Two separate special meetings of the shareholders of the Ivy High Income Opportunities Fund (the “Fund”) will be held via audio teleconference on April 1, 2021. The first
meeting will be held at 1:30 p.m., Central Time (the “First Meeting”) and the second meeting will be held at 3:00 p.m., Central Time (the “Second Meeting”) (each, a “Meeting” and collectively, the “Meetings”). You are receiving this letter
because you were a shareholder of record of the Fund as of January 22, 2021 (the “Record Date”).
The Meetings are being held to approve matters important to your Fund relating to Macquarie Group Limited’s (“Macquarie Group”) proposed acquisition of Waddell & Reed
Financial, Inc. (“WDR”). On December 2, 2020, WDR, the parent company of Ivy Investment Management Company (“IICO”), and Macquarie Group, including its asset management division Macquarie Asset Management (together, “Macquarie”), announced that
they had entered into an agreement whereby Macquarie will acquire WDR (the “Transaction”). The Transaction is subject to approval by WDR’s shareholders and customary closing conditions, including receipt of applicable regulatory approvals.
Subject to such approvals and the satisfaction of certain other conditions, the Transaction is expected to close by mid-2021 (the “Closing”). Upon the Closing of the Transaction, the Fund’s investment advisory agreement will automatically terminate
in accordance with its terms and applicable regulations.
In order to help ensure that the Fund’s investment program continues uninterrupted upon the Closing, I am asking for your vote at the Meetings on the following proposals affecting
the Fund, as well as to transact such other business as may properly come before the Meetings or any adjournments thereof:
1. To elect the Trustee nominees named in the accompanying proxy statement: Joseph Harroz, Jr., Ann
D. Borowiec, Jerome D. Abernathy, Janet L. Yeomans and John A. Fry for Class I; Sandra A.J. Lawrence, Shawn K. Lytle, Thomas L. Bennett and Thomas K. Whitford for Class II; and H. Jeffrey Dobbs, Frances A. Sevilla-Sacasa, Christianna Wood and
Joseph W. Chow for Class III, to hold office until the Fund’s 2023, 2021, and 2022 annual meeting, respectively, or until their respective successors are elected and duly qualified.
2. To approve sub-advisory agreements between Delaware Management Company, a series of Macquarie Investment Management Business Trust, and each of Macquarie Investment Management Austria
Kapitalanlage AG, Macquarie Investment Management Global Limited and Macquarie Investment Management Europe Limited.
The Board of Trustees of the Fund have approved, and unanimously recommends that you vote FOR each proposal, including FOR all Trustee nominees.
Detailed information about the proposals is contained in the enclosed materials. Please review and consider the enclosed materials carefully, and then please take a moment to vote.
Due to the coronavirus outbreak (COVID-19) and to support the health and well-being of our shareholders, employees, and community, the Meetings will be
conducted exclusively via audio teleconference. Any shareholder wishing to participate in the Meetings telephonically can do so. If you were a record holder of Fund shares as of the Record Date, please e-mail our proxy solicitor, Di Costa
Partners, at meetinginfo@dicostapartners.com no later than 2:00 p.m. Eastern Time on March 31, 2021 to register. Please include the Fund’s name in the subject line and provide your name and address in the body of the e-mail. Di Costa
Partners will then e-mail you the conference call dial-in information and instructions for voting during the Meetings. If you held Fund shares through an intermediary, such as a broker-dealer, as of the Record Date, and you want to participate in
the Meetings, please e-mail Di Costa Partners
The conference call dial-in number will only be active for the date and time of the Meetings. If you have any questions prior to the Meetings, please call Di
Costa Partners at the phone number provided below.
Whether or not you plan to attend the Meetings via audio teleconference, your vote is needed.
Attendance at the Meetings will be limited to shareholders of the Fund as of the close of business on January 22, 2021, the Record Date. You are entitled to receive notice of,
and to vote at, each Meeting and any adjournment of each Meeting, even if you no longer hold shares of the Fund. Your vote is important no matter how many shares you own. It is important that your vote be received no later than the time of each
Meeting.
Your vote is important to us. Thank you for your response and for your investment.
The Board of Trustees of the Fund (the “Board”) has approved and unanimously recommends that you vote FOR all nominees in the Trustee Election Proposal, FOR the New Investment
Advisory Agreement Proposal and FOR the Sub-Advisory Agreement Proposal.
The Proposals are discussed in greater detail in the enclosed proxy statement. Please read the proxy statement carefully for information concerning the Proposals. The enclosed
materials contain the Notice of Special Meetings of Shareholders (the “Notice”), proxy statement and white proxy card. A proxy card is, in essence, a ballot. When you vote your proxy, it tells us how you wish to vote on important issues relating to
the Fund. If you complete, sign and return the white proxy card, we will vote it as you indicated. If you simply sign, date and return the enclosed white proxy card, but do not specify a vote, your proxy will be voted FOR the Proposals, including
FOR each Trustee nominee.
Shareholders of record of the Fund at the close of business on January 22, 2021 (the “Record Date”) are entitled to receive notice of, and to vote at, each Meeting and any
adjournments, postponements or delays thereof. It is important that your shares be voted at each Meeting. You may vote by telephone, Internet or by completing the enclosed white proxy card and returning it in the accompanying envelope as promptly
as possible. You may also vote by attending the Meetings via audio teleconference.
REGARDLESS OF WHETHER YOU PLAN TO PARTICIPATE IN THE MEETINGS VIA AUDIO TELECONFERENCE, PLEASE SIGN, DATE AND RETURN THE ENCLOSED WHITE PROXY CARD IN THE
ACCOMPANYING POSTAGE-PAID ENVELOPE OR VOTE BY TELEPHONE OR THROUGH THE INTERNET PURSUANT TO THE INSTRUCTIONS ON THE ENCLOSED WHITE PROXY CARD.
If you attend the Meetings via audio teleconference and wish to vote at that time, you will be able to do so and your vote at the Meetings will revoke any proxy you may have submitted. Merely
attending the Meetings via audio teleconference, however, will not revoke a previously given proxy.
The conference call dial-in number will only be active for the date and time of the Meetings. If you have any questions prior to the Meetings, please call DCP
at 833-892-6623.
YOUR VOTE IS EXTREMELY IMPORTANT. NO MATTER HOW MANY SHARES YOU OWN, PLEASE SEND IN THE WHITE PROXY CARD, OR VOTE BY TELEPHONE OR THE
INTERNET TODAY.
SECOND MEETING - PROPOSAL 2: TO APPROVE
SUB-ADVISORY AGREEMENTS BETWEEN DELAWARE MANAGEMENT COMPANY, A SERIES OF MACQUARIE INVESTMENT MANAGEMENT BUSINESS TRUST, AND EACH OF MACQUARIE INVESTMENT MANAGEMENT AUSTRIA KAPITALANLAGE
AG, MACQUARIE INVESTMENT MANAGEMENT GLOBAL LIMITED AND MACQUARIE INVESTMENT MANAGEMENT EUROPE LIMITED
Why am I being asked to approve the Sub-Advisory Agreement Proposal?
It is intended that DMC will utilize the Affiliated Sub-Advisers to access Macquarie’s global fixed income investment platform in providing advisory, trading and other services to the Fund as
discussed in more detail in the section below titled “Introduction” under “SECOND MEETING – PROPOSAL 2”.
Who are the proposed sub-advisers?
DMC has proposed that the following Affiliated Sub-Advisers each be approved as sub-advisers for the Fund: Macquarie Investment Management Austria Kapitalanlage AG, Macquarie
Investment Management Global Limited and Macquarie Investment Management Europe Limited. Each of these Affiliated Sub-Advisers is an affiliate of DMC and is part of Macquarie’s global fixed income investment platform.
How will the use of the Affiliated Sub-Advisers potentially benefit the Fund?
It is expected that the Affiliated Sub-Advisers will provide a long-term benefit to the Fund by providing the Fund with access to a global platform of investment professionals
and advisory services with expertise in certain areas. If the proposed Sub-Advisory Agreements are approved, DMC will utilize the Affiliated Sub-Advisers as described herein to leverage Macquarie’s global fixed income investment platform in
providing advisory, trading and other services to the Fund.
Will my Fund’s contractual management fee rates increase?
No. Under the terms of the Sub-Advisory Agreements DMC will pay the Affiliated Sub-Advisers directly out of the management fee it receives from the Fund. As previously discussed, the management fee which the Fund
pays to DMC will remain unchanged. The Fund will not incur any additional expenses related to the use of the Affiliated Sub-Advisers.
What will happen if shareholders of the Fund do not approve the Sub-Advisory Agreement Proposal?
If shareholders of the Fund do not approve the Sub-Advisory Agreement Proposal, the Fund will be managed without the use of the Affiliated Sub-Advisers.
VOTING PROCEDURES
Why did you send me this booklet?
You are receiving this booklet because you were a shareholder the Fund as of the close of business on January 22, 2021 (the “Record Date”). This booklet includes the Proxy Statement. It provides you
with information you should review before providing voting instructions on the matters listed above. The words “you” and “shareholder” are used in this Proxy Statement to refer to the person or entity that has voting rights or is being asked to
provide voting instructions in connection with the shares.
Who is asking for my vote?
The Board has sent a Proxy Statement to you and all other shareholders of record who have a beneficial interest in the Fund as of the Record Date. The Board is soliciting your vote for the Proposals
discussed herein.
Who is eligible to vote?
Shareholders holding an investment in shares of the Fund as of the close of business on the Record Date are eligible to vote. Shareholders of the Fund on the Record Date will be entitled to one vote
for each share (and a proportional fractional vote for each fraction of a share held). No shares have cumulative voting rights in the election of Trustees.
How do I vote?
Due to the coronavirus outbreak (COVID-19) and to support the health and well-being of our shareholders, employees, and community, the Meetings will be conducted exclusively via audio
teleconference. Any shareholder wishing to participate in the Meetings telephonically can do so. If you were a record holder of the Fund shares as of the Record Date, please email Di Costa Partners (“DCP”) at meetinginfo@dicostapartners.com
no later than 2:00 p.m. Eastern Time on March 31, 2021 to register. Please include the Fund’s name in the subject line and provide your name and address in the body of the e-mail. DCP will then e-mail you the
conference call dial-in information and instructions for voting during the Meetings. If you held Fund shares through an intermediary, such as a broker-dealer, as of the Record Date, and you want to participate in the Meetings, please email DCP at
meetinginfo@dicostapartners.com no later than 2:00 p.m. Eastern Time on March 31, 2021 to register. Please include the Fund’s name in the subject line and provide your name, address and proof of ownership as of the Record Date from your
intermediary. Please be aware that if you wish to vote at the Meetings you must first obtain a legal proxy from your intermediary reflecting the Fund’s name, the number of Fund shares you held and your name and e-mail address. You may
forward an e-mail from your intermediary containing the legal proxy or e-mail an image of the legal proxy to DCP at meetinginfo@dicostapartners.com and put “Legal Proxy” in the subject line. DCP will then e-mail you the
conference call dial-in information and instructions for voting during the Meetings.
The conference call dial-in number will only be active for the date and time of the Meetings. If you have any questions prior to the Meetings, please call Di Costa Partners at the phone number
provided below.
If you do not expect to be present at the Meetings via audio teleconference and wish to vote your shares, please vote your proxy in accordance with
the instructions included on the enclosed white proxy card. If your proxy is properly returned, shares represented by it will be voted at the Meetings in accordance with your instructions for the Proposals. If your proxy is properly executed and
returned and no choice is specified on the white proxy card with respect to the Proposals, the proxy will be voted FOR the approval of the Proposals,
including FOR the approval of each Trustee nominee, and in accordance with the judgment of the person appointed as proxy upon any other matter that
may properly come before the Meetings. Shareholders who execute proxies may revoke or change their proxy at any time prior to the time it is voted by delivering a written notice of revocation, by delivering a
subsequently dated proxy by mail, telephone or the Internet or by attending the Meetings via audio teleconference and voting at the Meetings. If you revoke a previous proxy, your vote will not be counted unless you attend the Meetings via audio
teleconference and vote or legally appoint another proxy to vote on your behalf.
If you own your shares through a bank, broker-dealer or other third-party intermediary who holds your shares of record, and you wish to attend the Meetings via audio teleconference and vote your
shares or revoke a previous proxy at the Meetings, you must request a legal proxy from such bank, broker-dealer or other third-party intermediary. If your proxy has not been revoked, the shares represented by the proxy will be cast at the Meetings
and any adjournments thereof. Attendance by a shareholder at the Meetings via audio teleconference does not, in itself, revoke a proxy.
How many shares of the Fund were outstanding as of the Record Date?
At the close of business on January 22, 2021, the Fund had 16,570,234.6 common shares issued and outstanding.
How can I obtain more information about the Fund?
You may speak to a representative of DCP, who can assist you with any questions, by calling 833-892-6623. Copies of the Fund’s Annual Report for the most recently completed fiscal year previously
have been mailed or made available to shareholders. This Proxy Statement should be read in conjunction with the Annual Report. You can obtain a copy of the Annual Report, without charge, by writing to the Fund or
to Ivy Client Services at 6300 Lamar Avenue, Overland Park, Kansas 66202, or by calling 888-923-3355. You should receive the Annual Report within three business days of your request. Copies of the Annual Report are also available free of charge
at www.ivyinvestments.com.
FIRST MEETING - PROPOSAL 1
THE TRUSTEE ELECTION PROPOSAL
Introduction
In connection with the Transaction, the Board has determined to increase the size of the Board to thirteen members, to be comprised of three (3) existing trustees of the Fund and ten (10)
trustees from the Delaware Funds by Macquarie board of trustees. Among other things, the Board considered the background and experience of each Trustee nominee, including the Trustee’s experience with the Fund or the Delaware Funds by
Macquarie, and determined that each Trustee nominee would provide valuable continuity and enhance the Board’s oversight of the Fund following the completion of the Transaction.
