SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. __)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-12
OPTIMUM FUND TRUST
- --------------------------------------------------------------------------------
(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):
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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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:
____________________________________________________________
OPTIMUM FUND TRUST
July [1], 2004
OPTIMUM INTERNATIONAL FUND
Dear Shareholder:
Enclosed is a Notice of Meeting for a Special Meeting of Shareholders of Optimum
International Fund (the "Fund"), a series of Optimum Fund Trust (the "Trust").
The Meeting has been called for August 31, 2004 at 3:00 p.m., Eastern time, at
2005 Market Street, One Commerce Square, 2nd Floor Auditorium, Philadelphia,
Pennsylvania 19103. The accompanying Proxy Statement describes a certain
proposal (the "Proposal") being presented for your consideration and requests
your prompt attention and vote via the enclosed proxy card.
PLEASE TAKE A MOMENT TO FILL OUT, SIGN AND
RETURN THE ENCLOSED PROXY CARD!
The enclosed Proxy Statement describes the Proposal you are being asked to
consider, which is to approve a new subadvisory agreement. As more fully
described in the Proxy Statement, a new subadvisory agreement is needed as a
result of the pending sale by Delaware Investments of its London-based
international investment management business, specifically Delaware
International Advisers Ltd. ("DIAL"). If the shareholders of the Fund approve
the Proposal, DIAL (which is currently the manager of the Fund) will be able to
continue as sub-adviser for the Fund.
The Proposal is being presented to shareholders in connection with Delaware
Investments pending sale of DIAL. The sale of DIAL will result in the automatic
termination of DIAL's subadvisory agreement with respect to the Fund between
Delaware Management Company, a series of Delaware Management Business Trust
("DMC"), the investment manager to the Fund, and DIAL. The Proposal will not
result in a change in the investment objective or investment policies of the
Fund, nor will the investment management fees or any other expenses paid by the
Fund change.
Please take the time to review this entire document and vote now! Whether or not
you plan to attend the Meeting, please vote your shares by completing, dating
and signing the enclosed proxy card. If you determine at a later date that you
wish to attend the Meeting, you may revoke your proxy and vote in person. Proxy
cards must be received prior to the Meeting in order to be counted.
Thank you for your prompt attention and participation.
Sincerely,
/s/ Jude T. Driscoll
Jude T. Driscoll
President and Chief Executive Officer
OPTIMUM FUND TRUST
Optimum International Fund
One Commerce Square
Philadelphia, PA 19103
(800) 523-1918
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held on August 31, 2004
To the Shareholders of Optimum International Fund:
This is your official notice that a Special Meeting of Shareholders (the
"Meeting") of Optimum International Fund (the "Fund"), a series of Optimum Fund
Trust, a Delaware statutory trust (the "Trust"), has been called by the Board of
Trustees of the Trust and will be held at 2005 Market Street, One Commerce
Square, 2nd Floor Auditorium, Philadelphia, PA 19103, on August 31, 2004 at 3:00
p.m., Eastern time. The Special Meeting is being called for the following
reasons:
1. To approve a Sub-Advisory Agreement between Delaware Management Company and
Delaware International Advisers Ltd. (the "Proposal").
2. To vote upon any other business as may properly come before the Meeting or
any adjournment thereof.
The Proposal set forth above is more fully described in the attached Proxy
Statement. A copy of the form of proposed Subadvisory Agreement is attached as
Exhibit A to the Proxy Statement. The Board of Trustees of the Trust is
soliciting your votes.
If you are a shareholder of record of the Fund as of the close of business on
June 28, 2004, you have the right to direct the persons listed on the enclosed
proxy card as to how your shares in the Fund should be voted. In addition, a
Proxy Statement describing the matters to be voted on at the Meeting or any
adjournment(s) thereof is attached to this Notice. YOUR VOTE IS IMPORTANT.
By Order of the Board of Trustees,
/s/ Richelle S. Maestro
Richelle S. Maestro
Secretary
July 1, 2004
TO SECURE THE LARGEST POSSIBLE REPRESENTATION AND TO SAVE THE EXPENSE OF
FURTHER MAILINGS, PLEASE MARK YOUR PROXY CARD, SIGN IT, AND RETURN IT IN
THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN
THE UNITED STATES. PROXY CARDS MUST BE RECEIVED BEFORE THE MEETING IN
ORDER TO BE COUNTED. YOU MAY REVOKE YOUR PROXY AT ANY TIME AT OR BEFORE
THE MEETING OR VOTE IN PERSON IF YOU ATTEND THE MEETING.
Proxy Statement
TABLE OF CONTENTS
Page
----
MEETING INFORMATION......................................................................................1
PURPOSES OF THE MEETING..................................................................................1
OVERVIEW OF THE PROPOSAL.................................................................................1
WHY AM I GETTING THIS PROXY?...........................................................1
WHAT IS AN "INTERIM AGREEMENT?"........................................................2
WHAT IS THE BOARD OF TRUSTEES RECOMMENDING?............................................3
PROPOSAL: TO APPROVE A NEW SUBADVISORY AGREEMENT WITH DIAL..............................................3
INTRODUCTION....................................................................................3
APPROVAL OF THE NEW SUBADVISORY AGREEMENT.......................................................4
BOARD CONSIDERATIONS............................................................................4
COMPARISON OF THE CURRENT SUBADVISORY AGREEMENT AND THE NEW SUBADVISORY AGREEMENT...............6
ADVISORY SERVICES......................................................................6
FEES...................................................................................6
PAYMENT OF EXPENSES....................................................................6
BROKERAGE..............................................................................7
LIMITATION OF LIABILITY................................................................7
CONTINUANCE............................................................................8
TERMINATION............................................................................8
INTERIM AGREEMENT...............................................................................8
ADDITIONAL INFORMATION ABOUT DMC, DIAL AND OTHER SERVICE PROVIDERS.......................................9
DMC AND DIAL....................................................................................9
ADMINISTRATOR AND THE DISTRIBUTOR..............................................................13
(i)
VOTING INFORMATION......................................................................................13
HOW MANY VOTES ARE NECESSARY TO APPROVE THE PROPOSAL?.................................13
HOW DO I ENSURE MY VOTE IS ACCURATELY RECORDED?.......................................14
MAY I REVOKE MY PROXY?................................................................14
WHAT OTHER MATTERS WILL BE VOTED UPON AT THE MEETING?.................................14
WHO IS ENTITLED TO VOTE?..............................................................15
WHAT OTHER SOLICITATIONS WILL BE MADE?................................................15
MORE INFORMATION REGARDING THE FUNDS..................................................15
PRINCIPAL SHAREHOLDERS..................................................................................15
SHAREHOLDER PROPOSALS...................................................................................16
EXHIBIT A - FORM OF SUB-ADVISORY AGREEMENT.............................................................A-1
(ii)
Preliminary
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
OF
OPTIMUM INTERNATIONAL FUND
A SERIES OF
OPTIMUM FUND TRUST
TO BE HELD ON AUGUST 31, 2004
MEETING INFORMATION
This Proxy Statement solicits proxies to be voted at a Special Meeting of
Shareholders (the "Meeting") of Optimum International Fund, a series of Optimum
Fund Trust, a Delaware statutory trust (the "Trust"). The Meeting will be held
at the principal offices of the Trust, which are located at 2005 Market Street,
One Commerce Square, 2nd Floor Auditorium, Philadelphia, PA 19103, on August 31,
2004 at 3:00 p.m., Eastern time. The Board of Trustees of the Trust, on behalf
of the Optimum International Fund (the "Fund"), is soliciting these proxies.
This Proxy Statement and form of Proxy Card will first be sent to shareholders
on or about July [6], 2004.
PURPOSES OF THE MEETING
The purpose of the Meeting is to consider the Proposal that is listed in the
accompanying Notice and any other business that may properly come before the
Meeting.
The Board of Trustees of the Trust urges you to complete, sign and return the
Proxy Card included with this Proxy Statement whether or not you intend to be
present at the Meeting. It is important that you return the signed Proxy Card
promptly to help assure a quorum for the Meeting.
OVERVIEW OF THE PROPOSAL
WHY AM I GETTING THIS PROXY?
