As filed with the Securities and Exchange Commission on June 11, 1999
(File Nos. 333-67705 and
811-09107).
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. 2 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 2 [X]
MACKENZIE SOLUTIONS
(Exact Name of Registrant as Specified in Charter)
Via Mizner Financial Plaza
700 South Federal Highway - Suite 300
Boca Raton, Florida 33432
(Address of Principal Executive Offices)
Registrant's Telephone Number: (800) 777-6472
C. William Ferris
Mackenzie Investment Management Inc.
Via Mizner Financial Plaza
700 South Federal Highway - Suite 300
Boca Raton, Florida 33432
(Name and Address of Agent for Service)
Copies to:
Joseph R. Fleming, Esq.
Dechert Price & Rhoads
Ten Post Office Square, South - Suite 1230
Boston, MA 02109
Approximate date of proposed public offering: As soon as practicable after the
effective date of this Registration Statement.
Title of securities being registered: Shares of beneficial interest, no par
value per share.
<PAGE>
MACKENZIE SOLUTIONS
CROSS REFERENCE SHEET
This Pre-Effective Amendment No. 2 to the Registration Statement of
Mackenzie Solutions (the "Registrant") contains the Prospectus and Statement of
Additional Information to be used with the five series that comprise the
Registrant's International Solutions asset allocation program.
ITEMS REQUIRED BY FORM N-1A:
PART A:
ITEM 1 FRONT AND BACK COVER PAGES: Front and back cover pages
ITEM 2 RISK/RETURN SUMMARY: INVESTMENTS, RISKS AND PERFORMANCE:
Principal Investment Strategies; Principal Risks
ITEM 3 RISK/RETURN SUMMARY: FEE TABLE: Fees and Expenses
ITEM 4 INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES, AND
RELATED RISKS: Principal Investment Strategies; Principal
Risks; Additional Information About Investment Strategies And
Risks
ITEM 5 MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE: Not applicable
ITEM 6 MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE: Management
ITEM 7 SHAREHOLDER INFORMATION: Shareholder Information
ITEM 8 DISTRIBUTION ARRANGEMENTS: Shareholder Information
ITEM 9 FINANCIAL HIGHLIGHTS INFORMATION: Not applicable
PART B
ITEM 10 COVER PAGE AND TABLE OF CONTENTS: Cover Page; Table of Contents
ITEM 11 FUND HISTORY: General Information
ITEM 12 DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS: Investment
Objectives, Strategies and Risks; Information About The Underlying
Funds; Investment Restrictions
ITEM 13 MANAGEMENT OF THE FUND: Investment Advisory And Other Services
ITEM 14 CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES: Trustees and
Officers
ITEM 15 INVESTMENT ADVISORY AND OTHER SERVICES: Investment Advisory And Other
Services
ITEM 16 BROKERAGE ALLOCATION AND OTHER PRACTICES: Brokerage Allocation
ITEM 17 CAPITAL STOCK AND OTHER SECURITIES: Capitalization and Voting Rights
ITEM 18 PURCHASE, REDEMPTION AND PRICING OF SHARES: Special Rights and
Privileges; Capitalization and
Voting Rights; Net Asset Value
ITEM 19 TAXATION OF THE FUND: Taxation
ITEM 20 UNDERWRITERS: Distribution Services
ITEM 21 CALCULATION OF PERFORMANCE DATA: Performance Information
ITEM 22 FINANCIAL STATEMENTS: Financial Statements
<PAGE>
<PAGE> 1
[INTERNATIONAL SOLUTIONS LOGO]
PROSPECTUS
JULY 1, 1999
<TABLE>
<CAPTION>
<S> <C>
International Solutions is an asset INTERNATIONAL SOLUTIONS
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.
</TABLE>
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.
IVY MACKENZIE
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
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
HOW TO RECEIVE MORE INFORMATION 28
</TABLE>
2
<PAGE> 3
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").
<TABLE>
<CAPTION>
<S> <C>
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:
</TABLE>
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.
3
<PAGE> 4
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 o 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.
4
<PAGE> 5
(*) 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.
<TABLE>
<CAPTION>
FUND PRINCIPAL STRATEGIES WHO SHOULD INVEST(*)
---- -------------------- --------------------
<S> <C> <C>
INTERNATIONAL SOLUTIONS I - Invests 35-50% in international bond May be appropriate for relatively con-
CONSERVATIVE GROWTH funds and 50-65% in international servative international investors seek-
equity funds. ing a prudent trade-off between equi-
ty 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
risk to achieve capital appreciation.
INTERNATIONAL SOLUTIONS IV - Invests exclusively in international May be appropriate for international
LONG-TERM GROWTH equity funds, with 20-35% invested investors seeking higher potential
in emerging market equity funds. growth over the long-term, while
being willing to sustain 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% invested investors who have a longer time hori-
in emerging market equity funds. zon for their investments and are will-
ing to bear a higher level of risk to
seek a greater return.
</TABLE>
5
<PAGE> 6
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 (see "Emerging Market Securities" in the
"Additional Information About Investment Strategies and Risks" section).
6
<PAGE> 7
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 to which 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.
- - INTERNATIONAL SOLUTIONS II - BALANCED GROWTH: This Fund's higher emphasis
(relative to the Conservative Growth Fund) on underlying funds that invest in
equity securities make it less susceptible to bond market losses, but may
lead to moderately increased volatility.
- - 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.
- - 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.
- - 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.
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)
<TABLE>
<CAPTION>
MAXIMUM SALES CHARGE MAXIMUM DEFERRED MAXIMUM SALES CHARGE REDEMPTION EXCHANGE
(LOAD) IMPOSED ON SALES CHARGE (LOAD) (AS (LOAD) IMPOSED ON FEE(*) FEE
PURCHASES (AS A PERCENT- A PERCENTAGE OF ORIGINAL REINVESTED DIVIDENDS
AGE OF OFFERING PRICE) PURCHASE PRICE)
- ----------------- ------------------------ ------------------------ ----------------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
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
</TABLE>
(*)If you choose to receive your redemption proceeds via Federal Funds wire, a
$10 wire fee will be charged to your account.
7
<PAGE> 8
ANNUAL FUND OPERATING EXPENSES(expenses that are deducted from Fund assets):
<TABLE>
<CAPTION>
INTERNATIONAL SOLUTIONS I - MANAGEMENT DISTRIBUTION AND/OR SERVICE OTHER TOTAL ANNUAL FUND
CONSERVATIVE GROWTH FEES (12B-1) FEES EXPENSES(1) OPERATING EXPENSES(1)(2)
<S> <C> <C> <C> <C>
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%
</TABLE>
(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 Expense do not exceed the following amounts:
- International Solutions I: Class A - 0.67%; Class B - 1.42%; Class C -
1.42%; Class I: - 0.34%; Advisor Class: - 0.42%.
- International Solutions II: Class A - 0.61%; Class B - 1.36%; Class C -
1.36%; Class I - 0.28%; Advisor Class - 0.36%.
- International Solutions III: Class A - 0.53%; Class B - 1.28%; Class C -
1.28%; Class I - 0.20%; Advisor Class - 0.28%.
- International Solutions IV: Class A - 0.35%; Class B - 1.10%; Class C -
1.10%; Class I - 0.02%; Advisor Class - 0.10%.
- International Solutions V: Class A - 0.45%; Class B - 1.20%; Class C -
1.20%; Class I - 0.12%; Advisor Class - 0.20%.
Each manager of an underlying fund has agreed to make a payment to IMI at an
annual rate of up to .25% of the average daily value of the shares of the
underlying fund held by a Fund during the relevant period. 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.
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
- 1.25%-1.39%; International Solutions II - 1.31%- 1.45%; International
Solutions III - 1.39%-1.53%; International Solutions IV - 1.56%-1.72%;
International Solutions V - 1.46%-1.62%.
8
<PAGE> 9
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:
<TABLE>
<CAPTION>
INTERNATIONAL SOLUTIONS I - ONE YEAR: THREE YEARS:
CONSERVATIVE GROWTH
<S> <C> <C>
Class A(*) $640 $777
Class B $645 (1) $749 (2)
Class B (no redemption) $145 $449
Class C $245 (3) $449
Class C (no redemption) $145 $449
Class I(**) $ 43 $135
Advisor Class $ 43 $135
INTERNATIONAL SOLUTIONS II -
BALANCED GROWTH:
Class A(*) $645 $795
Class B $651 (1) $768 (2)
Class B (no redemption) $151 $468
Class C $251 (3) $468
Class C (no redemption) $151 $468
Class I(**) $ 49 $154
Advisor Class $ 49 $154
INTERNATIONAL SOLUTIONS III -
MODERATE GROWTH:
Class A(*) $626 $735
Class B $630 (1) $706 (2)
Class B (no redemption) $130 $406
Class C $230 (3) $406
Class C (no redemption) $130 $406
Class I(**) $ 29 $ 90
Advisor Class $ 29 $ 90
INTERNATIONAL SOLUTIONS IV -
LONG-TERM GROWTH:
Class A(*) $634 $759
Class B $638 (1) $731 (2)
Class B (no redemption) $138 $431
Class C $238 (3) $431
Class C (no redemption) $138 $431
Class I(**) $ 37 $116
Advisor Class $ 37 $116
INTERNATIONAL SOLUTIONS V -
AGGRESSIVE GROWTH:
Class A(*) $618 $711
Class B $622 (1) $681 (2)
Class B (no redemption) $122 $381
Class C $222 (3) $381
Class C (no redemption) $122 $381
Class I(**) $ 20 $ 64
Advisor Class $ 20 $ 64
</TABLE>
(*) 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.
9
<PAGE> 10
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 many 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.
10
<PAGE> 11
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 primary investment objec-
tive 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.
11
<PAGE> 12
UNDERLYING FUND RISKS
The main risks associated with investing in each Fund, such as "management
risk," "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.
12
<PAGE> 13
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.
13
<PAGE> 14
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 to 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. 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. 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 share price 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 net asset value of the underlying funds whose shares are held in
the Fund's portfolio. Each underlying fund is responsible for determining its
own net asset value 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.
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 on-going basis, over time they will increase the cost of
your investment and may cost you more than paying other types of sales charges.
15
<PAGE> 16
The following table displays the various investment minimums, sales charges and
expenses that apply to each class:
<TABLE>
<CAPTION>
MINIMUM MINIMUM CONTINGENT
INITIAL SUBSEQUENT INITIAL SALES DEFERRED SALES SERVICE AND
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 a certain NAV
reduction of initial purchases
sales charge
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 net asset
value per share ("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 1.00% may apply to Class A shares
that are redeemed within two years 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.
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).
16
<PAGE> 17
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 1.00%
Next $2,000,000 0.50%
Over $5,000,000 0.25%
</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 the
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.
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:
17
<PAGE> 18
<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.
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.
18
<PAGE> 19
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
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 .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); and
- - 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.
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.
- - 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. IMI and IMDI serve,
respectively, as manager and distributor of each Ivy Fund. Additional
information about the Ivy Funds may be obtained by calling or writing to the
Distributor 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 the Distributor.