At the First Meeting, shareholders of the Fund will be asked to elect the following nominees to serve as Trustees on the Board of the Fund: Jerome D. Abernathy, Thomas L. Bennett, Ann D.
Borowiec, Joseph W. Chow, H. Jeffrey Dobbs, John A. Fry, Joseph Harroz, Jr., Sandra A.J. Lawrence, Frances A. Sevilla-Sacasa, Thomas K. Whitford, Christianna Wood, Janet L. Yeomans, and Shawn K. Lytle (the “Trustee Nominees”).
The Board currently consists of nine Trustees: James M. Concannon, H. Jeffrey Dobbs, James D. Gressett, Joseph Harroz, Jr., Glendon E. Johnson, Jr., Sandra A.J. Lawrence, Frank J. Ross, Jr., Michael
G. Smith, and Philip J. Sanders (the “Current Trustees”).
If each Trustee Nominee is approved, the Board of the Fund would consist of thirteen Trustees. Ten of the Trustee Nominees — Jerome D. Abernathy, Thomas L. Bennett, Ann D. Borowiec, Joseph W.
Chow, John A. Fry, Frances A. Sevilla-Sacasa, Thomas K. Whitford, Christianna Wood, Janet L. Yeomans, and Shawn K. Lytle — would be added to the Board and are currently trustees on the Delaware Funds by Macquarie board. Three of the Trustee
Nominees — Joseph Harroz, Jr., Sandra A.J. Lawrence, and H. Jeffrey Dobbs — currently serve on the Board and have previously been elected by shareholders of the Fund or appointed to serve by that Board, and would continue to serve on the Board
after the Meetings. Except for Mr. Lytle, each Trustee would not be considered to be an “interested person” of the Fund (as such term is defined in the Investment Company Act of 1940, as amended (the “1940 Act”) (the “Independent Trustees” or
“Independent Trustee Nominees”). Should Mr. Lytle be elected to the Board by shareholders, he would be considered an “interested” Trustee because of his position with Macquarie (the “Interested Trustee” or “Interested Trustee Nominee”).
At a meeting held on January 12, 2021, the Board, at the recommendation of the Fund’s Governance Committee, nominated each Trustee Nominee for election to the Board. Mr. Abernathy, Mr. Bennett, Ms. Borowiec, Mr.
Chow, Mr. Dobbs, Mr. Fry, Mr. Harroz, Ms. Lawrence, Ms. Sevilla-Sacasa, Mr. Whitford, Ms. Wood, and Ms. Yeomans were recommended by the current Independent Trustees.
If elected, the Trustee Nominees will serve as Trustees effective only upon the Closing of the Transaction. If the Transaction is not consummated, the Trustee Nominees who are not Current Trustees
will not serve as Trustees of the Fund, even if elected by shareholders.
Proposed Composition of the Board
Set forth below is the composition of the Board should each Trustee Nominee be approved by Shareholders at the First Meeting.
Class I Trustees(1)
|
Class II Trustees(2)
|
Class III Trustees(3)
|
Joseph Harroz, Jr.
|
Sandra A.J. Lawrence
|
H. Jeffrey Dobbs
|
Ann D. Borowiec
|
Shawn K. Lytle
|
Frances A. Sevilla-Sacasa
|
Jerome D. Abernathy
|
Thomas L. Bennett
|
Christianna Wood
|
Janet L. Yeomans
|
Thomas K. Whitford
|
Joseph W. Chow
|
John A. Fry
|
|
|
(1)
|
It is currently anticipated that the Class I Trustees will next stand for election at the Fund’s 2023 annual meeting of shareholders.
|
(2)
|
It is currently anticipated that the Class II Trustees will next stand for election at the Fund’s 2021 annual meeting of shareholders.
|
(3)
|
It is currently anticipated that the Class III Trustees will next stand for election at the Fund’s 2022 annual meeting of shareholders.
|
Information about the Trustee Nominees
The persons named in the accompanying form of proxy intend to vote at the First Meeting (unless directed not to vote) FOR the election of each Trustee
Nominee set forth below. All Trustee Nominees have indicated that they will serve on the Board, and the Board has no reason to believe that any of them will become unavailable to continue to serve as Trustees. If a Trustee Nominee declines or is
unavailable to serve for any reason, the persons named as proxies will vote for such other Trustee Nominees nominated by the current Independent Trustees. The Trustee Nominees, if elected at the Meeting, will hold office for a term in accordance
with their class or until their respective successors shall have been elected and duly qualified. Under the Declaration of Trust and Amended and Restated By-Laws, a Trustee may serve until his or her term expires, until he or she dies or resigns,
or in the event of bankruptcy, adjudicated incompetence or other incapacity to perform the duties of the office, or his or her removal.
Independent Trustee Nominees
The twelve Independent Trustee Nominees, their term of office and length of time served (as applicable), their principal business occupations during the past five years, the number of portfolios
overseen by the Independent Trustee Nominees (or the number of portfolios they will oversee should they be elected by shareholders, as applicable) and other directorships, if any, held by the Independent Trustee Nominees are shown below.
NAME,
ADDRESS AND
YEAR OF BIRTH
|
POSITION(S)
HELD OR TO BE HELD WITH
THE FUND
|
TRUSTEE
SINCE
|
PRINCIPAL
OCCUPATION(S)
DURING PAST
5 YEARS
|
NUMBER
OF FUNDS IN
FUND
COMPLEX
OVERSEEN OR TO BE OVERSEEN
|
OTHER
DIRECTORSHIPS
HELD DURING
PAST 5 YEARS
|
Jerome D. Abernathy
100 Independence,
610 Market Street
|
Trustee
|
N/A
|
Managing Member, Stonebrook Capital Management, LLC (financial
|
161
|
None
|
NAME,
ADDRESS AND
YEAR OF BIRTH
|
POSITION(S)
HELD OR TO BE HELD WITH
THE FUND
|
TRUSTEE
SINCE
|
PRINCIPAL
OCCUPATION(S)
DURING PAST
5 YEARS
|
NUMBER
OF FUNDS IN
FUND
COMPLEX
OVERSEEN OR TO BE OVERSEEN
|
OTHER
DIRECTORSHIPS
HELD DURING
PAST 5 YEARS
|
Philadelphia, PA
19106-2354
1959
|
|
|
technology: macro factors and databases) (January 1993–Present)
|
|
|
Thomas L. Bennett
100 Independence,
610 Market Street
Philadelphia, PA
19106-2354
1947
|
Chair and Trustee
|
N/A
|
Private Investor (March 2004–Present)
|
161
|
None
|
Ann D. Borowiec
100 Independence,
610 Market Street
Philadelphia, PA
19106-2354
1958
|
Trustee
|
N/A
|
Chief Executive Officer, Private Wealth Management (2011–2013) and Market Manager, New Jersey Private Bank (2005–2011)—J.P.Morgan Chase & Co.
|
161
|
Director—Banco Santander International (October 2016–December 2019)
Director—Santander Bank,
N.A. (December 2016–
December 2019)
|
Joseph W. Chow
100 Independence,
610 Market Street
Philadelphia, PA
19106-2354
1953
|
Trustee
|
N/A
|
Private Investor (April 2011–Present)
|
161
|
Director and Audit Committee Member—Hercules Technology
Growth Capital, Inc. (July 2004–July 2014)
|
H. Jeffrey Dobbs
6300 Lamar Avenue
Overland Park, KS
66202
1955
|
Trustee
|
2019
|
Global Sector Chairman, Industrial Manufacturing—KPMG LLP (2010-2015)
|
161
|
Director—Valparaiso University (2012-Present)
Director—TechAccel LLC (2015-Present) (Tech R&D)
Board Member—Kansas City Repertory Theatre (2015-Present)
Board Member—PatientsVoices, Inc. (healthcare) (2018-Present)
Kansas City Campus for Animal Care (2018-Present)
Director—National Association of Manufacturers (2010- 2015)
Director—The Children’s Center (2003-2015)
Director—Metropolitan Affairs Coalition (2003-2015)
Director—Michigan Roundtable for Diversity and Inclusion (2003-2015)
Trustee—Ivy NextShares
(2019)
Trustee—Ivy VIP (2019-
|
NAME,
ADDRESS AND
YEAR OF BIRTH
|
POSITION(S)
HELD OR TO BE HELD WITH
THE FUND
|
TRUSTEE
SINCE
|
PRINCIPAL
OCCUPATION(S)
DURING PAST
5 YEARS
|
NUMBER
OF FUNDS IN
FUND
COMPLEX
OVERSEEN OR TO BE OVERSEEN
|
OTHER
DIRECTORSHIPS
HELD DURING
PAST 5 YEARS
|
|
|
|
|
|
Present) (28 portfolios
overseen)
Trustee—InvestEd Portfolios
(2019-Present) (10 portfolios
overseen)
Trustee—Ivy Funds (2019-
Present) 45 portfolios overseen)
|
John A. Fry
100 Independence,
610 Market Street
Philadelphia, PA
19106-2354
1960
|
Trustee
|
N/A
|
President—Drexel University (August 2010–Present)
President—Franklin & Marshall College (July 2002–June 2010)
|
161
|
Director; Compensation
Committee and Governance Committee Member—Community Health Systems (May 2004–Present)
Director—Drexel Morgan
& Co.(2015–December 2019)
Director and Audit Committee Member— vTv Therapeutics Inc. (2017–Present)
Director and Audit Committee Member—FS Credit Real Estate Income Trust, Inc. (2018–Present)
Director and Audit Committee Member—Federal Reserve Bank of Philadelphia (January
2020–Present)
|
Joseph Harroz, Jr.
6300 Lamar Avenue
Overland Park, KS
66202
1967
|
Trustee
|
2013
|
President (2020-Present), Interim President (2019-2020), Vice President (2010-2019) and Dean (2010-2019)—College of Law, University of Oklahoma
Managing Member—Harroz Investments, LLC, (commercial enterprises) (1998-2019)
Managing Member—St. Clair, LLC (commercial enterprises) (2019-Present)
|
161
|
Director—OU Medicine, Inc. (2020-Present)
Director and Shareholder—Valliance Bank (2007-Present)
Director—Foundation Healthcare (formerly Graymark HealthCare) (2008-2017)
Trustee—the Mewbourne Family Support Organization (2006-Present) (non-profit)
Independent Director—LSQ Manager, Inc. (real estate) (2007-2016)
Director—Oklahoma Foundation for Excellence (non-profit) (2008 -Present)
Independent Chairman and Trustee—Waddell & Reed Advisors Funds (Independent
|
NAME,
ADDRESS AND
YEAR OF BIRTH
|
POSITION(S)
HELD OR TO BE HELD WITH
THE FUND
|
TRUSTEE
SINCE
|
PRINCIPAL
OCCUPATION(S)
DURING PAST
5 YEARS
|
NUMBER
OF FUNDS IN
FUND
COMPLEX
OVERSEEN OR TO BE OVERSEEN
|
OTHER
DIRECTORSHIPS
HELD DURING
PAST 5 YEARS
|
|
|
|
|
|
Chairman: 2015-2018; Trustee: 1998-2018)
Independent Chairman and
Trustee—Ivy NextShares
(2016-2019)
Independent Chairman and
Trustee—Ivy VIP (Independent
Chairman: 2015-Present;
Trustee: 1998-Present) (28
portfolios overseen)
Independent Chairman and
Trustee—InvestEd Portfolios
(Independent Chairman: 2015-
Present; Trustee: 2001-Present)
(10 portfolios overseen)
Independent Chairman and
Trustee—Ivy Funds (2013-
Present) (45 portfolios overseen)
|
Sandra A.J. Lawrence
6300 Lamar Avenue
Overland Park, KS
66202
1957
|
Trustee
|
2019
|
Retired
Formerly, Chief Administrative Officer—Children’s Mercy Hospitals and Clinics (2016-2019); and CFO—Children’s Mercy Hospitals and Clinics (2005-2016)
|
161
|
Director—Hall Family Foundation (1993-Present)
Director—Westar Energy (utility) (2004-2018)
Trustee—Nelson-Atkins Museum of Art (non-profit) (2007-2020)
Director—Turn the Page KC (non-profit) (2012-2016)
Director—Kansas Metropolitan Business and Healthcare Coalition (non-profit) (2017-2019)
Director—National Association of Corporate Directors (non-profit) (2017-Present)
Director—American Shared Hospital Services (medical device) (2017-Present)
Director—Evergy, Inc., Kansas City Power & Light Company, KCP&L Greater Missouri Operations Company, Westar Energy, Inc. and Kansas Gas and Electric Company (related utility companies) (2018-Present)
|
NAME,
ADDRESS AND
YEAR OF BIRTH
|
POSITION(S)
HELD OR TO BE HELD WITH
THE FUND
|
TRUSTEE
SINCE
|
PRINCIPAL
OCCUPATION(S)
DURING PAST
5 YEARS
|
NUMBER
OF FUNDS IN
FUND
COMPLEX
OVERSEEN OR TO BE OVERSEEN
|
OTHER
DIRECTORSHIPS
HELD DURING
PAST 5 YEARS
|
|
|
|
|
|
Director—Stowers (research) (2018);
CoChair—Women Corporate, Directors (director education) (2018-2020)
Trustee-Ivy NextShares
(2019)
Trustee—Ivy VIP (2019-
Present) (28 portfolios
overseen)
Trustee—InvestEd Portfolios
(2019-Present) (10 portfolios
overseen)
Trustee—Ivy Funds (2019-
Present) (45 portfolios overseen)
|
Frances A. Sevilla-Sacasa
100 Independence,
610 Market Street
Philadelphia, PA
19106-2354
1956
|
Trustee
|
N/A
|
Private Investor
(January 2017–Present)
Chief Executive Officer— Banco Itaú International
(April 2012–December 2016)
Executive Advisor to Dean (August 2011–March 2012) and Interim Dean (January 2011–July 2011)—University of Miami School of Business Administration
President—U.S. Trust Bank of America Private Wealth
Management (Private Banking) (July 2007–December 2008)
|
161
|
Director; New Senior Investment Group Inc. (real estate investment trust) (January 2021 – Present)
Trust Manager and Audit
Committee Chair—Camden Property Trust (August 2011–Present)
Director; Strategic Planning
and Reserves Committee and Nominating and Governance Committee Member—Callon Petroleum Company (December 2019–Present)
Director; Audit Committee
Member—Carrizo Oil & Gas, Inc. (March 2018–December 2019)
|
Thomas K. Whitford
100 Independence,
610 Market Street
Philadelphia, PA
19106-2354
1956
|
Trustee
|
N/A
|
Vice Chairman (2010–April 2013)—PNC Financial Services Group
|
161
|
Director—HSBC North
America Holdings Inc.
