SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Under Rule 14a-12
VOYAGEUR MUTUAL FUNDS III
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
Delaware
Investments(SM)
- ---------------
A member of Lincoln Financial Group(R)
DELAWARE GROWTH STOCK FUND
(to be renamed Delaware Core Equity Fund)
a series of Voyageur Mutual Funds III
June 8, 2001
Dear Shareholder:
A Special Meeting of Shareholders of Delaware Growth Stock Fund, to be
renamed Delaware Core Equity Fund (the "Fund"), is being held at the Crowne
Plaza Hotel, 1800 Market Street, Philadelphia, PA on July 26, 2001 at 10:30
a.m. Eastern time. We ask that you take the time to review the enclosed Notice
and Proxy Statement and provide us with your vote on the proposal to be
considered at the meeting.
The enclosed Proxy Statement describes an important proposal to approve a new
Sub-Advisory Agreement (the "New Agreement") for the Fund with Voyageur
Asset Management, Inc. ("Voyageur"), which currently provides sub-advisory
services for the Fund. On December 8, 2000, Voyageur's predecessor, Voyageur
Asset Management LLC, merged into a subsidiary of Dain Rauscher Corporation
("Dain Rauscher"). As a result of this transaction, the Sub-Advisory
Agreement under which Voyageur's predecessor served as sub-adviser terminated
as a matter of law and was replaced by an interim sub-advisory services
agreement. Subsequently, on January 10, 2001, Dain Rauscher and its
subsidiaries (including Voyageur) were acquired by Royal Bank of Canada. The
Fund is now requesting that you approve the new sub-advisory arrangement with
Voyageur.
We realize that this Proxy Statement will take time to review, but your vote
is very important. Please familiarize yourself with the proposal presented and
mark, sign and return your proxy card (or cards) in the enclosed postage-paid
envelope. You may also call toll-free to vote by telephone, or you may vote
using the Internet. The insert accompanying this Proxy Statement describes how
to vote using these methods.
Thank you for taking this matter seriously and participating in this
important process.
Sincerely,
/s/ Charles E. Haldeman, Jr.
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Charles E. Haldeman, Jr.
Chairman
/s/ David K. Downes
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David K. Downes
President
PX-GS
[THIS PAGE INTENTIONALLY LEFT BLANK]
Delaware
Investments(SM)
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A member of Lincoln Financial Group(R)
DELAWARE GROWTH STOCK FUND
(to be renamed Delaware Core Equity Fund)
a series of Voyageur Mutual Funds III
One Commerce Square
Philadelphia, PA 19103
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held on July 26, 2001
To the Shareholders of Delaware Growth Stock Fund (to be renamed Delaware Core
Equity Fund):
This is your official Notice that a Special Meeting of Shareholders of
Delaware Growth Stock Fund to be renamed Delaware Core Equity Fund (the
"Fund"), a series of Voyageur Mutual Funds III (the "Trust"), will be held on
Thursday, July 26, 2001 at 10:30 a.m. Eastern time at the Crowne Plaza Hotel,
1800 Market Street, Philadelphia, Pennsylvania.
During the meeting, or any adjournments thereof (the "Meeting"), shareholders
of the Fund will vote on the following proposals:
1. To approve a new Sub-Advisory Agreement for the Fund between Delaware
Management Company, the Fund's current investment adviser, and Voyageur Asset
Management, Inc.
2. Any other business properly brought before the Meeting.
The Board of Trustees has fixed May 30, 2001 as the record date for
determining the shareholders who will be entitled to vote at the Meeting. If
you do not expect to attend, you are requested to complete, date and sign the
enclosed proxy and return it promptly in the envelope provided for that
purpose. The enclosed proxy is being solicited on behalf of the Board of
Trustees of the Trust.
Please vote your proxy promptly to avoid the need for further mailings. Your
vote is important.
/s/ Charles E. Haldeman, Jr.
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Charles E. Haldeman, Jr.
Chairman
/s/ David K. Downes
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David K. Downes
President
[THIS PAGE INTENTIONALLY LEFT BLANK]
Delaware
Investment(SM)
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A member of Lincoln Financial Group(R)
PROXY STATEMENT
DELAWARE GROWTH STOCK FUND
(to be renamed Delaware Core Equity Fund)
(the "Fund")
One Commerce Square
Philadelphia, PA 19103
1.800.523.1918
SPECIAL MEETING OF SHAREHOLDERS
To be held on July 26, 2001
TABLE OF CONTENTS
Page
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Questions and Answers 2
General Information 4
Proposal: To approve a New Sub-Advisory Agreement for the Fund 6
EXHIBIT A: Form of New Sub-Advisory Agreement A-1
QUESTIONS AND ANSWERS
We encourage you to read the Proxy Statement in full; however, the following
are some typical questions that shareholders might have regarding the Proxy
Statement.