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.
24
<PAGE> 25
- - 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
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.
25
<PAGE> 26
- - 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 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.
26
<PAGE> 27
- - 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 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.
27
<PAGE> 28
- - 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.
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 July [__], 1999
(the "SAI"), which is incorporated by reference into this Prospectus and is
available upon request and without charge from IMDI at the following address
and phone number:
Ivy Mackenzie Distributors, Inc.
Via Mizner Financial Plaza
700 South Federal Highway
Boca Raton, Florida 33432
(800) 821-4347
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 (800)
821-4350 for other information or shareholder inquiries about the Funds.
Investment Company Act File No. 811-09107
28
<PAGE> 29
(INTERNATIONAL SOLUTIONS)
ACCOUNT APPLICATION
------------------------------------
ACCOUNT NUMBER
PLEASE MAIL APPLICATIONS AND CHECKS TO: Ivy Mackenzie Services Corp., P.O. Box
3022, Boca Raton, FL 33431-0922
1. REGISTRATION
[ ] Individual
[ ] Joint Tenant
[ ] Estate
[ ] UGMA/UTMA
[ ] Corporation
[ ] Partnership
[ ] Sole Proprietor
[ ] Trust
- ------------------------------
[ ] Other
--------------------------------
- --------------------------------------------------------------------------------
Owner, Custodian or Trustee
- --------------------------------------------------------------------------------
Co-owner or Minor
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Street
- --------------------------------------------------------------------------------
City State Zip Code
<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>
- - - -
------------------------------------------ ------------------------------------------
Phone Number -- Day Phone Number -- Evening
</TABLE>
2. TAX ID NUMBER
<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>
- - 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 ON COMPLETING THIS SECTION.
</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 Authorized Signature of Dealer
Code
</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------------------------------
[ ] or New
Fund Name ------------------------------- Account Number------------------------------
[ ] or New
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".
<CAPTION>
<S> <C>
D.
*If
</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------------------------------
[ ] or New
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------------------------------
[ ] or New
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
[ ] 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
<TABLE>
<S> <C> <C> <C>
A. SPECIAL PAYEE MAILING ADDRESS
Please send all disbursements to this special payee
----------------------------------------------------------------------------------------------------
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
above 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 "Exchange Privilege" 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)
<PAGE>
INTERNATIONAL SOLUTIONS
Via Mizner Financial Plaza, Suite 300
700 South Federal Highway
Boca Raton, Florida 33432
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
STATEMENT OF ADDITIONAL INFORMATION
July 1, 1999
This Statement of Additional Information ("SAI") describes the five
investment portfolios (the "Funds") that comprise the International Solutions
asset allocation program of Mackenzie Solutions (the "Trust"). The International
Solutions program is designed to enable investors to tailor their exposure to
different investment techniques in the international securities markets and
related risks by investing in a single Fund or group of Funds that invest
primarily in the shares of other mutual funds. All of the mutual funds in which
the Funds invest have an international investment emphasis. No offer is made in
this SAI of the shares of any of these other funds.
This SAI is not a prospectus and should be read in conjunction with the
prospectus for the Funds dated July 1, 1999 (the "Prospectus"), which may be
obtained upon request and without charge from the Trust at the Distributor's
address and telephone number printed below.
INVESTMENT MANAGER
Ivy Management, Inc.
Via Mizner Financial Plaza, Suite 300
700 South Federal Highway
Boca Raton, Florida 33432
Telephone: (800) 777-6472
DISTRIBUTOR
Ivy Mackenzie Distributors, Inc.
Via Mizner Financial Plaza, Suite 300
700 South Federal Highway
Boca Raton, Florida 33432
Telephone: (800) 456-5111
<PAGE>
TABLE OF CONTENTS
GENERAL INFORMATION....................................................1
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS............................1
INFORMATION ABOUT THE UNDERLYING FUNDS.................................4
INVESTMENT OBJECTIVES AND STRATEGIES...................................4
INVESTMENT RESTRICTIONS...............................................24
MANAGEMENT OF THE FUNDS...............................................25
TRUSTEES AND OFFICERS........................................25
COMPENSATION TABLE...........................................27
INVESTMENT ADVISORY AND OTHER SERVICES................................28
INVESTMENT MANAGER...........................................28
ASSET ALLOCATION CONSULTANT..................................30
TERM AND TERMINATION OF ADVISORY
AGREEMENT AND SUBADVISORY AGREEMENT..........................30
PERSONAL INVESTMENTS BY EMPLOYEES OF IMI AND GIT.............30
CUSTODIAN....................................................31
FUND ACCOUNTING SERVICES.....................................31
TRANSFER AGENT AND DIVIDEND PAYING AGENT.....................31
ADMINISTRATOR................................................31
AUDITORS.....................................................32
BROKERAGE ALLOCATION..................................................32
CAPITALIZATION AND VOTING RIGHTS......................................32
SPECIAL RIGHTS AND PRIVILEGES.........................................34
AUTOMATIC INVESTMENT METHOD..................................34
EXCHANGE OF SHARES...........................................34
LETTER OF INTENT.............................................36
RETIREMENT PLANS.............................................36
REINVESTMENT PRIVILEGE.......................................40
REDUCED SALES CHARGES AND RIGHTS OF ACCUMULATION.............41
SYSTEMATIC WITHDRAWAL PLAN...................................41
GROUP SYSTEMATIC INVESTMENT PROGRAM..........................42
REDEMPTIONS..................................................43
CONVERSION OF CLASS B SHARES.................................44
NET ASSET VALUE.......................................................44
TAXATION 45
TAXATION OF THE FUNDS AND THEIR SHAREHOLDERS.................45
DISTRIBUTIONS................................................46
DISPOSITION OF SHARES........................................47
BACKUP WITHHOLDING...........................................48
TAXATION OF THE UNDERLYING FUNDS.............................48
DISTRIBUTION SERVICES.................................................48
PERFORMANCE INFORMATION...............................................51
FINANCIAL STATEMENTS..................................................54
APPENDIX A: STATEMENT OF ASSETS AND LIABILITIES AS
OF____________, 1999 AND REPORT OF INDEPENDENT ACCOUNTANTS............55
<PAGE>
GENERAL INFORMATION
The Funds are separately managed series of the Trust, a diversified
open-end management investment company organized as a Massachusetts business
trust on November 18, 1998. Each Fund invests primarily in the shares of other
mutual funds (referred to in this SAI as "underlying funds"), and normally
invests in eight to fifteen underlying funds whose combined investment
strategies and techniques are consistent with the Fund's investment objective.
The underlying funds are from the following registered fund complexes: Bankers
Trust, Ivy Funds, Lazard Asset Management, Montgomery Asset Management, Scudder
Funds and Warburg Pincus Asset Management. Many of the underlying funds are
equity mutual funds that invest largely in stocks to achieve growth. Other
underlying funds are bond mutual funds that primarily seek total return. The
underlying funds may focus their investments in single countries or geographic
regions, and in established or emerging markets and economies. All of the
underlying funds have an international investment emphasis.
The Funds are designed to accommodate distinct investor financial goals
and profiles, ranging from "conservative growth" to "aggressive growth". There
is no guarantee that a Fund will be able to meet its investment objective, and
an investor in the Funds could lose money.
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
Each Fund has its own investment objective and principal investment
strategies, which are summarized below and described in greater detail in the
"Principal Risks" and "Additional Information about Investment Strategies and
Risks" sections of the Prospectus.
o 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.
o 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 reduces its overall risk relative
to the Moderate Growth, Long-Term Growth and Aggressive Growth Funds.
o 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.
o INTERNATIONAL SOLUTIONS IV - LONG-TERM GROWTH: The primary 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).
o 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.
The Funds are subject to varying degrees of potential investment risk
and return. The more aggressive Funds (such as International Solutions IV and V)
are designed for international investors with a longer investment time horizon
and a high degree of risk tolerance. In pursuing higher returns through a mix of
underlying funds that invest more heavily in equity securities (including those
in emerging market countries), these Funds are susceptible to greater risks and
wider fluctuations in value. In contrast, the more conservative Funds (such as
International Solutions I and II) are designed for international investors with
a shorter investment time horizon and/or a lower degree of risk tolerance. You
should consult with your financial advisor to determine which Fund or
combination of Funds, if any, may be appropriate in light of your financial
needs and risk tolerance.
The principal risks of investing in a particular Fund are determined by
the characteristics of the securities held by the underlying funds in which the
Fund invests. Each Fund's assets are allocated among certain of the underlying
funds in accordance with predetermined percentage ranges, based on the Fund's
investment objective and Ivy Management's evaluation of the financial markets,
world economies and the relative performance potential of the underlying funds.
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. As diversified,
open-end investment companies, the underlying funds spread investment risk in
varying degrees by limiting their holdings in any one company or industry. Each
underlying fund will experience some degree of price volatility, however, that
is driven by the extent to which its own investment portfolio is exposed to
these various conditions. A Fund could therefore lose money at any time during
which the underlying funds in which it is invested are not performing as well as
expected. The degree to which each Fund is affected by the performance of any
one underlying fund will depend upon the relative weight of the underlying
fund's shares held by the Fund. For example, the Conservative Growth Fund, which
is expected to have significant holdings in international fixed income funds,
would be more susceptible to losses caused by a downturn in the international
bond markets than would be the Aggressive Growth Fund, which normally invests
primarily in underlying funds that are equity-oriented. On the other hand, the
Conservative Growth Fund has only limited exposure to losses that occur in the
international equity markets.
Other considerations relating to the underlying funds can affect the
performance of the Funds. For example, investment decisions by the investment
advisers of the underlying funds are made independently and bear no direct
relation to the management techniques employed with respect to the Funds.
Accordingly, the investment adviser of an underlying fund may decide to purchase
shares of the same issuer whose shares are being sold by the investment adviser
of another underlying fund (which would cause an indirect expense to a Fund in
the form or transaction costs without accomplishing any investment purpose). The
underlying funds are also permitted under the securities laws to invest some
portion of their assets in other investment companies. Where this occurs, the
underlying funds will be subject to the expenses charged by those investment
companies to its shareholders.
Each Fund may also deviate from its primary investment emphasis on the
underlying funds and assume a temporary defensive position by investing in U.S.
government securities and short-term commercial paper. During such times, a Fund
may miss out on indirect investment opportunities through underlying funds that
continue to perform well despite the market factors that gave rise to the Fund's
having assumed its defensive position. Assuming a defensive position could also
cause a Fund to experience a higher turnover rate. Higher than normal trading in
underlying fund shares may result in realization of net short-term capital gains
that would not otherwise be realized, and shareholders are taxed on such gains
when distributed from the Fund at ordinary income tax rates (see "Dividends,
Distributions and Taxes").
