contemplates the exchange of commercial bank debt for newly issued
bonds (Brady Bonds). The World Bank and/or the IMF support the restructuring by
providing funds pursuant to loan agreements or other arrangements which enable
the debtor nation to collateralize the new Brady Bonds or to repurchase
outstanding bank debt at a discount. Under these arrangements with the World
Bank and/or the IMF, debtor nations have been required to agree to the
implementation of certain domestic monetary and fiscal reforms. Such reforms
have included the liberalization of trade and foreign investment, the
privatization of state-owned enterprises and the setting of targets for public
spending and borrowing. These policies and programs seek to promote the debtor
country's ability to service its external obligations and promote its economic
growth and development. Investors should recognize that the Brady Plan only sets
forth general guiding principles for economic reform and debt reduction,
emphasizing that solutions must be negotiated on a case-by-case basis between
debtor nations and their creditors. The investment adviser to the Portfolios
believes that economic reforms undertaken by countries in connection with the
issuance of Brady Bonds make the debt of countries which have issued or have
announced plans to issue Brady Bonds an attractive opportunity for investment.
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To date, Mexico, Costa Rica, Venezuela, Uruguay and Nigeria have issued
approximately $50 billion of Brady Bonds, and Argentina, Brazil and the
Philippines have announced plans to issue approximately $90 billion, based on
current estimates, of Brady Bonds. Investors should recognize that Brady Bonds
have been issued only recently, and accordingly do not have a long payment
history. Agreements implemented under the Brady Plan to date are designed to
achieve debt and debt-service reduction through specific options negotiated by a
debtor nation with its creditors. As a result, the financial packages offered by
each country differ. The types of options have included the exchange of
outstanding commercial bank debt for bonds issued at 100% of face value of such
debt, bonds issued at a discount of face value of such debt, bonds bearing an
interest rate which increases over time and bonds issued in exchange for the
advancement of new money by existing lenders. Certain Brady Bonds have been
collateralized as to principal due at maturity by U.S. Treasury zero coupon
bonds with a maturity equal to the final maturity of such Brady Bonds, although
the collateral is not available to investors until the final maturity of the
Brady Bonds. Collateral purchases are financed by the IMF, the World Bank and
the debtor nations' reserves. In addition, the first two or three interest
payments on certain types of Brady Bonds may be collateralized by cash or
securities agreed upon by creditors.
Options on Securities, Futures Contracts and Options on Futures Contracts (The
Aggressive Growth Portfolio, The Real Estate Investment Trust Portfolios, The
Diversified Core Fixed Income Portfolio, The Emerging Markets Portfolio, The
Global Equity Portfolio, The Asset Allocation Portfolio, The Small-Cap Growth
Equity Portfolio and The Growth and Income Portfolio)
In order to remain fully invested, and to reduce transaction costs, The
Aggressive Growth Portfolio, The Real Estate Investment Trust Portfolios, The
Diversified Core Fixed Income Portfolio, The Emerging Markets Portfolio, The
Global Equity Portfolio, The Asset Allocation Portfolio, The Small-Cap Growth
Equity Portfolio and The Growth and Income Portfolio may, to the limited extent
identified in the related Prospectus, use futures contracts, options on futures
contracts and options on securities and may enter into closing transactions with
respect to such activities. The Portfolios may only enter into these
transactions for hedging purposes, if it is consistent with the Portfolios'
investment objectives and policies. The Portfolios will not engage in such
transactions to the extent that obligations resulting from these activities in
the aggregate exceed 25% of the Portfolios' assets.
Options
The Aggressive Growth Portfolio, The Real Estate Investment Trust
Portfolios, The Emerging Markets Portfolio, The Global Equity Portfolio, The
Asset Allocation Portfolio, The Small-Cap Growth Equity Portfolio and The Growth
and Income Portfolio may purchase call options, write call options on a covered
basis, purchase put options and write put options. Writing put options will
require the Portfolio to segregate assets sufficient to cover the put while the
option is outstanding.
The Portfolios may invest in options that are either exchange-listed or
traded over-the-counter. Certain over-the-counter options may be illiquid. Thus,
it may not be possible to close options positions and this may have an adverse
impact on the Portfolios' ability to effectively hedge their securities. The
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, The
Global Equity Portfolio, The Asset Allocation Portfolio, The Small-Cap Growth
Equity Portfolio and The Growth and Income Portfolio will not invest more than
15% of their respective assets in illiquid securities.
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
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right to buy and the writer (in this case a Portfolio) the obligation to sell
the underlying security at the exercise price during the option period. If the
security rises in value, however, the Portfolio may not fully participate in the
market appreciation.
During the option period, a covered call option writer may be assigned
an exercise notice by the broker/dealer through whom such call option was sold
requiring the writer to deliver the underlying security against payment of the
exercise price. This obligation is terminated upon the expiration of the option
period or at such earlier time in which the writer effects a closing purchase
transaction. A closing purchase transaction cannot be effected with respect to
an option once the option writer has received an exercise notice for such
option.
With respect to options on actual portfolio securities owned by the
Portfolios, a Portfolio may enter into closing purchase transactions. A closing
purchase transaction is one in which the Portfolio, when obligated as a writer
of an option, terminates its obligation by purchasing an option of the same
series as the option previously written.
Consistent with the limited purposes for which the Portfolios intend to
engage in the writing of covered calls, closing purchase transactions will
ordinarily be effected to realize a profit on an outstanding call option, to
prevent an underlying security from being called, to permit the sale of the
underlying security or to enable the Portfolios to write another call option on
the underlying security with either a different exercise price or expiration
date or both.
The Portfolios may realize a net gain or loss from a closing purchase
transaction depending upon whether the net amount of the original premium
received on the call option is more or less than the cost of effecting the
closing purchase transaction. Any loss incurred in a closing purchase
transaction may be partially or entirely offset by the premium received from a
sale of a different call option on the same underlying security. Such a loss may
also be wholly or partially offset by unrealized appreciation in the market
value of the underlying security. Conversely, a gain resulting from a closing
purchase transaction could be offset in whole or in part by a decline in the
market value of the underlying security.
If a call option expires unexercised, a Portfolio will realize a
short-term capital gain in the amount of the premium on the option, less the
commission paid. Such a gain, however, may be offset by depreciation in the
market value of the underlying security during the option period. If a call
option is exercised, a Portfolio will realize a gain or loss from the sale of
the underlying security equal to the difference between the cost of the
underlying security, and the proceeds of the sale of the security plus the
amount of the premium on the option, less the commission paid.
The market value of a call option generally reflects the market price
of an underlying security. Other principal factors affecting market value
include supply and demand, interest rates, the price volatility of the
underlying security and the time remaining until the expiration date.
The Portfolios will write call options only on a covered basis, which
means that the Portfolios will own the underlying security subject to a call
option at all times during the option period. Unless a closing purchase
transaction is effected, the Portfolios would be required to continue to hold a
security which they might 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
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option may be below, equal to, or above the current market value of the
underlying security at the time the option is written.
B. Purchasing Call Options--The Portfolios may purchase call options to
the extent that premiums paid by the Portfolios do not aggregate more than 2% of
their total assets. When a Portfolio purchases a call option, in return for a
premium paid by the Portfolio to the writer of the option, the Portfolio obtains
the right to buy the security underlying the option at a specified exercise
price at any time during the term of the option. The writer of the call option,
who receives the premium upon writing the option, has the obligation, upon
exercise of the option, to deliver the underlying security against payment of
the exercise price. The advantage of purchasing call options is that the
Portfolios may alter portfolio characteristics and modify portfolio maturities
without incurring the cost associated with portfolio transactions.
The Portfolios may, following the purchase of a call option, liquidate
their positions by effecting a closing sale transaction. This is accomplished by
selling an option of the same series as the option previously purchased. The
Portfolios will realize a profit from a closing sale transaction if the price
received on the transaction is more than the premium paid to purchase the
original call option; the Portfolios will realize a loss from a closing sale
transaction if the price received on the transaction is less than the premium
paid to purchase the original call option.
Although the Portfolios will generally purchase only those call options
for which there appears to be an active secondary market, there is no assurance
that a liquid secondary market on an exchange will exist for any particular
option, or at any particular time, and for some options no secondary market on
an exchange may exist. In such event, it may not be possible to effect closing
transactions in particular options, with the result that the Portfolios would
have to exercise their options in order to realize any profit and would incur
brokerage commissions upon the exercise of such options and upon the subsequent
disposition of the underlying securities acquired through the exercise of such
options. Further, unless the price of the underlying security changes
sufficiently, a call option purchased by a Portfolio may expire without any
value to the Portfolio.
C. Purchasing Put Options--The Portfolios may purchase put options to
the extent premiums paid by the Portfolios do not aggregate more than 2% of
their total assets. The 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
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it is the holder of an outstanding option, liquidates its position by selling an
option of the same series as the option previously purchased.
D. Writing Put Options--A put option written by a Portfolio obligates
it to buy the security underlying the option at the exercise price during the
option period and the purchaser of the option has the right to sell the security
to the Portfolio. During the option period, the Portfolio, as writer of the put
option, may be assigned an exercise notice by the broker/dealer through whom the
option was sold requiring the Portfolio to make payment of the exercise price
against delivery of the underlying security. The obligation terminates upon
expiration of the put option or at such earlier time at which the writer effects
a closing purchase transaction. A Portfolio may write put options only if the
Portfolio will maintain in a segregated account with its Custodian Bank, cash,
U.S. government securities or other assets in an amount not less than the
exercise price of the option at all times during the option period. The amount
of cash, U.S. government securities or other assets held in the segregated
account will be adjusted on a daily basis to reflect changes in the market value
of the securities covered by the put option written by the Portfolios.
Consistent with the limited purposes for which the Portfolios intend to engage
in the writing of put options, such put options will generally be written in
circumstances where the investment adviser wishes to purchase the underlying
security for the Portfolios at a price lower than the current market price of
the security. In such event, a Portfolio would write a put option at an exercise
price which, reduced by the premium received on the option, reflects the lower
price it is willing to pay.
Following the writing of a put option, the Portfolios may wish to
terminate the obligation to buy the security underlying the option by effecting
a closing purchase transaction. This is accomplished by buying an option of the
same series as the option previously written. The Portfolios may not, however,
effect such a closing transaction after they have been notified of the exercise
of the option.
Options on Stock Indices
The Emerging Markets Portfolio, The Global Equity Portfolio, The
Diversified Core Fixed Income Portfolio, The Asset Allocation Portfolio, The
Small-Cap Growth Equity Portfolio and The Growth and Income Portfolio may
acquire options on stock indices. A stock index assigns relative values to the
common stocks included in the index with the index fluctuating with changes in
the market values of the underlying common stock.
Options on stock indices are similar to options on stocks but have
different delivery requirements. Stock options provide the right to take or make
delivery of the underlying stock at a specified price. A stock index option
gives the holder the right to receive a cash "exercise settlement amount" equal
to (i) the amount by which the fixed exercise price of the option exceeds (in
the case of a put) or is less than (in the case of a call) the closing value of
the underlying index on the date of exercise, multiplied by (ii) a fixed "index
multiplier." Receipt of this cash amount will depend upon the closing level of
the stock index upon which the option is based being greater than (in the case
of a call) or less than (in the case of a put) the exercise price of the option.
The amount of cash received will be equal to such difference between the closing
price of the index and exercise price of the option expressed in dollars times a
specified multiple. The writer of the option is obligated, in return for the
premium received to make delivery of this amount. Gain or loss to a Portfolio on
transactions in stock index options will depend on price movements in the stock
market generally (or in a particular industry or segment of the market) rather
than price movements of individual securities. As with stock options, a
Portfolio may offset its position in stock index options prior to expiration by
entering into a closing transaction on an Exchange or it may let the option
expire unexercised.
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A stock index fluctuates with changes in the market values of the stock
so included. Some stock index options are based on a broad market index such as
the Standard & Poor's 500 or the New York Stock Exchange Composite Index, or a
narrower market index such as the Standard & Poor's 100. Indices are also based
on an industry or market segment such as the AMEX Oil and Gas Index or the
Computer and Business Equipment Index. Options on stock indices are currently
traded on domestic exchanges such as: The Chicago Board Options Exchange, the
New York Stock Exchange and American Stock Exchange as well as on foreign
exchanges.
A Portfolio's ability to hedge effectively all or a portion of its
securities through transactions in options on stock indices depends on the
degree to which price movements in the Portfolio's securities. Since a Portfolio
will not duplicate the components of an index, the correlation will not be
exact. Consequently, a Portfolio bears the risk that the prices of the
securities being hedged will not move in the same amount as the hedging
instrument. It is also possible that there may be a negative correlation between
the index or other securities which would result in a loss on both such
securities and the hedging instrument.
Positions in stock index options may be closed out only on an Exchange
which provides a secondary market. There can be no assurance that a liquid
secondary market will exist for any particular stock index option. Thus, it may
not be possible to close such an option. The inability to close options
positions could have an adverse impact on a Portfolio's ability effectively to
hedge its securities. A Portfolio will enter into an option position only if
there appears to be a liquid secondary market for such options.
A Portfolio will not engage in transactions in options on stock indices
for speculative purposes but only to protect appreciation attained and to take
advantage of the liquidity available in the option markets.
Futures and Options on Futures
Consistent with the limited circumstances under which The Aggressive
Growth Portfolio, The Real Estate Investment Trust Portfolios, The Diversified
Core Fixed Income Portfolio, The Emerging Markets Portfolio, The Global Equity
Portfolio, The Asset Allocation Portfolio, The Small-Cap Growth Equity Portfolio
and The Growth and Income Portfolio will use futures, the Portfolios may enter
into contracts for the purchase or sale for future delivery of securities. While
futures contracts provide for the delivery of securities, deliveries usually do
not occur. Contracts are generally terminated by entering into an offsetting
transaction. When a Portfolio enters into a futures transaction, it must deliver
to the futures commission merchant selected by the Portfolio an amount referred
to as "initial margin." This amount is maintained by the futures commission
merchant in an account at the Portfolio's Custodian Bank. Thereafter, a
"variation margin" may be paid by the Portfolio to, or drawn by the Portfolio
from, such account in accordance with controls set for such account, depending
upon changes in the price of the underlying securities subject to the futures
contract.
Consistent with the limited purposes for which the Portfolios may
engage in these transactions, a Portfolio may enter into such futures contracts
to protect against the adverse effects of fluctuations in interest rates without
actually buying or selling the securities. For example, if interest rates are
expected to increase, a Portfolio might enter into futures contracts for the
sale of debt securities. Such a sale would have much the same effect as selling
an equivalent value of the debt securities owned by the Portfolio. If interest
rates did increase, the value of the debt securities in the portfolio would
decline, but the value of the futures contracts to the Portfolio would increase
at approximately the same rate, thereby keeping the net asset value of the
Portfolio from declining as much as it otherwise would have. Similarly, when it
is expected that interest rates may decline, futures contracts may be purchased
to hedge in anticipation of subsequent purchases of securities at higher prices.
Because the fluctuations in the value of futures contracts should be similar to
those of debt
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securities, a Portfolio could take advantage of the anticipated rise in value of
debt securities without actually buying them until the market had stabilized. At
that time, the futures contracts could be liquidated and the Portfolio could
then buy debt securities on the cash market.
With respect to options on futures contracts, when a Portfolio is not
fully invested, it may purchase a call option on a futures contract to hedge
against a market advance due to declining interest rates. The purchase of a call
option on a futures contract is similar in some respects to the purchase of a
call option on an individual security. Depending on the pricing of the option
compared to either the price of the futures contract upon which it is based, or
the price of the underlying debt securities, it may or may not be less risky
than ownership of the futures contract or underlying debt securities.
The writing of a call option on a futures contract constitutes a
partial hedge against the declining price of the security which is deliverable
upon exercise of the futures contract. If the futures price at the expiration of
the option is below the exercise price, the Portfolio will retain the full
amount of the option premium which provides a partial hedge against any decline
that may have occurred in the Portfolio's holdings. The writing of a put option
on a futures contract constitutes a partial hedge against the increasing price
of the security which is deliverable upon exercise of the futures contract. If
the futures price at the expiration of the option is higher than the exercise
price, the Portfolio will retain the full amount of option premium which
provides a partial hedge against any increase in the price of securities which
the Portfolio intends to purchase.
If a put or call option that a Portfolio has written is exercised, the
Portfolio will incur a loss which will be reduced by the amount of the premium
it receives. Depending on the degree of correlation between changes in the value
of its portfolio securities and changes in the value of its futures positions, a
Portfolio's losses from existing options on futures may, to some extent, be
reduced or increased by changes in the value of portfolio securities. The
purchase of a put option on a futures contract is similar in some respects to
the purchase of protective puts on portfolio securities. For example, consistent
with the limited purposes for which the Portfolios will engage in these
activities, a Portfolio will purchase a put option on a futures contract to
hedge the Portfolio's securities against the risk of rising interest rates.
To the extent that interest rates move in an unexpected direction, the
Portfolios may not achieve the anticipated benefits of futures contracts or
options on futures contracts or may realize a loss. For example, if a Portfolio
is hedged against the possibility of an increase in interest rates which would
adversely affect the price of securities held in its portfolio and interest
rates decrease instead, the Portfolio will lose part or all of the benefit of
the increased value of its securities which it has because it will have
offsetting losses in its futures position. In addition, in such situations, if
the Portfolio had insufficient cash, it may be required to sell securities from
its portfolio to meet daily variation margin requirements. Such sales of
securities may, but will not necessarily, be at increased prices which reflect
the rising market. The Portfolios may be required to sell securities at a time
when it may be disadvantageous to do so.
Further, with respect to options on futures contracts, the Portfolios
may seek to close out an option position by writing or buying an offsetting
position covering the same securities or contracts and have the same exercise
price and expiration date. The ability to establish and close out positions on
options will be subject to the maintenance of a liquid secondary market, which
cannot be assured.
* * *
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From time to time, the Portfolios may also, as noted below, engage in
the following investment techniques:
Asset-Backed Securities (The Intermediate Fixed Income Portfolio, The
Limited-Term Maturity Portfolio, The Aggregate Fixed Income Portfolio, The
Diversified Core Fixed Income Portfolio, The Asset Allocation Portfolio and The
Growth and Income Portfolio)
The Intermediate Fixed Income Portfolio, The Limited-Term Maturity
Portfolio, The Aggregate Fixed Income Portfolio, The Diversified Core Fixed
Income Portfolio, The Asset Allocation Portfolio and The Growth and Income
Portfolio may each invest a portion of their assets in asset-backed securities.
The rate of principal payment on asset-backed securities generally depends on
the rate of principal payments received on the underlying assets. Such rate of
payments may be affected by economic and various other factors such as changes
in interest rates or the concentration of collateral in a particular geographic
area. Therefore, the yield may be difficult to predict and actual yield to
maturity may be more or less than the anticipated yield to maturity. The credit
quality of most asset-backed securities depends primarily on the credit quality
of the assets underlying such securities, how well the entities issuing the
securities are insulated from the credit risk of the originator or affiliated
entities, and the amount of credit support provided to the securities.
Asset-backed securities are often backed by a pool of assets
representing the obligations of a number of different parties. To lessen the
effect of failures by obligors on underlying assets to make payments, such
securities may contain elements of credit support. Such credit support falls
into two categories: (i) liquidity protection, and (ii) protection against
losses resulting from ultimate default by an obligor on the underlying assets.
Liquidity protection refers to the provision of advances, generally by the
entity administering the pool of assets, to ensure that the receipt of payments
due on the underlying pool is timely. Protection against losses resulting from
ultimate default enhances the likelihood of payments of the obligations on at
least some of the assets in the pool. Such protection may be provided through
guarantees, insurance policies or letters of credit obtained by the issuer or
sponsor from third parties, through various means of structuring the transaction
or through a combination of such approaches. The Portfolios will not pay any
additional fees for such credit support, although the existence of credit
support may increase the price of a security.
Examples of credit support arising out of the structure of the
transaction include "senior-subordinated securities" (multiple class securities
with one or more classes subordinate to other classes as to the payment of
principal thereof and interest thereon, with the result that defaults on the
underlying assets are borne first by the holders of the subordinated class),
creation of "reserve funds" (where cash or investments, sometimes funded from a
portion of the payments on the underlying assets, are held in reserve against
future losses) and "over collateralization" (where the scheduled payments on, or
the principal amount of, the underlying assets exceeds that required to make
payments of the securities and pay any servicing or other fees). The degree of
credit support provided for each issue is generally based on historical
information respecting the level of credit risk associated with the underlying
assets. Delinquencies or losses in excess of those anticipated could adversely
affect the return on an investment in such issue.
High-Yield Securities (The High Yield Bond Portfolio and The Diversified Core
Fixed Income Portfolio and The Asset Allocation Portfolio)
The High Yield Bond Portfolio and The Diversified Core Fixed Income
Portfolio and The Asset Allocation Portfolio may invest their assets in
high-yielding, lower rated or unrated fixed-income securities (commonly known as
"junk bonds") issued by U.S. companies or, in the case of The Diversified Core
Fixed Income Portfolio and The Asset Allocation Portfolio, also in foreign
companies. Among the possible risks of investing in high-yield securities are
the possibility of legislative and regulatory action and proposals. There are
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a variety of legislative actions which have been taken or which are considered
from time to time by the United States Congress which could adversely affect the
market for high-yield securities. For example, Congressional legislation limited
the deductibility of interest paid on certain high-yield securities used to
finance corporate acquisitions. Also, Congressional legislation has, with some
exceptions, generally prohibited federally-insured savings and loan institutions
from investing in high-yield securities. Regulatory actions have also affected
the high-yield market. For example, many insurance companies have restricted or
eliminated their purchases of high-yield securities as a result of, among other
factors, actions taken by the National Association of Insurance Commissioners.
If similar legislative and regulatory actions are taken in the future, they
could result in further tightening of the secondary market for high-yield
issues, could reduce the number of new high-yield securities being issued and
could make it more difficult for the Portfolios to attain their investment
objective.
Repurchase Agreements
While each Portfolio is permitted to do so, it normally does not invest
in repurchase agreements, except to invest cash balances or for temporary
defensive purposes.
The funds in the Delaware Investments family, including Pooled Trust,
Inc. and Foundation Funds, have obtained an exemption from the joint-transaction
prohibitions of Section 17(d) of the 1940 Act to allow such funds jointly to
invest cash balances. Each Portfolio may invest cash balances in a joint
repurchase agreement in accordance with the terms of the Order and subject
generally to the conditions described below.
A repurchase agreement is a short-term investment by which the
purchaser acquires ownership of a debt security and the seller agrees to
repurchase the obligation at a future time and set price, thereby determining
the yield during the purchaser's holding period. Should an issuer of a
repurchase agreement fail to repurchase the underlying security, the loss to a
Portfolio, if any, would be the difference between the repurchase price and the
market value of the security. Each Portfolio will limit its investments in
repurchase agreements to those which its respective investment adviser, under
the guidelines of the Board of Directors or Trustees, as applicable, determines
to present minimal credit risks and which are of high quality. In addition, a
Portfolio must have collateral of at least 102% of the repurchase price,
including the portion representing the Portfolio's yield under such agreements
which is monitored on a daily basis.
Portfolio Loan Transactions
Each Portfolio may loan up to 25% of its assets to qualified
broker/dealers or institutional investors for their use relating to short sales
or other security transactions.
It is the understanding of Pooled Trust, Inc. and Foundation Funds, as
applicable, that the staff of the Commission permits portfolio lending by
registered investment companies if certain conditions are met. These conditions
are as follows: 1) each transaction must have 100% collateral in the form of
cash, short-term U.S. government securities, or irrevocable letters of credit
payable by banks acceptable to Pooled Trust, Inc. from the borrower; 2) this
collateral must be valued daily and should the market value of the loaned
securities increase, the borrower must furnish additional collateral to a
Portfolio; 3) a Portfolio must be able to terminate the loan after notice, at
any time; 4) a Portfolio must receive reasonable interest on any loan, and any
dividends, interest or other distributions on the lent securities, and any
increase in the market value of such securities; 5) a Portfolio may pay
reasonable custodian fees in connection with the loan; and 6) the voting rights
on the lent securities may pass to the borrower; however, if the Board of
Directors or Trustees of Pooled Trust, Inc. or Foundation Funds, as applicable,
know that a material event will occur affecting an investment loan, they must
either terminate the loan in order to vote the proxy or enter into an
alternative arrangement with the borrower to enable the directors to vote the
proxy.
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The major risk to which a Portfolio would be exposed on a loan
transaction is the risk that the borrower would go bankrupt at a time when the
value of the security goes up. Therefore, a Portfolio will only enter into loan
arrangements after a review of all pertinent facts by the respective investment
adviser, under the supervision of the Board of Directors or Trustees as
applicable, including the creditworthiness of the borrowing broker, dealer or
institution and then only if the consideration to be received from such loans
would justify the risk. Creditworthiness will be monitored on an ongoing basis
by the respective investment adviser.
Restricted and Rule 144A Securities
Each Portfolio may invest in restricted securities, including
securities eligible for resale without registration pursuant to Rule 144A ("Rule
144A Securities") under the Securities Act of 1933. Rule 144A Securities are
traded among qualified institutional investors. While maintaining oversight, the
Board of Directors or Trustees, as applicable, has delegated to the respective
investment adviser the day-to-day function of determining whether or not
individual Rule 144A Securities are liquid for purposes of each Portfolio's
limitation (whether 15% or 10% of total assets) on investments in illiquid
assets. The Boards have instructed the respective investment adviser to consider
the following factors in determining the liquidity of a Rule 144A Security: (i)
the frequency of trades and trading volume for the security; (ii) whether at
least three dealers are willing to purchase or sell the security and the number
of other potential purchasers; (iii) whether at least two dealers are making a
market in the security; and (iv) the nature of the security and the nature of
the marketplace trades (e.g., the time needed to dispose of the security, the
method of soliciting offers, and the mechanics of transfer).
Investing in Rule 144A Securities could have the effect of increasing
the level of a Portfolio's illiquidity to the extent that qualified
institutional buyers become, for a time, uninterested in purchasing these
securities. After the purchase of a Rule 144A Security, however, the Board of
Directors or Trustees, as applicable, and the respective investment adviser will
continue to monitor the liquidity of that security to ensure that a Portfolio
has no more than 10% or 15%, as appropriate, of its total assets in illiquid
securities.
The International Mid-Cap Sub Portfolio, The Diversified Core Fixed
Income Portfolio, The Asset Allocation Portfolio, The Small-Cap Growth Equity
Portfolio and The Growth and Income Portfolio may purchase privately-placed
securities whose resale is restricted under applicable securities laws. Such
restricted securities generally offer a higher return potential than comparable
registered securities but involve some additional risk since they can be resold
only in privately-negotiated transactions or after registration under applicable
securities laws. The registration process may involve delays which would result
in the Portfolio obtaining a less favorable price on a resale. The International
Mid-Cap Sub Portfolio, Diversified Core Fixed Income Portfolio, The Asset
Allocation Portfolio, The Small-Cap Growth Equity Portfolio and The Growth and
Income Portfolio will not purchase illiquid assets if more than 15% of its net
assets would then consist of such illiquid securities.
Non-Traditional Equity Securities (The International Mid-Cap Sub Portfolio, The
Emerging Markets Portfolio and The Asset Allocation Portfolio)
The International Mid-Cap Sub Portfolio, The Emerging Markets Portfolio
and The Asset Allocation Portfolio may invest in convertible preferred stocks
that offer enhanced yield features, such as Preferred Equity Redemption
Cumulative Stock ("PERCS"), which provide an investor, such as a Portfolio, with
the opportunity to earn higher dividend income than is available on a company's
common stock. A PERCS is a preferred stock which generally features a mandatory
conversion date, as well as a capital appreciation limit which is usually
expressed in terms of a stated price. Upon the conversion date, most PERCS
convert into common stock of the issuer (PERCS are generally not convertible
into cash at maturity). Under a typical arrangement, if after a
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predetermined number of years the issuer's common stock is trading at a price
below that set by the capital appreciation limit, each PERCS would convert to
one share of common stock. If, however, the issuer's common stock is trading at
a price above that set by the capital appreciation limit, the holder of the
PERCS would receive less than one full share of common stock. If, however, the
issuer's common stock is trading at a price above that set by the capital
appreciation limit, the holder of the PERCS would receive less than one full
share of common stock. The amount of that fractional share of common stock
received by the PERCS holder is determined by dividing the price set by the
capital appreciation limit of the PERCS by the market price of the issuer's
common stock. PERCS can be called at any time prior to maturity, and hence do
not provide call protection. However, if called early, the issuer may pay a call
premium over the market price to the investor. This call premium declines at a
preset rate daily, up to the maturity date of the PERCS.
The International Mid-Cap Sub Portfolio, The Emerging Markets Portfolio
and The Asset Allocation Portfolio may also invest in other enhanced convertible
securities. These include but are not limited to ACES (Automatically Convertible
Equity Securities), PEPS (participating Equity Preferred Stock), PRIDES
(Preferred Redeemable Increased Dividend Equity Securities), SAILS (Stocks
Appreciation Income Linked Securities), TECONS (Term Convertible Notes), QICS
(Quarterly Income Cumulative Securities) and DECS (Dividend Enhanced Convertible
Securities). ACES, PEPS, PRIDES, SAILS, TECONS, QICS, and DECS all have the
following features: They are company-issued convertible preferred stock; unlike
PERCS, they do not have capital appreciation limits; they seek to provide the
investor with high current income, with some prospect of future capital
appreciation; they are typically issued with three to four-year maturities; they
typically have some built-in call protection for the first two to three years;
investors have the right to convert them into shares of common stock at a preset
conversion ratio or hold them until maturity; and upon maturity, they will
automatically convert to either cash or a specified number of shares of common
stock.
U.S. Government Securities
As disclosed in the Prospectus for The International Mid-Cap Sub
Portfolio, the Portfolio may invest in U.S. government securities for temporary
purposes and otherwise (see "INVESTMENT OBJECTIVES, POLICIES AND RISK
CONSIDERATIONS"). Such securities may include a variety of securities which are
issued or guaranteed as to the payment of principal and interest by the U.S.
government, and by various agencies or instrumentalities which have been
established or sponsored by the U.S. government.
U.S. Treasury securities are backed by the "full faith and credit" of the United
States. Securities issued or guaranteed by federal agencies and U.S. government
sponsored instrumentalities may or may not be backed by the full faith and
credit of the United States. In the case of securities not backed by the full
faith and credit of the United States, investors in such securities look
principally to the agency or instrumentality issuing or guaranteeing the
obligation for ultimate repayment, and may not be able to assert a claim against
the United States itself in the event the agency or instrumentality does not
meet its commitment. Agencies which are backed by the full faith and credit of
the United States include the Export-Import Bank, Farmers Home Administration,
Federal Financing Bank, and others. Certain agencies and instrumentalities, such
as the Government National Mortgage Association ("GNMA"), are, in effect, backed
by the full faith and credit of the United States through provisions in their
charters that they may make "indefinite and unlimited" drawings on the Treasury,
if needed to service its debt. Debt from certain other agencies and
instrumentalities, including the Federal Home Loan Bank and Federal National
Mortgage Association, are not guaranteed by the United States, but those
institutions are protected by the discretionary authority for the U.S. Treasury
to purchase certain amounts of their securities to assist the institutions in
meeting their debt obligations. Finally, other agencies and instrumentalities,
such as the Farm Credit System and the Federal Home Loan Mortgage Corporation,
are
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federally chartered institutions under U.S. government supervision, but their
debt securities are backed only by the creditworthiness of those institutions,
not the U.S. government.
Some of the U.S. government agencies that issue or guarantee securities include
the Export-Import Bank of the United States, Farmers Home Administration,
Federal Housing Administration, Maritime Administration, Small Business
Administration, and the Tennessee Valley Authority.
An instrumentality of a U.S. government agency is a government agency organized
under Federal charter with government supervision. Instrumentalities issuing or
guaranteeing securities include, among others, Federal Home Loan Banks, the
Federal Land Banks, Central Bank for Cooperatives, Federal Immediate Credit
Banks and the Federal National Mortgage Association.
Concentration
In applying The Small-Cap Growth Equity Portfolio's, The Growth and
Income Portfolio's and The Asset Allocation Portfolio's policy on concentration:
(i) utility companies will be divided according to their services, for example,
gas, gas transmission, electric and telephone will each be considered a separate
industry; (ii) financial service companies will be classified according to the
end users of their services, for example, automobile finance, bank finance and
diversified finance will each be considered a separate industry; and (iii) asset
backed securities will be classified according to the underlying assets securing
such securities.
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ACCOUNTING AND TAX ISSUES
When The Aggressive Growth Portfolio, either of The Real Estate
Investment Trust Portfolios, The International Fixed Income Portfolio, The
Emerging Markets Portfolio, The Global Equity Portfolio, The Diversified Core
Fixed Income Portfolio, The Asset Allocation Portfolio, The Small-Cap Growth
Equity Portfolio or The Growth and Income Portfolio writes a call, or purchases
a put option, an amount equal to the premium received or paid by it is included
in the section of the Portfolio's assets and liabilities as an asset and as an
equivalent liability.
In writing a call, the amount of the liability is subsequently "marked
to market" to reflect the current market value of the option written. The
current market value of a written option is the last sale price on the principal
exchange on which such option is traded or, in the absence of a sale, the mean
between the last bid and ask prices. If an option which a Portfolio has written
expires on its stipulated expiration date, the Portfolio recognizes a short-term
capital gain. If a Portfolio enters into a closing purchase transaction with
respect to an option which the Portfolio has written, the Portfolio realizes a
short-term gain (or loss if the cost of the closing transaction exceeds the
premium received when the option was sold) without regard to any unrealized gain
or loss on the underlying security, and the liability related to such option is
extinguished. If a call option which a Portfolio has written is exercised, the
Portfolio realizes a capital gain or loss from the sale of the underlying
security on foreign currency and the proceeds from such sale are increased by
the premium originally received.
The premium paid by a Portfolio for the purchase of a put option is
reported in the section of the Portfolio's assets and liabilities as an
investment and subsequently adjusted daily to the current market value of the
option. For example, if the current market value of the option exceeds the
premium paid, the excess would be unrealized appreciation and, conversely, if
the premium exceeds the current market value, such excess would be unrealized
depreciation. The current market value of a purchased option is the last sale
price on the principal exchange on which such option is traded or, in the
absence of a sale, the mean between the last bid and ask prices. If an option
which the Portfolio has purchased expires on the stipulated expiration date, the
Portfolio realizes a short-term or long-term capital loss for federal income tax
purposes in the amount of the cost of the option. If the Portfolio exercises a
put option, it realizes a capital gain or loss (long-term or short-term,
depending on the holding period of the underlying security) from the sale of the
underlying security and the proceeds from such sale will be decreased by the
premium originally paid.
Options on Certain Stock Indices
Accounting for options on certain stock indices will be in accordance
with generally accepted accounting principles. The amount of any realized gain
or loss on closing out such a position will result in a realized gain or loss
for tax purposes. Such options held by a Portfolio at the end of each fiscal
year on a broad-based stock index will be required to be "marked to market" for
federal income tax purposes. Generally, 60% of any net gain or loss recognized
on such deemed sales or on any actual sales will be treated as long-term capital
gain or loss, and the remainder will be treated as short-term capital gain or
loss.
Other Tax Requirements
Each Portfolio has qualified or intends to qualify, and each that has
qualified intends to continue to qualify, as a regulated investment company
under Subchapter M of the Code. As such, a Portfolio will not be subject to
federal income tax, or to any excise tax, to the extent its earnings are
distributed as provided in the Code and it satisfies other requirements relating
to the sources of its income and diversification of its assets.
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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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Investment in Foreign Currencies and Foreign Securities--Certain of the
Portfolios are authorized to invest certain limited amounts in foreign
securities. Such investments, if made, will have the following additional tax
consequences to each Portfolio:
Under the Code, gains or losses attributable to fluctuations in foreign
currency exchange rates which occur between the time a Portfolio accrues income
(including dividends), or accrues expenses which are denominated in a foreign
currency, and the time a Portfolio actually collects such income or pays such
expenses generally are treated as ordinary income or loss. Similarly, on the
disposition of debt securities denominated in a foreign currency and on the
disposition of certain options, futures, forward contracts, gain or loss
attributable to fluctuations in the value of foreign currency between the date
of acquisition of the security or contract and the date of its disposition are
also treated as ordinary gain or loss. These gains or losses, referred to under
the Code as "Section 988" gains or losses, may increase or decrease the amount
of a Portfolio's net investment company taxable income, which, in turn, will
affect the amount of income to be distributed to you by a Portfolio.
If a Portfolio's Section 988 losses exceed a Portfolio's other net
investment company taxable income during a taxable year, a Portfolio generally
will not be able to make ordinary dividend distributions to you for that year,
or distributions made before the losses were realized will be recharacterized as
return of capital distributions of federal income tax purposes, rather than as
an ordinary dividend or capital gain distribution. If a distribution is treated
as a return of capital, your tax basis in your Portfolio shares will be reduced
by a like amount (to the extent of such basis), and any excess of the
distribution over your tax basis in your Portfolio shares will be treated as
capital gain to you.
The 1997 Act generally requires that foreign income be translated into
U.S. dollars at the average exchange rate for the tax year in which the
transactions are conducted. Certain exceptions apply to taxes paid more than two
years after the taxable year to which they relate. This new law may require a
Portfolio to track and record adjustments to foreign taxes paid on foreign
securities in which it invests. Under a Portfolio's current reporting procedure,
foreign security transactions are recorded generally at the time of each
transaction using the foreign currency spot rate available for the date of each
transaction. Under the new law, a Portfolio will be required to record a fiscal
year end (and at calendar year end for excise tax purposes) an adjustment that
reflects the difference between the spot rates recorded for each transaction and
the year-end average exchange rate for all of a Portfolio's foreign securities
transactions. There is a possibility that the mutual fund industry will be given
relief from this new provision, in which case no year-end adjustments will be
required.