Q: Why is Delaware Investments sending me this Proxy Statement?
Mutual funds are required to obtain shareholders' votes for certain types of
action. As a shareholder, you have a right to vote on certain major decisions,
such as the one included here.
Q: On what issue am I being asked to vote?
You are being asked to approve a new Sub-Advisory Agreement (the "New
Agreement") between Voyageur Asset Management, Inc. ("Voyageur") and Delaware
Management Company ("DMC"), the Fund's investment adviser, that will allow
Voyageur to continue providing investment sub-advisory services to the Delaware
Growth Stock Fund (to be renamed Delaware Core Equity Fund) (the "Fund").
Q: Why am I being asked to approve the New Agreement?
The Fund is registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), which requires that any investment sub-advisory agreement for
a mutual fund terminate automatically if the sub-adviser experiences a change in
actual control or management. This provision has the effect of ensuring that
shareholders have a say in the company or persons that manage this Fund.
In December 2000, Voyageur's predecessor was acquired by Dain Rauscher
Corporation ("Dain Rauscher") through a merger transaction (the "Dain Rauscher
Transaction"). The Dain Rauscher Transaction constituted a "change of control"
of Voyageur's predecessor under the 1940 Act. As a result, the sub-advisory
agreement then in effect was deemed to have terminated as a matter of law. Since
that termination, Voyageur and its predecessor have continued providing
sub-advisory services to the Fund, at first without any compensation, then after
April 19, 2001 on an at-cost basis. Thereafter, Dain Rauscher and its
subsidiaries (including Voyageur) were acquired by Royal Bank of Canada ("RBC").
This second transaction constituted another "change of control," but did not
impact Voyageur's ability to provide sub-advisory services to the Fund.
On April 19, 2001, the Board of Trustees of the Trust approved the New
Agreement subject to the approval of the Fund's shareholders. In order for
Voyageur to continue to provide these services on an ongoing basis and to
receive a sub-advisory fee, shareholders of the Fund are being asked to approve
the New Agreement. The sub-advisory fees to be paid to Voyageur under the New
Agreement will be paid by DMC, not the Fund. In the event that the New Agreement
is not approved by the shareholders of the Fund, it is anticipated that Voyageur
will cease providing sub-advisory services and that DMC will take responsibility
for all aspects of investment management until such time as a new sub-advisory
agreement is approved by the Board and by the shareholders of the Fund.
Q: What are the details of the changes in ownership?
Voyageur was established in 1983 as a fixed income adviser of separate
accounts and mutual funds. On the date that the Dain Rauscher Transaction was
publicly announced, Voyageur's predecessor had $6 billion in assets under
management, including $1 billion in equity and balanced portfolios and $5
billion in fixed income assets.
Prior to completing the Dain Rauscher Transaction, Voyageur's predecessor was
a wholly owned subsidiary of Dougherty Financial Group LLC. The Dain Rauscher
Transaction occurred when Voyageur's predecessor merged into Dain Rauscher's
investment advisory subsidiary, Insight Investment Management, Inc. ("Insight").
When the Dain Rauscher Transaction was announced, the combined firm had almost
$13 billion under management, and was one of the nation's largest full-service
securities firms with 1,200 investment executives and 3,800 employees, serving
individual investors and small businesses. After the completion of the Dain
Rauscher Transaction, Insight changed its name to Voyageur Asset Management,
Inc.
Dain Rauscher was subsequently sold to RBC (the "RBC Transaction"). RBC is a
Canadian-based, diversified global financial services organization and a leading
provider of personal and commercial banking, investment and trust services,
insurance, corporate and investment banking, online banking and
transaction-based services. RBC employs 49,000 people who serve 10 million
personal, business and public sector customers in 30 countries. RBC is now the
sole owner of Voyageur, but Voyageur continues to operate under the Voyageur
name.
2
Q: How does the change in ownership of Voyageur affect the management of the
Fund?
The persons responsible for managing Voyageur are not expected to change as a
result of the ownership changes resulting from the Dain Rauscher Transaction or
the RBC Transaction. The portfolio managers did, however, change at the time of
the Dain Rauscher Transaction for reasons unrelated to that Transaction. It is
anticipated that the ownership changes may result in increased investment
research capabilities that can benefit the Fund.
Q: How would the proposal affect me as a shareholder?
The Fund and its investment objective will not change. You will still own the
same number of shares in the same Fund. The Fund's current portfolio manager(s)
will not change. DMC will continue to act as investment adviser and, assuming
the proposal in this Proxy Statement is approved by the shareholders of the
Fund, Voyageur will continue to provide sub-advisory services to the Fund. The
terms of the Prior Agreement and the New Agreement, including the sub-advisory
fee, are substantially identical.
