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INTERNATIONAL
SOLUTIONS
PROSPECTUS
JUNE 29, 1999
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INTERNATIONAL SOLUTIONS
International Solutions is an asset
allocation program currently INTERNATIONAL SOLUTIONS I CONSERVATIVE GROWTH
consisting of five separate
investment portfolios ("Funds"). The
Funds enable investors to tailor their INTERNATIONAL SOLUTIONS II BALANCED GROWTH
exposure to different investment
techniques in the international INTERNATIONAL SOLUTIONS III MODERATE GROWTH
securities markets and related risks
by investing primarily in the shares INTERNATIONAL SOLUTIONS IV LONG-TERM GROWTH
of other mutual funds that in turn
invest in a broad range of foreign INTERNATIONAL SOLUTIONS V AGGRESSIVE GROWTH
securities. No offer is made in this
Prospectus for shares of these other
funds.
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The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy or accuracy of this Prospectus. Any
representation to the contrary is a criminal offense.
Investments in the Funds are not deposits of any bank and are not federally
insured by the Federal Deposit Insurance Corporation or any other government
agency.
MACKENZIE
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TABLE OF CONTENTS
INVESTMENT OBJECTIVES 3
INVESTMENT STRATEGIES AND RISKS 4
FEES AND EXPENSES 7
ADDITIONAL INFORMATION ABOUT INVESTMENT STRATEGIES AND RISKS 10
MANAGEMENT 15
SHAREHOLDER INFORMATION:
PRICING OF FUND SHARES 15
HOW TO BUY SHARES 15
HOW TO REDEEM SHARES 21
HOW TO EXCHANGE SHARES 22
DISTRIBUTIONS AND TAXES 23
INVESTMENT OBJECTIVES AND STRATEGIES OF THE UNDERLYING FUNDS 24
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INVESTMENT OBJECTIVES
The International Solutions Funds each have their own investment objectives,
strategies and risks, ranging from "conservative growth" to "aggressive growth,"
and invest in the shares of other mutual funds (referred to as "underlying
funds"). Each Fund pursues its objective through a different mix of underlying
funds.
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INTERNATIONAL SOLUTIONS I - Primarily capital preservation with moderate current income, and
CONSERVATIVE GROWTH: secondarily capital appreciation.
INTERNATIONAL SOLUTIONS II - A balance of capital appreciation and capital preservation, with moderate
BALANCED GROWTH: current income.
INTERNATIONAL SOLUTIONS III - Primarily capital appreciation, and secondarily preservation of capital.
MODERATE GROWTH:
INTERNATIONAL SOLUTIONS IV -- Capital appreciation without regard to current income.
LONG-TERM GROWTH:
INTERNATIONAL SOLUTIONS V - Aggressive capital appreciation without regard to current income.
AGGRESSIVE GROWTH:
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The underlying funds are from the following registered fund complexes:
- BANKERS TRUST - MONTGOMERY ASSET MANAGEMENT
- IVY FUNDS - SCUDDER FUNDS
- LAZARD ASSET MANAGEMENT - WARBURG PINCUS ASSET MANAGEMENT
Many of the underlying funds are international equity mutual funds that invest
largely in stocks to achieve growth. Other underlying funds are international
bond mutual funds that emphasize total return. The underlying funds may focus
their investments in single countries or geographic regions, and in established
or emerging markets and economies.
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INVESTMENT STRATEGIES AND RISKS
HOW ARE A FUND'S ASSETS INVESTED?
Each Fund normally invests in eight to fifteen underlying funds whose combined
investment strategies and techniques are consistent with the Fund's investment
objective. Each underlying fund in turn invests in a wide range of foreign
securities. As a result, an investment in a Fund is effectively diversified over
a large number of different foreign issuers. Each Fund's portfolio is expected
to be relatively static with only minor periodic adjustments in response to
changing market conditions.
HOW ARE A FUND'S UNDERLYING FUNDS CHOSEN?
The selection of the underlying funds that comprise each Fund's portfolio is
based on "Modern Portfolio Theory", which provides an analytical framework for
transforming return, risk, cost and accounting data into a coherent portfolio
structure. This investment approach involves an initial estimate of each
underlying fund's overall risk/return profile based on an analysis of the
following factors:
- the underlying fund's long-term return forecast;
- its estimated risk level, based on its perceived potential for loss or
gain and short- and long-term returns;
- its current and historical investment style; and
- its relative diversification potential, based on its perceived potential to
reduce the loss or gain of each Fund.
Other factors that may be considered include:
- standard accounting-based valuation and risk measures;
- an underlying fund manager's investment style and decision-making process;
- capital market statistics (such as alpha, beta and R2); and
- cost factors, such as an underlying fund's expense ratio and
administrative overhead.
The information produced by this analysis is used as input for a specially
designed computer model that produces a range of "efficient" portfolios with the
highest expected long-term returns for their respective levels of risk. A
cross-checking analysis is performed to help ensure that all portfolios conform
to professional standards of asset class and geographic diversification. A mix
of underlying funds is then selected for each Fund at a level of risk that is
appropriate in light of the Fund's investment objective. The result is a range
of investment choices for investors across a broad spectrum of risk preferences.
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WHAT ARE EACH FUND'S PRINCIPAL STRATEGIES?
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FUND PRINCIPAL STRATEGIES WHO SHOULD INVEST*
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INTERNATIONAL SOLUTIONS I - Invests 35-50% in international bond May be appropriate for relatively
CONSERVATIVE GROWTH funds and 50-65% in international conservative international investors
equity funds. seeking a prudent trade-off between
equity and fixed income investments.
INTERNATIONAL SOLUTIONS II - Invests 20-35% in international bond May be appropriate for international
BALANCED GROWTH funds and 65-80% in international investors with limited tolerance for
equity funds. year-to-year volatility.
INTERNATIONAL SOLUTIONS III - Invests 75-90% in international equi- May be appropriate for moderately
MODERATE GROWTH ty funds and 10-25% in international aggressive international investors who
bond funds. are willing to bear a moderate level of
volatility.
INTERNATIONAL SOLUTIONS IV - Invests exclusively in international May be appropriate for international
LONG-TERM GROWTH equity funds, with 20-35% invested investors who are willing to sustain
in emerging market equity funds. potentially significant fluctuations in
capital value in the short-term.
INTERNATIONAL SOLUTIONS V - Invests exclusively in international May be appropriate for aggressive
AGGRESSIVE GROWTH equity funds, with 35-50% international investors who have a longer
in emerging market equity funds. time horizon for their investments and are
willing to bear a higher level of risk.
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* The information appearing in the "Who Should Invest" column is provided
merely as a general guide and not as an investment recommendation. You
should consult with your financial advisor to determine which Fund or
combination of Funds, if any, may be appropriate in light of your
individual financial needs and risk tolerance.
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WHAT ARE THE FUNDS' MAIN RISK CHARACTERISTICS?
As with any mutual fund, you may lose money by investing in a Fund. Certain
risks of loss are inherent in the Funds' international investment emphasis and
in the way their portfolios are structured. Specifically, since the Funds'
portfolios are comprised almost exclusively of the shares of other mutual funds
that invest heavily in foreign securities, the ultimate performance of a Fund
will depend upon the success of these underlying funds (and each underlying
fund's performance will depend in turn on the foreign markets and securities in
which the underlying fund is invested). Among the chief risks associated with
this investment approach are:
- MANAGEMENT RISK: The underlying funds that comprise each Fund's portfolio
are separately managed and their securities are purchased on the basis of a
wide range of different investment strategies and management styles. An
underlying fund's manager might not select securities that perform as well as
the securities held by other mutual funds that are not included in the Fund's
portfolio, which would diminish the returns of those Funds that hold the
underlying fund's shares. Each Fund's manager could also misjudge the
expected investment performance of the underlying funds that are candidates
for inclusion in the Fund's portfolio, resulting in similar performance
shortfalls.
- GENERAL MARKET RISK: It is always possible that the underlying funds held in
a Fund's portfolio will not produce favorable returns, even where "management
risk" is not a factor. Specifically, the value of each underlying fund's
investments and the income they generate will vary daily and generally
reflect market conditions, interest rates and other issuer-specific,
political or economic developments. An underlying fund will experience some
amount of price volatility that is driven by the extent to which its own
investment portfolio is exposed to these conditions. A Fund could therefore
lose money at any time during which the underlying funds in which it invests
are not performing as well as expected.
- FOREIGN SECURITY RISK: Investing in foreign securities involves a number of
economic, financial and political considerations that are not associated
with the U.S. markets and that could affect a Fund's performance unfavorably
depending upon prevailing conditions at any given time. Among these
potential risks are:
- greater price volatility;
- comparatively weak supervision and regulation of securities exchanges,
brokers and issuers;
- higher brokerage costs;
- fluctuations in foreign currency exchange rates and related conversion
costs;
- adverse tax consequences; and
- settlement delays.
The risks of investing in foreign securities are more acute in countries with
new or developing economies. These additional risks include, among others:
- greater price volatility and less liquidity;
- less stable governments;
- abrupt changes in exchange rate regime or monetary policy; and
- unusually high inflation rates and/or high national debt levels.
(See "Emerging Market Securities" in the "Additional Information About
Investment Strategies and Risks" section.)
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WHAT ARE THE SPECIAL RISKS ASSOCIATED WITH EACH FUND?
The degree to which each Fund is affected by the performance of a single
underlying fund will depend upon the relative weight of the underlying fund's
shares in the Fund's portfolio. The weightings for each Fund, by general
underlying fund type, are captured in the table on page 5 under the heading
"Principal Strategies". Following is information about the general risks
associated with each Fund's investment strategies. Other important information
about the risks that the Funds and their investors are exposed to indirectly, by
virtue of the investment activities of the underlying funds, appears in the
section entitled "Additional Information About Investment Strategies and Risks".
