NOVEMBER 3, 1999
DELAWARE POOLED TRUST, INC.
THE BALANCED PORTFOLIO
SUPPLEMENT TO THE PROSPECTUS
The following supplements the section of the Prospectus entitled "Additional
Investment Information":
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SECURITIES
INTEREST RATE SWAP AND INDEX SWAP AGREEMENTS: In an interest rate swap, a
fund receives payment from another party based on a floating interest rate in
return for making payments based on a fixed interest rate. An interest rate
swap can also work in reverse, with a fund receiving payments based on a fixed
interest rate and making payments based on a floating interest rate. In an
index swap, a fund receives gains or incurs losses based on the total return
of an index, in exchange for making fixed or floating interest rate payments
to another party.
HOW WE USE THEM
Interest rate swaps may be used to adjust the Portfolio's sensitivity to
interest rates by changing its duration. We may also use interest rate swaps
to hedge against changes in interest rates. We use index swaps to gain
exposure to markets that the Portfolio invests in, such as the corporate bond
market. We may also use index swaps as a substitute for futures, options or
forward contracts if such contracts are not directly available to the
Portfolio on favorable terms.
Interest rate swaps and index swaps will be considered illiquid securities.
The following supplements the section of the Prospectus entitled "Risk
Factors":
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RISKS
MARKET RISK: Index swaps are subject to the same market risks as the
investment market or sector that the index represents. Depending on the
actual movements of the index and how well the portfolio manager forecasts
those movements, a fund could experience a higher or lower return than
anticipated.
HOW WE STRIVE TO MANAGE THEM
In evaluating the use of an index swap, we carefully consider how market
changes could affect the swap and how that compares to us investing directly
in the market the swap is intended to represent.
When selecting dealers with whom we would make interest rate or index swap
agreements, we focus on those with high quality ratings and do careful credit
analysis before investing.
RISKS
INTEREST RATE RISK: Swaps may be particularly sensitive to interest rate
changes. Depending on the actual movements of interest rates and how well the
portfolio manager anticipates them, the Fund could experience a higher or
lower return than anticipated. For example, if the Fund holds interest rate
swaps and is required to make payments based on variable interest rates, it
will have to make increased payments if interest rates rise, which will not
necessarily be offset by the fixed-rate payments it is entitled to receive
under the swap agreement.
HOW WE STRIVE TO MANAGE THEM
The Portfolio will not invest in interest rate or index swaps with maturities
of more than two years. Each business day we will calculate the amount the
Portfolio must pay for any swaps it holds and will segregate enough cash or
other liquid securities to cover that amount.
RISKS
LIQUIDITY RISK (see prospectus for discussion of this risk)
HOW WE STRIVE TO MANAGE THEM
Swap agreements will be treated as illiquid securities, but most swap dealers
will be willing to repurchase interest rate swaps.