Delaware International Advisers Ltd. ("DIAL") is currently one of two
subadvisers to the Fund. If the Proposal described in this Proxy Statement is
approved, DIAL will continue to provide day-to-day investment management to its
portion of the Fund, as allocated to it from time to time (the "Managed
Portion"). However, DMH Corp., a parent company of DIAL, has entered into an
agreement that, if consummated, will result in a company owned by DIAL's current
management and others (the "Purchasers") purchasing DIAL from Delaware
Investments (the "DIAL Acquisition"). The Purchasers are paying Delaware
Investments $172 million in cash and will provide relief of certain liabilities
of approximately $27 million as of April 30, 2004. Under applicable law, the
DIAL Acquisition will automatically result in a termination of DIAL's
subadvisory agreement with Delaware Management Company ("DMC"), which provides
for the provision of subadvisory services to the Fund (the "Current Subadvisory
Agreement").
The purpose of the Meeting is to have shareholders of the Fund vote upon a new
subadvisory agreement between DIAL and DMC (the "New Subadvisory Agreement")
that will be needed for the Fund's continuity of operations upon the anticipated
completion of the DIAL Acquisition. The DIAL Acquisition is expected to close
later this year.
WHAT IS AN "INTERIM AGREEMENT?"
As discussed above, the laws that govern the operation of the Fund provide that
the Current Subadvisory Agreement will automatically terminate as a result of
the DIAL Acquisition. If the DIAL Acquisition is completed before the Meeting
where shareholders approve the New Subadvisory Agreement, DMC and DIAL will need
an interim agreement (the "Interim Agreement") to ensure that uninterrupted
subadvisory services are provided by DIAL for the Managed Portion of the Fund.
The Interim Agreement, if actually entered into, will permit DIAL to continue
managing the Managed Portion of the Fund until the New Subadvisory Agreement is
approved by the Fund's shareholders or until DMC makes other arrangements for
portfolio management of the Managed Portion. However, applicable law requires
that the Interim Agreement terminate no later than 150 days after it becomes
effective.
The Interim Agreement is identical in form and terms to the Current Subadvisory
Agreement, except for certain additional provisions that are permitted or
required by applicable law. The term and effective date of the Interim Agreement
differ from the Current Subadvisory Agreement. As mentioned, the Interim
Agreement can only remain in effect for 150 days. In addition, the Interim
Agreement will have an "escrow" provision so that any compensation earned by
DIAL under the Interim Agreement would be held in an interest-bearing escrow
account with [_____].
In order for such compensation to be released from the escrow account to DIAL
for services to the Fund, the law requires that shareholders of the Fund approve
an agreement with DIAL before the end of the 150-day period. In this case,
shareholder approval of the New Sub-Advisory Agreement will cause any fees in
the escrow account to be released to DIAL.
If the Interim Agreement is entered into (i.e., because the DIAL Acquisition
closes before shareholders of the Fund approve the New Subadvisory Agreement)
and shareholders approve the New Subadvisory Agreement, then DIAL is entitled to
receive the compensation held in the escrow account plus any interest earned
thereon. If the Interim Agreement is entered into and shareholders do not
approve the New Subadvisory Agreement, then DIAL is entitled to receive the
lesser of the compensation held in the escrow account or its actual costs of
providing subadvisory services during the period that such fees are being
escrowed.
2
WHAT IS THE BOARD OF TRUSTEES RECOMMENDING?
At the Meeting, the Board of Trustees is recommending that shareholders of the
Fund approve the New Subadvisory Agreement whereby DIAL will be able to continue
to provide the day-to-day investment management of the Managed Portion and any
compensation held in escrow pursuant to the Interim Agreement will be released
to DIAL.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT YOU
VOTE "FOR" THE NEW SUBADVISORY AGREEMENT
PROPOSAL: TO APPROVE A NEW SUBADVISORY AGREEMENT WITH DIAL
INTRODUCTION
In order to maintain the existing services and management for the Managed
Portion of the Fund following the closing of the DIAL Acquisition, management of
the Fund recommended to the Board of Trustees at its June 17, 2004 Board meeting
that DIAL be retained to continue to provide the day-to-day investment
management as sub-adviser of the Managed Portion.
On June 17, 2004, the Board of Trustees of the Trust met to review and consider
the DIAL Acquisition, its impact upon the Trust and the Fund, and Fund
management's recommendation. As more fully described below, the Board of
Trustees reviewed information provided by DIAL and the Purchasers. Based upon
such information and the recommendations of Fund management, the Board of
Trustees, at its June 17, 2004 meeting, approved the New Subadvisory Agreement,
subject to shareholder approval. The terms and conditions of the New Subadvisory
Agreement are substantially the same as the terms and conditions of the Current
Subadvisory Agreement, except as otherwise described below under "COMPARISON OF
THE CURRENT SUBADVISORY AGREEMENT AND THE NEW SUBADVISORY AGREEMENT."
The Current Subadvisory Agreement was (1) originally approved by the Board of
Trustees, including a majority of the trustees who are not "interested persons"
("Independent Trustees"), as defined by Section 2(a)(19) of the Investment
Company Act of 1940, as amended (the "1940 Act") on _________, 2003 and (2) was
approved by the initial shareholder of the Fund and became effective with
respect to the Fund on [ ], 2003. The Current Subadvisory Agreement has not
since been submitted to the Board of Trustees or Fund shareholders for their
reapproval.
As noted above and in accordance with the applicable rules under the 1940 Act,
shareholder approval of the New Subadvisory Agreement is necessary in order for
DIAL to receive any investment advisory fees escrowed pursuant to the Interim
Agreement and for DIAL to continue to provide investment management services to
the Fund.
3
APPROVAL OF THE NEW SUBADVISORY AGREEMENT
The New Subadvisory Agreement will become effective on the later of the date the
Fund's shareholders approve it or the closing of the DIAL Acquisition. If
shareholders do not approve the New Subadvisory Agreement with DIAL, DMC will
either directly manage the Managed Portion on a day-to-day basis, or hire
another sub-adviser, subject to any necessary Board of Trustees and shareholder
approvals, to manage the Managed Portion on a day-to-day basis.
BOARD CONSIDERATIONS
In considering approval of the New Subadvisory Agreement and submission of it to
shareholders for their approval, the Board of Trustees reviewed information and
representations provided by DIAL and advice from outside counsel as to the
adequacy of the materials provided by DIAL, and focused on: (1) the nature,
extent, and quality of the services to be provided by DIAL; (2) the investment
performance of the Fund and comparable funds advised or subadvised by DIAL; (3)
the compatibility of DIAL's investment philosophy and methodology with the other
subadviser co-managing the Fund, Marsico Capital Management, LLC; and (4) the
costs of the services to be provided and profits to be realized by DIAL and its
affiliates from the relationship with the Fund.
In considering the nature, extent and quality of the services to be provided by
DIAL, the Board specifically considered that the New Subadvisory Agreement
contains substantially similar provisions to those in the Current Subadvisory
Agreement except for the effective dates and the fees. With respect to the New
Subadvisory Agreement, the Board considered the benefits of providing
consistency of portfolio management. The Board reviewed materials provided by
DIAL regarding the experience and qualifications of personnel responsible for
managing the Fund, and placed weight on DIAL's representation that there are no
foreseeable changes with respect to the DIAL personnel responsible for security
selection after the closing of the DIAL Acquisition. The Board also considered
DIAL's management of the operating expenses of the Fund, such as transaction
costs, including how portfolio transactions for the Fund are conducted, and how
brokers are chosen. The Board also considered information provided by the
Purchasers regarding their plans for DIAL, particularly Hellman & Friendman,
LLC's prior experience in providing financing to investment advisory firms and
its demonstrated commitment to providing the necessary financial support to the
firms to ensure their success.
The Board also considered that DIAL would continue to co-manage the Fund with
another subadviser, Marsico Capital Management, LLC. The Board considered the
compatibility of the two subadvisers' investment philosophy and methodology and
4
that the New Subadvisory Agreement provides flexibility to DMC to adjust the
amount of the Fund's assets advised by DIAL. Based upon these considerations,
the Board determined that the nature, extent and quality of the services to be
provided by DIAL under the New Subadvisory Agreement are good and that the New
Subadvisory Agreement is in the best interests of shareholders.
In considering the investment performance of the Fund, and specifically of the
Managed Portion of the Fund, as well as the comparable mutual funds advised by
DIAL, the Board looked at the Fund's performance to date relative to its peers
and benchmark. The Board also considered that the Fund has been in existence for
less than a year, but that DIAL has managed the Managed Portion in the style
represented to the Board. Based upon these considerations, the Board determined
that the performance of the Fund provided evidence of the high quality of
portfolio management services to be provided under the New Subadvisory
Agreement.