(December 2013–Present)
Director—HSBC USA Inc. (July 2014–Present)
Director—HSBC Bank
USA, National Association
(July 2014–March 2017)
Director—HSBC Finance
|
NAME,
ADDRESS AND
YEAR OF BIRTH
|
POSITION(S)
HELD OR TO BE HELD WITH
THE FUND
|
TRUSTEE
SINCE
|
PRINCIPAL
OCCUPATION(S)
DURING PAST
5 YEARS
|
NUMBER
OF FUNDS IN
FUND
COMPLEX
OVERSEEN OR TO BE OVERSEEN
|
OTHER
DIRECTORSHIPS
HELD DURING
PAST 5 YEARS
|
|
|
|
|
|
Corporation (December 2013–April 2018)
|
Christianna Wood
100 Independence,
610 Market Street
Philadelphia, PA
19106-2354
1959
|
Trustee
|
N/A
|
Chief Executive Officer and President—Gore Creek Capital, Ltd. (August 2009–Present)
|
161
|
Director; Finance
Committee and Audit
Committee Member—
H&R Block Corporation
(July 2008–Present)
Director; Investments Committee, Capital and Finance Committee and Audit Committee Member—Grange Insurance (2013–Present)
Trustee; Chair of Nominating and Governance Committee and Member of Audit Committee—The Merger Fund (2013–Present), The Merger Fund VL
(2013–Present), WCM
Alternatives: Event-Driven
Fund(2013–Present), and
WCM Alternatives: Credit
Event Fund (December 2017–Present)
Director; Chair of Governance Committee and Audit Committee Member—International Securities Exchange (2010–2016)
|
Janet L. Yeomans
100 Independence,
610 Market Street
Philadelphia, PA
19106-2354
1948
|
Trustee
|
N/A
|
Vice President and Treasurer
(January 2006–July 2012), Vice President—Mergers & Acquisitions (January 2003–January 2006), and Vice President and Treasurer (July
1995–January 2003)—3M Company
|
161
|
Director; Personnel and
Compensation Committee
Chair; Member of Nominating, Investments, and Audit Committees for various periods throughout directorship—Okabena Company (2009–2017)
|
Interested Trustee Nominee
The Interested Trustee Nominee, his term of office and length of time served (or the length of time served should he be elected by shareholders), his principal business occupations during the past
five years, the number of portfolios overseen by the Interested Trustee Nominee (or the number of portfolios he will oversee should he be elected by shareholders) and other directorships, if any, held by the Interested Trustee Nominee are shown
below. If elected, Mr. Lytle would be an Interested Trustee by virtue of his position as Global Head of Macquarie Investment Management and Head of Americas – Macquarie Group.
NAME,
ADDRESS AND
YEAR OF BIRTH
|
POSITION(S)
HELD OR TO BE HELD WITH
THE FUND
|
TRUSTEE
SINCE
|
PRINCIPAL
OCCUPATION(S)
DURING PAST
5 YEARS
|
NUMBER
OF FUNDS IN
FUND
COMPLEX
OVERSEEN OR TO BE OVERSEEN
|
OTHER
DIRECTORSHIPS
HELD
|
Shawn K. Lytle
100 Independence,
610 Market Street
Philadelphia, PA
19106-2354
1970
|
Trustee
|
N/A
|
Global Head of Macquarie Investment Management (January 2019 – Present); Head of Americas of Macquarie Group (December 2017 – Present); Deputy Global Head of Macquarie Investment Management (2017 – 2019); President of Macquarie
Investment Management Americas (2015 – 2017)
|
161
|
Trustee—UBS
Relationship Funds, SMA
Relationship Trust, and UBS Funds (May 2010–
April 2015)
|
Trustee Qualifications
The Governance Committee of the Board is responsible for identifying, evaluating and recommending candidates to the Board. The Governance Committee reviews the background and the educational,
business and professional experience of candidates and the candidates’ expected contributions to the Board. Although the Board has not adopted a formal diversity policy, the Board nevertheless believes that the different perspectives, viewpoints,
professional experience, education, and individual qualities of each director contribute to the Board’s diversity of experiences and bring a variety of complementary skills. It is the Trustees’ belief that this allows the Board, as a whole, to
oversee the business of the Fund in a manner consistent with the best interests of the Fund’s shareholders.
The Board has determined that each Trustee Nominee is qualified to serve on the Board because of his or her specific attributes, including prior experience, background and skills. The Board
considered that the Trustee Nominees’ familiarity and experience with the Fund, as members of the Board, or of DMC and its affiliates, as members of the Delaware Funds by Macquarie board, would result in the newly-constituted board having a breadth
of knowledge that would enhance its ability to oversee the Fund upon Closing of the Transaction.
The following is a summary of various qualifications, experiences and skills of each Trustee Nominee that led to the Board’s conclusion that each Trustee Nominee should serve as a Trustee on the
Board.
Independent Trustee Nominees
Jerome D. Abernathy – Mr. Abernathy has over 30 years of experience in the investment management industry. In selecting him to serve on the Board, the Independent Trustees noted and valued his extensive
experience as a chief investment officer, director of research, trader, and analytical proprietary trading researcher. Mr. Abernathy received a B.S. in electrical engineering from Howard University and a Ph.D. in electrical engineering and
computer science from Massachusetts Institute of Technology.
Thomas L. Bennett – Mr. Bennett has over 30 years of experience in the investment management industry, particularly with fixed income portfolio management and credit analysis. He has served in senior
management for a number of money management firms. Mr. Bennett has also served as a board member of another investment company, an educational institution, nonprofit organizations, and for-profit companies. He has an M.B.A. from the University of
Cincinnati. Mr. Bennett has been nominated to serve as Chair of the Board upon Closing of the Transaction.
Ann D. Borowiec – Ms. Borowiec has over 25 years of experience in the banking and wealth management industry. Ms. Borowiec also serves as a board member on several nonprofit organizations. In nominating her
to the Board, the Independent Trustees found that her experience as a Chief Executive Officer in the private wealth management business at a leading global asset manager and private bank, including the restructuring of business lines and defining
client recruitment strategies, complemented the skills of existing board members. Her experience would also provide
additional oversight skill in the area of fund distribution. Ms. Borowiec holds a B.B.A. from Texas Christian University and an M.B.A. from Harvard University.
Joseph W. Chow – Mr. Chow has over 30 years of experience in the banking and financial services industry. In nominating him to the Board, the Independent Trustees found that his extensive experience in
business strategy in non-US markets complemented the skills of existing Board members and also reflected the increasing importance of global financial markets in investment management. The Independent Trustees also found that Mr. Chow’s management
responsibilities as a former Executive Vice President of a leading global asset servicing and investment management firm as well as his experience as Chief Risk and Corporate Administration Officer would add helpful oversight skills to the Board’s
expertise. Mr. Chow holds a B.A. degree from Brandeis University and M.C.P. and M.S. in Management degree from Massachusetts Institute of Technology.
H. Jeffrey Dobbs – Mr. Dobbs has more than 35 years of experience in the automotive, industrial manufacturing, financial services and consumer sectors. He also has served as a partner in a public accounting
firm. Mr. Dobbs holds a degree in accounting from Valparaiso University. The Independent Trustees concluded that Mr. Dobbs is suitable to act as Trustee because of his extensive work in the global professional services industry, as well as his
educational background.
John A. Fry – Mr. Fry has over 30 years of experience in higher education. He has served in senior management for three major institutions of higher learning including serving as president of a leading
research university. Mr. Fry has also served as a board member of many nonprofit organizations and several for-profit companies. Mr. Fry has extensive experience in overseeing areas such as finance, investments, risk-management, internal audit,
and information technology. He holds a B.A. degree in American Civilization from Lafayette College and an M.B.A. from New York University.
Joseph Harroz, Jr. – Mr. Harroz serves as the President of a state university, and also serves as a Director of a bank. He also has served as President and Director of a publicly-traded company, as Interim
President and General Counsel to a state university system and as Dean of the College of Law of that state university. Mr. Harroz holds a B.A. degree from the University of Oklahoma and a J.D. from Georgetown University Law Center. Mr. Harroz has
multiple years of service as a Trustee to the funds in the Ivy Fund Complex (the “Fund Complex”). The Independent Trustees concluded that Mr. Harroz is suitable to serve as Trustee because of his educational background, his work experience and the
length of his service as a Trustee to the Fund.
Sandra A.J. Lawrence – Ms. Lawrence has been a member and chair of the board of several public corporations, closely-held corporations and charitable organizations. She also has more than 16 years of
experience serving on the boards of public companies, including as Audit Committee Chair and Nominating/Governance Committee Chair, and has served as a chief financial officer and on investment and finance committees. She served as President of
Stern Brothers, a municipal bond house, where she held NASD Series licenses 7, 24 and 63. Ms. Lawrence holds an A.B. from Vassar College, as well as master’s degrees from the Massachusetts Institute of Technology and Harvard Business School.
The Independent Trustees concluded that Ms. Lawrence is suitable to serve as Trustee because of her work experience, financial background, academic background and service on corporate and charitable boards.
Frances A. Sevilla-Sacasa – Ms. Sevilla-Sacasa has over 30 years of experience in banking and wealth management. In nominating her to the Board, the Independent Trustees of the Fund found that her extensive
international wealth management experience, in particular, complemented the skills of existing Board members and also reflected the increasing importance of international investment management not only for dollar-denominated investors but also for
investors outside the US. The Independent Trustees also found that Ms. Sevilla-Sacasa’s management responsibilities as the former President and Chief Executive Officer of a major trust and wealth management company would add a helpful oversight
skill to the Board’s expertise, and her extensive nonprofit board experience gave them confidence that she would make a meaningful, experienced contribution to the Board. Finally, in electing Ms. Sevilla-Sacasa to the Board, the Independent
Trustees valued her perceived dedication to client service as a result of her overall career experience. Ms. Sevilla-Sacasa holds B.A. and M.B.A. degrees from the University of Miami and Thunderbird School of Global Management, respectively.
Thomas K. Whitford – Mr. Whitford has over 25 years of experience in the banking and financial services industry, and served as Vice Chairman of a major banking, asset management, and residential mortgage
banking institution. In
nominating him to the Board, the Independent Trustees found that Mr. Whitford’s senior management role in wealth management and experience in the mutual fund servicing business would provide valuable current
management and financial industry insight, in particular, and complemented the skills of existing Board members. The Independent Trustees also found that his senior management role in integrating company acquisitions, technology, and operations
and his past role as Chief Risk Officer would add a helpful oversight skill to the Board’s expertise. Mr. Whitford holds a B.S. degree from the University of Massachusetts and an M.B.A. degree from The Wharton School of the University of
Pennsylvania.
Christianna Wood – Ms. Wood has over 30 years of experience in the investment management industry. In selecting her to serve on the Board, the Independent Trustees noted and valued her significant portfolio
management, corporate governance and audit committee experience. Ms. Wood received a B.A. in economics from Vassar College and an M.B.A. in finance from New York University.
Janet L. Yeomans – Ms. Yeomans has over 28 years of business experience with a large global diversified manufacturing company, including service as Treasurer for this company. In this role, Ms. Yeomans had
significant broad-based financial experience, including global financial risk-management, investments, and mergers and acquisitions. She served as a board member of a for-profit company and also is a current board member of a hospital and a public
university system. She holds degrees in mathematics and physics from Connecticut College, an M.S. in mathematics from Illinois Institute of Technology, and an M.B.A. from the University of Chicago.
Interested Trustee Nominee
Shawn K. Lytle – Mr. Lytle has over 20 years of experience in the investment management industry. He has been the Global Head of Macquarie Investment Management since January 2019 and Head of Americas –
Macquarie Group since December 2017, and he is responsible for all aspects of Macquarie Investment Management’s business. He joined the firm as President of Macquarie Investment Management – Americas in 2015. Prior to that time, Mr. Lytle served
in various executive management, investment management, and distribution positions at two major banking institutions. He holds a B.A. degree from The McDonough School of Business at Georgetown University. Mr. Lytle serves on the board of
directors of the National Association of Securities Professionals (NASP), the Sustainability Accounting Standards Board, and he is a member of the board of governors for the Investment Company Institute (ICI). In November 2017, Mr. Lytle was named
to the Black Enterprise list of “Most Powerful Executives in Corporate America.”
Board Structure and Related Matters
The Fund is governed by the Board, which is responsible for the overall management of the Fund. Such responsibility includes general oversight and review of the Fund’s investment activities, in
accordance with Federal law and the law of the State of Delaware, as well as the stated policies of the Fund. The Board has appointed officers of the Fund and delegated to them the management of the day-to-day operations of the Fund, based on
policies reviewed and approved by the Board, with general oversight by the Board.
Under the Declarations of Trust and By-laws, a Trustee’s term of office will terminate in the event of the death, resignation, removal, bankruptcy, adjudicated incompetence or other incapacity of
the Trustee. The Fund holds an annual meeting of shareholders for the election or re-election of Trustees. Delaware law permits shareholders to remove Trustees under certain circumstances and requires the Fund to assist in shareholder
communications.