Q. Are there any differences between the Prior Agreement and the New
Agreement?
Prior to December 8, 2000, Voyageur's predecessor had been providing sub-
advisory services to the Fund under a Sub-Advisory Agreement dated April 15,
1999 (the "Prior Agreement"). The terms of the Prior Agreement and the New
Agreement, including the sub-advisory fee, are substantially identical. Because
the sub-advisory fees to be received by Voyageur under the New Agreement will be
paid by DMC, your approval of the New Agreement will not increase the expenses
paid by the Fund.
Q. Who is paying the costs associated with the Meeting and the proxy
solicitation?
Voyageur and DMC, not the Fund, will bear the costs associated with the
Meeting and the proxy solicitation.
Q: How do the Board members recommend that I vote?
The Board members recommend that you vote in favor of, or FOR, the New
Agreement.
Q: Whom do I call for more information on how to place my vote?
Please call the Fund at 1.800.523.1918 for additional information on how to
place your vote.
3
PLEASE VOTE
YOUR VOTE IS IMPORTANT
GENERAL INFORMATION
Meeting Information. The Board of Trustees of Voyageur Mutual Funds III (the
"Trust"), on behalf of the Delaware Growth Stock Fund (to be renamed Delaware
Core Equity Fund) (the "Fund"), is soliciting your proxy to be voted at the
Special Meeting of Shareholders to be held on Thursday, July 26, 2001 at 10:30
a.m. Eastern time at the Crowne Plaza Hotel, 1800 Market Street, Philadelphia,
PA 19103 or any adjournments of the meeting (hereafter, the "Meeting").
Purpose of Meeting. The purpose of the Meeting is to consider the approval of
a new Sub-Advisory Agreement ("New Agreement") with Voyageur Asset
Management, Inc., a Minnesota corporation ("Voyageur").
The Board urges you to complete, sign and return the Proxy Card included with
this Proxy Statement, or use one of the other voting methods described in the
insert accompanying this Proxy Statement, whether or not you intend to be
present at the Meeting. It is important that you return the signed Proxy Card or
use one of the other voting methods described in the insert accompanying this
Proxy Statement promptly to help assure a quorum for the Meeting.
General Voting Information. The persons designated on the Proxy Card as
proxies will vote your shares as you instruct on each Proxy Card. If your signed
Proxy Card is returned without any voting instructions, your shares will be
voted "FOR" the Proposal. The persons designated as proxies will also be
authorized to vote in their discretion on any other matters which may come
before the Meeting. If you sign and return a Proxy Card, you may still attend
the Meeting to vote your shares in person. If your shares are held of record by
a broker-dealer and you wish to vote in person at the Meeting, you should obtain
a Legal Proxy from your broker of record and present it at the Meeting. You may
also revoke your proxy at any time before the Meeting: (i) by notifying Delaware
Investments in writing; (ii) by submitting a later signed Proxy Card; or (iii)
by voting your shares in person at the Meeting.
Each shareholder may cast one vote for each full share and a partial vote for
each partial share of the Fund that they own on the record date, which is May
30, 2001. It is expected that this Proxy Statement and the accompanying Proxy
Card will be mailed to shareholders of record on or about June 8, 2001.
This proxy solicitation is being made largely by mail, but may also be made by
officers or employees of the Trust or its investment manager or affiliates
through telephone, oral or other communications. Shareholders may provide proxy
instructions by returning their Proxy Card by mail and may also communicate
proxy instructions through the Internet or by telephone via touch- tone voting.
Votes Required to Approve the Proposal. The shareholders of the Fund are being
asked to vote on the New Agreement. Provided that a quorum is present, approval
of the New Agreement requires the affirmative vote of the lesser of: (i) more
than 50% of the outstanding securities of the Fund; or (ii) 67% or more of the
voting securities of the Fund present at the Meeting, if the holders of more
than 50% of the Fund's outstanding voting securities are present or represented
by proxy.
Solicitation of Proxies. DMC will reimburse banks, brokers or dealers for
their reasonable expenses in forwarding soliciting materials to shareholders.
Reports to Shareholders and Financial Statements. The Fund's most recent
Semi-Annual Report to Shareholders was previously mailed to shareholders. It is
anticipated that the Fund's upcoming Annual Report to Shareholders will become
available on or about June 29, 2001. Copies of these reports are available upon
request, without charge, by writing the Fund at One Commerce Square,
Philadelphia, PA 19103, or by calling 1.800.523.1918.