For temporary or emergency purposes, each Fund may also borrow from
qualified banks to the maximum extent permitted by the Investment Company Act of
1940, as amended (the "1940 Act"). Borrowing may exaggerate the effect on a
Fund's net asset value of any increase or decrease in the value of the
securities held by the Fund. Money borrowed will also be subject to interest
costs (which may include commitment fees and/or the cost of maintaining minimum
average balances).
INFORMATION ABOUT THE UNDERLYING FUNDS
Following is a brief description of the investment objectives and
principal investment policies of the underlying funds in which the Funds may
invest. 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 following information, as
well as the risk information appearing in the section that follows, is merely a
summary and should not be relied upon as a complete statement of the investment
techniques that the underlying funds may use, or the risks to which they may be
exposed, in pursuing their respective investment objectives. Additional
information about the Ivy Funds may be obtained by calling or writing to the
Distributor at the phone number and address printed on the cover page of this
SAI. Contact information relating to the other underlying funds is also
available through the Distributor.
INVESTMENT OBJECTIVES AND STRATEGIES
EQUITY UNDERLYING FUNDS:
o 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.
o 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. The Fund's manager
uses a disciplined value approach while looking for investment opportunities
around the world.
The Fund invests in a variety of economic sectors and industry segments
to reduce the effects of price volatility in any one area. The Fund's manager
seeks out rapidly expanding foreign economies and companies that generally have
at least $1 billion in capitalization at the time of investment and a solid
history of operations. Other factors that the Fund's manager considers in
selecting particular countries include long term economic growth prospects,
anticipated inflation levels, and the effect of applicable government policies
on local business conditions. The Fund is managed using a value approach, which
focuses on financial ratios such as price/earnings, price/book value, price/cash
flow, dividend yield and price/replacement cost. Typically the securities
purchased are attractively valued on one or more of these measures relative to a
broad universe of comparable securities.
o 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. The Fund is managed
by a team that focuses on both value and growth factors.
The Fund invests across a wide range of geographic, economic and
industry sectors. Countries are selected on the basis of a mix of factors that
include long-term economic growth prospects, anticipated inflation levels, and
the effect of applicable government policies on local business conditions. The
Fund is managed using a value approach, which focuses on financial ratios such
as price/earnings, price/book value, price/cash flow, dividend yield and
price/replacement cost. Typically the securities purchased are attractively
valued on one or more of these measures relative to a broad universe of
comparable securities.
o 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 Fund's management team uses a
disciplined value approach while looking for investment opportunities around the
world.
The Fund invests in companies located or otherwise doing business in
European countries and that cover a broad range of economic and industry
sectors. The Fund may also invest a significant portion of its assets outside of
Europe. Countries are selected on the basis of a mix of factors that include
long-term economic growth prospects, anticipated inflation levels, and the
effect of applicable government policies on local business conditions. The Fund
is managed using a value approach, which focuses on financial ratios such as
price/earnings, price/book value, price/cash flow, dividend yield and
price/replacement cost. Typically the securities purchased are attractively
valued on one or more of these measures relative to a broad universe of
comparable securities.
o THE JAPAN FUND, INC., managed by Scudder Kemper Investments, Inc.,
seeks to provide long-term capital appreciation. The fund's investment
objective may not be changed without shareholder approval. Unless
otherwise indicated, the fund's other investment policies may be
changed without a vote of the shareholders.
The fund pursues its objective by investing at least 80% of its assets
in Japanese securities (including American Depository Receipts). The term
Japanese securities includes securities issued by companies organized under the
laws of Japan ("Japanese companies"), companies affiliated with Japanese
companies and companies, wherever organized, that derive 50% or more of their
revenues from Japan. The fund intends to focus its investments in the equity
securities of select Japanese companies, both large and small, that have an
active market for their securities and that show a potential for
greater-than-average growth.
The fund invests primarily in the common stock of Japanese companies.
The fund 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. These are generally securities of relatively
small or little-known companies that the portfolio managers believe have
above-average earnings growth potential.
In evaluating a particular investment, the fund's management considers
a number of factors, including:
o the size of the company;
o the depth and quality of the company's management;
o the company's product line, business strategy or competitive position
in its industry;
o marketing and technical strengths;
o research and development efforts;
o financial strength;
o cost structure;
o revenue and earnings growth potential; and
o price-earnings ratios and other stock valuation measures.
A security is typically sold when, in the opinion of the portfolio
management team: the stock has reached its fair market value and its
appreciation is limited; a company's fundamentals and competitive strength have
deteriorated; the portfolio management team loses confidence in the company's
management; the fund's portfolio is too heavily weighted in a particular stock
or industry; or more attractive alternatives are available in other companies or
sectors.
To a more limited extent, the fund may, but is not required to, utilize
other investments and investment techniques that may impact fund performance,
including, but not limited to, preferred stock, debt securities convertible into
common stock and common stock purchase warrants, as well as debt securities of
varying maturities, such as those issued by the government of Japan and Japanese
companies, when the fund's management believes that the potential for capital
appreciation from debt securities equals or exceeds that available from equity
securities. The debt securities in which the fund may invest are rated no lower
than BBB by Standard & Poor's Corporation or Baa by Moody's Investors Service,
Inc. or, if unrated, are of equivalent quality as determined by the investment
manager. The fund may also invest to a limited extent in options, futures and
other derivatives (financial instruments whose value is based on indices,
commodities or securities). The fund may invest up to 20% of its assets in cash
or in short-term government or other short-term prime obligations.
o LAZARD INTERNATIONAL EQUITY PORTFOLIO 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 that the
Investment Manager believes are undervalued based their earnings, cash
flow or asset values.
The Portfolio generally invests at least 80% of its total assets in
equity securities of companies located in at least three different foreign
countries. The allocation of the Portfolio's assets among geographic sectors may
shift from time to time based on the Investment Manager's judgment and its
analysis of market conditions. However, the Investment Manager currently intends
to invest the Portfolio's assets primarily in companies based in developed
markets.
The Portfolio may invest up to 20% of its total assets in investment
grade fixed-income securities and short-term money market instruments. The
Portfolio may engage, to a limited extent, in various investment techniques,
such as foreign currency transactions and lending portfolio securities.
The Portfolio typically sells a stock when it is no longer considered a
value company, appears less likely to benefit from the current market and
economic environment, shows deteriorating fundamentals or falls short of the
Investment Manager's expectations.
o LAZARD INTERNATIONAL SMALL CAP PORTFOLIO 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 Europe,
Australasia and Far East Small Cap Index that the Investment Manager
believes are undervalued based on their earnings, cash flow or asset
values.
In choosing stocks for the Portfolio, the Investment Manager looks for
smaller, well managed non-U.S. companies that have the potential to grow. 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.
The International Small Cap Portfolio 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 Europe, Australasia and Far East Small Cap Index
(the "MSCI EAFE Small Cap Index") that the Investment Manager believes are
undervalued based on their earnings, cash flow or asset values. The MSCI EAFE
Small Cap Index is an unmanaged index of securities listed on foreign stock
exchanges.
The Portfolio generally invests at least 80% of its total assets in
equity securities, including American and Global Depositary Receipts, of small
non-U.S. companies. The Portfolio generally invests at least 65% of its total
assets in equity securities of small companies located in at least three foreign
countries. The allocation of the Portfolio's assets among geographic regions may
shift from time to time based on the Investment Manager's judgment and its
analysis of market conditions. However, the Investment Manager currently intends
to invest the Portfolio's assets primarily in companies based in Continental
Europe, the United Kingdom, the Pacific Basin, Latin America and Canada.
The Portfolio may invest up to 20% of its total assets in equity
securities of large companies or investment grade debt securities. The Portfolio
may engage, to a limited extent, in various investment techniques, such as
options and futures transactions, foreign currency transactions and lending
portfolio securities. The Portfolio typically sells a stock when it is no longer
considered a value company, appears less likely to benefit from the current
market and economic environment, shows deteriorating fundamentals or falls short
of the Investment Manager's expectations.
o 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. The portfolio managers seek well-managed companies that
they believe will be able to increase their sales and corporate
earnings on a sustained basis. In addition, the portfolio managers
purchase shares of companies that they consider to be under- or
reasonably-valued relative to their long-term prospects. The managers
favor companies that they believe have a competitive advantage, offer
innovative products or services, and may profit from such trends as
deregulation and privatization. On a strategic basis, the Fund's
assets may be allocated among countries in an attempt to take
advantage of market trends. The Fund's portfolio managers and analysts
frequently travel to the countries in which the Fund invests or may
invest to gain firsthand insight into the economic, political and
social trends that affect investments in those countries.
o SCUDDER GREATER EUROPE GROWTH FUND 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 defines a European company as follows:
o a company organized under the laws of a European country or for which
the principal securities trading market is in Europe; or
o a company wherever organized, where at least 50% of the company's
non-current assets, capitalization, gross revenue or profit in its
most recent fiscal year represents (directly or indirectly through
subsidiaries) assets or activities located in Europe.
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.
The portfolio management team conducts regional, country, industry and
company analysis in search of investments likely to benefit from economic,
political, industrial and other changes occurring across Europe. In analyzing
regions and countries, the portfolio management team analyzes factors such as
projected economic growth, changes in interest rates and inflation, trade
patterns, currency fluctuations and political developments. In selecting
securities, the portfolio management team seeks companies with strong and
sustainable earnings growth, solid management, leading products or technologies
and market strategies that are positioned to benefit from growth and
developments in the region and companies undergoing changes which will enhance
shareholder value.
A security is typically sold when, in the opinion of the portfolio
management team, the stock has reached its fair market value and its
appreciation is limited, a company's fundamentals have deteriorated, the
portfolio management team loses confidence in company management, the fund's
portfolio is too heavily weighted in a particular company, country or sector, or
more attractive alternatives are available in other companies or sectors.
To a more limited extent the fund may, but is not required to, invest
in the following:
The fund may invest up to 20% of its total assets in European debt
securities, including debt securities that are rated below investment grade by
one or more nationally recognized rating association (commonly referred to as
"junk bonds"). The fund may utilize other investments and investment techniques
that may impact fund performance, including, but not limited to, options,
futures and other derivatives (financial instruments that derive their value
from other securities or commodities or that are based on indices).
o 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. The Fund may invest up to 20% of its
total assets in foreign debt securities, and 5% of its total assets in
debt securities that are rated below investment-grade (commonly
referred to as "high yield" or "junk" bonds).
o WARBURG PINCUS INTERNATIONAL EQUITY FUND seeks long-term capital
appreciation. To pursue this goal, it invests in equity securities of
companies located or conducting a majority of their business outside
the U.S. or companies whose securities trade primarily in markets
outside of the U.S.
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.
In choosing equity securities, the fund's portfolio managers use a
bottom-up investment approach that begins with an analysis of individual
companies. The managers look for companies of any size whose stocks appear to be
discounted relative to earnings, assets or projected growth. The portfolio
managers determine value based upon research and analysis, taking all relevant
factors into account.
The fund intends to invest substantially all of its assets in common
stocks, warrants and securities convertible into or exchangeable for common
stocks. To a limited extent, the fund may also engage in other investment
practices.
o WARBURG PINCUS JAPAN GROWTH FUND seeks long-term growth of capital. To
pursue this goal, it invests in equity securities of growth companies
located in or conducting a majority of their business in Japan.