- INTERNATIONAL SOLUTIONS I - CONSERVATIVE GROWTH: By investing as much as 50%
of its assets in international fixed income funds, this Fund will be more
susceptible than the other Funds to losses caused by a downturn in the
international bond markets. Because fixed income investments fall in value as
interest rates rise, this Fund is also susceptible to losses at times of
rising interest rates.
- - INTERNATIONAL SOLUTIONS II - BALANCED GROWTH: This Fund's higher
emphasis (relative to the Conservative Growth Fund) on underlying funds
that invest in equity securities may lead to moderately increased volatility.
This Fund also may be susceptible to losses at times of rising interest
rates.
- INTERNATIONAL SOLUTIONS III - MODERATE GROWTH: The underlying funds that
comprise this Fund invest more in equity securities than fixed income
securities. This increases the Fund's exposure to downturns in the equity
markets and is likely to cause the Fund to experience greater fluctuations in
value. This Fund is less susceptible to losses at times of rising interest
rates.
- INTERNATIONAL SOLUTIONS IV - LONG-TERM GROWTH: By investing exclusively in
underlying funds that in turn invest heavily in equity securities, this Fund
is expected to be more volatile than those Funds with more balanced
portfolios. This Fund also has a moderate emerging markets exposure, and is
susceptible to the increased risks associated with those markets. (see
"Emerging Market Securities" in the "Additional Information About Investment
Strategies and Risks" section).
- INTERNATIONAL SOLUTIONS V - AGGRESSIVE GROWTH: Since this Fund invests
exclusively in equity underlying funds that may also have significant
holdings in emerging markets securities, it is more susceptible to wide
fluctuations in value than the other Funds. (see "Emerging Market Securities"
in the "Additional Information About Investment Strategies and Risks"
section).
FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay if you buy
and hold a Fund's shares:
SHAREHOLDER FEES (fees paid directly from your investment)
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Maximum Sales Maximum Deferred
Charge (Load) Sales Charge (Load) Maximum Sales
Imposed on Purchases (as a percentage of Charge (Load)
Fund (as a percentage of original purchase Imposed on Redemption Exchange
Class offering price) price) Reinvested Dividends Fee* Fee
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Class A 5.75% None None None None
Class B None 5.00% None None None
Class C None 1.00% None None None
Class I None None None None None
Advisor Class None None None None None
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*If you choose to receive your redemption proceeds via Federal Funds wire, a
$10 wire fee will be charged to your account.
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ANNUAL FUND OPERATING EXPENSES(expenses that are deducted from Fund assets):
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MANAGEMENT DISTRIBUTION AND/OR SERVICE OTHER TOTAL ANNUAL FUND
FEES (12B-1) FEES EXPENSES(1) OPERATING EXPENSES(1)(2)
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INTERNATIONAL SOLUTIONS I -
CONSERVATIVE GROWTH
Class A 0.25% 0.25% 0.38% 0.88%
Class B 0.25% 1.00% 0.38% 1.63%
Class C 0.25% 1.00% 0.38% 1.63%
Class I 0.25% None 0.30% 0.55%
Advisor Class 0.25% None 0.38% 0.63%
INTERNATIONAL SOLUTIONS II -
BALANCED GROWTH
Class A 0.25% 0.25% 0.38% 0.88%
Class B 0.25% 1.00% 0.38% 1.63%
Class C 0.25% 1.00% 0.38% 1.63%
Class I 0.25% None 0.30% 0.55%
Advisor Class 0.25% None 0.38% 0.63%
INTERNATIONAL SOLUTIONS III-
MODERATE GROWTH
Class A 0.25% 0.25% 0.38% 0.88%
Class B 0.25% 1.00% 0.38% 1.63%
Class C 0.25% 1.00% 0.38% 1.63%
Class I 0.25% None 0.30% 0.55%
Advisor Class 0.25% None 0.38% 0.63%
INTERNATIONAL SOLUTIONS IV -
LONG-TERM GROWTH
Class A 0.25% 0.25% 0.38% 0.88%
Class B 0.25% 1.00% 0.38% 1.63%
Class C 0.25% 1.00% 0.38% 1.63%
Class I 0.25% None 0.30% 0.55%
Advisor Class 0.25% None 0.38% 0.63%
INTERNATIONAL SOLUTIONS V -
AGGRESSIVE GROWTH
Class A 0.25% 0.25% 0.38% 0.88%
Class B 0.25% 1.00% 0.38% 1.63%
Class C 0.25% 1.00% 0.38% 1.63%
Class I 0.25% None 0.30% 0.55%
Advisor Class 0.25% None 0.38% 0.63%
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(1) Based on estimated amounts for each Fund's initial fiscal period ending
December 31, 1999.
(2) Ivy Management, Inc. ("IMI"), the Funds' Manager, has agreed to reimburse
the Funds' fees and expenses to the extent necessary to ensure that the
Funds' Annual Fund Operating Expenses do not exceed the following amounts:
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- International Solutions I: Class A - 0.64%; Class B - 1.39%; Class C - 1.39%; Class I - 0.31%; Advisor Class - 0.39%.
- International Solutions II: Class A - 0.58%; Class B - 1.33%; Class C - 1.33%; Class I - 0.25%; Advisor Class - 0.33%.
- International Solutions III: Class A - 0.48%; Class B - 1.23%; Class C - 1.23%; Class I - 0.15%; Advisor Class - 0.23%.
- International Solutions IV: Class A - 0.33%; Class B - 1.08%; Class C - 1.08%; Class I - 0.00%; Advisor Class - 0.08%.
- International Solutions V: Class A - 0.35%; Class B - 1.10%; Class C - 1.10%; Class I - 0.02%; Advisor Class - 0.10%.
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Each Fund's shareholders will bear indirectly the Fund's proportionate share
of fees and expenses charged by the underlying funds in which the Fund is
invested. The weighted average expense ratios borne by each Fund are derived
from the underlying funds' most recent shareholder reports. Based on the
expected portfolio composition of each Fund (which can change but is likely
to be relatively static), the weighted average expense ratios for each Fund
are estimated to fall within the following ranges: International Solutions I
- 1.28%-1.42%; International Solutions II - 1.34%-1.48%; International
Solutions III - 1.43%- 1.59%; International Solutions IV - 1.58%-1.74%;
International Solutions V - 1.56%-1.72%.
Each manager of an underlying fund has agreed to make a payment to IMI at an
annual rate of up to 0.25% of the average daily value of the shares of the
underlying fund held by a Fund during any calendar quarter. Such payments
will be used by IMI to reduce the expenses of the Fund. By effectively
lowering each Fund's expenses, the payments will also reduce the amount of
the reimbursement by IMI necessary to maintain each Fund's Annual Operating
Expense at the level stated above.
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EXAMPLES
The following examples are intended to help you compare the cost of investing in
each Fund with the cost of investing in other mutual funds. Each example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods. Each example also assumes
that your investment has a 5% return each year and that each Fund's operating
expenses remain the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be as follows:
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ONE YEAR THREE YEARS
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INTERNATIONAL SOLUTIONS I -
CONSERVATIVE GROWTH
Class A* $660 $840
Class B $666 (1) $814 (2)
Class B (no redemption) $166 $514
Class C $266 (3) $514
Class C (no redemption) $166 $514
Class I** $ 56 $176
Advisor Class** $ 64 $202
INTERNATIONAL SOLUTIONS II -
BALANCED GROWTH
Class A* $660 $840
Class B $666 (1) $814 (2)
Class B (no redemption) $166 $514
Class C $266 (3) $514
Class C (no redemption) $166 $514
Class I** $ 56 $176
Advisor Class** $ 64 $202
INTERNATIONAL SOLUTIONS III -
MODERATE GROWTH
Class A* $660 $840
Class B $666 (1) $814 (2)
Class B (no redemption) $166 $514
Class C $266 (3) $514
Class C (no redemption) $166 $514
Class I** $ 56 $176
Advisor Class** $ 64 $202
INTERNATIONAL SOLUTIONS IV -
LONG-TERM GROWTH
Class A* $660 $840
Class B $666 (1) $814 (2)
Class B (no redemption) $166 $514
Class C $266 (3) $514
Class C (no redemption) $166 $514
Class I** $ 56 $176
Advisor Class** $ 64 $202
INTERNATIONAL SOLUTIONS V -
AGGRESSIVE GROWTH
Class A* $660 $840
Class B $666 (1) $814 (2)
Class B (no redemption) $166 $514
Class C $266 (3) $514
Class C (no redemption) $166 $514
Class I** $ 56 $176
Advisor Class** $ 64 $202
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* Assumes deduction of the maximum 5.75% initial sales charge at the
time of purchase and no deduction of a CDSC at the time of redemption.
** Class I and Advisor Class shares are not subject to an initial sales
charge at the time of purchase, nor are they subject to the
deduction of a CDSC at the time of redemption.
(1) Assumes deduction of a 5% CDSC at the time of redemption.
(2) Assumes deduction of a 3% CDSC at the time of redemption.
(3) Assumes deduction of a 1% CDSC at the time of redemption.
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ADDITIONAL INFORMATION
ABOUT INVESTMENT STRATEGIES AND RISKS
The central premise of the International Solutions asset allocation program is
that a well diversified investment portfolio tends to be less volatile than a
portfolio that emphasizes a particular type of investment category or technique,
such as stocks, bonds, or a particular country or industry sector. Consistent
with this premise, the Funds offer a high level of diversification for
international investors at various levels of risk tolerance by investing in a
broad array of mutual funds that are each managed separately and invest in many
different types of securities and foreign markets.