If shareholders elect the Trustee Nominees, after the Closing of the Transaction, the Board will be comprised of twelve Independent Trustees (92%) and one Interested Trustee. The Board believes that
having a majority of Independent Trustees on the Board is appropriate and in the best interests of the Fund’s shareholders. The Board also has nominated Thomas L. Bennett, an Independent Trustee Nominee, to serve as Independent Chair of the Board
upon Closing of the Transaction. In that regard, Mr. Bennett’s responsibilities will include: setting an agenda for each meeting of the Board; presiding at all meetings of the Board and of the Independent Trustees; and serving as a liaison with
other Trustees, the Fund’s officers and other management personnel, and counsel. The Independent Chair also performs such other duties as the Board may from time to time determine.
The Board generally holds four regularly scheduled meetings each year. The Board may hold special meetings, as needed, in person, by videoconference or by telephone, to address matters arising
between regular meetings. The
Independent Trustees also hold four regularly scheduled meetings each year, during a portion of which management is not present, as well as a special meeting in connection with the Board’s annual
consideration of the Fund’s management agreements, and may hold special meetings, as needed.
The Board has established a committee structure (described below) that includes four standing committees, the Audit Committee, the Governance Committee, the Investment Oversight Committee, and the
Executive Committee, the first three of which are comprised solely of Independent Trustees. The Board periodically evaluates its structure and composition, as well as various aspects of its operations. The Board believes that its leadership
structure, including its Independent Chair position and its committees, is appropriate for the Fund in light of, among other factors, the asset size and nature of the Fund, the number of Funds overseen by the Board, the arrangements for the conduct
of the Fund’s operations, the number of Trustees, and the Board’s responsibilities.
Committees of the Board
The Board has established the following standing committees: Audit Committee, Executive Committee, Investment Oversight Committee and Governance Committee. The respective duties and current
memberships of the standing committees are set forth below.
Audit Committee. The Audit Committee serves as an independent and objective party to monitor the Fund’s accounting policies, financial reporting and
internal control system, as well as the work of the Fund’s independent registered public accounting firm. The Committee also serves to provide an open avenue of communication among the Fund’s independent registered public accounting firm, the
internal accounting staff of IICO and the Board. As of the date of this Proxy Statement, the Audit Committee consists of James M. Concannon, H. Jeffrey Dobbs (Chair) and James D. Gressett.
Executive Committee. The Executive Committee acts as necessary on behalf of the full Board. When the Board is not in session, the Executive Committee has
and may exercise any or all of the powers of the Board in the management of the business and affairs of the Fund except the power to increase or decrease the size of, or fill vacancies on, the Board, and except as otherwise provided by law. As of
the date of this Proxy Statement, the Executive Committee consists of Glendon E. Johnson, Jr. and Philip J. Sanders.
Investment Oversight Committee. The Investment Oversight Committee reviews, among other things, the investment performance of the Fund, any proposed
changes to the Fund’s investment policies, and the Fund’s market trading activities and portfolio transactions. As of the date of this Proxy Statement, the Investment Oversight Committee consists of Michael G. Smith (Chair), James M. Concannon,
and Glendon E. Johnson, Jr.
Governance Committee. The Governance Committee evaluates, selects and recommends to the Board candidates to serve as Independent Trustees. The Governance
Committee will consider candidates for Trustee recommended by Shareholders. Written recommendations with any supporting information should be directed to the Secretary of the Fund. The Governance Committee also oversees the functioning of the
Board and its committees. As of the date of this Proxy Statement, the Governance Committee consists of Frank J. Ross, Jr. (Chair), James D. Gressett, Glendon E. Johnson, Jr. and Sandra A.J. Lawrence. The Board has adopted a written charter of
the Governance Committee, which is attached as Appendix A.
During the fiscal year ended September 30, 2020, the Board met 7 times, the Executive Committee did not meet, the Audit Committee met 4 times, the Governance Committee met 7 times, and the
Investment Oversight Committee met 4 times.
During the fiscal year ended September 30, 2020, each Current Trustee of the Fund attended at least 75% of the aggregate of: (i) all regular meetings of the Board; and (ii) all meetings of all
committees of the Board on which the Trustee served.
Risk Oversight
Consistent with its responsibility for oversight of the Fund, the Board oversees the management of risks relating to the administration and operation of the Fund. The Board performs this risk
management oversight directly and, as to certain matters, directly through its committees and through its Independent Trustees. The following provides an overview of the principal, but not all, aspects of the Board’s oversight of risk management
for the Fund. The Board will continue this same level of risk management oversight following the Closing of the Transaction.
In general, the Fund’s risks include, among other things, investment risk, credit risk, liquidity risk, valuation risk, operational risk and regulatory compliance risk. The Board has adopted, and
periodically reviews, policies and procedures designed to address these and other risks to the Fund. In addition, under the general oversight of the Board, IICO, any sub-advisers (if applicable) and other service providers to the Fund have
themselves adopted a variety of policies, procedures and controls designed to address particular risks of the Fund. Different processes, procedures and controls are employed with respect to different types of risks.
The Board also oversees risk management for the Fund through review of regular reports, presentations and other information from officers of the Fund and other persons.
Senior officers of the Fund, senior officers of IICO and Waddell & Reed Services Company, doing business as WI Services Company (“WISC”) (collectively, “Ivy”), and the Fund’s Chief Compliance
Officer (“CCO”) regularly report to the Board on a range of matters, including those relating to risk management. The Board also regularly receives reports from IICO with respect to the investments and securities trading of the Fund, reports
from Fund management personnel regarding valuation procedures and reports from management’s Valuation Committee regarding the valuation of particular securities. In addition to regular reports from Ivy, the Board also receives reports regarding
other service providers to the Fund, either directly or through Ivy or the Fund’s CCO, on a periodic or regular basis. At least annually, the Board receives a report from the Fund’s CCO regarding the effectiveness of the Fund’s compliance
program. Also, on an annual basis, the Board receives reports, presentations and other information from Ivy in connection with the Board’s consideration of the renewal of each of the Fund’s agreements with Ivy.
Senior officers of the Fund and senior officers of Ivy also report regularly to the Audit Committee on Fund valuation matters, and on the Fund’s internal controls and accounting and financial
reporting policies and practices. Ivy compliance and internal audit personnel also report regularly to the Audit Committee. In addition, the Audit Committee receives regular reports from the Fund’s independent registered public accounting firm on
internal control and financial reporting matters. On at least a quarterly basis, the Independent Trustees meet separately with the Fund’s CCO to discuss matters relating to the Fund’s compliance program.
The Board’s role in risk oversight following the Closing of the Transaction is expected to be substantially the same as the above, albeit with respect to DMC as investment adviser, Delaware
Distributors, L.P. (“DDLP”) as distributor, and other unaffiliated and Macquarie affiliated service providers.
Selection of Nominees
The Board’s Governance Committee makes Independent Trustee candidate recommendations to the Board pursuant to its charter. The Governance Committee evaluates a candidate’s qualification for Board
membership and the independence of such candidate from IICO and other principal service providers. In connection with the Transaction, the Governance Committee also evaluated the Trustee Nominees’ independence from DMC and other
Macquarie-affiliated service providers.
The Governance Committee evaluates candidates using certain criteria, considering, among other qualities, a high level of integrity, appropriate experience, a commitment to fulfill the fiduciary
duties inherent in Board membership, and the extent to which potential candidates possess sufficiently diverse skill sets that would contribute to the Board’s overall effectiveness.
The Governance Committee considers prospective candidates from any reasonable source, including from recommendations by shareholders of the Fund. The Governance Committee initially evaluates
prospective candidates
on the basis of preliminary information required of all preliminary candidates, considered in light of the criteria discussed above. Those prospective candidates that appear likely to be able to
fill a significant need of the Board would be contacted by a Governance Committee member to discuss the position; if there appeared to be sufficient interest, a meeting with one or more Governance Committee members would be arranged. If the
Governance Committee, based on the results of these contacts, believed it had identified a viable candidate, it would air the matter with the full group of Independent Trustees for input.
Any request by management to meet with the prospective candidate would be given appropriate consideration. The Fund has not paid a fee to third parties to assist in finding nominees.
Shareholders seeking to recommend one or more candidates to the Board should direct the names of such candidates they wish to be considered to the attention of the Fund’s Governance Committee, in
care of the Fund’s Secretary, at the address of the Fund listed on the front page of this Proxy Statement. Such candidates will be considered with any other trustee candidates on the basis of the same criteria described above used to consider
and evaluate candidates recommended by other sources.
For candidates to serve as Independent Trustees, independence from IICO (or Macquarie in this case), its affiliates and other principal service providers is critical, as is an independent and
questioning mindset. The Governance Committee also considers whether the prospective candidates’ workloads would allow them to attend the vast majority of Board meetings, be available for service on Board committees, and devote the additional time
and effort necessary to keep up with Board matters and the rapidly changing regulatory environment in which the Fund operates. Different substantive areas may assume greater or lesser significance at particular times, in light of the Board’s
present composition and the Governance Committee’s (or the Board’s) perceptions about future issues and needs.
Ownership of Fund Shares
Set forth in Appendix B is information regarding shares of the Fund beneficially owned by the Trustees and each Trustee Nominee as of September 30, 2020, as determined in accordance with Rule
16a-1(a)(2) under the Securities Exchange Act of 1934, as amended, as well as the aggregate dollar range of shares owned by each Trustee Nominee of funds within the Fund Complex. An Independent Trustee may elect to defer a portion of his or her
annual compensation, which deferred amount is deemed to be invested in shares of funds within the Fund Complex. The amounts listed in Appendix B as “owned” shares include any shares in which the Trustee’s deferred compensation is deemed invested
by a Trustee.
Compensation
The fees paid to the Trustees are allocated among the funds in the Fund Complex based on each fund’s relative asset size. Information relating to compensation paid to the Current Trustees for the
Fund’s most recent fiscal year is set forth in Appendix C.
Required Vote
The presence at the First Meeting, either in person or by proxy, of one-third of the outstanding shares shall be sufficient to constitute a quorum. Trustees are elected by the affirmative vote
of a plurality of shares present at the Meeting and entitled to vote, at which quorum is present. This means that the 13 candidates who receive the largest number of votes will be elected as trustees. In the election of trustees, votes may be
cast in favor of a candidate or withheld. If elected, the Trustee Nominees will serve as Trustees effective only upon the Closing of the Transaction. If the Transaction is not consummated, the Current Trustees will remain on the Board and the
Trustee Nominees who are not Current Trustees will not serve as Trustees of the Fund, even if elected by shareholders.
THE BOARD, INCLUDING THE INDEPENDENT TRUSTEES, UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF THE FUND VOTE FOR THE ELECTION OF EACH TRUSTEE NOMINEE.
SECOND MEETING - PROPOSAL 1
TO APPROVE A NEW INVESTMENT ADVISORY AGREEMENT FOR THE FUND
(“NEW INVESTMENT ADVISORY AGREEMENT PROPOSAL”)
Introduction
The Current Investment Advisory Agreement between the Fund and IICO will automatically terminate upon the Closing of the Transaction. It is proposed that post-Transaction, DMC, a series of MIMBT,
serve as the investment adviser to the Fund. To ensure that advisory services can continue uninterrupted following the termination of the Current Investment Advisory Agreement, the Board, including the Board’s Independent Trustees, have approved
the proposed New Investment Advisory Agreement for the Fund, to become effective upon the Closing, subject to shareholder approval. If the proposed New Investment Advisory Agreement is approved by shareholders, DMC will manage the Fund effective
upon the Closing. In the event shareholders do not approve the proposed New Investment Advisory Agreement by the Closing, DMC will serve as investment adviser of the Fund pursuant to an Interim Investment Advisory Agreement, but must place its
compensation for its services during this interim period in escrow, pending shareholder approval of the New Investment Advisory Agreement. The Interim Investment Advisory Agreement would have substantially the same terms as the terms of the Current
Investment Advisory Agreement. If the Transaction is not consummated, the New Investment Advisory Agreement Proposal will not be implemented, even if approved by shareholders.
Pursuant to section 15(a)(4) of the 1940 Act, any investment advisory agreement, including any sub-advisory agreement, on behalf of a registered investment company must terminate automatically
upon its “assignment.” As used in the 1940 Act, the term “assignment” includes any transfer of a controlling interest in an investment adviser. Such a transfer is often referred to as a “Change of Control Event.” Consummation of the Transaction,
which is set to occur in the first half of 2021, whereby WDR will be acquired by Macquarie, will constitute a Change of Control Event for IICO, resulting in the automatic termination of the Current Investment Advisory Agreement between IICO and the
Fund. Section 15(a) of the 1940 Act also provides that “it shall be unlawful for any person to serve or act as an investment adviser of a registered investment company, except pursuant to a written contract, which contract . . . has been approved
by the vote of a majority of the outstanding voting securities of such registered company,” as defined by the 1940 Act. Because it is proposed that DMC serve as the new investment adviser to the Fund after the Closing, the proposed New Investment
Advisory Agreement must be approved by the Fund’s shareholders.
IICO and the Fund are unaware of any Trustee having any material interest, direct or indirect, in the Transaction, except that Philip J. Sanders, President of the Fund, is deemed to have such
an interest because of his positions at WDR and its affiliates and because of his compensation arrangements totaling approximately $14,059,945 based on the anticipated Closing of the Transaction, assuming an effective date of January 15, 2021.
This amount does not reflect certain compensation actions that may occur prior to completion of the Transaction, including any equity award grants that may be made after the assumed effective time of January 15, 2021. He also is potentially
entitled to additional ongoing compensation relating to post-Transaction transitional activities involving certain Fund matters. These compensation arrangements are more fully described in the preliminary proxy statement that WDR filed with the
SEC on January 22, 2021.
Section 15(f) of the 1940 Act
Macquarie has made certain covenants in connection with the Transaction regarding compliance with section 15(f) of the 1940 Act, which, in pertinent part, provides a safe harbor for the receipt
by an investment adviser or any of its affiliated persons of any amount or benefit in connection with certain transactions, such as the Transaction, involving an assignment of an investment management services agreement as long as two conditions
are satisfied.