The Portfolios may be subject to foreign withholding taxes on income
from certain of its foreign securities. If more than 50% of the total assets of
a Portfolio at the end of its fiscal year are invested in securities of foreign
corporations, a Portfolio may elect to pass-through to you your pro rata share
of foreign taxes paid by a Portfolio. If this election is made, you will be: (i)
required to include in your gross income your pro rata share of foreign source
income (including any foreign taxes paid by a Portfolio); and (ii) entitled to
either deduct your share of such foreign taxes in computing your taxable income
or to claim a credit for such taxes against your U.S. income tax, subject to
certain limitations under the Code. You will be informed by a Portfolio at the
end of each calendar year regarding the availability of any such foreign tax
credits and the amount of foreign source income (including any foreign taxes
paid by a Portfolio). If a Portfolio elects to pass-through to you the foreign
income taxes that it has paid, you will be informed at the end of the calendar
year of the amount of foreign taxes paid and foreign source income that must be
included on your federal income tax return. If a Portfolio invests 50% or less
of its total assets in securities of foreign corporations, it will not be
entitled to pass-through to you your pro-rata shares of foreign taxes paid by a
Portfolio. In this case, these taxes will be taken as a deduction by a
Portfolio, and the income reported to you will be the net amount
-27-
<PAGE>
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 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
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<PAGE>
guarantees that it will do so and it reserves the right to make such investments
as a matter of its fundamental investment policy.
Most foreign exchange gains are classified as ordinary income which
will be taxable to you as such when distributed. Similarly, you should be aware
that any foreign exchange losses realized by a Portfolio, including any losses
realized on the sale of foreign debt securities, are generally treated as
ordinary losses for federal income tax purposes. This treatment could increase
or reduce a Portfolio's income available for distribution to you, and may cause
some or all of a Portfolio's previously distributed income to be classified as a
return of capital.
-29-
<PAGE>
PERFORMANCE INFORMATION
From time to time, Pooled Trust, Inc. may state each Portfolio's total
return and each Portfolio class' total return in advertisements and other types
of literature. Any statements of total return performance data will be
accompanied by information on the Portfolio's or the Portfolio class' average
annual total rate of return over the most recent one-, five-, and ten-year
periods, as relevant. Pooled Trust, Inc. may also advertise aggregate and
average total return information of each Portfolio and Portfolio class over
additional periods of time.
Average annual total rate of return for each Portfolio and Portfolio
class is based on a hypothetical $1,000 investment that includes capital
appreciation and depreciation during the stated periods. The following formula
will be used for the actual computations:
n
P(1+T) = ERV
Where: P = a hypothetical initial purchase order of $1,000, after
deduction of the maximum front-end sales charge in the
case of REIT Fund A Class of The Real Estate Investment
Trust Portfolio;
T = average annual total return;
n = number of years;
ERV = redeemable value of the hypothetical $1,000 purchase at
the end of the period, after deduction of the applicable
CDSC, if any, in the case of REIT Fund B Class and
REIT Fund C Class of The Real Estate Investment Trust
Portfolio.
Aggregate or cumulative total return is calculated in a similar manner,
except that the results are not annualized. Each calculation assumes that all
distributions are reinvested at net asset value.
The total return for REIT Fund A Class of The Real Estate Investment Trust
Portfolio at offer reflects the maximum front-end sales charge of 4.75% paid on
the purchase of shares. The total return for REIT Fund A Class at net asset
value (NAV) does not reflect the payment of any front-end sales charge. The
Limited CDSC, applicable only to certain redemptions of those shares, will not
be deducted from any computation of total return. See the Prospectus for REIT
Fund A Class for a description of the Limited CDSC and the limited instances in
which it applies. The Fund may also present total return information for The
Real Estate Investment Trust Portfolio that does not reflect the deduction of
the maximum front-end sales charge with respect to REIT Fund A Class.
The performance, as shown below, is the average annual total return
quotations for The 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 Real Estate Investment Trust Portfolio, The
High-Yield Bond Portfolio, The International Fixed Income Portfolio and The
Emerging Markets Portfolios through April 30, 1998. Securities prices fluctuated
during the period covered and the past results should not be considered as
representative of future performance.
Average Annual Total Return(1)
-30-
<PAGE>
<TABLE>
<CAPTION>
The The
Large-Cap Aggressive
Value Equity Growth
Portfolio Portfolio
<S> <C> <C> <C>
1 year ended 1 year ended
4/30/98 35.54% 4/30/98 39.63%
3 years ended 3 years ended
4/30/98 27.48% 4/30/98 20.11%
5 years ended 5 years ended
4/30/98 21.69% 4/30/98 16.67%
Period 2/3/92(2) Period 2/27/92(2)
through 4/30/98 20.86% through 4/30/98 12.31%
The
The Global
International Fixed
Equity Income
Portfolio Portfolio
1 year ended 1 year ended
4/30/98 13.36% 4/30/98 6.05%
3 years ended 3 years ended
4/30/98 15.17% 4/30/98 11.06%
5 years ended 5 years ended
4/30/98 13.21% 4/30/98 9.64%
Period 2/4/92(2) Period 11/30/92(2)
through 4/30/98 12.82% through 4/30/98 10.61%
</TABLE>
(1) Certain expenses of the Portfolios have been waived and paid by the
respective investment adviser. In the absence of such waiver and payment,
performance would have been affected negatively.
(2) Date of initial sale.
-31-
<PAGE>
Average Annual Total Return(1)
The
Labor The
Select Intermediate
International Fixed
Equity Income
Portfolio Portfolio
1 year ended 1 year ended
4/30/98 20.38% 4/30/98 8.39%
Period Period
12/19/95(2) 3/12/96(2)
through through
4/30/98 20.66% 4/30/98 6.61%
(1) Certain expenses of the Portfolios have been waived and paid by the
respective investment adviser. In the absence of such waiver and payment,
performance would have been affected negatively.
(2) Date of initial sale.
<TABLE>
<CAPTION>
Average Annual Total Return(1)
The
The International The
High-Yield Fixed Emerging
Bond Income Markets
Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C> <C>
1 year ended 1 year ended 1 year ended
4/30/98 21.22% 4/30/98 5.58% 4/30/98 (4.53%)
Period Period Period
12/2/96(2) 4/11/97(2) 4/14/97(2)
through through through
4/30/98 18.88% 4/30/98 5.48% 4/30/98 (3.34%)
</TABLE>
(1) Certain expenses of the Portfolios have been waived and paid by the
respective investment adviser. In the absence of such waiver and payment,
performance would have been affected negatively.
(2) Date of initial sale.
-32-
<PAGE>
Average Annual Total Return(1)
The Real Estate Investment Trust Portfolio
The Real Estate
Investment Trust
Portfolio Class (2)
1 year ended
4/30/98 25.80%
Period
12/6/95(3)
through
4/30/98 30.09%
(1) Certain expenses of the Portfolios have been waived and paid by the
investment adviser. In the absence of such waiver and payment, performance
would have been affected negatively.
(2) Shares of The Real Estate Investment Trust Portfolio class were made
available for sale beginning October 14, 1997. Pursuant to applicable
regulation, total return shown for the class prior to commencement of
operations is that of the original (and then only) class of shares offered
by The Real Estate Investment Trust Portfolio. That original class has been
redesignated REIT Fund A Class. Like The Real Estate Investment Trust
Portfolio class, the original class, prior to its redesignation, did not
carry a front-end sales charge and was not subject to Rule 12b-1
distribution expenses.
(3) Date of initial sale of the original class (now REIT Fund A Class).
<TABLE>
<CAPTION>
Average Annual Total Return(1)
The Real Estate Investment Trust Portfolio
REIT Fund REIT Fund REIT Fund
A Class(2) A Class(2) Institutional Class(3)
(at Offer) (at NAV)
<S> <C> <C> <C> <C>
1 year ended
4/30/98 19.63% 25.63% 25.80%
Period
12/6/95(4)
through
4/30/98 27.41% 30.02% 30.09%
</TABLE>
(1) Certain expenses of the Portfolios have been waived and paid by the
investment adviser. In the absence of such waiver and payment, performance
would have been affected negatively.
-33-
<PAGE>
(2) The total return presented above is based upon the performance of the
original (and then only) class of shares offered by The Real Estate
Investment Trust Portfolio, which did not carry a front-end sales charge
and was not subject to Rule 12b-1 distribution expenses. That original
class has been redesignated REIT Fund A Class. Effective October 14, 1997,
a front-end sales charge of 4.75% was imposed on sales of those shares and
effective November 3, 1997 the class was subject to annual 12b-1
distribution expenses of up to 0.30% of average daily net assets of the
class. Performance numbers for REIT Fund A Class (at Offer) are calculated
giving effect to the sales charge. For periods prior to November 3, 1997,
no adjustment has been made to reflect the effect of 12b-1 payments.
Performance on and after November 3, 1997 will be affected by 12b-1
payments. REIT Fund A Class is subject to other expenses (at a higher rate
than applicable to the original class) which may affect performance of the
Class.
(3) Shares of REIT Fund Institutional Class were made available for sale
beginning October 14, 1997. Pursuant to applicable regulation, total return
shown for the class prior to commencement of operations is that of the
original (and then only) class of shares offered by The Real Estate
Investment Trust Portfolio. That original class has been redesignated REIT
Fund A Class. Like REIT Fund Institutional Class, the original class, prior
to its redesignation, did not carry a front-end sales charge and was not
subject to Rule 12b-1 distribution expenses. REIT Fund Institutional Class
is subject to other expenses (at a higher rate than applicable to the
original class) which may affect performance of the Class.
(4) Date of initial sale of the original class (now REIT Fund A Class).
Pooled Trust, Inc. may also quote each Portfolio's current yield,
calculated as described below, in advertisements and investor communications.
The yield computation is determined by dividing the net investment income
per share earned during the period by the maximum offering price per share on
the last day of the period and annualizing the resulting figure, according to
the following formula:
a--b 6
YIELD = 2[(-------- + 1) -- 1]
cd
Where: a = dividends and interest earned during the period;
b = expenses accrued for the period (net of reimbursements);
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends;
d = the maximum offering price per share on the last day of the
period.
The above formula will be used in calculating quotations of yield, based
on specific 30-day periods identified in advertising by a Portfolio. Yield
quotations are based on the Portfolio's net asset value on the last day of the
period and will fluctuate depending on the period covered. The 30-day yields for
The Global Fixed Income Portfolio and The Intermediate Fixed Income Portfolio as
of April 30, 1998 were 4.68% and
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<PAGE>
5.66%, respectively. Each yield reflects the waiver and reimbursement commitment
by its investment adviser.
Investors should note that income earned and dividends paid by The
Intermediate Fixed Income Portfolio, The Limited-Term Maturity Portfolio, The
Global Fixed Income Portfolio, The International Fixed Income Portfolio, The
High-Yield Bond Portfolio, The Aggregate Fixed Income Portfolio and The
Diversified Core Fixed Income Portfolio will also vary depending upon
fluctuation in interest rates and performance of each Portfolio.
The net asset value of these seven Portfolios will fluctuate in value
inversely to movements in interest rates and, therefore, will tend to rise when
interest rates fall and fall when interest rates rise. Likewise, the net asset
value for these Portfolios will vary from day to day depending upon fluctuation
in the prices of the securities held by each Portfolio. Thus, investors should
consider net asset value fluctuation as well as yield in making an investment
decision.
Each Portfolio's total return performance will be computed by adding all
reinvested income and realized securities profits distributions plus the change
in net asset value during a specific period and dividing by the net asset value
at the beginning of the period. The computation will not reflect the impact of
any income taxes payable by shareholders (who are subject to such tax) on the
reinvested distributions included in the calculation. Portfolio shares are sold
without a sales charge, except for REIT Fund A Class, REIT Fund B Class and REIT
Fund C Class of The Real Estate Investment Trust Portfolio. Because security
prices fluctuate, past performance should not be considered as a representation
of the results which may be realized from an investment in the Portfolios in the
future.
Pooled Trust, Inc. may promote the total return performance of The Real
Estate Investment Trust Portfolio II by comparison to the original class (prior
to its redesignation as REIT Fund A Class) of The Real Estate Investment Trust
Portfolio.
From time to time, each Portfolio may also quote its actual total return
performance, dividend results and other performance information in advertising
and other types of literature. This information may be compared to that of other
mutual funds with similar investment objectives and to stock, bond and other
relevant indices or to rankings prepared by independent services or other
financial or industry publications that monitor the performance of mutual funds.
For example, the performance of a Portfolio may be compared to data prepared by
Lipper Analytical Services, Inc., Morningstar, Inc., or to the S&P 500 Index,
the Dow Jones Industrial Average, the Morgan Stanley Capital International
(MSCI), Europe, Australia and Far East (EAFE) Index, the MSCI Emerging Markets
Free Index, or the Salomon Brothers World Government Bond Index. Performance
also may be compared to data prepared by Lipper Analytical Services, Inc.,
Morningstar, Inc. or the performance of unmanaged indices compiled or maintained
by statistical research firms such as Lehman Brothers or Salomon Brothers, Inc.
Salomon Brothers and Lehman Brothers are statistical research firms that
maintain databases of international market, bond market, corporate and
government-issued securities of various maturities. This information, as well as
unmanaged indices compiled and maintained by these firms, will be used in
preparing comparative illustrations. In addition, the performance of multiple
indices compiled and maintained by these firms may be combined to create a
blended performance result for comparative purposes. Generally, the indices
selected will be representative of the types of securities in which a Portfolio
may invest and the assumptions that were used in calculating the blended
performance will be described.
-35-
<PAGE>
Lipper Analytical Services, Inc. maintains statistical performance
databases, as reported by a diverse universe of independently-managed mutual
funds. Morningstar, Inc. is a mutual fund rating service that rates mutual funds
on the basis of risk-adjusted performance. Rankings that compare a Portfolio's
performance to another fund in appropriate categories over specific time periods
also may be quoted in advertising and other types of literature. The S&P 500 and
the Dow Jones Industrial Average are industry-accepted unmanaged indices of
generally-conservative securities used for measuring general market performance.
Similarly, the MSCI EAFE Index, the MSCI Emerging Markets Free Index, and the
Salomon Brothers World Government Bond Index are industry-accepted unmanaged
indices of equity securities in developed countries and global debt securities,
respectively, used for measuring general market performance. The total return
performance reported for these indices will reflect the reinvestment of all
distributions on a quarterly basis and market price fluctuations. The indices do
not take into account any sales charges or other fees. A direct investment in an
unmanaged index is not possible.
Comparative information on the Consumer Price Index may also be included
in advertisements or other literature. The Consumer Price Index, as prepared by
the U.S. Bureau of Labor Statistics, is the most commonly used measure of
inflation. It indicates the cost fluctuations of a representative group of
consumer goods. It does not represent a return from an investment.
Current interest rate and yield information on government debt obligations
of various durations, as reported weekly by the Federal Reserve (Bulletin H.15),
may also be used. As well, current industry rate and yield information on all
industry available fixed-income securities, as reported weekly by The Bond
Buyer, may also be used in preparing comparative illustrations.
A Portfolio may also promote its yield and/or total return performance and
use comparative performance information computed by and available from certain
industry and general market research and publications, such as Lipper Analytical
Services, Inc. and Morningstar, Inc.
The performance of multiple indices compiled and maintained by statistical
research firms, such as Morgan Stanley, Salomon Brothers and Lehman Brothers,
may be combined to create a blended performance result for comparative purposes.
Generally, the indices selected will be representative of the types of
securities in which a Portfolio may invest and the assumptions that were used in
calculating the blended performance will be described.
Wellesley Group Inc. is an investment management consulting firm
specializing in investment and market research for endowments and pension plans.
Wellesley Group will be maintaining, on behalf of Pooled Trust, Inc., peer group
comparison composites for each Portfolio. The peer group composites will be
constructed by selecting publicly-offered mutual funds that have investment
objectives that are similar to those maintained by each Portfolio. Wellesley
Group will also be preparing performance analyses of actual Portfolio
performance, and benchmark index exhibits, for inclusion in client quarterly
review packages.
Ibbotson Associates of Chicago, Illinois ("Ibbotson") provides
historical returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury bills,
the U.S. rate of inflation (based on the Consumer Price Index), and combinations
of various capital markets. The performance of these capital markets is based on
the returns of different indices. A Portfolio may use the performance of these
capital markets in order to demonstrate general risk-versus-reward investment
scenarios. Performance
-36-
<PAGE>
comparisons may also include the value of a hypothetical investment in any of
these capital markets. The risks associated with the security types in any
capital market may or may not correspond directly to those of the Portfolio. A
Portfolio may also compare performance to that of other compilations or indices
that may be developed and made available in the future.
A Portfolio may include discussions or illustrations of the potential
investment goals of a prospective investor (including materials that describe
general principles of investing, such as asset allocation, diversification, risk
tolerance, and goal setting, questionnaires designed to help create a personal
financial profile, worksheets used to project savings needs based on assumed
rates of inflation and hypothetical rates of return and action plans offering
investment alternatives), investment management techniques, policies or
investment suitability of a Portfolio (such as value investing, market timing,
dollar cost averaging, asset allocation, constant ratio transfer, automatic
account rebalancing, the advantages and disadvantages of investing in
tax-deferred and taxable investments or global or international investments),
economic and political conditions, the relationship between sectors of the
economy and the economy as a whole, the effects of inflation and historical
performance of various asset classes, including but not limited to, stocks,
bonds and Treasury bills. From time to time advertisements, sales literature,
communications to shareholders or other materials may summarize the substance of
information contained in shareholder reports (including the investment
composition of a Portfolio), as well as the views as to current market,
economic, trade and interest rate trends, legislative, regulatory and monetary
developments, investment strategies and related matters believed to be of
relevance to a Portfolio. In addition, selected indices may be used to
illustrate historic performance of selected asset classes. The Portfolio may
also include in advertisements, sales literature, communications to shareholders
or other materials, charts, graphs or drawings which illustrate the potential
risks and rewards of investment in various investment vehicles, including but
not limited to, domestic and international stocks, and/or bonds, treasury bills
and shares of a Portfolio. In addition, advertisements, sales literature,
communications to shareholders or other materials may include a discussion of
certain attributes or benefits to be derived by an investment in a Fund and/or
other mutual funds, shareholder profiles and hypothetical investor scenarios,
timely information on financial management, tax and retirement planning (such as
information on Roth IRAs and Education IRAs) and investment alternative to
certificates of deposit and other financial instruments. Such sales literature,
communications to shareholders or other materials may include symbols, headlines
or other material which highlight or summarize the information discussed in more
detail therein.
Materials may refer to the CUSIP numbers of a Portfolio and may
illustrate how to find the listings of a Portfolio in newspapers and
periodicals. Materials may also include discussions of other Portfolios,
products, and services.
A Portfolio may quote various measures of volatility and benchmark
correlation in advertising. In addition, the Portfolio may compare these
measures to those of other funds. Measures of volatility seek to compare the
historical share price fluctuations or total returns to those of a benchmark.
Measures of benchmark correlation indicate how valid a comparative benchmark may
be. Measures of volatility and correlation may be calculated using averages of
historical data. A Portfolio may advertise its current interest rate
sensitivity, duration, weighted average maturity or similar maturity
characteristics. Advertisements and sales materials relating to a Portfolio may
include information regarding the background and experience of its portfolio
managers.
The following tables are an example, for purposes of illustration only, of
cumulative total return performance through April 30, 1998 for each Portfolio,
other than The Limited-Term Maturity Portfolio, The International Mid-Cap Sub
Portfolio, The Asset Allocation Portfolio, The Small-Cap Growth Equity Portfolio
-37-
<PAGE>
and The Growth and Income Portfolio. For these purposes, the calculations assume
the reinvestment of any capital gains distributions and income dividends paid
during the indicated periods.
<TABLE>
<CAPTION>
Cumulative Total Return(1)
The The
Large-Cap Aggressive
Value Equity Growth
Portfolio Portfolio
<S> <C> <C> <C>
3 months ended 3 months ended
4/30/98 10.39% 4/30/98 15.57%
6 months ended 6 months ended
4/30/98 18.57% 4/30/98 14.12%
9 months ended 9 months ended
4/30/98 14.31% 4/30/98 15.64%
1 year ended 1 year ended
4/30/98 35.54% 4/30/98 39.63%
3 years ended 3 years ended
4/30/98 107.18% 4/30/98 73.27%
5 years ended 5 years ended
4/30/98 166.85% 4/30/98 116.13%
Period 2/3/92(2) Period 2/27/92(2)
through 4/30/98 226.18% through 4/30/98 104.81%
</TABLE>
(1) Certain expenses of the Portfolios have been waived and paid by the
respective investment adviser. In the absence of such waiver and
payment, performance would have been affected negatively.
(2) Date of initial sale.
-38-
<PAGE>
<TABLE>
<CAPTION>
Cumulative Total Return(1)
The The
International Global Fixed
Equity Income
Portfolio Portfolio
<S> <C> <C> <C>
3 months ended 3 months ended
4/30/98 9.65% 4/30/98 0.66%
6 months ended 6 months ended
4/30/98 11.33% 4/30/98 (0.04%)
9 months ended 9 months ended
4/30/98 0.86% 4/30/98 3.26%
1 year ended 1 year ended
4/30/98 13.36% 4/30/98 6.05%
3 years ended 3 years ended
4/30/98 52.76% 4/30/98 36.98%
5 years ended 5 years ended
4/30/98 85.97% 4/30/98 58.41%
Period 2/4/92(2) Period 11/30/92(2)
through 4/30/98 112.16% through 4/30/98 72.70%
</TABLE>
(1) Certain expenses of the Portfolios have been waived and paid by the
respective investment adviser. In the absence of such waiver and
payment, performance would have been affected negatively.
(2) Date of initial sale.
-39-
<PAGE>
<TABLE>
<CAPTION>
Cumulative Total Return(1)
The
Intermediate
Fixed The High-
Income Yield Bond
Portfolio Portfolio
<S> <C> <C> <C>
3 months ended 3 months ended
4/30/98 0.66% 4/30/98 3.58%
6 months ended 6 months ended
4/30/98 2.87% 4/30/98 8.23%
9 months ended 9 months ended
4/30/98 4.42% 4/30/98 12.73%
1 year ended 1 year ended
4/30/98 8.39% 4/30/98 21.22%
Period 3/12/96(2) Period 12/2/96(2)
through 4/30/98 14.66% through 4/30/98 27.63%
</TABLE>
(1) Certain expenses of the Portfolios have been waived and paid by the
respective investment adviser. In the absence of such waiver and
payment, performance would have been affected negatively.
(2) Date of initial sale.
Cumulative Total Return(1)
The Real Estate Investment Trust Portfolio
The Real Estate
Investment Trust
Portfolio Class (2)
3 months ended 4/30/98 (2.26%)
6 months ended 4/30/98 1.82%
9 months ended 4/30/98 9.27%
1 year ended 4/30/98 25.80%
Period 12/6/95(3) through 4/30/98 88.12%
-40-
<PAGE>
(1) Certain expenses of the Portfolio have been waived and paid by the
investment adviser. In the absence of such waiver and payment,
performance would have been affected negatively.
(2) Shares of The Real Estate Investment Trust Portfolio class were made
available for sale beginning October 14, 1997. Pursuant to applicable
regulation, total return shown for the class prior to commencement of
operations is that of the original (and then only) class of shares
offered by The Real Estate Investment Trust Portfolio. That original
class has been redesignated REIT Fund A Class. Like The Real Estate
Investment Trust Portfolio class, the original class, prior to its
redesignation, did not carry a front-end sales charge and was not
subject to Rule 12b-1 distribution expenses.
(3) Date of initial sale of the original class (now REIT Fund A Class).
-41-
<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
4/30/98 6.91% (2.26%)
6 months ended
4/30/98 (3.15%)(5) 1.82%
9 months ended
4/30/98 3.92% 9.27%
1 year ended
4/30/98 19.63% 25.80%
Period 12/6/95(4)
through 4/30/98 78.92% 88.12%
(1) Certain expenses of the Portfolio have been waived and paid by the
investment adviser. In the absence of such waiver and payment,
performance would have been affected negatively.
(2) The total return presented above is based upon the performance of the
original (and then only) class of shares offered by The Real Estate
Investment Trust Portfolio, which did not carry a front-end sales
charge and was not subject to Rule 12b-1 distribution expenses. That
original class has been redesignated REIT Fund A Class. Effective
October 14, 1997, a front-end sales charge of 4.75% was imposed on
sales of those shares and effective November 3, 1997 the class was
subject to annual 12b-1 distribution expenses of up to 0.30% of average
daily net assets of the class. These performance numbers are calculated
giving effect to the sales charge. For periods prior to November 3,
1997, no adjustment has been made to reflect the effect of 12b-1
payments. Performance on and after November 3, 1997 will be affected by
12b-1 payments. REIT Fund A Class is subject to other expenses (at a
higher rate than applicable to the original class) which may affect
performance of the Class.
(3) Shares of REIT Fund Institutional Class were made available for sale
beginning October 14, 1997. Pursuant to applicable regulation, total
return shown for the class prior to commencement of operations is that
of the original (and then only) class of shares offered by The Real
Estate Investment Trust Portfolio. That original class has been
redesignated REIT Fund A Class. Like REIT Fund Institutional Class, the
original class, prior to its redesignation, did not carry a front-end
sales charge and was not subject to Rule 12b-1 distribution expenses.
REIT Institutional Class is subject to other expenses (at a higher rate
than applicable to the original class) which may affect performance of
the Class.
(4) Date of initial sale of the original class (now REIT Fund A Class).
(5) Cumulative total return at net asset value was 1.68% for the six months
ended April 30, 1998.
-42-
<PAGE>
The cumulative total return for Class B Shares and Class C Shares of
The Real Estate Investment Trust Portfolio including deferred sales charge
reflects the deduction of the applicable CDSC that would be paid if the shares
were redeemed at April 30, 1998. The cumulative total return for Class B Shares
and Class C Shares excluding deferred sales charge assumes the shares were not
redeemed at April 30, 1998 and therefore does not reflect the deduction of a
CDSC.
<TABLE>
<CAPTION>
Cumulative Total Return
The Real Estate Investment Trust Portfolio(1)
REIT Fund REIT Fund REIT Fund REIT Fund
B Class B Class C Class C Class
(including (excluding (including (excluding
CDSC) CDSC) CDSC) CDSC)
<S> <C> <C> <C> <C>
3 months ended 4/30/98 (6.41%) (2.53%) (3.50%) (2.53%)
Period 11/11/97 (2) through 4/30/98 (2.10%) 1.60% 0.67% 1.60%
</TABLE>
(1) Certain expenses of the Portfolio have been waived and paid by the
investment adviser. In the absence of such waiver and payment,
performance would have been affected negative
(2) Date of initial sale; total return for this short of a time period may
not be representative of longer term results.
-43-
<PAGE>
<TABLE>
<CAPTION>
Cumulative Total Return(1)
The
Labor The
Select International
International Fixed
Equity Income
Portfolio Portfolio
<S> <C> <C> <C>
3 months ended 3 months ended
4/30/98 10.87% 4/30/98 0.69%
6 months ended 6 months ended
4/30/98 13.95% 4/30/98 (1.23%)
9 months ended 9 months ended
4/30/98 8.36% 4/30/98 3.92%
1 year ended 1 year ended
4/30/98 20.38% 4/30/98 5.58%
Period 12/19/95(2) Period 4/11/97(2)
through 4/30/98 55.95% through 4/30/98 5.79%
The The
Emerging Global
Markets Equity
Portfolio Portfolio
3 months ended 3 months ended
4/30/98 13.55% 4/30/98 9.68%
6 months ended 6 months ended
4/30/98 4.92% 4/30/98 14.03%
9 months ended Period 10/15/97(3)
4/30/98 (14.05%) through 4/30/98 8.93%
1 year ended
4/30/98 (4.53%)
Period 4/14/97(2)
through 4/30/98 (3.48%)
</TABLE>
(1) Certain expenses of the Portfolio have been waived and paid by the
investment adviser. In the absence of such waiver and payment,
performance would have been affected negatively.
(2) Date of initial sale.
-44-
<PAGE>
(3) Date of initial sale; total return for this short of a time period may
not be representative of longer term results.
Cumulative Total Return(1)
The Real Estate
Investment Trust
Portfolio II
3 months ended 4/30/98 (2.39%)
Period 11/4/97(2)
through 4/30/98 1.17%
(1) Certain expenses of the Portfolio have been waived and paid by the
investment adviser. In the absence of such waiver and payment,
performance would have been affected negatively.
(2) Date of initial sale; total return for this short of a time period may
not be representative of longer term results.
<TABLE>
<CAPTION>
Cumulative Total Return (1)
The Small/Mid-Cap The Aggregate The Diversified
Value Equity Fixed Income Core Fixed
Portfolio Portfolio Income
Portfolio
<S> <C> <C> <C>
3 months ended 4/30/98 10.40% 0.81% 3.13%
Period 11/11/97 (2) through 4/30/98 9.88% 2.12% 4.71%
</TABLE>
(1) Certain expenses of the Portfolio have been waived and paid by the
investment adviser. In the absence of such waiver and payment,
performance would have been affected negatively.
(2) Date of initial sale; total return for this short of a time period may
not be representative of longer term results.
-45-
<PAGE>
In addition, information will be provided that discusses the
overriding investment philosophies of Delaware Management Company ("Delaware"),
(the investment adviser to The Large-Cap Value Equity, The 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, The Diversified Core Fixed Income, The Asset
Allocation, The Small-Cap Growth Equity and The Growth and Income Portfolios),
and Delaware International Advisers Ltd. ("Delaware International"), (an
affiliate of Delaware and the investment adviser to The International Equity,
The International Mid-Cap Sub, The Labor Select International Equity, The Global
Fixed Income, The International Fixed Income, The Emerging Markets and The
Global Equity Portfolios and the sub-adviser to The Diversified Core Fixed
Income Portfolio) and how those philosophies impact each Portfolio in the
strategies Pooled Trust, Inc. and Foundation Funds employs in seeking respective
Portfolio objectives. Since the investment disciplines being employed for each
Portfolio are based on the disciplines and strategies employed by an affiliate
of Delaware and Delaware International to manage institutional separate
accounts, investment strategies and disciplines of these entities may also be
discussed.
The Large-Cap Value Equity Portfolio's strategy relies on the
consistency, reliability and predictability of corporate dividends. Dividends
tend to rise over time, despite market conditions, and keep pace with rising
prices; they are paid out in "current" dollars. Just as important, current
dividend income can help lessen the effects of adverse market conditions. This
equity dividend discipline, coupled with the potential for capital gains, seeks
to provide investors with a consistently higher total-rate-of-return over time.
In implementing this strategy, the investment adviser seeks to buy securities
with a yield higher than the average of the S&P 500 Index. If a security held by
the Portfolio moves out of the acceptable yield range, it typically is sold.
This strict buy/sell discipline is instrumental in implementing The Large-Cap
Value Equity Portfolio strategy.
-46-
<PAGE>
TRADING PRACTICES AND BROKERAGE
Pooled Trust, Inc. or Foundation Funds, as applicable, (and, in the
case of The International Equity, The International Mid-Cap Sub, The Labor
Select International Equity, The Global Fixed Income, The International Fixed
Income, The Emerging Markets, The Global Equity and The Diversified Core Fixed
Income Portfolios, their investment adviser or sub-adviser) selects brokers or
dealers to execute transactions for the purchase or sale of portfolio securities
on the basis of its judgment of their professional capability to provide the
service. The primary consideration is to have brokers or dealers execute
transactions at best price and execution. Best price and execution refers to
many factors, including the price paid or received for a security, the
commission charged, the promptness and reliability of execution, the
confidentiality and placement accorded the order and other factors affecting the
overall benefit obtained by the account on the transaction. A number of trades
are made on a net basis where securities either are purchased directly from the
dealer or are sold to the dealer. In these instances, there is no direct
commission charged but there is a spread (the difference between the buy and
sell price) which is the equivalent of a commission. When a commission is paid,
Pooled Trust, Inc. or Foundation Funds pays reasonably competitive brokerage
commission rates based upon the professional knowledge of its trading department
(and, in the case of The International Equity, The International Mid-Cap Sub,
The Labor Select International Equity, The Global Fixed Income, The
International Fixed Income, The Emerging Markets, The Global Equity and The
Diversified Core Fixed Income Portfolios, their investment adviser or
sub-adviser) as to rates paid and charged for similar transactions throughout
the securities industry. In some instances, Pooled Trust, Inc. pays a minimal
share transaction cost when the transaction presents no difficulty.
Securities transactions for The International Equity, The
International Mid-Cap Sub, The Labor Select International Equity, The Global
Equity, The Emerging Markets, The Global Fixed Income, The International Fixed
Income, The High Yield Bond, The Real Estate Investment Trust and The
Diversified Core Fixed Income Portfolios may be effected in foreign markets
which may not allow negotiation of commissions or where it is customary to pay
fixed rates.
During the fiscal years ended October 31, 1995, 1996 and 1997, the
aggregate dollar amounts of brokerage commissions paid by the Portfolios listed
below amounted to the following:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
The Large-Cap Value Equity Portfolio $137,685 $117,326 $108,104
The 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 Emerging Markets Portfolio(3) $92,535 N/A N/A
The Global Equity Portfolio(4) $5,176 N/A N/A
</TABLE>
(1) Commenced operations on December 19, 1995.
(2) Commenced operations on December 6, 1995.
(3) Commenced operations on April 14, 1997.
(4) Commenced operations on October 15, 1997.
-47-
<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:
<TABLE>
<CAPTION>
Portfolio Brokerage
Transactions Commissions
Amounts Amounts
------------ -----------
<S> <C> <C>
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
</TABLE>
(1) Commenced operations on April 14, 1997.
As provided in the Securities Exchange Act of 1934 and each Portfolio's
Investment Management Agreement, higher commissions are permitted to be paid to
broker/dealers who provide brokerage and research services than to
broker/dealers who do not provide such services if such higher commissions are
deemed reasonable in relation to the value of the brokerage and research
services provided. Although transactions are directed to broker/dealers who
provide such brokerage and research services, Pooled Trust, Inc. believes that
the commissions paid to such broker/dealers are not, in general, higher than
commissions that would be paid to broker/dealers not providing such services and
that such commissions are reasonable in relation to the value of the brokerage
and research services provided. In some instances, services may be provided to
the investment advisers which constitute in some part brokerage and research
services used by the investment advisers in connection with their investment
decision-making process and constitute in some part services used by them in
connection with administrative or other functions not related to their
investment decision-making process. In such cases, the investment advisers will
make a good faith allocation of brokerage and research services and will pay out
of their own resources for services used by them in connection with
administrative or other functions not related to their investment
decision-making process. In addition, so long as no fund is disadvantaged,
portfolio transactions which generate commissions or their equivalent are
allocated to broker/dealers who provide daily portfolio pricing services to
Pooled Trust, Inc. and to other funds in the Delaware Investments family.
Subject to best price and execution, commissions allocated to brokers providing
such pricing services may or may not be generated by the funds receiving the
pricing service.
-48-
<PAGE>
Combined orders for two or more accounts or funds engaged in the
purchase or sale of the same security may be placed if the judgment is made that
joint execution is in the best interest of each participant and will result in
best price and execution. Transactions involving commingled orders are allocated
in a manner deemed equitable to each account or fund. When a combined order is
executed in a series of transactions at different prices, each account
participating in the order may be allocated an average price obtained from the
executing broker. It is believed that the ability of the accounts to participate
in volume transactions will generally be beneficial to the accounts and funds.
Although it is recognized that, in some cases, the joint execution of orders
could adversely affect the price or volume of the security that a particular
account or fund may obtain, it is the opinion of the investment advisers, the
Board of Directors of Pooled Trust, Inc. and the Board of Trustees of Foundation
Funds that the advantages of combined orders outweigh the possible disadvantages
of separate transactions.
Consistent with the Conduct Rules of the National Association of
Securities Dealers, Inc., and subject to seeking best price and execution,
orders may be placed with broker/dealers that have agreed to defray certain
Portfolio expenses, such as custodian fees.
Portfolio Turnover
Portfolio trading will be undertaken principally to accomplish each
Portfolio's objective in relation to anticipated movements in the general level
of interest rates. A Portfolio is free to dispose of portfolio securities at any
time, subject to complying with the Code and the 1940 Act, when changes in
circumstances or conditions make such a move desirable in light of the
investment objective. A Portfolio will not attempt to achieve or be limited to a
predetermined rate of portfolio turnover. Such a turnover always will be
incidental to transactions undertaken with a view to achieving a Portfolio's
investment objective.
The degree of portfolio activity may affect brokerage costs of a
Portfolio and taxes payable by a Portfolio's shareholders. A turnover rate of
100% would occur, for example, if all the investments in a Portfolio's
securities at the beginning of the year were replaced by the end of the year. In
investing for capital appreciation, a relevant Portfolio may hold securities for
any period of time. Portfolio turnover will also be increased by The Aggressive
Growth Portfolio, either of The Real Estate Investment Trust Portfolios, The
International Equity Portfolio, The Emerging Markets Portfolio, The Global
Equity Portfolio, The Diversified Core Fixed Income Portfolio, The Asset
Allocation Portfolio, The Small-Cap Growth Equity Portfolio and The Growth and
Income Portfolio, if the Portfolio writes a large number of call options which
are subsequently exercised. To the extent a Portfolio realizes gains on
securities held for less than six months, such gains are taxable to the
shareholder subject to tax or to a Portfolio at ordinary income tax rates. The
turnover rate also may be affected by cash requirements from redemptions and
repurchases of Portfolio shares. Total brokerage costs generally increase with
higher portfolio turnover rates.