The Funds' portfolios represent different points along a risk/return continuum,
ranging from lower risk and lower expected return to higher risk and higher
expected return. Each Fund's investments are determined by how the various
underlying funds' return and risk profiles combine at that point in the
continuum that best matches the Fund's investment objective. For example, since
bonds are generally perceived as less risky than stocks, Funds at the more
conservative end of the risk/return continuum (such as International Solutions I
and II) will invest in a higher proportion of bond underlying funds. In doing
so, however, these Funds are less likely to experience the higher potential
returns historically associated with equity investments. By contrast, Funds at
the more aggressive end of the continuum (such as International Solutions IV and
V) will invest in a higher proportion of underlying funds that hold common
stocks, but as a result are exposed to greater price volatility and similar
investment risks.
INTERNATIONAL SOLUTIONS I - CONSERVATIVE GROWTH: The primary investment
objective of the Conservative Growth Fund is capital preservation with moderate
current income, and secondarily capital appreciation. A number of the underlying
funds that make up the Conservative Growth Fund invest primarily in fixed income
securities, with limited exposure to equity securities and their associated
volatility. The Conservative Growth Fund has the highest weighting in foreign
bonds among the five Funds, and therefore is expected to bear the lowest
relative overall risk. The Fund will have a moderate degree of exposure to the
international equity markets, thus making the Fund potentially more volatile
than a mutual fund that invests exclusively in fixed income securities or has
some portion of its assets invested in the United States.
INTERNATIONAL SOLUTIONS II - BALANCED GROWTH: The primary investment
objective of the Balanced Growth Fund is a balance of capital appreciation and
capital preservation, with moderate current income. The Fund's portfolio of
underlying funds is designed to expose the Fund to the growth opportunities that
equity investing offers while preserving some degree of the stability
historically associated with fixed income securities. The Fund's higher emphasis
(relative to the Conservative Growth Fund) on underlying funds that invest in
equity securities may lead to moderately increased volatility, but its equal
emphasis on fixed income securities is expected to reduce its overall risk
relative to the Moderate Growth, Long-term Growth and Aggressive Growth Funds.
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INTERNATIONAL SOLUTIONS III - MODERATE GROWTH: The investment objective of the
Moderate Growth Fund is primarily capital appreciation, with preservation of
capital as a secondary objective. The underlying funds that make up the Moderate
Growth Fund invest primarily in equity securities, with some exposure to fixed
income securities intended to mitigate short-term losses that may occur in the
equity markets.
INTERNATIONAL SOLUTIONS IV - LONG-TERM GROWTH: The investment objective of
the Long-term Growth Fund is capital appreciation without regard to current
income. The underlying funds that make up the Long-term Growth Fund invest
primarily in equity securities, which are likely to cause greater fluctuations
in the Fund's share price than would be the case with the Conservative Growth,
Balanced Growth and Moderate Growth Funds (which have varying degrees of
exposure to the historically more stable fixed income markets). The Long-term
Growth Fund also has a moderate to high weighting in emerging markets (but less
than the Aggressive Growth Fund).
INTERNATIONAL SOLUTIONS V - AGGRESSIVE GROWTH: The investment objective of the
Aggressive Growth Fund is aggressive capital appreciation without regard to
current income. The underlying funds that comprise the Aggressive Growth Fund
may have significant holdings in emerging markets securities, which historically
have projected higher growth rates than established markets. However, emerging
market securities have historically experienced greater social, political and
economic risk than developed markets and are therefore more volatile.
Each Fund may from time to time take a temporary defensive position and invest
without limit in U.S. government securities and commercial paper. When a Fund
assumes such a defensive position it may not achieve its investment objective.
Of course, there can be no guarantee that a Fund will achieve its investment
objective even when it is not assuming a defensive position.
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UNDERLYING FUND RISKS
The main risks associated with investing in each Fund, such as "management
risk," "general market risk" and "foreign securities risk," are described on
page 6 of this Prospectus. Because the return on your investment is tied so
closely to the performance of the underlying funds, a description of the types
of securities in which the underlying funds principally invest and their
associated risks has been provided.
COMMON STOCKS: Many of the underlying funds invest primarily in common stock.
Common stock represents a proportionate ownership interest in the issuing
company, and so the value of common stock rises and falls with a company's
success or failure. The market value of common stock can fluctuate
significantly, with smaller companies being particularly susceptible to price
swings. Transaction costs in smaller company stocks may also be higher than
those of larger companies.
Most likely to be affected: ALL INTERNATIONAL SOLUTIONS FUNDS.
DEBT SECURITIES: Investment in debt securities involves both interest rate and
credit risk. Generally, the value of debt instruments rises and falls inversely
with fluctuations in interest rates. For example, as interest rates decline, the
value of debt securities generally increases. Conversely, rising interest rates
tend to cause the value of debt securities to decrease. A Fund's portfolio is
therefore susceptible to the decline in value of the fixed income funds in which
it invests in a rising interest rate environment. The market value of debt
securities also tends to vary according to the relative financial condition of
the issuer. Bonds with longer maturities tend to be more volatile than bonds
with shorter maturities.
Some of the underlying funds may invest a significant portion of their assets in
low-rated debt securities (sometimes referred to as "high yield" or "junk"
bonds). In general, low-rated debt securities offer higher yields due to the
increased risk that the issuer will be unable to meet its obligations of
interest or principal payments on time. For this reason, however, these bonds
are considered speculative and could significantly weaken the returns of any
underlying fund that holds them in its portfolio.
An underlying fund may also have significant holdings in sovereign debt. For a
variety of reasons (such as cash flow problems, limited foreign reserves, and
political constraints), the governmental entity that controls the repayment of
sovereign debt may not be able or willing to repay the principal or interest
when due. A governmental entity's ability to honor its debt obligations to an
underlying fund may also be contingent on its receipt from others (such as the
International Monetary Fund and more solvent foreign governments) of specific
disbursements. These disbursements may in turn be conditioned on the perceived
health of the governmental entity's economy and/or its implementation of
economic reforms. If any of these conditions fail, an underlying fund could lose
the entire value of its investment for an indefinite period of time.
Most likely to be affected: INTERNATIONAL SOLUTIONS I AND II.
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FOREIGN SECURITIES, IN GENERAL: Because of the international emphasis of the
International Solutions asset allocation strategy, all of the Funds will have
significant exposure to foreign securities regardless of the relative weight in
the Funds' portfolios of fixed income and equity-oriented underlying funds.
Investments in foreign securities involve an array of economic, financial and
political considerations not typically associated with U.S. markets, which may
affect an underlying fund's performance favorably or unfavorably, depending upon
prevailing conditions at any given time. For example, foreign investing may
involve brokerage costs and tax considerations that are not usually present in
the U.S. markets. The securities markets of certain foreign countries may also
be smaller, less liquid and subject to greater price volatility than U.S.
markets.
Other factors that can affect the value of foreign securities held by the
underlying funds include:
- - currency fluctuations, blockages, conversion costs or transfer
restrictions (see "Foreign Currencies" below);
- - comparatively weak government supervision and regulation of securities
exchanges, brokers and issuers;
- - non-uniform accounting, auditing and financial reporting standards;
- - unavailability of information about an issuer's securities and business
operations; and
- - settlement delays (which can cause an underlying fund to miss
attractive investment opportunities or impair its ability to dispose of
securities in a timely fashion, resulting in a loss if the value of the
securities declines before settlement).
Most likely to be affected: ALL INTERNATIONAL SOLUTIONS FUNDS.
EMERGING MARKET SECURITIES: The risks of investing in foreign securities are
heightened in countries with new or developing economies. These additional risks
include:
- - securities that are even less liquid and more volatile than those in
more developed foreign countries;
- - less stable governments that are susceptible to sudden adverse actions
(such as nationalization of businesses, restrictions on foreign
ownership, prohibitions against repatriation of assets or taxation of
capital or profits);
- - increased settlement delays;
- - abrupt changes in exchange rate regime or monetary policy;
- - restrictions on repatriation of capital;
- - unusually high inflation rates (which in extreme cases can cause the
value of a country's assets to erode sharply); and
- - high national debt levels (which may impede an issuer's payment of
principal and/or interest on external debt).
Most likely to be affected: INTERNATIONAL SOLUTIONS IV AND V.
FOREIGN CURRENCIES: Investing in foreign securities typically involves the use
of foreign currencies. The value of an underlying fund's assets, as measured in
U.S. dollars, may be affected favorably or unfavorably by changes in foreign
currency exchange rates and exchange control regulations. Currency conversions
can also be costly.
Most likely to be affected: ALL INTERNATIONAL SOLUTIONS FUNDS.
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DEPOSITORY INSTRUMENTS: Many of the underlying funds invest in foreign
securities through the mechanism of sponsored and unsponsored "depository
receipts" and "depository shares," which are instruments that evidence ownership
of underlying securities issued by a U.S. or foreign corporation. Unsponsored
depository programs are organized independently without the cooperation of the
issuer of the underlying securities. As a result, information concerning the
issuer may not be as current or as readily available as in the case of sponsored
depository instruments, and their prices may be more volatile than if they were
sponsored by the issuers of the underlying securities.
Most likely to be affected: ALL INTERNATIONAL SOLUTIONS FUNDS.
OTHER RISKS: The underlying funds can use a wide range of other investment
techniques to achieve their respective investment objectives. The risks
associated with these various techniques are described in each underlying fund's
prospectus, and some are summarized in the Funds' Statement of Additional
Information (which is available on request and without charge from the Funds'
distributor at the address printed on the back cover page). Any of these
investment techniques could cause an underlying fund to lose money if not used
successfully or if they are not practically available for investment purposes at
a time when their use would benefit the underlying fund.