The first condition requires that no “unfair burden” be imposed on the investment company or companies as a result of the Transaction, or as a result of any express or implied terms, conditions
or understandings applicable to such Transaction. The term “unfair burden,” as defined in the 1940 Act, includes any arrangement during the two-year period after the change in control whereby the investment adviser (or predecessor or successor
investment adviser), or any interested person of any such investment adviser, receives or is entitled to receive any compensation, directly or indirectly, from such investment company or its security holders (other than fees for bona fide
investment advisory
or other services) or from any person in connection with the purchase or sale of securities or other property to, from or on behalf of such investment company (other than bona fide ordinary
fees for principal underwriting services). No such compensation arrangements are contemplated by the Transaction. WDR and Macquarie have agreed to refrain from imposing or seeking to impose, for a period of two years after the Closing of the
Transaction, any “unfair burden” on the Fund.
The second condition requires that, during the three-year period immediately following the closing of the Transaction, at least 75% of an investment company’s board of directors or trustees not
be “interested persons” (as defined in Section 2(a)(19) of the 1940 Act) of the investment adviser or predecessor investment adviser. The Board of Trustees of the Fund and the Delaware Funds by Macquarie board each currently satisfies such 75%
requirement, and the newly constituted board, provided approval of the Trustee Nominees in the Trustee Election Proposal, will satisfy such 75% requirement. Macquarie has agreed with WDR to use its reasonable best efforts to ensure continued
satisfaction of the 75% requirement for the three-year period following the Closing.
The Current Investment Advisory Agreement
IICO, a Delaware corporation, serves as the investment adviser to the Fund and each other trust within the Fund Complex. IICO has been a registered investment adviser with the SEC since 2002.
As of December 31, 2020, IICO had approximately $74.8 billion in total assets under management. IICO’s principal office is located at 6300 Lamar Avenue, Overland Park, KS 66202.
IICO provides investment management services to the Fund under the Current Investment Advisory Agreement. At a meeting held on August 11–12, 2020 (the “2020 15(c) Board Meeting”), the Board,
including the Board’s Independent Trustees, approved the renewal of the Current Investment Advisory Agreement. The Current Investment Advisory Agreement has been effective since April 1, 2013 and was last approved by the Fund’s sole shareholder
on March 21, 2013 in connection with the launch of the Fund.
The Proposed New Investment Advisory Agreement
DMC is a series of MIMBT. MIMBT, a Delaware statutory trust, is an indirect, wholly-owned registered investment advisory subsidiary of Macquarie Group. MIMBT has been a registered investment
adviser with the SEC since 1988. As of December 31, 2020, DMC had approximately $77.5 billion in total assets under management. DMC provides investment advisory services to registered investment companies within the Delaware Funds by Macquarie
complex, as well as to certain other affiliated registered investment companies. Its principal office is 100 Independence, 610 Market Street, Philadelphia, PA 19106. Additional information regarding the ownership structure of DMC is included in
Appendix F, and information regarding DMC’s other investment company clients is included in Appendix G.
It is proposed that DMC provide investment management services to the Fund pursuant to the proposed New Investment Advisory Agreement. The terms of the proposed New Investment Advisory Agreement,
and certain differences between the proposed New Investment Advisory Agreement and the Current Investment Advisory Agreement are described, generally, below. The proposed New Investment Advisory Agreement with DMC is substantially similar to the
Fund’s Current Investment Advisory Agreement with IICO. The proposed New Investment Advisory Agreement does not change the Fund’s contractual advisory fee rate. Differences in language, stylistic changes,
and changes to provisions that would not result in a change to a reasonable substantive interpretation of an agreement are not included in the below description; and the comparison below is qualified in its entirety by the Current Investment
Advisory Agreement and the proposed New Investment Advisory Agreement in Appendix E. The proposed New Investment Advisory Agreement primarily differs from the Current Investment Advisory Agreement as follows:
Fees. There would be no change in the fee schedule used to determine the gross investment advisory fees payable to
DMC under the proposed New Investment Advisory Agreement. Under the proposed New Investment Advisory Agreement, the fee will remain an annual fee computed daily in an amount equal to 1.00% of the average daily value of the Fund’s assets. The
Current Investment Advisory Agreement and proposed New Investment Advisory Agreement differ in how they describe the calculus of the Fund’s net assets to which the Fund’s management fee is applied. Under the Current Investment Advisory Agreement,
the Fund calculates average daily net assets as the Fund’s total assets, including the assets attributable to the proceeds from any borrowings or other forms of structural leverage, minus liabilities other than the aggregate indebtedness entered
into for purposes of leverage. The proposed New
Investment Advisory Agreement calculates average daily net assets without regard to (i) the liquidation value or other involuntary liquidation preference of any outstanding senior security which
is a stock, including shares of preferred stock, of the Fund (as those terms are defined in section 18 of the 1940 Act) and (ii) liabilities arising from other senior securities, borrowings, or other forms of leveraging. Given the current leverage
used by the Fund, there will be no change in the advisory fees paid by the Fund under the New Investment Advisory Agreement upon the Closing. In addition, the Current Investment Advisory Agreement for the Fund contains a provision which states
that if the laws, regulations or policies of any state in which shares of the Fund are qualified for sale limit the operation and management expenses of the Fund, IICO will refund to the Fund the amount by which such expenses exceed the lowest of
such state limitations; the proposed New Investment Advisory Agreement contains no such provision. Finally, the proposed New Investment Advisory Agreement provides that, if it is terminated prior to the end of any calendar month for the Fund, the
management fee to DMC shall be prorated and shall be payable within ten (10) calendar days after the Agreement’s termination date; the Current Investment Advisory Agreement does not have such a provision.
Investment Advisory Services. The proposed New Investment Advisory Agreement generally requires DMC to provide
substantially similar services to the Fund as IICO does under the Current Investment Advisory Agreement. The proposed New Investment Advisory Agreement generally provides that, subject to the direction and control of the Board, DMC shall: (i)
regularly make decisions as to what securities and other instruments to purchase and sell on behalf of the Fund; (ii) effect the purchase and sale of those investments in furtherance of the Fund’s objectives and policies; and (iii) furnish the
Board with information and reports regarding the Fund’s investments as DMC deems appropriate or as the Board may reasonably request. Further, the proposed New Investment Advisory Agreement includes a provision stating that DMC is deemed to be an
independent contractor, which requires that, without express authorization, it has no authority to act for or represent the Fund. There is no such provision in the Current Investment Advisory Agreement, however, the Current Investment Advisory
Agreement does provide that IICO is subject at all times to the direction and control of the Board.
In addition, aside from acting as investment adviser to the Fund, the Current Investment Advisory Agreement explicitly provides that IICO or one of its affiliates may also act
as a transfer agent or shareholder servicing agent for the Fund or as the accounting services agent of the Fund so long as there are separate agreements to that effect. The proposed New Investment Advisory Agreement contains no similar provision.
Sub-advisers. The proposed New Investment Advisory Agreement provides that DMC may, to the extent permitted by
applicable law, appoint at its own expense one or more sub-advisers, including affiliates of DMC, to perform investment advisory services for the Fund. The Current Investment Advisory Agreement for the Fund permits IICO to contract with
sub-advisers to perform services for the Fund for which IICO is responsible. However, while the proposed New Investment Advisory Agreement provides that DMC may terminate a sub-adviser in its sole discretion at any time to the extent permitted by
applicable law and that DMC will assume the terminated sub-adviser’s responsibilities for the Fund unless and until a new sub-adviser is selected, the Current Investment Advisory Agreement contains no such conditional provision.
Best Execution. Under the proposed New Investment Advisory Agreement, subject to the primary objective of obtaining
the best execution, DMC may place orders for the purchase and sale of portfolio securities and other instruments with such broker/dealers selected by DMC who provide statistical, factual and financial information and services to the Fund, to DMC,
to any sub-adviser, or to any other fund or account for which DMC or any sub-adviser provides investment advisory services and/or with broker/dealers who sell shares of the Fund or who sell shares of any other investment company for which DMC or
any sub-adviser provides investment advisory services. Further, the proposed New Investment Advisory Agreement provides that broker/dealers who sell shares of any investment companies or series thereof for which DMC or a sub-adviser provides
investment 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 SEC and the Financial Industry Regulatory Authority and
does not take into account such broker/dealer’s promotion or sale of such shares. The Current Investment Advisory Agreement contains no similar provisions, but it does provide that IICO shall have no duty to seek advance competitive commission bids
and that IICO may select brokers based solely on its current knowledge of prevailing commission rates; the proposed New Investment Advisory Agreement contains no such provision with respect to seeking advance competitive commission bids.
Soft Dollars. The Current Investment Advisory Agreement and the proposed New Investment Advisory Agreement provide
that IICO and DMC, respectively, 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 IICO or DMC 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 IICO’s or DMC’s overall responsibilities with respect to the Fund and to other clients for which they exercise investment discretion.
Other Business. The proposed New Investment Advisory Agreement provides that the services of DMC are not exclusive
to the Fund and that DMC and its affiliates may render services to others; the Current Investment Advisory Agreement contains no similar provision.
Payment of Expenses. The proposed New Investment Advisory Agreement and the Current Investment Advisory Agreement
have provisions addressing allocation of expenses; the Agreements provide that the Fund is responsible for its own expenses and provide specific examples of such expenses.
The Current Investment Advisory Agreement differs from the proposed New Investment Advisory Agreement in that it provides for those expenses for which IICO shall pay in full,
including the salaries and employment benefits of all employees of IICO who are engaged in providing these advisory services; adequate office space and suitable office equipment for such employees; and all telephone and communications costs
relating to such functions. The proposed New Investment Advisory Agreement contains no such provision explicitly. Rather, it provides that, in the conduct of the respective businesses of DMC and the Fund and in the performance of the proposed New
Investment Advisory Agreement, the Fund and DMC may share facilities common to each, which may include legal and accounting personnel, with appropriate proration of expenses between them. Under this provision, certain expenses associated with
Macquarie personnel providing legal services and producing regulatory materials are allocated to the Delaware Funds by Macquarie. The Current Investment Advisory Agreement does not specifically provide for the proration of shared expenses. It is
not anticipated that the total expense ratio of the Fund will increase materially as a result of this provision.
The advisory fee rate in the proposed New Investment Advisory Agreement, if approved, will be the same as in the Current Investment Advisory Agreement.
Limitation on Liability. The limitation of liability provisions in the Current Investment Advisory Agreement and the
proposed New Investment Advisory Agreement are the same. Both Agreements provide that, in the absence of willful misfeasance, bad faith, gross negligence, or a reckless disregard of the performance of its duties as the investment adviser to the
Fund, IICO and DMC, respectively, shall not be liable to the Fund or to any shareholder for any action or omission arising in the course of, or connected with, rendering its services under the Agreements or for any losses arising from the purchase,
holding or sale of any security.
Term and Continuance. If approved by shareholders of the Fund, the proposed New Investment Advisory Agreement will
continue in effect for an initial period of two years from the date of implementation, whereas the Current Investment Advisory Agreement had a one-year term. The Agreements have substantially similar provisions for renewal, and may be renewed
provided that renewal and continuance is specifically approved at least annually in accordance with the 1940 Act.
Termination. The Agreements have substantially similar termination provisions, generally providing that the
Agreement may be terminated at any time, without the payment of any penalty, by the Fund upon giving sixty (60) calendar days’ written notice, provided that the termination is directed or approved by the vote of a majority of the Board or by the
vote of a 1940 Act Majority of the Fund’s outstanding voting securities. The proposed New Investment Advisory Agreement may also be terminated by DMC on sixty (60) calendar days’ written notice; the Current Investment Advisory Agreement may be
terminated by IICO on one hundred twenty (120) calendar days’ written notice.
Further, the proposed New Investment Advisory Agreement provides that, upon termination of the Agreement, the obligations of all the parties thereunder shall cease and
terminate as of the date of such termination, except for any obligation to respond for a breach of the Agreement committed prior to such termination, and except
for the obligation of the Fund to pay to DMC the fee if the Agreement is terminated prior to the end of any calendar month, as described in “The Proposed New Investment Advisory Agreement—Fees.”
The Current Investment Advisory Agreement contains no similar provisions.
Assignment. As required by the 1940 Act, the Current Investment Advisory Agreement and proposed New Investment
Advisory Agreement will immediately terminate in the event of their “assignment” (as defined in the 1940 Act). However, in addition, the proposed New Investment Advisory Agreement provides that the Agreement shall extend to and bind the
administrators, successors and permitted assigns of the parties thereto. The Current Investment Advisory Agreement contains no such provision.
Proxy Voting. The proposed New Investment Advisory Agreement provides that the decisions to be made by DMC shall
include exercising discretion regarding any voting rights, rights to consent to corporate actions and any other rights pertaining to the Fund’s investment securities. The Current Investment Advisory Agreement does not contain any provisions
explicitly providing IICO with the ability to vote proxies on behalf of the Fund; however, the Agreement does provide that IICO shall take, on behalf of the Fund, all actions which appear to IICO necessary to carry into effect its investment
programs and supervisory functions.
Amendments. To incorporate the requirements of the 1940 Act explicitly, the proposed New Investment Advisory
Agreement provides that it generally may not be amended without a shareholder vote and a vote of the Independent Trustees, but that it may be amended without shareholder approval if the amendment relates solely to a change for which applicable laws
and regulations do not require shareholder approval. The proposed New Investment Advisory Agreement also provides that it may be amended pursuant to a written agreement executed by the Fund and DMC. The Current Investment Advisory Agreement does
not explicitly contain similar provisions.
Additional Information. The Current Investment Advisory Agreement was last approved for continuance by the Board in
August 2020. A discussion of the basis for the Board’s approval of the Current Investment Advisory Agreement for the Fund is available in the Fund’s most recent semi-annual or annual report.
Appendix G lists other registered funds advised by DMC that have investment objectives similar to those of the Fund, the net assets of such funds, the fee schedule pursuant to
which DMC received advisory fees from such funds, and whether DMC has contractually agreed to waive all or a portion of its investment advisory fees and/or pay/reimburse expenses to cap total expenses at a specified amount.