The manager believes that Japanese industry is in an important period
of deregulation and restructuring. By investing in growth companies positioned
to benefit from the dynamic structural changes taking place in the Japanese
industrial system, the fund intends to provide investors with an opportunity to
participate in these developments. In choosing equity securities, the fund's
portfolio manager seeks to identify Japanese companies with attractive growth
potential. The manager also looks for companies whose equity securities appear
undervalued based on factors such as earnings or assets. 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. Except for temporary defensive
purposes, the fund does not intend to invest in securities of non-Asian issuers.
This fund currently intends to invest at least 80% of assets in equity
securities of Japanese issuers. Equity holdings may consist of:
o common and preferred stocks
o rights and warrants
o securities convertible into or exchangeable for common stocks
o American Depositary Receipts ("ADRs")
To a limited extent, the fund may also engage in other investment
practices.
o WARBURG PINCUS JAPAN SMALL COMPANY FUND seeks long-term capital
appreciation. To pursue this goal, it invests in equity securities of
small companies located in or conducting a majority of their business
in Japan.
Under normal market conditions, the fund will invest at least 65% of
assets in equity securities of small Japanese companies. The fund considers a
"small" company to be one whose market capitalization does not exceed the
largest capitalization of companies in the:
o JASDAQ Index
o Second Section of the Tokyo Stock Exchange or
o Smaller half of the First Section of the Tokyo Stock Exchange
Some companies may outgrow the definition of a small company after the
fund has purchased their securities. These companies continue to be considered
small for purposes of the fund's 65% minimum allocation to Japanese
small-company equities.
Once the 65% policy is met, the fund may invest in Japanese or other
Asian companies of any size. Except for temporary defensive purposes, the fund
does not intend to invest in securities of non-Asian issuers. The fund will not
invest more than 10% of assets in any one country except Japan.
In choosing equity securities, the fund's portfolio manager looks for
companies that offer attractive opportunities for capital appreciation. Equity
holdings may consist of common stocks, rights and warrants, and securities
convertible into or exchangeable for common stocks. To a limited extent, the
fund may also engage in other investment practices.
EMERGING MARKET UNDERLYING FUNDS:
o IVY ASIA PACIFIC FUND'S principal investment objective is long-term
growth. Consideration of current income is secondary to this principal
objective.
Fund invests at least 65% of its assets in 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. The Fund usually invests in at least three different
countries, and does not intend to concentrate its investments in any particular
industry.
The countries in which the Fund invests are selected on the basis of a
mix of factors that include long-term economic growth prospects, anticipated
inflation levels, and the effect of applicable government policies on local
business conditions. The Fund is managed using a value approach which focuses on
financial ratios such as price/earnings, price/book value, price/cash flow,
dividend yield and price/replacement cost. Typically the securities purchased
are attractively valued on one or more of these measures relative to a broad
universe of comparable securities.
o 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's management team
uses a value approach to find stocks it believes are undervalued relative to
their long-term growth prospects.
The Fund seeks to achieve its investment objective of long-term capital
growth primarily by investing in the equity securities of companies that are
expected to profit from the economic development and growth of the China Region
through a direct business connection (such as an exchange listing or significant
profit base) in one or more China Region countries. The Fund may invest more
than 25% of its assets in the securities of issuers in a single China Region
country, and could have significantly more than 50% of its assets invested in
Hong Kong. The Fund expects to invest the balance of its assets in the equity
securities of companies whose current or expected performance is considered to
be strongly associated with the China Region. The Fund's management team seeks
to reduce risk by focusing on companies with strong foreign joint venture
partners, well-positioned consumer franchises or monopolies, or that operate in
strategic or protected industries.
The countries in which the Fund invests are selected on the basis of a
mix of factors that include long-term economic growth prospects, anticipated
inflation levels, and the effect of applicable government policies on local
business conditions. The Fund is managed using a value approach which focuses on
financial ratios such as price/earnings, price/book value, price/cash flow,
dividend yield and price/replacement cost. Typically the securities purchased
are attractively valued on one or more of these measures relative to a broad
universe of comparable securities.
o IVY DEVELOPING NATIONS FUND'S principal investment objective is
long-term growth. Consideration of current income is secondary to this
principal objective.
The Fund seeks to achieve its principal objective of long-term capital
growth by investing at least 65% of its assets in the equity securities of
companies that the Fund's manager believes will benefit from the economic
development and growth of emerging markets. The Fund considers an emerging
market country to be one that is generally viewed as "developing" or "emerging"
by the World Bank, the International Finance Corporation or the United Nations.
The Fund usually invests its assets in at least three different
emerging market countries, and may invest at least 25% of its assets in the
securities of issuers located in a single country.
The countries in which the Fund invests are selected on the basis of a
mix of factors that include long-term economic growth prospects, anticipated
inflation levels, and the effect of applicable government policies on local
business conditions. The Fund is managed using a value approach which focuses on
financial ratios such as price/earnings, price/book value, price/cash flow,
dividend yield and price/replacement cost. Typically the securities purchased
are attractively valued on one or more of these measures relative to a broad
universe of comparable securities.
o IVY SOUTH AMERICA FUND'S principal 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 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.
The Fund normally invests its assets in at least three different
countries, and expects to focus its investments in Argentina, Brazil, Chile,
Colombia, Peru and Venezuela. The Fund's holdings are concentrated in
high-quality companies, selected for both their defensive strengths and
long-term prospects.
The Fund does not expect to concentrate its investments in any
particular industry. The Fund may, however, invest more than 5% of a portion of
its assets in a single issuer. The countries in which the Fund invests are
selected on the basis of a mix of factors that include long-term economic growth
prospects, anticipated inflation levels, and the effect of applicable government
policies on local business conditions. The Fund is managed using a value
approach which focuses on financial ratios such as price/earnings, price/book
value, price/cash flow, dividend yield and price/replacement cost. Typically the
securities purchased are attractively valued on one or more of these measures
relative to a broad universe of comparable securities.
o LAZARD EMERGING MARKETS PORTFOLIO 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 that the Investment
Manager believes are undervalued based on their earnings, cash flow or
asset values.
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.
The Portfolio generally invests at least 65% of its total assets in
equity securities, including American and Global Depositary Receipts, of
companies whose principal business activities are located in emerging market
countries. The Portfolio invests at least 65% of its total assets in equity
securities of companies in at least three different foreign countries. The
allocation of the Portfolio's assets among emerging market countries may shift
from time to time based on the Investment Manager's judgment and its analysis of
market conditions. However, the Portfolio is likely to focus on companies in
Latin America, the Pacific Basin and Europe.
The Portfolio may invest, to a limited extent, in closed-end investment
companies that invest in emerging market securities. When the Investment Manager
believes it is warranted, the Portfolio may invest, without limitation, in high
quality fixed-income securities or the equity securities of U.S. companies. The
Portfolio may engage, to a limited extent, in various investment techniques,
such as options and futures transactions, foreign currency transactions and
lending portfolio securities.
The Portfolio typically sells a stock when it is no longer considered a
value company, appears less likely to benefit from the current market and
economic environment, shows deteriorating fundamentals or falls short of the
Investment Manager's expectations.
o 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. The Fund typically maintains investments in at
least six of these countries at all times, with no more than 35% of
its assets in any single one of them. These may include:
o Latin America: Argentina, Brazil, Chile, Colombia, Costa Rica,
Jamaica, Mexico, Peru, Trinidad and Tobago, Uruguay and Venezuela
o Asia: Bangladesh, China/Hong Kong, India, Indonesia, Malaysia,
Pakistan, the Philippines, Singapore, South Korea, Sri Lanka, Taiwan,
Thailand and Vietnam
o Europe: Czech Republic, Greece, Hungary, Kazakhstan, Poland, Portugal,
Romania, Russia, Slovakia, Slovenia, Turkey and Ukraine
o The Middle East: Israel and Jordan
o Africa: Egypt, Ghana, Ivory Coast, Kenya, Morocco, Nigeria, South
Africa, Tunisia and Zimbabwe
The Fund's strategy combines computer-based screening techniques with
in-depth financial review and on-site analysis of companies, countries and
regions to identify potential investments. The Fund's portfolio managers and
analysts frequently travel to the emerging markets to gain firsthand insight
into the economic, political and social trends that affect investments in those
countries. The portfolio managers strive to keep the Fund well diversified
across individual stocks, industries and countries to reduce its overall risk.
o SCUDDER EMERGING MARKETS GROWTH FUND seeks long-term growth of
capital. Unless otherwise indicated, the fund's investment objective
and strategies may be changed without a vote of shareholders.
The fund seeks to achieve its investment objective by investing at
least 65% of its total assets in the equity securities of emerging market
issuers around the globe. The fund considers "emerging markets" to include any
country defined as an emerging or developing economy by the International Bank
for Reconstruction and Development (i.e., the World Bank), the International
Finance Corporation or the United Nations or its authorities. The fund deems an
issuer to be located in an emerging market if:
o the issuer is organized under the laws of an emerging market country;
o the issuer's principal securities trading market is in an emerging
market; or
o at least 50% of the issuer's non-current assets, capitalization, gross
revenue or profit in any one of the two most recent fiscal years is
derived (directly or indirectly from subsidiaries) from assets or
activities located in emerging markets.
In evaluating investments, the portfolio management team uses extensive
fundamental and field research and studies the economic fundamentals of each
country and region. The portfolio management team also examines regional themes
to identify industries and companies it believes most likely to benefit from the
political, social and economic changes taking place in a given region of the
world.
The portfolio management team looks for companies with strong and
sustainable earnings growth, solid management with a proven ability to add value
over time and reasonable stock market valuations. While these companies may be
among the largest in their local markets, they may be small by the standards of
U.S. stock market capitalization.
The portfolio management team 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. A stock is typically sold when, in the
opinion of the portfolio management team, the stock has reached its fair market
value and its appreciation is limited, a company's fundamentals have
deteriorated, the fund's portfolio is too heavily weighted in a particular
stock, industry or sector and if country risk escalates to the point that the
risk outweighs probable returns.
To a more limited extent the fund may, but is not required to, invest
in the following:
The fund may invest up to 35% of its total assets in equity securities
of issuers in the U.S. and other developed markets. The fund may invest up to
35% of its total assets in emerging market and domestic debt securities if the
portfolio management team determines that capital appreciation of debt
securities is likely to equal or exceed the capital appreciation of equity
securities. The fund may utilize other investments and investment techniques
that may impact fund performance, including, but not limited to, options,
futures and other derivatives (financial instruments that derive their value
from other securities or commodities or that are based on indices).
o SCUDDER LATIN AMERICA FUND 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 assets in equity securities. The
fund may invest the balance of its assets in non-Latin American equity
securities.
The fund defines Latin America as Mexico, Central America, South
America and the Spanish-speaking islands of the Caribbean.