The underlying funds that comprise each Fund's portfolio are listed in the
Fund's financial statements, which are available to shareholders upon request
and without charge as soon as they are available after the close of the annual
or semi-annual period to which they relate. The investment objectives and
principal investment strategies of the underlying funds are summarized on pages
24-27 of this Prospectus.
OTHER IMPORTANT INFORMATION
YEAR 2000 RISKS: Many computer software and hardware systems in use today cannot
distinguish between the year 2000 and the year 1900 because of the way dates are
encoded and calculated (the "Year 2000 Problem"). The inability of
computer-based systems to make this distinction could have a seriously adverse
effect on the handling of securities trades, pricing and account services
worldwide. The Funds' service providers are taking steps that each believes are
reasonably designed to address the Year 2000 Problem with respect to the
computer systems that they use. Information about the year 2000 readiness of the
underlying funds is also taken into consideration during the investment decision
making process (though such information may be limited to public filings or
statements from representatives of the underlying funds that are not readily
verifiable). The Funds believe these steps will be sufficient to avoid any
material adverse impact on the Funds. At this time, however, there can be no
assurance that significant problems will not occur (which either directly or
indirectly could cause a Fund to lose money).
EUROPEAN MONETARY UNION: The Funds may have investments in Europe. On January 1,
1999 a new European currency called the "euro" was introduced and adopted for
use by eleven European countries. The transition to daily usage of the euro will
occur during the period from January 1, 1999 through December 31, 2001, at which
time euro bills and coins will be put into circulation. Certain European Union
members, including the United Kingdom, did not officially implement the euro on
January 1, 1999 and may cause market disruptions when and if they decide to do
so. Should this occur, the underlying funds (and hence the Funds that hold their
shares) could experience investment losses.
14
<PAGE> 15
MANAGEMENT
Ivy Management, Inc. ("IMI"), located at Via Mizner Financial Plaza, 700 South
Federal Highway, Boca Raton, Florida 33432, provides investment advisory and
business management services to the Funds using a team approach. IMI's
responsibilities include making investment decisions; assisting with the
preparation of the Funds' financial statements, prospectuses and periodic
reports to shareholders, as well as Federal and state tax reporting; and
providing certain accounting and pricing services. IMI is an SEC-registered
investment advisor with over $5 billion in assets under management, and also
advises and provides business management services to the Ivy Funds.
Garmaise Investment Technologies (US) Inc. ("GIT"), 30 St. Clair Avenue West,
Suite 1110, Toronto, Ontario, Canada, M4V 3A1, provides asset allocation
consulting services to IMI in connection with the Funds pursuant to a
subadvisory contract with IMI. The president of GIT, an SEC-registered
investment advisor, has over 20 years of investment advisory experience and uses
a proprietary computer-based method of portfolio selection known as
"Optimization." GIT's responsibilities include making recommendations to IMI
regarding the underlying funds that comprise each Fund's portfolio and
determining when changing the relative mix of underlying funds within a Fund's
portfolio may be appropriate in light of prevailing market conditions.
For the combined services provided by IMI and GIT, each Fund pays a fee at the
annual rate of 0.25% of the Fund's average net assets.
SHAREHOLDER INFORMATION
PRICING OF FUND SHARES
Each Fund calculates its net asset value per share ("NAV") by dividing the value
of its net assets by the total number of its shares outstanding as of the close
of regular trading (usually 4:00 p.m. Eastern time) on the New York Stock
Exchange on each day the Exchange is open for trading (normally any weekday that
is not a national holiday). The value of a Fund's net assets on any given day is
based almost entirely on the NAV of the underlying funds whose shares are held
in the Fund's portfolio. Each underlying fund is responsible for determining its
own NAV on any given day.
The number of shares you receive when you place a purchase or exchange order,
and the payment you receive after submitting a redemption request, is based on
the Fund's net asset value next determined after your instructions are received
in proper form by Ivy Mackenzie Services Corp. ("IMSC"), the Funds' transfer
agent, or by your registered securities dealer. If you are buying Class A
shares, the number of shares you receive will be reduced by an amount that is
equal to the value of the front-end sales charge that applies to Class A shares
(see "Class A Shares" below).
HOW TO BUY SHARES
The essential features of the Funds' different classes of shares are described
in the following table. If you do not specify on your Account Application which
class of shares you are purchasing, it will be assumed that you are purchasing
Class A shares.
15
<PAGE> 16
Each Fund has adopted separate distribution plans pursuant to Rule 12b-1 under
the 1940 Act for its Class A, B and C shares that allow the Fund to pay
distribution and other fees for the sale and distribution of its shares and for
services provided to shareholders. Because these fees are paid out of each
Fund's assets on an ongoing basis, over time they will increase the cost of your
investment and may cost you more than paying other types of sales charges.
The following table displays the various investment minimums, sales charges and
expenses that apply to each class:
<TABLE>
<CAPTION>
MINIMUM MINIMUM CONTINGENT
FUND INITIAL SUBSEQUENT INITIAL SALES DEFERRED SALES SERVICE AND
CLASS INVESTMENT* INVESTMENT* CHARGE CHARGE DISTRIBUTION FEES
- ------------- ----------- ----------- ---------------- -------------- -------------------
<S> <C> <C> <C> <C> <C>
Class A $ 1,000 $ 100 Maximum 5.75%, None, except on 0.25% Service fee
with options for certain NAV
a reduction. purchases
Class B $ 1,000 $ 100 None Maximum 5%, 0.25% Service fee
declining over six and 0.75%
years Distribution fee
Class C $ 1,000 $ 100 None 1% for the first 0.25% Service fee
year and 0.75%
Distribution fee
Class I $ 5,000,000 $ 10,000 None None None
$ 10,000
Advisor Class $ 250 None None None
</TABLE>
* Minimum initial and subsequent investments for retirement plans are $25.
Class A Shares
INITIAL SALES CHARGE
Class A shares are sold at a public offering price equal to their NAV plus an
initial sales charge, as set forth below (the sales charge is reduced as the
amount invested increases):
<TABLE>
<CAPTION>
SALES CHARGE SALES CHARGE PORTION OF PUBLIC
AS A PERCENTAGE OF AS A PERCENTAGE OF OFFERING PRICE
AMOUNT INVESTED PUBLIC OFFERING PRICE NET AMOUNT INVESTED RETAINED BY DEALER
--------------------- ------------------- ------------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than $100,000 5.25% 5.54% 4.50%
$100,000 but less than $250,000 4.50% 4.71% 3.75%
$250,000 but less than $500,000 3.00% 3.09% 2.50%
$500,000 or over 0.00% 0.00% 0.00%
</TABLE>
* A Contingent Deferred Sales Charge ("CDSC") of 0.50% may apply to Class A
shares that are redeemed within 12 months of the end of the month in which they
were purchased. Class A shares that are acquired through reinvestment of
dividends or distributions are not subject to an initial sales charge.
16
<PAGE> 17
HOW TO REDUCE YOUR INITIAL SALES CHARGE
- - "Rights of Accumulation" permits you to pay the sales charge that applies
to the cost or value (whichever is higher) of all International Solutions
Class A shares you own.
- - A "Letter of Intent" permits you to pay the sales charge that would apply
to your cumulative purchase of Fund shares over a 13-month period (certain
restrictions apply).
HOW TO ELIMINATE YOUR INITIAL SALES CHARGE
You may purchase Class A shares at NAV (without an initial sales charge or a
CDSC):
- - through certain investment advisors and financial planners who charge a
management, consulting or other fee for their services;
- - under certain qualified retirement plans;
- - as an employee or director of Mackenzie Investment Management Inc. or its
affiliates;
- - as an employee of a selected dealer; or
- - through the Merrill Lynch Daily K Plan (the "Plan"), provided the Plan has
at least $3 million in assets or over 500 or more eligible employees.
Certain trust companies, bank trust departments, credit unions, savings and
loans and other similar organizations may be also exempt from the initial sales
charge on Class A shares.
You may also purchase Class A shares at NAV if you are investing at least
$500,000 through a dealer or agent. Ivy Mackenzie Distributors, Inc. ("IMDI"),
the Funds' distributor, may pay the dealer or agent (out of IMDI's own
resources) for its distribution assistance according to the following schedule:
<TABLE>
<CAPTION>
PURCHASE AMOUNT COMMISSION
--------------- ----------
<S> <C>
First $3,000,000 0.50%
Next $2,000,000 0.25%
Over $5,000,000 0.10%
</TABLE>
IMDI may from time to time pay a bonus or other cash incentive to dealers (other
than IMDI) including, for example, those which employ a registered
representative who sells a minimum dollar amount of the shares of a Fund and/or
other funds distributed by IMDI during a specified time period.
Each Fund may, from time to time, waive the initial sales charge on its Class A
shares sold to clients of certain dealers meeting criteria established by IMDI.
This privilege will apply only to Class A shares of a Fund that are purchased
using proceeds obtained by such clients by redeeming another mutual fund's
shares on which a sales charge was paid. Purchases must be made within 60 days
of redemption from the other fund, and the Class A shares purchased are subject
to a 1.00% CDSC if redeemed within the first year after purchase.
SERVICE FEE
Class A shares are subject to an ongoing service fee at an annual rate of up to
0.25% of a Fund's average net assets attributable to its Class A shares.