In considering the costs of the services to be provided and profits to be
realized by DIAL and its affiliates from the relationship with the Fund, the
Board considered fee information for the Fund and the fair market value of the
services provided by DIAL. The Board looked at the advisory fees of the Fund
compared to its peer group, at overall levels of expenses for the Fund compared
to its peer group and at what proportion of the fees paid to DMC were being
passed through to DIAL with respect to the Managed Portion. The Board also noted
that the proposed change to the DIAL's subadvisory fee would lower, at least
initially, the subadvisory fees received by DIAL.
Based upon these considerations, and the considerations regarding fees and
expenses in general, the Board was able to determine that the fees under the New
Subadvisory Agreement are fair and reasonable.
In reaching its decision to recommend approval of the New Subadvisory Agreement,
the Board did not identify any single factor as being of paramount importance.
Based on the information and representations provided by DIAL and its
considerations as described above, the Board of Trustees, including a majority
of Independent Trustees, determined (1) that the New Subadvisory Agreement would
provide appropriate continuity of services to the Fund and its shareholders and
(2) that the terms thereof, including the compensation to be paid under the New
Subadvisory Agreement, are satisfactory in view of the 1940 Act, including the
rules and regulations thereunder, are fair and reasonable and are in the best
interests of shareholders. Therefore, the Board of Trustees determined that the
New Subadvisory Agreement should be submitted to shareholders for approval.
5
COMPARISON OF THE CURRENT SUBADVISORY AGREEMENT AND THE NEW SUBADVISORY
AGREEMENT
ADVISORY SERVICES
Under the proposed New Subadvisory Agreement, DMC, as manager, will retain DIAL
as a sub-adviser and DIAL will continue to manage the Managed Portion on a
day-to-day basis, subject to the supervision of DMC. The services to be provided
to the Fund by DIAL, as sub-adviser, under the New Subadvisory Agreement will be
identical to those currently provided by DIAL under the Current Subadvisory
Agreement.
Under the Current Subadvisory Agreement applicable to the Fund, DIAL is
responsible for the day-to-day portfolio management of the Managed Portion and
determines from time to time the securities and other investments that are
purchased, retained, or sold with respect to that Managed Portion. In addition,
DIAL implements such determinations through the placement of orders for the
execution of portfolio transactions with or through brokers or dealers as
selected by DIAL. DIAL provides the services under the Current Subadvisory
Agreement in accordance with the Fund's investment objectives, policies and
restrictions, as stated in the Fund's current prospectus. DIAL will have the
same contractual obligations and duties under the New Subadvisory Agreement.
Both the Current Subadvisory Agreement and the New Subadvisory Agreement require
the manager and sub-adviser to maintain all books and records with respect to
the securities transactions of the Fund and to furnish the Board such periodic
and special reports as the Board may request.
FEES
The rate of investment management fees payable by the Fund will not be affected
by the DIAL Acquisition because DMC pays subadvisers to the Fund out of the fees
it receives under the investment management agreement it has with the Trust on
behalf of the Fund. However, the subadvisory fees under the proposed New
Subadvisory Agreement differ from those under the Current Subadvisory Agreement.
The annual rate of subadvisory fees payable to DIAL by DMC, based on the average
daily net assets of the Managed Portion, and the subadvisory fees earned, fees
paid and fees waived by DIAL during the fiscal period ended March 31, 2004 are
as follows:
- ---------------------------------------------------- ------------ ------------ ------------
FEES FEES FEES
RATE OF SUBADVISORY FEES EARNED PAID WAIVED
- ---------------------------------------------------- ------------ ------------ ------------
0.55% of the first $50 million $ $ $
0.40% of the next $50 million
0.36% of all assets above $100 million
- ---------------------------------------------------- ------------ ------------ ------------
Under the New Subadvisory Agreement DIAL would receive 0.40% of the average
daily net assets of the Managed Portion.
PAYMENT OF EXPENSES
Under the Current Subadvisory Agreement and the New Subadvisory Agreement, the
subadviser pays all the expenses incurred by it in connection with its
6
activities under the relevant agreement, other than the cost of securities
(including brokerage commissions, if any) purchased or sold for the Fund.
BROKERAGE
The Current Subadvisory Agreement, subject to the primary objective of obtaining
the best execution, permits DIAL to 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
DMC, or to any other fund for which DIAL provides investment advisory services
and/or with broker-dealers who sell shares of the Trust or who sell shares of
any other investment company (or series thereof) for which DIAL or any
sub-adviser provides investment advisory services. Broker-dealers who sell
shares of any investment companies or series thereof for which DIAL or any
sub-adviser provides investment advisory services are permitted to 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 U.S. Securities
and Exchange Commission ("SEC") and NASD Regulation, Inc. Subject to such
policies and procedures as may be adopted by the Board of Trustees and officers
of the Trust, under the Current Subadvisory Agreement, DIAL may cause the Fund
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 DIAL 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 DIAL's overall responsibilities with
respect to the Trust and to other investment companies (or series thereof) and
other advisory or subadvisory accounts for which DIAL exercises investment
discretion.
The New Subadvisory Agreement contains a substantially similar provision;
however, the portion of the provision permitting DIAL to consider the sale of
Trust or other investment company shares when placing purchases and sales of
portfolio securities has been eliminated.
LIMITATION OF LIABILITY
The Current Subadvisory Agreement provides that DIAL shall not be liable to DMC,
the Trust, the Fund or any shareholder for any action or omission in the course
of, or connected with, rendering services or for any losses that may be
sustained in the purchase, holding or sale of any security, or otherwise, in the
absence of willful misfeasance, bad faith, gross negligence, or a reckless
disregard of the performance of its duties as subadviser to the Trust and to
DMC. The New Subadvisory Agreement contains an identical provision.
The Current Subadvisory Agreement and New Subadvisory Agreement each provide
that DIAL and DMC shall indemnify each other and their respective affiliates to
the fullest extent permitted by law against any and all loss, damage, judgments,
fines, amount paid in settlement and reasonable expenses, including attorney's
7
fees incurred by such party and its affiliates arising from or in connection
with such Agreement so long as such losses arise out of the other party's
willful misfeasance, bad faith, gross negligence, or reckless disregard in
performing its responsibilities under the Agreement.
CONTINUANCE
If shareholders of the Fund approve the New Subadvisory Agreement, it will
continue until two years from the date of its execution, unless earlier
terminated. The New Subadvisory Agreement may be continued from year to year
thereafter by a majority vote of the Board of the Trust or by a vote of a
majority of all votes attributable to the outstanding shares of the Fund,
provided that in either case the terms and the renewal have been approved by the
vote of a majority of the Independent Trustees, cast in person at a meeting
called for the purpose of voting on such approval.
In connection with the DIAL Acquisition, DMC and DIAL have agreed, subject to
their respective fiduciary obligations and oversight of the Board of Trustees,
to maintain their relationship for the foreseeable future and for at least 18
months following the DIAL Acquisition.
TERMINATION
The Current Subadvisory Agreement provides that it may be terminated at any time
on 60 days' written notice to the other party, without the payment of any
penalty, by the Trust (by vote of the Board of Trustees or by vote of a majority
of the outstanding voting securities of the Fund) or by DIAL. The Current
Subadvisory Agreement also provides that it would immediately terminate in the
event of its assignment.
The New Subadvisory Agreement may be terminated with respect to the Fund by DMC
at any time, without the payment of a penalty, on 90 days' written notice to
DIAL; by the Trust at any time, on 60 days' written notice to DIAL; and by DIAL
on 90 days' written notice to DIAL and the Trust. The New Subadvisory Agreement
also provides that it would immediately terminate in the event of its
assignment.
INTERIM AGREEMENT
As mentioned above, in the event that the DIAL Acquisition is closed prior to
shareholders of the Fund approving the New Subadvisory Agreement, to assure that
the Fund continues to be managed by DIAL after the DIAL Acquisition and the
termination of the Current Subadvisory Agreement as a result thereof, the Board
of Trustees (including a majority of the Independent Trustees) approved the
Interim Agreement with respect to the Fund pursuant to Rule 15a-4 under the 1940
Act at its in-person meeting held on June 17, 2004.