4
Principal Shareholders. As of May 30, 2001, the Fund had 1,302,851.926 Class A
shares outstanding, 217,967.031 Class B shares outstanding, 85,341.044 Class C
shares outstanding and 81,886.220 Institutional Class shares outstanding. To the
knowledge of the Fund's management, as of May 30, 2001, the following entities
held beneficially of record more than 5% of the Fund's outstanding shares of a
class:
Share Amount and Percentage of Class
Name and Address of Holder Ownership
-------------------------- ---------
Class C:
Emery Jahnke 5,115.915 6.0%
Ann Jahnke JT TEN
2402 Lilac Lane
Fargo, ND 58102
Institutional Class:
Sierra Cities.com 401(k) Plan 62,798.010 76.6%
600 Travis Street
69th Floor - Suite 1300
Houston, TX 77002
UFCW & Employers Supp Pension 15,785.68 19.27%
1 Neshaminy Interplex, Suite 303
Trevose, PA 19053
In addition, to the knowledge of the Fund's management, as of May 30, 2001, no
Trustee of the Trust owned 1% or more of the outstanding shares of the Fund, and
the officers and Trustees of the Trust owned, as a group, less than 1% of the
Fund's outstanding shares.
Voting by Broker-Dealers. The Trust expects that, before the Meeting, broker-
dealer firms holding shares of the Fund in "street name" for their customers
will request voting instructions from their customers and beneficial owners. If
these instructions are not received by the date specified in the broker-dealer
firms' proxy solicitation materials, the Trust understands that stock exchange
rules will not permit the broker-dealers to vote on the New Agreement on behalf
of their customers and beneficial owners. Certain broker-dealers may exercise
discretion over shares held in their name for which no instructions are received
by voting those shares in the same proportion as they vote shares for which they
received instructions.
Quorum. Thirty-three and one-third percent (33 1/3 %) of the Fund's
outstanding shares, present in person or represented by proxy, constitutes a
quorum at the Meeting. Proxies returned for shares that represent "broker
non-votes" (i.e., shares held by brokers or nominees as to which: (i)
instructions have not been received from the beneficial owners or persons
entitled to vote; and (ii) the broker or nominee does not have discretionary
voting power on a particular matter), and shares whose proxies reflect an
abstention on any item are all counted as shares present and entitled to vote
for purposes of determining whether the required quorum of shares exists.
Abstentions and broker non-votes will be treated as votes present but not cast.
Other Matters and Discretion of Attorneys Named in the Proxy. The Fund is not
required, and does not intend, to hold regular annual meetings of its
shareholders. Shareholders wishing to submit proposals for consideration for
inclusion in a proxy statement for the next meeting of shareholders should send
their written proposals to the Fund's offices at One Commerce Square, 34th
Floor, Philadelphia, PA 19103, so they are received within a reasonable time
before any such meeting. No business other than the matters described above is
expected to come before the Meeting, but should any other matter requiring a
vote of shareholders arise, including any question as to an adjournment or
postponement of the Meeting, the persons named on the enclosed proxy card will
vote on such matters according to their best judgment in the interests of the
Fund.
5
Proposal: To Approve a New Sub-Advisory Agreement for Delaware Growth Stock
Fund (to be renamed Delaware Core Equity Fund)
Shareholders of the Fund are being asked to approve a new Sub-Advisory
Agreement (previously defined as the "New Agreement") with Voyageur, which
currently provides sub-advisory services to the Fund. The Board of Trustees of
the Trust, on behalf of the Fund, is recommending that shareholders approve the
New Agreement between DMC and Voyageur, which would become effective immediately
following shareholder approval. The New Agreement is substantially identical to
the Prior Agreement and differs only in its effectiveness and termination dates.
Under the New Agreement (as with the Prior Agreement), DMC would bear the cost
of all sub-advisory fees payable to Voyageur under the New Agreement.
The New Agreement is necessary because the Prior Agreement terminated
automatically, in accordance with the 1940 Act, as a result of the acquisition
of Voyageur's predecessor by Dain Rauscher in December 2000. Voyageur is
currently continuing to provide sub-advisory services to the Fund under an
interim agreement at cost as permitted under the 1940 Act. A shareholder vote
approving the New Agreement is required under the 1940 Act. The Prior Agreement,
dated April 15, 1999, had been approved by shareholders of the Fund on April 13,
1999.
This proposal sets forth information about Voyageur and the Fund's investment
adviser, DMC. A summary of the New Agreement and a discussion of the factors
considered by the Board when it approved the New Agreement are set forth below.
Investment Adviser. Beginning May 1, 1997, the Fund retained DMC to serve as
its investment adviser. DMC is an investment adviser registered under the
Investment Advisers Act of 1940, which, along with its affiliates, serves as
investment manager or sub-adviser to many of the investment companies within the
Delaware Investments family of funds under separate investment management
agreements or sub-advisory agreements with each fund. DMC is a series of
Delaware Management Business Trust, which is an indirect, wholly owned
subsidiary of Lincoln National Corporation ("LNC"). DMC is located at One
Commerce Square, 2005 Market Street, Philadelphia, PA 19103. LNC, with
headquarters at 1500 Market Street, Philadelphia, PA 19103, is a publicly held,
diversified organization involved in many aspects of the financial services
industry, including insurance and investment management.