17
<PAGE> 18
CLASS B AND CLASS C SHARES
CONTINGENT DEFERRED SALES CHARGE
Class B and Class C shares are not subject to an initial sales charge but are
subject to a CDSC. If you redeem your Class C shares within one year of purchase
they will be subject to a CDSC of 1.00%. Class B shares redeemed within six
years of purchase will be subject to a CDSC at the following rates:
<TABLE>
<CAPTION>
CDSC AS A PERCENTAGE
OF DOLLAR AMOUNT
YEAR SINCE PURCHASE SUBJECT TO CHARGE
---------------------- --------------------
<S> <C>
First 5.00%
Second 4.00%
Third 3.00%
Fourth 3.00%
Fifth 2.00%
Sixth 1.00%
Seventh and thereafter 0.00%
</TABLE>
The CDSC for both Class B and Class C shares will be assessed on an amount equal
to the lesser of the current market value or the original purchase cost of the
shares being redeemed. No charge will be assessed on increases in account value
above the original purchase price or on reinvested dividends and distributions.
Shares will be redeemed on a lot-by-lot basis in the following order:
- - shares held more than six years;
- - shares acquired through reinvestment of dividends and distributions;
- - shares subject to the lowest CDSC percentage, on a first-in, first-out
basis
(1) with the portion of the lot attributable to capital appreciation,
which is not subject to a CDSC, redeemed first; then
(2) the portion of the lot attributable to your original basis, which is
subject to a CDSC.
WAIVER OF THE CDSC
The CDSC for Class B shares is waived for:
- - certain post-retirement withdrawals from an IRA or other retirement plan if
you are over 59 1/2 years old.
- - redemptions by certain eligible 401(a) and 401(k) plans and certain
retirement plan rollovers.
- - redemption resulting from a tax-free return of excess contribution to an
IRA.
- - withdrawals resulting from shareholder death or disability provided that
the redemption is requested within one year of death or disability.
- - withdrawals through the Systematic Withdrawal Plan of up to 12% per year of
your account value at the time the plan is established.
- - redemptions through the Merrill Lynch Daily K Plan, if the Plan has less
than $3 million in assets or fewer than 500 eligible employees. For further
information see "Group Systematic Investment Program" in the SAI.
18
<PAGE> 19
SERVICE AND DISTRIBUTION FEE
Both Class B shares and Class C shares are subject to an ongoing service and
distribution fee at a combined annual rate of up to 1.00% of a Fund's average
net assets attributable to its Class B or Class C shares. The ongoing
distribution fees will cause these shares to have a higher expense ratio than
that of Class A, Class I and Advisor Class shares. IMDI uses the money that it
receives from the deferred sales charge and the distribution fees to cover
various promotional and sales related expenses, as well as expenses related to
providing distribution services, such as compensating selected dealers and
agents for selling these shares.
SHARE CONVERSION FEATURE
Approximately eight years after the original date of purchase, your Class B
shares will be converted automatically to Class A shares. Class A shares are
subject to lower annual expenses than Class B shares. The conversion from Class
B shares to Class A shares is not considered a taxable event for federal income
tax purposes. Class C shares do not have a similar conversion feature.
CLASS I AND ADVISOR CLASS SHARES
Class I and Advisor Class shares are not subject to an initial sales charge or a
CDSC, nor to ongoing service or distribution fees. Class I shares are offered
only to institutions and certain individuals. Advisor Class shares are offered
only to the following investors:
- - trustees or other fiduciaries purchasing shares for employee benefit plans
that are sponsored by organizations that have at least 1,000 employees;
- - any account with assets of at least $10,000 if (a) a financial planner,
trust company, bank trust department or registered investment adviser has
investment discretion, and where the investor pays such person as
compensation for his advice and other services an annual fee of at least
0.50% on the assets in the account, or (b) such account is established
under a "wrap fee" program and the account holder pays the sponsor of the
program an annual fee of at least 0.50% on the assets in the account;
- - officers and Trustees of Mackenzie Solutions (and their relatives);
- - directors or employees of Mackenzie Investment Management Inc. or its
affiliates; and
- - directors, officers, partners, registered representatives, employees and
retired employees (and their relatives) of dealers having a sales agreement
with IMDI (or trustees or custodians of any qualified retirement plan or
IRA established for the benefit of any such person).
19
<PAGE> 20
SUBMITTING YOUR PURCHASE ORDER
INITIAL INVESTMENTS
Complete and sign the Account Application appearing in the middle of this
Prospectus. Enclose a check payable to the International Solutions Fund in which
you wish to invest. You should note on the check the class of shares you wish to
purchase (see page 16 for minimum initial investments.) Deliver your application
materials to your registered representative or selling broker, or send them to
one of the addresses below:
BY REGULAR MAIL: BY COURIER:
Ivy Mackenzie Services Corp. Ivy Mackenzie Services Corp.
PO Box 3022 700 South Federal Hwy., Suite 300
Boca Raton, FL 33431-0922 Boca Raton, FL 33432
BUYING ADDITIONAL SHARES
There are several ways to increase your investment in a Fund:
- - BY MAIL - Send your check with a completed investment slip (attached to
your account statement) or written instructions indicating the account
registration, Fund number or name, and account number. Mail to one of the
addresses above.
- - THROUGH YOUR BROKER - Deliver to your registered representative or selling
broker the investment slip (attached to your account statement) or written
instructions, along with your payment.
- - BY WIRE - Purchases may also be made by wiring money from your bank account
to your International Solutions account. Your bank may charge a fee for
wiring funds. Before wiring any funds, please call IMSC at (800) 821-4350.
Wiring instructions are as follows:
First Union National Bank of Florida
Jacksonville, FL
ABA #063000021
Account #2000002757919
For further credit to:
Your International Solutions Account Registration
Your Fund Number and Account Number
- - BY AUTOMATIC INVESTMENT METHOD ("AIM") - You can elect to have funds
electronically drawn each month from your bank account and invested as a
purchase of shares into your International Solutions account. Complete
sections 6A and 7B of the Account Application.
20
<PAGE> 21
HOW TO REDEEM SHARES
SUBMITTING YOUR REDEMPTION ORDER
You may redeem your Fund shares through your registered securities dealer or
directly through IMSC. If you choose to redeem through your registered
securities dealer, the dealer is responsible for properly transmitting
redemption orders in a timely manner. If you choose to redeem directly through
IMSC, you have several ways to submit your request:
- - BY MAIL - Send your written redemption request to IMSC at one of the
addresses on page 20 of this Prospectus. Be sure that all registered owners
listed on the account sign the request. Medallion signature guarantees and
supporting legal documentation may be required. When you redeem, IMSC will
normally send redemption proceeds to you on the next business day, but may
take up to seven days (or longer in the case of shares recently purchased
by check).
- - BY TELEPHONE - Call IMSC at (800) 821-4350 to redeem from your individual,
joint or custodial account. To process your redemption order by telephone,
you must have telephone redemption privileges on your account (see section
6E of the Account Application). IMSC employs reasonable procedures that
require personal identification prior to acting on redemption instructions
communicated by telephone to confirm that such instructions are genuine. In
the absence of such procedures, a Fund or IMSC may be liable for any losses
due to unauthorized or fraudulent telephone instructions. Requests by
telephone can only be accepted for amounts up to $50,000.
- - BY SYSTEMATIC WITHDRAWAL PLAN ("SWP") - You can elect to have funds
electronically drawn each month from your International Solutions account
and deposited directly into your bank account. Certain minimum balances and
minimum distributions apply. Complete section 6B of the Account Application
to add this feature to your account.
RECEIVING YOUR REDEMPTION PROCEEDS
You can receive redemption proceeds through a variety of payment methods:
- - BY CHECK - Unless otherwise instructed, checks will be made payable to the
current account registration and sent to the address of record.
- - BY FEDERAL FUNDS WIRE - Proceeds will be wired on the next business day to
a pre-designated bank account. Your account will be charged $10 each time
redemption proceeds are wired to your bank, and your bank may also charge
you a fee for receiving a Federal Funds wire.
- - BY ELECTRONIC FUNDS TRANSFER ("EFT") - For SWP redemptions only.
21
<PAGE> 22
IMPORTANT REDEMPTION INFORMATION
- - A CDSC may apply to certain Class A share redemptions, to Class B shares
redeemed within 6 years of purchase, and to Class C shares that are
redeemed within one year of purchase.
- - All redemptions are made at the NAV next determined after a redemption
request has been received in good order. Requests for redemptions must be
received by IMSC by 4:00 p.m. Eastern time to be processed at the NAV for
that day. Any redemption request that is received after 4:00 p.m. Eastern
time will be processed at the price determined on the following business
day.
- - If you own shares of more than one class of a Fund, the Fund will redeem
first the shares having the highest 12b-1 fees, unless you instruct
otherwise.
- - Within a class of shares, any shares subject to a CDSC will be redeemed
last unless you specifically elect otherwise.
- - Class B and Class C shares will be redeemed in the order described under
"Class B and Class C Shares -- Contingent Deferred Sales Charge".
- - A Fund may (on 60 days' notice) redeem the accounts of shareholders whose
investment, including sales charges paid, has been less than $1,000 for
more than 12 months.
- - A Fund may take up to seven days (or longer in the case of shares recently
purchased by check) to send redemption proceeds.
HOW TO EXCHANGE SHARES
You may exchange your Fund shares for shares of another Fund, subject to certain
restrictions (see "Important Exchange Information" below).
SUBMITTING YOUR EXCHANGE ORDER
You may submit an exchange request to IMSC as follows:
- - BY MAIL - Send your written exchange request to IMSC at one of the
addresses on page 20 of this Prospectus. Be sure that all registered
owners listed on the account sign the request.
- - BY TELEPHONE - Call IMSC at (800) 821-4350 to authorize an exchange
transaction. To process your exchange order by telephone, you must have
telephone exchange privileges on your account (see section 6E of the
Account Application). IMSC employs reasonable procedures that require
personal identification prior to acting on exchange instructions
communicated by telephone to confirm that such instructions are genuine. In
the absence of such procedures, a Fund or IMSC may be liable for any losses
due to unauthorized or fraudulent telephone instructions.