If needed, the Interim Agreement would become effective upon the closing of the
DIAL Acquisition (the "Interim Effective Date"), and would terminate the earlier
of 150 days from the Interim Effective Date or upon shareholder approval of the
New Subadvisory Agreement. The Interim Agreement also provides that the Board of
8
Trustees, or a majority of the "outstanding voting securities" of the Fund, as
that term is defined in the 1940 Act, may terminate the Interim Agreement on 10
days' written notice to DIAL. The Interim Agreement also provides that DMC may
terminate it at any time upon 60 days' written notice to DIAL. The Interim
Agreement also terminates immediately in the event of its "assignment," as that
term is defined in the 1940 Act.
Pursuant to the terms of the Interim Agreement, the maximum amount of investment
management fees payable by DMC to DIAL during this interim period would be
identical to that which would have been payable to DIAL under the Current
Subadvisory Agreement.
In accordance with the provisions of Rule 15a-4 under the 1940 Act, the
compensation to be paid to DIAL under the Interim Agreement would be held in an
interest-bearing escrow account. The costs, if any, of maintaining such escrow
account would be borne by DMC and DIAL. The Interim Agreement also provides
that, if the shareholders of the Fund approve a new agreement with DIAL no later
than 150 days from the Interim Effective Date, DIAL would be entitled to the
compensation held in the escrow account (including interest earned). If the New
Sub-Advisory Agreement is not approved by the shareholders, the Interim
Agreement provides that DIAL will be entitled to be paid, out of the escrow
account, the lesser of (1) the total amount held in the escrow account (plus
interest earned on that amount) or (2) any costs incurred by DIAL in performing
its duties under the Interim Agreement prior to its termination (plus interest
earned on the amount while in the escrow account). Such amount would be released
to DIAL, as appropriate, from the escrow account. Any excess monies held in the
escrow account will be returned to DMC.
ADDITIONAL INFORMATION ABOUT DMC, DIAL AND
OTHER SERVICE PROVIDERS
DMC AND DIAL
DMC is registered as an investment adviser under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), and, together with its predecessors, has
been managing funds within the Delaware Investments family since 1938. DMC is
located at 2005 Market Street, Philadelphia, Pennsylvania 19103-7094.
DIAL is a United Kingdom affiliate of DMC, is an investment adviser registered
in the United States under the Advisers Act and is regulated in the United
Kingdom by the Financial Services Authority. Since 1990, DIAL has managed the
overseas assets of the funds within the Delaware Investments family. DIAL is
located at Third Floor, 80 Cheapside, London, England EC2V 6EE.
As of May 31, 2004, DMC was managing approximately $25 billion in assets in
various open-end and closed-end investment company accounts. DIAL was managing
approximately $19.5 billion in institutional or separately managed accounts and
approximately $4.5 billion in mutual fund accounts as of the same date. Other
9
affiliates of DMC and DIAL were managing additional institutional and separate
account assets in the amount of $[ ] billion as of that date.
Both DMC and DIAL are indirect, wholly-owned subsidiaries of Lincoln National
Corporation, also known as Lincoln Financial Group. Lincoln National
Corporation, with headquarters currently in Philadelphia, Pennsylvania, is a
diversified organization involved in many aspects of the financial services
industry, including insurance and investment management. Delaware International
Holdings Ltd., located at [ ], is the minority shareholder of DIAL. DIAL Holding
Company located at [address], is the majority shareholder of DIAL.
After the closing of the DIAL Acquisition, DIAL will continue to be owned by
Delaware International Holdings Ltd. and DIAL Holding Company. DIAL Holding
Company will, after the closing of the DIAL Acquisition, be an indirect,
wholly-owned subsidiary of an entity majority-owned and controlled by senior
management of DIAL with a substantial minority investment by a private equity
fund affiliated with Hellman & Friedman, LLC.
DIAL also provides sub-advisory services to other mutual funds that have
investment objectives that are similar to those of the Fund. The following is a
list of these similar funds that are sub-advised by DIAL (and not managed by
DMC) along with the assets of the fund and the investment subadvisory fees that
each fund pays as of May 31, 2004:
- -----------------------------------------------------------------------------------------------
ASSETS UNDER
DIAL'S
TRUST NAME - MANAGEMENT/ EFFECTIVE
FUND NAME FUND SIZE SUBADVISORY FEE TYPE OF FUND FEE WAIVER
- -----------------------------------------------------------------------------------------------
AB Funds Trust $183,000,000 / 0.37% International Investment
- -International $185,000,000 Equity Manager agreed
Equity Fund to waive fees
through 4/30/05
- -----------------------------------------------------------------------------------------------
BBH Fund, Inc. - $110,000,000/ 0.41% International None
BBH International $115,000,000 Equity
Equity Fund
- -----------------------------------------------------------------------------------------------
Frank Russell $131,000,000/ 0.29% International None
Investment $132,000,000 Equity
Company -
International Fund
- -----------------------------------------------------------------------------------------------
Frank Russell $167,000,000/ 0.29% International None
Investment $169,000,000 Equity
Company -
International
Securities Fund
- -----------------------------------------------------------------------------------------------
10
- ----------------------------------------------------------------------------------------
ASSETS UNDER
DIAL'S
TRUST NAME - MANAGEMENT/ EFFECTIVE
FUND NAME FUND SIZE SUBADVISORY FEE TYPE OF FUND FEE WAIVER
- ----------------------------------------------------------------------------------------
Fremont Mutual $14,000,000/ 0.50% International None
Fund, Inc. - $14,000,000 Equity
Fremont Global
Fund
- ----------------------------------------------------------------------------------------
TIFF Investment $47,000,000/ 0.53% International None
Program Inc. - $48,000,000 Equity
TIFF
International
Equity Fund
- ----------------------------------------------------------------------------------------
UBS PACE Select $167,000,000/ 0.35% International None
Advisors Trust - $169,000,000 Equity
UBS PACE
International
Equity Investments
- ----------------------------------------------------------------------------------------
11
DMC is a series of Delaware Management Business Trust. The Trustees who operate
the business and their principal occupations (that are positions with DMC) are
as follows: Jude T. Driscoll is the President and Chief Executive Officer of
DMC; Lisa O. Brinkley, Senior Vice President and Compliance Officer of DMC;
Gerald S. Frey, Managing Director and Chief Investment Officer-Growth Investing;
James L. Shields, Senior Vice President and Chief Investment Officer; See Y.
Quek, Executive Vice President, Managing Director-Fixed Income; Patrick P.
Coyne, Executive Vice President, Managing Director, Chief Investment
Officer-Fixed Income; Joanne O. Hutcheson, Executive Vice President, Chief
Operating Officer; Joseph H. Hastings, Executive Vice President, Interim Chief
Financial Officer, Treasurer, Controller; Richelle S. Maestro, Executive Vice
President, General Counsel and Secretary; and John B. Fields, Senior Vice
President/Trustee. The address of each of the officers and/or Directors of DMC
is 2005 Market Street, Philadelphia, Pennsylvania 19103-7094.
12
Currently and until the closing of the DIAL Acquisition, Jude T. Driscoll is
Chairman and Director of DIAL. Clive A. Gillmore is Deputy Managing Director of
DIAL. In addition to Mr. Driscoll and Mr. Gillmore, the directors and their
principal occupations with DIAL are as follows: John C. Campbell, Director;
George E. Deming, Director; Elizabeth A. Desmond, Regional Research
Director/Director/Senior Portfolio Manager; John Emberson, Director/Chief
Operating Officer/Secretary; John Kirk, Director/Senior Portfolio Manager;
Graham R. Kitson, Vice Chairman/Director; Nigel G. May, Regional Research
Director/Director/Senior Portfolio Manager; Christopher A. Moth, Director/Chief
Investment Officer Fixed Income/Senior Portfolio Manager; Hamish O. Parker,
Director/Senior Portfolio Manager; and David G. Tilles, Managing Director/Chief
Investment Officer. The address of each of the officers and/or Directors of
DIAL, other than Messrs. Driscoll and Gillmore, is 80 Cheapside, London, England
EC2V 6EE.
After the closing of the DIAL Acquisition, David G. Tilles will be the Managing
Director and Chief Executive Officer of DIAL. Clive A. Gillmore will be the
Deputy Managing Director of DIAL. In addition to Mr. Tilles and Mr. Gillmore,
the directors and their principal occupations with DIAL will be as follows: G.
Roger H. Kitson, Director; Hamish O. Parker, Director; Elizabeth, A. Desmond,
Regional Research Director; John Emberson, Director/Chief Operating Officer;
John Kirk, Director/Global Fixed Income and Currency; Nigel G. May, Regional
Research Director; and Christopher A. Moth, Director/Chief Investment Officer
Global Fixed Income & Currency. The address of each of the officers and/or
Directors of DIAL is 80 Cheapside, London, England EC2V 6EE.