Under normal circumstances: (1) the annual portfolio turnover rate of
The International Equity Portfolio is not expected to exceed 50%; (2) the annual
portfolio turnover rate of The Global Fixed Income Portfolio, The International
Fixed Income Portfolio and The Limited-Term Maturity Portfolio is not expected
to exceed 200%; (3) the annual portfolio turnover rate of The Large-Cap Value
Equity Portfolio, The 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, The High-Yield Bond Portfolio, The Growth and Income Portfolio
and The Asset Allocation Portfolio is not expected to exceed 100%; (4) the
annual portfolio turnover rate of The Intermediate Fixed Income Portfolio and
The Aggregate Fixed Income Portfolio is not expected to exceed 250%; (5) the
annual portfolio turnover rate of The International Mid-Cap Sub Portfolio is not
expected to exceed 50%; (6) the annual portfolio turnover rate of The
Diversified Core
-49-
<PAGE>
Fixed Income Portfolio is not expected to exceed 50%; and (7) the annual
portfolio turnover rate of The Small-Cap Growth Equity Portfolio is expected to
be 100%. The portfolio turnover rate of a Portfolio is calculated by dividing
the lesser of purchases or sales of securities for the particular fiscal year by
the monthly average of the value of the securities owned by the Portfolio during
the particular fiscal year, exclusive of securities whose maturities at the time
of acquisition are one year or less.
The portfolio turnover rates of the following Portfolios for the past
two fiscal years were as follows:
<TABLE>
<CAPTION>
October 31, 1997 October 31, 1996
---------------- ----------------
<S> <C> <C>
The Large-Cap Value Equity Portfolio 73% 74%
The 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.
-50-
<PAGE>
PURCHASING SHARES
The following supplements the disclosure provided in the Portfolios'
Prospectuses.
Delaware Distributors, L.P. serves as the national distributor for each
Portfolio's shares. See the related Prospectus for information on how to invest.
Pooled Trust, Inc. or Foundation Funds, as applicable, reserves the right to
suspend sales of Portfolio shares, and reject any order for the purchase of
Portfolio shares if in the opinion of management such rejection is in the
Portfolio's best interest.
Certificates representing shares purchased are not ordinarily issued
unless a shareholder submits a specific request. Certificates are not issued in
the case of Class B Shares or Class C Shares of The Real Estate Investment Trust
Portfolio or The International Mid-Cap Sub Portfolio shares or in the case of
any retirement plan account including self-directed IRAs. However, purchases not
involving the issuance of certificates are confirmed to the investor and
credited to the shareholder's account on the books maintained on behalf of
Pooled Trust, Inc. The investor will have the same rights of ownership with
respect to such shares as if certificates had been issued. An investor that is
permitted to obtain a certificate may receive a certificate representing full
share denominations purchased by sending a letter signed by each owner of the
account to the Transfer Agent requesting the certificate. No charge is assessed
by Pooled Trust, Inc. or Foundation Funds for any certificate issued. A
shareholder may be subject to fees for replacement of a lost or stolen
certificate, under certain conditions, including the cost of obtaining a bond
covering the lost or stolen certificate. Please contact the Portfolios for
further information. Investors who hold certificates representing any of their
shares may only redeem those shares by written request. The investor's
certificate(s) must accompany such request.
Purchasing Shares (The Real Estate Investment Trust Portfolio class of The Real
Estate Investment Trust Portfolio and all other Portfolios 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 International or an affiliate of Delaware to make
investments in the Portfolios by a contribution of securities in-kind to such
Portfolios.
Purchasing Shares (The International Mid-Cap Sub Portfolio)
Shares of The International Mid-Cap Sub Portfolio are offered and sold
on a continuous basis to investors who currently have, or concurrently with
their investment establish, an investment advisory relationship with Delaware
International with respect to equity securities and who have authorized Delaware
International to allocate a portion of those assets to the Portfolio. Shares are
sold at the net asset value next
-51-
<PAGE>
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 fund in the Delaware
Investments family, the Manager or any of the Manager's affiliates if the
purchases are made pursuant to a payroll deduction program. Shares purchased
pursuant to the Uniform Gifts to Minors Act or the Uniform Transfers to Minors
Act and shares purchased in connection with an Automatic Investing Plan are
subject to a minimum initial purchase of $250 and a minimum subsequent purchase
of $25. Accounts opened under an Asset Planner Service are subject to a minimum
initial investment of $2,000 per Asset Planner strategy selected. There are no
minimum purchase requirements for REIT Fund Institutional Class ("Institutional
Class Shares").
Each purchase of Class B Shares is subject to a maximum purchase
limitation of $250,000. For Class C Shares, each purchase must be in an amount
that does not exceed $1,000,000. See Investment Plans for purchase limitations
applicable to retirement plans. Pooled Trust, Inc. will reject any purchase
order for more than $250,000 of Class B Shares and $1,000,000 or more of Class C
Shares. An investor may exceed these limitations by making cumulative purchases
over a period of time. In doing so, an investor should keep in mind, however,
that reduced front-end sales charges apply to investments of $100,000 or more in
Class A Shares, and that Class A Shares are subject to lower annual 12b-1 Plan
expenses than Class B Shares and Class C Shares and generally are not subject to
a CDSC.
The NASD has adopted Conduct Rules, as amended, relating to investment
company sales charges. Pooled Trust, Inc. and the Distributor intend to operate
in compliance with these rules.
Class A Shares are purchased at the offering price, which reflects a
maximum front-end sales charge of 4.75%; however, lower front-end sales charges
apply for larger purchases. See the table in the appropriate Prospectus. Class A
Shares are also subject to annual 12b-1 Plan expenses for the life of the
investment.
Class B Shares are purchased at net asset value and are subject to a
CDSC of: (i) 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.
-52-
<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,
absent any applicable fee waiver, annual 12b-1 Plan expenses of up to a maximum
of 0.30% of the average daily net assets of Class A Shares, or to purchase
either Class B or Class C Shares and have the entire initial purchase amount
invested in the Portfolio with the investment thereafter subject to a CDSC and
annual 12b-1 Plan expenses.
Class A Shares
Purchases of $100,000 or more of Class A Shares at the offering price
carry reduced front-end sales charges and may include a series of purchases over
a 13-month period under a Letter of Intention signed by the purchaser. See
Front-End Sales Charge Alternative - Class A Shares in the appropriate
Prospectus for a table illustrating reduced front-end sales charge. See also
Special Purchase Features - Class A Shares, below for more information on ways
in which investors can avail themselves of reduced front-end sales charges and
other purchase features.
Certain dealers who enter into an agreement to provide extra training
and information on Delaware Investments products and services and who increase
sales of funds in the Delaware Investments family may receive an additional
commission of up to 0.15% of the offering price in connection with sales of
Class A Shares. Such dealers must meet certain requirements in terms of
organization and distribution capabilities and their ability to increase sales.
The Distributor should be contacted for further information on these
requirements as well as the basis and circumstances upon which the additional
commission will be paid. Participating dealers may be deemed to have additional
responsibilities under the securities laws.
Dealer's Commission
As described more fully in the related Prospectus, for initial
purchases of Class A Shares of $1,000,000 or more, a dealer's commission may be
paid by the Distributor to financial advisers through whom such purchases are
effected. See Front-End Sales Charge Alternative - Class A Shares in the related
Prospectus for the applicable schedule and further details.
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Contingent Deferred Sales Charge - Class B Shares and Class C Shares
Class B and Class C Shares are purchased without a front-end sales
charge. Class B Shares redeemed within six years of purchase may be subject to a
CDSC at the rates set forth above, and Class C Shares redeemed within 12 months
of purchase may be subject to a CDSC of 1%. CDSCs are charged as a percentage of
the dollar amount subject to the CDSC. The charge will be assessed on an amount
equal to the lesser of the net asset value at the time of purchase of the shares
being redeemed or the net asset value of those shares at the time of redemption.
No CDSC will be imposed on increases in net asset value above the initial
purchase price, nor will a CDSC be assessed on redemptions of shares acquired
through reinvestment of dividends or capital gains distributions. See Waiver of
Contingent Deferred Sales Charge - Class B and Class C Shares under Redemption
and Exchange in the related Prospectus for a list of the instances in which the
CDSC is waived.
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
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any reimbursement from such Classes. Subject to seeking best price and
execution, the Classes may, from time to time, buy or sell portfolio securities
from or to firms which receive payments under the Plans.
From time to time, the Distributor may pay additional amounts from its
own resources to dealers for aid in distribution or for aid in providing
administrative services to shareholders.
The Plans and the Distribution Agreement, as amended, have been
approved by the Board of Directors of Pooled Trust, Inc., including a majority
of the directors who are not "interested persons" (as defined in the 1940 Act)
of Pooled Trust, Inc. and who have no direct or indirect financial interest in
the Plans by vote cast in person at a meeting duly called for the purpose of
voting on the Plans and such Agreement. Continuation of the Plans and the
Distribution Agreement, as amended, must be approved annually by the Board of
Directors in the same manner, as specified above.
Each year, the directors must determine whether continuation of the
Plans is in the best interest of shareholders of, respectively, the Class A
Shares, Class B Shares and Class C Shares and that there is a reasonable
likelihood of the Plan relating to a Class providing a benefit to that Class.
The Plans and the Distribution Agreement, as amended, may be terminated at any
time without penalty by a majority of those directors who are not "interested
persons" or by a majority vote of the outstanding voting securities of the
relevant Class. Any amendment materially increasing the maximum percentage
payable under the Plans must likewise be approved by a majority vote of the
outstanding voting securities of the relevant Class, as well as by a majority
vote of those directors who are not "interested persons." With respect to the
Class A Share Plan, any material increase in the maximum percentage payable
thereunder must also be approved by a majority of the outstanding voting
securities of the Class B Shares. Also, any other material amendment to the
Plans must be approved by a majority vote of the directors including a majority
of the noninterested directors of Pooled Trust, Inc. having no interest in the
Plans. In addition, in order for the Plans to remain effective, the selection
and nomination of directors who are not "interested persons" of Pooled Trust,
Inc. must be effected by the directors who themselves are not "interested
persons" and who have no direct or indirect financial interest in the Plans.
Persons authorized to make payments under the Plans must provide written reports
at least quarterly to the Board of Directors for their review.
Other Payments to Dealers - Class A, Class B and Class C Shares
From time to time, at the discretion of the Distributor, all registered
broker/dealers whose aggregate sales of the Class A, B and C Shares exceed
certain limits as set by the Distributor, may receive from the Distributor an
additional payment of up to 0.25% of the dollar amount of such sales. The
Distributor may also provide additional promotional incentives or payments to
dealers that sell shares of the funds in the Delaware Investments family. In
some instances, these incentives or payments may be offered only to certain
dealers who maintain, have sold or may sell certain amounts of shares. The
Distributor may also pay a portion of the expense of preapproved dealer
advertisements promoting the sale of shares of funds in the Delaware Investments
family.
Special Purchase Features - Class A Shares
Buying Class A Shares at Net Asset Value
Class A Shares may be purchased without a front-end sales charge under
the Dividend Reinvestment Plan and, under certain circumstances, the Exchange
Privilege and the 12-Month Reinvestment Privilege.
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Current and former officers, trustees and employees of Pooled Trust,
Inc., any other fund in the Delaware Investments family, the Manager, the
Manager's affiliates or any of the Manager's affiliates that may in the future
be created, legal counsel to the funds and registered representatives and
employees of broker/dealers who have entered into Dealer's Agreements with the
Distributor may purchase Class A Shares of the Portfolio and any of the funds in
the Delaware Investments family, including any fund that may be created, at net
asset value per share. Family members of such persons at their direction, and
any employee benefit plan established by any of the foregoing funds,
corporations, counsel or broker/dealers may also purchase Class A Shares at net
asset value. Class A Shares may also be purchased at net asset value by current
and former officers, directors and employees (and members of their families) of
the Dougherty Financial Group LLC. Purchases of Class A Shares may also be made
by clients of registered representatives of an authorized investment dealer at
net asset value within 12 months after the registered representative changes
employment, if the purchase is funded by proceeds from an investment where a
front-end sales charge, contingent deferred sales charge or other sales charge
has been assessed.
Purchases of Class A Shares may also be made at net asset value by bank
employees who provide services in connection with agreements between the bank
and unaffiliated brokers or dealers concerning sales of shares of funds in the
Delaware Investments family. Officers, directors and key employees of
institutional clients of the Manager, or any of its affiliates, may purchase
Class A Shares at net asset value. Moreover, purchases may be effected at net
asset value for the benefit of the clients of brokers, dealers and registered
investment advisers affiliated with a broker or dealer, if such broker, dealer
or investment adviser has entered into an agreement with the Distributor
providing specifically for the purchase of Class A Shares in connection with
special investment products, such as wrap accounts or similar fee based
programs. Such purchasers are required to sign a letter stating that the
purchase is for investment only and that the securities may not be resold except
to the issuer. Such purchasers may also be required to sign or deliver such
other documents as The Real Estate Investment Trust Portfolio may reasonably
require to establish eligibility for purchase at net asset value.
Investors in Delaware Investments Unit Investment Trusts may reinvest
monthly dividend checks and/or repayment of invested capital into Class A Shares
of any of the funds in the Delaware Investments family at net asset value.
Purchases of Class A Shares at net asset value may also be made by the
following: financial institutions investing for the account of their trust
customers if they are not eligible to purchase shares of the Institutional
Class; any group retirement plan (excluding defined benefit pension plans), or
such plans of the same employer, for which plan participant records are
maintained on the Retirement Financial Services, Inc. proprietary record keeping
system that (i) has in excess of $500,000 of plan assets invested in Class A
Shares of funds in the Delaware Investments family and any stable value product
available through the funds in the Delaware Investments family, or (ii) is
sponsored by an employer that has at any point after May 1, 1997 had more than
100 employees while such plan has held Class A Shares of a fund in the Delaware
Investments family and such employer has properly represented to Retirement
Financial Services, Inc. in writing that it has the requisite number of
employees and has received written confirmation back from Retirement Financial
Services, Inc.
Investments in Class A Shares made by plan level and/or participant
retirement accounts that are for the purpose of repaying a loan taken from such
accounts will be made at net asset value. Loan repayments made to a Delaware
Investments account in connection with loans originated from accounts previously
maintained by another investment firm will also be invested at net asset value.
The Portfolio must be notified in advance that the trade qualifies for
purchase at net asset value.
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Letter of Intention
The reduced front-end sales charges described above with respect to the
Class A Shares are also applicable to the aggregate amount of purchases made by
any such purchaser previously enumerated within a 13-month period pursuant to a
written Letter of Intention provided by the Distributor and signed by the
purchaser, and not legally binding on the signer or Pooled Trust, Inc., which
provides for the holding in escrow by the Transfer Agent of 5% of the total
amount of Class A Shares intended to be purchased until such purchase is
completed within the 13-month period. A Letter of Intention may be dated to
include shares purchased up to 90 days prior to the date the Letter is signed.
The 13-month period begins on the date of the earliest purchase. If the intended
investment is not completed, except as noted below, the purchaser will be asked
to pay an amount equal to the difference between the front-end sales charge on
the Class A Shares purchased at the reduced rate and the front-end sales charge
otherwise applicable to the total shares purchased. If such payment is not made
within 20 days following the expiration of the 13-month period, the Transfer
Agent will surrender an appropriate number of the escrowed shares for redemption
in order to realize the difference. Such purchasers may include the value (at
offering price at the level designated in their Letter of Intention) of all
their shares of the Portfolio and of any class of any of the other mutual funds
in the Delaware Investments family (except shares of any fund in the Delaware
Investments family which does not carry a front-end sales charge, CDSC or
Limited CDSC, other than shares of Delaware Group Premium Fund, Inc.
beneficially owned in connection with the ownership of variable insurance
products, unless they were acquired through an exchange from a Delaware
Investments fund which carried a front-end sales charge, CDSC or Limited CDSC)
previously purchased and still held as of the date of their Letter of Intention
toward the completion of such Letter.
Employers offering a Delaware Investments retirement plan may also
complete a Letter of Intention to obtain a reduced front-end sales charge on
investments of Class A Shares made by the plan. The aggregate investment level
of the Letter of Intention will be determined and accepted by the Transfer Agent
at the point of plan establishment. The level and any reduction in front-end
sales charge will be based on actual plan participation and the projected
investments in funds in the Delaware Investments family that are offered with a
front-end sales charge, CDSC or Limited CDSC for a 13-month period. The Transfer
Agent reserves the right to adjust the signed Letter of Intention based on this
acceptance criteria. The 13-month period will begin on the date this Letter of
Intention is accepted by the Transfer Agent. If actual investments exceed the
anticipated level and equal an amount that would qualify the plan for further
discounts, any front-end sales charges will be automatically adjusted. In the
event this Letter of Intention is not fulfilled within the 13-month period, the
plan level will be adjusted (without completing another Letter of Intention) and
the employer will be billed for the difference in front-end sales charges due,
based on the plan's assets under management at that time. Employers may also
include the value (at offering price at the level designated in their Letter of
Intention) of all their shares intended for purchase that are offered with a
front-end sales charge, CDSC or Limited CDSC of any class. Class B Shares and
Class C Shares of the Portfolio and other funds in the Delaware Investments
family which offer corresponding classes of shares may also be aggregated for
this purpose.
Combined Purchases Privilege
In determining the availability of the reduced front-end sales charge
previously set forth with respect to Class A Shares, purchasers may combine the
total amount of any combination of Class A Shares, Class B Shares and/or Class C
Shares of the Portfolio, as well as shares of any other class of any of the
other funds in the Delaware Investments family (except shares of any Delaware
Investments fund which does not carry a front-end sales charge, CDSC or Limited
CDSC, other than shares of Delaware Group Premium Fund, Inc. beneficially owned
in connection with the ownership of variable insurance products, unless they
were acquired through an exchange from a fund in the Delaware Investments family
which carried a front-end sales charge,
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CDSC or Limited CDSC). In addition, assets held by investment advisory clients
of the Manager or its affiliates in a stable value account may be combined with
other Delaware Investments fund holdings.
The privilege also extends to all purchases made at one time by an
individual; or an individual, his or her spouse and their children under 21; or
a trustee or other fiduciary of trust estates or fiduciary accounts for the
benefit of such family members (including certain employee benefit programs).
Right of Accumulation
In determining the availability of the reduced front-end sales charge
with respect to Class A Shares, purchasers may also combine any subsequent
purchases of Class A Shares, Class B Shares and Class C Shares of the Portfolio,
as well as shares of any other class of any of the other fund in the Delaware
Investments family which offer such classes (except shares of any Delaware
Investments fund which does not carry a front-end sales charge, CDSC or Limited
CDSC, other than shares of Delaware Group Premium Fund, Inc. beneficially owned
in connection with the ownership of variable insurance products, unless they
were acquired through an exchange from shares from a fund in the Delaware
Investments family which carried a front-end sales charge, CDSC or Limited
CDSC). If, for example, any such purchaser has previously purchased and still
holds Class A Shares and/or shares of any other of the classes described in the
previous sentence with a value of $40,000 and subsequently purchases $60,000 at
offering price of additional shares of Class A Shares, the charge applicable to
the $60,000 purchase would be 3.75%. For the purpose of this calculation, the
shares presently held shall be valued at the public offering price that would
have been in effect were the shares purchased simultaneously with the current
purchase. Investors should refer to the table of sales charges for Class A
Shares to determine the applicability of the Right of Accumulation to their
particular circumstances.
12-Month Reinvestment Privilege
Holders of Class A Shares (and of the Institutional Class holding
shares which were acquired through an exchange from one of the other mutual
funds in the Delaware Investments family offered with a front-end sales charge)
who redeem such shares of the Portfolio have one year from the date of
redemption to reinvest all or part of their redemption proceeds in Class A
Shares of the Portfolio or in Class A Shares of any of the other funds in the
Delaware Investments family, subject to applicable eligibility and minimum
purchase requirements, in states where shares of such other funds may be sold,
at net asset value without the payment of a front-end sales charge. This
privilege does not extend to Class A Shares where the redemption of the shares
triggered the payment of a Limited CDSC. Persons investing redemption proceeds
from direct investments in mutual funds in the Delaware Investments family
offered without a front-end sales charge will be required to pay the applicable
sales charge when purchasing Class A Shares. The reinvestment privilege does not
extend to a redemption of either Class B Shares or Class C Shares.
Any such reinvestment cannot exceed the redemption proceeds (plus any
amount necessary to purchase a full share). The reinvestment will be made at the
net asset value next determined after receipt of remittance. A redemption and
reinvestment could have income tax consequences. It is recommended that a tax
adviser be consulted with respect to such transactions. Any reinvestment
directed to a fund in which the investor does not then have an account will be
treated like all other initial purchases of a fund's shares. Consequently, an
investor should obtain and read carefully the prospectus for the fund in which
the investment is intended to be made before investing or sending money. The
prospectus contains more complete information about the fund, including charges
and expenses.
Investors should consult their financial advisers or the Transfer
Agent, which also serves as the Portfolio's shareholder servicing agent, about
the applicability of the Limited CDSC (see Contingent Deferred
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Sales Charge for Certain Redemptions of Class A Shares Purchased at Net Asset
Value under Redemption and Exchange in the related Prospectus) in connection
with the features described above
Group Investment Plans
Group Investment Plans which are not eligible to purchase shares of the
Institutional Class may also benefit from the reduced front-end sales charges
for investments in Class A Shares set forth in the table in the related
Prospectus, based on total plan assets. If a company has more than one plan
investing in the Delaware Investments family, then the total amount invested in
all plans would be used in determining the applicable front-end sales charge
reduction upon each purchase, both initial and subsequent, upon notification to
the Portfolio at the time of each such purchase. Employees participating in such
Group Investment Plans may also combine the investments made in their plan
account when determining the applicable front-end sales charge on purchases to
non-retirement Delaware Investments accounts if they so notify the Portfolio in
connection with each purchase. For other retirement plans and special services,
see Retirement Plans for the Fund Classes under Investment Plans for information
about Retirement Plans.
Institutional Class Shares of the Portfolio
Institutional Class Shares of the Portfolio are available for purchase
only by: (a) retirement plans introduced by persons not associated with brokers
or dealers that are primarily engaged in the retail securities business and
rollover individual retirement accounts from such plans; (b) tax-exempt employee
benefit plans of Delaware, Delaware International or their affiliates and
securities dealer firms with a selling agreement with the Distributor; (c)
institutional advisory accounts of Delaware, Delaware International or their
affiliates and those having client relationships with Delaware, Delaware
International or their affiliates and their corporate sponsors, as well as
subsidiaries and related employee benefit plans and rollover individual
retirement accounts from such institutional advisory accounts; (d) a bank, trust
company and similar financial institution investing for its own account or for
the account of its trust customers for whom such financial institution is
exercising investment discretion in purchasing Institutional Class Shares,
except where the investment is part of a program that requires payment to the
financial institution of a Rule 12b-1 Plan fee; and (e) registered investment
advisers investing on behalf of clients that consist solely of institutions and
high net-worth individuals having at least $1,000,000 entrusted to the adviser
for investment purposes, but only if the adviser is not affiliated or associated
with a broker or dealer and derives compensation for its services exclusively
from its clients for such advisory services.
Institutional Class Shares of the Portfolio are available for purchase
at net asset value, without the imposition of a front-end or contingent deferred
sales charge and are not subject to Rule 12b-1 expenses.
Investment Plans
Reinvestment Plan/Open Account
Unless otherwise designated by shareholders in writing, dividends from
net investment income and distributions from realized securities profits, if
any, will be automatically reinvested in additional shares of the respective
Class (based on the net asset value in effect on the payable date) and will be
credited to the shareholder's account on that date. All dividends and
distributions of the Institutional Class Shares are reinvested in the accounts
of the holders of such shares (based on the net asset value in effect on the
reinvestment date). A confirmation of each dividend payment from net investment
income will be mailed to shareholders quarterly. A confirmation of any
distributions from realized securities profits will be mailed to shareholders in
the first quarter of the fiscal year.
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Under the Reinvestment Plan/Open Account, shareholders may purchase and
add full and fractional shares to their plan accounts at any time either through
their investment dealers or by sending a check or money order to The Portfolio.
Such purchases, which must meet the minimum subsequent purchase requirements
stated in the related Prospectus and this Statement of Additional Information,
are made for Class A Shares at the public offering price and for Class B Shares,
Class C Shares and Institutional Class Shares at the net asset value, at the end
of the day of receipt. A reinvestment plan may be terminated at any time. This
plan does not assure a profit nor protect against depreciation in a declining
market.
Reinvestment of Dividends in Other Funds in the Delaware Investments Family
Subject to applicable eligibility and minimum initial purchase
requirements of each fund and the limitations set forth below, holders of Class
A, Class B and Class C Shares may automatically reinvest their dividends and/or
distributions in any of the mutual funds in the Delaware Investments family,
including the Portfolio, in states where their shares may be sold. Such
investments will be at net asset value at the close of business on the
reinvestment date without any front-end sales charge or service fee. The
shareholder must notify the Transfer Agent in writing and must have established
an account in the fund into which the dividends and/or distributions are to be
invested. Any reinvestment directed to a fund in which the investor does not
then have an account, will be treated like all other initial purchases of a
fund's shares. Consequently, an investor should obtain and read carefully the
prospectus for the fund in which the investment is intended to be made before
investing or sending money. The prospectus contains more complete information
about the fund, including charges and expenses. See also Additional Methods of
Adding to Your Investment - Dividend Reinvestment Plan under How to Buy Shares
in the related Prospectus.
Subject to the following limitations, dividends and/or distributions
from other funds in the Delaware Investments family may be invested in shares of
the Portfolio, provided an account has been established. Dividends from Class A
Shares may not be directed to Class B Shares or Class C Shares. Dividends from
Class B Shares may only be directed to other Class B Shares and dividends from
Class C Shares may only be directed to other Class C Shares. See Appendix
B-Classes Offered in the related Prospectus for the funds in the Delaware
Investments family that are eligible for investment by holders of Portfolio
shares.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money Purchase
Pension Plans, 401(k) Defined Contribution Plans, 403(b)(7) Deferred
Compensation Plans or 457 Deferred Compensation Plans.
Investing by Electronic Fund Transfer
Direct Deposit Purchase Plan--Investors may arrange for the Portfolio
to accept for investment in Class A, Class B or Class C Shares, through an agent
bank, preauthorized government or private recurring payments. This method of
investment assures the timely credit to the shareholder's account of payments
such as social security, veterans' pension or compensation benefits, federal
salaries, Railroad Retirement benefits, private payroll checks, dividends, and
disability or pension fund benefits. It also eliminates lost, stolen and delayed
checks.
Automatic Investing Plan--Shareholders of Class A, Class B and Class C
Shares may make automatic investments by authorizing, in advance, monthly
payments directly from their checking account for deposit into their Portfolio
account. This type of investment will be handled in either of the following
ways. (1) If the shareholder's bank is a member of the National Automated
Clearing House Association ("NACHA"), the amount of the investment will be
electronically deducted from his or her account by Electronic Fund Transfer
("EFT"). The shareholder's checking account will reflect a debit each month at a
specified date although no
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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 advantage
of either service must complete an authorization form. Either service can be
discontinued by the shareholder at any time without penalty by giving written
notice.
Payments to the Portfolio from the federal government or its agencies
on behalf of a shareholder may be credited to the shareholder's account after
such payments should have been terminated by reason of death or otherwise. Any
such payments are subject to reclamation by the federal government or its
agencies. Similarly, under certain circumstances, investments from private
sources may be subject to reclamation by the transmitting bank. In the event of
a reclamation, the Portfolio may liquidate sufficient shares from a
shareholder's account to reimburse the government or the private source. In the
event there are insufficient shares in the shareholder's account, the
shareholder is expected to reimburse the Portfolio.
Direct Deposit Purchases by Mail
Shareholders may authorize a third party, such as a bank or employer,
to make investments directly to their Portfolio accounts. The Portfolio will
accept these investments, such as bank-by-phone, annuity payments and payroll
allotments, by mail directly from the third party. Investors should contact
their employers or financial institutions who in turn should contact the
Portfolio for proper instructions.
Wealth Builder Option
Shareholders can use the Wealth Builder Option to invest in Class A
Shares, Class B Shares or Class C Shares through regular liquidations of shares
in their accounts in other mutual funds in the Delaware Investments family.
Shareholders of the Classes may elect to invest in one or more of the other
mutual funds in the Delaware Investments family through the Wealth Builder
Option. See Wealth Builder Option and Redemption and Exchange in the related
Prospectus.
Under this automatic exchange program, shareholders can authorize
regular monthly investments (minimum of $100 per fund) to be liquidated from
their account and invested automatically into other mutual funds in the Delaware
Investments family, subject to the conditions and limitations set forth in the
related Prospectus. The investment will be made on the 20th day of each month
(or, if the fund selected is not open that day, the next business day) at the
public offering price or net asset value, as applicable, of the fund selected on
the date of investment. No investment will be made for any month if the value of
the shareholder's account is less than the amount specified for investment.
Periodic investment through the Wealth Builder Option does not insure
profits or protect against losses in a declining market. The price of the fund
into which investments are made could fluctuate. Since this
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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.
Asset Planner
To invest in Delaware Investments funds using the Asset Planner asset
allocation service, you should complete a Asset Planner Account Registration
Form, which is available only from a financial adviser or investment dealer.
Effective as of September 1, 1997, the Asset Planner Service is only available
to financial advisers or investment dealers who have previously used this
service.
The Asset Planner service offers a choice of four predesigned asset
allocation strategies (each with a different risk/reward profile) in
predetermined percentages in Delaware Investments funds. With the help of a
financial adviser, you may also design a customized asset allocation strategy.
The sales charge on an investment through the Asset Planner service is
determined by the individual sales charges of the underlying funds and their
percentage allocation in the selected Strategy. Exchanges from existing Delaware
Investments accounts into the Asset Planner service may be made at net asset
value under the circumstances described under Investing by Exchange in the
Prospectus. The minimum initial investment per Strategy is $2,000; subsequent
investments must be at least $100. Individual fund minimums do not apply to
investments made using the Asset Planner service. Generally, only shares within
the same class may be used within the same Strategy. However, Class A Shares of
The Real Estate Investment Trust Portfolio and of other funds in the Delaware
Investments family may be used in the same Strategy with consultant class shares
that are offered by certain other funds in the Delaware Investments family.
An annual maintenance fee, currently $35 per Strategy, is due at the
time of initial investment and by September 30th of each subsequent year. The
fee, payable to Delaware Service Company, Inc. to defray extra costs associated
with administering the Asset Planner service, will be deducted automatically
from one of the funds within your Asset Planner account if not paid by September
30th. However, effective November 1, 1996, the annual maintenance fee is waived
until further notice. Investors who utilize the Asset Planner for an IRA will
continue to pay an annual IRA fee of $15 per Social Security number.
Investors will receive a customized quarterly Strategy Report
summarizing all Asset Planner investment performance and account activity during
the prior period. Confirmation statements will be sent following all
transactions other than those involving a reinvestment of distributions.
Certain shareholder services are not available to investors using the
Asset Planner service, due to its special design. These include Delaphone,
Checkwriting, Wealth Builder Option and Letter of Intention. Systematic
Withdrawal Plans are available after the account has been open for two years.
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Retirement Plans for the Fund Classes
An investment in a Portfolio may be suitable for tax-deferred
retirement plans. Delaware Investments offers a full spectrum of retirement
plans, including the 401(k) deferred compensation plan, Individual Retirement
Account ("IRA") and the new Roth IRA and Education IRA.
Among the retirement plans the Delaware Investments offers, Class B
Shares are available for investment only by Individual Retirement Accounts,
SIMPLE IRAs, Roth IRAs, Education IRAs, Simplified Employee Pension Plans,
Salary Reduction Simplified Employee Pension Plans and 403(b) and 457 Deferred
Compensation Plans. The CDSC may be waived on certain redemptions of Class B
Shares and Class C Shares. See Waiver of Contingent Deferred Sales Charge under
Redemption and Exchange in the Prospectus for Class B Shares and Class C Shares
for a list of the instances in which the CDSC is waived.
Purchases of Class B Shares are subject to a maximum purchase
limitation of $250,000 for retirement plans. Purchases of Class C Shares must be
in an amount that is less than $1,000,000 for such plans. The maximum purchase
limitations apply only to the initial purchase of shares by the retirement plan.
Minimum investment limitations generally applicable to other investors
do not apply to retirement plans other than Individual Retirement Accounts, for
which there is a minimum initial purchase of $250 and a minimum subsequent
purchase of $25 regardless of which Class is selected. Retirement plans may be
subject to plan establishment fees, annual maintenance fees and/or other
administrative or trustee fees. Fees are based upon the number of participants
in the plan as well as the services selected. Additional information about fees
is included in retirement plan materials. Fees are quoted upon request. Annual
maintenance fees may be shared by Delaware Management Trust Company, the
Transfer Agent, other affiliates of the Manager and others that provide services
to such plans.
Certain shareholder investment services available to non-retirement
plan shareholders may not be available to retirement plan shareholders. Certain
retirement plans may qualify to purchase Institutional Class Shares. For
additional information on any of the Plans and Delaware's retirement services,
call the Shareholder Service Center telephone number.
It is advisable for an investor considering any one of the retirement
plans described below to consult with an attorney, accountant or a qualified
retirement plan consultant. For further details, including applications for any
of these plans, contact your investment dealer or the Distributor.
Taxable distributions from the retirement plans described below may be
subject to withholding.
Please contact your investment dealer or the Distributor for the
special application forms required for the plans described below.
Prototype Profit Sharing or Money Purchase Pension Plans
Prototype Plans are available for self-employed individuals,
partnerships, corporations and other eligible forms of organizations. These
plans can be maintained as Section 401(k), profit sharing or money purchase
pension plans. Contributions may be invested only in Class A Shares and Class C
Shares.
Individual Retirement Account ("IRA")
A document is available for an individual who wants to establish an IRA
and make contributions which may be tax-deductible, even if the individual is
already participating in an employer-sponsored retirement plan.
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Even if contributions are not deductible for tax purposes, as indicated below,
earnings will be tax-deferred. In addition, an individual may make contributions
on behalf of a spouse who has no compensation for the year; however,
participation may be restricted based on certain income limits.
IRA Disclosures
The Taxpayer Relief Act of 1997 provides new opportunities for
investors. Individuals have five types of tax-favored IRA accounts that can be
utilized depending on the individual's circumstances. A new Roth IRA and
Education IRA are available in addition to the existing deductible IRA and
non-deductible IRA.
Deductible and Non-deductible IRAs
An individual can contribute up to $2,000 in his or her IRA each year.
Contributions may or may not be deductible depending upon the taxpayer's
adjusted gross income ("AGI") and whether the taxpayer is an active participant
in an employer sponsored retirement plan. Even if a taxpayer is an active
participant in an employer sponsored retirement plan, the full $2,000 is still
available if the taxpayer's AGI is below $30,000 ($50,000 for taxpayers filing
joint returns) for years beginning after December 31, 1997. A partial deduction
is allowed for married couples with income between $50,000 and $60,000, and for
single individuals with incomes between $30,000 and $40,000. These income
phase-out limits reach $80,000-$100,000 in 2007 for joint filers and
$50,000-$60,000 in 2005 for single filers. No deductions are available for
contributions to IRAs by taxpayers whose AGI after IRA deductions exceeds the
maximum income limit established for each year and who are active participants
in an employer sponsored retirement plan.
Taxpayers who are not allowed deductions on IRA contributions still can
make non-deductible IRA contributions of as much as $2,000 for each working
spouse and defer taxes on interest or other earnings from the IRAs.
Under the new law, a married individual is not considered an active
participant in an employer sponsored retirement plan merely because the
individual's spouse is an active participant if the couple's combined AGI is
below $150,000. The maximum deductible IRA contribution for a married individual
who is not an active participant, but whose spouse is, is phased out for
combined AGI between $150,000 and $160,000.
Conduit (Rollover) IRAs
Certain individuals who have received or are about to receive eligible
rollover distributions from an employer-sponsored retirement plan or another IRA
may rollover the distribution tax-free to a Conduit IRA. The rollover of the
eligible distribution must be completed by the 60th day after receipt of the
distribution; however, if the rollover is in the form of a direct
trustee-to-trustee transfer without going through the distributee's hand, the
60-day limit does not apply.
A distribution qualifies as an "eligible rollover distribution" if it
is made from a qualified retirement plan, a 403(b) plan or another IRA and does
not constitute one of the following:
(i) Substantially equal periodic payments over the employee's life or
life expectancy or the joint lives or life expectancies of the employee and
his/her designated beneficiary;
(ii) Substantially equal installment payments for a period certain of
10 or more years;
(iii) A distribution, all of which represents a required minimum
distribution after attaining age 70 1/2;
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(iv) A distribution due to a Qualified Domestic Relations Order to an
alternate payee who is not the spouse (or former spouse) of the employee; and
(v) A distribution of after-tax contributions which is not includable
in income.
Roth IRAs
For taxable years beginning after December 31, 1997, non-deductible
contributions of up to $2,000 per year can be made to a new Roth IRA. As a
result of the Internal Revenue Service Restructuring and Reform Act of 1998 (the
"1998 Act"), the $2,000 annual limit will not be reduced by any contributions to
a deductible or nondeductible IRA for the same year. The maximum contribution
that can be made to a Roth IRA is phased out for single filers with AGI between
$95,000 and $110,000, and for couples filing jointly with AGI between $150,000
and $160,000. Qualified distributions from a Roth IRA would be exempt from
federal taxes. Qualified distributions are distributions (1) made after the
five-taxable year period beginning with the first taxable year for which a
contribution was made to a Roth IRA and (2) that are (a) made on or after the
date on which the individual attains age 59 1/2, (b) made to a beneficiary on or
after the death of the individual, (c) attributed to the individual being
disabled, or (d) for a qualified special purpose (e.g., first time homebuyer
expenses).