Sub-Adviser. Voyageur is registered as an investment adviser under the
Investment Advisers Act of 1940 and, together with its predecessor firm, has
been providing sub-advisory services to the Fund since May 1, 1997. Voyageur's
principal place of business is located at 90 South Seventh Street, Suite 4300,
Minneapolis, Minnesota 55402.
As of January 10, 2001, following the consummation of the Dain Rauscher
Transaction and the RBC Transaction, Voyageur became an indirect, wholly owned
subsidiary of RBC. RBC owns RBC Holdings (USA) Inc., which is the direct owner
of Dain Rauscher. Dain Rauscher, in turn, owns Voyageur.
The name, address and principal occupation of Voyageur's principal executive
officer and each of its directors is as follows:
Name & Address Title Principal Occupation
- -------------- ----- --------------------
John C. Appel Director Vice Chairman of
60 South 6th Street Dain Rauscher
Suite 1900
Minneapolis, MN 55402
Daniel J. Collins Chief Financial Officer Controller of
60 South 6th Street Dain Rauscher
Suite 1900
Minneapolis, MN 55402
John G. Taft Director and Chief Director and Chief
90 South 7th Street Executive Officer Executive Officer of
Suite 4300 Voyageur
Minneapolis, MN 55402
Irving Weiser Director Chairman, President and
60 South 6th Street CEO of Dain Rauscher
Suite 1900
Minneapolis, MN 55402
6
There is no material interest, direct or indirect, of any trustee of the Trust
in any material transaction to which Voyageur or any of its affiliates was or is
party during the fiscal year ended April 30, 2001. None of the Trust's officers
or trustees are officers, employees, directors or shareholders of Voyageur or
its parent(s).
Information About the New Agreement. The proposed New Agreement is identical
to the Prior Agreement, with the exception of the effectiveness and termination
dates, and is attached to this Proxy Statement as Exhibit A. The New Agreement
provides that Voyageur shall manage the investment and reinvestment of that
portion of the Fund's assets as DMC shall designate from time to time and shall
furnish DMC with investment recommendations, asset allocation advice, research,
and economic and other investment services with respect to securities in which
the Fund may invest. The New Agreement has an initial term of two years and
provides that it will continue in effect thereafter only if such continuation is
specifically approved at least annually with respect to the Fund (i) by a vote
of the majority of the Board, or a vote of a majority of the outstanding voting
securities of the Fund, and (ii) in either case, separately by a majority of the
Trustees who are not "interested persons" (as defined in the 1940 Act). The New
Agreement may be terminated without penalty by (i) the Trust, by a vote of a
majority of the Board, or (ii) a vote of a majority of the outstanding voting
securities of the Fund, or (iii) the sub-adviser at any time on 60 days' written
notice. The New Agreement will also terminate automatically upon its
"assignment," as that term is defined in the 1940 Act.
The New Agreement provides that DMC will pay Voyageur a fee of 0.325 of 1% of
the average daily net assets of the Fund; provided, however, that Voyageur shall
waive all or a portion of its fees to the extent necessary to bear its
proportionate share of the fee waiver that DMC offers the Fund. During the
fiscal year ended April 30, 2001 (which included the period from December 8,
2000 through April 18, 2001, during which the Interim Agreement was in effect
and no compensation was paid to Voyageur), DMC paid $85,695 to Voyageur in
connection with the performance of its services under the Prior Agreement and
approximately $1,300 for costs. In addition, had the Prior Agreement been in
effect during the entire fiscal year of the Fund, the aggregate fees paid by DMC
to Voyageur would have been $137,748.
Factors Considered by the Board of Trustees in approving the New Agreement. At
the April 18-19, 2001 meeting of the Board of Trustees of the Trust, the Board
considered the proposed arrangement under which Voyageur would remain as the
sub-adviser for the Fund under the New Agreement. At those Board meetings, the
Board reviewed Voyageur's historical performance as sub-adviser, as well as the
potential advantages to be gained by the Fund retaining Voyageur following the
RBC Transaction. The Board considered the qualifications of Voyageur's
personnel, noting their experience in managing portfolios similar to that of the
Fund. The Board evaluated the resources available to Voyageur through its
parent, Dain Rauscher, and the possible benefits accruing to the Fund as a
result of Voyageur's relationship with its Dain Rauscher broker/ dealer
affiliate. The Board discussed the potential costs and benefits of maintaining
Voyageur under terms substantially the same as those contained in the Prior
Agreement. The Board determined that the approval of the New Agreement was in
the best interest of the Fund and its shareholders.