ADMINISTRATOR AND THE DISTRIBUTOR
The Fund receives administrative services from DMC, the investment manager and
from Delaware Service Company, Inc., which acts as Shareholder Servicing,
Dividend Disbursing, Accounting Services and Transfer Agent. Delaware Service
Company, Inc. is located at 2005 Market Street, Philadelphia, PA 19103-7094. The
DIAL Acquisition will not affect the services provided by DMC or Delaware
Service Company, Inc.
The Fund's distributor is Delaware Distributors, L.P., 2005 Market Street,
Philadelphia, PA 19103-7094.
VOTING INFORMATION
HOW MANY VOTES ARE NECESSARY TO APPROVE THE PROPOSAL?
Provided that there is 33 1/3% of the shares present in person or represented by
proxy and entitled to vote at the Meeting (i.e., a quorum is present), the
approval of the Proposal requires the affirmative vote of the lesser of: (i) a
majority of the outstanding shares of the Fund, or (ii) 67% or more of the
shares represented at the Meeting at which the holders of more than 50% of the
outstanding shares of the Fund are represented in person or by proxy. Each
shareholder will be entitled to one vote for each dollar of net asset value per
share, and a proportionate fractional vote for any fractional dollar value, held
on the Record Date. If sufficient votes to approve the Proposal are not received
13
by the date of the Meeting, the Meeting may be adjourned to permit further
solicitations of proxies. The holders of a majority of shares of the Fund
entitled to vote at the Meeting and present in person or by proxy (whether or
not sufficient to constitute a quorum) may adjourn the Meeting. The Meeting may
also be adjourned by the chairperson of the Meeting.
Abstentions will be included for purposes of determining whether a quorum is
present at the Meeting, but will be treated as votes against the Proposal for
purposes of determining whether the matters to be voted upon at the Meeting have
been approved.
Abstentions and broker non-votes will be included for purposes of determining
whether a quorum is present at the Meeting, but will be treated as votes against
the Proposal for purposes of determining whether the matters to be voted upon at
the Meeting have been approved. Broker non-votes are proxies from brokers or
nominees indicating that such persons have not received voting instructions from
the beneficial owner or other person entitled to vote shares on a particular
matter with respect to which the brokers or nominees do not have discretionary
power. [It is not anticipated that any broker non-votes will be received.]
HOW DO I ENSURE MY VOTE IS ACCURATELY RECORDED?
You may attend the Meeting and vote in person. You may also vote by completing
and signing the attached proxy card and mailing it in the enclosed postage paid
envelope. A proxy card is, in essence, a ballot. If you simply sign and date the
proxy card but give no voting instructions, your shares will be voted in favor
of the Proposal and in accordance with the views of management upon any
unexpected matters that come before the Meeting or adjournment of the Meeting.
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 call toll-free to vote by
telephone, or you may vote using the Internet.
MAY I REVOKE MY PROXY?
Shareholders may revoke their proxy at any time before it is voted by sending a
written notice to the Trust expressly revoking their proxy, by signing and
forwarding to the Trust a later-dated proxy, or by attending the Meeting and
voting in person.
WHAT OTHER MATTERS WILL BE VOTED UPON AT THE MEETING?
The Board of Trustees of the Trust does not intend to bring any matters before
the Meeting other than that described in this Proxy Statement. The Board is not
aware of any other matters to be brought before the Meeting by others. If any
other matter legally comes before the Meeting, proxies for which discretion has
been granted will be voted in accordance with the views of management.
14
WHO IS ENTITLED TO VOTE?
Only shareholders of record of the Fund at the close of business on June 28,
2004 (the "Record Date") will be entitled to vote at the Meeting. As of the
Record Date, there were __________ outstanding shares of the Fund, of which
___________ are Class A Shares, ___________ are Class B Shares and ________ are
Class C Shares. As of the Record Date, the net asset values per share of each
class of shares of the Fund were as follows: $______ - Class A; $______ - Class
B; and $______ - Class C.
WHAT OTHER SOLICITATIONS WILL BE MADE?
The Fund will request broker-dealer firms, custodians, nominees and fiduciaries
to forward proxy materials to the beneficial owners of the shares of record. The
Fund may reimburse broker-dealer firms, custodians, nominees and fiduciaries for
their reasonable expenses incurred in connection with such proxy solicitation.
In addition to solicitations by mail, officers and employees of the Trust,
without extra pay, may conduct additional solicitations by telephone, telecopy
and personal interviews. The Trust has engaged D.F. King & Co. to solicit
proxies from brokers, banks, other institutional holders and individual
shareholders at an anticipated cost of approximately $_____ to $_____, including
out of pocket expenses. The Trust expects that the solicitations will be
primarily by mail, but also may include telephone, telecopy or oral
solicitations. If the Trust does not receive your proxy card by a certain time,
you may receive a telephone call from D.F. King asking you to vote. The costs of
proxy solicitation will be borne by DMC, DIAL or their affiliates and will not
be borne by the Trust, the Fund or its shareholders.
MORE INFORMATION REGARDING THE FUNDS
The Fund's most recent Annual Report and Semi-Annual Report to Shareholders were
previously mailed to shareholders. Copies of these reports are available upon
request, without charge, by writing or calling the Fund at the address and
telephone number shown on the top of the Notice of Special Meeting of
Shareholders.
PRINCIPAL SHAREHOLDERS
On the Record Date, the officers and Trustees of the Trust, as a group, owned
less than 1% of the outstanding voting shares of the Fund.
To the best knowledge of the Trust, as of the Record Date, no person, except as
set forth below, owned beneficially or of record more than 5% of the outstanding
shares of any class of the Fund:
15
- ----------------------- ----------------------------------------------- ------------------- -----------------
NUMBER OF
SHARES PERCENTAGE OF
BENEFICIALLY FUND/CLASS
CLASS NAME AND ADDRESS OF SHAREHOLDER OWNED OWNED
- ----------------------- ----------------------------------------------- ------------------- -----------------
Class A
- ----------------------- ----------------------------------------------- ------------------- -----------------
Class B
- ----------------------- ----------------------------------------------- ------------------- -----------------
Class C
- ----------------------- ----------------------------------------------- ------------------- -----------------
SHAREHOLDER PROPOSALS
Because the Trust and the Fund do not hold regular shareholder meetings, there
currently is no specific date by which shareholder proposals intended to be
presented at future Meetings of Shareholders must be received by the Trust.
However, a proposal that is received by the Trust at its principal executive
offices a reasonable time before the Trust begins to print and mail its proxy
materials for such a meeting will be considered for inclusion in the Trust's
Proxy Statement and form or forms of proxy card relating to such meeting.
Proposals received thereafter will be considered untimely and will not be
considered for inclusion in these proxy materials.
16
EXHIBIT A
SUB-ADVISORY AGREEMENT
AGREEMENT made by and between DELAWARE MANAGEMENT COMPANY, A SERIES OF
DELAWARE MANAGEMENT BUSINESS TRUST (the "Investment Manager") and DELAWARE
INTERNATIONAL ADVISERS LIMITED (the "Sub-Adviser").
WITNESSETH:
WHEREAS, OPTIMUM FUND TRUST (the "Trust") is an investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), and is organized as a statutory trust under the laws of the State of
Delaware; and
WHEREAS, OPTIMUM INTERNATIONAL FUND (the "Fund") is a series of the
Trust; and
WHEREAS, the Investment Manager and the Trust, on behalf of the Fund,
have entered into an agreement (the "Investment Management Agreement") dated
July 17, 2003 whereby the Investment Manager will provide investment advisory
services to the Trust with respect to the Fund; and
WHEREAS, the Investment Manager has the authority under the Investment
Management Agreement to retain 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 (the
"Advisers Act"), and engage in the business of providing investment advisory
services; and
WHEREAS, the Board of Trustees (the "Board" or the "Trustees") of the
Trust and the Investment Manager desire that the Investment Manager retain the
Sub-Adviser to render investment advisory and other services with respect to
that portion of the Fund as the Investment Manager shall from time to time
allocate to the Sub-Adviser (the "Managed Portion") in the manner, for the
period, and on the terms hereinafter set forth;
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. (a) The Sub-Adviser will supervise and direct the investments of the
assets of the Managed Portion of the Fund in accordance with the Fund's
investment objectives, policies, and restrictions as provided in the Fund's
Prospectus and Statement of Additional Information, as currently in effect and
as amended or supplemented from time to time (hereinafter referred to as the
"PROSPECTUS"), and such other limitations as the Fund may impose by notice in
writing to the Sub-Adviser, subject always to the supervision and control of the
Investment Manager and the Board.