The fund defines the securities of Latin American issuers as follows:
o securities of companies organized under the laws of a Latin American
country or for which the principal securities trading market is in
Latin America;
o securities issued or guaranteed by the government of a Latin American
country, its agencies or instrumentalities, political subdivisions or
the central bank of the country;
o securities of companies, wherever organized, where at least 50% of an
issuer's non-current assets, capitalization, gross revenue or profits
in any one of the two most recent fiscal years represents (directly or
indirectly through subsidiaries) assets or activities located in Latin
America; or
o securities of Latin American issuers, as defined above, in the form of
depositary shares.
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.
In managing its portfolio, the fund seeks the securities of companies
with a demonstrated record of achieving high rates of cash flow from their core
businesses and of reinvesting a substantial portion of the cash flow in the
businesses. This reflects the portfolio management team's belief that earnings
and dividend growth and growth of shareholders' capital are linked to the
reinvestment of cash flow in new plant and equipment and other earnings assets
and is particularly relevant to companies in Latin America. The portfolio
management team also seeks to invest in the securities of companies with a
limited amount of balance sheet debt relative to their cash flow. Competitive
strength, measured by a company's market share, return on capital, gross
margins, and pricing power, is an important consideration in stock selection.
The fund will buy stock based on the portfolio management team's
analysis of a company's potential for achieving a competitive rate of return on
a fund shareholder's capital at varying entry prices. The portfolio management
team selects stock based on disciplined fundamental research and valuation
analysis that they believe will yield promising investment opportunities for
long-term capital appreciation. The portfolio management team does not look to a
high rate of portfolio turnover as a source of investment opportunity but rather
views the annual retention and reinvestment of cash in the business by portfolio
companies as intrinsic to the creation of shareholder value.
Stocks will be sold when, in the portfolio management team's opinion,
their market value is unlikely to provide significant further competitive
investment returns, when the rate of return earned on capital experiences an
adverse trend, when a company's fundamentals and competitive strength have
deteriorated, or when the fund's portfolio is too heavily weighted in a
particular stock or industry.
The portfolio management team believes that the universe of companies
meeting its selection criteria is small and as a result the portfolio will show
a comparatively high degree of concentration both with respect to the amount of
assets invested in any one company and the amount of assets invested in a single
industry.
To a more limited extent the fund may, but is not required to, utilize
other investments and investment techniques that may impact fund performance,
including, but not limited to, options, futures and other derivatives (financial
instruments that derive their value from other securities or commodities or that
are based on indices).
o SCUDDER PACIFIC OPPORTUNITIES FUND seeks to provide long-term growth
of capital. The fund pursues its objective by investing in 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 defines securities of Pacific Basin companies as follows:
o securities of companies organized under the laws of a Pacific Basin
country or for which the principal securities trading market in the
Pacific Basin;
o securities of companies, wherever organized, where at least 50% of a
company's non-current assets, capitalization, gross revenue or profit
in any one of the two most recent fiscal years represents (directly or
indirectly through subsidiaries) assets or activities located in the
Pacific Basin.
The fund's investment program focuses on the smaller, emerging markets
in the Pacific Basin and intends to invest in at least three countries. In
managing its portfolio, the portfolio management team uses intensive fundamental
research to locate attractive, undervalued companies with excellent management,
dominant market positions, clear competitive advantages, and strong balance
sheets. The portfolio management team seeks to invest the fund's assets in
stable, established companies which they believe will prosper as the regional
economy recovers.
The portfolio management team evaluates investments for the fund from
both a macroeconomic and a microeconomic perspective, using extensive field
research. On a macroeconomic level, the portfolio management team seeks out the
industries and sectors they believe most likely to benefit from the political,
social and economic changes taking place across the Pacific Basin. On a
microeconomic level, the portfolio management team seeks companies they believe
possess exceptional business prospects, due to their market dominance, high
growth potential, or innovative services, products or technologies. The
portfolio management team typically sells a stock when, in the opinion of the
portfolio management team, the stock has reached its fair market value and its
appreciation is limited, a company's fundamentals have deteriorated or the
fund's portfolio is too heavily weighted in a particular stock, industry or
sector.
Because the fund may engage in active and frequent trading of portfolio
securities, the fund may have higher transaction costs, which would lower the
fund's performance over time. In addition, shareholders may incur taxes on any
unrealized capital gains.
To a more limited extent the fund may, but is not required to, invest
in the following:
The fund may invest up to 35% of its total assets in high-quality
foreign or domestic debt securities. The fund may invest up to 35% of its assets
in equity securities of U.S. and other non-Pacific Basin issuers, excluding
Japan. The fund may utilize other investments and investment techniques that may
impact fund performance, including, but not limited to, options, futures and
other derivatives (financial instruments that derive their value from other
securities or commodities or that are based on indices).
FIXED INCOME FUNDS:
o 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:
o low rated debt securities (commonly referred to as "high yield" or
"junk" bonds); and
o derivative investment techniques (such as options, futures, interest
rate and credit swaps, and foreign currency exchange transactions).
The Fund's manager invests in bonds and bond markets that are believed
to be undervalued relative to other issuers or markets. In selecting bonds for
the Fund's portfolio, the manager will consider yields, credit quality and the
fundamental outlook for currency and interest rate trends in different parts of
the world, and may also take into account the ability to hedge currency and
local bond price risk.
The Fund's portfolio is actively managed to limit its exposure to
individual country, sector, interest rate and currency risks. The Fund may,
however, invest more than 5% of a portion of its assets in a single issuer.
o LAZARD INTERNATIONAL FIXED INCOME PORTFOLIO 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 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 invests primarily in non-U.S. fixed-income securities of
varying maturities. The Portfolio typically invests more than half of
its total assets in corporate bonds, mortgage-related securities and
asset-backed securities. The Portfolio typically invests less than
half of its total assets in foreign government obligations. 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.
The International Fixed-Income Portfolio seeks high total return from a
combination of current income and capital appreciation. The Portfolio invests
primarily in non-U.S. fixed-income securities of varying maturities.
The Portfolio typically invests more than half of its total assets in
corporate bonds, mortgage-related securities and asset-backed securities. The
Portfolio typically invests less than half of its total assets in foreign
government obligations. 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 Portfolio may invest in any region of the world, including
emerging market countries. However, the Investment Manager 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 also may invest in American or Global Depositary Receipts issued in
relation to a pool of fixed-income securities in which the Portfolio could
invest directly.
The Portfolio generally invests at least 85% of its total assets in
investment grade fixed-income securities or the unrated equivalent as determined
by the Investment Manager. The Portfolio may invest up to 15% of its total
assets in fixed-income securities rated, at the time of purchase, below
investment grade and as low as the lowest rating assigned by S&P and Moody's or
the unrated equivalent as determined by the Investment Manager.
The Investment Manager anticipates that, under normal market
conditions, the Portfolio's effective duration will range between two and eight
years. Duration is a measure of how sensitive the securities held by the
Portfolio may be to changes in interest rates.
The Portfolio may engage, to a limited extent, in various investment
techniques, such as options and futures transactions, foreign currency
transactions and lending portfolio securities. The Portfolio typically sells a
fixed-income security when new information changes the Investment Manager's
fundamental view of the issuer, the current price appreciation makes the future
value of the security less attractive or the market sector becomes overvalued
relative to other sectors.
o SCUDDER INTERNATIONAL BOND FUND'S primary objective is 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 portfolio management team will select investments on the basis of,
among other things, yields, credit quality, and the fundamental outlooks for
currency and interest rate trends in different parts of the globe, taking into
account the ability to hedge a degree of currency or local bond price risk. The
fund is not limited in its average portfolio maturity or the maturity of any
portfolio security.
The portfolio management team typically looks for bonds with attractive
yields (interest rates) relative to market alternatives; from countries and/or
companies with stable or improving fundamentals; and denominated in stable or
appreciating currencies. The portfolio management team typically sells a bond
when yields decline below market averages; when the credit fundamentals appear
to be deteriorating; or when the underlying currency might depreciate.
Because the fund may engage in active and frequent trading of portfolio
securities, the fund may have higher transaction costs which would lower the
fund's performance over time. In addition, shareholders may incur taxes on any
realized capital gains.
To a more limited extent the fund may, but is not required to, invest
in the following:
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. The fund
also may invest up to 35% of the value of its total assets in investment-grade
U.S. debt securities. The fund may utilize other investments and investment
techniques that may impact fund performance, including, but not limited to,
options, futures and other derivatives (financial instruments that derive their
value from other securities or commodities or that are based on indices).
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.
RISKS: The risks described in this section are in addition to the risks
disclosed in the Prospectus under "Additional Information About Investment
Strategies and Risks". The underlying funds may, to a greater or lesser extent,
use a wide range of other investment techniques to achieve their respective
investment objectives, which are described in detail in each underlying fund's
prospectus and statement of additional information. Among these other investment
techniques are the following, any of which 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):
o ILLIQUID SECURITIES: An "illiquid security" is an asset that may not
be sold or disposed of in the ordinary course of business within seven
days at approximately the value at which an underlying fund has valued
the security on its books. Illiquid securities may include securities
that are subject to restrictions on resale ("restricted securities")
because they have not been registered under the Securities Act of
1933, as amended (the "1933 Act"). Illiquid securities often offer the
potential for higher returns than more readily marketable securities,
but may be difficult to dispose of at an advantageous time or price.
Issuers of restricted securities may not be subject to the disclosure
and other investor protection requirements that would apply if their
securities were publicly traded. An underlying fund may also have to
bear the expense of registering restricted securities for resale, and
the risk of substantial delays in effecting those registrations.
o MORTGAGE BACKED SECURITIES: Mortgage-backed securities are securities
representing part ownership of a pool of mortgage loans. Although the
mortgage loans in the pool will have maturities of up to 30 years, the
actual average life of the loans typically will be substantially less
because the mortgages will be subject to principal amortization and
may be prepaid prior to maturity. In periods of falling interest
rates, the rate of prepayment tends to increase, thereby shortening
the actual average life of the security. Conversely, rising interest
rates tend to decrease the rate of prepayment, thereby lengthening the
security's actual average life (and increasing the security's price
volatility). Since it is not possible to predict accurately the
average life of a particular pool, and because prepayments are
reinvested at current rates, the market value of mortgage-backed
securities may decline during periods of declining interest rates.