Distributions that are not qualified distributions would always be
tax-free if the taxpayer is withdrawing contributions, not accumulated earnings.
Taxpayers with AGI of $100,000 or less are eligible to convert an
existing IRA (deductible, nondeductible and conduit) to a Roth IRA. Earnings and
contributions from a deductible IRA are subject to a tax upon conversion;
however, no 10% excise tax for early withdrawal would apply. If the conversion
is done prior to January 1, 1999, then the income from the conversion can be
included in income ratably over a four-year period beginning with the year of
conversion.
Education IRAs
For taxable years beginning after December 31, 1997, an Education IRA
has been created exclusively for the purpose of paying qualified higher
education expenses. Taxpayers can make non-deductible contributions up to $500
per year per beneficiary. The $500 annual limit is in addition to the $2,000
annual contribution limit applicable to IRAs and Roth IRAs. Eligible
contributions must be in cash and made prior to the date the beneficiary reaches
age 18. Similar to the Roth IRA, earnings would accumulate tax-free. There is no
requirement that the contributor be related to the beneficiary, and there is no
limit on the number of beneficiaries for whom one contributor can establish
Education IRAs. In addition, multiple Education IRAs can be created for the same
beneficiaries, however, the contribution limit of all contributions for a single
beneficiary cannot exceed $500 annually.
This $500 annual contribution limit for Education IRAs is phased out
ratably for single contributors with modified AGI between $95,000 and $110,000,
and for couples filing jointly with modified AGI of between $150,000 and
$160,000. Individuals with modified AGI above the phase-out range are not
allowed to make contributions to an Education IRA established on behalf of any
other individual.
Distributions from an Education IRA are excludable from gross income to
the extent that the distribution does not exceed qualified higher education
expenses incurred by the beneficiary during the year the distribution is made
regardless of whether the beneficiary is enrolled at an eligible educational
institution on a full-time, half-time, or less than half-time basis.
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Any balance remaining in an Education IRA at the time a beneficiary
becomes 30 years old must be distributed, and the earnings portion of such a
distribution will be includible in gross income of the beneficiary and subject
to an additional 10% penalty tax if the distribution is not for qualified higher
educations expenses. Tax-free (and penalty-free) transfers and rollovers of
account balances from one Education IRA benefiting one beneficiary to another
Education IRA benefiting a different beneficiary (as well as redesignations of
the named beneficiary) is permitted, provided that the new beneficiary is a
member of the family of the old beneficiary and that the transfer or rollover is
made before the time the old beneficiary reaches age 30 and the new beneficiary
reaches age 18.
A company or association may establish a Group IRA or Group Roth IRA
for employees or members who want to purchase shares of the Portfolio.
Investments generally must be held in the IRA until age 59 1/2 in order
to avoid premature distribution penalties, but distributions generally must
commence no later than April 1 of the calendar year following the year in which
the participant reaches age 70 1/2. Individuals are entitled to revoke the
account, for any reason and without penalty, by mailing written notice of
revocation to Delaware Management Trust Company within seven days after the
receipt of the IRA Disclosure Statement or within seven days after the
establishment of the IRA, except, if the IRA is established more than seven days
after receipt of the IRA Disclosure Statement, the account may not be revoked.
Distributions from the account (except for the pro-rata portion of any
nondeductible contributions) are fully taxable as ordinary income in the year
received. Excess contributions removed after the tax filing deadline, plus
extensions, for the year in which the excess contributions were made are subject
to a 6% excise tax on the amount of excess. Premature distributions
(distributions made before age 59 1/2, except for death, disability and certain
other limited circumstances) will be subject to a 10% excise tax on the amount
prematurely distributed, in addition to the income tax resulting from the
distribution. For information concerning the applicability of a CDSC upon
redemption of Class B Shares and Class C Shares, see Contingent Deferred Sales
Charge - Class B Shares and Class C Shares under Classes of Shares in the
Prospectus for Class B Shares and Class C Shares.
Effective January 1, 1997, the 10% premature distribution penalty will
not apply to distributions from an IRA that are used to pay medical expenses in
excess of 7.5% of adjusted gross income or to pay health insurance premiums by
an individual who has received unemployment compensation for 12 consecutive
weeks. In addition, effective January 1, 1998, the new law allows for premature
distribution without a 10% penalty if (i) the amounts are used to pay qualified
higher education expenses (including graduate level courses) of the taxpayer,
the taxpayer's spouse or any child or grandchild of the taxpayer or the
taxpayer's spouse, or (ii) used to pay acquisition costs of a principle
residence for the purchase of a first-time home by the taxpayer, taxpayer's
spouse or any child or grandchild of the taxpayer or the taxpayer's spouse. A
qualified first-time homebuyer is someone who has had no ownership interest in a
residence during the past two years. The aggregate amount of distribution for
first-time home purchases cannot exceed a lifetime cap of $10,000.
Simplified Employee Pension Plan ("SEP/IRA")
A SEP/IRA may be established by an employer who wishes to sponsor a
tax-sheltered retirement program by making contributions on behalf of all
eligible employees. Each of the Classes is available for investment by a
SEP/IRA.
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Salary Reduction Simplified Employee Pension Plan ("SAR/SEP")
Although new SAR/SEP plans may not be established after December 31,
1996, existing plans may continue to be maintained by employers having 25 or
fewer employees. An employer may elect to make additional contributions to such
existing plans.
Prototype 401(k) Defined Contribution Plan
Section 401(k) of the Code permits employers to establish qualified
plans based on salary deferral contributions. Effective January 1, 1997,
non-governmental tax-exempt organizations may establish 401(k) plans. Plan
documents are available to enable employers to establish a plan. An employer may
also elect to make profit sharing contributions and/or matching contributions
with investments in only Class A Shares and Class C Shares or certain other
funds in the Delaware Investments family. Purchases under the Plan may be
combined for purposes of computing the reduced front-end sales charge applicable
to Class A Shares as set forth in the table in the related Prospectus.
Deferred Compensation Plan for Public Schools and Non-Profit Organizations
("403(b)(7)")
Section 403(b)(7) of the Code permits public school systems and certain
non-profit organizations to use mutual fund shares held in a custodial account
to fund deferred compensation arrangements for their employees. A custodial
account agreement is available for those employers who wish to purchase shares
of any of the Classes in conjunction with such an arrangement. Applicable
front-end sales charges with respect to Class A Shares for such purchases are
set forth in the table in the related Prospectus.
Deferred Compensation Plan for State and Local Government Employees ("457")
Section 457 of the Code permits state and local governments, their
agencies and certain other entities to establish a deferred compensation plan
for their employees who wish to participate. This enables employees to defer a
portion of their salaries and any federal (and possibly state) taxes thereon.
Such plans may invest in shares of the Portfolio. Although investors may use
their own plan, there is available a Delaware Investments 457 Deferred
Compensation Plan. Interested investors should contact the Distributor or their
investment dealers to obtain further information. Applicable front-end sales
charges for such purchases of Class A Shares are set forth in the table in the
related Prospectus.
SIMPLE IRA
A SIMPLE IRA combines many of the features of an IRA and a 401(k) Plan
but is easier to administer than a typical 401(k) Plan. It requires employers to
make contributions on behalf of their employees and also has a salary deferral
feature that permits employees to defer a portion of their salary into the plan
on a pre-tax basis. A SIMPLE IRA is available only to plan sponsors with 100 or
fewer employees.
SIMPLE 401(k)
A SIMPLE 401(k) is like a regular 401(k) except that it is available
only to plan sponsors 100 or fewer employees and, in exchange for mandatory plan
sponsor contributions, discrimination testing is not required.
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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 days when the following
holidays are observed: New Year's Day, Martin Luther King, Jr.'s Birthday,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas. When the New York Stock Exchange is closed, Pooled
Trust, Inc. and Foundation Funds will generally be closed, pricing calculations
will not be made and purchase and redemption orders will not be processed.
Class A, B and C Shares and Institutional Class Shares of The Real Estate
Investment Trust Portfolio
Orders for purchases of Class A Shares are effected at the offering
price next calculated by the Fund in which shares are being purchased after
receipt of the order by Pooled Trust, Inc., its agent or certain other
authorized persons. See Distribution and Service under Investment Management
Agreements. Orders for purchases of Class B Shares, Class C Shares and the
Institutional Classes are effected at the net asset value per share next
calculated after receipt of the order by the Fund, its agent or certain other
authorized persons. Selling dealers are responsible for transmitting orders
promptly.
The offering price for Class A Shares consists of the net asset value
per share plus any applicable front-end sales charges. Offering price and net
asset value are computed as of the close of regular trading on the New York
Stock Exchange (ordinarily, 4 p.m., Eastern time) on days when the Exchange is
open. The New York Stock Exchange is scheduled to be open Monday through Friday
throughout the year except days when the following holidays are observed: New
Year's Day, Martin Luther King, Jr.'s Birthday, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas. When the
New York Stock Exchange is closed, Pooled Trust, Inc. will generally be closed,
pricing calculations will not be made and purchase and redemption orders will
not be processed.
Each Class will bear, pro-rata, all of the common expenses of the
Portfolio. The net asset values of all outstanding shares of each Class will be
computed on a pro-rata basis for each outstanding share based on the
proportionate participation in the Portfolio represented by the value of shares
of that Class. All income earned and expenses incurred by the Portfolio will be
borne on a pro-rata basis by each outstanding share of a Class, based on each
Class' percentage in the Portfolio represented by the value of shares of such
Classes, except that the Class A, Class B and Class C Shares alone will bear the
12b-1 Plan expenses payable under their respective Plans. Due to the specific
distribution expenses and other costs that would be allocable to each Class, the
dividends paid to each Class of The Real Estate Investment Trust Portfolio may
vary. However, the net asset value per share of each Class is expected to be
equivalent.
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* * *
The net asset value per share of each Portfolio is determined by
dividing the total market value of the Portfolio's investments and other assets,
less any liabilities, by the total outstanding shares of the Portfolio.
Securities listed on a U.S. securities exchange for which market quotations are
available are valued at the last quoted sale price on the day the valuation is
made. Price information on listed securities is taken from the exchange where
the security is primarily traded. Securities listed on a foreign exchange are
valued at the last quoted sale price available before the time when net assets
are valued. Unlisted securities and listed securities not traded on the
valuation date for which market quotations are readily available are valued at a
price that is considered to best represent fair value within a range not in
excess of the current ask prices nor less than the current bid prices. Domestic
over-the-counter equities, domestic equity securities that are not traded and
U.S. government securities (and those of its agencies and instrumentalities) are
priced at the mean of the bid and ask price.
Bonds and other fixed-income securities are valued according to the
broadest and most representative market, which will ordinarily be the
over-the-counter market. Net asset value includes interest on fixed-income
securities, which is accrued daily. In addition, bonds and other fixed-income
securities may be valued on the basis of prices provided by a pricing service
when such prices are believed to reflect the fair market value of such
securities. The prices provided by a pricing service are determined without
regard to bid or last sale prices but take into account institutional size
trading in similar groups of securities and any developments related to the
specific securities. Securities not priced in this manner are valued at the most
recent quoted mean price or, when stock exchange valuations are used, at the
latest quoted sale price on the day of valuation. If there is no such reported
sale, the latest quoted mean price will be used. Securities with remaining
maturities of 60 days or less are valued at amortized cost, if it approximates
market value. In the event that amortized cost does not approximate market
value, market prices as determined above will be used.
Exchange-traded options are valued at the last reported sales price or,
if no sales are reported, at the mean between the last reported bid and ask
prices. Non-exchange traded options are valued at fair value using a
mathematical model. Futures contracts are valued at their daily quoted
settlement price. The value of other assets and securities for which no
quotations are readily available (including restricted securities) are
determined in good faith at fair value using methods determined by the Board of
Directors or Trustees, as applicable.
The securities in which The International Equity Portfolio, The
International Mid-Cap Sub Portfolio, The Labor Select International Equity
Portfolio, The Global Fixed Income Portfolio, The International Fixed Income
Portfolio, The Emerging Markets Portfolio and The Global Equity Portfolio (as
well as The Real Estate Investment Trust Portfolios, The High-Yield Bond
Portfolio, The Diversified Core Fixed Income Portfolio The Asset Allocation
Portfolio, The Small-Cap Growth Equity Portfolio and The Growth and Income
Portfolio, to the limited extent described in the Prospectus) may invest from
time to time may be listed primarily on foreign exchanges which trade on days
when the New York Stock Exchange is closed (such as holidays or Saturday). As a
result, the net asset value of those Portfolios may be significantly affected by
such trading on days when shareholders have no access to the Portfolios.
For purposes of calculating net asset value per share, all assets and
liabilities initially expressed in foreign currencies will be converted into
U.S. dollars at the mean between the bid and ask prices of such currencies
against the U.S. dollar as provided by an independent pricing service or any
major bank, including the Custodian Banks. Forward foreign currency contracts
are valued at the mean price of the contract.
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Interpolated values will be derived when the settlement date of the contract is
on an interim period for which quotations are not available. Foreign securities
and the prices of foreign securities denominated in foreign currencies are
translated into U.S. dollars at the mean between the bid and offer quotations of
such currencies based on rates in effect as of the close of the London Stock
Exchange.
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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. or Foundation Funds, as applicable, receives appropriate regulatory
approvals to permit such redemptions for the account of such investors.
Pooled Trust, Inc. and Foundation Funds has elected to be governed by
Rule 18f-1 under the 1940 Act pursuant to which Pooled Trust, Inc. is obligated
to redeem shares solely in cash up to the lesser of $250,000 or 1% of the net
asset value of each Portfolio during any 90-day period for any one shareholder.
The value of a Portfolio's investments is subject to changing market
prices. Redemption proceeds may be more or less than the shareholder's cost
depending upon the market value of the Portfolio's securities. Thus, a
shareholder redeeming shares of a Portfolio may, if such shareholder is subject
to federal income tax, sustain either a gain or loss, depending upon the price
paid and the price received for such shares.
Small Accounts
For all Portfolios except The International Mid-Cap Sub Portfolio, due
to the relatively higher cost of maintaining small accounts, Pooled Trust, Inc.
and Foundation Funds reserves the right to redeem Portfolio shares in any of its
accounts at the then-current net asset value if as a result of redemption or
transfer a shareholder's investment in a Portfolio has a value of less than
$500,000. However, before Pooled Trust, Inc. redeems such shares and sends the
proceeds to the shareholder, the shareholder will be notified in writing that
the value of the shares in the account is less than $500,000 and will be allowed
90 days from that date of notice
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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.
* * *
Pooled Trust, Inc. and Foundation Funds has available certain
redemption privileges, as described below. They are unavailable to shareholders
of The International Equity Portfolio, The 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.
Redemptions involving The Asset Allocation Portfolio will be forwarded to
Foundation Funds. Checks payable to the shareholder(s) of record will normally
be mailed three business days, but no later than seven days, after receipt of
the redemption request.
In addition, redemption proceeds can be transferred to your
predesignated bank account by wire or by check by calling Pooled Trust, Inc., as
described above. The Telephone Redemption Option on the Account Registration
Form must have been elected by the shareholder and filed with Pooled Trust, Inc.
before the request is received. Payment will be made by wire or check to the
bank account designated on the authorization form as follows:
1. Payment By Wire: Request that Federal Funds be wired to the bank
account designated on the Account Registration Form. Redemption proceeds will
normally be wired on the next business day following receipt of the redemption
request. There is no charge for this service. If the proceeds are wired to the
shareholder's account at a bank which is not a member of the Federal Reserve
System, there could be a delay in the crediting of the funds to the
shareholder's bank account.
2. Payment by Check: Request a check be mailed to the bank account
designated on the Account Registration Form. Redemption proceeds will normally
be mailed three business days, but no later than seven days, from the date of
the telephone request. This procedure will take longer than the Payment by Wire
option (1 above) because of the extra time necessary for the mailing and
clearing of the check after the bank receives it. If expedited payment under
these procedures could adversely affect a Portfolio, Pooled Trust, Inc. or as
applicable, Foundation Funds may take up to seven days to pay the shareholder.
To reduce the risk of attempted fraudulent use of the telephone
redemption procedure, payment will be made only to the bank account designated
on the Account Registration Form. If a shareholder wishes to change the bank
account designated for such redemption, a written request in accordance with the
instructions set forth in the Prospectus will be required.
Exchange Privilege
Shares of each Portfolio may be exchanged for shares of any other
Portfolio or for the institutional classes of the other funds in the Delaware
Investments family. Exchange requests should be sent to Delaware
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Pooled Trust, Inc., One Commerce Square, 2005 Market Street, Philadelphia, PA
19103 Attn: Client Services. Exchanges involving The Asset Allocation Portfolio
will be forwarded to Foundation Funds.
Any such exchange will be calculated on the basis of the respective net
asset values of the shares involved and will be subject to the minimum
investment requirements noted above. There is no sales commission or charge of
any kind, except for the special purchase and redemption reimbursement fees for
exchanges involving shares of The International Mid-Cap Sub Portfolio, The
Emerging Markets Portfolio and The Global Equity Portfolio. See Exchange
Privilege under Shareholder Services in the related Prospectus. The shares of a
Portfolio into which an exchange is made, if necessary, must be authorized for
sale in the state in which the investor is domiciled. Before making an exchange,
a shareholder should consider the investment objectives of the Portfolio to be
purchased.
Exchange requests may be made either by mail, FAX message or by
telephone. Telephone exchanges will be accepted only if the certificates for the
shares to be exchanged are held by Pooled Trust, Inc. or, as applicable,
Foundation Funds for the account of the shareholder and the registration of the
two accounts will be identical. Requests for exchanges received prior to 4 p.m.,
Eastern time, for the Portfolios will be processed as of the close of business
on the same day. Requests received after this time will be processed on the next
business day. Exchanges may also be subject to limitations as to amounts or
frequency, and to other restrictions established by the Board of Directors or
Trustees, as applicable, to assure that such exchanges do not disadvantage a
Portfolio and its shareholders. Exchanges into and out of The International
Equity Portfolio, The Labor Select International Equity Portfolio, The Global
Fixed Income Portfolio, The International Fixed Income Portfolio and The Global
Equity Portfolio shall be subject to the special purchase and redemption
procedures identified in sections of the related Prospectus entitled Purchase of
Shares and Redemption of Shares.
For federal income tax purposes, an exchange between Portfolios is a
taxable event for shareholders subject to federal income tax, and, accordingly,
a gain or loss may be realized. Pooled Trust, Inc. and Foundation Funds reserves
the right to suspend or terminate or amend the terms of the exchange privilege
upon 60 days' written notice to client shareholders.
* * *
Neither Pooled Trust, Inc., Foundation Funds, the Portfolios nor the
Portfolios' transfer agent, Delaware Service Company, Inc., is responsible for
any losses incurred in acting upon written or telephone instructions for
redemption or exchange of Portfolio shares which are reasonably believed to be
genuine. With respect to such telephone transactions, Pooled Trust, Inc. or, as
applicable, Foundation Funds will ensure that reasonable procedures are used to
confirm that instructions communicated by telephone are genuine (including
verification of a form of personal identification) as if it does not, Pooled
Trust, Inc., Foundation Funds or Delaware Service Company, Inc. may be liable
for any losses due to unauthorized or fraudulent transactions. A written
confirmation will be provided for all purchase, exchange and redemption
transactions initiated by telephone.
Class A, B and C Shares and Institutional Class Shares of The Real Estate
Investment Trust Portfolio
Any shareholder may require The Real Estate Investment Trust Portfolio
to redeem shares by sending a written request, signed by the record owner or
owners exactly as the shares are registered, to the Portfolio, at 1818 Market
Street, Philadelphia, PA 19103. In addition, certain expedited redemption
methods described below are available when stock certificates have not been
issued. Certificates are issued for the Class A Shares and Institutional Class
Shares only if a shareholder specifically requests them. Certificates are not
issued for
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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. A
signature guarantee can be obtained from a commercial bank, a trust company or a
member of a securities transfer association medallion program. A signature
guarantee cannot be provided by a notary public. A signature guarantee is
designed to protect the shareholders, the Fund and its agents from fraud. The
Fund reserves the right to reject a signature guarantee supplied by an
institution based on its creditworthiness. The Portfolio may request further
documentation from corporations, retirement plans, executors, administrators,
trustees or guardians.
In addition to redemption of Portfolio shares, the Distributor, acting
as agent of The Real Estate Investment Trust Portfolio, offers to repurchase
Portfolio shares from broker/dealers acting on behalf of shareholders. The
redemption or repurchase price, which may be more or less than the shareholder's
cost, is the net asset value per share next determined after receipt of the
request in good order by the Portfolio, its agent or certain other authorized
persons, subject to any applicable CDSC or Limited CDSC. See Distribution and
Service under Investment Management Agreements. This is computed and effective
at the time the offering price and net asset value are determined. See
Determining Offering Price and Net Asset Value. The Portfolio and the
Distributor end their business days at 5 p.m., Eastern time. This offer is
discretionary and may be completely withdrawn without further notice by the
Distributor.
Orders for the repurchase of Portfolio shares which are submitted to
the Distributor prior to the close of its business day will be executed at the
net asset value per share computed that day (subject to any applicable CDSC or
Limited CDSC), if the repurchase order was received by the broker/dealer from
the shareholder prior to the time the offering price and net asset value are
determined on such day. The selling dealer has the responsibility of
transmitting orders to the Distributor promptly. Such repurchase is then settled
as an ordinary transaction with the broker/dealer (who may make a charge to the
shareholder for this service) delivering the shares repurchased.
Certain redemptions of Class A Shares purchased at net asset value may
result in the imposition of a Limited CDSC. See Contingent Deferred Sales Charge
for Certain Redemptions of Class A Shares Purchased at Net Asset Value under
Redemption and Exchange in the related Prospectus. Redemptions of Class B Shares
are subject to the following CDSC: (i) 4% if shares are redeemed within two
years of purchase; (ii) 3% if shares are redeemed during the third or fourth
year following purchase; (iii) 2% if shares are redeemed during the fifth year
following purchase; and (iv) 1% if shares are redeemed during the sixth year
following purchase. Class C Shares are subject to a CDSC of 1% if shares are
redeemed within 12 months following purchase. See Contingent Deferred Sales
Charge under Classes of Shares in the related Prospectus. Except for the
applicable CDSC or Limited CDSC, and with respect to the expedited payment by
wire described below, for which there is currently a $7.50 bank wiring cost,
neither The Portfolio nor its Distributor charges a fee for redemptions or
repurchases, but such fees could be charged at any time in the future.
Payment for shares redeemed will ordinarily be mailed the next business
day, but in no case later than seven days, after receipt of a redemption request
in good order; provided, however, that each commitment to mail or wire
redemption proceeds by a certain time, as described below, is modified by the
qualifications described in the next paragraph.
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The Portfolio will process written or telephone redemption requests to
the extent that the purchase orders for the shares being redeemed have already
been settled. The Portfolio will honor the redemption requests as to shares for
which a check was tendered as payment, but the Portfolio will not mail or wire
the proceeds until it is reasonably satisfied that the check has cleared. This
potential delay can be avoided by making investments by wiring Federal Funds.
If a shareholder has been credited with a purchase by a check which is
subsequently returned unpaid for insufficient funds or for any other reason, the
Portfolio will automatically redeem from the shareholder's account the shares
purchased by the check plus any dividends earned thereon. Shareholders may be
responsible for any losses to the Portfolio or to the Distributor.
In case of a suspension of the determination of the net asset value
because the New York Stock Exchange is closed for other than weekends or
holidays, or trading thereon is restricted or an emergency exists as a result of
which disposal by the Portfolio of securities owned by it is not reasonably
practical, or it is not reasonably practical for the Portfolio fairly to value
its assets, or in the event that the Securities and Exchange Commission has
provided for such suspension for the protection of shareholders, the Portfolio
may postpone payment or suspend the right of redemption or repurchase. In such
case, the shareholder may withdraw the request for redemption or leave it
standing as a request for redemption at the net asset value next determined
after the suspension has been terminated.
Payment for shares redeemed or repurchased may be made either in cash
or kind, or partly in cash and partly in kind. Any portfolio securities paid or
distributed in kind would be valued as described in Determining Offering Price
and Net Asset Value. Subsequent sale by an investor receiving a distribution in
kind could result in the payment of brokerage commissions. However, Pooled
Trust, Inc. has elected to be governed by Rule 18f-1 under the 1940 Act pursuant
to which the Portfolio is obligated to redeem shares solely in cash up to the
lesser of $250,000 or 1% of the net asset value of the Portfolio during any
90-day period for any one shareholder.
The value of the Portfolio's investments is subject to changing market
prices. Thus, a shareholder reselling shares to the Portfolio may sustain either
a gain or loss, depending upon the price paid and the price received for such
shares.
Small Accounts
Before the Portfolio involuntarily redeems shares from an account that,
under the circumstances listed in the related Prospectus, has remained below the
minimum amounts required by the Portfolio's Prospectus and sends the proceeds to
the shareholder, the shareholder will be notified in writing that the value of
the shares in the account is less than $1,000 and will be allowed 60 days from
that date of notice to make an additional investment to meet the required
minimum of $1,000. See The Conditions of Your Purchase under How to Buy Shares
in the related Prospectus. Any redemption in an inactive account established
with a minimum investment may trigger mandatory redemption. No CDSC or Limited
CDSC will apply to the redemptions described in this paragraph.
* * *
The Portfolio has made available certain redemption privileges, as
described below. The Portfolio reserves the right to suspend or terminate these
expedited payment procedures upon 60 days' written notice to shareholders.
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Expedited Telephone Redemptions
Holders of Class A Shares, Class B Shares and Class C Shares or their
investment dealers of record wishing to redeem any amount of shares of $50,000
or less for which certificates have not been issued may call the Shareholder
Service Center at 800-523-1918 or, in the case of shareholders of the
Institutional Class, their Client Services Representative at 800-828-5052 prior
to the time the offering price and net asset value are determined, as noted
above, and have the proceeds mailed to them at the record address. Checks
payable to the shareholder(s) of record will normally be mailed the next
business day, but no later than seven days, after the receipt of the redemption
request. This option is only available to individual, joint and individual
fiduciary-type accounts.
In addition, redemption proceeds of $1,000 or more can be transferred
to your predesignated bank account by wire or by check by calling the phone
number listed above. An authorization form must have been completed by the
shareholder and filed with the Portfolio before the request is received. Payment
will be made by wire or check to the bank account designated on the
authorization form as follows:
1. Payment by Wire: Request that Federal Funds be wired to the bank
account designated on the authorization form. Redemption proceeds will normally
be wired on the next business day following receipt of the redemption request.
There is a $7.50 wiring fee (subject to change) charged by CoreStates Bank, N.A.
which will be deducted from the withdrawal proceeds each time the shareholder
requests a redemption from Class A Shares, Class B Shares or Class C Shares. If
the proceeds are wired to the shareholder's account at a bank which is not a
member of the Federal Reserve System, there could be a delay in the crediting of
the funds to the shareholder's bank account.
2. Payment by Check: Request a check be mailed to the bank account
designated on the authorization form. Redemption proceeds will normally be
mailed the next business day, but no later than seven days, from the date of the
telephone request. This procedure will take longer than the Payment by Wire
option (1 above) because of the extra time necessary for the mailing and
clearing of the check after the bank receives it.
Redemption Requirements: In order to change the name of the bank and
the account number it will be necessary to send a written request to the
Portfolio and a signature guarantee may be required. Each signature guarantee
must be supplied by an eligible guarantor institution. The Portfolio reserves
the right to reject a signature guarantee supplied by an eligible institution
based on its creditworthiness.
To reduce the shareholder's risk of attempted fraudulent use of the
telephone redemption procedure, payment will be made only to the bank account
designated on the authorization form.
If expedited payment under these procedures could adversely affect the
Portfolio, the Portfolio may take up to seven days to pay the shareholder.
Neither the Portfolio nor its Transfer Agent is responsible for any
shareholder loss incurred in acting upon written or telephone instructions for
redemption or exchange of Portfolio shares which are reasonably believed to be
genuine. With respect to such telephone transactions, the Portfolio will follow
reasonable procedures to confirm that instructions communicated by telephone are
genuine (including verification of a form of personal identification) as, if it
does not, the Portfolio or the Transfer Agent may be liable for any losses 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
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and redemption transactions initiated by telephone.
Systematic Withdrawal Plans
Shareholders of Class A Shares, Class B Shares and Class C Shares who
own or purchase $5,000 or more of shares at the offering price or net asset
value, as applicable for which certificates have not been issued may establish a
Systematic Withdrawal Plan for monthly withdrawals of $25 or more, or quarterly
withdrawals of $75 or more, although the Fund does not recommend any specific
amount of withdrawal. This $5,000 minimum does not apply for the Portfolio's
prototype retirement plans. Shares purchased with the initial investment and
through reinvestment of cash dividends and realized securities profits
distributions will be credited to the shareholder's account and sufficient full
and fractional shares will be redeemed at the net asset value calculated on the
third business day preceding the mailing date.
Checks are dated either the 1st or the 15th of the month, as selected
by the shareholder (unless such date falls on a holiday or a weekend), and are
normally mailed within two business days. Both ordinary income dividends and
realized securities profits distributions will be automatically reinvested in
additional shares of the Class at net asset value. This plan is not recommended
for all investors and should be started only after careful consideration of its
operation and effect upon the investor's savings and investment program. To the
extent that withdrawal payments from the plan exceed any dividends and/or
realized securities profits distributions paid on shares held under the plan,
the withdrawal payments will represent a return of capital and the share balance
may in time be depleted, particularly in a declining market.
The sale of shares for withdrawal payments constitutes a taxable event
and a shareholder may incur a capital gain or loss for federal income tax
purposes. This gain or loss may be long-term or short-term depending on the
holding period for the specific shares liquidated. Premature withdrawals from
retirement plans may have adverse tax consequences.
Withdrawals under this plan made concurrently with the purchases of
additional shares may be disadvantageous to the shareholder. Purchases of Class
A Shares through a periodic investment program in a fund managed by the Manager
must be terminated before a Systematic Withdrawal Plan with respect to such
shares can take effect, except if the shareholder is a participant in one of our
retirement plans or is investing in Delaware Investments funds which do not
carry a sales charge. Redemptions of Class A Shares pursuant to a Systematic
Withdrawal Plan may be subject to a Limited CDSC if the purchase was made at net
asset value and a dealer's commission has been paid on that purchase.
Redemptions of Class B Shares or Class C Shares pursuant to a Systematic
Withdrawal Plan may be subject to a CDSC, unless the annual amount selected to
be withdrawn is less than 12% of the account balance on the date that the
Systematic Withdrawal Plan was established. See Waiver of Contingent Deferred
Sales Charge - Class B and Class C Shares and Waiver of Limited Contingent
Deferred Sales Charge - Class A Shares under Redemption and Exchange in the
related Prospectus. Shareholders should consult their financial adviser to
determine whether a Systematic Withdrawal Plan would be suitable for them.
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.
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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.
The policy of Pooled Trust, Inc. and Foundation Funds, as applicable,
is to distribute substantially all of each Portfolio's net investment income and
any net realized capital gains in the amount and at the times that will avoid
any federal income or excise taxes. All dividends and capital gains
distributions of accounts in REIT Fund Institutional Class shall be
automatically reinvested in the Class. For all other Portfolios and Classes of
The Real Estate Investment Trust Portfolio, shareholders may elect to receive
dividends and capital gains distributions in cash, otherwise, all such dividends
and distributions will be automatically reinvested in the Portfolios. The
amounts of any dividend or capital gains distributions cannot be predicted.
All dividends out of net investment income, together with distributions
from short-term capital gains, will be taxable to those shareholders who are
subject to income taxes as ordinary income. (These distributions may be eligible
for the dividends-received deductions for corporations.) Any net long-term
capital gains distributed to those shareholders who are subject to income tax
will be taxable as such, regardless of the length of time a shareholder has
owned their shares. Of the dividends paid by The Large-Cap Value Equity
Portfolio and The Real Estate Investment Trust Portfolio for the fiscal year
ended October 31, 1997, 40% and 62%, respectively, were eligible for the
dividends-received deduction for corporations. For the fiscal year ended October
31, 1997, no portion of the dividends paid by The 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 is treated as a separate entity (and hence as a separate
"regulated investment company") for federal tax purposes. Any net capital gains
recognized by a Portfolio are distributed to its investors without need to
offset (for federal income tax purposes) such gains against any net capital
losses of another Portfolio.
Each year, Pooled Trust, Inc. or, as applicable, Foundation Funds will
mail information to investors on the amount and tax status of each Portfolio's
dividends and distributions. Shareholders should consult their own tax advisers
regarding specific questions as to federal, state or local taxes.
Each class of shares of The Real Estate Investment Trust Portfolio will
share proportionately in the investment income and expenses of the Portfolio,
except that Class A Shares, Class B Shares and Class C Shares alone will incur
distribution fees under their respective 12b-1 plans.
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TAXES
The following supplements the tax disclosure provided in the
Prospectuses.
Under the Taxpayer Relief Act of 1997 (the "1997 Act"), as revised by
the 1998 Act, the Fund is required to track its sales of portfolio securities
and to report its capital gain distributions to you according to the following
categories of holding periods:
"Pre-Act long-term capital gains": securities sold by a Portfolio
before May 7, 1997, that were held for more than 12 months. These gains
will be taxable to individual investors at a maximum rate of 28%.
"Mid-term capital gains" or "28 percent rate gain": securities sold by
a Portfolio after July 28, 1997 that were held more than one year but
not more than 18 months. These gains will be taxable to individual
investors at a maximum rate of 28%.
"1997 Act long-term capital gains" or "20 percent rate gain":
securities sold by the Fund between May 7, 1997 and July 28, 1997 that
were held for more than 12 months, and securities sold by the Fund
after July 28, 1997 that were held for more than 18 months. As revised
by the 1998 Act, this rate applies to securities held for more than 12
months for tax years beginning after December 31, 1997. These gains
will be taxable to individual investors at a maximum rate of 20% for
investors in the 28% or higher federal income tax brackets, and at a
maximum rate of 10% for investors in the 15% federal income tax
bracket.
"Qualified 5-year gains": For individuals in the 15% bracket, qualified
5-year gains are net gains on securities held for more than 5 years
which are sold after December 31, 2000. For individuals who are subject
to tax at higher rate brackets, qualified 5-year gains are net gains on
securities which are purchased after December 31, 2000 and are held for
more than 5 years. Taxpayers subject to tax at a higher rate brackets
may also make an election for shares held on January 1, 2001 to
recognize gain on their shares (any loss is disallowed) in order to
qualify such shares as qualified 5-year property as though purchased
after December 31, 2000. These gains will be taxable to individual
investors at a maximum rate of 18% for investors in the 28% or higher
federal income tax brackets, and at a maximum rate of 8% for investors
in the 15% federal income tax bracket when sold after the 5 year
holding period.
A portion of each Portfolio's dividends may qualify for the
dividends-received deduction for corporations provided in the federal income tax
law. The portion of dividends paid by a Portfolio that so qualifies will be
designated each year in a notice mailed to a Portfolio's shareholders, and
cannot exceed the gross amount of dividends received by a Portfolio from
domestic (U.S.) corporations that would have qualified for the
dividends-received deduction in the hands of a Portfolio if the Portfolio was a
regular corporation. The availability of the dividends-received deduction is
subject to certain holding period and debt financing restrictions imposed under
the Code on the corporation claiming the deduction. Under the 1997 Act, the
amount that a Portfolio may designate as eligible for the dividends-received
deduction will be reduced or eliminated if the shares on which the dividends
earned by a Portfolio were debt-financed or held by a Portfolio for less than a
46-day period during a 90-day period beginning 45 days before the ex-dividend
date and ending 45 days after the
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ex-dividend date. Similarly, if your Portfolio shares are debt-financed or held
by you for less than a 46-day period during a 90-day period beginning 45 days
before the ex-dividend date and ending 45 days after the ex-dividend date, then
the dividends-received deduction for Portfolio dividends on your shares may also
be reduced or eliminated. Even if designated as dividends eligible for the
dividends-received deduction, all dividends (including any deducted portion)
must be included in your alternative minimum taxable income calculation.
Shareholders will be notified annually by Pooled Trust, Inc. as to the
federal income tax status of dividends and distributions paid by their
Portfolio.
In addition to the federal taxes described above, shareholders may or
may not be subject to various state and local taxes. Because shareholders' state
and local taxes may be different than the federal taxes described above,
shareholders should consult their own tax advisers.
See also Other Tax Requirements under Accounting and Tax Issues in this
Part B.
Futures Contracts and Stock Options
(The Aggressive Growth Portfolio, The Real Estate Investment Trust Portfolios,
The Emerging Markets Portfolio, The Global Equity Portfolio, The Diversified
Core Fixed Income Portfolio, The Asset Allocation Portfolio, The Small-Cap
Growth Equity Portfolio and The Growth and Income Portfolio)
The Aggressive Growth Portfolio's, The Real Estate Investment Trust
Portfolios', The Emerging Markets Portfolio's, The Global Equity Portfolio's,
The Diversified Core Fixed Income Portfolio's, The Asset Allocation Portfolio's,
The Small-Cap Growth Equity Portfolio's and The Growth and Income Portfolio's
transactions in options and futures contracts will be subject to special tax
rules that may affect the amount, timing and character of distributions to
shareholders. For example, certain positions held by a Portfolio on the last
business day of each taxable year will be marked to market (i.e., treated as if
closed out) on such day, and any gain or loss associated with such positions
will be treated as 60% long-term and 40% short-term capital gain or loss.