The Board has unanimously approved the proposed New Agreement and recommends
that you vote FOR the New Agreement for the Fund.
7
OTHER INFORMATION
Other Matters to Come Before the Meeting. The Trustees do not intend to bring
any matters before the Meeting other than the Proposal, and are not aware of any
other matters to be brought before the Meeting by others. If any other matters
do properly come before the Meeting, the persons named in the enclosed proxy
will use their best judgment in voting on such matters.
Information about the Fund's Other Service Providers. Delaware Distributors,
L.P., serves as the principal underwriter to the Fund and Delaware Service
Company, Inc., serves as its administrator; both have as their principal
address One Commerce Square, Philadelphia, PA 19103. Lincoln Financial
Distributors, Inc. ( "LFD ") serves as the Fund's sub-distributor. The
principal address of LFD is 350 Church Street, Hartford, CT 06103.
8
EXHIBIT A
SUB-ADVISORY AGREEMENT
AGREEMENT, made by and between DELAWARE MANAGEMENT COMPANY, a series of
Delaware Management Business Trust (the "Investment Manager "), and VOYAGEUR
ASSET MANAGEMENT, INC. ( "Sub-Adviser ").
WITNESSETH:
WHEREAS, VOYAGEUR MUTUAL FUNDS III, a Delaware business trust (the "Trust"),
has been organized and operates as an investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the DELAWARE CORE EQUITY FUND (formerly the Delaware Growth Stock
Fund) of the Trust (the "Fund") engages in the business of investing and
reinvesting its assets in securities; and
WHEREAS, the Investment Manager and the Trust on behalf of the Fund have
entered into an agreement ("Investment Management Agreement") whereby the
Investment Manager will provide investment advisory services to the Trust with
respect to Fund; and
WHEREAS, the Investment Management Agreement permits the Investment Manager
to hire one or more sub-advisers to assist the Investment Manager in providing
investment advisory services to the Trust with respect to the Fund; and
WHEREAS, the Investment Manager and the Sub-Adviser are registered investment
advisers under the Investment Advisers Act of 1940, as amended, and engage in
the business of providing investment management services.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and each of the parties hereto intending to be legally bound, it is agreed as
follows:
1. The Investment Manager hereby employs the Sub-Adviser, subject always to
the Investment Manager's control and supervision, to manage the investment and
reinvestment of that portion of the Fund's assets as the Investment Manager
shall designate from time to time and to furnish the Investment Manager with
investment recommendations, asset allocation advice, research, economic analysis
and other investment services with respect to securities in which the Fund may
invest, subject to the direction of the Board and officers of the Trust for the
period and on the terms hereinafter set forth. The Sub-Adviser hereby accepts
such employment and agrees during such period to render the services and assume
the obligations herein set forth for the compensation herein provided. The
Sub-Adviser shall for all purposes herein be deemed to be an independent
contractor, and shall, unless otherwise expressly provided and authorized, have
no authority to act for or represent the Trust in any way, or in any way be
deemed an agent of the Trust. The Sub-Adviser shall regularly make decisions as
to what securities to purchase and sell on behalf of the Fund with respect to
that portion of the Fund's assets designated by the Investment Manager, shall
effect the purchase and sale of such investments in furtherance of the Fund's
objectives and policies and shall furnish the Board of Trustees of the Trust
with such information and reports regarding its activities as the Investment
Manager deems appropriate or as the Trustees of the Trust may reasonably request
in the performance of its duties and obligations under this Agreement. The
Sub-Adviser shall act in conformity with the Declaration of Trust, By-Laws and
Prospectus of the Trust and with the instructions and directions of the
Investment Manager and of the Board of Trustees of the Trust and will conform to
and comply with the requirements of the 1940 Act, the Internal Revenue Code of
1986 and all other applicable federal and state laws and regulations consistent
with the provisions of Section 15(c) of the 1940 Act.
2. Under the terms of the Investment Management Agreement, the Trust shall
conduct its own business and affairs and shall bear the expenses and salaries
necessary and incidental thereto including, but not in limitation of the
foregoing, the costs incurred in: the maintenance of its corporate existence;
the maintenance of its own books, records and procedures; dealing with its own
shareholders; the payment of dividends; transfer of shares, including issuance
and repurchase of shares; preparation of share certificates; reports and notices
to shareholders; calling and holding of shareholders' meetings; miscellaneous
office expenses; brokerage commissions; custodian fees; legal and accounting
fees; taxes; and federal and state registration fees. Without limiting the
foregoing, except as the Investment Manager and the Sub-Adviser may agree in
writing from time to time, the Sub-Adviser shall have no responsibility for
record maintenance and preservation obligations under Section 31 of the 1940
Act.