Similar risks are associated with an underlying fund's use of other
asset-backed securities investment techniques.
o SHORT SALES: An underlying fund might sell a security short and borrow
the same security from a broker or other institution to complete the
sale. The underlying fund would realize a gain if the security
declines in price between those dates. On the other hand, the
underlying fund would lose money if the price of the borrowed security
increases between the date of the short sale and the date on which the
fund replaces the security. Moreover, although an underlying fund's
gain would be limited to the amount at which it sold a security short,
its potential loss is limited only by the maximum attainable price of
the security (which could be quite high) less the price at which the
security was sold.
o REPURCHASE AGREEMENTS: A repurchase agreement is a contract under
which an underlying fund buys a money market instrument from a bank or
broker-dealer and obtains a simultaneous commitment from the seller to
repurchase the instrument at a specified time and at an agreed-upon
yield. These agreements often are fully collateralized with the
underlying fund's U.S. Government securities or other securities that
its advisor has approved for use as collateral for repurchase
agreements, and the collateral must be marked-to-market daily. If the
executing bank or broker-dealer fails to perform its obligations under
the contract, the Fund could experience some delay in obtaining direct
ownership of the underlying collateral and might incur a loss if the
value of the security should decline (as well as any costs incurred in
disposing of the security).
o WARRANTS: The holder of a warrant pays for the right to purchase a
given number of an issuer's shares at a specified price until the
warrant expires. If a warrant is not exercised by the date of its
expiration (such as when the underlying securities are no longer an
attractive investment), an underlying fund would lose what it paid for
the warrant.
o ZERO COUPON BONDS: Zero coupon bonds are debt obligations issued
without any requirement for the periodic payment of interest, and are
issued at a significant discount from face value. The discount
approximates the total amount of interest the bonds would accrue and
compound over the period until maturity at a rate of interest
reflecting the market rate at the time of issuance. If an underlying
fund holds zero coupon bonds in its portfolio, it would recognize
income currently for Federal income tax purposes in the amount of the
unpaid, accrued interest and generally would be required to distribute
dividends representing that income to shareholders currently (even
though the underlying fund has not actually received any income
proceeds). These required cash distribution payment could force the
underlying fund to sell portfolio securities at a disadvantageous time
and/or price. Moreover, since the interest on zero coupon obligations
is not distributed to an underlying fund on a current basis but is in
effect compounded, their value is subject to greater fluctuations in
response to changing interest rates than the value of debt obligations
that distribute income regularly.
o NON-DIVERSIFICATION RISK: Certain of the underlying funds are
classified as "non-diversified" under the 1940 Act, and may therefore
invest a greater percentage of their respective assets in a particular
issuer than "diversified" funds. As a result, these underlying funds
may also be more susceptible than diversified funds to the price
movements of certain securities they hold in their portfolios.
o DERIVATIVE TRANSACTIONS: An underlying fund may, but is not
necessarily required to, use various derivative investment strategies
to (i) hedge various market risks (such as interest rates, currency
exchange rates, and broad or specific equity or fixed-income market
movements), (ii) manage the effective maturity or duration of
fixed-income securities in its portfolio, and/or (iii) enhance
potential gain. These derivative investment techniques are generally
accepted as part of modern portfolio management and are used regularly
by other mutual funds and institutional investors. Derivative
transactions involve a number of risks, however, including the
possibility of default by the other party to the transaction and, to
the extent an underlying fund's view as to certain market movements is
incorrect, the risk of losses that are greater than if the derivative
technique(s) had not been used.
The types of derivative transactions in which an underlying fund
may engage include, but are not necessarily limited to, (i) the
purchase and sale of exchange-listed and over-the-counter put and
call options on securities, equity and fixed-income indices and
other financial instruments; (ii) the purchase and sale of
financial futures contracts and options thereon; interest rate
transactions (such as swaps, caps, floors or collars); and (iii)
currency transactions (such as currency forward contracts,
currency futures contracts, and options on currencies or currency
futures). Any or all of these derivative investment techniques may
be used at any time singly or in combination, and there is no
particular strategy that dictates the use of one technique rather
than another.
Using put and call options could cause an underlying fund to lose
money by forcing the sale or purchase of portfolio securities at
inopportune times or for prices higher (in the case of put
options) or lower than (in the case of call options) than current
market values; limiting the amount of appreciation the underlying
fund can realize on its investments; or causing the underlying
fund to hold a security it might otherwise sell.
Foreign currency transactions (such as forward foreign currency
contracts) can cause investment losses in a variety of ways. For
example, changes in currency exchange rates may result in poorer
overall performance for an underlying fund than if it had not
engaged in such transactions. There may also be an imperfect
correlation between an underlying fund's portfolio holdings of
securities denominated in a particular currency and forward
contracts entered into by the underlying fund. An imperfect
correlation of this type may prevent the underlying fund from
achieving the intended hedge or expose the underlying fund to the
risk of currency exchange loss.
Futures transactions (and related options) involve other types of
risks. For example, the variable degree of correlation between
price movements of futures contracts and price movements in the
related portfolio position of an underlying fund could cause
losses on the hedging instrument that are greater than gains in
the value of the underlying fund's position. In addition, futures
and options markets may not be liquid in all circumstances and
certain over-the-counter options may have no markets. As a result,
an underlying fund might not be able to close out a transaction
without incurring substantial losses (and it is possible that the
transaction cannot even be closed). In addition, the daily
variation margin requirements for futures contracts would create a
greater ongoing potential financial risk than would purchases of
options, where the exposure is limited to the cost of the initial
premium.
Currency futures contracts and options thereon may be traded on
foreign exchanges. Such transactions may not be regulated as
effectively as similar transactions in the United States and are
subject to the risk of governmental actions affecting trading in,
or the prices of, foreign securities. The value of such positions
could also be adversely affected by (i) other complex foreign
political, legal and economic factors, (ii) lesser availability
than in the United States of data on which to make trading
decisions, (iii) delays in the Fund's ability to act upon economic
events occurring in foreign markets during non business hours in
the United States, (iv) the imposition of different exercise and
settlement terms and procedures and margin requirements than in
the United States, and (v) lesser trading volume.
Finally, although the use of futures and options transactions for
hedging purposes should tend to minimize the risk of loss due to a
decline in the value of the hedged position, these devices also
tend to limit any potential gain that might result from an
increase in the position's value.
INVESTMENT RESTRICTIONS
Each Fund has adopted certain fundamental investment policies, which
may only be changed with the approval of a majority of the Fund's outstanding
voting shares (see "Capitalization and Voting Rights").
Under these policies, no Fund may:
(i) issue senior securities (except as permitted under the 1940 Act, and as
otherwise permitted by any authorized regulatory authority);
(ii) borrow money, except for temporary or emergency purposes (or as otherwise
permitted by the 1940 Act or any authorized regulatory authority);
(iii)engage in the business of underwriting securities issued by others (except
as otherwise permitted by applicable law);
(iv) concentrate its investments in a particular industry or group of
industries;
(v) purchase or sell real estate;
(vi) purchase physical commodities or contracts relating to physical
commodities; and
(vii)make loans (except as permitted under the 1940 Act, and as otherwise
permitted by any authorized regulatory authority).
Each of the policies described in this section relate to the Funds and
may or may not have been adopted by the underlying funds, each of which has its
own investment policies and restrictions that are described in its prospectus
and statement of additional information.
MANAGEMENT OF THE FUNDS
The business and affairs of each Fund are managed under the direction
of the Trustees. Information about the Funds' investment manager and other
service providers appears in the "Investment Advisory and Other Services"
section, below.
TRUSTEES AND OFFICERS
The Board of Trustees of the Trust is responsible for the overall
management of the Funds, including general supervision and review of the Funds'
investment activities. The Board, in turn, elects the officers who are
responsible for administering each Fund's day-to-day operations.
The Trustees and Executive Officers of the Trust, their business
addresses and principal occupations during the past five years are:
<TABLE>
<S> <C> <C>
NAME, ADDRESS, AGE POSITION WITH THE BUSINESS AFFILIATIONS AND
TRUST PRINCIPAL OCCUPATIONS
Keith J. Carlson*, President and Senior Vice President of MIMI
700 South Federal Hwy. Trustee 1996-present); Senior Vice
Suite 300 President and Director of MIMI
Boca Raton, FL 33432 1994-1996); Senior Vice
Age: 41 President and Treasurer of MIMI
(1989-1994); Senior Vice
President and Director of MIMI
(1994-present); Senior Vice
President, Treasurer and
Director of IMI
(1992-1994); Senior
Vice President and
Director, IMSC
(1996-present);
President and
Director of IMSC
(1993-1996);
President, Chief
Executive Officer
and Director of
IMDI
(1994-present);
Vice President of
MFI (1987-1995);
Trustee and
President of MST
(1996-1998); Vice
President of MST
(1994-1998);
Treasurer of MST
(1985-1994);
Executive Vice
President and
Director of IMDI
(1993-1994);
Trustee of MST
(1996-1998).
Ian Carmichael, Trustee President of Control Systems, Inc. (sales and service
1812 Sabal Palm Circle, of computer products) (1983-present).
Boca Raton, FL 33432
Age: 51
P. Rodney Cunningham, Trustee President and Chief Executive Officer,
1450 N.W. 1st Avenue, Boca Raton Transportation, Inc. (passenger
Boca Raton, FL 33432 transport) (1978-present); President and Chief
Age: 51 Executive Officer, Cunningham
Communications, Inc. (wireless
communications) (1983-present); Chairman and Chief
Executive Officer, Palm Beach Transportation, Inc.
(passenger transport) (1987-present); President and
Chief Executive Officer, Telco, Inc. (equipment
leasing) (1993-present); President and Chief Excecutive
Officer, 1501 F.M.R., Inc. (real estate)
(1994-present); President and Chief Executive Officer,
Newport CRC, Inc. (real estate) (1996-present);
Director, Nations Bank of Palm Beach County (banking)
(1996-present); Director, Transportation Casualty
Insurance Co. (insurance) (1988-1998).
Gary R. Ellis, Trustee Senior Vice President, Chief Financial Officer and
1812 Sabal Palm Circle Treasurer of Consolidated Cigar Holdings, Inc. and
Boca Raton, FL 33432 Consolidated Cigar Corporation (cigar manufacturing and
Age: 45 marketing) (1988-present).
C. William Ferris, Vice President Senior Vice President, Chief Financial Officer
700 South Federal Hwy. and Secretary/ and Secretary/Treasurer of MIMI (1995-
Suite 300 Treasurer present); Senior Vice President, Finance
Boca Raton, FL 33432 and Administration/ Compliance Officer of
Age: 53 MIMI (1989-1994); Senior Vice President,
Secretary/Treasurer and Clerk
of IMI (1994-present);
Vice President,
Finance/Administration
and Compliance
Officer of IMI
(1992-1994); Senior
Vice President,
Secretary/Treasurer
and Director of
IMDI (1994-present);
Secretary/Treasurer
and Director of
IMDI (1993-1994);
President and Director of IMSC
(1996-present); and Secretary/
Treasurer and
Director of IMSC
(1993-1996).
Michael G. Landry*, Chairman and President, Chief Executive Officer and
700 South Federal Hwy. Trustee (Chief Director of MIMI (1987- present); President,
Suite 300 Executive Director and Chairman of IMI (1992-
Boca Raton, FL 33432 Officer) present); Chairman and Director
Age: 51 of Ivy Mackenzie Services Corp. ("IMSC")
(1993- present);
Chairman and
Director of Ivy
Mackenzie
Distributors, Inc.