Certain positions held by a Portfolio that substantially diminish its risk of
loss with respect to other positions in a Portfolio will constitute "straddles,"
which are subject to special tax rules that may cause deferral of the
Portfolio's losses, adjustments in the holding periods of Portfolio securities
and conversion of short-term into long-term capital losses. Certain tax
elections exist for straddles which could alter the effects of these rules. The
Portfolios will limit their activities in options and futures contracts to the
extent necessary to meet the requirements of Subchapter M of the Code.
Forward Currency Contracts
(The International Equity Portfolio, The International Mid-Cap Sub Portfolio,
The Labor Select International Equity Portfolio, The Real Estate Investment
Trust Portfolios, The Global Fixed Income Portfolio, The Emerging Markets
Portfolio, The International Fixed Income Portfolio, The Global Equity
Portfolio, The Diversified Core Fixed Income Portfolio, The Asset Allocation
Portfolio, The Small-Cap Growth Equity Portfolio and The Growth and Income
Portfolio)
The International Equity Portfolio, The International Mid-Cap Sub
Portfolio, The Labor Select International Equity Portfolio, The Real Estate
Investment Trust Portfolios, The Global Fixed Income Portfolio, The
International Fixed Income Portfolio, The Emerging Markets Portfolio, The Global
Equity Portfolio, The Diversified Core Fixed Income Portfolio, The Asset
Allocation Portfolio, The Small-Cap Growth Equity Portfolio and The Growth and
Income Portfolio will be required for federal income tax purposes to recognize
any gains and losses on forward currency contracts as of the end of each taxable
year as well as those actually realized during the year. In most cases, any such
gain or loss recognized with respect to a forward currency
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contract is considered to be ordinary income or loss. Furthermore, forward
currency futures contracts which are intended to hedge against a change in the
value of securities held by these Portfolios may affect the holding period of
such securities and, consequently, the nature of the gain or loss on such
securities upon disposition.
Special tax considerations also apply with respect to foreign
investments of these Portfolios. For example, certain foreign exchange gains and
losses (including exchange gains and losses on forward currency contracts)
realized by the Portfolio will be treated as ordinary income or losses.
State and Local Taxes
Shares of Pooled Trust, Inc. are exempt from Pennsylvania county
personal property tax.
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INVESTMENT MANAGEMENT AGREEMENTS
Delaware Management Company ("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, The Diversified
Core Fixed Income and The Asset Allocation, The Small-Cap Growth Equity and The
Growth and Income Portfolios, subject to the supervision and direction of Board
of Directors or Trustees of Pooled Trust, Inc. or, as applicable, Foundation
Funds. Delaware International Advisers Ltd. ("Delaware International"), Third
Floor, 80 Cheapside, London, England EC2V 6EE, furnishes similar services to The
International Equity, The International Mid-Cap Sub Portfolio, The Labor Select
International Equity, The Global Fixed Income, The International Fixed Income,
The Emerging Markets and The Global Equity Portfolios, and provides sub-advisory
services to The Diversified Core Fixed Income Portfolio subject to the
supervision and direction of Pooled Trust, Inc.'s Board of Directors. Lincoln
Investment Management, Inc. ("Lincoln") serves as sub-adviser to Delaware with
respect to The Real Estate Investment Trust Portfolios. Lincoln's address is 200
E. Berry Street, Fort Wayne, Indiana 46802.
Delaware and its predecessors have been managing the funds in the
Delaware Investments family since 1938. On July 31, 1998, Delaware and its
affiliates within Delaware Investments, including Delaware International
Advisers Ltd., were managing in the aggregate more than $43 billion in assets in
the various institutional or separately managed (approximately $25,873,990,000)
and investment company ($17,929,500,000) accounts.
Lincoln (formerly Lincoln National Investment Management Company) was
incorporated in 1930. As of July 31, 1998, Lincoln had approximately $39 billion
in assets under management.
The Investment Management Agreements for The Large-Cap Value Equity,
The 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. The Investment Management
Agreements for The Asset Allocation Portfolio, The Small-Cap Growth Equity
Portfolio and The Growth and Income Portfolio are each dated August 31, 1998 and
were approved by the initial shareholder on that date.
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<PAGE>
Each such Agreement has an initial term of two years and may be renewed
after its initial term only so long as such renewal and continuance are
specifically approved at least annually by the Board of Directors or Trustees,
as applicable, or by vote of a majority of the outstanding voting securities of
the Portfolio, and only if the terms of the renewal thereof have been approved
by the vote of a majority of the directors or trustees of Pooled Trust, Inc. or
Foundation Funds who are not parties thereto or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval. Each Agreement is terminable without penalty on 60 days' notice by the
directors of Pooled Trust, Inc., the trustees of Foundation Funds or by the
investment adviser. Each Agreement will terminate automatically in the event of
its assignment.
As compensation for the services to be rendered under their advisory
agreements, Delaware or, as relevant, Delaware International is entitled to an
advisory fee (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%****
The Asset Allocation Portfolio 0.05%
The Small-Cap Growth Equity Portfolio 0.75%
The Growth and Income Portfolio 0.55%
* 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.
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<PAGE>
*** 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.
**** 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, The Diversified
Core Fixed Income, The Asset Allocation, The Small-Cap Growth Equity and The
Growth and Income Portfolios.
Delaware, or as applicable Delaware International, has elected voluntarily
to waive that portion, if any of the annual investment advisory fees payable by
a particular Portfolio and to pay a Portfolio for its expenses to the extent
necessary to ensure that the expenses of that Portfolio (exclusive of taxes,
interest, brokerage commissions and extraordinary expenses) did not exceed, on
an annualized basis, the following percentages of average daily net assets from
the commencement of operations through October 31, 1998 (unless otherwise
noted):
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<PAGE>
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 0.70%
The Small/Mid-Cap Value Equity Portfolio 0.89%
The Labor Select International Equity Portfolio 0.96%
The Real Estate Investment Trust Portfolio 0.86%*
The Real Estate Investment Trust Portfolio II 0.86%
The Intermediate Fixed Income Portfolio 0.53%
The Aggregate Fixed Income Portfolio 0.53%
The Limited-Term Maturity Portfolio 0.43%
The Global Fixed Income Portfolio 0.60%**
The International Fixed Income Portfolio 0.60%***
The High-Yield Bond Portfolio 0.59%
The Emerging Markets Portfolio 1.55%
The Global Equity Portfolio 0.96%
The Diversified Core Fixed Income Portfolio 0.57%
The Asset Allocation Portfolio 0.15%****
The Small-Cap Growth Equity Portfolio 0.89%****
The Growth and Income Portfolio 0.68%****
* With respect to REIT Fund A Class, REIT Fund B Class, REIT Fund C Class
and REIT Fund Institutional Class of The Real Estate Investment Trust
Portfolio, Delaware has elected voluntarily to waive that portion, if any,
of the annual Investment Advisory Fee payable by such classes and to
reimburse each class for its expenses to the extent necessary to ensure
that the expenses of each class (exclusive of 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 October 31, 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
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<PAGE>
through April 30, 1994. Such waiver for The International Fixed Income
Portfolio was modified effective May 1, 1994 to provide that such
expenses of the Portfolio do not exceed, on an annual basis, 0.60%.
**** Effective from the commencement of operations through April 30, 1999.
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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 $441,785 earned $343,114 earned $255,586 earned
$433,247 paid $328,126 paid $237,776 paid
$8,538 waived $14,988 waived $17,810 waived
The 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").
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
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<PAGE>
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 each Portfolio under separate
Distribution Agreements dated as follows:
The Large-Cap Value Equity Portfolio April 3, 1995
The Aggressive Growth Portfolio April 3, 1995
The Intermediate Fixed Income Portfolio April 3, 1995
The Limited-Term Maturity Portfolio April 3, 1995
The International Equity Portfolio April 3, 1995
The Global Fixed Income Portfolio April 3, 1995
The International Fixed Income Portfolio April 3, 1995
The Real Estate Investment Trust Portfolio November 29, 1995
The Small/Mid-Cap Value Equity Portfolio November 29, 1995
The Labor Select International Equity Portfolio November 29, 1995
The High-Yield Bond Portfolio November 29, 1995
The Emerging Markets Portfolio April 14, 1997
The Global Equity Portfolio October 14, 1997
The Real Estate Investment Trust Portfolio II October 14, 1997.
The International Mid-Cap Sub Portfolio December 24, 1997
The Aggregate Fixed Income Portfolio December 24, 1997
The Diversified Core Fixed Income Portfolio December 24, 1997.
The Asset Allocation Portfolio August 31, 1998
The Small-Cap Growth Equity Portfolio August 31, 1998
The Growth and Income Portfolio August 31, 1998
Delaware Distributors, L.P. is an affiliate of the investment advisers and
bears all of the costs of promotion and distribution.
Delaware Service Company, Inc., an affiliate of Delaware, is Pooled Trust,
Inc.'s shareholder servicing, dividend disbursing and transfer agent for each
Portfolio pursuant to an Amended and Restated Shareholders Services Agreement
dated August 31, 1998. Delaware Service Company, Inc. also provides accounting
services to the Portfolio pursuant to the terms of a separate Fund Accounting
Agreement. Delaware Service Company, Inc.'s principal business address is 1818
Market Street, Philadelphia, PA 19103. It is also an indirect, wholly owned
subsidiary of DMH.
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<PAGE>
OFFICERS AND DIRECTORS
The business and affairs of Pooled Trust, Inc. and Foundation Funds are
managed under the direction of its Board of Directors or Trustees, as
applicable.
As of July 31, 1998, no one account held 25% or more of the outstanding
shares of any of Pooled Trust, Inc.'s Portfolios or Foundation Funds'
portfolios. As of July 31, 1998, the directors and officers of Pooled Trust,
Inc., as a group, owned less than 1% of the outstanding shares of The Real
Estate Investment Trust Portfolio; they did not hold shares of any of the other
Portfolios. As of July 31, 1998, the trustees and officers of Foundation Funds
did not hold any shares of the Portfolios.
As of July 31, 1998, management believes the following accounts held of
record 5% or more of the outstanding shares of a Portfolio. Management has no
knowledge of beneficial ownership.
Delaware Pooled Trust, Inc.
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
The Large-Cap Value
Equity Portfolio Northern Trust
TRST PHH Group
P.O. Box 92956
Chicago, IL 60675 622,822 10.88%
Mac & Co.
A/C LNFF5033902
Mutual Funds Operations
P.O. Box 3198
Pittsburgh, PA 15230 481,796 8.41%
Amsouth Bank TTEE FBO
Lloyd Nolan Foundation Retirement Plan
Attn: Trust Operations - Mutual Funds
P.O. Box 11426
Birmington, AL 25202 388,758 6.79%
Commerce Bank of Kansas City
Trust Burns & McDonnell
Employee Stock Ownership Plan
P.O. Box 419248
Kansas City, MO 64141 365,715 6.39%
Lasalle National Bank Trustee
FBO Metz Baking Company
P.O. Box 1443
Chicago, IL 60690 355,282 6.20%
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
The Large-Cap Cherrytrust & Co.
Value Equity FBO Colorado Open Shop
Portfolio Employers Pension Trust
C/O The Bank of Cherry Creek NA
3033 E. First Ave
Denver, CO 80206 343,086 5.99%
Strafe & Co.
For Consolidated Products
Profit Sharing Plan
P.O. Box 160
Westerville, OH 43086 320,799 5.60%
The Northern Trust Company
TRST Children's Memorial
Pension Trust
P.O. Box 92956
Chicago, IL 60675 294,829 5.15%
The Aggressive Crestar Bank
Growth Portfolio Cust the College of William and Mary
P.O. Box 8795
Blow Memorial Hall
Williamsburg, VA 23187 209,023 31.89%
The City of Groton
295 Meridian Street
Groton, CT 06340 126,514 19.30%
NCSC Staff Pension Plan
Defined Benefit
8403 Colesville Rd. Ste 1200
Silver Spring, MD 20910 116,006 17.69%
Philadelphia Association of Zeta Psi
Fraternity U/T/A E W Weil
613 Kirsch Avenue
Wayne, PA 19087 90,479 13.80%
Our Sunday Visitor, Inc.
200 Noll Plaza
Huntington, IN 46750 38,125 5.81%
</TABLE>
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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 3,070,753 8.34%
The Salvation Army
Eastern Territory
440 West Nyack Road
West Nyack, NY 10994 2,843,234 7.72%
The Intermediate
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 662,855 22.07%
Patterson & Co.
c/o CoreStates Bank
P.O. Box 7829
Philadelphia, PA 19101 428,145 14.25%
The City of Groton
295 Meridian Street
Groton, CT 06340 359,423 11.96%
Crestar Bank
Cust The College of William and Mary
Room 224 Private Funds Office
Blow Memorial Hall
P.O. Box 8795
Williamsburg, VA 23187 340,105 11.32%
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
The Intermediate NCSC Staff Pension Plan
Fixed Income Defined Benefit
Portfolio 8403 Colesville Rd. Ste 1200
Silver Spring, MD 20910 322,797 10.74%
Our Sunday Visitor Inc.
200 Noll Plaza
Huntington, IN 46750 204,301 6.80%
Philadelphia Association of Zeta Psi
Fraternity U/T/A E W Weil
613 Kirsch Avenue
Wayne, PA 19087 175,637 5.84%
Fleet National Bank TTEE
FBO International Terminal
Operating Pension
Attn: 50502918
P.O. Box 92800
Rochester, NY 14692 166,881 5.55%
The Limited-Term Delaware Management Company
Maturity Portfolio Attn. Joe Hastings
1818 Market Street
Philadelphia, PA 19103 2,100 100.00%
The Global
Fixed Income
Portfolio Public School Retirement System
of the City of ST Louis
One Mercantile Center
Suite 2607
St Louis, MO 63101 6,679,389 11.43%
Bankers Trust Co
FBO SLU Delaware Fund
Attn: Tom DeAngelo
34 Exchange Place MS 3029
Jersey City, NJ 07302 4,514,815 7.72%
Saxon & Co.
FBO Western Pennsylvania Teamsters
& Employers Pension Fund
P.O. Box 7780-1888
Philadelphia, PA 19183 4,357,039 7.45%
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
The Global Bost & Co.
Fixed Income Mutual Funds Operations
Portfolio P.O. Box 3198
Pittsburgh, PA 15230 4,028,764 6.89%
Washington Suburban Sanitary Commission
Employees Retirement Plan
14501 Sweitzer Ln.
Laurel, MD 20707 3,208,871 5.49%
The International
Fixed Income
Portfolio Montgomery County Public Schools
Employee's Pension & Retirement System
850 Hungerford Dr. Rm 154
Rockville, MD 20850 1,833,616 24.50%
Adventist Health System Sunbelt
Healthcare Corp.- Core
111 N. Orlando Ave.
Winter Park, FL 32789 1,831,227 24.47%
El Paso Firemen & Policemen's
Pension Fund Policemen's Division
8201 Lockheed Drive Ste. 229
El Paso, TX 79925 1,210,732 16.18%
Comerica Bank Trustee
Oakwood Pension Plan
P.O. Box 75000 M/C #3446
Detriot, MI 48275 907,821 12.13%
El Paso Firemen & Policemen's
Pension Fund Policemen's Division
8201 Lockheed Drive Ste. 229
El Paso, TX 79925 756,708 10.11%
The Bank of New York ITF
Unisource Group Trust 12/29/97
One Wall Street 12th Fl.
New York, NY 10005 521,024 6.96%
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
The Small/Mid-
Cap Value Equity
Portfolio The Lincoln National Life Insurance
Company
1300 South Clinton Street
Fort Wayne, IN 46802 352,941 99.99%
The Labor Select
International Equity
Portfolio Maritime Association IRA
Pension Fund
11550 Fuqua St Ste 425
Houston, TX 77034 2,071,578 28.20%
Operating Engineers
LCL 101 Pension
301 E. Armour Blvd. Suite 203
Kansas City, MO 64111 1,104,287 15.03%
Carpenters 626 Pension Fund
P.O. Box 740
Davis Road and Oakwood Lane
Valley Forge, PA 19482 786,333 10.70%
Local 25 S.E.I.U. & Participating
Enployees Pension Trust
111 W. Jackson Blvd Ste 2102
Chicago, IL 60604 570,318 7.76%
Operating Engineers Pension Trust Fund
8401 Corporate Drive Suite 200
Landover, MD 20785 431,204 5.87%
Keystone District Council of Carpenters
Pension Fund
524 S. 22nd Street
Harrisburg, PA 17104 421,441 5.73%
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
The Labor Select
International Equity
Portfolio First of America Trust Company
Cust Plumbers and Steamfitters
Local 137 Pension Trust
International Portfolio
P.O. Box 4042
Kalamazoo, MI 49002 381,856 5.19%
The Real Estate
Investment
Trust Portfolio Charles Schwab & Co, Inc.
A Class Special Custody Account for the
Exclusive Benefit of Custodians
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104 55,983 6.10%
The High-Yield
Bond Portfolio The Bank of New York ITF
Unisource Group Trust 12/29/97
One Wall Street 12th Fl.
New York, NY 10005 612,542 31.80%
Schwartz 1996 Charitable Remainder Unitrust
c/o TCS Group, L.L.C.
1200 Shermer Road Suite 212
Northbrook, IL 60062 348,252 18.08%
Chicago Trust Co.
FBO Lincoln National Corp.
Employees Retirement Plan
c/o Marshall & Ilsley Trust Co.
P.O. Box 2977
Milwaukee, WI 53201 347,376 18.03%
Melhorn & Co Shopmen's Iron
Workers Union #502 Pension Fund
C/O PNC Bank
1600 Market Street
Lower Level 2
Philadelphia, PA 19103 179,842 9.33%
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
The High-Yield
Bond Portfolio Mac & Co LCWF
Mutual Funds Operations
P.O. Box 3198
Pittsburgh PA 15320 159,244 8.26%
Trust Seven Hundred Thirty
U/A/D 4/2/94
c/o TCS Group, L.L.C.
1200 Shermer Road Suite 212
Northbrook, IL 60062 125,153 6.49%
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 125,153 6.49%
The Emerging
Markets
Portfolio Congra Master Pension Trust
One Congra Drive
Omaha, NE 68102 1,675,977 30.30%
Burlington Northern Santa Fe
Retirement Plan
1700 E. Golf Rd.
Schaumburg, IL 60173 1,024,092 18.51%
Father Flanagan's Trust Fund
14100 Crawford St.
Boys Town, NE 68010 904,395 16.35%
Mac & Co
Mutual Fund Operations
P.O. Box 3198
Pittsburgh, PA 15230 588,235 10.63%
Chicago Trust Company
FBO Lincoln National Corp.
Employees Retirement Trust
1000 N. Water St. TR 4
Milwaukee, WI 53202 549,182 9.93%
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
The Global
Equity Portfolio Lincoln National Life Insurance
Company
1300 S. Clinton Street
Fort Wayne, IN 46802 354,720 99.99%
REIT Fund
B Class MLPF&S For the Sole
Benefit of its Customers
4800 Deer Lake Drive E 2nd Fl.
Jacksonville, FL 32246 250,643 27.90%
REIT Fund
C Class MLPF&S For the Sole
Benefit of its Customers
4800 Deer Lake Drive E 2nd Fl.
Jacksonville, FL 32246 38,277 23.61%
REIT Fund
Institutional
Class DMC Employee Profit Sharing Plan
Delaware Management Company
1818 Market Street
Philadelphia, PA 19103 123,044 94.43%
The Real Estate
Investment Trust
Portfolio Class The Lincoln National Life Insurance
Company
1300 S. Clinton Street
Fort Wayne, IN 46802 1,474,826 43.88%
The Lincoln National Life Insurance
Company
1300 S. Clinton Street
Fort Wayne, IN 46802 1,260,377 37.50%
American States Insurance Company
500 Meridan Street
Indianapolis, IN 46204 625,797 18.61%
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
The Real Estate
Investment
Trust Portfolio II The Philadelphia Orchestra Association
1420 Locust Street Ste 400
Philadelphia, PA 19103 124,421 30.72%
Lincoln National Life Insurance
Company
1300 S. Clinton Street
Fort Wayne, IN 46802 123,303 30.45%
City of Groton
295 Merdian Street
Groton, CT 06340 71,785 17.72%
Marian and Speros Martel
Foundation, Inc.
1001 Fannin Street
Houston, TX 77002 63,475 16.67%
Family Health Council, Inc.
Money Purchase Pension Plan
2400 CNG Tower
Pittsburgh, PA 15222 21,904 5.40%
The Aggregate
Fixed Income
Portfolio Lincoln National Life Insurance
Company
1300 S. Clinton Street
Fort Wayne, IN 46802 235,294 99.99%
The Diversified
Core Fixed Income
Portfolio Lincoln National Life Insurance
Company
1300 S. Clinton Street
Fort Wayne, IN 46802 352,941 99.99%
</TABLE>
-100-
<PAGE>
Delaware Group Foundation Funds
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
Income Portfolio A Class RS DMTC MPP Plan 9,435 23.21%
Shiawassee Community TCH CU MPPP
Attn: Retirement Plans
1818 Market Street
Philadelphia, PA 19103-3638
DMTC C/F Profit Sharing Plan 9,175 22.57%
for Richard Scott
FBO Richard Scott
P.O. Box 80845
College Station
Fairbanks, AK 99708-0845
DMTC C/F Pension Plan 8,028 19.74%
for Richard Scott
FBO Richard Scott
P.O. Box 80845
College Station
Fairbanks, AK 99708-0845
Ann M. Garber 5,816 14.30%
92 Strasburg Pike
Lancaster, PA 17602-1322
RS DMTC 401(k) Plan 5,734 14.10%
Waltz Brothers 401(k)
Attn: Retirement Plans
1818 Market Street
Philadelphia, PA 19103-3638
Income Portfolio B Class NFSC FEBO # BQ7-019119 2,508 93.68%
R. James Benninghoff
5601 Coldwater Road
Fort Wayne, IN 46825-5450
Income Portfolio C Class H. Dale Zimmermann 2,247 93.00%
Norma J. Zimmermann JTWROS
775 Stone Hill Road
Shoemakersville, PA 19555-9046
</TABLE>
-101-
<PAGE>
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
Income Portfolio Delaware Management Business TR-DIA 5,925 99.99%
Institutional Class Attn: Joseph Hastings
1818 Market Street, 16th Floor
Philadelphia, PA 19103-3691
Balanced Portfolio A Class RS DMTC MPP Plan 9,926 19.57%
Shiawassee Community TCH CU MPPP
Attn: Retirement Plans
1818 Market Street
Philadelphia, PA 19103-3638
DMTC C/F Profit Sharing Plan 9,080 17.90%
for Richard Scott
FBO Richard Scott
P.O. Box 80845
College Station
Fairbanks, AK 99708-0845
DMTC C/F Pension Plan 7,945 15.66%
for Richard Scott
FBO Richard Scott
P.O. Box 80845
College Station
Fairbanks, AK 99708-0845
Glenn A. Shively and 5,364 10.57%
Deborah Z. Shively JT WROS
1401 Le Boutillier Road
Malvern, PA 19355-8741
Patricia A. McDaniel 5,077 10.01%
7500 Hampton Blvd., Apt. C2
Norfolk, VA 23505-1764
Mary E. Siegrist 4,775 9.41%
P.O. Box 288
Intercourse, PA 17534-0288
</TABLE>
-102-
<PAGE>
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
Balanced Portfolio B Class Sarah A. Anthony 9,349 24.64%
RR 3 Box 137
Kunkletown, PA 18058-9521
Attn: Mutual Funds 7,706 20.31%
BHC Securities Inc.
FAO 45021199 One Commerce Square 2005 market
Street, Suite 1200 Philadelphia, PA
19103-7042
DMTC C/F The Rollover IRA 5,440 14.34%
of Dewey H. Moon
2832 Fannie Thompson Road
Monroe, GA 30656-3445
Balanced Portfolio B Class DMTC Custodian for the IRA 3,451 9.09%
of Alfred R. Kroening
304 E. Arlington St.
Bangor, MI 49013-1444
Lucille F. Goss 2,733 7.20%
502 Elizabeth Drive, Apt. 313
Lancaster, PA 17601-4406
Patsy S. Charles 2,242 5.91%
P.O. Box 3
Willow Street, PA 17584-0003
</TABLE>
-103-
<PAGE>
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
Balanced Portfolio C Class Diabetes Foundation of 14,472 19.53%
Rhode Island, Inc.
1007 Waterman Ave.
East Providence, RI 02914
Elaine J. Avery 10,983 14.82%
1789 E. 91 St.
Brooklyn, NY 11236-5405
Rollie Culp and Deborah T. Culp JT WROS 9,885 13.34%
1143 Whitehall Rd.
Williamstown, NJ 08094-7684
DMTC C/F The Rollover IRA of 7,968 10.75%
Joan F. Sylvander
1757 E. 26th St.
Brooklyn, NY 11229-2405
DMTC C/F The Rollover IRA of 6,409 8.65%
Catherine A. Horch
133 Henry St., Apt. 8
Brooklyn, NY 11201-2250
DMTC C/F The Rollover IRA of 5,512 7.44%
Josephine Benfatti
2017 Kimball St.
Brooklyn, NY 11234-5021
Paul K. Graybill & Grace H. Graybill 4,947 6.67%
Ten ENT
4 Bomberger Road
Lititz, PA 17543-9510
Balanced Portfolio Delaware Management Business TR-DIA 5,905 100.00%
Institutional Class Attn: Joseph Hastings
1818 Market Street, 16th Fl.
Philadelphia, PA 19103-3691
</TABLE>
-104-
<PAGE>
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
Growth Portfolio A Class RS DMTC 401(k) Plan 15,148 29.81%
Angelheart Designs Inc.
Attn: Retirement Plans
1818 Market Street
Philadelphia, PA 19103-3638
DMTC C/F Profit Sharing Plan 8,908 17.53%
for Richard Scott
FBO Richard Scott
P.O. Box 80845
College Station
Fairbanks, AK 99708-0845
DMTC C/F Pension Plan 7,795 15.34%
for Richard Scott
FBO Richard Scott
P.O. Box 80845
College Station
Fairbanks, AK 99708-0845
RS DMTC 401(k) Plan 4,909 9.66%
Waltz Brothers 401(k)
Attn: Retirement Plans
1818 Market Street
Philadelphia, PA 19103-3638
DMTC C/F The 403(b)(7) Plan of 2,737 5.38%
D Rex Tyson
8920 Palmtree Ln.
Pembroke Pines, Fl 33024-4610
</TABLE>
-105-
<PAGE>
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
Growth Portfolio B Class NSFC FEBO # BQ5-00540 8,721 10.77%
Carolyn W. Shay
9 North Marsh Rd.
Savannah, GA 31410-1036
Jonathan A. Carver and 7,716 9.53%
Charles D. Carver, Sr. JT WROS
151 Amberidge Dr. NW
Cartersville, GA 30120
DMTC Custodian for IRA of 6,186 7.64%
Charlotte K. Sebacher
5 Meadow Way
Sharpsburg, GA 30277-9767
NSFC FEBO # BQ5-918326 5,155 6.36%
NSFC/DMTC IRA Rollover
FBO Jennifer R. Williams
P.O. Box 30156
Raleigh, NC 27622-0156
DMTC C/F The Rollover IRA of 5,017 6.19%
Marlyn S. Dochenetz
868 Wilton Ln. NW
Lilburn, GA 30047-4865
Charles D. Carver Cust 4,717 5.82%
Cara T. Carver UTMA - GA
151 Amberidge Dr. NW
Cartersville, GA 30121-7388
Charles D. Carver, Sr. Cust 4,696 5.80%
Charles D. Carver, Jr. UTMA - ga
151 Amberidge Dr. NW
Cartersville, GA 30121-7388
</TABLE>
-106-
<PAGE>
<TABLE>
<CAPTION>
Portfolio Name and Address of Account Share Amount Percentage
<S> <C> <C> <C>
Growth Portfolio C Class Richard K. Moreford 3,230 53.42%
1109 Tall Pines CT
Petoskey, MI 49770-3200
NSFC FEBO # BQ5-022128 1,049 17.35%
Judy A. Martinelli
239 Clifton Ln.
Peachtree City, GA 30269-4225
RS DMTC 401(k) Plan 598 9.89%
GENFED Federal Credit Union
Attn: Retirement Plans
1818 Market Street
Philadelphia, PA 19103-3638
RS DMTC 401(k) Plan 493 7.27%
Shore Line Construction Inc.
Attn: Retirement Plans
1818 Market Street
Philadelphia, PA 19103-3638
Growth Portfolio Delaware Management Business TR-DIA 5,882 99.99%
Attn: Joseph Hastings
1818 Market Street, 16th Fl.
Philadelphia, PA 19103-3638
</TABLE>
DMH Corp., Delvoy, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Management Company, Inc., Delaware Investment Advisers, (a series of Delaware
Management Business Trust), Delaware Distributors, L.P., Delaware Distributors,
Inc., Delaware Service Company, Inc., Delaware Management Trust Company,
Delaware International Holdings Ltd., Founders Holdings, Inc., Delaware
International Advisers Ltd., Delaware Capital Management, Inc. and Retirement
Financial Services, Inc. are direct or indirect, wholly owned subsidiaries of
Delaware Management Holdings, Inc. ("DMH"). On April 3, 1995, a merger between
DMH and a wholly owned subsidiary of Lincoln National Corporation ("Lincoln
National") was completed. DMH, Delaware and Delaware International are now
indirect, wholly owned subsidiaries, and subject to the ultimate control, of
Lincoln National. Lincoln National, with headquarters in Fort Wayne, Indiana, is
a diversified organization with operations in many aspects of the financial
services industry, including insurance and investment management.
Certain officers and directors of Pooled Trust, Inc. and Foundation
Funds hold identical positions in each of the other funds in the Delaware
Investments family. Directors or Trustees, as applicable, and principal officers
of Pooled Trust, Inc. and Foundation Funds are noted below along with their ages
and their business experience for the past five years. Unless otherwise noted,
the address of each officer and director is One Commerce Square, Philadelphia,
PA 19103.
-107-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
*Wayne A. Stork (61)
Chairman and Director and/or Trustee of Pooled Trust, Inc. and Foundation Funds, 32 other investment
companies in the Delaware Investments family and Delaware Capital Management, Inc.
Chairman, President, Chief Executive Officer and Director of DMH Corp., Delaware Distributors, Inc.
and Founders Holdings, Inc.
Chairman, President, Chief Executive Officer, Chief Investment Officer and Director/Trustee of
Delaware Management Company, Inc. and Delaware Management Business Trust
Chairman, President, Chief Executive Officer and Chief Investment Officer of Delaware Management
Company (a series of Delaware Management Business Trust)
Chairman, Chief Executive Officer and Chief Investment Officer of Delaware Investment Advisers
(a series of Delaware Management Business Trust)
Chairman, Chief Executive Officer and Director of Delaware International Advisers Ltd., Delaware
International Holdings Ltd. and Delaware Management Holdings, Inc.
President and Chief Executive Officer of Delvoy, Inc.
Chairman of Delaware Distributors, L.P.
Director of Delaware Service Company, Inc. and Retirement Financial Services, Inc.
During the past five years, Mr. Stork has served in various executive capacities at different times
within the Delaware organization.
*Jeffrey J. Nick (45)
President, Chief Executive Officer and Director and/or Trustee of the Pooled Trust, Inc. and Foundation
Funds and 32 other investment companies in the Delaware Investments family
President and Director of Delaware Management Holdings, Inc.
President, Chief Executive Officer and Director of Lincoln National Investment Companies, Inc.
President of Lincoln Funds Corporation
Director of Delaware International Advisers Ltd.
From 1992 to 1996, Mr. Nick was Managing Director of Lincoln National UK plc and from 1989 to 1992,
he was Senior Vice President responsible for corporate planning and development
for Lincoln National Corporation.
Richard G. Unruh, Jr. (58)
Executive Vice President of Pooled Trust, Inc., Foundation Funds, 32 other investment companies in the
Delaware Investments family, Delaware Management Holdings, Inc., Delaware Management Company
(a series of Delaware Management Business Trust) and Delaware Capital Management, Inc.
President of Delaware Investment Advisers (a series of Delaware Management Business Trust)
Executive Vice President and Director/Trustee of Delaware Management Company, Inc. and Delaware
Management Business Trust
Director of Delaware International Advisers Ltd.
During the past five years, Mr. Unruh has served in various executive capacities at different times
within the Delaware organization.
</TABLE>
- ----------------------
* Director/Trustee affiliated with the Portfolio's investment manager and
considered an "interested person" as defined in the 1940 Act.
-108-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Paul E. Suckow (51)
Executive Vice President/Chief Investment Officer, Fixed Income of Pooled Trust, Inc., Foundation Funds,
32 other investment companies in the Delaware Investments family, Delaware Management Company,
Inc., Delaware Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust) and Delaware Management
Holdings, Inc.
Executive Vice President and Director of Founders Holdings, Inc.
Executive Vice President of Delaware Capital Management, Inc. and Delaware Management Business
Trust
Director of Founders CBO Corporation
Director of HYPPCO Finance Company Ltd.
Before returning to Delaware Investments in 1993, Mr. Suckow was Executive Vice President and
Director of Fixed Income for Oppenheimer Management Corporation, New York, NY from 1985 to
1992. Prior to that, Mr. Suckow was a fixed-income portfolio manager for Delaware Investments.
David K. Downes (58)
Executive Vice President, Chief Operating Officer, Chief Financial Officer of Pooled Trust, Inc.,
Foundation Funds, 32 other investment companies in the Delaware Investments family, Delaware
Management Holdings, Inc., Founders CBO Corporation, Delaware Capital Management, Inc.,
Delaware Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust) and Delaware
Distributors, L.P.
Executive Vice President, Chief Financial Officer, Chief Administrative Officer and Trustee of
Delaware Management Business Trust
Executive Vice President, Chief Operating Officer, Chief Financial Officer and Director of
Delaware Management Company, Inc., DMH Corp., Delaware Distributors, Inc., Founders
Holdings, Inc. and Delvoy, Inc.
President, Chief Executive Officer, Chief Financial Officer and Director of Delaware Service
Company, Inc.
President, Chief Operating Officer, Chief Financial Officer and Director of Delaware International
Holdings Ltd.
Chairman,Chief Executive Officer and Director of Delaware Management Trust Company and Retirement
Financial Services, Inc.
Director of Delaware International Advisers Ltd.
Vice President of Lincoln Funds Corporation
During the past five years, Mr. Downes has served in various executive capacities at different times
within the Delaware organization.
</TABLE>
-109-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Walter P. Babich (70)
Director and/or Trustee of Pooled Trust, Inc., Foundation Funds and 32 other investment companies in
the Delaware Investments family
460 North Gulph Road, King of Prussia, PA 19406 Board Chairman, Citadel Constructors, Inc.
From 1986 to 1988, Mr. Babich was a partner of Irwin & Leighton and from 1988 to 1991, he was a
partner of I&L Investors.
John H. Durham (61)
Director and/or Trustee of Pooled Trust, Inc., Foundation Funds and 17 other investment companies in
the Delaware Investments family
Partner, Complete Care Services
120 Gibraltar Road, Horsham, PA 19044
Mr. Durham served as Chairman of the Board of each fund in the Delaware Investments family from
1986 to 1991; President of each fund from 1977 to 1990; and Chief Executive Officer of each
fund from 1984 to 1990. Prior to 1992, with respect to Delaware Management Holdings, Inc.,
Delaware Management Company, Delaware Distributors, Inc. and Delaware Service Company, Inc.,
Mr. Durham served as a director and in various executive capacities at different times.
Anthony D. Knerr (59)
Director and/or Trustee of Pooled Trust, Inc., Foundation Funds and 32 other investment companies in
the Delaware Investments family
500 Fifth Avenue, New York, NY 10110
Founder and Managing Director, Anthony Knerr & Associates
From 1982 to 1988, Mr. Knerr was Executive Vice President/Finance and Treasurer of Columbia
University, New York. From 1987 to 1989, he was also a lecturer in English at the University.
In addition, Mr. Knerr was Chairman of The Publishing Group, Inc., New York, from 1988 to
1990. Mr. Knerr founded The Publishing Group, Inc. in 1988.
Ann R. Leven (57)
Director and/or Trustee of Pooled Trust, Inc., Foundation Funds and 32 other investment companies in
the Delaware Investments family
785 Park Avenue, New York, NY 10021
Treasurer, National Gallery of Art
From 1984 to 1990, Ms. Leven was Treasurer and Chief Fiscal Officer of the Smithsonian Institution,
Washington, DC, and from 1975 to 1992, she was Adjunct Professor of Columbia Business School.
W. Thacher Longstreth (77)
Director and/or Trustee of Pooled Trust, Inc., Foundation Funds and 32 other investment companies in
the Delaware Investments family
City Hall, Philadelphia, PA 19107
Philadelphia City Councilman.
</TABLE>
-110-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Thomas F. Madison (62)
Director and/or Trustee of Pooled Trust, Inc., Foundation Funds and 32 other investment companies in
the Delaware Investments family
200 South Fifth Street, Suite 2100, Minneapolis, Minnesota 55402
President and Chief Executive Officer, MLM Partners, Inc.
Mr. Madison has also been Chairman of the Board of Communications Holdings, Inc. since 1996.
From February to September 1994, Mr. Madison served as Vice Chairman--Office of the CEO of The
Minnesota Mutual Life Insurance Company and from 1988 to 1993, he was President of U.S. WEST
Communications--Markets.
Charles E. Peck (72)
Director and/or Trustee of Pooled Trust, Inc., Foundation Funds and 32 other investment companies in
the Delaware Investments family
P.O. Box 1102, Columbia, MD 21044
Secretary/Treasurer, Enterprise Homes, Inc.