Directors, officers and employees of the Sub-Adviser may be directors,
officers and employees of other funds which have employed the Sub-Adviser as
sub-adviser or investment manager. Directors, officers and employees of the
Sub-Adviser who are
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Trustees, officers and/or employees of the Trust, shall not receive any
compensation from the Trust for acting in such dual capacity. In the conduct of
the respective business of the parties hereto and in the performance of this
Agreement, the Trust, the Investment Manager and the Sub-Adviser may share
facilities common to each, which may include legal and accounting personnel,
with appropriate proration of expenses between and among them.
3. (a) Subject to the primary objective of obtaining the best execution, the
Sub-Adviser may place orders for the purchase and sale of portfolio securities
and other instruments with such broker/dealers who provide statistical, factual
and financial information and services to the Trust, to the Investment Manager,
to the Sub-Adviser or to any other fund for which the Investment Manager or
Sub-Adviser provides investment advisory services and/or with broker/dealers who
sell shares of the Trust or who sell shares of any other fund for which the
Investment Manager or Sub-Adviser provides investment advisory services.
Broker/dealers who sell shares of the funds for which the Investment Manager or
Sub-Adviser provides advisory services shall only receive orders for the
purchase or sale of portfolio securities to the extent that the placing of such
orders is in compliance with the rules of the Securities and Exchange Commission
and NASD Regulation, Inc.
(b) Notwithstanding the provisions of subparagraph (a) above and subject to
such policies and procedures as may be adopted by the Board of Trustees and
officers of the Trust, the Sub-Adviser may cause the Trust to pay a member of an
exchange, broker or dealer an amount of commission for effecting a securities
transaction in excess of the amount of commission another member of an exchange,
broker or dealer would have charged for effecting that transaction, in such
instances where the Sub-Adviser has determined in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such member, broker or dealer, viewed in terms of either
that particular transaction or the Sub-Adviser's overall responsibilities with
respect to the Trust and to other funds and other advisory accounts for which
the Investment Manager or the Sub-Adviser exercises investment discretion.
4. As compensation for the services to be rendered to the Trust for the
benefit of the Fund by the Sub-Adviser under the provisions of this Agreement,
the Investment Manager shall pay to the Sub-Adviser an annual fee equal to
0.325% of the average daily net assets of the Fund; provided however, that the
Sub-Adviser shall waive all or a portion of the fees payable under this
Agreement to the extent necessary to bear its proportionate share of any
management fee waiver undertaken by the Investment Manager. The amount of such
waiver by the Sub-Adviser shall be calculated by multiplying the dollar amount
of the management fees waived by the investment manager by the percentage that
the then-current sub-advisory fee rate represents of the then-current investment
management fee rate.
If this Agreement is terminated prior to the end of any calendar month, the
Sub-Advisory fee shall be prorated for the portion of any month in which this
Agreement is in effect according to the proportion which the number of calendar
days during which the Agreement is in effect bears to the number of calendar
days in the month, and shall be payable within 10 days after the date of
termination.
5. The services to be rendered by the Sub-Adviser to the Trust for the
benefit of the Fund under the provisions of this Agreement are not to be deemed
to be exclusive, and the Sub-Adviser shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby; provided, however,
except for advisory arrangements implemented prior to the date of this
Agreement, during the term of this Agreement, the Sub-Adviser will not, without
the written consent of the Investment Manager, which consent will not be
unreasonably withheld, render investment company advisory services to an
investment company (or portfolio thereof) which the Investment Manager
reasonably determines would be in competition with and which has investment
policies similar to those of the Fund.
6. Subject to the limitation set forth in Paragraph 5, the Sub-Adviser, its
directors, officers, employees, agents and shareholders may engage in other
businesses, may render investment advisory services to other investment
companies, or to any other corporation, association, firm or individual, and may
render underwriting services to the Trust or to any other investment company,
corporation, association, firm or individual.
The Investment Manager agrees that it shall not use the Sub-Adviser's name or
otherwise refer to the Sub-Adviser in any materials distributed to third
parties, including the Fund's shareholders, without the prior written consent of
the Sub-Adviser.
7. In the absence of willful misfeasance, bad faith, gross negligence, or a
reckless disregard of the performance of its duties as Sub-Adviser to the
Company, the Sub-Adviser shall not be subject to liability to the Trust or to
the Fund, to the Investment Manager or to any shareholder of the Trust for any
action or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding or
sale of any security, or otherwise.