(b) As part of the services it will provide hereunder, the
Sub-Adviser is authorized, in its discretion and without prior consultation with
the Fund or the Investment Manager to:
(i) obtain and evaluate information relating to investment
recommendations, asset allocation advice, industries, businesses, securities
markets, research, economic analysis, and other investment services with respect
to the securities that are included in the Managed Portion or that are under
consideration for inclusion in the Managed Portion and invest the Managed
Portion in accordance with the Investment Manager's and the Board's written
direction as more fully set forth herein and as otherwise directed;
(ii) regularly make decisions as to what securities to purchase
and sell on behalf of the Fund with respect to the Managed Portion, effect the
purchase and sale of such investments in furtherance of the Fund's objectives
and policies, and furnish the Board with such information and reports regarding
the Sub-Adviser's activities in the performance of its duties and obligations
under this Agreement as the Investment Manager deems appropriate or as the Board
may reasonably request, including such reports, information, and certifications
as the officers of the Trust may reasonably require in order to comply with
applicable international, federal and state laws and regulations;
(iii) provide any and all material composite or other
performance information, records and supporting documentation about accounts or
funds the Sub-Adviser manages, if appropriate, that are relevant to the Managed
Portion and that have investment objectives, policies, and strategies
substantially similar to those employed by the Sub-Adviser in managing the
Managed Portion that may be reasonably necessary, under applicable laws, to
allow the Fund or its agent to present information concerning the Sub-Adviser's
prior performance in the Fund's currently effective Prospectus, as the same may
be hereafter modified, amended, and/or supplemented from time to time, and in
any permissible reports and materials prepared by the Fund or its agent;
(iv) provide information as reasonably requested by the
Investment Manager or the Board to assist them or their agents in the
determination of the fair value of certain portfolio securities held in the
Managed Portion when market quotations are not readily available for the purpose
of calculating the Fund's net asset value in accordance with procedures and
methods established by the Board;
(v) vote proxies, exercise conversion or subscription rights,
and respond to tender offers and other consent solicitations ("Corporate
Actions") with respect to the issuers of securities held in the Managed Portion,
provided materials relating to such Corporate Actions have been timely received
by the Sub-Adviser, and to submit reports regarding such Corporate Actions,
including a copy of any policies regarding such Corporate Actions, in a form
reasonably satisfactory to the Investment Manager and the Fund in order to
comply with any applicable federal or state reporting requirements;
A-2
(vi) provide performance and other information as reasonably
requested by the Investment Manager or the Board to assist them or their agent
in conducting ongoing due diligence and performance monitoring; and
(vii) maintain all accounts, books, and records with respect to
the Managed Portion as are required of an investment adviser of a registered
investment company pursuant to the 1940 Act and the Advisers Act and the rules
thereunder and preserve for the periods prescribed by Rule 31a-2 under the 1940
Act any accounts, books and records that it maintains for the Fund and that are
required to be maintained by Rule 31a-1 under the 1940 Act. The Sub-Adviser
shall furnish to the Investment Manager copies of all such accounts, books, and
records as the Investment Manager may reasonably request. The Sub-Adviser agrees
that such accounts, books, and records are the property of the Trust, and will
be surrendered to the Trust promptly upon request, with the understanding that
the Sub-Adviser may retain its own copy of all records.
(c) The Sub-Adviser shall not consult with any other sub-adviser of
the Fund or of any fund that is an "affiliated person" of the Fund concerning
transactions for the Fund in securities or other assets, except as such
consultations may be reasonably necessary in order to ensure compliance with
Rule 12d3-1 under the 1940 Act.
(d) In furnishing services hereunder, the Sub-Adviser shall be
subject to, and shall perform in accordance with, the following: (i) provisions
of the Trust's Agreement and Declaration of Trust, as the same may be hereafter
modified, amended, and/or supplemented from time to time, that are applicable to
the Managed Portion; (ii) provisions of the Trust's By-Laws, as the same may be
hereafter modified, amended, and/or supplemented from time to time; that are
applicable to the Managed Portion; (iii) the Fund's Prospectus; (iv) the 1940
Act and the Advisers Act and the rules under each and all other international,
federal and state securities laws or regulations applicable to the Trust and the
Fund; (v) the Trust's compliance procedures and other policies and procedures
adopted from time to time by the Board applicable to the Managed Portion; and
(vi) the written instructions of the Investment Manager.
(e) The Investment Manager agrees to provide the Sub-Adviser with
current copies of the documents mentioned in paragraph 1(d)(i), (ii), (iii) and
(v) above and all changes made to such documents at, or if practicable, before
the time such changes become effective, and the Investment Manager acknowledges
and agrees that the Sub-Adviser shall not be responsible for compliance with
such documents or amendments unless and until they are received by the
Sub-Adviser. The Sub-Adviser shall be fully protected in acting upon any proper
instructions reasonably believed by it to be genuine and signed or communicated
by or on behalf of the Investment Manager or the Fund.
A-3
(f) The Sub-Adviser hereby agrees during the period hereinafter set
forth 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,
the Fund or the Investment Manager in any way, or in any way be deemed an agent
of the Trust, the Fund or the Investment Manager.
(g) The Sub-Adviser may perform its services through its employees,
officers or agents, and the Investment Manager shall not be entitled to the
advice, recommendation or judgment of any specific person; provided, however,
that the persons identified in the Fund's Prospectus shall perform the portfolio
management duties described therein until the Sub-Adviser notifies the
Investment Manager that one or more other affiliates, employees, officers or
agents identified in such notice shall assume such duties as of a specific date.
(h) The Investment Manager shall provide (or use its best efforts to
cause to be provided) timely information to the Sub-Adviser regarding such
matters as the cash requirements and cash available for investment in the
Managed Portion, and all other information as may be reasonably necessary for
the Sub-Adviser to perform its responsibilities under this Agreement.
2. (a) 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 existence as a
statutory trust organized under the laws of the State of Delaware; 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, if any; reports and
notices to shareholders; calling and holding of shareholders' meetings;
miscellaneous office expenses; brokerage commissions; custodian fees; legal and
accounting fees; taxes; interest and federal and state registration fees.
(b) Directors, officers and employees of the Sub-Adviser may be
directors, officers and employees of other funds that have employed the
Sub-Adviser as sub-adviser or investment manager. Directors, officers and
employees of the Sub-Adviser who are Trustees, officers and/or employees of the
Trust, shall not receive any compensation from the Trust for acting in such dual
capacity.
3. (a) The Sub-Adviser will select brokers and dealers to effect all
Fund transactions with respect to the Managed Portion subject to the conditions
set forth herein. The Sub-Adviser may combine orders for the Managed Portion
with orders for other accounts or funds under management. Transactions involving
combined orders are allocated in a manner deemed equitable to each account. The
Sub-Adviser will place all necessary orders with brokers, dealers, or issuers,
and will negotiate brokerage commissions, if applicable. The Sub-Adviser is
directed at all times to seek to execute transactions for the
A-4
Managed Portion (i) in accordance with any written policies, practices or
procedures that may be established by the Board or the Investment Manager from
time to time and provided to the Sub-Adviser, and (ii) as described in the
Fund's Prospectus and SAI. In placing any orders for the purchase or sale of
investments for the Fund, with respect to the Managed Portion, the Sub-Adviser
shall use its best efforts to obtain for the Managed Portion "best execution,"
considering all of the circumstances, and shall maintain records adequate to
demonstrate compliance with this requirement.
(b) Subject to the appropriate policies and procedures approved by
the Board and provided to the Sub-Adviser in writing, the Sub-Adviser may, to
the extent authorized by Section 28(e) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), cause the Managed Portion to pay a broker or
dealer that provides brokerage and research services to the Investment Manager,
the Sub-Adviser and the Managed Portion an amount of commission for effecting a
Fund transaction in excess of the amount of commission another broker or dealer
would have charged for effecting that transaction if the Sub-Adviser determines,
in good faith, that such amount of commission is reasonable in relation to the
value of such brokerage and research services provided viewed in terms of that
particular transaction or the Sub-Adviser's overall responsibilities to its
clients for which the Investment Manager or the Sub-Adviser exercises investment
discretion. To the extent authorized by Section 28(e) and the Board, the
Sub-Adviser shall not be deemed to have acted unlawfully or to have breached any
duty created by this Agreement or otherwise solely by reason of such action.