Appendix H describes the aggregate amount of IICO’s fees and the amount and purpose of any other material payments to IICO and its affiliates for services provided to the Fund
during its last fiscal year.
No Anticipated Changes to the Fund’s Portfolio Management at Closing
Following the Transaction, DMC will oversee the activities of the Fund’s investment team. The IICO employees who provide operational support to the Fund and the IICO investment professionals who
currently manage the Fund will remain at the Closing of the Transaction, albeit as Macquarie employees. Additionally, DMC may use the Affiliated Sub-Advisers to provide certain sub-advisory services as described in the Sub-Advisory Agreement
Proposal if such proposal is approved by shareholders. Any changes to investment professionals in the future will be made with the best interests of shareholders in mind.
Additional Information About DMC
Appendix F provides the name, address and principal occupation of each executive officer and each trustee of DMC, and Appendix I provides the names of each individual who is an officer or trustee
of the Fund and who is also an officer, employee or shareholder of DMC.
Board Considerations in Approving the Proposed New Investment Advisory Agreement
At a meeting held on January 12, 2021 (the “January 2021 Meeting”), the Board, including the Board’s Independent Trustees, considered and unanimously approved the proposed New Investment Advisory Agreement between
the Fund and DMC, as shown in Appendix E. The Board also determined to recommend that shareholders of the Fund approve the proposed New Investment Advisory Agreement. The Board’s Independent Trustees reviewed the approval of the
proposed New Investment Advisory Agreement in executive sessions with their independent legal counsel at which no representatives of DMC or IICO were present. In voting their approval of the proposed New Investment
Advisory Agreement at the January 2021 Meeting, the Board relied on an order issued by the SEC in response to the impacts of the COVID-19 pandemic that provided temporary relief from the in-person meeting requirements under section 15 of the 1940
Act.
Background for the Board Approvals
At a meeting held on December 17, 2020, representatives of WDR, IICO and DMC met with the Board to discuss the merger agreement with Macquarie, pursuant to which Macquarie would acquire WDR. The Independent Trustees
were advised that the Transaction, if completed, would constitute a Change of Control Event and result in the termination of the Current Investment Advisory Agreement. The Independent Trustees were also advised that it was proposed that DMC, a
wholly-owned subsidiary of Macquarie, would serve as the investment adviser to the Fund after the Closing and that the Board would be asked to consider approval of the terms and conditions of the proposed New Investment Advisory Agreement with DMC
and thereafter to submit the proposed New Investment Advisory Agreement to the Fund’s shareholders for approval.
In anticipation of the Transaction, the Trustees met at a series of subsequent meetings on January 6, 2021, January 9, 2021, and January 12, 2021, which included meetings of the full Board and separate meetings of
the Independent Trustees for the purposes of considering, among other things: whether it would be in the best interests of the Fund and its respective shareholders to approve the proposed New Investment Advisory Agreement; and the anticipated
impacts of the Transaction on the Fund and its shareholders (each, a “Board Meeting”). During each of these Board Meetings, the Board sought additional and clarifying information as they deemed necessary or appropriate. The Independent Trustees
worked with their independent legal counsel to prepare formal due diligence requests (the “Diligence Requests”) that were submitted to DMC and DDLP. The Diligence Requests sought information relevant to the Board’s consideration of the proposed New
Investment Advisory Agreement and distribution arrangements, and other anticipated impacts of the Transaction on the Fund and its shareholders. DMC and DDLP provided documents and information in response to the Diligence Requests (the “Response
Materials”). Senior management representatives of DMC, WDR and IICO participated in a portion of each Board Meeting and addressed various questions raised by the Board. Throughout the process, the Independent Trustees were assisted by their
independent legal counsel, who advised them on, among other things, their duties and obligations relating to their consideration of the proposed New Investment Advisory Agreement.
The Board’s evaluation of the proposed New Investment Advisory Agreement reflected the information provided specifically in connection with its review of the proposed New Investment Advisory Agreement, as well as,
where relevant, information that was previously furnished to the Board in connection with the most recent renewal of the Current Investment Advisory Agreement on August 11-12, 2020 (“2020 15(c) Board Meeting”) and at other subsequent Board meetings
in 2020. The Board’s evaluation of the proposed New Investment Advisory Agreement also reflected their knowledge gained as Trustees of the Fund with respect to services provided by IICO and its affiliates.
The Board’s approvals and recommendations were based on their determination, within its business judgment, that it would be in the best interests of the Fund and the Fund’s respective shareholders, for DMC to provide
investment advisory services to the Fund, following the Closing.
Factors Considered in Approving the Proposed New Investment Advisory Agreement
In connection with the Board’s consideration of the proposed New Investment Advisory Agreement, DMC and IICO advised the Board about a variety of matters, including the following:
|
•
|
The nature, extent, and quality of the services to be provided to the Fund by DMC post-Transaction are expected to be of at least the same level as the services currently provided to the Fund by IICO.
|
|
•
|
DMC’s stated commitment to maintaining and enhancing the Fund shareholder experience.
|
|
•
|
DMC does not propose changes to the investment objective of the Fund.
|
|
•
|
The proposed New Investment Advisory Agreement does not change the Fund’s contractual advisory fee rate.
|
|
•
|
The portfolio manager and portfolio management team at IICO that manage the Fund are expected to continue to do so post-Transaction as employees of Macquarie, if they choose to become employees of Macquarie.
|
|
•
|
DMC’s intended use of certain Affiliated Sub-Advisers to leverage Macquarie’s global fixed income investment platform in providing advisory, trading and other services to the Fund.
|
|
•
|
DDLP’s distribution capabilities, including its significant network of intermediary relationships, which may provide additional opportunities for the Fund to grow assets and lower fees and expenses through increased economies of scale.
|
|
•
|
The support expressed by the current senior management team at IICO for the Transaction and IICO’s recommendation that the Board approve the proposed New Investment Advisory Agreement.
|
|
•
|
The commitments of Macquarie and WDR to bear all of the direct expenses of the Transaction, including all legal costs and costs associated with the proxy solicitation, regardless of whether the Transaction is consummated.
|
|
•
|
In addition to the matters noted above, in their deliberations regarding approval of the proposed New Investment Advisory Agreement, the Board considered the factors discussed below, among others.
|
The Nature, Extent, and Quality of Services Expected to be Provided by DMC. The Board received and considered information regarding the nature, extent and
quality of services expected to be provided by DMC. In evaluating the nature, extent and quality of services to be provided by DMC, the Board considered information provided by DMC regarding its advisory services, investment philosophy and
process, investment management capabilities, business and operating structure, scale of operations, leadership and reputation, distribution capabilities, and financial condition (both pre- and post-Closing). The Board also considered the
capabilities, resources, and personnel of DMC, including senior and other personnel of IICO who had been extended offers to join DMC, in order to determine whether DMC is capable of providing the same level of investment management services
currently provided to the Fund, and also considered the transition and integration plans to move management of the Fund to DMC. The Board recognized that the IICO personnel who had been extended offers may not accept such offers and personnel
changes may occur in the future in the ordinary course of business. The Board considered the resources and infrastructure that DMC intends to devote to its compliance program to ensure compliance with applicable laws and regulations as well as
DMC’s commitment to those programs. The Board also considered the policies and practices of DMC regarding the selection of broker/dealers and the execution of portfolio transactions. The Board considered the resources that DMC has devoted to its
risk management program and cybersecurity program. The Board also reviewed information provided by DMC related to its business, legal, and regulatory affairs. This review considered the resources available to DMC to provide the services specified
under the proposed New Investment Advisory Agreement. The Board considered DMC’s financial condition, including the financing of the Transaction, and noted that DMC is expected to be able to provide a high level of service to the Fund and
continuously invest and re-invest in its business. Finally, the Board considered that following the Transaction, there is not expected to be any diminution in the nature, quality and extent of services provided to the Fund, and its shareholders by
DMC compared to those currently provided by IICO.
The Board considered that, while it was proposed that DMC would become the investment adviser to the Fund, the same portfolio manager and portfolio management team at IICO that manage the Fund are expected to
continue to do so after the Transaction as employees of Macquarie, if they choose to become employees of Macquarie. The Board determined that they had considered the qualifications of the portfolio manager at IICO at the 2020 15(c) Board Meeting.
The Board considered that DMC’s experience in allocating assets to, and overseeing the advisory services of, its sub-advisers, was similar to IICO’s role in allocating assets to and overseeing the advisory services
provided by its sub-advisers. The Board considered that DMC may utilize certain Affiliated Sub-Advisers to leverage Macquarie’s global fixed income investment platform in providing advisory, trading and other services to the Fund.
The Board considered that the terms and conditions of the proposed New Investment Advisory Agreement are substantially similar to the terms and conditions of the Current Investment Advisory Agreement (see “The
Proposed New Investment Advisory Agreement”, above).
After review of these and other considerations, the Board concluded that DMC will be capable of providing investment advisory services of the same high quality as the investment advisory services provided to the Fund
by IICO, and that these services are appropriate in nature and extent in light of the Fund’s operations and investor needs.
Performance of the Fund. With respect to the performance of the Fund, the Board considered their review at the
2020 15(c) Board Meeting of peer group and benchmark investment performance comparison data relating to the Fund’s long-term performance record for similar accounts. The Board considered that information reviewed at the 2020 15(c) Board Meeting
would be relevant given that the Fund is expected to retain its current portfolio manager and portfolio management team. Based on information presented to the Board at the 2020 15(c) Board Meeting and its discussions with DMC, the Board concluded
that DMC is capable of generating a level of long-term investment performance that is appropriate in light of the Fund’s investment objective, strategy and restrictions.
Fees to Be Paid to DMC and Expenses of the Fund. The Board considered that they had reviewed the Fund’s existing
advisory fee rate at the 2020 15(c) Board Meeting. The Board considered that the proposed New Investment Advisory Agreement does not change the Fund’s contractual advisory fee rate. The Board also considered that DMC and IICO had represented to
the Board that they will each use their best efforts to ensure that they and their respective affiliates do not take any action that imposes an “unfair burden” on the Fund as a result of the Transaction or as a result of any express or implied
terms, conditions or understandings applicable to the Change of Control Event, for so long as the requirements of section 15(f) of the 1940 Act apply. The Board also considered a comparison of the proposed advisory fee to be paid by the Fund to the
advisory fees paid by funds and other accounts managed by DMC deemed to be comparable to the Fund in terms of investment objectives and strategies (for further information, see Appendix G). The Board concluded that the retention of DMC was unlikely
to impose an unfair burden on the Fund because, after the Transaction, none of IICO, DMC, DDLP, or any of their respective affiliates, would be entitled to receive any compensation directly or indirectly (i) from any person in connection with the
purchase or sale of securities or other property to, from, or on behalf of the Fund (other than ordinary fees for bona fide principal underwriting services), or (ii) from the Fund or its shareholders for other than bona fide investment advisory or
other services. Based on their review, the Board determined, with respect to the Fund, that DMC’s advisory fee is fair and reasonable in light of the nature, extent and quality of services to be provided to the Fund under the proposed New
Investment Advisory Agreement.
Extent to Which DMC May Realize Economies of Scale as the Fund Grows Larger and Whether Fee Levels Reflect These Economies of Scale for the Benefit of the Fund’s
Shareholders. The Board considered potential or anticipated economies of scale in relation to the services DMC would provide to the Fund. The Board considered DMC’s representation that the
significant increase in its assets under management post-Transaction may reasonably be expected to enable the new combined firm to reach greater economies of scale in a shorter time frame. The Boards also considered DMC’s representation that it
expected to realize economies of scale in connection with the operation of the Fund, specifically by achieving operational efficiencies, cost synergies and possible consolidation of service providers and vendors. The Board noted that they will
have the opportunity to periodically re-examine whether the Fund has achieved economies of scale, and the appropriateness of investment advisory fees payable to DMC, in the future.
Profits to be Realized by DMC and its Affiliates from Their Relationship with the Fund. The Board considered the
benefits DMC and its affiliates may derive from their relationship with the Fund. The Board also considered information on DMC’s profitability that was provided to the board of trustees of the Delaware Funds by Macquarie complex in connection with
their most recent 15(c) process. The Board considered DMC’s representation that the fully integrated Fund Complex, including investments to support ongoing growth, was expected to have an overall marginally positive impact on DMC’s overall
financial profitability. The Board considered that the expected profitability of DMC and its affiliates was not excessive in light of the nature, extent and quality of the services to be provided to the Fund. The Board noted the difficulty of
accurately projecting profitability under the current circumstances and noted that they would have the opportunity to give further consideration to DMC’s profitability with respect to the Fund at the end of the initial two-year term of the proposed
New Investment Advisory Agreement.
Fall-Out Benefits to DMC and its Affiliates. The Board considered the possible fall-out benefits and other types of
benefits that may accrue to DMC and its affiliates. The Board noted that the Transaction provides DMC and its affiliates the opportunity to deliver investment products and services to the WDR network. The Board considered that the Transaction, if
completed, would significantly increase DMC’s assets under management and expand DMC’s investment capabilities and relationships with certain wealth management intermediaries. Specifically, the Board considered that upon completion of the
Transaction, Macquarie has agreed to sell WDR’s wealth management platform to LPL Financial Holdings Inc. This increased size and diversification could facilitate DMC’s continued
investment in its business and products, which DMC would be able to leverage across a broader base of assets. DMC also would be able to use trading commission credits from the Fund’s transactions in securities to
“purchase” third-party research and execution services to support its investment process. Based on their review, the Board determined that any “fall-out” benefits and other types of benefits that may accrue to DMC are fair and reasonable.
Conclusions. Based on the foregoing and other relevant considerations, at the January 2021
Meeting, the Board, including a majority of the Board’s Independent Trustees, acting within their business judgment, (1) concluded that the terms of the proposed New Investment Advisory Agreement are fair and reasonable and that approval of the
proposed New Investment Advisory Agreement is in the best interests of the Fund and its respective shareholders, (2) voted to approve the proposed New Investment Advisory Agreement, and (3) voted to recommend approval of the proposed New Investment
Advisory Agreement by shareholders of the Fund. The Board noted that no one factor was determinative of their decision which, instead, was premised upon the totality of factors considered. The Board also noted that different Board members likely
placed emphasis on different factors in reaching their individual conclusions to vote in favor of the proposed New Investment Advisory Agreement and to recommend approval of the proposed New Investment Advisory Agreement by shareholders of the
Fund.