("IMDI")
(1994-present);
Director and
President of IMDI
(1993-1994);
Chairman and
Trustee of Ivy Fund
(____-____);
President and
Trustee of Ivy Fund
(____-____);
Director and
President of The
Mackenzie Funds
Inc. ("MFI")
(1987-1995);
Trustee of
Mackenzie Series
Trust ("MST")
(1987-1998);
President of MST
(1987-1996);
Chairman of MST
(1996-1998).
Ted A. Parkhill, Vice President
700 South Federal Hwy.
Suite 300
Boca Raton, FL 33432
Age: ___
</TABLE>
* Deemed to be an "interested person" of the Trust, as defined under the 1940
Act.
Class A shares of a Fund may be purchased without an initial sales
charge or contingent deferred sales charge by officers and Trustees of the Trust
(and their relatives). As of the date of this SAI, the Officers and Trustees of
the Trust as a group owned no Fund shares.
COMPENSATION TABLE
<TABLE>
<S> <C> <C> <C>
NAME/ POSITION AGGREGATE PENSION OR ESTIMATED ANNUAL TOTAL COMPENSATION FROM
COMPENSATION FROM RETIREMENT BENEFITS BENEFITS UPON TRUST AND FUND COMPLEX
TRUST* ACCRUED AS A PART RETIRE-MENT PAID TO TRUSTEES*
OF FUND EXPENSES
Keith J. Carlson, $_________ N/A N/A $_________
President and Trustee
Ian Carmichael, Trustee $_________ N/A N/A N/A
P. Rodney Cunningham, $_________ N/A N/A N/A
Trustee
Gary R. Ellis, Trustee $_________ N/A N/A N/A
Michael G. Landry, $_________ N/A N/A $_________
Chairman and Trustee
(Chief Executive Officer)
C. William Ferris/ Vice $_________ N/A N/A N/A
President and Secretary/
Treasurer
Ted A. Parkhill $_________ N/A N/A N/A
</TABLE>
* Estimated for the Funds' initial fiscal year ending December 31, 1999.
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT MANAGER
Ivy Management, Inc. ("IMI"), Via Mizner Financial Plaza, 700 South
Federal Highway, Boca Raton, Florida 33432, provides investment advisory and
business management services to the Funds pursuant to a Business Management and
Investment Advisory Agreement (the "Advisory Agreement"). The Advisory Agreement
was approved by the sole shareholder of each Fund on __________, 1999. Before
that, the Advisory Agreement was approved at a meeting held on March 18, 1999 by
each Fund's Board of Trustees, including a majority of the Trustees who are
neither "interested persons" (as defined in the 1940 Act) of the Funds nor have
any direct or indirect financial interest in the operation of the Funds'
distribution plans (see "Distribution Services") or in any related agreement
(referred to herein as the "Independent Trustees").
IMI is a wholly owned subsidiary of Mackenzie Investment Management
Inc. ("MIMI"), Via Mizner Financial Plaza, 700 South Federal Highway, Boca
Raton, Florida 33432, a Delaware corporation with approximately 10% of its
outstanding common stock listed on the Toronto Stock Exchange ("TSE"). MIMI is a
subsidiary of Mackenzie Financial Corporation ("MFC"), 150 Bloor Street West,
Toronto, Ontario, Canada, a public corporation organized under the laws of
Ontario whose shares are listed for trading on the TSE. MFC is registered in
Ontario as a mutual fund dealer. IMI currently acts as manager and investment
adviser to all of the underlying funds that are series of Ivy Fund.
The Advisory Agreement obligates IMI to make investments for the
accounts of the Funds in accordance with its best judgment and within the
investment objectives and restrictions set forth in the Prospectus, the 1940 Act
and the provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), relating to regulated investment companies, and subject to policy
decisions adopted by the Trustees. Under the Advisory Agreement, IMI is also
obligated to (1) coordinate with each Fund's Custodian and monitor the services
it provides to the Fund; (2) coordinate with and monitor any other third parties
furnishing services to the Funds; (3) provide the Funds with necessary office
space, telephones and other communications facilities as needed; (4) provide the
services of individuals competent to perform administrative and clerical
functions that are not performed by employees or other agents engaged by the
Funds or by IMI acting in some other capacity pursuant to a separate agreement
or arrangements with the Funds; (5) maintain or supervise the maintenance by
third parties of such books and records of the Funds as may be required by
applicable Federal or state law; (6) authorize and permit IMI's directors,
officers and employees who may be elected or appointed as trustees or officers
of the Funds to serve in such capacities; and (7) take such other action with
respect to the Funds, upon their approval, as may be required by applicable law,
including without limitation the rules and regulations of the Securities and
Exchange Commission (the "SEC") and of state securities commissions and other
regulatory agencies.
Each Fund pays IMI a fee for its services under the Advisory Agreement
at an annual rate of 0.25% of the Fund's average net assets. Each Fund is also
responsible for the following expenses: (1) the fees and expenses of the Fund's
Independent Trustees; (2) the salaries and expenses of any of the Funds'
officers or employees who are not affiliated with IMI; (3) interest expenses;
(4) taxes and governmental fees, including any original issue taxes or transfer
taxes applicable to the sale or delivery of shares or certificates therefor; (5)
brokerage commissions and other expenses incurred in acquiring or disposing of
portfolio securities; (6) the expenses of registering and qualifying shares for
sale with the SEC and with various state securities commissions; (7) accounting
and legal costs; (8) insurance premiums; (9) fees and expenses of the Funds'
Custodian and Transfer Agent and any related services; (10) expenses of
obtaining quotations of portfolio securities and of pricing shares; (11)
expenses of maintaining the Funds' legal existence and of shareholders'
meetings; (12) expenses of preparation and distribution to existing shareholders
of periodic reports, proxy materials and prospectuses; and (13) fees and
expenses of membership in industry organizations.
IMI has voluntarily agreed to reimburse each Fund's fees and expenses
to the extent necessary to ensure that each Fund's Annual Operating Expenses do
not exceed certain levels disclosed in the Prospectus. With respect to each
Fund, IMI has entered into formal agreements with the managers of the underlying
funds pursuant to which the Manager has agreed to pay to IMI an amount equal to
an annual rate of up to 0.25% of the average daily value of the shares of the
underlying fund that are held by the Fund during the relevant period. IMI shall
use these payments to reduce the expenses of the Fund payable to certain service
providers of the Fund. Because such payments shall effectively reduce the Fund's
Annual Operating Expenses, these payments from the Managers of the underlying
funds may have the effect of reducing the amount that IMI would otherwise
voluntarily reimburse the Fund in order to maintain the Fund's Annual Operating
Expense at the level disclosed in the Prospectus.
ASSET ALLOCATION CONSULTANT
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 agreement with IMI (the "Subadvisory Agreement"). The Subadvisory
Agreement was approved by the sole shareholder of each Fund on __________, 1999.
Before that, the Subadvisory Agreement was approved at a meeting held on
__________, 1999 by each Fund's Board of Trustees, including a majority of the
Independent Trustees.
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 its services, GIT receives a portion of the
0.25% fee that each Fund pays to IMI.
TERM AND TERMINATION OF ADVISORY AGREEMENT AND SUBADVISORY AGREEMENT
The initial term of the Advisory Agreement is two years from March 18,
1999. The initial term of the Subadvisory Agreement is two years from
___________, 1999. Each Agreement will continue in effect with respect to the
Funds from year to year, or for more than the initial period, as the case may
be, only so long as such continuance is specifically approved at least annually
(i) by the vote of a majority of the Independent Trustees and (ii) either (a) by
the vote of a majority of the outstanding voting securities (as defined in the
1940 Act) of each Fund or (b) by the vote of a majority of the entire Board. If
the question of continuance of either Agreement (or adoption of any new
agreement) is presented to shareholders, continuance (or adoption) shall occur
only if approved by the affirmative vote of a majority of the outstanding voting
securities of each Fund. (See "Capitalization and Voting Rights.")
Each Agreement may be terminated with respect to a Fund at any time,
without payment of any penalty, by the vote of a majority of the Board, or by a
vote of a majority of the outstanding voting securities of that Fund, on 60
days' written notice to IMI, or by IMI on 60 days' written notice to the Trust.
The Advisory Agreement shall terminate automatically in the event of its
assignment.
PERSONAL INVESTMENTS BY EMPLOYEES OF IMI AND GIT
Employees of IMI and of GIT are permitted to make personal securities
transactions, subject to the requirements and restrictions set forth in IMI's
Code of Ethics and Business Conduct Polity (the "Code of Ethics"). The Code of
Ethics is designed to identify and address certain conflicts of interest between
personal investment activities and the interests of investment advisory clients
such as the Funds. Among other things, the Code of Ethics, which generally
complies with standards recommended by the Investment Company Institute's
Advisory Group on Personal Investing, prohibits certain types of transactions
absent prior approval, applies to portfolio managers, traders, research analysts
and others involved in the investment advisory process, and imposes time periods
during which personal transactions may not be made in certain securities, and
requires the submission of duplicate broker confirmations and monthly reporting
of securities transactions. Exceptions to these and other provisions of the Code
of Ethics may be granted in particular circumstances after review by appropriate
personnel.
CUSTODIAN
Pursuant to a Custodian Agreement with the Trust, Brown Brothers
Harriman & Co. (the "Custodian"), a private bank and member of the principal
securities exchanges, located at 40 Water Street, Boston, Massachusetts 02109
(the "Custodian"), maintains custody of the Funds' assets.
FUND ACCOUNTING SERVICES
Pursuant to a Fund Accounting Services Agreement, MIMI provides certain
accounting and pricing services for the Funds. As compensation for those
services, each Fund pays MIMI a monthly fee plus out-of-pocket expenses as
incurred. The monthly fee is based upon the net assets of each Fund at the
preceding month end at the following rates: $1,250 when net assets are $10
million and under; $2,500 when net assets are over $10 million to $40 million;
$5,000 when net assets are over $40 million to $75 million; and $6,500 when net
assets are over $75 million. As of the date of this SAI, no payments have been
made under the agreement.
TRANSFER AGENT AND DIVIDEND PAYING AGENT
Pursuant to a Transfer Agency and Shareholder Service Agreement, Ivy
Mackenzie Services Corp. ("IMSC"), a wholly owned subsidiary of MIMI, is the
transfer agent for the Funds. Under the Agreement, each Fund (except with
respect to its Class I shares) pays a monthly fee at an annual rate of $20.00
for each open Class A, Class B and Class C account. Each Fund pays $10.25 per
open Class I account. In addition, each Fund pays a monthly fee at an annual
rate of $4.58 per account that is closed plus certain out-of-pocket expenses. As
of the date of this SAI, the Funds had made no payments for transfer agency
services. Certain broker-dealers that maintain shareholder accounts with the
Funds through an omnibus account provide transfer agent and other
shareholder-related services that would otherwise be provided by IMSC if the
individual accounts that comprise the omnibus account were opened by their
beneficial owners directly. IMSC pays such broker-dealers a per account fee for
each open account within the omnibus account, or a fixed rate (e.g., .10%) fee,
based on the average daily net asset value of the omnibus account (or a
combination thereof). As of the date of this SAI, no payments have been made
with respect to the provision of these services for the Funds.
