NOVEMBER 3, 1999
DELAWARE POOLED TRUST, INC.
THE BALANCED PORTFOLIO
THE INTERMEDIATE FIXED INCOME PORTFOLIO
THE AGGREGATE FIXED INCOME PORTFOLIO
THE DIVERSIFIED CORE FIXED INCOME 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
The Balanced, The Intermediate Fixed Income, The Aggregate Fixed Income and
The Diversified Core Fixed Income Portfolios may use Interest rate swaps to
adjust each 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 Fund
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 Portfolios 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 for The Balanced, The Intermediate
Fixed Income, The Aggregate Fixed Income and The Diversified Core Fixed Income
Portfolios, 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 for these Portfolios, we focus on those dealers 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 Balanced, The Intermediate Fixed Income, The Aggregate Fixed Income and
The Diversified Core Fixed Income Portfolios, by investing in swaps, are
subject to additional interest rate risk. The Portfolios 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 Portfolios must pay for any
swaps they hold and will segregate enough cash or other liquid securities to
cover that amount.
RISKS
LIQUIDIDTY RISK (see prospectus for discussion of this risk)
HOW WE STRIVE TO MANAGE THEM
Swap agreements entered into by The Balanced, The Intermediate Fixed Income,
The Aggregate Fixed Income and The Diversified Core Fixed Income Portfolios
will be treated as illiquid securities. However, most swap dealers will be
willing to repurchase interest rate swaps.