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8. This Agreement shall be executed and become effective as of the date
written below if approved by the vote of a majority of the outstanding voting
securities of the Fund. It shall continue in effect for a period of two years
and may be renewed thereafter only so long as such renewal and continuance is
specifically approved at least annually by the Board of Trustees or by the vote
of a majority of the outstanding voting securities of the Fund and only if the
terms and the renewal hereof have been approved by the vote of a majority of the
Trustees of the Trust who are not parties hereto or interested persons of any
such party ("Independent Trustees"), cast in person at a meeting called for the
purpose of voting on such approval. Notwithstanding the foregoing, this
Agreement may be terminated by the Investment Manager or the Trust at any time,
without the payment of a penalty, on sixty days' written notice to the
Sub-Adviser, of the Investment Manager's or the Trust's intention to do so, in
the case of the Trust pursuant to action by the Board of Trustees of the Trust
or pursuant to the vote of a majority of the outstanding voting securities of
the Fund. The Sub-Adviser may terminate this Agreement at any time, without the
payment of a penalty, on sixty days' written notice to the Investment Manager
and the Trust of its intention to do so. Upon termination of this Agreement, the
obligations of all the parties hereunder shall cease and terminate as of the
date of such termination, except for any obligation to respond for a breach of
this Agreement committed prior to such termination, and except for the
obligation of the Investment Manager to pay to the Sub-Adviser the fee provided
in Paragraph 4 hereof, prorated to the date of termination. This Agreement shall
automatically terminate in the event of its assignment. This Agreement shall
automatically terminate upon the termination of the Investment Management
Agreement.
9. This Agreement shall extend to and bind the successors of the parties
hereto.
10. For the purposes of this Agreement, the terms "vote of a majority of the
outstanding voting securities"; "interested person"; and "assignment" shall have
the meaning defined in the Investment Company Act of 1940.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized officers and duly attested as of the ___ day
of _____, 2001.
VOYAGEUR ASSET MANAGEMENT, INC. DELAWARE MANAGEMENT COMPANY,
a series of Delaware Management Business Trust
By:______________________________ By:___________________________________________
Name: Name: David K. Downes
Title: Title: President
Agreed to and accepted as of the day and year first above written:
VOYAGEUR MUTUAL FUNDS III
on behalf of the DELAWARE CORE EQUITY
FUND (formerly the Delaware Growth Stock
Fund)
By:___________________________________________
David K. Downes
President and Chief Executive Officer
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[THIS PAGE INTENTIONALLY LEFT BLANK]
DELAWARE GROWTH STOCK FUND (the "Fund")
SPECIAL SHAREHOLDER MEETING - JULY 26, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby appoints David K. Downes, Richard J. Flannery and
Richelle S. Maestro, or any of them, each with the right of substitution,
proxies of the undersigned at the Special Meeting of Shareholders of the Fund to
be held at the Crowne Plaza Hotel, 1800 Market Street, Philadelphia,
Pennsylvania, on Thursday, July 26, 2001 at 10:30 A.M., Eastern time or at any
postponement or adjournments thereof, with all the powers which the undersigned
would possess if personally present, and instructs them to vote upon any matters
which may properly be acted upon at this meeting and specifically as indicated
on the reverse side of this form. Please refer to the proxy statement for a
discussion of each of these matters.
BY SIGNING AND DATING THIS CARD, YOU AUTHORIZE THE PROXIES TO VOTE THE PROPOSAL
AS MARKED, OR IF NOT MARKED, TO VOTE "FOR" THE PROPOSAL, AND TO USE THEIR
DISCRETION TO VOTE ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING,
OR AT ANY POSTPONEMENT OR ADJOURNMENT THEREOF. PLEASE COMPLETE AND MAIL THIS
CARD AT ONCE IN THE ENCLOSED ENVELOPE.
Please fill in box as shown using black or blue ink or number 2 pencil.
To approve a new Sub-Advisory Agreement on FOR AGAINST ABSTAIN
behalf of the Fund between Delaware Management
Company and Voyageur Asset Management, Inc. [ ] [ ] [ ]
THIS PROXY CARD IS ONLY VALID WHEN SIGNED
AND DATED. TO SECURE THE LARGEST POSSIBLE
REPRESENTATION AND AVOID THE ADDITIONAL
EXPENSE TO THE FUND OF FURTHER
SOLICITATION, PLEASE DATE AND SIGN.
Date ____________, 2001
__________________________________________________________________
| |
|__________________________________________________________________|
Signature(s) (Joint Owners) (PLEASE SIGN WITHIN BOX)
PLEASE DATE AND SIGN NAME OR NAMES
ABOVE AS PRINTED ON THIS CARD TO
AUTHORIZE THE VOTING OF YOUR SHARES AS
INDICATED. WHERE SHARES ARE REGISTERED
WITH JOINT OWNERS, ALL JOINT OWNERS
SHOULD SIGN. PERSONS SIGNING AS EXECUTOR,
ADMINISTRATOR, TRUSTEE OR OTHER
REPRESENTATIVE SHOULD GIVE FULL TITLE AS
SUCH.
3