IMPORTANT EXCHANGE INFORMATION
- - You must exchange into the same share class you currently own.
- - Exchanges are considered taxable events and may result in a capital gain or
a capital loss for tax purposes.
- - It is the policy of the Funds to discourage the use of the exchange
privilege for the purpose of timing short-term market fluctuations. A Fund
may therefore limit the frequency of exchanges by a shareholder or cancel a
shareholder's exchange privilege if at any time it appears that such market
timing strategies are being used. For example, shareholders exchanging more
than five times in a 12-month period may be considered to be using
market-timing strategies.
22
<PAGE> 23
DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
- - Each Fund generally declares and pays dividends and capital gain
distributions (if any) at least once a year.
- - Dividends and distributions are "reinvested" in additional Fund shares
unless you request to receive them in cash.
- - Reinvested dividends and distributions are added to your account at NAV and
are not subject to a CDSC regardless of which share class you own.
- - Cash dividends and distributions can be sent to you:
BY MAIL - a check will be mailed to the address of record unless otherwise
instructed.
BY EFT - your proceeds will be directly deposited into your bank account.
To change your dividend and/or distribution options, call IMSC at (800)821-4350.
TAX CONSEQUENCES
Dividends paid out of a Fund's net investment income (including ordinary income
dividends received by the Fund from an underlying fund) and net short-term
capital gains will be taxable to you as ordinary income. Distributions of net
long-term capital gains earned by a Fund (including long-term capital gain
distributions received by the Fund from an underlying fund) are taxable to you
as long-term capital gains, regardless of how long you have held your Fund
shares. Fund dividend and capital gain distributions are taxable to you in the
same manner whether received in cash or reinvested in additional Fund shares.
Each year the Funds will notify you of the tax status of dividends and other
distributions.
A distribution will be treated as paid to you on December 31 of the current
calendar year if it is declared by a Fund in October, November or December with
a record date in such a month and paid by the Fund during January of the
following calendar year.
Upon the sale or exchange of your Fund shares, you may realize a capital gain or
loss which will be long-term or short-term, generally depending upon how long
you held your shares.
Each Fund may be required to withhold U.S. Federal income tax at the rate of 31%
of all taxable distributions payable to you if you fail to provide the Fund with
your correct taxpayer identification number or to make required certifications,
or if you have been notified by the IRS that you are subject to backup
withholding. Backup withholding is not an additional tax. Any amounts withheld
may be credited against your U.S. Federal income tax liability.
Fund distributions also may be subject to state, local and foreign taxes. You
should consult your own tax adviser regarding the particular tax consequences of
an investment in a Fund.
23
<PAGE> 24
INVESTMENT OBJECTIVES AND STRATEGIES
OF THE UNDERLYING FUNDS
Following is a brief description of the investment objectives and principal
investment strategies of the underlying funds. The risks associated with certain
of these investment practices are described in "Additional Information About
Investment Strategies and Risks" and in the SAI. The following information and
the risk information contained in this Prospectus and in the SAI is merely a
summary and should not be relied upon as a complete statement of the investment
techniques that the underlying funds may use to achieve their respective
investment objectives. Additional information about the Ivy Funds may be
obtained by calling or writing to IMDI (which distributes the Ivy Fund's shares)
at the phone number and address printed on the back cover page of this
Prospectus. Contact information relating to the other underlying funds is also
available through IMDI.
EQUITY UNDERLYING FUNDS
BT INVESTMENT INTERNATIONAL EQUITY PORTFOLIO, managed by Bankers Trust, has
an investment objective of long-term capital appreciation from investment in
foreign equity securities (or other securities with equal characteristics); the
production of any current income is incidental to this objective. The Portfolio
invests at least 65% of the value of its total assets in the equity securities
of foreign issuers, consisting of common stock and other securities with equity
characteristics. These issuers are primarily established companies based in
developed countries outside the United States. However, the Portfolio may also
invest in securities of issuers in underdeveloped countries. The Portfolio will
at all times be invested in the securities of issuers based in at least three
countries other than the United States.
IVY INTERNATIONAL FUND II's principal investment objective is long-term capital
growth. Consideration of current income is secondary to this principal
objective. The Fund invests at least 65% of its assets in equity securities
principally traded in European, Pacific Basin and Latin American markets. To
control its exposure to certain risks, the Fund might engage in foreign currency
exchange transactions and forward foreign currency contracts.
IVY INTERNATIONAL SMALL COMPANIES FUND seeks long-term growth. Consideration of
current income is secondary to this principal objective. The Fund invests at
least 65% of its assets in the common stock of foreign issuers having total
market capitalization of less than $1 billion. The Fund might engage in foreign
currency exchange transactions and forward foreign currency contracts to control
its exposure to certain risks.
IVY PAN-EUROPE FUND's principal investment objective is long-term capital
growth. Consideration of current income is secondary to this principal
objective. The Fund invests at least 65% of its assets in the equity securities
of large and medium-sized European companies.
THE JAPAN FUND, INC., managed by Scudder Kemper Investments, seeks to provide
long-term capital appreciation. The Fund pursues its objective by investing at
least 80% of its assets in Japanese securities (including American Depository
Receipts). The Fund invests primarily in the common stock of Japanese companies.
It anticipates that most equity securities of Japanese companies in which it
invests will be listed on Japanese securities exchanges. However, the Fund may
also invest up to 30% of its net assets in equity securities that are traded in
an over-the-counter market.
LAZARD INTERNATIONAL EQUITY PORTFOLIO is a non-diversified fund that seeks
long-term capital appreciation. The Portfolio invests primarily in equity
securities, principally common stocks, of relatively large non-U.S. companies
with market capitalizations in the range of the Morgan Stanley Capital
International (MSCI) Europe, Australasia and Far East Index. The percentage
24
<PAGE> 25
of the Portfolio's assets invested in particular geographic sectors may shift
from time to time based on the investment manager's judgment. Ordinarily, the
Portfolio invests in at least three different foreign countries.
LAZARD INTERNATIONAL SMALL CAP PORTFOLIO is a non-diversified fund that seeks
long-term capital appreciation. The Portfolio invests primarily in equity
securities, principally common stocks, of relatively small, non-U.S. companies
in the range of the Morgan Stanley Capital International (MSCI) Europe,
Australasia and Far East Small Cap Index. The percentage of the Portfolio's
assets invested in particular geographic sectors may shift from time to time
based on the investment manager's judgment. Ordinarily, the Portfolio invests in
at least three different foreign countries.
MONTGOMERY INTERNATIONAL GROWTH FUND seeks long-term capital appreciation by
investing in medium- and large-cap companies in developed stock markets outside
the United States. The Fund invests at least 65% of its total assets in the
common stocks of companies outside the United States whose shares have a stock
market value (market capitalization) of more than $1 billion. The Fund currently
concentrates its investments in the stock markets of western Europe,
particularly the United Kingdom, France, Germany, Italy and the Netherlands, as
well as developed markets in Asia, such as Japan and Hong Kong. The Fund
typically invests in at least three countries outside the United States, with no
more than 40% of its assets in any one country.
SCUDDER GREATER EUROPE GROWTH FUND is a non-diversified fund that seeks to
provide long-term growth of capital. The Fund seeks to achieve its investment
objective by investing at least 80% of its total assets in the equity securities
of European companies. The Fund expects that it will invest primarily in the
more established and liquid countries of Western and Southern Europe. However,
the Fund may also invest in the lesser developed Southern and Eastern European
markets as well as in the former communist countries of the Soviet Union. The
Fund intends to allocate its investments among at least three countries.
SCUDDER INTERNATIONAL FUND seeks long-term growth of capital primarily from
foreign equity securities. The Fund invests in companies, wherever organized,
which do business primarily outside the United States. The Fund intends to
diversify investments among several countries and to have represented in this
portfolio, in substantial proportions, business activities in not less than
three different countries other than the U.S.
WARBURG PINCUS INTERNATIONAL EQUITY FUND seeks long-term capital appreciation.
Under normal market conditions, the Fund will invest at least 65% of assets in
equity securities of issuers from at least three foreign countries. The Fund
intends to diversify its investments across different countries, although at
times it may invest a significant part of its assets in a single country.
Although the Fund emphasizes developed countries, it may also invest in emerging
markets.
WARBURG PINCUS JAPAN GROWTH FUND seeks long-term growth of capital. The Fund may
invest in companies of any size, whether traded on an exchange or
over-the-counter. Under normal market conditions, the Fund will invest at least
65% of assets in equity securities of Japanese issuers. The remaining portion
may be invested in securities of other Asian issuers.
WARBURG PINCUS JAPAN SMALL COMPANY FUND seeks long-term capital appreciation.
Under normal market conditions, the Fund will invest at least 65% of assets in
equity securities of small Japanese companies. Once the 65% policy is met, the
Fund may invest in Japanese or other Asian companies of any size. The Fund will
not invest more than 10% of assets in any one country except Japan.
EMERGING MARKET UNDERLYING FUNDS
Ivy Asia Pacific Fund's principal investment objective is long-term growth.
Consideration of current income is secondary to this principal objective. The
Fund invests at least 65% of its assets in
25
<PAGE> 26
equity securities issued in Asia Pacific countries, which include China, Hong
Kong, India, Indonesia, Malaysia, Pakistan, the Philippines, Singapore, Sri
Lanka, South Korea, Taiwan, Thailand and Vietnam.