From 1981 to 1990, Mr. Peck was Chairman and Chief Executive Officer of The Ryland Group, Inc.,
Columbia, MD.
George M. Chamberlain, Jr. (51)
Senior Vice President, Secretary and General Counsel of Pooled Trust, Inc., Foundation Funds, 32
other investment companies in the Delaware Investments family, Delaware Distributors, L.P.,
Delaware Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust) and Delaware Management
Holdings, Inc.
Senior Vice President, Secretary, General Counsel and Director/Trustee of DMH Corp., Delaware
Management Company, Inc., Delaware Distributors, Inc., Delaware Service Company, Inc.,
Founders Holdings, Inc., Retirement Financial Services, Inc., Delaware Capital Management,
Inc., Delvoy, Inc. and Delaware Management Business Trust
Executive Vice President, Secretary, 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.
Secretary of Lincoln Funds Corporation
Attorney.
During the past five years, Mr. Chamberlain has served in various executive capacities at different
times within the Delaware organization.
</TABLE>
-111-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Joseph H. Hastings (48)
Senior Vice President/Corporate Controller of Pooled Trust, Inc., Foundation Funds, 32 other
investment companies in the Delaware Investments family and Founders Holdings, Inc.
Senior Vice President/Corporate Controller and Treasurer of Delaware Management Holdings, Inc.,
DMH Corp., Delaware Management Company, Inc., Delaware Management Company (a series
of Delaware Management Business Trust), Delaware Distributors, L.P., Delaware Distributors,
Inc., Delaware Service Company, Inc., Delaware Capital Management, Inc., Delaware
International Holdings Ltd., Delvoy, Inc. and Delaware Management Business Trust
Chief Financial Officer/Treasurer of Retirement Financial Services, Inc.
Executive Vice President/Chief Financial Officer/Treasurer of Delaware Management Trust Company
Senior Vice President/Assistant Treasurer of Founders CBO Corporation
Treasurer of Lincoln Funds Corporation
During the past five years, Mr. Hastings has served in various executive capacities at different
times within the Delaware organization.
Michael P. Bishof (36)
Senior Vice President/Treasurer of Pooled Trust, Inc., Foundation Funds, 32 other investment
companies in the Delaware Investments family and Founders Holdings, Inc.
Senior Vice President/Investment Accounting of Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware Management Business Trust) and Delaware
Service Company, Inc.
Senior Vice President and Treasurer/Manager of Investment Accounting of Delaware Distributors, L.P.
and Delaware Investment Advisers (a series of Delaware Management Business Trust)
Senior Vice President and Manager of Investment Accounting of Delaware International Holdings Ltd.
Assistant Treasurer of Founders CBO Corporation
Before joining Delaware Investments in 1995, Mr. Bishof was a Vice President for Bankers Trust, New
York, NY from 1994 to 1995, a Vice President for CS First Boston Investment Management, New
York, NY from 1993 to 1994 and an Assistant Vice President for Equitable Capital Management
Corporation, New York, NY from 1987 to 1993.
George E. Deming (56)
Vice President/Senior Portfolio Manager of The Large-Cap Value Equity Portfolio.
Vice President/Senior Portfolio Manager of Delaware Investment Advisers (a series of Delaware
Management Business Trust).
Before joining Delaware Investments in 1978, Mr. Deming was responsible for portfolio management and
institutional sales at White Weld & Co., Inc. He is a member of the Financial Analysts of
Philadelphia. During the past five years, Mr. Deming has served in various capacities at
different times within the Delaware organization.
</TABLE>
-112-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Gerald S. Frey (52)
Vice President/Senior Portfolio Manager of Pooled Trust, Inc., of nine other investment companies in
the Delaware Investments family and of Delaware Management Company, Inc. and Delaware
Management Company (a series of Delaware Management Business Trust)
Before joining Delaware Investments in 1996, Mr. Frey was a Senior Director with Morgan Grenfell
Capital Management, New York, NY from 1986 to 1995.
Gary A. Reed (43)
Vice President/Senior Portfolio Manager of Pooled Trust, Inc., of 17 other investment companies
in the Delaware Investments family, Delaware Management Company, Inc., Delaware Investment
Advisers (a series of Delaware Management Business Trust), Delaware Management Company (a
series of Delaware Management Business Trust) and Delaware Capital Management, Inc.
Vice President/Senior Portfolio Manager of Delaware Capital Management, Inc.
During the past five years, Mr. Reed has served in such capacities within the Delaware organization.
Gerald T. Nichols (40)
Vice President/Senior Portfolio Manager of Pooled Trust, Inc., of 17 other investment companies in
the Delaware Investments family, Delaware Management Company, Inc., Delaware Investment
Advisers (a series of Delaware Management Business Trust) and Delaware Management Company (a
series of Delaware Management Business Trust)
Vice President of Founders Holdings, Inc.
Treasurer/Assistant Secretary and Director of Founders CBO Corporation.
During the past five years, Mr. Nichols has served in various capacities at different times within the
Delaware organization.
Paul A. Matlack (38)
Vice President/Senior Portfolio Manager of Pooled Trust, Inc., of 17 other investment companies in
the Delaware Investments family, Delaware Management Company, Inc., Delaware Investment
Advisers (a series of Delaware Management Business Trust) and Delaware Management Company (a
series of Delaware Management Business Trust)
Vice President of Founders Holdings, Inc.
President and Director of Founders CBO Corporation.
During the past five years, Mr. Matlack has served in various capacities at different times within
the Delaware organization.
Babak Zenouzi (35)
Vice President/Senior Portfolio Manager of Pooled Trust, Inc., of eleven other investment companies in
the Delaware Investments family, Delaware Management Company, Inc. and Delaware
Management Company (a series of Delaware Management Business Trust)
Vice President/Assistant Portfolio Manager of Delaware Investment Advisers.
Before joining Delaware Investments in 1992, Mr. Zenouzi held positions of Assistant Vice President,
Senior Financial Analyst and Portfolio Accountant for The Boston Company, Boston, MA
from 1986 to 1991.
</TABLE>
-113-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Roger A. Early (44)
Vice President/Senior Portfolio Manager of Pooled Trust, Inc. and 17 other investment companies
in the Delaware Investments family, Delaware Management Company, Inc.,
Delaware Investment Advisers (a series of Delaware Management Business Trust) and Delaware
Management Company (a series of Delaware Management Business Trust)
Before joining Delaware Investments, Mr. Early was a portfolio manager for Federated Investment
Counseling's fixed-income group, with over $1 billion in assets.
Frank X. Morris (37)
Vice President/Portfolio Manager of Pooled Trust, Inc.
Vice President/Senior Portfolio Manager of Delaware Investment Advisers (a series of Delaware
Management Business Trust)
Before joining Delaware Investments in 1997, he served as vice president and director of equity
research at PNC Asset Management. Mr. Morris is president of the Financial Analysis Society of
Philadelphia and is a member of the Association of Investment Management and Research and the
National Association of Petroleum Investment Analysts.
James F. Stanley (31)
Vice President/Portfolio Manager of Pooled Trust, Inc.
Vice President of Delaware Investment Advisers (a series of Delaware Management Business Trust)
Before joining Delaware Investments in 1997, Mr. Stanley served as a senior managing equity analyst
covering the chemical, building products, and housing industries at Dreyfus Corporation.
J. Paul Dokas (38)
Vice President/Portfolio Manager of Pooled Trust, Inc. and Foundation Funds
Vice President/DIA Equity of Delaware Investment Advisers (a series of Delaware Management Business
Trust)
Before joining Delaware Investments in 1997, he was a Director of Trust
Investments for Bell Atlantic Corporation in Philadelphia.
George H. Burwell (36)
Vice President/Senior Portfolio Manager of Pooled Trust, Inc., nine other investment companies in
Delaware Investments, Delaware Management Company, Inc. and Delaware Management
Company (a series of Delaware Management Business Trust)
Before joining Delaware Investments in 1992, Mr. Burwell was a portfolio manager for Midlantic Bank,
New Jersey. In addition, he was a security analyst for Balis & Zorn, New York and for First
Fidelity Bank, New Jersey.
</TABLE>
-114-
<PAGE>
With respect to Pooled Trust, Inc., the following is a compensation table
listing for each director entitled to receive compensation, the aggregate
compensation received from Pooled Trust, Inc. and the total compensation
received from all Delaware Investments funds for the fiscal year ended October
31, 1997 and an estimate of annual benefits to be received upon retirement under
the Delaware Group Retirement Plan for Directors/Trustees as of October 31,
1997. Only the independent directors of Pooled Trust, Inc. receive compensation
from the Fund.
<TABLE>
<CAPTION>
Pension or Total
Retirement Estimated Compensation
Aggregate Benefits Annual from 33
Compensation Accrued Benefits Delaware
from Pooled as Part of Upon Investment
Name Trust, Inc. Fund Expenses Retirement(1) Companies(2)
<S> <C> <C> <C> <C>
W. Thacher Longstreth $3,384 None $38,000 $58,618
Ann R. Leven $3,738 None $38,000 $63,743
Walter P. Babich $3,669 None $38,000 $62,743
Anthony D. Knerr $3,669 None $38,000 $62,743
Charles E. Peck $3,286 None $38,000 $55,432
Thomas F. Madison(3) $1,680 None $38,000 $30,913
John H. Durham(4) N/A None N/A N/A
</TABLE>
With respect to Foundation Funds, the following is a compensation table
listing for each trustee entitled to receive compensation, the aggregate
compensation expected to be received from Foundation Funds during its fiscal
year and the total compensation expected to be received from all funds in the
Delaware Investments family during the Trust's fiscal year and an estimate of
annual benefits to be received upon retirement under the Delaware Group
Retirement Plan for Directors/Trustees as of September 30, 1998. Only the
independent directors of Foundation Funds receive compensation from the Trust.
<TABLE>
<CAPTION>
Pension or Total
Aggregate Retirement Estimated Compensation
Compensation Benefits Annual from
expected to be Accrued Benefits Delaware
received from as Part Upon Investment
the Trust of the Trust Retirement(1) Companies(2)
Name
<S> <C> <C> <C> <C>
W. Thacher Longstreth (3) None $38,500 $63,447
Ann R. Leven (3) None $38,500 $69,609
Walter P. Babich (3) None $38,500 $68,447
Anthony D. Knerr (3) None $38,500 $68,447
Charles E. Peck (3) None $38,500 $63,447
Thomas F. Madison(4) (3) None $38,500 $65,115
John H. Durham(5) (3) None $31,000 $24,189
</TABLE>
(1) Under the terms of the Delaware Group Retirement Plan for
Directors/Trustees, each disinterested director/trustee who, at the
time of his or her retirement from the Board, has attained the age of
70 and served on the Board for at least five continuous years, is
entitled to receive payments from each investment company in the
Delaware Investments family for which he or she serves as a director or
trustee for a period equal to the lesser of the number of years that
such person served as a director or trustee or the remainder of such
person's life. The amount of such payments will be equal, on an annual
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basis, to the amount of the annual retainer that is paid to
directors/trustees of each investment company at the time of such
person's retirement. If an eligible director/trustee retired as of the
periods noted above for Pooled Trust, Inc. and Foundation Funds, he or
she would be entitled to annual payments totaling the amounts noted
above, in the aggregate, from all of the investment companies in the
Delaware Investments family for which he or she served as director or
trustee, based on the number of investment companies in the Delaware
Investments family as of that date.
(2) Each independent director/trustee (other than John H. Durham) currently
receives a total annual retainer fee of $38,500 for serving as a
director or trustee for all 34 investment companies in Delaware
Investments, plus $3,145 for each Board Meeting attended. John H.
Durham currently receives a total annual retainer fee of $31,000 for
serving as a director or trustee for 19 investment companies in
Delaware Investments, plus $1,757.50 for each Board Meeting attended.
Ann R. Leven, Walter P. Babich, and Anthony D. Knerr serve on the
Fund's audit committee; Ms. Leven is the chairperson. Members of the
audit committee currently receive additional annual compensation of
$5,000 from all investment companies, in the aggregate, with the
exception of the chairperson, who receives $6,000.
(3) The payments to the independent directors of Foundation Funds are
expected to be de minimis for the fiscal year ended September 30, 1998.
(4) Thomas F. Madison joined the Board of Directors/Trustees on April 30,
1997.
(5) John H. Durham joined the Board of Directors/Trustees of Pooled Trust,
Inc. and Foundation Funds and 17 other investment companies in Delaware
Investments on April 16, 1998.
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EXCHANGE PRIVILEGE
The Real Estate Investment Trust Portfolio
(Class A Shares, Class B Shares, Class C Shares and Institutional Class Shares)
The exchange privileges available for shareholders of the Class A
Shares, Class B Shares, Class C Shares and Institutional Class Shares of The
Real Estate Investment Trust Portfolio and for shareholders of the classes of
the other funds in the Delaware Investments family are set forth in the relevant
prospectuses for such classes. The following supplements that information. The
Portfolio may modify, terminate or suspend the exchange privilege upon 60 days'
notice to shareholders.
All exchanges involve a purchase of shares of the fund into which the
exchange is made. As with any purchase, an investor should obtain and carefully
read that fund's prospectus before buying shares in an exchange. The prospectus
contains more complete information about the fund, including charges and
expenses. A shareholder requesting such an exchange will be sent a current
prospectus and an authorization form for any of the other mutual funds in the
Delaware Investments family. Exchange instructions must be signed by the record
owner(s) exactly as the shares are registered.
An exchange constitutes, for tax purposes, the sale of one fund or
series and the purchase of another. The sale may involve either a capital gain
or loss to the shareholder for federal income tax purposes.
In addition, investment advisers and dealers may make exchanges between
funds in the Delaware Investments family on behalf of their clients by telephone
or other expedited means. This service may be discontinued or revised at any
time by the Transfer Agent. Such exchange requests may be rejected if it is
determined that a particular request or the total requests at any time could
have an adverse effect on any of the funds. Requests for expedited exchanges may
be submitted with a properly completed exchange authorization form, as described
above.
Telephone Exchange Privilege
Shareholders owning shares for which certificates have not been issued
or their investment dealers of record may exchange shares by telephone for
shares in other mutual funds in the Delaware Investments family. This service is
automatically provided unless the Portfolio receives written notice from the
shareholder to the contrary.
Shareholders or their investment dealers of record may contact the
Shareholder Service Center at 800-523-1918 or, in the case of shareholders of
the Institutional Class, their Client Services Representative at 800-828-5052 to
effect an exchange. The shareholder's current Fund account number must be
identified, as well as the registration of the account, the share or dollar
amount to be exchanged and the fund into which the exchange is to be made.
Requests received on any day after the time the offering price and net asset
value are determined will be processed the following day. See Determining
Offering Price and Net Asset Value. Any new account established through the
exchange will automatically carry the same registration, shareholder information
and dividend option as the account from which the shares were exchanged. The
exchange requirements of the fund into which the exchange is being made, such as
sales charges, eligibility and investment minimums, must be met. (See the
prospectus of the fund desired or inquire by calling the Transfer Agent or, as
relevant, your Client Services Representative.) Certain funds are not available
for retirement plans.
The telephone exchange privilege is intended as a convenience to
shareholders and is not intended to be a vehicle
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to speculate on short-term swings in the securities market through frequent
transactions in and out of the funds in the Delaware Investments family.
Telephone exchanges may be subject to limitations as to amounts or frequency.
The Transfer Agent and the Portfolio reserve the right to record exchange
instructions received by telephone and to reject exchange requests at any time
in the future.
As described in the Portfolio's Prospectuses, neither the Portfolio nor
the Transfer Agent is responsible for any shareholder loss incurred in acting
upon written or telephone instructions for redemption or exchange of Portfolio
shares which are reasonably believed to be genuine.
Right to Refuse Timing Accounts
With regard to accounts that are administered by market timing services
("Timing Firms") to purchase or redeem shares based on changing economic and
market conditions ("Timing Accounts"), the Portfolio will refuse any new timing
arrangements, as well as any new purchases (as opposed to exchanges) in Delaware
Investments funds from Timing Firms. The Portfolio reserves the right to
temporarily or permanently terminate the exchange privilege or reject any
specific purchase order for any person whose transactions seem to follow a
timing pattern who: (i) makes an exchange request out of the Portfolio within
two weeks of an earlier exchange request out of the Portfolio, or (ii) makes
more than two exchanges out of the Portfolio per calendar quarter, or (iii)
exchanges shares equal in value to at least $5 million, or more than 1/4 of 1%
of the Portfolio's net assets. Accounts under common ownership or control,
including accounts administered so as to redeem or purchase shares based upon
certain predetermined market indicators, will be aggregated for purposes of the
exchange limits.
Restrictions on Timed Exchanges
Timing Accounts operating under existing timing agreements may only
execute exchanges between the following eight Delaware Investments funds: (1)
Decatur Income Fund, (2) Decatur Total Return Fund, (3) Delaware Fund, (4)
Limited-Term Government Fund, (5) Tax-Free USA Fund, (6) Delaware Cash Reserve,
(7) Delchester Fund and (8) Tax-Free Pennsylvania Fund. No other Delaware
Investments funds are available for timed exchanges. Assets redeemed or
exchanged out of Timing Accounts in Delaware Investments funds not listed above
may not be reinvested back into that Timing Account. The Portfolio reserves the
right to apply these same restrictions to the account(s) of any person whose
transactions seem to follow a timing pattern (as described above).
The Portfolio also reserves the right to refuse the purchase side of an
exchange request by any Timing Account, person, or group if, in the Manager's
judgment, the Portfolio would be unable to invest effectively in accordance with
its investment objectives and policies, or would otherwise potentially be
adversely affected. A shareholder's purchase exchanges may be restricted or
refused if the Portfolio receives or anticipates simultaneous orders affecting
significant portions of the Portfolio's assets. In particular, a pattern of
exchanges that coincide with a "market timing" strategy may be disruptive to the
Portfolio and therefore may be refused.
Except as noted above, only shareholders and their authorized brokers
of record will be permitted to make exchanges or redemptions.
* * *
Following is a summary of the investment objectives of the other
Delaware Investments funds:
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Delaware Fund seeks long-term growth by a balance of capital
appreciation, income and preservation of capital. It uses a dividend-oriented
valuation strategy to select securities issued by established companies that
are believed to demonstrate potential for income and capital growth. Devon Fund
seeks current income and capital appreciation by investing primarily in
income-producing common stocks, with a focus on common stocks the Manager
believes have the potential for above average dividend increases over time.
Trend Fund seeks long-term growth by investing in common stocks issued
by emerging growth companies exhibiting strong capital appreciation potential.
Small Cap Value Fund seeks capital appreciation by investing primarily
in common stocks whose market values appear low relative to their underlying
value or future potential.
DelCap Fund seeks long-term capital growth by investing in common
stocks and securities convertible into common stocks of companies that have a
demonstrated history of growth and have the potential to support continued
growth.
Decatur Income Fund seeks the highest possible current income by
investing primarily in common stocks that provide the potential for income and
capital appreciation without undue risk to principal. Decatur Total Return Fund
seeks long-term growth by investing primarily in securities that provide the
potential for income and capital appreciation without undue risk to principal.
Blue Chip Fund seeks to achieve long-term capital appreciation. Current income
is a secondary objective. It seeks to achieve these objectives by investing
primarily in equity securities and any securities that are convertible into
equity securities. Social Awareness Fund seeks to achieve long-term capital
appreciation. It seeks to achieve this objective by investing primarily in
equity securities of medium- to large-sized companies expected to grow over time
that meet the Fund's "Social Criteria" strategy.
Delchester Fund seeks as high a current income as possible by investing
principally in high yield, high risk corporate bonds, and also in U.S.
government securities and commercial paper. Strategic Income Fund seeks to
provide investors with high current income and total return by using a
multi-sector investment approach, investing principally in three sectors of the
fixed-income securities markets: high yield, higher risk securities, investment
grade fixed-income securities and foreign government and other foreign
fixed-income securities. High-Yield Opportunities Fund seeks to provide
investors with total return and, as a secondary objective, high current income.
U.S. Government Fund seeks high current income by investing primarily
in long-term U.S. government debt obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
Limited-Term Government Fund seeks high, stable income by investing
primarily in a portfolio of short- and intermediate-term securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities and
instruments secured by such securities. U.S. Government Money Fund seeks maximum
current income with preservation of principal and maintenance of liquidity by
investing only in short-term securities issued or guaranteed as to principal and
interest by the U.S. government, its agencies or instrumentalities, and
repurchase agreements collateralized by such securities, while maintaining a
stable net asset value.
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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.
Tax-Free USA Fund seeks high current income exempt from federal income
tax by investing in municipal bonds of geographically-diverse issuers. Tax-Free
Insured Fund invests in these same types of securities but with an emphasis on
municipal bonds protected by insurance guaranteeing principal and interest are
paid when due. Tax-Free USA Intermediate Fund seeks a high level of current
interest income exempt from federal income tax, consistent with the preservation
of capital by investing primarily in municipal bonds.
Tax-Free Money Fund seeks high current income, exempt from federal
income tax, by investing in short-term municipal obligations, while maintaining
a stable net asset value.
Tax-Free New Jersey Fund seeks a high level of current interest income
exempt from federal income tax and New Jersey state and local taxes, consistent
with preservation of capital. Tax-Free Ohio Fund seeks a high level of current
interest income exempt from federal income tax and Ohio state and local taxes,
consistent with preservation of capital. Tax-Free Pennsylvania Fund seeks a high
level of current interest income exempt from federal income tax and Pennsylvania
state and local taxes, consistent with the preservation of capital.
International Equity Fund seeks to achieve long-term growth without
undue risk to principal by investing primarily in international securities that
provide the potential for capital appreciation and income. Global Bond Fund
seeks to achieve current income consistent with the preservation of principal by
investing primarily in global fixed-income securities that may also provide the
potential for capital appreciation. Global Assets Fund seeks to achieve
long-term total return by investing in global securities which will provide
higher current income than a portfolio comprised exclusively of equity
securities, along with the potential for capital growth. Emerging Markets Fund
seeks long-term capital appreciation by investing primarily in equity securities
of issuers located or operating in emerging countries.
U.S. Growth Fund seeks to maximize capital appreciation by investing in
companies of all sizes which have low dividend yields, strong balance sheets and
high expected earnings growth rates relative to their industry. Overseas Equity
Fund seeks to maximize total return (capital appreciation and income),
principally through investments in an internationally diversified portfolio of
equity securities. New Pacific Fund seeks long-term capital appreciation by
investing primarily in companies which are domiciled in or have their principal
business activities in the Pacific Basin.
Foundation Funds are "fund of funds" which invest in other funds in the
Delaware Investments family. Foundation Funds Income Portfolio seeks a
combination of current income and preservation of capital with capital
appreciation by investing primarily in a mix of fixed income and domestic equity
securities, including fixed income and domestic equity Underlying Funds.
Foundation Funds Balanced Portfolio seeks capital appreciation with current
income as a secondary objective by investing primarily in domestic equity and
fixed income securities, including domestic equity and fixed income Underlying
Funds. Foundation Funds Growth Portfolio seeks long term capital growth by
investing primarily in equity securities, including equity Underlying Funds,
and, to a lesser extent, in fixed income securities, including fixed-income
Underlying Funds.
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Delaware Group Premium Fund, Inc. offers 16 funds available exclusively
as funding vehicles for certain insurance company separate accounts. Decatur
Total Return Series seeks the highest possible total rate of return by selecting
issues that exhibit the potential for capital appreciation while providing
higher than average dividend income. Delchester Series seeks as high a current
income as possible by investing in rated and unrated corporate bonds, U.S.
government securities and commercial paper. Capital Reserves Series seeks a high
stable level of current income while minimizing fluctuations in principal by
investing in a diversified portfolio of short- and intermediate-term securities.
Cash Reserve Series seeks the highest level of income consistent with
preservation of capital and liquidity through investments in short-term money
market instruments. DelCap Series seeks long-term capital appreciation by
investing its assets in a diversified portfolio of securities exhibiting the
potential for significant growth. Delaware Series seeks a balance of capital
appreciation, income and preservation of capital. It uses a dividend-oriented
valuation strategy to select securities issued by established companies that are
believed to demonstrate potential for income and capital growth. International
Equity Series seeks long-term growth without undue risk to principal by
investing primarily in equity securities of foreign issuers that provide the
potential for capital appreciation and income. Small Cap Value Series seeks
capital appreciation by investing in small cap common stocks whose market values
appear low relative to their underlying value or future earnings and growth
potential. Emphasis will also be placed on securities of companies that may be
temporarily out of favor or whose value is not yet recognized by the market.
Trend Series seeks long-term capital appreciation by investing primarily in
small-cap common stocks and convertible securities of emerging and other
growth-oriented companies. These securities will have been judged to be
responsive to changes in the market place and to have fundamental
characteristics to support growth. Income is not an objective. Global Bond
Series seeks to achieve current income consistent with the preservation of
principal by investing primarily in global fixed-income securities that may also
provide the potential for capital appreciation. Strategic Income Series seeks
high current income and total return by using a multi-sector investment
approach, investing primarily in three sectors of the fixed-income securities
markets: high-yield, higher risk securities; investment grade fixed-income
securities; and foreign government and other foreign fixed-income securities.
Devon Series seeks current income and capital appreciation by investing
primarily in income-producing common stocks, with a focus on common stocks that
the investment manager believes have the potential for above-average dividend
increases over time. Emerging Markets Series seeks to achieve long-term capital
appreciation by investing primarily in equity securities of issuers located or
operating in emerging countries. Convertible Securities Series seeks a high
level of total return on its assets through a combination of capital
appreciation and current income by investing primarily in convertible
securities. Social Awareness Series seeks to achieve long-term capital
appreciation by investing primarily in equity securities of medium to
large-sized companies expected to grow over time that meet the Series' "Social
Criteria" strategy. REIT Series seeks to achieve maximum long-term total return,
with capital appreciation as a secondary objective, by investing in securities
of companies primarily engaged in the real estate industry.
Delaware-Voyageur US Government Securities Fund seeks to provide a high
level of current income consistent with the prudent investment risk by investing
in U.S. Treasury bills, notes, bonds, and other obligations issued or
unconditionally guaranteed by the full faith and credit of the U.S. Treasury,
and repurchase agreements fully secured by such obligations.
Delaware-Voyageur Tax-Free Arizona Insured Fund seeks to provide a high
level of current income exempt from federal income tax and the Arizona personal
income tax, consistent with the preservation of capital. Delaware-Voyageur
Minnesota Insured Fund seeks to provide a high level of current income exempt
from federal income tax and the Minnesota personal income tax, consistent with
the preservation of capital.
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Delaware-Voyageur Tax-Free Minnesota Intermediate Fund seeks to provide
a high level of current income exempt from federal income tax and the Minnesota
personal income tax, consistent with preservation of capital. The Fund seeks to
reduce market risk by maintaining an average weighted maturity from five to ten
years.
Delaware-Voyageur Tax-Free California Insured Fund seeks to provide a
high level of current income exempt from federal income tax and the California
personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Florida Insured Fund seeks to provide a high level of
current income exempt from federal income tax, consistent with the preservation
of capital. The Fund will seek to select investments that will enable its shares
to be exempt from the Florida intangible personal property tax.
Delaware-Voyageur Tax-Free Florida Fund seeks to provide a high level of current
income exempt from federal income tax, consistent with the preservation of
capital. The Fund will seek to select investments that will enable its shares to
be exempt from the Florida intangible personal property tax. Delaware-Voyageur
Tax-Free Kansas Fund seeks to provide a high level of current income exempt from
federal income tax, the Kansas personal income tax and the Kansas Intangible
personal property tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Missouri Insured Fund seeks to provide a high level
of current income exempt from federal income tax and the Missouri 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
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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.
Delaware-Voyageur Tax-Free Minnesota Fund seeks to provide a high level
of current income exempt from federal income tax and the Minnesota personal
income tax, consistent with the preservation of capital. Delaware-Voyageur
Tax-Free North Dakota Fund seeks to provide a high level of current income
exempt from federal income tax and the North Dakota personal income tax,
consistent with the preservation of capital.
For more complete information about any of the funds in the Delaware
Investments family, including charges and expenses, you can obtain a prospectus
from the Distributor. Read it carefully before you invest or forward funds.
Each of the summaries above is qualified in its entirety by the
information contained in each fund's prospectus(es).
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GENERAL INFORMATION
Delaware furnishes investment management services to The Large-Cap
Value Equity, The 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, The Diversified
Core Fixed Income, The Asset Allocation, The Small-Cap Growth Equity and The
Growth and Income Portfolios. Delaware International furnishes similar services
to The International Equity, The International Mid-Cap Sub, The Labor Select
International Equity, The Global Fixed Income, The International Fixed Income,
The Emerging Markets and The Global Equity Portfolios and also serves as
sub-adviser to The Diversified Core Fixed Income Portfolio. Delaware and
Delaware International also provide investment management services to certain of
the other funds in the Delaware Investments family. While investment decisions
of the Portfolios are made independently from those of the other funds and
accounts, investment decisions for such other funds and accounts may be made at
the same time as investment decisions for the Portfolios.
Delaware or Delaware International also manages the investment options
for Delaware Medallion (SM) III Variable Annuity. Medallion is issued by
Allmerica Financial Life Insurance and Annuity Company (First Allmerica
Financial Life Insurance Company in New York and Hawaii). Delaware Medallion
offers various investment series ranging from domestic equity funds,
international equity and bond funds and domestic fixed income funds. Each
investment series available through Medallion utilizes an investment strategy
and discipline the same as or similar to one of the Delaware Investments mutual
funds available outside the annuity. See Delaware Group Premium Fund, Inc.,
above.
Access persons and advisory persons of the Delaware Investments funds,
as those terms are defined in SEC Rule 17j-1 under the 1940 Act, who provide
services to Delaware, Delaware International or their affiliates, are permitted
to engage in personal securities transactions subject to the exceptions set
forth in Rule 17j-1 and the following general restrictions and procedures: (1)
certain blackout periods apply to personal securities transactions of those
persons; (2) transactions must receive advance clearance and must be completed
on the same day as the clearance is received; (3) certain persons are prohibited
from investing in initial public offerings of securities and other restrictions
apply to investments in private placements of securities; (4) opening positions
may only be closed-out at a profit after a 60-day holding period has elapsed;
and (5) the Compliance Officer must be informed periodically of all securities
transactions and duplicate copies of brokerage confirmations and account
statements must be supplied to the Compliance Officer.
The Distributor acts as national distributor for each Portfolio and for
the other mutual funds in the Delaware Investments family. As previously
described, prior to January 3, 1995, DDI served as the national distributor for
the Portfolios' shares.
The Transfer Agent, an affiliate of Delaware and Delaware
International, acts as shareholder servicing, dividend disbursing and transfer
agent for the Portfolios and for the other mutual funds in the Delaware
Investments family. The Transfer Agent's compensation for providing services to
the Portfolios of Pooled Trust, Inc. (other than The Real Estate Investment
Trust Portfolio effective October 14, 1997) is $25,000 annually. The Transfer
Agent will bill, and Pooled Trust, Inc. (in the case of The International
Mid-Cap Sub Portfolio, Delaware International) will pay, such compensation
monthly allocated among the current Portfolios (other than The Real Estate
Investment Trust Portfolio) based on the relative percentage of assets of each
Portfolio at the time of billing and adjusted appropriately to reflect the
length of time a particular Portfolio is in operation during any billing period.
The Transfer Agent is paid a fee by The Real Estate Investment Trust Portfolio
for providing these services consisting of an annual per account charge of $5.50
plus transaction
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charges for particular services according to a schedule. The Transfer Agent is
paid a fee by The Asset Allocation Portfolio for providing these services
consisting of an annual per account charge of $11.00 plus transaction charges
for particular services according to a schedule. Compensation is fixed each year
and approved by the Board of Directors/Trustees, including a majority of the
disinterested directors. The Transfer Agent also provides accounting services to
the Portfolios. Those services include performing all functions related to
calculating each Portfolio's net asset value and providing all financial
reporting services, regulatory compliance testing and other related accounting
services. For its services, the Transfer Agent is paid a fee based on total
assets of all funds in the Delaware Investments family for which it provides
such accounting services. Such fee is equal to 0.25% multiplied by the total
amount of assets in the complex for which the Transfer Agent furnishes
accounting services, where such aggregate complex assets are $10 billion or
less, and 0.20% of assets if such aggregate complex assets exceed $10 billion.
The fees are charged to each fund, including the Portfolios, on an aggregate
pro-rata basis. The asset-based fee payable to the Transfer Agent is subject to
a minimum fee calculated by determining the total number of investment
portfolios and associated classes.
Custody Arrangements
The Chase Manhattan Bank ("Chase"), 4 Chase Metrotech Center,
Brooklyn, NY 11245 serves as custodian for each Portfolio. As custodian, Chase
maintains a separate account or accounts for a Portfolio; receives, holds and
releases portfolio securities on account of a Portfolio; receives and disburses
money on behalf of a Portfolio; and collects and receives income and other
payments and distributions on account of a Portfolio's portfolio securities.
With respect to foreign securities, Chase makes arrangements with
subcustodians who were approved by the directors/trustees of Pooled Trust, Inc.
or, as applicable, Foundation Funds in accordance with Rule 17f-5 of the 1940
Act. In the selection of foreign subcustodians, the directors consider a number
of factors, including, but not limited to, the reliability and financial
stability of the institution, the ability of the institution to provide
efficiently the custodial services required for the Portfolios, and the
reputation of the institutions in the particular country or region.
Capitalization
Pooled Trust, Inc. has a present authorized capitalization of two
billion shares of capital stock with a $.01 par value per share. The Board of
Directors has allocated fifty million shares to each Portfolio.
Foundation Funds currently consists four portfolios of shares.
Foundation Funds has an unlimited authorized number of shares of beneficial
interest with no par value allocated to each portfolio.
While all shares have equal voting rights on matters affecting Pooled
Trust, Inc. or Foundation Funds, as applicable, each Portfolio would vote
separately on any matter which affects only that Portfolio, such as any change
in its own investment objective and policy or action to dissolve a Portfolio and
as otherwise prescribed by the 1940 Act. Shares of each Portfolio have a
priority in that Portfolios' assets, and in gains on and income from the
portfolio of that Portfolio. Shares have no preemptive rights, are fully
transferable and, when issued, are fully paid and nonassessable.
Effective December 24, 1997, the name of The Defensive Equity
Small/Mid-Cap Portfolio was changed to The 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.
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Noncumulative Voting
Portfolio shares have noncumulative voting rights which means that the
holders of more than 50% of the shares of Pooled Trust, Inc. voting for the
election of directors can elect all the directors if they choose to do so, and,
in such event, the holders of the remaining shares will not be able to elect any
directors.
This Statement of Additional Information does not include all of the
information contained in the Registration Statement which is on file with the
Securities and Exchange Commission.
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FINANCIAL STATEMENTS
Ernst & Young LLP serves as independent auditors for Delaware Pooled
Trust, Inc. ("Pooled Trust, Inc.") and, in its capacity as such, audits the
financial statements contained in Pooled Trust, Inc.'s Annual Reports. The Real
Estate Investment Trust, The Large-Cap Value Equity (formerly known as The
Defensive Equity), The 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, Financial Highlights and Notes to Financial Statements, and The
Limited-Term Maturity Portfolio's Statement of Assets and Liabilities and Notes
to Financial Statements as well as the reports of Ernst & Young LLP for the
fiscal year ended October 31, 1997 are included in Pooled Trust, Inc.'s Annual
Reports to shareholders. The financial statements, financial highlights, the
notes relating thereto and the reports of Ernst & Young LLP listed above are
incorporated by reference from the Annual Reports into this Statement of
Additional Information.
Ernst & Young LLP serves as the independent auditors for Delaware Group
Foundation Funds and, in its capacity as such, will audit the annual financial
statements of The Asset Allocation Portfolio.
Unaudited financial statements and the notes relating thereto for each
Portfolio other than The International Mid-Cap Sub Portfolio, The Asset
Allocation Portfolio, The Small-Cap Growth Equity Portfolio and The Growth and
Income Portfolio are incorporated by reference from the Semi-Annual Reports into
this Statement of Additional Information.
-127-
<PAGE>
PART C
Other Information
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Part A - Financial Highlights
* Part B - Statements of Net Assets
Statements of Assets and Liabilities
Statements of Operations
Statements of Changes in Net Assets
Notes to Financial Statements
Accountant's Report
* The financial statements and Accountant's Report listed
above are incorporated into Part B by reference from the
Registrant's Annual Reports for the fiscal year ended
October 31, 1997. The unaudited financial statements are
incorporated into Part B by reference from the Registrant's
SemiAnnual Reports for the period ended ended April 30, 1998.
(b) Exhibits:
(1) Articles of Incorporation.
(a) Articles of Incorporation, as amended and
supplemented through November 28, 1995, incorporated
into this filing by reference to Post-Effective
Amendment No. 8 filed September 15, 1995 and
Post-Effective Amendment No. 9 filed November 24,
1995.
(b) Executed Articles Supplementary (January 14, 1997)
incorporated into this filing by reference to
Post-Effective Amendment No. 14 filed January 16,
1997.
(c) Articles Supplementary (April 14, 1997) incorporated
into this filing by reference to Post-Effective
Amendment No. 16 filed May 23, 1997.
(d) Articles Supplementary (October 9, 1997)
incorporated into this filing by reference to
Post-Effective Amendment No. 20 filed October 24,
1997.
(e) Articles of Amendment to Articles of Incorporation
(October 9, 1997) incorporated into this filing by
reference to Post-Effective Amendment No. 20 filed
October 24, 1997.
(f) Form of Articles Supplementary (1997) incorporated
into this filing by reference to Post-Effective
Amendment No. 21 filed December 23, 1997.