(c) Subject to applicable law and regulations, including Section
17(e) of the 1940 Act and Rule 17e-1 thereunder, the Sub-Adviser is authorized
to place orders for the purchase and sale of securities for the Managed Portion
with brokers or dealers that are affiliated with the Sub-Adviser. Any entity or
person associated with the Investment Manager or the Sub-Adviser that is a
member of a national securities exchange is authorized to effect any transaction
on such exchange for the account of the Fund to the extent and as permitted by
Section 11(a)(1)(H) of the Exchange Act and Rule 11a2-2(T) thereunder.
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 a fee as provided in
Schedule A attached hereto.
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 materially impaired thereby.
6. (a) 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.
A-5
(b) Neither the Investment Manager, the Trust nor the Fund shall use
the Sub-Adviser's actual or fictitious name(s), mark(s), derivative(s) and/or
logo(s) (or that of any affiliate of the Sub-Adviser, other than that of the
Fund, the Trust, or any affiliate of the Investment Manager that is an affiliate
of the Sub-Adviser solely by reason of the Sub-Adviser's provision of services
pursuant to this Agreement) or otherwise refer to the Sub-Adviser in any
materials related to the Trust or the Fund distributed to third parties,
including the Fund's shareholders, without prior review and written approval by
or on behalf of the Sub-Adviser, which may not be unreasonably withheld or
delayed. Upon termination of this Agreement, the Investment Manager, the Trust
and the Fund, shall, to the extent applicable and as soon as is reasonably
possible, cease to use the Sub-Adviser's actual or fictitious name(s), mark(s),
derivative(s) and/or logo(s) in materials related to the Fund.
(c) The Sub-Adviser shall not use the Investment Manager's name (or
that of any affiliate of the Investment Manager, other than that of any
affiliate of the Sub-Adviser that is an affiliate of the Investment Manager
solely by reason of the Sub-Adviser's provision of services pursuant to this
Agreement) or otherwise refer to the Investment Manager in any materials related
to the Trust or the Fund distributed to third parties, including the Fund's
shareholders, without prior review and written approval by the Investment
Manager, which may not be unreasonably withheld or delayed. Upon termination of
this Agreement, the Sub-Adviser, shall, to the extent applicable and as soon as
is reasonably possible, cease to use the actual or fictitious name(s), mark(s),
derivative(s) and/or logo(s) of the Trust and the Fund.
(d) This Section 6 applies solely to materials related to the Fund
and the Trust only, and not to other products or relationships between the
Sub-Adviser and the Investment Manager.
7. (a) In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard in the performance of its duties as
Sub-Adviser to the Trust on behalf of the Fund, neither the Sub-Adviser nor any
of its officers, directors, employees or agents (collectively, "Sub-Adviser
Related Persons") shall be liable to the Trust, the Fund, the Investment Manager
or 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. The
Sub-Adviser makes no representation or warranty, express or implied, that any
level of performance or investment results will be achieved by the Managed
Portion or the Fund, or that the Managed Portion or the Fund will perform
comparably with any standard or index, including other clients of the
Sub-Adviser, whether public or private. Subject to the first sentence of this
Section 7(a), the Sub-Adviser shall not be responsible for any loss incurred by
any reason of any act or omission of any bank, broker, the custodian bank or any
administrator or trustee whether appointed on behalf of the Investment Manager,
the Fund or the Trust. Nothing contained herein shall be deemed to waive any
liability which cannot be waived under applicable law, including applicable U.S.
state and federal securities laws, ERISA and the Financial Services and Markets
Act 2000 of the United Kingdom ("FSMA") or any rules or regulations adopted
under any of those laws.
A-6
(b) The Investment Manager shall indemnify Sub-Adviser Related
Persons to the fullest extent permitted by law against any and all loss, damage,
judgments, fines, amounts paid in settlement and reasonable expenses, including
attorneys' fees, (collectively "Losses") incurred by the Sub-Adviser or
Sub-Adviser Related Persons arising from or in connection with this Agreement or
the performance by the Sub-Adviser or Sub-Adviser Related Persons of its or
their duties hereunder so long as such Losses arise out of the Investment
Manager's willful misfeasance, bad faith, gross negligence, or reckless
disregard in performing its responsibilities hereunder, including, without
limitation, such Losses arising under any applicable law or that may be based
upon any untrue statement of a material fact contained in the Trust's
Registration Statement, or any amendment thereof or any supplement thereto, or
the omission to state therein a material fact that was known or that should have
been known and was required to be stated therein or necessary to make the
statements therein not misleading, unless such statement or omission was made in
reasonable reliance upon information furnished to the Investment Manager or the
Trust by the Sub-Adviser or a Sub-Adviser Related Person specifically for
inclusion in the Registration Statement or any amendment thereof or supplement
thereto, except to the extent any such Losses referred to in this paragraph (b)
result from willful misfeasance, bad faith, gross negligence or reckless
disregard on the part of the Sub-Adviser or a Sub-Adviser Related Person in the
performance of any of its duties under, or in connection with, this Agreement.
(c) The Sub-Adviser shall indemnify the Investment Manager and its
affiliates and its or their controlling persons, officers, directors, employees,
agents, legal representatives and persons controlled by it (collectively,
"Investment Manager Related Persons") to the fullest extent permitted by law
against any and all Losses incurred by the Investment Manager or Investment
Manager Related Persons arising from or in connection with this Agreement or the
performance by the Investment Manager or Investment Manager Related Persons of
its or their duties hereunder so long as such Losses arise out of the
Sub-Adviser's willful misfeasance, bad faith, gross negligence, or reckless
disregard in performing its responsibilities hereunder, including, without
limitation, such Losses arising under any applicable law or that may be based
upon any untrue statement of a material fact contained in the Trust's
Registration Statement, or any amendment thereof or any supplement thereto, or
the omission to state therein a material fact that was known or that should have
been known and was required to be stated therein or necessary to make the
statements therein not misleading, if such statement or omission was made in
reasonable reliance upon information furnished to the Investment Manager or the
Trust by the Sub-Adviser or a Sub-Adviser Related Person specifically for
inclusion in the Registration Statement or any amendment thereof or supplement
thereto, except to the extent any such Losses referred to in this paragraph (c)
result from willful misfeasance, bad faith, gross negligence or reckless
disregard on the part of the Investment Manager or an Investment Manager Related
Person in the performance of any of its duties under, or in connection with,
this Agreement.
A-7
8. (a) This Agreement shall be executed and become effective as of the
date written below; provided, however, that this Agreement shall not become
effective with respect to the Fund unless it has first been approved in the
manner required by the 1940 Act and the rules thereunder or in accordance with
exemptive or other relief granted by the Securities and Exchange Commission (the
"SEC") or its staff. This Agreement shall continue in effect for a period of two
(2) years and may be renewed thereafter only so long as such renewal and
continuance is specifically approved at least annually by the Board 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
those Trustees of the Trust who are not parties hereto or "interested persons"
of the Trust, the Fund, or any party hereto, cast in person at a meeting called
for the purpose of voting on such approval.
(b) No amendment to this Agreement shall be effective unless
approved in the manner required by the 1940 Act and the rules thereunder or in
accordance with exemptive or other relief granted by the SEC or its staff.
(c) This Agreement may be terminated (i) by the Investment Manager
at any time, without the payment of a penalty, on ninety (90) days' written
notice to the Sub-Adviser of the Investment Manager's intention to do so and
(ii) by the Trust at any time, without the payment of a penalty, on sixty (60)
days' written notice to the Sub-Adviser of the Trust's intention to do so
pursuant to action by the Board 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 ninety (90) 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 (i) any obligation arising out of or relating to a breach of this Agreement
committed prior to such termination, (ii) 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, and (iii) any indemnification obligation
provided in Paragraph 7 hereof. This Agreement shall automatically terminate in
the event of its assignment or upon the termination of the Investment Management
Agreement.
9. Any information and advice furnished by either party to this
Agreement to the other party shall be treated as confidential and shall not be
disclosed to third parties without the consent of the other party hereto.