IVY CHINA REGION FUND's principal investment objective is long-term capital
growth. Consideration of current income is secondary to this principal
objective. The Fund invests at least 65% of its assets in the equity securities
of companies that are located or have a substantial business presence in the
China Region, which includes China, Hong Kong, Taiwan, South Korea, Singapore,
Malaysia, Thailand, Indonesia and the Philippines. The Fund may also invest in
equity securities of companies whose current or expected performance is
considered to be strongly associated with the China Region. A large portion of
the Fund is likely to be invested in equity securities of companies that trade
in Hong Kong.
IVY DEVELOPING NATIONS FUND's principal investment objective is long-term
growth. Consideration of current income is secondary to this principal
objective. The Fund invests at least 65% of its assets in equity securities of
companies that are located in, or are expected to profit from, countries whose
markets are generally considered to be "developing" or "emerging". The Fund may
invest more than 25% of its assets in a single country, but usually will hold
securities from at least three emerging market countries in its portfolio.
IVY SOUTH AMERICA FUND is a non-diversified fund with a principal investment
objective of long-term growth. Consideration of current income is secondary to
this principal objective. The Fund invests at least 65% of its assets in equity
securities and government and corporate debt securities issued throughout South
America, Central America and the Spanish-speaking islands of the Caribbean. The
Fund is likely to have significant investments in Argentina, Brazil, Chile,
Colombia, Peru and Venezuela. The Fund may invest in low rated debt securities
to increase its potential yield.
LAZARD EMERGING MARKETS PORTFOLIO is a non-diversified fund that seeks long-term
capital appreciation. The Portfolio invests primarily in equity securities,
principally common stocks, of non-U.S. companies whose principal activities are
in emerging market countries. Emerging market countries include all countries
represented by the Morgan Stanley Capital International Emerging Markets (Free)
Index, which currently includes: Argentina, Brazil, Chile, China, Colombia, the
Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Israel, Jordan, Korea,
Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Russia, Sri
Lanka, South Africa, Taiwan, Thailand, Turkey and Venezuela.
MONTGOMERY EMERGING MARKETS FUND seeks long-term capital appreciation by
investing in companies based or operating primarily in developing economies
throughout the world. The Fund invests at least 65% of its total assets in the
stocks of companies based in the world's developing economies, and typically
maintains investments in at least six different countries (with no more than 35%
of its assets in any single one of them). The geographic regions in which the
Fund may focus its investments include Latin America, Asia, Europe, the Middle
East and Africa.
SCUDDER EMERGING MARKETS GROWTH FUND is a non-diversified fund that seeks
long-term growth of capital. The Fund seeks to achieve its objective by
investing at least 65% of its total assets in the equity securities of emerging
market issuers around the globe. The Fund currently weights its investments more
heavily in countries in Latin America. However, the Fund may pursue investment
opportunities in Asia, Africa, the Middle East and the developing countries of
Europe, primarily in Eastern Europe.
SCUDDER LATIN AMERICA FUND is a non-diversified fund that seeks long-term
capital appreciation. The Fund pursues its investment objective by investing at
least 65% of its total assets in the securities of Latin American issuers, and
50% of the Fund's total assets will be invested in Latin American equity
securities. To meet its objective, the Fund normally invests at least 65% of its
total
26
<PAGE> 27
assets in equity securities. The Fund defines Latin America as Mexico, Central
America, South America and the Spanish-speaking islands of the Caribbean. The
Fund expects to focus its investments in Argentina, Brazil, Chile, Colombia,
Mexico and Peru and may invest in other Latin American countries when the
portfolio management team deems it appropriate. The Fund intends to allocate its
assets among at least three countries.
SCUDDER PACIFIC OPPORTUNITIES FUND is a non-diversified fund that seeks to
provide long-term growth of capital. The Fund pursues its objective by investing
at least 65% of its total assets in equity securities of Pacific Basin
companies, excluding Japan. Pacific Basin countries include Australia, the
Peoples Republic of China, India, Indonesia, Malaysia, New Zealand, the
Philippines, Sri Lanka, Pakistan and Thailand, as well as Hong Kong, Singapore,
South Korea and Taiwan. The Fund may invest in the securities of other Pacific
Basin countries when the markets in such countries become sufficiently
developed. The Fund will not invest in Japanese securities. The Fund intends to
invest in at least three countries.
FIXED INCOME UNDERLYING FUNDS
IVY INTERNATIONAL STRATEGIC BOND FUND seeks total return and, consistent with
that objective, to maximize current income. The Fund invests at least 65% of its
assets in a managed portfolio of foreign bonds. The Fund may also invest in U.S.
bonds. The types of debt securities the Fund may hold include corporate,
government, and mortgage or asset backed securities. At least 65% of the value
of the Fund's portfolio is expected to be rated in the four highest rating
categories used by Moody's and S&P. Among the other securities and investment
techniques that the Fund's manager considers important in achieving the Fund's
investment objective (or in controlling the Fund's exposure to risk) are low
rated debt securities (commonly referred to as "high yield" or "junk" bonds) and
derivative investment techniques (such as options, futures, interest rate and
credit swaps, and foreign currency exchange transactions).
LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO is a non-diversified fund that seeks
maximum total return from a combination of capital appreciation and current
income. The Portfolio generally invests at least 80% of its total assets in
fixed-income securities of companies within, or governments, their agencies or
instrumentalities of, at least three different non-U.S. countries. The
investment manager of the Fund currently intends to invest the Portfolio's
assets primarily in companies within, or governments of, Continental Europe, the
United Kingdom, Canada and the Pacific Basin. The Portfolio generally invests at
least 85% of its total assets in investment grade fixed-income securities and
may invest up to 15% of its total assets in fixed-income securities rated below
investment grade ("junk bonds"). Under normal market conditions, the Portfolio's
effective duration (a measure of interest rate sensitivity) will range between
two and eight years.
SCUDDER INTERNATIONAL BOND FUND is a non-diversified fund with a primary
objective of income. As a secondary objective, the Fund seeks protection and
possible enhancement of principal. The Fund pursues its investment objectives by
investing at least 65% of its total assets in high-quality bonds denominated in
foreign currencies with credit ratings within the three highest rating
categories of one or more nationally recognized rating associations, or, if
unrated, considered to be of comparable quality by the adviser. The Fund may
invest up to 15% of its net assets in bonds rated below investment-grade.
Securities rated below investment-grade (commonly referred to as "junk bonds"),
entail greater risks than investment-grade bonds.
ALL UNDERLYING FUNDS
For temporary or emergency purposes or to assume a defensive position when
market conditions warrant, an underlying fund may, to the extent described in
its prospectus, (i) borrow money from banks and (ii) invest without limit in
cash, U.S. government securities, commercial paper and similar money market
securities.
27
<PAGE> 28
HOW TO RECEIVE MORE INFORMATION
Additional information about the Funds and their investments is contained in the
Statement of Additional Information for the Funds dated June 29, 1999 (the
"SAI"), which is incorporated by reference into this Prospectus and is available
upon request and without charge from IMDI at the distributor's address below.
Information about the Funds (including the SAI) may also be reviewed and copied
at the SEC's Public Reference Room in Washington, D.C. (please call
1-800-SEC-0330 for further details). Copies of this information may be obtained,
upon payment of a copying fee, by writing the Public Reference Section of the
SEC, Washington, D.C. 20549-6009. Information about the Funds is also available
on the SEC's Internet Website (www.sec.gov).
SHAREHOLDER INQUIRIES
Please call Ivy Mackenzie Services Corp., the Funds' transfer agent, at the
phone number listed below for other information or shareholder inquiries about
the Funds.
BOARD OF TRUSTEES OFFICERS
Keith J. Carlson Michael G. Landry, Chairman
Ian Carmichael Keith J. Carlson, President
P. Rodney Cunningham Ted A. Parkhill, Vice President
Gary D. Ellis C. William Ferris, Secretary/Treasurer
Michael G. Landry
LEGAL COUNSEL AUDITORS
Dechert Price & Rhoads PricewaterhouseCoopers LLP
Boston, Massachusetts Fort Lauderdale, Florida
CUSTODIAN INVESTMENT MANAGER
Brown Brothers Harriman & Co. Ivy Management, Inc.
Boston, Massachusetts Boca Raton, Florida
TRANSFER AGENT DISTRIBUTOR
Ivy Mackenzie Services Corp. Ivy Mackenzie Distributors, Inc.
PO Box 3022 700 South Federal Highway
Boca Raton, Florida 33431-0922 Boca Raton, Florida 33432
(800) 821-4350 (800) 821-4347
Investment Company Act File No. 811-09107
IS0799PR01 (International
Solutions Logo)
<PAGE> 29
(INTERNATIONAL SOLUTIONS)
ACCOUNT APPLICATION
PLEASE MAIL APPLICATIONS AND CHECKS TO: Ivy Mackenzie Services Corp., P.O. Box
3022, Boca Raton, FL 33431-0922
Make sure both pages of this application are included.
This application should not be used for retirement accounts for which
Mackenzie Solutions (IBT) is custodian.
FUND USE ONLY
- ---------------------- ------------------------ ------------------------
ACCOUNT NUMBER DEALER/BRANCH/REP ACCOUNT TYPE/SOC CD
1. REGISTRATION
[ ] Individual [ ] Estate [ ] Corporation [ ] Sole Proprietor
[ ] Joint Tenant [ ] UGMA/UTMA [ ] Partnership
[ ] Trust --------------------- [ ] Other -----------------------
- -------------------------------------------------------------------------------
Owner, Custodian or Trustee
- -------------------------------------------------------------------------------
Co-owner or Minor
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Street
- -------------------------------------------------------------------------------
City State Zip Code
<TABLE>
<S> <C>
- - - -
------------------------------------------ ------------------------------------------
Phone Number -- Day Phone Number -- Evening
</TABLE>
2. TAX ID NUMBER
<TABLE>
<S> <C>
- - or -
-------------------------------------- -----------------------------------
Social Security Number Tax Identification Number
<CAPTION>
<S> <C> <C>
Citizenship: [ ] U.S.