(g) Form of Articles of Amendment (1997) to Articles of
Incorporation incorporated into this filing by
reference to Post-Effective Amendment No. 22 filed
December 23, 1997.
<PAGE>
Part C - Other Information
(continued)
(h) Form of Articles of Supplementary (1998) to Articles
of Incorporation to be filed by Amendment.
(2) By-Laws. By-Laws, as amended to date, incorporated into
this filing by reference to Post-Effective Amendment No. 8
filed September 15, 1995.
(3) Voting Trust Agreement. Inapplicable.
(4) Copies of All Instruments Defining the Rights of Holders.
(a) Articles of Incorporation and Articles
Supplementary.
(1) Articles Fifth and Ninth of the Articles of
Incorporation (May 29, 1991), Article Fifth of
Articles of Amendment (October 10, 1991),
Article Second of Articles Supplementary
(September 21, 1992), Article Second of
Articles Supplementary (August 3, 1993),
Article Second of Articles Supplementary
(October 12, 1994) incorporated into this
filing by reference to Post-Effective
Amendment No. 8 filed September 15, 1995.
(2) Article Fourth of Articles Supplementary
(November 28, 1995) incorporated into this
filing by reference to Post-Effective
Amendment No. 9 filed November 24, 1995.
(3) Article Second of Articles Supplementary
(April 14, 1997) incorporated into this filing
by reference to Post-Effective Amendment No.
16 filed May 23, 1997.
(4) Article Fourth of Articles Supplementary
(October 9, 1997) incorporated into this
filing by reference to Post-Effective
Amendment No. 20 filed October 24, 1997.
(5) Article Fourth of Articles of Amendment
(October 9, 1997) incorporated into this
filing by reference to Post-Effective
Amendment No. 20 filed October 24, 1997.
(6) Article Third of Articles Supplementary (1997)
incorporated into this filing by reference to
Post-Effective Amendment No. 21 filed December
23, 1997.
(7) Articles Supplementary (1998) to be filed by
Amendment.
(b) By-Laws. Articles II, III and XIV of the By-Laws
incorporated into this filing by reference to
Post-Effective Amendment No. 8 filed September 15,
1995.
<PAGE>
Part C - Other Information
(continued)
(5) Investment Management Agreements.
(a)(1) Executed Investment Management Agreements
between Delaware Management Company, Inc. and
the Registrant on behalf of The Defensive Equity
(to be renamed The Large-Cap Value Equity), The
Aggressive Growth, The Fixed Income (to be
renamed The Intermediate Fixed Income) and The
Limited-Term Maturity Portfolios (April 3, 1995)
incorporated into this filing by reference to
Post-Effective Amendment No. 8 filed September
15, 1995.
(a)(2) Executed Investment Management Agreements
between Delaware International Advisers Ltd. and
the Registrant on behalf of The International
Equity, The Global Fixed Income and The
International Fixed Income Portfolios (April 3,
1995) incorporated into this filing by reference
to Post-Effective Amendment No. 8 filed
September 15, 1995.
(a)(3) Executed Investment Management Agreements
between Delaware Management Company, Inc. and
the Registrant on behalf of The Defensive Equity
Small/Mid-Cap (to be renamed Small/Mid-Cap Value
Equity), The High-Yield Bond and The Real Estate
Investment Trust Portfolios (November 29, 1995)
incorporated into this filing by reference to
Post-Effective Amendment No. 10 filed February
23, 1996.
(a)(4) Executed Investment Management Agreement between
Delaware International Advisers Ltd. and the
Registrant on behalf of The Labor Select
International Equity Portfolio (November 29,
1995) incorporated into this filing by reference
to Post-Effective Amendment No. 10 filed
February 23, 1996.
(a)(5) Executed Investment Management Agreement (April
14, 1997) between Delaware International
Advisers Ltd. and the Registrant on behalf of
The Emerging Markets Portfolio incorporated into
this filing by reference to Post-Effective
Amendment No. 17 filed August 1, 1997.
(a)(6) Form of Investment Management Agreement (1997)
between Delaware International Advisers Ltd. and
the Registrant on behalf of The Global Equity
Portfolio incorporated into this filing by
reference to Post-Effective Amendment No. 20
filed October 24, 1997.
(a)(7) Form of Investment Management Agreement (1997)
between Delaware Management Company, Inc. and
the Registrant on behalf of The Real Estate
Investment Trust Portfolio II incorporated into
this filing by reference to Post-Effective
Amendment No. 20 filed October 24, 1997.
(a)(8) Form of Investment Management Agreement (1997)
between Delaware Management Company, Inc. and
the Registrant on behalf of The Aggregate Fixed
Income Portfolio incorporated into this filing
by reference to Post-Effective Amendment No. 21
filed December 23, 1997.
(a)(9) Form of Investment Management Agreement (1997)
between Delaware Management Company, Inc. and
the Registrant on behalf of The Diversified
<PAGE>
Part C - Other Information
(continued)
Core Fixed Income Portfolio incorporated into
this filing by reference to Post-Effective
Amendment No. 21 filed December 23, 1997.
(a)(10) Form of Investment Management Agreement (1998)
between Delaware Management Company and the
Registrant on behalf of The Small-Cap Growth
Equity Portfolio incorporated into this filing
by reference to Post-Effective Amendment No. 22
filed June 17, 1998.
(a)(11) Form of Investment Management Agreement (1998)
between Delaware Management Company and the
Registrant on behalf of The Growth and Income
Portfolio incorporated into this filing by
reference to Post-Effective Amendment No. 22
filed June 17, 1998.
(b)(1) Executed Sub-Advisory Agreement (November 29,
1995) between Delaware Management Company, Inc.
and Lincoln Investment Management, Inc. on
behalf of the Registrant for The Real Estate
Investment Trust Portfolio incorporated into
this filing by reference to Post-Effective
Amendment No. 10 filed February 23, 1996.
(b)(2) Form of Sub-Advisory Agreement (1997) between
Delaware International Advisers Ltd. and
Delaware Management Company, Inc. on behalf of
The Global Equity Portfolio incorporated into
this filing by reference to Post-Effective
Amendment No. 20 filed October 24, 1997.
(b)(3) Form of Sub-Advisory Agreement (1997) between
Delaware Management Company, Inc. and Lincoln
Investment Management, Inc. on behalf of The
Real Estate Investment Trust Portfolio II
incorporated into this filing by reference to
Post-Effective Amendment No. 20 filed October
24, 1997.
(b)(4) Form of Sub-Advisory Agreement (1997) between
Delaware Management Company, Inc. and Delaware
International Advisers Ltd. on behalf of The
Diversified Core Fixed Income Portfolio
incorporated into this filing by reference to
Post-Effective Amendment No. 21 filed December
21, 1997.
(6) (a) Distribution Agreements.
(i) Form of Distribution Agreements (April
1995) between Delaware Distributors,
L.P. and the Registrant on behalf of
The Defensive Equity (to be renamed The
Large-Cap Value Equity), The Aggressive
Growth, The International Equity, The
Global Fixed Income, The Fixed Income
(to be renamed The Intermediate Fixed
Income), The Limited-Term Maturity and
The International Fixed Income
Portfolios incorporated into this
filing by reference to Post-Effective
Amendment No. 9 filed October 24, 1995.
(ii) Form of Distribution Agreements
(November 1995) between Delaware
Distributors, L.P. and the Registrant
on behalf of The Defensive Equity
Small/Mid-Cap (to be renamed
Small/Mid-Cap Value Equity), The
High-Yield Bond, The Labor Select
International Equity and The Real
Estate Investment Trust Portfolios
incorporated into this filing by
reference to Post-Effective Amendment
No. 9 filed October 24, 1995.
<PAGE>
Part C - Other Information
(continued)
(iii) Executed Distribution Agreement (April
14, 1997) between Delaware
Distributors, L.P. and the Registrant
on behalf of The Emerging Markets
Portfolio incorporated into this filing
by reference to Post-Effective
Amendment No. 17 filed August 1, 1997.
(iv) Form of Distribution Agreement (1997)
between Delaware Distributors, L.P. and
the Registrant on behalf of The Global
Equity Portfolio incorporated into this
filing by reference to Post-Effective
Amendment No. 20 filed October 24,
1997.
(v) Form of Distribution Agreement (1997)
between Delaware Distributors, L.P. and
the Registrant on behalf of The Real
Estate Investment Trust Portfolio II
incorporated into this filing by
reference to Post-Effective Amendment
No. 20 filed October 24, 1997.
(vi) Form of Amended and Restated
Distribution Agreement (1997) for The
Real Estate Investment Trust Portfolio
incorporated into this filing by
reference to Post-Effective Amendment
No. 20 filed October 24, 1997.
(vii) Form of Distribution Agreement (1997)
between Delaware Distributors, L.P. and
the Registrant on behalf of The
Aggregate Fixed Income Portfolio
incorporated into this filing by
reference to Post-Effective Amendment
No. 21 filed December 23, 1997.
(viii) Form of Distribution Agreement (1997)
between Delaware Distributors, L.P. and
the Registrant on behalf of The
Diversified Core Fixed Income Portfolio
incorporated into this filing by
reference to Post-Effective Amendment
No. 21 filed December 23, 1997.
(ix) Form of Distribution Agreement (1998)
between Delaware Distributors, L.P. and
the Registrant on behalf of The
Small-Cap Growth Equity Portfolio
incorporated into this filing by
reference to Post-Effective Amendment
No. 22 filed June 17, 1998.
(x) Form of Distribution Agreement (1998)
between Delaware Distributors, L.P. and
the Registrant on behalf of The Growth
and Income Portfolio incorporated into
this filing by reference to
Post-Effective Amendment No. 22 filed
June 17, 1998.
(b) Administration and Service Agreement. Form of
Administration and Service Agreement (as
amended November 1995) (Module) incorporated
into this filing by reference to Post-Effective
Amendment No. 17 filed August 1, 1997.
(c) Dealer's Agreement. Dealer's Agreement (as
amended November 1995) (Module) incorporated
into this filing by reference to Post-Effective
Amendment No. 17 filed August 1, 1997.
(d) Mutual Fund Agreement for the Delaware Group of
Funds (as amended November 1995) (Module)
incorporated into this filing by reference to
Post-Effective Amendment No. 17 filed August
1, 1997.
<PAGE>
Part C - Other Information
(continued)
(7) Bonus, Profit Sharing, Pension Contracts.
(a) Amended and Restated Profit Sharing Plan
(November 17, 1994) incorporated into this
filing by reference to Post-Effective Amendment
No. 8 filed September 15, 1995.
(b) Amendment to Profit Sharing Plan (December 21,
1995) incorporated into this filing by
reference to Post-Effective Amendment No. 10
filed February 23, 1996.
(8) Custodian Agreements.
(a) Executed Custodian Agreement (1996) between the
Registrant and The Chase Manhattan Bank on
behalf of The Global Fixed Income, The
International Equity, The Labor Select
International Equity, The Real Estate
Investment Trust, The High-Yield Bond and The
International Fixed Income Portfolios
incorporated into this filing by reference to
Post-Effective Amendment No. 12 filed August
23, 1996.
(b) Form of Securities Lending Agreement (1996)
between the Registrant and The Chase Manhattan
Bank on behalf of The Global Fixed Income, The
International Equity, The Labor Select
International Equity, The Real Estate
Investment Trust, The High-Yield Bond and The
International Fixed Income Portfolios
incorporated into this filing by reference to
Post-Effective Amendment No. 12 filed August
23, 1996.
(c) Form of Securities Lending Agreement (1997)
between the Registrant and The Chase Manhattan
Bank on behalf of The Emerging Markets
Portfolio incorporated into this filing by
reference to Post-Effective Amendment No. 14
filed January 16, 1997.
(d) Form of Securities Lending Agreement (1997)
between Registrant and The Chase Manhattan Bank
on behalf of The Aggregate Fixed Income
Portfolio and The Diversified Core Fixed Income
Portfolio incorporated into this filing by
reference to Post-Effective Amendment No. 20
filed October 24, 1997.
(e) Amendment to Custodian Agreement (1997) between
the Registrant and The Chase Manhattan Bank
incorporated into this filing by reference to
Post-Effective Amendment No. 21 filed December
23, 1997.
<PAGE>
Part C - Other Information
(continued)
(f) Letter (April 14, 1997) to add The Emerging
Markets Portfolio to the Custodian Agreement
between the Registrant and The Chase Manhattan
Bank incorporated into this filing by reference
to Post-Effective Amendment No. 22 filed June
17, 1998.
(g) Letter (October 14, 1997) to add The Global
Equity Portfolio and The Real Estate Investment
Trust Portfolio II to the Custodian Agreement
between the Registrant and The Chase Manhattan
Bank incorporated into this filing by reference
to Post-Effective Amendment No. 22 filed June
17, 1998.
(h) Letter (December 24, 1997) to add The Aggregate
Fixed Income Portfolio and The Diversified Core
Fixed Income Portfolio to the Custodian
Agreement between the Registrant and The Chase
Manhattan Bank incorporated into this filing by
reference to Post-Effective Amendment No. 22
filed June 17, 1998.
(i) Form of letter to add The Small-Cap Growth
Equity Portfolio and The Growth and Income
Portfolio to the Custodian Agreement between
the Registrant and The Chase Manhattan Bank
incorporated into this filing by reference to
Post-Effective Amendment No. 22 filed June 17,
1998.
(j) Form of letter to add The Large-Cap Value
Equity Portfolio, The Aggressive Growth
Portfolio, The Intermediate Fixed Income
Portfolio, The Limited-Term Maturity Portfolio
and The Small/Mid-Cap Value Equity Portfolio to
the Custodian Agreement between the Registrant
and The Chase Manhattan Bank to be filed by
Amendment.
(9) Other Material Contracts.
(a) Executed Fourth Amended and Restated
Shareholders Services Agreement (April 1997)
between Delaware Service Company, Inc. and the
Registrant on behalf of each Portfolio
incorporated into this filing by reference to
Post-Effective Amendment No. 17 filed August
1, 1997.
(b) Form of Fifth Amended and Restated Shareholders
Services Agreement (October 1997) between
Delaware Service Company, Inc. and the
Registrant on behalf of each Portfolio
incorporated into this filing by reference to
Post-Effective Amendment No. 20 filed October
24, 1997.
(c) Form of Sixth Amended and Restated Shareholders
Services Agreement (1997) between Delaware
Service Company, Inc. and the Registrant on
behalf of each Portfolio incorporated into this
filing by reference to Post-Effective Amendment
No. 21 filed December 23, 1997.
<PAGE>
Part C - Other Information
(continued)
(d) Form of Seventh Amended and Restated
Shareholder Services Agreement (1998) between
Delaware Service Company, Inc. and the
Registrant on behalf of each Portfolio
incorporated into this filing by reference to
Post-Effective Amendment No. 22 filed June 17,
1998.
(e) Executed Delaware Group of Funds Fund
Accounting Agreement (August 19, 1996) between
Delaware Service Company, Inc. and the
Registrant on behalf of each Fund incorporated
into this filing by reference to Post-Effective
Amendment No. 16 filed May 23, 1997.
(iii) Form of Amendment No. 10 to Delaware
Group of Funds Fund Accounting
Agreement incorporated into this filing
by reference to Post-Effective
Amendment No. 22 filed June 17, 1998.
(10) Opinion of Counsel. Incorporated into this filing by
reference to Post-Effective Amendment No. 22 filed
June 17, 1998.
(11) Consent of Auditors. Attached as Exhibit.
(12) Inapplicable.
(13) Undertaking of Initial Shareholder. Incorporated into
this filing by reference to Pre-Effective Amendment
No. 1 filed August 16, 1991.
(14) Inapplicable.
(15) Plan Under Rule 12b-1.
(a) Form of 12b-1 Plan for REIT Fund Class A
incorporated into this filing by reference to
Post-Effective Amendment No. 21 filed December
23, 1997.
(b) Form of 12b-1 Plan for REIT Fund Class B
incorporated into this filing by reference to
Post-Effective Amendment No. 21 filed December
23, 1997.
(c) Form of 12b-1 Plan for REIT Fund Class C
incorporated into this filing by reference to
Post-Effective Amendment No. 21 filed December
23, 1997.
<PAGE>
Part C - Other Information
(continued)
(16) Schedules of Computation for each Performance
Quotation.
(a) Incorporated into this filing by reference to
Post-Effective Amendment No. 8 filed September
15, 1995, Post-Effective Amendment No. 11
filed May 24, 1996, Post-Effective Amendment
No. 12 filed August 23, 1996, Post-Effective
Amendment No. 13 filed January 15, 1997,
Post-Effective Amendment No. 16 filed May 23,
1997, Post-Effective Amendment No. 19 filed
October 10, 1997 and Post-Effective Amendment
No. 21 filed December 23, 1997.
(17) Financial Data Schedules.
(a) Financial Data Schedules for the fiscal year
ended October 31, 1997 incorporated into this
filing by reference to Post-Effective
Amendment No. 21 filed December 23, 1997.
(b) Financial Data Schedules for the period ended
April 30, 1998 attached as Exhibit.
(18) Plan under Rule 18f-3.
(a) Form of Rule 18f-3 Plan incorporated into this
filing by reference to Post-Effective
Amendment No. 20 filed October 24, 1997.
(b) Amended Appendix A to Rule 18f-3 Plan
incorporated into this filing by reference to
Post-Effective Amendment No. 20 filed October
24, 1997.
(19) Other: Directors' Power of Attorney.
(a) Incorporated into this filing by reference to
Post-Effective Amendment No. 21 filed December
23, 1997.
(b) Director's Power of Attorney for John H.
Durham incorporated into this filing by
reference to Post-Effective Amendment No. 22
filed June 17, 1998.
Item 25. Persons Controlled by or under Common Control with Registrant. None.
<PAGE>
Part C - Other Information
(continued)
Item 26. Number of Holders of Securities.
(1) (2)
Number of
Title of Class Record Holders
-------------- --------------
The Large-Cap Value Equity Portfolio:
Common Stock Par Value 41 Accounts as of
$.01 Per Share July 31, 1998
The Aggressive Growth Portfolio:
Common Stock Par Value 12 Accounts as of
$.01 Per Share July 31, 1998
The International Equity Portfolio:
Common Stock Par Value 141 Accounts as of
$.01 Per Share July 31, 1998
The Global Fixed Income Portfolio:
Common Stock Par Value 84 Accounts as of
$.01 Per Share July 31, 1998
The Intermediate Fixed Income Portfolio:
Common Stock Par Value 17 Accounts as of
$.01 Per Share July 31, 1998
The Limited-Term
Maturity Portfolio:
Common Stock Par Value 3 Accounts as of
$.01 Per Share July 31, 1998
The International Fixed
Income Portfolio:
Common Stock Par Value 11 Accounts as of
$.01 Per Share July 31, 1998
The Small/Mid-Cap
Value Equity Portfolio:
Common Stock Par Value 2 Accounts as of
$.01 Per Share July 31, 1998
<PAGE>
Part C - Other Information
(continued)
(1) (2)
Number of
Title of Class Record Holders
-------------- --------------
The High-Yield Bond Portfolio:
Common Stock Par Value 11 Accounts as of
$.01 Per Share July 31, 1998
The Labor Select International
Equity Portfolio:
Common Stock Par Value 21 Accounts as of
$.01 Per Share July 31, 1998
The Emerging Markets Portfolio:
Common Stock Par Value 19 Accounts as of
$.01 Per Share July 31, 1998
The Global Equity Portfolio:
Common Stock Par Value 2 Accounts as of
$.01 Per Share July 31, 1998
The Real Estate Investment
Trust Portfolio class:
Common Stock Par Value 5 Accounts as of
$.01 Per Share July 31, 1998
REIT Fund A Class:
Common Stock Par Value 1,217 Accounts as of
$.01 Per Share July 31, 1998
REIT Fund B Class:
Common Stock Par Value 841 accounts as of
$.01 Per Share July 31, 1998
REIT Fund C Class:
Common Stock Par Value 223 Accounts as of
$.01 Per Share July 31, 1998
REIT Fund Institutional Class:
Common Stock Par Value 6 Accounts as of
$.01 Per Share July 31, 1998
<PAGE>
Part C - Other Information
(continued)
(1) (2)
Number of
Title of Class Record Holders
-------------- --------------
The Real Estate Investment Trust Portfolio II:
Common Stock Par Value 6 Accounts as of
$.01 Per Share July 31, 1998
The Aggregate Fixed Income Portfolio:
Common Stock Par Value 2 Accounts as of
$.01 Per Share July 31, 1998
The Diversified Core Fixed Income Portfolio
Common Stock Par Value 2 Accounts as of
$.01 Per Share July 31, 1998
The International Mid-Cap Sub Portfolio
Common Stock Par Value 0 Accounts as of
$.01 Per Share July 31, 1998
The Small-Cap Growth Equity Portfolio
Common Stock Par Value 0 Accounts as of
$.01 Per Share July 31, 1998
The Growth and Income Portfolio
Common Stock Par Value 0 Accounts as of
$.01 Per Share July 31, 1998
The Asset Allocation Portfolio
Common Stock par Value 0 Accounts as of
$.01 Per Share May 31, 1998
Item 27. Indemnification. Incorporated into this filing by reference to
initial Registration Statement filed May 31, 1991.
<PAGE>
Part C - Other Information
(continued)
Item 28. Business and Other Connections of Investment Adviser.
(a) Delaware Management Company (the "Manager"), a series of Delaware
Management Business Trust, serves as investment manager to the Registrant and
also serves as investment manager or sub-adviser to certain of the other funds
in the Delaware Investments family (Delaware Group Equity Funds I, Inc.,
Delaware Group Equity Funds II, Inc., Delaware Group Equity Funds III, Inc.,
Delaware Group Equity Funds IV, Inc., Delaware Group Equity Funds V, Inc.,
Delaware Group Government Fund, Inc., Delaware Group Income Funds, Inc.,
Delaware Group Limited-Term Government Funds, Inc., Delaware Group Cash Reserve,
Inc., Delaware Group Tax-Free Fund, Inc., Delaware Group State Tax-Free Income
Trust, Delaware Group Tax-Free Money Fund, Inc., Delaware Group Premium Fund,
Inc., Delaware Group Global & International Funds, Inc., Delaware Group Adviser
Funds, Inc., Delaware Group Dividend and Income Fund, Inc., Delaware Group
Global Dividend and Income Fund, Inc., Delaware Group Foundation Funds, Inc.,
Voyageur Intermediate Tax-Free Funds, Inc., Voyageur Tax-Free Funds, Inc.,
Voyageur Funds, Inc., Voyageur Insured Funds, Inc., Voyageur Investment Trust,
Voyageur Investment Trust II, Voyageur Mutual Funds, Inc., Voyageur Mutual Funds
II, Inc., Voyageur Mutual Funds III, Inc., Voyageur Arizona Municipal Income
Fund, Inc., Voyageur Colorado Insured Municipal Income Fund, Inc., Voyageur
Florida Insured Municipal Income Fund, Voyageur Minnesota Municipal Fund, Inc.,
Voyageur Minnesota Municipal Fund II, Inc. and Voyageur Minnesota Municipal Fund
III, Inc.). In addition, certain officers of the Manager also serve as
directors/trustees of the other funds in the Delaware Investments family, and
certain officers are also officers of these other funds. A company indirectly
owned by the Manager's indirect parent company acts as principal underwriter to
the mutual funds in the Delaware Investments family (see Item 29 below) and
another such company acts as the shareholder services, dividend disbursing,
accounting servicing and transfer agent for all of the mutual funds in the
Delaware Investments family.
The following persons serving as officers of the Manager have held the
following positions during the past two years:
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
Wayne A. Stork Chairman of the Board, President, Chief Executive
Officer, Chief Investment Officer and
Director/Trustee of Delaware Management Company,
Inc. and Delaware Management Business Trust;
Chairman of the Board, President, Chief Executive
Officer, Chief Investment Officer of Delaware
Management Company (a series of Delaware
Management Business Trust); Chairman of the Board,
President, Chief Executive Officer and Director of
DMH Corp., Delaware Distributors, Inc. and
Founders Holdings, Inc.; Chairman, Chief Executive
Officer and Chief Investment Officer of Delaware
Investment Advisers (a series of Delaware
Management Business Trust); Chairman, Chief
Executive Officer and Director of Delaware
International Holdings Ltd. and Delaware
International Advisers Ltd.; Chairman of the Board
and Director of the Registrant, each of the other
funds in the Delaware Investments family, Delaware
Management Holdings, Inc., and Delaware Capital
Management, Inc.; Chairman of Delaware
Distributors, L.P.; President and Chief Executive
Officer of Delvoy, Inc.; and Director and/or
Trustee of Delaware Service Company, Inc. and
Retirement Financial Services, Inc.
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
Part C - Other Information
(continued)
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
Richard G. Unruh, Jr. Executive Vice President of the Registrant, each
of the other funds in the Delaware Investments
family, Delaware Management Holdings, Inc.,
Delaware Capital Management, Inc. and Delaware
Management Company (a series of Delaware
Management Business Trust); Executive Vice
President and Director/Trustee of Delaware
Management Company, Inc. and Delaware Management
Business Trust; President of Delaware Investment
Advisers (a series of Delaware Management Business
Trust); and Director of Delaware International
Advisers Ltd.
Board of Directors, Chairman of Finance Committee,
Keystone Insurance Company since 1989, 2040 Market
Street, Philadelphia, PA; Board of Directors,
Chairman of Finance Committee, AAA Mid Atlantic,
Inc. since 1989, 2040 Market Street, Philadelphia,
PA; Board of Directors, Metron, Inc. since 1995,
11911 Freedom Drive, Reston, VA
Paul E. Suckow Executive Vice President/Chief Investment Officer,
Fixed Income of Delaware Management Company, Inc.,
Delaware Management Company (a series of Delaware
Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management Business
Trust), the Registrant, each of the other funds in
the Delaware Investments family and Delaware
Management Holdings, Inc.; Executive Vice
President and Director of Founders Holdings, Inc.;
Executive Vice President of Delaware Capital
Management, Inc. and Delaware Management Business
Trust; and Director of Founders CBO Corporation
Director, HYPPCO Finance Company Ltd.
David K. Downes Executive Vice President, Chief Operating Officer,
Chief Financial Officer and Director of Delaware
Management Company, Inc., DMH Corp, Delaware
Distributors, Inc., Founders Holdings, Inc. and
Delvoy, Inc.; Executive Vice President, Chief
Financial Officer, Chief Administrative Officer
and Trustee of Delaware Management Business Trust;
Executive Vice President, Chief Operating Officer
and Chief Financial Officer of the Registrant and
each of the other funds in the Delaware
Investments family, Delaware Management Holdings,
Inc., Founders CBO Corporation, Delaware Capital
Management, Inc., Delaware Management Company (a
series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware
Management Business Trust) and Delaware
Distributors, L.P.; 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
Retirement Financial Services, Inc.; Chairman and
Director of Delaware Management Trust Company;
Director of Delaware International Advisers Ltd.;
and Vice President of Lincoln Funds Corporation
Chief Executive Officer and Director of Forewarn,
Inc. since 1993, 8 Clayton Place, Newtown Square,
PA
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
Part C - Other Information
(continued)
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
George M. Senior Vice President, General Counsel, Secretary
Chamberlain, Jr. and Director/Trustee of Delaware Management
Company, Inc., DMH Corp., Delaware Distributors,
Inc., Delaware Service Company, Inc., Founders
Holdings, Inc., Delaware Capital Management, Inc.,
Retirement Financial Services, Inc., Delvoy, Inc.
and Delaware Management Business Trust; Senior
Vice President, Secretary and General Counsel of
the Registrant, each of the other funds in the
Delaware Investments family, Delaware
Distributors, L.P., Delaware Management Company (a
series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware
Management Business Trust) and Delaware Management
Holdings, Inc.; Senior Vice President and Director
of Delaware International Holdings Ltd.; Executive
Vice President, Secretary, General Counsel and
Director of Delaware Management Trust Company;
Director of Delaware International Advisers Ltd.;
Secretary of Lincoln Funds Corporation
Richard J. Flannery Senior Vice President/Corporate and International
Affairs of the Registrant, each of the other funds
in the Delaware Investments family, Delaware
Management Holdings, Inc., DMH Corp., Delaware
Management Company, Inc., Delaware Distributors,
Inc., Delaware Distributors, L.P., Delaware
Management Trust Company, Delaware Capital
Management, Inc., Delaware Service Company, Inc.,
Delaware Management Company (a series of Delaware
Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management Business
Trust) and Retirement Financial Services, Inc.;
Executive Vice President/Corporate & International
Affairs and Director of Delaware International
Holdings Ltd.; Senior Vice President/ Corporate
and International Affairs and Director of Founders
Holdings, Inc. and Delvoy, Inc.; Senior Vice
President of Founders CBO Corporation; and
Director of Delaware International Advisers Ltd.
Director, HYPPCO Finance Company Ltd.
Limited Partner of Stonewall Links, L.P. since
1991, Bulltown Rd., Elverton, PA; Director and
Member of Executive Committee of Stonewall Links,
Inc. since 1991, Bulltown Rd., Elverton, PA
Michael P. Bishof Senior Vice President and Treasurer of the
Registrant, each of the other funds in the
Delaware Investments family and Founders Holdings,
Inc.; Senior Vice President/Investment Accounting
of Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust) and Delaware Service
Company, Inc.; Senior Vice President and
Treasurer/Manager, Investment Accounting of
Delaware Distributors, L.P. and Delaware
Investment Advisers (a series of Delaware
Management Business Trust); Senior Vice President
and Assistant Treasurer of Founders CBO
Corporation; and Senior Vice President and Manager
of Investment Accounting of Delaware International
Holdings Ltd.
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
Part C - Other Information
(continued)
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
Joseph H. Hastings Senior Vice President/Corporate Controller and
Treasurer of Delaware Management Holdings, Inc.,
DMH Corp., Delaware Management Company, Inc.,
Delaware Distributors, Inc., Delaware Capital
Management, Inc., Delaware Distributors, L.P.,
Delaware Service Company, Inc., Delaware
International Holdings Ltd., Delaware Management
Company (a series of Delaware Management Business
Trust), Delvoy, Inc. and Delaware Management
Business Trust; Senior Vice President/Corporate
Controller of the Registrant, each of the other
funds in the Delaware Investments family and
Founders Holdings, Inc.; Executive Vice President,
Chief Financial Officer and Treasurer of Delaware
Management Trust Company; Chief Financial Officer
and Treasurer of Retirement Financial Services,
Inc.; Senior Vice President/Assistant Treasurer of
Founders CBO Corporation; and Treasurer of Lincoln
Funds Corporation
Michael T. Taggart Vice President/Facilities Management and
Administrative Services of Delaware Management
Company, Inc. and Delaware Management Company (a
series of Delaware Management Business Trust)
Douglas L. Anderson Senior Vice President/Operations of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), Delaware Investment and Retirement
Services, Inc. and Delaware Service Company, Inc.;
Senior Vice President/ Operations and Director of
Delaware Management Trust Company
James L. Shields Senior Vice President/Chief Information Officer of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust), Delaware Service
Company, Inc. and Retirement Financial Services,
Inc.
Eric E. Miller Senior Vice President, Assistant Secretary and
Deputy General Counsel of the Registrant and each
of the other funds in the Delaware Investments
family, Delaware Management Company, Inc.,
Delaware Management Company (a series of Delaware
Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management Business
Trust), Delaware Management Holdings, Inc., DMH
Corp., Delaware Distributors, L.P., Delaware
Distributors Inc., Delaware Service Company, Inc.,
Delaware Management Trust Company, Founders
Holdings, Inc., Delaware Capital Management, Inc.
and Retirement Financial Services, Inc.; Assistant
Secretary of Delaware Management Business Trust;
and Senior Vice President and Assistant Secretary
of Delvoy, Inc.
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
Part C - Other Information
(continued)
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
Richelle S. Maestro Vice President and Assistant Secretary of the
Registrant, each of the other funds in the
Delaware Investments family, Delaware Management
Company, Inc., Delaware Management Company (a
series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware
Management Business Trust), Delaware Management
Holdings, Inc., Delaware Distributors, L.P.,
Delaware Distributors, Inc., Delaware Service
Company, Inc., DMH Corp., Delaware Management
Trust Company, Delaware Capital Management, Inc.,
Retirement Financial Services, Inc., Founders
Holdings, Inc. and Delvoy, Inc.; Vice President
and Secretary of Delaware International Holdings
Ltd.; and Secretary of Founders CBO Corporation
Partner of Tri-R Associates since 1989, 10001
Sandmeyer Lane, Philadelphia, PA
Richard Salus(1) Vice President/Assistant Controller of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust) and Delaware Management Trust Company
Bruce A. Ulmer Vice President/Director of LNC Internal Audit of
the Registrant, each of the other funds in the
Delaware Investments family, Delaware Management
Company, Inc., Delaware Management Company (a
series of Delaware Management Business Trust),
Delaware Management Holdings, Inc., DMH Corp.,
Delaware Management Trust Company and Retirement
Financial Services, Inc.; Vice President/Director
of Internal Audit of Delvoy, Inc.
Joel A. Ettinger(2) Vice President/Director of Taxation of the
Registrant, each of the other funds in the
Delaware Investments family, Delaware Management
Company, Inc., Delaware Management Company (a
series of Delaware Management Business Trust) and
Delaware Management Holdings, Inc., Founders
Holdings, Inc. and Founders CBO Corporation
Christopher Adams Vice President/Strategic Planning of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust) and Delaware Service Company, Inc.
Susan L. Hanson Vice President/Strategic Planning of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust) and Delaware Service Company, Inc.
Dennis J. Mara(3) Vice President/Acquisitions of Delaware Management
Company, Inc. and Delaware Management Company (a
series of Delaware Management Business Trust)
Scott Metzger Vice President/Business Development of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust) and Delaware Service Company, Inc.
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
Part C - Other Information
(continued)
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
Lisa O. Brinkley Vice President/Compliance of the Registrant,
Delaware Management Company, Inc., each of the
other funds in the Delaware Investments family,
Delaware Management Company (a series of Delaware
Management Business Trust), DMH Corp., Delaware
Distributors, L.P., Delaware Distributors, Inc.,
Delaware Service Company, Inc., Delaware
Management Trust Company, Delaware Capital
Management, Inc. and Retirement Financial
Services, Inc.; Vice President/Compliance Officer
of Delaware Management Business Trust; and Vice
President of Delvoy, Inc.
Mary Ellen Carrozza Vice President/Client Services of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust) and the
Registrant
Gerald T. Nichols Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management Business
Trust), the Registrant, 20 other investment
companies in the Delaware Investments family; Vice
President of Founders Holdings, Inc.; and
Treasurer, Assistant Secretary and Director of
Founders CBO Corporation
Paul A. Matlack Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management Business
Trust), 20 other investment companies in the
Delaware Investments family; Vice President of
Founders Holdings, Inc.; and President and
Director of Founders CBO Corporation
Gary A. Reed Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management Business
Trust), 17 investment companies in the Delaware
Investments family and Delaware Capital
Management, Inc.
Patrick P. Coyne Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management Business
Trust), the Registrant, 17 other investment
companies in the Delaware Investments family and
Delaware Capital Management, Inc.
Roger A. Early Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management Business
Trust), the Registrant, 17 other investment
companies in the Delaware Investments family
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
Part C - Other Information
(continued)
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
Mitchell L. Conery(4) Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management Business
Trust), the Registrant, 18 other investment
companies in the Delaware Investments family and
Delaware Capital Management, Inc.
George H. Burwell Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust), the Registrant and 10
other investment companies in the Delaware
Investments family
John B. Fields Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management Business
Trust), the Registrant, nine other investment
companies in the Delaware Investments family,
Delaware Capital Management, Inc. and Trustee of
Delaware Management Business Trust
Gerald S. Frey(5) Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management Business
Trust), the Registrant, nine other investment
companies in the Delaware Investments family
Christopher Beck(6) Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management Business
Trust), the Registrant, nine other investment
companies in the Delaware Investments family
Elizabeth H. Howell(7) Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust), the Registrant and
seven other investment companies in the Delaware
Investments family
Andrew M. McCullagh, Jr.(8) Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust) the Registrant and
eight other investment companies in the Delaware
Investments family
Babak Zenouzi Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust), the Registrant and 11
other investment companies in the Delaware
Investments family
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
Part C - Other Information
(continued)
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
J. Paul Dokas(9) Vice President/Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), the Registrant and one other investment
company in the Delaware Investments family
Cynthia Isom Vice President/Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), the Registrant and 17 other investment
companies in the Delaware Investments family
Paul Grillo Vice President/Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust), the
Registrant and 19 other investment companies in
the Delaware Investments family
Marshall T. Bassett(10) Vice President/Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust), the
Registrant and nine other investment companies
in the Delaware Investments family
John A. Heffern(11) Vice President/Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust) and nine other investment companies in the
Delaware Investments family
Lori P. Wachs Vice President/Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust) and nine other investment companies in the
Delaware Investments family
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
(1) SENIOR MANAGER, Ernst & Young LLP prior to December 1996.
(2) TAX PRINCIPAL, Ernst & Young LLP prior to April 1998.
(3) CORPORATE CONTROLLER, IIS prior to July 1997.
(4) INVESTMENT OFFICER, Travelers Insurance prior to January 1997.
(5) SENIOR DIRECTOR, Morgan Grenfell Capital Management prior to June 1996.
(6) SENIOR PORTFOLIO MANAGER, Pitcairn Trust Company prior to May 1997.
(7) SENIOR PORTFOLIO MANAGER, Voyageur Fund Managers, Inc. prior to May
1997.
(8) SENIOR VICE PRESIDENT, SENIOR PORTFOLIO MANAGER, Voyageur Asset
Management LLC prior to May 1997.
(9) DIRECTOR OF TRUST INVESTMENTS, Bell Atlantic Corporation prior to
February 1997.