Required Vote
Approval of the New Investment Advisory Agreement Proposal requires the vote of a “1940 Act majority” of the outstanding voting securities of the Fund. For these purposes and as used herein, a “1940
Act Majority” is the vote of (1) 67% or more of the voting securities of the Fund entitled to vote on the Proposal that are present at the Second Meeting, if the holders of more than 50% of the outstanding shares are present or represented by
proxy, or (2) more than 50% of the outstanding voting securities entitled to vote on the Proposal, whichever is less. If the proposed New Investment Advisory Agreement is approved by shareholders, DMC will manage the Fund effective upon the
Closing. If the Transaction is not consummated, the New Investment Advisory Agreement Proposal will not be implemented, even if approved by shareholders.
THE BOARD, INCLUDING THE INDEPENDENT TRUSTEES, UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF THE FUND VOTE FOR THE NEW INVESTMENT ADVISORY AGREEMENT PROPOSAL.
SECOND MEETING - PROPOSAL 2
TO APPROVE SUB-ADVISORY AGREEMENTS BETWEEN DELAWARE MANAGEMENT COMPANY, A SERIES OF MACQUARIE INVESTMENT MANAGEMENT BUSINESS TRUST, AND EACH OF MACQUARIE INVESTMENT MANAGEMENT
AUSTRIA KAPITALANLAGE AG, MACQUARIE INVESTMENT MANAGEMENT GLOBAL LIMITED AND MACQUARIE INVESTMENT MANAGEMENT EUROPE LIMITED
(THE “SUB-ADVISORY AGREEMENT PROPOSAL”)
Introduction
DMC intends to utilize Macquarie’s global fixed income investment platform to provide advisory, trading and other services to the Fund. In order to leverage Macquarie’s global fixed income
investment platform for the Fund, DMC seeks to collaborate with its affiliates, Macquarie Investment Management Austria Kapitalanlage AG (“MIMAK”), Macquarie Investment Management Europe Limited (“MIMEL”), Macquarie Investment Management Global
Limited (“MIMGL”), each a registered investment adviser with the SEC and referred to herein as the “Affiliated Sub-Advisers,” in its management of the Fund. DMC has recommended, and the Board, including the Board’s Independent Trustees, has
approved the proposed Sub-Advisory Agreements between DMC and each of the Affiliated Sub-Advisers, to become effective upon the Closing, subject to shareholder approval and contingent on approval of the New Investment Advisory Agreement Proposal.
If the proposed New Investment Advisory Agreement and the proposed Sub-Advisory Agreements are approved by shareholders, DMC will utilize the Affiliated Sub-Advisers in its management of the Fund after the Closing. In the event shareholders do not
approve the proposed New Investment Advisory Agreement or proposed Sub-Advisory Agreements by the Closing, the Affiliated Sub-Advisers will not be utilized in the management of the Fund. If the Transaction is not consummated, the Sub-Advisory
Agreement Proposal will not be implemented, even if approved by shareholders.
DMC will compensate each of MIMAK, MIMEL and MIMGL for their sub-advisory services to the Fund. Fund shareholders will not bear additional expenses related to the use of the
Affiliated Sub-Advisers.
The Fund’s investment objectives, policies, and limitations will not change in connection with this Proposal. It is currently anticipated that the Fund’s current portfolio
manager will continue to have ultimate portfolio management discretion over the Fund at Closing, albeit as an employee of Macquarie. While DMC will continue to drive the Fund’s strategy and investment process and be responsible for the
day-to-day management of the Fund’s portfolio, DMC will be able to delegate portions of the implementation of the Fund’s strategy to MIMAK, MIMEL, and MIMGL if the Sub-Advisory Agreement Proposal is approved by shareholders.
Additional information regarding the ownership structure of the Affiliated Sub-Advisers is included in Appendix F, and information regarding the Affiliated Sub-Advisers’ other investment company
clients is included in Appendix G.
Macquarie’s Global Investment Platform
Below is a brief description of Macquarie’s global investment platforms, the Affiliated Sub-Advisers and the anticipated role that the Affiliated Sub-Advisers would play in the investment program
of the Fund.
Global Fixed Income Investment Platform
DMC utilizes the Affiliated Sub-Advisers, MIMAK, MIMEL and MIMGL to provide portfolio management and trading services, as well as to share investment research and recommendations, with respect
to the fixed income mutual funds that DMC advises. The global fixed income investment platform includes offices in Philadelphia (DMC), Sydney (MIMGL), London (MIMEL) and Vienna (MIMAK), which provide 24-hour coverage across the three major
market time zones (Australasia, Europe, Americas) and collaboration on all major fixed income asset classes presently managed by all four locations. DMC believes that this global coverage will be beneficial for the Fund, as it translates into
potentially more resources and diversity of viewpoints to assist in the management of the Fund. DMC collaborates across locations and is able to delegate to its affiliates specific execution of the Fund’s strategy from time to time in its sole
discretion, although DMC and the Fund’s named portfolio manager are responsible for driving the Fund’s strategy and investment process and remain primarily responsible for the day-to-day management of the Fund’s
portfolio. DMC believes the ability to utilize its global affiliates in this manner enables DMC’s portfolio managers to leverage the capabilities of the broader Macquarie Asset Management
(“MAM”) organization and to take advantage of its affiliates’ expertise and location in Austral-Asian, European or British financial markets, as well as the affiliates’ access to research and investment ideas that may be unique to or influenced
by those financial markets. Moreover, utilizing local traders in the applicable time zone, or closer to the applicable time zone, provides benefits such as efficiencies, access to relationships those traders may have with local market
participants and more nimble execution and reactivity to information that may impact the region.
The Sub-Advisory Agreements
At the recommendation of DMC, the Board has approved, subject to shareholder approval, that DMC, on behalf of the Fund, enter into the Sub-Advisory Agreements with MIMAK, MIMGL and MIMEL. Upon
the approval of these Sub-Advisory Agreements, the Fund will benefit from Macquarie’s global fixed income investment platform. A form of Sub-Advisory Agreement is attached hereto as Appendix J. The terms of each Sub-Advisory Agreement are
substantially similar.
See below for a summary of the terms of the form of Sub-Advisory Agreement, attached hereto as Appendix J:
Fees. DMC will compensate the Affiliated Sub-Advisers. The compensation payable to an Affiliated Sub-Adviser shall
not exceed a specified percentage of DMC’s retained advisory fee payable from the Fund under the proposed New Investment Advisory Agreement (after DMC has paid any amounts towards the Fund’s expense waivers, if applicable).
Investment Advisory Services. The Affiliated Sub-Adviser will supervise and direct the investments of the assets of
the Fund in accordance with the Fund’s investment objectives, policies, and restrictions.
Best Execution. In placing any orders for the purchase or sale of investments for the Fund the Affiliated
Sub-Adviser shall use its reasonable endeavors to obtain for the Fund “best execution,” considering all of the circumstances, and shall maintain records adequate to demonstrate compliance with this requirement.
Other Business. The Affiliated 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 Fund or to any other investment company,
corporation, association, firm or individual.
Payment of Expenses. The Affiliated Sub-Adviser shall not be obligated to pay any expenses of DMC or the Fund unless
expressly assumed by the Affiliated Sub-Adviser pursuant to its Sub-Advisory Agreement or otherwise agreed to in writing.
Limitation on Liability. In the absence of willful misfeasance, bad faith, gross negligence, or reckless disregard
in the performance of its duties as sub-adviser to the Fund, neither the Affiliated Sub-Adviser nor any of its affiliates nor any of its or their controlling persons, members, officers, directors, employees or agents shall be liable to the Fund,
DMC or any shareholder of the Fund 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.
Term and Continuance. The Sub-Advisory Agreement shall continue in effect with respect to the Fund for a period of
two (2) years and may be renewed thereafter with respect to the Fund only so long as such renewal and continuance with respect to the Fund 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 thereof have been approved by the vote of a majority of the Fund’s independent directors, the Fund, or any party thereto, cast in person at a meeting called for the purpose of
voting on such approval.
Termination. The Sub-Advisory Agreement may be terminated with respect to the Fund (i) by DMC at any time, without
the payment of a penalty, on 60 days’ written notice to the Affiliated Sub-Adviser of DMC’s intention to do so and (ii) by the Fund at any time, without the payment of a penalty, on 60 days’ written notice to the Affiliated Sub-Adviser of the
Fund’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 Affiliated Sub-Adviser may terminate its Sub-Advisory Agreement with respect to the Fund at any time, without the payment of a penalty, on 60
days’ written notice to DMC and the Fund of its intention to do so. Upon termination of the Sub-Advisory Agreement, the obligations of all the parties thereunder 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 the Sub-Advisory Agreement committed prior to such termination, (ii) the obligation of DMC to pay to the Affiliated Sub-Adviser its fee prorated to the date of termination, and (iii) any
indemnification obligation provided for in the Sub-Advisory Agreement.
Assignment. As required by the 1940 Act, the Sub-Advisory Agreement shall automatically terminate in the event of
its assignment (as such term is defined in the 1940 Act) or upon the termination of the Investment Management Agreement.
Proxy Voting. As part of the services it will provide, the Affiliated Sub-Adviser is authorized, in its discretion
and without prior consultation with the Fund or DMC to vote proxies, exercise conversion or subscription rights, and respond to tender offers and other consent solicitations with respect to the issuers of securities held in the Fund.
Amendments. The Sub-Advisory Agreement may be amended only by written agreement of DMC and the Affiliated
Sub-Adviser and only in accordance with the provisions of the 1940 Act and the rules and regulations promulgated thereunder or any applicable exemptive order.
Additional Information Regarding the Affiliated Sub-Advisers
Like DMC, MIMAK, MIMGL and MIMEL are investment advisory entities within Macquarie Investment Management (“MIM”), which is a division of MAM. MAM is Macquarie’s funds management business. MAM is
a full-service asset manager, offering a diverse range of capabilities and products including infrastructure and real asset management, securities investment management and structured access to funds, equity-based products, and alternative assets.
MIM offers securities investment management capabilities across a number of asset classes including fixed income, currencies, equities, infrastructure securities, private markets, hedge funds,
and multi-asset allocation solutions. MIM delivers a full-service offering to both institutional and retail clients in Australia and the US with selective offerings in other regions.
MIMAK. MIMAK is located at Kaerntner Strasse 28, 1010 Vienna, Austria. MIMAK conducts a range of financial services to institutional and corporate clients and manages
investments across a diverse range of asset classes. MIMAK is currently serving as a sub-adviser with primary responsibility for day-to-day asset allocation decisions for five open-end funds and two closed-end funds in the Delaware Funds by
Macquarie fund complex, as well as an asset allocation product offered by a DMC affiliate, and also serves as a sub-adviser to certain funds investing in fixed income securities in the Delaware Funds by Macquarie fund complex and the Optimum
Fixed Income Fund of Optimum Fund Trust, providing investment support on a regular basis and when directed by DMC, investment discretion and trading. MIMAK is an affiliate of DMC and a part of MIM. As of December 31, 2020, MIMAK’s team, which
includes 14 investment professionals, managed more than $6.2 billion in AUM. As of September 30, 2020, MIM managed more than $253.1 billion in assets for institutional and individual clients.
MIMGL. MIMGL is an Australian incorporated entity with an Australian Financial Services License and is registered with the SEC. MIMGL provides
investment advisory services for mandates managed across a range of asset classes. MIMGL is currently serving as a sub-adviser with primary responsibility for five open-end funds in the Delaware Funds by Macquarie fund complex, and also serves
as a sub-adviser to certain funds investing in fixed income securities in the Delaware Funds by Macquarie fund complex and the Optimum Fixed Income Fund of Optimum Fund Trust, providing investment support on a regular basis and when directed by
DMC, investment discretion and trading. MIMGL is an affiliate of DMC and a part of MIM. As of December 31, 2020, the MIMGL team, which includes 42 investment professionals, managed AUD $98.1 billion in AUM across 44 strategies. As of September
30, 2020, MIM managed more than $253.1 billion in assets for institutional and individual clients.
MIMEL. MIMEL is authorized and regulated by the Financial Conduct Authority (“FCA”) in the United Kingdom. MIMEL is also a registered investment
adviser with the SEC pursuant to the Advisers Act. MIMEL is headquartered in London, England. MIMEL provides investment advisory services for fixed income assets. MIMEL serves as a sub-
adviser to certain funds investing in fixed income securities in the Delaware Funds by Macquarie fund complex and the Optimum Fixed Income Fund of Optimum Fund Trust, providing investment
support on a regular basis and when directed by DMC, investment discretion and trading. MIMEL is an affiliate of DMC and a part of MIM. As of December 31, 2020, MIMEL’s team, which includes 7 investment professionals, managed more than $464.9
million in AUM. As of September 30, 2020, MIM managed more than $253.1 billion in assets for institutional and individual clients.
Factors relating to the Board’s approval of the Affiliated Sub-Advisers to serve as sub-advisers to the Fund
Following is a discussion of the factors considered by the Board in approving the Sub-Advisory Agreements between DMC and each of the Affiliated Sub-Advisers. In evaluating the Sub-Advisory
Agreements, the Board, including a majority of the Independent Trustees, made a separate finding that the Sub-Advisory Agreements are in the best interests of the Fund and its shareholders, and do not involve a conflict of interest from which any
of DMC, MIMAK, MIMGL or MIMEL derives an inappropriate advantage.