[ ] Other
-----------------------------
</TABLE>
<TABLE>
<S> <C> <C>
UNDER PENALTY OF PERJURY, I CERTIFY BY SIGNING IN SECTION 8 BELOW THAT: (1) THE NUMBER SHOWN IN
THIS SECTION IS MY CORRECT TAXPAYER IDENTIFICATION NUMBER (TIN), AND (2) I AM NOT SUBJECT TO BACKUP
WITHHOLDING BECAUSE: (A) I HAVE NOT BEEN NOTIFIED BY THE INTERNAL REVENUE SERVICE (IRS) THAT I AM
SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF A FAILURE TO REPORT ALL INTEREST OR DIVIDENDS, OR (B)
THE IRS HAS NOTIFIED ME THAT I AM NO LONGER SUBJECT TO BACKUP WITHHOLDING. (CROSS OUT ITEM (2) IF
YOU HAVE BEEN NOTIFIED BY THE IRS THAT YOU ARE CURRENTLY SUBJECT TO BACKUP WITHHOLDING BECAUSE OF
UNDERREPORTING INTEREST OR DIVIDENDS ON YOUR TAX RETURN.) PLEASE SEE THE "TAX CONSEQUENCES" SECTION
OF THE PROSPECTUS FOR ADDITIONAL INFORMATION.
</TABLE>
3. DEALER INFORMATION
<TABLE>
<S> <C> <C>
The undersigned ("Dealer") agrees to all applicable provisions in this Application, guarantees the
signature and legal capacity of the Shareholder, and agrees to notify Ivy Mackenzie Services Corp.
of any purchases made under a Letter of Intent or Rights of Accumulation.
----------------------------------------------- -----------------------------------------------
Dealer Name Representative's Name and Number
----------------------------------------------- -----------------------------------------------
Branch Office Address Representative's Phone Number
----------------------------------------------- -----------------------------------------------
City State Zip Code Authorized Signature of Dealer
</TABLE>
<PAGE> 30
4. INVESTMENTS
<TABLE>
<S> <C> <C> <C>
A. Enclosed is my check ($1,000 minimum) for $ --------------- made payable to the appropriate
International Solutions fund.*
B. Please invest in [ ] Class A [ ] Class B [ ] Class C [ ] Class I [ ] Advisor Class of the
following fund(s):
$ --------------- International Solutions I - Conservative Growth
$ --------------- International Solutions II - Balanced Growth
$ --------------- International Solutions III - Moderate Growth
$ --------------- International Solutions IV - Long-term Growth
$ --------------- International Solutions V - Aggressive Growth
C. I qualify for a reduction or elimination of the sales charge due to the following privilege (applies
only to Class A Shares):
[ ] New Letter of Intent (if ROA or 90-day backdate privilege is applicable, provide account(s)
information below.)
[ ] ROA, with the account(s) listed below.
[ ] Existing Letter of Intent, with accounts listed below.
Fund Name ------------------------------- Account Number------------------------------
Fund Name ------------------------------- Account Number------------------------------
In establishing a Letter of Intent, you will need to purchase Class A shares over a 13-month period
in accordance with the provisions in the Prospectus. The aggregate amount of these purchases will be
at least equal to the amount indicated below (see Prospectus for minimum amount required for reduced
sales charges.)
[ ] $50,000 [ ] $100,000 [ ] $250,000 [ ] $500,000
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
D. FOR DEALER USE ONLY
Confirmed trade orders:
--------------------- --------------------- ---------------------
Confirm Number Number of Shares Trade Date
*If investing in more than one Fund, make your check payable to "International Solutions".
</TABLE>
5. DISTRIBUTION OPTIONS
I would like to reinvest dividends and capital gains into additional shares of
the same class in this account at net asset value unless a different option is
checked below:
<TABLE>
<S> <C> <C> <C>
A. [ ] Reinvest all dividends and capital gains into additional shares of the same class of a different
International Solutions fund.
Fund Name ------------------------------- Account Number ------------------------------
B. [ ] Pay all dividends in cash and reinvest capital gains into additional shares of the same class of
this Fund, or in a different International Solutions fund.
Fund Name ------------------------------- Account Number ------------------------------
C. [ ] Pay all dividends and capital gains in cash.
I REQUEST THE ABOVE CASH DISTRIBUTION, SELECTED IN B OR C ABOVE, TO BE SENT TO:
[ ] the account address of record listed in Section 1.
[ ] the special payee listed in Section 7A (by mail).
[ ] the special payee listed in Section 7B (by EFT).
</TABLE>
<PAGE> 31
6. OPTIONAL SPECIAL FEATURES
<TABLE>
<S> <C> <C> <C>
A. [ ] AUTOMATIC INVESTMENT METHOD (AIM) -- I wish to automatically invest in International Solutions
by having my bank account debited and my International Solutions account credited with additional
shares. Please attach a voided check to ensure your correct bank account will be debited.
or
B. [ ] SYSTEMATIC WITHDRAWAL PLANS (SWP) -- I wish to automatically withdraw funds from my
International Solutions account and have my bank account credited with the proceeds.
If you elect to participate in the AIM or SWP program, complete the information below:
Frequency
[ ] Annually: On the __________ day of the month of __________________________ .
[ ] Semi-Annually: On the __________ day of the months of _________________ and
_________________ .
[ ] Quarterly: On the __________ day of the [ ] first month or [ ] second month or
[ ] third month of each quarter
[ ] Monthly: [ ] once per month on the _____ day of the month*
[ ] twice per month on the ________ days of the month*
[ ] 3 times per month on the __________ days of the month*
[ ] 4 times per month on the _______________ days of the month*
Periodic Amount $ _________________ starting in the month of _________________ .
(Minimum $50)
Fund & Share Class [ ] Class A [ ] Class B [ ] Class C of _________________________ .
Fund Name
Receipt of Proceeds
(for SWPs only) [ ] Send SWP proceeds via check to the account of address of record.
[ ] Send SWP proceeds via check to the special payee listed in Section 7A.
[ ] Send SWP proceeds via electronic payment to the special payee listed in
Section 7B.
C. FEDERAL FUNDS WIRE FOR REDEMPTION PROCEEDS** [ ] YES [ ] NO
By checking "YES" immediately above, I authorize the Agent to honor telephone instructions for
the redemption of Fund shares up to $50,000. Proceeds may be wire transferred to the bank account
designated in Section 7B. ($1,000 minimum).
D. TELEPHONE EXCHANGES** [ ] YES [ ] NO***
By checking "YES" immediately above, I authorize exchanges by telephone among the International
Solutions funds, upon instructions from any person as more fully described in the Prospectus. To
change this option once established, written instructions must be received from the shareholder of
record or the current registered representative.
E. TELEPHONE REDEMPTIONS** [ ] YES [ ] NO***
By checking "YES" immediately above, the Fund or its agents are authorized to honor telephone
instructions from any person as more fully described in the Prospectus for the redemption of Fund
shares. The amount of the redemption shall not exceed $50,000 and the proceeds are to be payable to
the shareholder of record and mailed to the address of record. To change this option once
established, written instructions must be received from the shareholder of record or the current
registered representative.
* There must be a period of at least seven calendar days between each investment/withdrawal
period.
** This option may not be selected if shares are issued in certificate form.
*** If neither box is checked, this telephone privilege will be provided automatically.
</TABLE>
<PAGE> 32
7. SPECIAL PAYEE
If you would like to receive your redemption proceeds at an address different
than the one listed in Section 1 of this application, complete Section 7A
and/or 7B below.
<TABLE>
<S> <C> <C> <C>
A. SPECIAL PAYEE MAILING ADDRESS
----------------------------------------------------------------------------------------------------
Name of Bank or Individual
----------------------------------------------------------------------------------------------------
Account Number (if applicable)
----------------------------------------------------------------------------------------------------
Street
----------------------------------------------------------------------------------------------------
City/State/Zip
---------------------------------------------------------------------------------------------------------
B. SPECIAL PAYEE FED WIRE / E.F.T. INFORMATION
----------------------------------------------------------------------------------------------------
Financial Institution
--------------------------------------------- ---------------------------------------------------
ABA # Account Number
----------------------------------------------------------------------------------------------------
Street
----------------------------------------------------------------------------------------------------
City/State/Zip
(Please attach a voided check)
</TABLE>
8. SIGNATURES
Investors should be aware that failure to check "No" under Section 6D or 6E of
this application means that the Telephone Exchange or Telephone Redemption
Privileges will be provided. The Funds employ reasonable procedures that require
personal identification prior to acting on exchange/redemption instructions
communicated by telephone to confirm that such instructions are genuine. In the
absence of such procedures, a Fund may be liable for any losses due to
unauthorized or fraudulent telephone instructions. Please see "How to Exchange
Shares" and "How to Redeem Shares" in the Prospectus for more information on
these privileges.
I certify to my legal capacity to purchase or redeem shares of the Fund for my
own account or for the account of the organization named in Section 1. I have
received a current Prospectus and understand its terms are incorporated in this
application by reference. I am certifying my taxpayer information as stated in
Section 2.
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF
THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP
WITHHOLDING.
<TABLE>
<S> <C>
- ------------------------------------------------------------ -------------------------------------
Signature of Owner, Custodian, Trustee or Corporate Officer Date
- ------------------------------------------------------------ -------------------------------------
Signature of Joint Owner, Co-Trustee or Corporate Officer Date
</TABLE>
(REMEMBER TO SIGN SECTION 8)