(10) VICE PRESIDENT, Morgan Stanley Asset Management prior to March 1997.
(11) SENIOR VICE PRESIDENT, EQUITY RESEARCH, NatWest Securities Corporation
prior to March 1997.
(b) Delaware International Advisers Ltd. ("Delaware International") serves
as investment manager to The International Equity Portfolio, The Global Fixed
Income Portfolio, The International Fixed Income Portfolio, The Labor Select
International Equity Portfolio, The Emerging Markets Portfolio, The Global
Equity Portfolio and The International Mid-Cap Sub Portfolio. In addition,
Delaware International also serves as investment manager or sub-adviser to
certain of the other funds in the Delaware Investments family (Delaware
<PAGE>
Part C - Other Information
(continued)
Group Income Funds, Inc., Delaware Group Premium Fund, Inc., Delaware Group
Global & International Funds, Inc. and Delaware Group Global Dividend and Income
Fund, Inc.) and provides investment advisory services to institutional accounts
primarily retirement plans and endowment funds.
Information regarding the officers and directors of Delaware International
and the positions they have held with the Registrant during the past two fiscal
years is provided below.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Delaware International Advisers Ltd.
Business Address and its Affiliates and Other Positions and Offices Held
- ------------------ ---------------------------------------------------------------
<S> <C>
*Wayne A. Stork Chairman, Chief Executive Officer and Director of Delaware International
Holdings Ltd. and Delaware International Advisers Ltd.; Chairman of the Board,
President, Chief Executive Officer, Chief Investment Officer and
Director/Trustee of Delaware Management Company, Inc. and Delaware
Management Business Trust; Chairman of the Board, President, Chief Executive
Officer, Chief Investment Officer of Delaware Management Company (a series
of Delaware Management Business Trust); Chairman of the Board, President,
Chief Executive Officer and Director of DMH Corp., Delaware Distributors,
Inc. and Founders Holdings, Inc.; Chairman, Chief Executive Officer and Chief
Investment Officer of Delaware Investment Advisers (a series of Delaware
Management Business Trust); Chairman of the Board and Director of the
Registrant, each of the other funds in the Delaware Investments family,
Delaware Management Holdings, Inc., and Delaware Capital Management, Inc.;
Chairman of Delaware Distributors, L.P.; President and Chief Executive Officer
of Delvoy, Inc.; and Director and/or Trustee of Delaware Service Company, Inc.
and Retirement Financial Services, Inc.
*Jeffrey J. Nick Director of Delaware International Advisers Ltd.; President, Chief Executive
Officer and Director and/or Trustee of the Registrant and each of the other
investment companies in the Delaware Investments family; President and
Director of Delaware Management Holdings, Inc.; President, Chief Executive
Officer and Director of Lincoln National Investment Companies, Inc.; and
President of Lincoln Funds Corporation
**David G. Tilles Managing Director, Chief Investment Officer and Director of Delaware
International Advisers Ltd. and Chief Investment Officer and Director of
Delaware International Holdings, Ltd.
**G. Roger H. Kitson Vice Chairman and Director of Delaware International Advisers Ltd.
**Ian G. Sims Deputy Managing Director/ Chief Investment Officer/Global Fixed Income and
Director of Delaware International Advisers Ltd.
**John Emberson Secretary, Compliance Officer, Finance Director and Director of Delaware
International Advisers Ltd.
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
** Business address of each is Third Floor, 80 Cheapside, London, England EC2V 6EE.
</TABLE>
<PAGE>
Part C - Other Information
(continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Delaware International Advisers Ltd.
Business Address and its Affiliates and Other Positions and Offices Held
- ------------------ ---------------------------------------------------------------
<S> <C>
**Nigel G. May Senior Portfolio Manager/Head of Pacific Basin Group and Director of Delaware
International Advisers Ltd.
**Elizabeth A. Desmond Senior Portfolio Manager/Head of European Group and Director of Delaware
International Advisers Ltd.
*David K. Downes Director of Delaware International Advisers Ltd.; Executive Vice President, Chief
Operating Officer, Chief Financial Officer and Director of Delaware Management
Company, Inc., DMH Corp, Delaware Distributors, Inc., Founders Holdings, Inc.
and Delvoy, Inc.; Executive Vice President, Chief Financial Officer, Chief
Administrative Officer and Trustee of Delaware Management Business Trust;
Executive Vice President, Chief Operating Officer and Chief Financial Officer of
the Registrant and each of the other funds in the Delaware Investments family,
Delaware Management Holdings, Inc., Founders CBO Corporation, Delaware
Capital Management, Inc., Delaware Management Company (a series of Delaware
Management Business Trust), Delaware Investment Advisers (a series of Delaware
Management Business Trust) and Delaware Distributors, L.P.; 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 Retirement Financial Services, Inc.; Chairman and Director
of Delaware Management Trust Company; and Vice President of Lincoln Funds
Corporation
Chief Executive Officer and Director of Forewarn, Inc. since 1993, 8 Clayton Place,
Newtown Square, PA
*Richard G. Unruh, Jr. President of Delaware Investment Advisers (a series of Delaware Management
Business Trust); Executive Vice President and Director/Trustee of Delaware
Management Company, Inc. and Delaware Management Business Trust; Executive
Vice President of the Registrant, each of the other funds in the Delaware
Investments family, Delaware Management Holdings, Inc., Delaware Capital
Management, Inc. and Delaware Management Company (a series of Delaware
Management Business Trust); and Director of Delaware International Advisers Ltd.
Board of Directors, Chairman of Finance Committee, Keystone Insurance Company
since 1989, 2040 Market Street, Philadelphia, PA; Board of Directors, Chairman
of Finance Committee, AAA Mid Atlantic, Inc. since 1989, 2040 Market Street,
Philadelphia, PA; Board of Directors, Metron, Inc. since 1995, 11911 Freedom
Drive, Reston, VA
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
** Business address of each is Third Floor, 80 Cheapside, London, England EC2V 6EE.
</TABLE>
<PAGE>
Part C - Other Information
(continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Delaware International Advisers Ltd.
Business Address and its Affiliates and Other Positions and Offices Held
- ------------------ ---------------------------------------------------------------
<S> <C>
*Richard J. Flannery Senior Vice President/Corporate and International Affairs of the Registrant, each
of the other funds in the Delaware Investments family, Delaware Management
Holdings, Inc., DMH Corp., Delaware Management Company, Inc., Delaware
Distributors, Inc., Delaware Distributors, L.P., Delaware Management Trust
Company, Delaware Capital Management, Inc., Delaware Service Company,
Inc., Delaware Management Company (a series of Delaware Management
Business Trust), Delaware Investment Advisers (a series of Delaware
Management Business Trust) and Retirement Financial Services, Inc.; Executive
Vice President/Corporate & International Affairs and Director of Delaware
International Holdings Ltd.; Senior Vice President/ Corporate and International
Affairs and Director of Founders Holdings, Inc. and Delvoy, Inc.; Senior Vice
President of Founders CBO Corporation; and Director of Delaware International
Advisers Ltd.
Director, HYPPCO Finance Company Ltd.
Limited Partner of Stonewall Links, L.P. since 1991, Bulltown Rd., Elverton, PA;
Director and Member of Executive Committee of Stonewall Links, Inc. since
1991, Bulltown Rd., Elverton, PA
*John C. E. Campbell Director of Delaware International Advisers Ltd.; Executive Vice
President of Delaware Investment Advisers
*George M. Chamberlain, Jr. Senior Vice President, Secretary and General Counsel of the Registrant, each of
the other funds in the Delaware Investments family, Delaware Distributors, L.P.,
Delaware Management Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series of Delaware Management
Business Trust) and Delaware Management Holdings, Inc.; Senior Vice
President, General Counsel, Secretary and Director/Trustee of Delaware
Management Company, Inc., DMH Corp., Delaware Distributors, Inc., Delaware
Service Company, Inc., Founders Holdings, Inc., Delaware Capital Management,
Inc., Retirement Financial Services, Inc., Delvoy, Inc. and Delaware
Management Business Trust; Senior Vice President and Director of Delaware
International Holdings Ltd.; Executive Vice President, Secretary, General
Counsel and Director of Delaware Management Trust Company; Director of
Delaware International Advisers Ltd.; Secretary of Lincoln Funds Corporation
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
** Business address of each is Third Floor, 80 Cheapside, London, England EC2V 6EE.)
</TABLE>
<PAGE>
Part C - Other Information
(continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
<S> <C>
*George E. Deming Director of Delaware International Advisers Ltd.; Vice President/Senior Portfolio
Manager of Delaware Investment Advisers
**Timothy W. Sanderson Senior Portfolio Manager, Deputy Compliance Officer, Director Equity Research,
Chief Investment Officer and Director of Delaware International Advisers Ltd.
**Clive A. Gillmore Senior Portfolio Manager, Director U.S. Mutual Fund Liaison and Director of
Delaware International Advisers Ltd.
**Hamish O. Parker Senior Portfolio Manager, Director U.S. Marketing Liaison and Director of
Delaware International Advisers Ltd.
**Gavin A. Hall Senior Portfolio Manager of Delaware International Advisers Ltd.
**Robert Akester Senior Portfolio Manager of Delaware International Advisers Ltd.
**Hywel Morgan Senior Portfolio Manager of Delaware International Advisers Ltd.
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
** Business address of each is Third Floor, 80 Cheapside, London, England EC2V 6EE.
</TABLE>
(c) Lincoln Investment Management Company, Inc. serves as sub-adviser to The
Real Estate Investment Trust Portfolio and The Real Estate Investment Trust
Portfolio II. Lincoln Investment Management Company, Inc. also serves as
sub-adviser to Delaware Group Adviser Funds, Inc. and investment manager to
Lincoln National Convertible Securities Fund, Inc., Lincoln National Income
Fund, Inc., Lincoln National Aggressive Growth Fund, Inc., Lincoln National Bond
Fund, Inc., Lincoln National Capital Appreciation Fund, Inc., Lincoln National
Equity-Income Fund, Inc., Lincoln National Global Asset Allocation Fund, Inc.,
Lincoln National Growth and Income Fund, Inc., Lincoln National International
Fund, Inc., Lincoln National Managed Fund, Inc., Lincoln National Money Market
Fund, Inc., Lincoln National Social Awareness Fund, Inc., Lincoln National
Special Opportunities Fund, Inc. and to other clients. Lincoln Investment
Management Company, Inc. is registered with the Securities and Exchange
Commission as an investment adviser and has acted as an investment adviser to
investment companies for over 40 years.
<PAGE>
Part C - Other Information
(continued)
Information regarding the officers and directors of Lincoln Investment
Management Company, Inc. and the positions they held during the past two years
follows:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Lincoln Investment Management Company,
Business Address Inc. and its Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------------------------
<S> <C>
*H. Thomas McMeekin President & Director of Lincoln Investment Management, Inc., Lincoln
National Convertible Securities Fund, Inc. and Lincoln National Income Fund, Inc.;
President, Chief Executive Officer and Director of Lincoln National Mezzanine
Corporation; Executive Vice President (previously Senior Vice President) and Chief
Investment Officer of Lincoln National Corporation; and Director of The Lincoln
National Life Insurance Company, Lynch & Mayer, Inc. and Vantage Global
Advisors, Inc.
*Dennis A. Blume Vice President of Lincoln Investment Management, Inc. and Lincoln National Realty
Corporation; and Director of Lynch & Mayer, Inc. and Vantage Global Advisors, Inc.
*Steven R. Brody Senior Vice President and Director of Lincoln Investment Management, Inc.;
Director and Vice President of Lincoln National Mezzanine Corporation; Vice
President of The Lincoln National Life Insurance Company; Director of Lincoln
National Realty Corporation; Treasurer of Lincoln National Convertible Securities
Fund, Inc. and Lincoln National Income Fund, Inc.; and Assistant Treasurer of
Lincoln Financial Group, Inc., Lincoln National Aggressive Growth Fund, Inc.,
Lincoln National Bond Fund, Inc., Lincoln National Capital Appreciation Fund,
Inc., Lincoln National Equity-Income Fund, Inc., Lincoln National Global Asset
Allocation Fund, Inc., Lincoln National Growth and Income Fund, Inc., Lincoln
National Health & Casualty Insurance Company, Lincoln National International
Fund, Inc., Lincoln National Life Reinsurance Company, Lincoln National Managed
Fund, Inc., Lincoln National Money Market Fund, Inc., Lincoln National
Reassurance Company, Lincoln National Social Awareness Fund, Inc. and Lincoln
National Special Opportunities Fund, Inc.
*Ann L. Warner Vice President of Lincoln Investment Management, Inc.; Second Vice President
of Lincoln Life & Annuity Company of New York; Director of Lincoln National
Convertible Securities Fund, Inc.; and Director and Vice President of Lincoln
National Income Fund, Inc.
*JoAnn E. Becker Senior Vice President & Director of Lincoln Investment Management, Inc. and The
Lincoln National Life Insurance Company; and Director of LNC Equity Sales
Corporation, The Richard Leahy Corporation and Professional Financial Planning,
Inc.
*David A. Berry Vice President of Lincoln Investment Management, Inc., Lincoln National
Convertible Securities Fund, Inc. and Lincoln National Income Fund, Inc.; and
Second Vice President of Lincoln Life & Annuity Company of New York
* Business address is 200 East Berry Street, Fort Wayne, IN 46802.
** Business address is 1300 S. Clinton Street, Fort Wayne, IN 46802.
</TABLE>
<PAGE>
Part C - Other Information
(continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Lincoln Investment Management Company,
Business Address Inc. and its Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------------------------
<S> <C>
*Kathy E. Bowman Vice President of Lincoln Investment Management, Inc.
*Philip C. Byrde Vice President of Lincoln Investment Management, Inc.
*Patrick R. Chasey Vice President of Lincoln Investment Management, Inc.
*Garrett W. Cooper Vice President of Lincoln Investment Management, Inc.
*David C. Fischer Vice President of Lincoln Investment Management, Inc. and
Lincoln National Income Fund, Inc.
*Robert C. Franzino Vice President/Portfolio Manager of Lincoln Investment Management, Inc.
*Luc N. Girard Vice President of Lincoln Investment Management, Inc. and The Lincoln National
Life Insurance Company
*Jennifer C. Hom Vice President of Lincoln Investment Management, Inc.
*James M. Keefer Vice President and Associate General Counsel of Lincoln Investment
Management, Inc.
*Timothy H. Kilfoil Vice President of Lincoln Investment Management, Inc.
*Lawrence T. Kissko Vice President of Lincoln Investment Management, Inc.; Vice President and
Director Lincoln National Realty Corporation; and Vice President of The Lincoln
National Life Insurance Company
*Howard R. Lodge Vice President of Lincoln Investment Management, Inc.
*David J. Miller Vice President of Lincoln Investment Management, Inc.
*David C. Patch Vice President of Lincoln Investment Management, Inc.
*Ann L. Warner Vice President of Lincoln Investment Management, Inc.
* Business address is 200 East Berry Street, Fort Wayne, IN 46802.
** Business address is 1300 S. Clinton Street, Fort Wayne, IN 46802.
</TABLE>
<PAGE>
Part C - Other Information
(continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Lincoln Investment Management Company,
Business Address Inc. and its Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------------------------
<S> <C>
*Janet C. Whitney Vice President and Treasurer of Lincoln Investment Management, Inc.,
The Financial Alternative, Inc., Financial Alternative Resources, Inc., Financial
Choices, Inc., Financial Investments, Inc., Financial Investment Services, Inc., The
Financial Resources Department, Inc., Investment Alternatives, Inc., The Investment
Center, Inc., The Investment Group, Inc., LNC Administrative Services
Corporation, LNC Equity Sales Corporation, The Richard Leahy Corporation,
Lincoln National Aggressive Growth Fund, Inc., Lincoln National Bond Fund, Inc.,
Lincoln National Capital Appreciation Fund, Inc., Lincoln National Equity-Income
Fund, Inc., Lincoln National Global Assets Allocation Fund, Inc., Lincoln National
Growth and Income Fund, Inc., Lincoln National Health & Casualty Insurance
Company, Lincoln National Intermediaries, Inc., Lincoln National International
Fund, Inc., Lincoln National Managed Fund, Inc., Lincoln National Management
Services, Inc., Lincoln National Mezzanine Corporation, Lincoln National Money
Market Fund, Inc. Lincoln National Realty Corporation, Lincoln National Risk
Management, Inc., Lincoln National Social Awareness Fund, Inc., Lincoln National
Special Opportunities Fund, Inc., Lincoln National Structured Settlement, Inc.,
Personal Financial Resources, Inc., Personal Investment Services, Inc., Special
Pooled Risk Administrators, Inc., Underwriters & Management Services, Inc.; Vice
President and Treasurer (previously Vice President and General Auditor) of Lincoln
National Corporation; and Assistant Treasurer of First Penn-Pacific Life Insurance
Company
* Business address is 200 East Berry Street, Fort Wayne, IN 46802.
** Business address is 1300 S. Clinton Street, Fort Wayne, IN 46802.
</TABLE>
<PAGE>
Part C - Other Information
(continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Lincoln Investment Management Company,
Business Address Inc. and its Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------------------------
<S> <C>
*C. Suzanne
Womack Corporate Secretary of Lincoln Investment Management, Inc., Corporate Benefit Systems Services
Corporation, The Financial Alternative, Inc., Financial Alternative Resources, Inc.,
Financial Choices, Inc., The Financial Resources Department, Inc., Financial Investment
Services, Inc., Financial Investments, Inc., Insurance Services, Inc., Investment
Alternatives, Inc., The Investment Center, Inc. (TN), The Investment Group, Inc., LNC
Administrative Services Corporation, LNC Equity Sales Corporation, The Richard Leahy
Corporation, Lincoln Life Improved Housing, Inc., Lincoln National (China) Inc.,
Lincoln National Convertible Securities Fund, Inc., Lincoln National Health & Casualty
Insurance Company, Lincoln National Income Fund, Inc., Lincoln National Intermediaries,
Inc., Lincoln National Life Reinsurance Company, Lincoln National Management Services,
Inc., Lincoln National Mezzanine Corporation, Lincoln National Realty Corporation,
Lincoln National Reassurance Company, Lincoln National Reinsurance Company (Barbados)
Limited, Lincoln National Reinsurance Company Limited, Lincoln National Risk
Management, Inc., Lincoln National Structured Settlement, Inc., Old Fort Insurance
Company, Ltd., Personal Financial Resources, Inc., Personal Investment Services, Inc.,
Professional Financial Planning, Inc., Reliance Life Insurance Company of Pittsburgh,
Special Pooled Risk Administrators, Inc. and Underwriters & Management Services, Inc.;
Vice President, Secretary and Director of Lincoln National Foundation, Inc.; Secretary
and Assistant Vice President of Lincoln National Corporation and The National Life
Insurance Company; and Assistant Secretary of Lincoln National Aggressive Growth Fund,
Inc., Lincoln National Bond Fund, Inc., Lincoln National Capital Appreciation Fund,
Inc., Lincoln National Equity-Income Fund, Inc., Lincoln National Global Asset
Allocation Fund, Inc., Lincoln National Growth and Income Fund, Inc., Lincoln National
International Fund, Inc., Lincoln National Managed Fund, Inc., Lincoln National Money
Market Fund, Inc., Lincoln National Social Awareness Fund, Inc., Lincoln National
Special Opportunities Fund, Inc., Lincoln National Variable Annuity Funds A & B and
Lincoln Life & Annuity Company of New York
* Business address is 200 East Berry Street, Fort Wayne, IN 46802.
** Business address is 1300 S. Clinton Street, Fort Wayne, IN 46802.
</TABLE>
<PAGE>
Part C - Other Information
(continued)
Item 29. Principal Underwriters.
(a) Delaware Distributors, L.P. serves as principal underwriter for all the
mutual funds in the Delaware Investments family.
(b) Information with respect to each director, officer or partner of
principal underwriter:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------ --------------------- ---------------------
<S> <C> <C>
Delaware Distributors, Inc. General Partner None
Delaware Investment
Advisers Limited Partner None
Delaware Capital
Management, Inc. Limited Partner None
Wayne A. Stork Chairman Chairman
Bruce D. Barton President and Chief Executive None
Officer
David K. Downes Executive Vice President, Executive Vice President, Chief
Chief Operating Officer Operating Officer and Chief
and Chief Financial Officer Financial Officer
George M. Chamberlain, Jr. Senior Vice President/Secretary/ Senior Vice President/
General Counsel Secretary/General Counsel
Richard J. Flannery Senior Vice President/Corporate Senior Vice President/
and International Affairs Corporate and International Affairs
Joseph H. Hastings Senior Vice President/Corporate Senior Vice President/
Controller & Treasurer Corporate Controller
Terrence P. Cunningham Senior Vice President/Financial None
Institutions
Thomas E. Sawyer Senior Vice President/ None
National Sales Director
Mac McAuliffe Senior Vice President/Sales None
Manager, Western Division
</TABLE>
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
Part C - Other Information
(continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------ --------------------- ---------------------
<S> <C> <C>
J. Chris Meyer Senior Vice President/ None
Director Product Management
William M. Kimbrough Senior Vice President/Wholesaler None
Daniel J. Brooks Senior Vice President/Wholesaler None
Bradley L. Kolstoe Senior Vice President/Western None
Division Sales Manager
Henry W. Orvin Senior Vice President/Eastern None
Division Sales Manager
Michael P. Bishof Senior Vice President and Treasurer/ Senior Vice
Manager, Investment Accounting President/Treasurer
Eric E. Miller Senior Vice President/Assistant Senior Vice President/Assistant
Secretary/Deputy Secretary/Deputy
General Counsel General Counsel
</TABLE>
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
Part C - Other Information
(continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------ --------------------- ---------------------
<S> <C> <C>
Richelle S. Maestro Vice President/ Vice President/
Assistant Secretary Assistant Secretary
Lisa O. Brinkley Vice President/Compliance Vice President/Compliance
Daniel H. Carlson Vice President/Strategic Marketing None
Diane M. Anderson Vice President/Plan Record Keeping None
and Administration
Anthony J. Scalia Vice President/Defined Contribution None
Sales, SW Territory
Courtney S. West Vice President/Defined Contribution None
Sales, NE Territory
Denise F. Guerriere Vice President/Client Services None
Gordon E. Searles Vice President/Client Services None
Lori M. Burgess Vice President/Client Services None
Julia R. Vander Els Vice President/Participant Services None
Jerome J. Alrutz Vice President/Retail Sales None
Scott Metzger Vice President/Business Development Vice President/Business
Development
Larry Carr Vice President/Sales Manager None
Stephen C. Hall Vice President/Institutional Sales None
Gregory J. McMillan Vice President/ National Accounts None
Holly W. Reimel Senior Vice President/Manager, None
National Accounts
Christopher H. Price Vice President/Manager, None
Insurance
Stephen J. DeAngelis Senior Vice President, National None
Director/Manager Account Services
</TABLE>
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
Part C - Other Information
(continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------ --------------------- ---------------------
<S> <C> <C>
Andrew W. Whitaker Vice President/Financial Institutions None
Jesse Emery Vice President/ Marketing None
Communications
Darryl S. Grayson Vice President, Broker/Dealer None
Internal Sales
Dinah J. Huntoon Vice President/Product None
Manager Equity
Soohee Lee Vice President/Fixed Income None
Product Management
Michael J. Woods Vice President/UIT Product None
Management
Ellen M. Krott Vice President/Marketing None
Dale L. Kurtz Vice President/Marketing Support None
David P. Anderson Vice President/Wholesaler None
Lee D. Beck Vice President/Wholesaler None
Gabriella Bercze Vice President/Wholesaler None
Larry D. Birdwell Vice President/Wholesaler None
Terrence L. Bussard Vice President/Wholesaler None
William S. Carroll Vice President/Wholesaler None
William L. Castetter Vice President/Wholesaler None
Thomas J. Chadie Vice President/Wholesaler None
Joseph Gallagher Vice President/Wholesaler None
Thomas C. Gallagher Vice President/Wholesaler None
Douglas R. Glennon Vice President/Wholesaler None
</TABLE>
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
Part C - Other Information
(continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------ --------------------- ---------------------
<S> <C> <C>
Ronald A. Haimowitz Vice President/Wholesaler None
Edward J. Hecker Vice President/Wholesaler None
Christopher L. Johnston Vice President/Wholesaler None
Michael P. Jordan Vice President/Wholesaler None
Jeffrey A. Keinert Vice President/Wholesaler None
Thomas P. Kennett Vice President/ Wholesaler None
Theodore T. Malone Vice President/Wholesaler None
Debbie A. Marler Vice President/Wholesaler None
Nathan W. Medin Vice President/Wholesaler None
Roger J. Miller Vice President/Wholesaler None
Andrew Morris Vice President/Wholesaler None
Patrick L. Murphy Vice President/Wholesaler None
Scott Naughton Vice President/Wholesaler None
Stephen C. Nell Vice President/Wholesaler None
Julia A. Nye Vice President/Wholesaler None
Joseph T. Owczarek Vice President/Wholesaler None
Mary Ellen Pernice-Fadden Vice President/Wholesaler None
Mark A. Pletts Vice President/Wholesaler None
Philip G. Rickards Vice President/Wholesaler None
Laura E. Roman Vice President/Wholesaler None
Linda Schulz Vice President/Wholesaler None
Edward B. Sheridan Vice President/Wholesaler None
Robert E. Stansbury Vice President/Wholesaler None
</TABLE>
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
Part C - Other Information
(continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------ --------------------- ---------------------
<S> <C> <C>
Julia A. Stanton Vice President/Wholesaler None
Larry D. Stone Vice President/Wholesaler None
Edward J. Wagner Vice President/Wholesaler None
Wayne W. Wagner Vice President/Wholesaler None
John A. Wells Vice President/Marketing None
Technology
Scott Whitehouse Vice President/Wholesaler None
</TABLE>
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
(c) Inapplicable.
Item 30. Location of Accounts and Records.
All accounts and records are maintained in the Philadelphia office
at 1818 Market Street, Philadelphia, PA 19103 or One Commerce
Square, Philadelphia, PA 19103.
Item 31. Management Services. None.
Item 32. Undertakings.
(a) Not Applicable.
(b) Not Applicable.
(c) The Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's
latest annual report to shareholders, upon request and
without charge.
(d) Not Applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, this Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in this City of Philadelphia and Commonwealth of Pennsylvania on
this 27th day of August, 1998. DELAWARE POOLED TRUST, INC.
By /s/Wayne A. Stork
--------------------
Wayne A. Stork
Chairman
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
- -------------------------- -------------------------- ---------------
<S> <C> <C>
/s/Wayne A. Stork Chairman and Director August 27, 1998
- --------------------------
Wayne A. Stork
/s/David K. Downes Executive Vice President/Chief
- -------------------------- Operating Officer/Chief Financial
David K. Downes Officer (Principal Financial Officer
and Principal Accounting Officer) August 27, 1998
/s/Walter P. Babich *
- --------------------------
Walter P. Babich Director August 27, 1998
/s/Anthony D. Knerr *
- -------------------------- Director August 27, 1998
Anthony D. Knerr
/s/Ann R. Leven *
- -------------------------- Director August 27, 1998
Ann R. Leven
/s/W. Thacher Longstreth *
- -------------------------- Director August 27, 1998
W. Thacher Longstreth
/s/ Thomas F. Madison *
- -------------------------- Director August 27, 1998
Thomas F. Madison
/s/Jeffrey J. Nick *
- -------------------------- Director August 27, 1998
Jeffrey J. Nick
/s/Charles E. Peck *
- -------------------------- Director August 27, 1998
Charles E. Peck
/s/John H. Durham *
- -------------------------- Director August 27, 1998
John H. Durham
* By /s/Wayne A. Stork
--------------------------
Wayne A. Stork
as Attorney-in-Fact
for each of the persons indicated
</TABLE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Exhibits
to
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Exhibit
- ----------- -------
EX-99.B11 Consent of Auditors
EX-27 Financial Data Schedules
<PAGE>
Consent of Ernst & Young LLP, Independent Auditors
We consent to the references to our firm under the captions "Financial
Highlights" in the Prospectus and "Financial Statements" in the Statement of
Additional Information and to the incorporation by reference in this
Post-Effective Amendment No. 23 to the Registration Statement (Form N-1A) (No.
33-40991) of Delaware Pooled Trust, Inc. of our report dated December 1, 1997,
included in the 1997 Annual Report to shareholders.
/s/Ernst & Young LLP
- --------------------
Ernst & Young LLP
Philadelphia, Pennsylvania
August 25, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000875352
<NAME> DELAWARE POOLED TRUST, INC.
<SERIES>
<NUMBER> 01
<NAME> THE INTERNATIONAL EQUITY PORTFOLIO
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 495,514,824
<INVESTMENTS-AT-VALUE> 597,380,689
<RECEIVABLES> 4,462,645
<ASSETS-OTHER> 158,711
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 602,002,045
<PAYABLE-FOR-SECURITIES> 1,170,687
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 468,908
<TOTAL-LIABILITIES> 1,639,595
<SENIOR-EQUITY> 355,298
<PAID-IN-CAPITAL-COMMON> 506,962,945
<SHARES-COMMON-STOCK> 35,529,753
<SHARES-COMMON-PRIOR> 31,531,503
<ACCUMULATED-NII-CURRENT> 1,784,621
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (10,567,256)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 101,826,842
<NET-ASSETS> 600,362,450
<DIVIDEND-INCOME> 6,062,558
<INTEREST-INCOME> 1,006,318
<OTHER-INCOME> 0
<EXPENSES-NET> 2,415,160
<NET-INVESTMENT-INCOME> 4,653,716
<REALIZED-GAINS-CURRENT> (9,314,821)
<APPREC-INCREASE-CURRENT> 63,856,178
<NET-CHANGE-FROM-OPS> 59,195,073
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 17,520,747
<DISTRIBUTIONS-OF-GAINS> 4,749,754
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,501,037
<NUMBER-OF-SHARES-REDEEMED> 875,213
<SHARES-REINVESTED> 1,372,426
<NET-CHANGE-IN-ASSETS> 100,166,789
<ACCUMULATED-NII-PRIOR> 15,069,873
<ACCUMULATED-GAINS-PRIOR> 3,079,098
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,010,785
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,415,160
<AVERAGE-NET-ASSETS> 537,176,990
<PER-SHARE-NAV-BEGIN> 15.860
<PER-SHARE-NII> 0.135
<PER-SHARE-GAIN-APPREC> 1.605
<PER-SHARE-DIVIDEND> 0.550
<PER-SHARE-DISTRIBUTIONS> 0.150
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 16.900
<EXPENSE-RATIO> 0.910
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000875352
<NAME> DELAWARE POOLED TRUST, INC.
<SERIES>
<NUMBER> 02
<NAME> THE LARGE CAP VALUE EQUITY PORTFOLIO
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 75,660,079
<INVESTMENTS-AT-VALUE> 93,942,452
<RECEIVABLES> 1,340,186
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 95,282,638
<PAYABLE-FOR-SECURITIES> 1,110,899
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 129,645
<TOTAL-LIABILITIES> 1,240,544
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 65,540,911
<SHARES-COMMON-STOCK> 5,038,924
<SHARES-COMMON-PRIOR> 4,377,036
<ACCUMULATED-NII-CURRENT> 392,167
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 9,826,643
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 18,282,373
<NET-ASSETS> 94,042,094
<DIVIDEND-INCOME> 1,047,641
<INTEREST-INCOME> 59,109
<OTHER-INCOME> 0
<EXPENSES-NET> 295,794
<NET-INVESTMENT-INCOME> 810,956
<REALIZED-GAINS-CURRENT> 9,807,464
<APPREC-INCREASE-CURRENT> 4,151,419
<NET-CHANGE-FROM-OPS> 14,769,839
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,359,418
<DISTRIBUTIONS-OF-GAINS> 12,031,890
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 231,670
<NUMBER-OF-SHARES-REDEEMED> 350,857
<SHARES-REINVESTED> 781,075
<NET-CHANGE-IN-ASSETS> 12,940,196
<ACCUMULATED-NII-PRIOR> 940,629
<ACCUMULATED-GAINS-PRIOR> 12,022,384
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 237,219
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 303,845
<AVERAGE-NET-ASSETS> 88,317,414
<PER-SHARE-NAV-BEGIN> 18.530
<PER-SHARE-NII> 0.163
<PER-SHARE-GAIN-APPREC> 2.967
<PER-SHARE-DIVIDEND> 0.300
<PER-SHARE-DISTRIBUTIONS> 2.700
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 18.660
<EXPENSE-RATIO> 0.670
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000875352
<NAME> DELAWARE POOLED TRUST, INC.
<SERIES>
<NUMBER> 03
<NAME> THE AGGRESSIVE GROWTH PORTFOLIO
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 4,882,145
<INVESTMENTS-AT-VALUE> 5,919,582
<RECEIVABLES> 156,828
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,076,410
<PAYABLE-FOR-SECURITIES> 314,124
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 132,838
<TOTAL-LIABILITIES> 446,962
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,359,228
<SHARES-COMMON-STOCK> 670,707
<SHARES-COMMON-PRIOR> 754,166
<ACCUMULATED-NII-CURRENT> (4,223)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,237,006
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,037,437
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<DIVIDEND-INCOME> 7,156
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<OTHER-INCOME> 0
<EXPENSES-NET> 30,199
<NET-INVESTMENT-INCOME> (4,223)
<REALIZED-GAINS-CURRENT> 1,329,028
<APPREC-INCREASE-CURRENT> (686,156)
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<ACCUMULATED-GAINS-PRIOR> 4,614,239
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<OVERDIST-NET-GAINS-PRIOR> 0
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<PER-SHARE-NII> (0.024)
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<PER-SHARE-DIVIDEND> 0.000
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<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 8.390
<EXPENSE-RATIO> 0.930
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
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<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000875352
<NAME> DELAWARE POOLED TRUST, INC.
<SERIES>
<NUMBER> 04
<NAME> THE INTERMEDIATE FIXED INCOME PORTFOLIO
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 28,257,985
<INVESTMENTS-AT-VALUE> 28,733,659
<RECEIVABLES> 783,861
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 14,728
<TOTAL-ASSETS> 29,532,248
<PAYABLE-FOR-SECURITIES> 1,665,122
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 75,264
<TOTAL-LIABILITIES> 1,740,386
<SENIOR-EQUITY> 27,595
<PAID-IN-CAPITAL-COMMON> 27,389,129
<SHARES-COMMON-STOCK> 2,759,491
<SHARES-COMMON-PRIOR> 3,009,582
<ACCUMULATED-NII-CURRENT> 299
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 179,988
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 194,851
<NET-ASSETS> 27,791,862
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 975,269
<OTHER-INCOME> 0
<EXPENSES-NET> 80,015
<NET-INVESTMENT-INCOME> 895,254
<REALIZED-GAINS-CURRENT> 190,952
<APPREC-INCREASE-CURRENT> (211,143)
<NET-CHANGE-FROM-OPS> 875,063
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 894,954
<DISTRIBUTIONS-OF-GAINS> 30,150
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 39,977
<NUMBER-OF-SHARES-REDEEMED> 362,902
<SHARES-REINVESTED> 72,834
<NET-CHANGE-IN-ASSETS> (2,574,334)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 19,186
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 60,518
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 157,450
<AVERAGE-NET-ASSETS> 30,436,926
<PER-SHARE-NAV-BEGIN> 10.090
<PER-SHARE-NII> 0.297
<PER-SHARE-GAIN-APPREC> (0.010)
<PER-SHARE-DIVIDEND> 0.297
<PER-SHARE-DISTRIBUTIONS> 0.010
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.070
<EXPENSE-RATIO> 0.53
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
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<NAME> THE LIMITED-TERM MATURITY PORTFOLIO
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<NAME> THE GLOBAL FIXED INCOME PORTFOLIO
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<NAME> THE INTERNATIONAL FIXED INCOME PORTFOLIO
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<NUMBER> 08
<NAME> THE SMALL\MID-CAP VALUE EQUITY PORTFOLIO
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<NAME> THE LABOR SELECT INTERNATIONAL EQUITY PORTFOLIO
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<NAME> REAL ESTATE INVESTMENT TRUST PORTFOLIO A CLASS
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<NAME> DELAWARE POOLED TRUST, INC.
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<NUMBER> 112
<NAME> REAL ESTATE INVESTMENT TRUST PORTFOLIO B CLASS
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<NAME> DELAWARE POOLED TRUST, INC.
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<NAME> REAL ESTATE INVESTMENT TRUST PORTFOLIO C CLASS
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<NAME> DELAWARE POOLED TRUST, INC.
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<NUMBER> 114
<NAME> REAL ESTATE INVESTMENT TRUST PORTFOLIO INST'L CLASS
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<NAME> REAL ESTATE INVESTMENT TRUST PORTFOLIO CLASS
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<NUMBER> 12
<NAME> THE HIGH-YIELD BOND PORTFOLIO
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<NAME> DELAWARE POOLED TRUST, INC.
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<NUMBER> 13
<NAME> THE EMERGING MARKETS PORTFOLIO
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<CIK> 0000875352
<NAME> DELAWARE POOLED TRUST, INC.
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<NUMBER> 14
<NAME> THE GLOBAL EQUITY PORTFOLIO
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<NAME> REAL ESTATE INVESTMENT TRUST PORTFOLIO II
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<NAME> DELAWARE POOLED TRUST, INC.
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<NUMBER> 16
<NAME> THE AGGREGATE FIXED INCOME PORTFOLIO
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<TABLE> <S> <C>
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<CIK> 0000875352
<NAME> DELAWARE POOLED TRUST, INC.
<SERIES>
<NUMBER> 17
<NAME> THE DIVERSIFIED CORE FIXED INCOME PORTFOLIO
<S> <C>
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