Notwithstanding the foregoing, information shall not be subject to such
confidentiality obligations if it:
(i) is already known to the receiving party at the time it is
obtained (other than through previous disclosure by the
protected party or by a party known by the receiving party
to be bound by a confidentiality obligation to the
protected party);
(ii) is or becomes publicly known or available through no
wrongful act of the receiving party;
(iii) is rightfully received from a third party who, to the best
of the receiving party's knowledge, is not under a duty of
confidentiality;
A-8
(iv) is required to be disclosed by the receiving party pursuant
to a requirement of a court order, subpoena, governmental
or regulatory agency or law (provided the receiving party
provides the protected party written notice of such
requirement, to the extent such notice is permitted);
(v) is relevant to the defense of any claim or cause of action
asserted against the receiving party (provided the
receiving party provides the protected party with sixty
(60) days' written notice of any disclosure if practicable
or such lesser amount as may be necessary and provided such
notice does not prejudice the receiving party); or
(vi) has been or is independently developed or obtained by the
receiving party.
The Sub-Adviser shall not disclose any "nonpublic personal information" (as such
term is defined in Regulation S-P, including any amendments thereto) pertaining
to the customers of the Trust or a client of the Investment Manager to any third
party or use such information other than for the purpose of providing the
services contemplated by this Agreement.
10. The Sub-Adviser represents, warrants and agrees that:
(a) The Sub-Adviser: (i) is registered as an investment adviser
under the Advisers Act and will continue to be so registered for so long as this
Agreement remains in effect; (ii) is not prohibited by the 1940 Act, the
Advisers Act or other law, regulation or order from performing the services
contemplated by this Agreement; (iii) to the best of its knowledge, has met and
will seek to continue to meet for so long as this Agreement remains in effect,
any other applicable federal or state requirements, or the applicable
requirements of any regulatory or industry self-regulatory agency necessary to
be met in order to perform the services contemplated by this Agreement; (iv) has
the authority to enter into and perform the services contemplated by this
Agreement; and (v) will promptly notify the Investment Manager of the occurrence
of any event that would disqualify the Sub-Adviser from serving as an investment
adviser of an investment company pursuant to Section 9(a) of the 1940 Act or
otherwise. The Sub-Adviser will also promptly notify the Fund and the Investment
Manager if it is served or otherwise receives notice of any action, suit,
proceeding, inquiry or investigation, at law or in equity, before or by any
court, public board or body, involving the affairs of the Fund, provided,
however, that routine regulatory examinations that do not specifically relate to
the Managed Portion or the Fund shall not be required to be reported by this
provision.
(b) The Sub-Adviser has adopted a written code of ethics complying
with the requirements of Rule 17j-1 under the 1940 Act and will provide the
Investment Manager and the Board with a copy of such code of ethics, together
with evidence of its adoption. In accordance with the requirements of Rule
17j-1, the Sub-Adviser shall certify to the Investment Manager that the
Sub-Adviser has complied in all material respects with the requirements of Rule
17j-1 during the previous year and that there has been no material violation of
the Sub-Adviser's code of ethics relating to the services the Sub-Adviser
A-9
performs under this Agreement or, if such a material violation has occurred,
that appropriate action was taken in response to such violation. Upon the
written request of the Investment Manager, the Sub-Adviser shall provide to the
Investment Manager, its employees or its agents all information required by Rule
17j-1(c)(1) relating to the approval by the Fund's Board of Trustees of the
Sub-Adviser's code of ethics relating to the services the Sub-Adviser performs
under this Agreement.
(c) The Sub-Adviser has provided the Investment Manager with a copy
of its Form ADV at least forty-eight (48) hours prior to execution of this
Agreement, which as of the date of this Agreement is its Form ADV as most
recently filed with the SEC, and promptly will furnish a copy of all amendments
to the Investment Manager at least annually. Such amendments shall reflect all
changes in the Sub-Adviser's organizational structure, professional staff or
other significant developments affecting the Sub-Adviser, as required by the
Advisers Act.
(d) The Sub-Adviser will notify the Trust and the Investment
Manager of any event that would be deemed an assignment of this Agreement, with
the exception of any assignment by or with respect to the Investment Manager, or
change of control of the Sub-Adviser, as applicable, and any changes in the key
personnel who are the portfolio manager(s) of the Managed Portion prior to or
promptly after such change. The Investment Manager will notify the Sub-Adviser
of any event that would be deemed an assignment of this Agreement, with the
exception of any assignment by or with respect to the Sub-Adviser, or change of
control of the Investment Manager, as applicable. The Sub-Adviser agrees to bear
all reasonable expenses of the Fund, if any, arising out of an assignment of
this Agreement or change in control of the Sub-Adviser so long as the assignment
is not by or with respect to the Investment Manager.
(e) The Sub-Adviser agrees to maintain an appropriate level of
errors and omissions or professional liability insurance coverage as shall be
reasonably necessary in light of its obligations under this Agreement.
11. This Agreement shall extend to and bind the successors of the
parties hereto. Nothing in this Agreement, express or implied, is intended to or
shall (a) confer on any person other than the parties hereto and their
respective successors or permitted assigns any rights (including third party
beneficiary rights), remedies, obligations or liabilities under or by reason of
this Agreement, or (b) constitute the parties hereto as partners or as
participants in a joint venture.
12. For the purposes of this Agreement, the terms "vote of a majority
of the outstanding voting securities," "interested person," "affiliated person,"
and "assignment" shall have the meanings given them in the 1940 Act, subject,
however to such exemptions as may be granted by the SEC and its staff under the
1940 Act.
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 __________, 2004.
A-10
DELAWARE INTERNATIONAL DELAWARE MANAGEMENT
ADVISERS LIMITED COMPANY, A SERIES OF
DELAWARE MANAGEMENT
BUSINESS TRUST
By:___________________________________ By:_________________________
Name: Name:
Title: Title:
Attest:________________________________ Attest:_____________________
Name:
Title:
Agreed to and accepted as of the day and year first above written:
OPTIMUM INTERNATIONAL
FUND
By:_________________________
Name:
Title:
Attest:_____________________
Name:
Title:
A-11
SCHEDULE A
TO
SUB-ADVISORY AGREEMENT
--------------
FEE SCHEDULE
--------------
The compensation payable to Sub-Adviser for its services hereunder, pursuant to
Paragraph 4 of the Sub-Advisory Agreement shall be calculated and paid as
follows:
The total fee will be 0.40% (40 basis points) (on an annual basis)
of the total assets within the Managed Portion(s) sub-advised by Sub-Adviser.
The fee shall be payable on the Managed Portion's average daily net assets
monthly to the Sub-Adviser on or before the tenth (10th) day of the next
succeeding calendar month. If this Agreement becomes effective or terminates
before the end of any month, the investment management fee for the period from
the effective date to the end of such month or from the beginning of such month
to the date of termination, as the case may be, shall be prorated according to
the proration which such period bears to the full month in which such
effectiveness or termination occurs. Each month, the Investment Manager will
provide the Sub-Adviser with a worksheet accompanying payment of the
sub-advisory fee that sets forth the computation of such sub-advisory fee.
A-12
OPTIMUM INTERNATIONAL FUND (THE "FUND")
SPECIAL SHAREHOLDER MEETING - AUGUST 31, 2004
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby appoints Richelle S. Maestro, Michael P. Bishof and David
P. O'Connor, or any of them, each with the right of substitution, proxies of the
undersigned at the Joint Special Meeting of Shareholders of the Fund named
above, a series of the Trust (as defined in the proxy statement) to be held at
the offices of Delaware Investments located at 2001 Market Street, 2nd Floor
Auditorium, Philadelphia, Pennsylvania 19103, on Tuesday, August 31, 2004 at
3:00 P.M. (E.T.), 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 these matters.
BY SIGNING AND DATING THIS CARD, YOU AUTHORIZE THE PROXIES TO VOTE THE PROPOSALS
AS MARKED, OR IF NOT MARKED, TO VOTE "FOR" THE PROPOSALS, AND TO USE THEIR
DISCRETION TO VOTE ON 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 POSTAGE-PAID ENVELOPE.
Please vote by checking (CHECK MARK) the appropriate box below.
FOR AGAINST ABSTAIN
1. To approve a Sub-Advisory Agreement between
Delaware Management Company and Delaware
International Advisers Ltd. |_| |_| |_|
THIS PROXY CARD IS ONLY VALID WHEN SIGNED AND
DATED. TO SECURE THE LARGEST POSSIBLE
REPRESENTATION AND AVOID THE ADDITIONAL EXPENSE OF
FURTHER SOLICITATION, PLEASE DATE AND SIGN NAME OR
NAMES BELOW 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.
Date _______________, 2004
----------------------------------------------------
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Signature(s) (Joint Owners) (PLEASE SIGN WITHIN BOX)