In connection with the Board’s consideration of the proposed Sub-Advisory Agreements, IICO, DMC, MIMAK, MIMEL, and MIMGL advised the Board about a variety of matters, including the following:
|
•
|
The nature, extent, and quality of the services to be provided to the Fund by the Affiliated Sub-Advisers together with DMC post-Transaction are expected to be of at least the same level as the services currently provided to the Fund by
IICO.
|
|
•
|
The Affiliated Sub-Advisers’ stated commitment to maintaining and enhancing the Fund shareholder experience.
|
|
•
|
The Affiliated Sub-Advisers do not propose changes to the investment objective of the Fund.
|
|
•
|
The proposed Sub-Advisory Agreements do not change the Fund’s contractual advisory fee rate and Fund shareholders will bear no additional expense in connection with the use of the Affiliated Sub-Advisers.
|
|
•
|
The support expressed by the current senior management team at IICO for the Transaction and IICO’s recommendation that the Board approve the proposed Sub-Advisory Agreements.
|
|
•
|
The commitments of Macquarie and WDR to bear all of the direct expenses of the Transaction, including all legal costs and costs associated with the proxy solicitation, regardless of whether the Transaction is consummated.
|
|
•
|
In addition to the matters noted above, in their deliberations regarding approval of the proposed Sub-Advisory Agreements, the Board considered the factors discussed below, among others.
|
Nature, extent, and quality of services to be provided by the Affiliated Sub-Advisers. The Board considered the nature, quality, and
extent of services that the Affiliated Sub-Advisers each would provide as a sub-adviser to the Fund. The Board took into account Macquarie’s global investment platform and the investment process to be employed by the Affiliated Sub-Advisers in
connection with each sub-adviser’s responsibilities in conjunction with DMC in managing the Fund, and the qualifications and experience of the Affiliated Sub-Advisers’ teams with regard to implementing the Fund’s investment mandate. The Board
considered each of the Affiliated Sub-Advisers’ organization, personnel, and operations. The Board considered the potential enhancements to the Fund’s portfolio management process from investment ideas, trading expertise and quantitative support
from the Affiliated Sub-Advisers. The Board also considered DMC’s review and recommendation process with respect to the Affiliated Sub-Advisers, and the favorable assessment as to the nature, quality, and extent of the sub-advisory services
expected to be provided by the Affiliated Sub-Advisers to the Fund. The Board also considered DMC’s experience with on-boarding new investment teams and sub-advisers. Based on their consideration and review of the foregoing factors, the Board
concluded that the nature, quality, and extent of the sub-advisory services to be provided by the Affiliated Sub-Advisers as well as the Affiliated Sub-Advisers’ ability to render such services based on its experience, organization and resources,
were appropriate for the Fund, in light of the Fund’s investment objectives, strategies, and policies.
Benefits of the Sub-Advisory Agreements. The
Board considered the following benefits in approving the Sub-Advisory Agreements:
●
|
The fixed income teams within MIMEL, MIMGL, and MIMAK have developed global research resources which have assisted them with generating a strong track record and delivering attractive risk-adjusted outcomes
for their clients in their global credit and income-based strategies. Utilizing the investment expertise and experience of DMC’s affiliates located in London, Sydney, and Vienna will provide DMC with more comprehensive investment resources
to use in its management of the Fund;
|
|
|
●
|
The potential to attract additional assets in the Fund. Many of the Fund’s competitors have access to ex-U.S. affiliates in connection with their management of similar strategies. Access to its ex-U.S.
affiliates may assist DMC with attracting assets and make the Fund more competitive. Leveraging its affiliates’ locations will provide DMC with real time extended coverage of global markets, follow-the-sun trading and potentially enhance
its investment process.
|
The costs of the services to be provided. The Board considered that DMC
will compensate MIMEL, MIMGL, and MIMAK for their sub-advisory services to the Fund out of DMC’s management fee. The Board noted that the Fund’s shareholders will not bear any additional expenses related to the use of the Affiliated
Sub-Advisers. The Board considered that the proposed New Investment Advisory Agreement does not change the Fund’s contractual advisory fee rate. Please see the discussion of the Board’s consideration in approving the New Investment Advisory
Agreement for further information regarding the Board’s consideration of the fees to be paid to DMC under the New Investment Advisory Agreement.
Performance of the Fund. The Board considered information provided by DMC and the Affiliated Sub-Advisers regarding
the expertise of the Sub-Advisers and the performance of funds they manage in the Delaware Funds by Macquarie complex. The Board concluded that the Affiliated Sub-Advisers are capable of assisting DMC in generating a level of long-term investment
performance that is appropriate in light of the Fund’s investment objective, strategies and restrictions.
Profits to be Realized by the Affiliated Sub-Advisers from Their Relationship with the Fund. The Board considered
the benefits the Affiliated Sub-Advisers may derive from their relationship with the Fund. The Board also considered information on the Affiliated Sub-Adviser’s profitability that was provided to the board of trustees of the Delaware Funds by
Macquarie complex in connection with their most recent 15(c) process. The Board considered that the expected profitability of the Affiliated Sub-Advisers was not excessive in light of the nature, extent and quality of the services to be provided to
the Fund. The Board noted the difficulty of accurately projecting profitability under the current circumstances and noted that they would have the opportunity to give further consideration to the Affiliated Sub-Advisers’ profitability with respect
to the Fund at the end of the initial two-year term of the proposed Sub-Advisory Agreements.
Fall-Out Benefits to DMC and its Affiliates. The Board considered the possible fall-out benefits and other types of
benefits that may accrue to the Affiliated Sub-Advisers. The Board noted that the Transaction provides the Affiliated Sub-Advisers the opportunity to deliver investment products and services to the WDR network. Based on its review, the Board
determined that any “fall-out” benefits and other types of benefits that may accrue to the Affiliated Sub-Advisers are fair and reasonable.
Conclusions. Based on the foregoing and other relevant considerations, at the January 2021 Meeting, the Board, including a majority of
the Board’s Independent Trustees, acting within their business judgment, (1) concluded that the terms of the proposed Sub-Advisory Agreements are fair and reasonable and that approval of the proposed Sub-Advisory Agreement is in the best interests
of the Fund and its respective shareholders, (2) voted to approve the proposed Sub-Advisory Agreements, and (3) voted to recommend approval of the proposed Sub-Advisory Agreements by shareholders of the Fund. The Board noted that no one factor was
determinative of their decision which, instead, was premised upon the totality of factors considered. The Board also noted that different Board members likely placed emphasis on different factors in reaching their individual conclusions to vote in
favor of the proposed Sub-Advisory Agreement and to recommend approval of the proposed Sub-Advisory Agreements by shareholders of the Fund.
Regulatory requirements
Under the 1940 Act, the definition of “investment adviser” is broad and encompasses the types of services anticipated to be provided by the Affiliated Sub-Advisers. Because the Affiliated
Sub-Advisers will be considered to be
investment advisors, Section 15 of the 1940 Act requires that DMC enter into sub-advisory agreements with those entities on behalf of the Fund. The 1940 Act requires that the Fund’s shareholders
approve the proposed Sub-Advisory Agreements before the Fund enters into such agreements.
If shareholders approve the Sub-Advisory Agreement Proposal, it is anticipated that the Affiliated Sub-Advisers would begin providing services to the Fund immediately after the Closing. If
shareholders do not approve the Sub-Advisory Agreement Proposal, the Affiliated Sub-Advisers will not provide additional advisory services to the Fund and the changes described herein will not take effect. If this should occur, the Board would
consider what additional actions to take, which could include continuing to solicit approval of the Sub-Advisory Agreement Proposal.
Required Vote. Approval of the Sub-Advisory Agreement Proposal requires a 1940 Act Majority Vote. If the Sub-Advisory Agreement
Proposal is approved by shareholders, DMC will utilize the Affiliated Sub-Advisors to provide certain sub-advisory services to the Fund effective upon the Closing. If the Transaction is not consummated, the Sub-Advisory Agreement Proposal will not
be implemented, even if approved by shareholders.
THE BOARD, INCLUDING THE INDEPENDENT TRUSTEES, UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF THE FUND VOTE FOR THE SUB-ADVISORY AGREEMENT PROPOSAL.
OTHER BUSINESS
The Board does not intend to present any other business at the Meetings. If, however, any other matters are properly brought before the Meetings, the persons named in the accompanying form of white
proxy card will vote thereon in accordance with their judgment.
The Fund generally is required to hold annual meetings of shareholders. Any shareholder who wishes to submit proposals to be considered at a special meeting of the Fund’s shareholders should send
such proposals to the Secretary of the Fund at 6300 Lamar Avenue, Overland Park, Kansas 66202. Any shareholder proposal intended to be presented at any future meeting of the Fund’s shareholders must be received by the Fund at its principal office
a reasonable time before the solicitation of proxies for such meeting in order for such proposal to be considered for inclusion in the proxy statement relating to such meeting. Moreover, inclusion of any such proposals is subject to limitations
under the federal securities laws. Persons named as proxies for any subsequent shareholders’ meeting will vote in their discretion with respect to proposals submitted on an untimely basis.
Shareholders who wish to send communications to the Board or the specific members of the Board should submit the communication in writing to the attention of the Secretary of the Fund, at the
address in the preceding paragraph, identifying the correspondence as intended for the Board of the Fund or a specified member of the Board. The Secretary will maintain a copy of any such communication and will promptly forward it to the Board or
the specified member of the Board, as appropriate.
INFORMATION ABOUT THE MEETINGS
Record Date
Shareholders of record of the Fund as of the close of business on the Record Date are entitled to vote at the Meetings or any adjournment, postponement or delay thereof. Shareholders of the Fund on
the Record Date will be entitled to one vote on each matter to be voted on for each share held and a fractional vote with respect to each fractional share held. No shares have cumulative voting rights in the election of Trustees. The number of
shares that you may vote is the total of the number shown on the white proxy card accompanying this Proxy Statement.
Revocation of Proxies
Shareholders who execute proxies may revoke or change their proxy at any time prior to the time it is voted by delivering a written notice of revocation, by delivering a subsequently dated proxy by
mail, telephone or the Internet or by attending the Meeting via audio teleconference and voting. If you revoke a previous proxy, your vote will not be counted unless you attend the Meeting via audio teleconference and vote, or legally appoint
another proxy to vote on your behalf. All properly executed and unrevoked proxies received in time for each Meeting will be voted as instructed by shareholders. If you execute your proxy but give no voting instructions, your shares that are
represented by proxies will be voted “FOR” the Proposals, including “FOR” each Trustee Nominee, and, in the proxies’ discretion, “FOR” or “AGAINST” any other business that may properly come before the Meetings.
Quorum, Voting and Adjournment
The presence at the First Meeting, via audio teleconference or by proxy, of one-third of the outstanding shares of the Fund entitled to vote, as of the Record Date, shall be necessary and sufficient
to constitute a quorum for the transaction of business for the Fund. The presence at the Second Meeting, via audio teleconference or by proxy, of one-third of the outstanding shares of the Fund entitled to vote, as of the Record Date, shall be
necessary and sufficient to constitute a quorum for the transaction of business for the Fund.
In the event that a quorum is not present at a Meeting, or if there are insufficient votes to approve a Proposal by the time of the applicable Meeting, the proxies, or their substitutes, or the
chairman of the Meeting may propose that the Meeting be adjourned one or more times to permit further solicitation. Any adjournment by the shareholders requires the affirmative vote of a majority of the total number of shares that are present via
audio teleconference or by proxy when the adjournment is being voted on. If a quorum is present, the proxies will vote in favor of any such adjournment
all shares that they are entitled to vote in favor of the Proposals and the proxies will vote against any such adjournment any shares for which they are directed to vote against the Proposals. The
proxies will not vote any shares for which they are directed to abstain from voting on the Proposals.
Effect of Abstentions and Broker Non-Votes. For purposes of determining the presence of a quorum for transacting business at the Meetings, abstentions and
broker “non-votes” (i.e., shares held by brokers or nominees, typically in “street name,” 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) will be treated as shares that are present for purposes of determining a quorum. For purposes of determining the approval of the Proposals, abstentions and
broker non-votes do not count as votes cast with respect to a Proposal. Accordingly, abstentions and broker non-votes will have no effect on the Trustee Election Proposal and will have the effect of a vote against the New Investment Advisory
Agreement Proposal and the Sub-Advisory Agreement Proposal.
Discretionary Voting
Broker-dealers that hold the Fund’s shares in “street name” for the benefit of their customers will request the instructions of such customers on how to vote their shares on the Proposals. The Fund
understands that, under the rules of the New York Stock Exchange (“NYSE”), such broker-dealer firms may for certain “routine” matters, without instructions from their customers and clients, grant discretionary authority to the proxies designated by
the Board to vote if no instructions have been received prior to the date specified in the broker-dealer firm’s request for voting instructions. The election of a Trustee is a “routine” matter and beneficial owners who do not provide proxy
instructions or who do not return a white proxy card may have their shares voted by broker-dealer firms in favor of the Trustee Election Proposal. Broker-dealers who are not members of the NYSE may be subject to other rules, which may or may not
permit them to vote your shares without instruction. We urge you to provide instructions to your broker or nominee so that your votes may be counted.
Solicitation of Proxies
The initial solicitation of proxies will be made by mail. Additional solicitations may be made by telephone, e-mail, or other personal contact by the Fund’s officers or employees or representatives
of IICO or one of its affiliates or by a proxy soliciting firm retained by the Fund. IICO has retained DCP as proxy solicitor to assist in the solicitation of proxy votes primarily by contacting shareholders by telephone and facsimile. The proxy
solicitor’s services include proxy consulting, mailing, tabulation and solicitation services. The cost of retaining such proxy solicitor, including printing and mailing costs, is estimated to be approximately $36,000 to be borne by WDR and
Macquarie and their respective affiliates. The Fund will not bear any costs associated with the proxy solicitation. Costs will vary depending on the number of solicitations made. The Fund’s officers, and those employees and representatives of IICO
or its affiliates who assist in the proxy solicitation, will not receive any additional or special compensation for any such efforts. In addition, the Fund will request broker-dealer firms, custodians, nominees and fiduciaries to forward proxy
materials to the beneficial owners of their shares held of record by such persons.