ADMINISTRATOR
Pursuant to an Administrative Services Agreement, MIMI provides certain
administrative services to the Funds. MIMI does not receive any compensation
under the Administrative Services Agreement. Outside of providing administrative
services to the Funds, as described above, MIMI may also act on behalf of IMDI
in paying commissions to broker-dealers with respect to sales of Class B and
Class C shares of the Funds. As of the date of this SAI, no payments have been
made with respect to the provision of these services for the Funds.
AUDITORS
PricewaterhouseCoopers LLP, independent certified public accountants,
have been selected as auditors for the Funds. The audit services performed by
PricewaterhouseCoopers LLP include audits of the annual financial statements of
each Fund. Other services provided principally relate to filings with the SEC
and the preparation of the Funds' tax returns.
BROKERAGE ALLOCATION
Subject to the overall supervision of the President and the Board, IMI
places orders for the purchase and sale of the Funds' underlying fund shares and
other permitted securities investments. In the case of the purchase and sale of
securities other than underlying fund shares (such as when a Fund is assuming a
temporary defensive position), IMI selects broker-dealers to execute
transactions and evaluates the reasonableness of commissions on the basis of
quality, quantity, and the nature of the firms' professional services. IMI may
consider sales of Fund shares as a factor in the selection of broker-dealers and
may select broker-dealers who provide IMI with research services. IMI will not,
however, execute brokerage transactions other than at the best price and
execution. As of the date of this SAI, the Funds have not paid any brokerage
commissions.
CAPITALIZATION AND VOTING RIGHTS
The capitalization of the Funds consists of an unlimited number of
shares of beneficial interest (no par value per share). When issued, shares of
each class of a Fund are fully paid, non-assessable, redeemable and fully
transferable. No class of shares of any Fund has preemptive rights or
subscription rights.
Under its Declaration of Trust, the Trust may create separate series or
portfolios and divide any series or portfolio into one or more classes. The
Trustees have authorized five series, each of which represents a Fund. The
Trustees have further authorized the issuance of Class A, Class B, Class C,
Class I and Advisor Class shares for the Funds.
Shareholders have the right to vote for the election of Trustees of the
Trust and on any and all matters on which they may be entitled to vote by law or
by the provisions of the Trust's By-Laws. The Trust is not required to hold a
regular annual meeting of shareholders, and it does not intend to do so. Shares
of each class of each Fund entitle their holders to one vote per share (with
proportionate voting for fractional shares). Shareholders of each Fund are
entitled to vote alone on matters that only affect the Fund. All classes of
shares of each Fund will vote together, except with respect to the distribution
plan applicable to the Fund's Class A, Class B or Class C shares or when a class
vote is required by the 1940 Act. On matters relating to all Funds, but
affecting them differently, separate votes by the shareholders of each Fund are
required. Approval of an investment advisory agreement and a change in
fundamental policies would be regarded as matters requiring separate voting by
the shareholders of each Fund. If the Trustees of the Trust determine that a
matter does not affect the interests of a particular Fund, then the shareholders
of that Fund will not be entitled to vote on that matter. Matters that affect
the Trust in general will be voted upon collectively by the shareholders of all
Funds.
As used in this SAI and the Prospectus, the phrase "majority vote of
the outstanding shares" of a Fund means the vote of the lesser of: (1) 67% of
the shares of the Fund (or of the Trust) present at a meeting if the holders of
more than 50% of the outstanding shares are present in person or by proxy; or
(2) more than 50% of the outstanding shares of the Fund (or of the Trust).
With respect to the submission to shareholder vote of a matter
requiring separate voting by each Fund, the matter shall have been effectively
acted upon with respect to that Fund if a majority of the outstanding voting
securities of the Fund votes for the approval of the matter, notwithstanding
that: (1) the matter has not been approved by a majority of the outstanding
voting securities of any other Fund; or (2) the matter has not been approved by
a majority of the outstanding voting securities of the Trust.
The Declaration of Trust provides that the holders of not less than
two-thirds of the outstanding shares of the Trust may remove a person serving as
trustee either by declaration in writing or at a meeting called for such
purpose. The Trustees are required to call a meeting for the purpose of
considering the removal of a person serving as Trustee if requested in writing
to do so by the holders of not less than 10% of the outstanding shares of the
Trust. Shareholders will be assisted in communicating with other shareholders in
connection with the removal of a Trustee.
The Trust's shares do not have cumulative voting rights and accordingly
the holders of more than 50% of the outstanding shares could elect the entire
Board, in which case the holders of the remaining shares would not be able to
elect any Trustees.
As of the date of this SAI, there were no Fund shares outstanding other
than those issued to the sole shareholder.
Under Massachusetts law, the Trust's shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Declaration of Trust disclaims liability of the shareholders,
Trustees or officers of the Trust for acts or obligations of the Trust, which
are binding only on the assets and property of the Trust, and requires that
notice of the disclaimer be given in each contract or obligation entered into or
executed by the Trust or its Trustees. The Declaration of Trust also provides
for indemnification out of Fund property for all loss and expense of any
shareholder of the Fund held personally liable for the obligations of the Fund.
The risk of a shareholder of the Trust incurring financial loss on account of
shareholder liability is limited to circumstances in which the Trust itself
would be unable to meet its obligations and, thus, should be considered remote.
No Fund is liable for the obligations of any other Fund.
SPECIAL RIGHTS AND PRIVILEGES
Information as to how to purchase Fund shares is contained in the
Prospectus. The Funds offer (and except as noted below, bear the cost of
providing) to investors the following additional rights and privileges. Each
Fund reserves the right to amend or terminate any one or more of these rights
and privileges. Notice of amendments to or terminations of rights and privileges
will be provided to shareholders in accordance with applicable law.
AUTOMATIC INVESTMENT METHOD
The Automatic Investment Method, which enables a Fund shareholder to
have specified amounts automatically drawn each month from his or her bank for
investment in Fund shares, is available for all classes of shares except Class
I. The minimum initial and subsequent investment under this method is $50 per
month (except in the case of a tax qualified retirement plan for which the
minimum initial and subsequent investment is $25 per month). A shareholder may
terminate the Automatic Investment Method at any time upon delivery to Ivy
Mackenzie Services Corp. ("IMSC") of telephone instructions or written notice.
To use this privilege, please complete Sections 6A and 7B of the Account
Application that is included with the Prospectus.
EXCHANGE OF SHARES
Shareholders of the Funds have an exchange privilege with each other
Fund. Before effecting an exchange, shareholders should review the Prospectus
and this SAI as it relates to the Fund into which the exchange is being made.
INITIAL SALES CHARGE SHARES. Class A shareholders may exchange their
Class A shares ("outstanding Class A shares") for Class A shares of another Fund
("new Class A Shares") on the basis of the relative net asset value per Class A
share, plus an amount equal to the difference, if any, between the sales charge
previously paid on the outstanding Class A shares and the sales charge payable
at the time of the exchange on the new Class A shares. (The additional sales
charge will be waived for Class A shares that have been invested for a period of
12 months or longer.)
CONTINGENT DEFERRED SALES CHARGE SHARES -- CLASS-A: Class A
shareholders may exchange their Class A shares that are subject to a contingent
deferred sales charge ("CDSC"), as described in the Prospectus ("outstanding
Class A shares"), for Class A shares of another Fund ("new Class A shares") on
the basis of the relative net asset value per Class A share, without the payment
of any CDSC that would otherwise be due upon the redemption of the outstanding
Class A shares. Class A shareholders of the Fund exercising the exchange
privilege will continue to be subject to that Fund's CDSC period following an
exchange if such period is longer than the CDSC period, if any, that applies to
the new Class A shares. For purposes of computing the CDSC that may be payable
upon the redemption of the new Class A shares, the holding period of the
outstanding Class A shares is "tacked" onto the holding period of the new Class
A shares.
CLASS B: Class B shareholders may exchange their Class B shares
("outstanding Class B shares") for Class B shares of another Fund ("new Class B
shares") on the basis of the relative net asset value per Class B share, without
the payment of any CDSC that would otherwise be due upon the redemption of the
outstanding Class B shares. Class B shareholders of the Fund exercising the
exchange privilege will continue to be subject to that Fund's CDSC schedule.
For purposes of both the conversion feature and computing the CDSC that
may be payable upon the redemption of the new Class B shares (prior to
conversion), the holding period of the outstanding Class B shares is "tacked"
onto the holding period of the new Class B shares.
The following table shows the CDSC schedule that applies to each Fund's
Class B shareholders:
CONTINGENT DEFERRED SALES CHARGE AS A PERCENTAGE OF
DOLLAR AMOUNT SUBJECT TO CHARGE
YEAR SINCE PURCHASE
First 5%
Second 4%
Third 3%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh and thereafter 0%
CLASS C: Class C shareholders may exchange their Class C shares
("outstanding Class C shares") for Class C shares of another Fund ("new Class C
shares") on the basis of the relative net asset value per Class C share, without
the payment of any CDSC that would otherwise be due upon redemption. (Class C
shares are subject to a CDSC of 1% if redeemed within one year of the date of
purchase.)
CLASS I AND ADVISOR CLASS: Subject to any "minimum purchase"
restrictions set forth in the following paragraph, Class I and Advisor Class
shareholders may exchange their outstanding Class I (or Advisor Class) shares
for Class I (or Advisor Class) shares of another Fund on the basis of the
relative net asset value per Class I (or Advisor Class) share.
ALL CLASSES: The minimum value of shares which may be exchanged into
another Fund in which shares are not already held is $_______ ($___________, in
the case of Class I shares). No exchange out of a Fund (other than by a complete
exchange of all Fund shares) may be made if it would reduce a shareholder's
interest in the Fund to less than $______ ($__________, in the case of Class I
shares).
Each exchange will be made on the basis of the relative net asset value
per share of the Funds involved in the exchange next computed following receipt
by IMSC of telephone instructions or a properly executed written request.
Exchanges, whether written or telephonic, must be received by IMSC by the close
of regular trading on the Exchange (normally 4:00 p.m. Eastern time) to receive
the price computed on the day of receipt. Exchange requests received after that
time will receive the price next determined following receipt of the request.
The exchange privilege may be modified or terminated at any time upon at least
60 days' notice (to the extent required by applicable law). See "Redemptions."
An exchange of shares between any of the Funds may result in a taxable
gain or loss. Generally, this will be a capital gain or loss (long-term or
short-term, depending on the holding period of the shares) in the amount of the
difference between the net asset value of the shares surrendered and the
shareholder's tax basis for those shares. However, in certain circumstances,
shareholders will be ineligible to take sales charges into account in computing
taxable gain or loss on an exchange. See "Taxation."
With limited exceptions, gain realized by a tax-deferred retirement
plan will not be taxable to the plan and will not be taxed to the participant
until distribution. Each investor should consult his or her tax adviser
regarding the tax consequences of an exchange transaction.
LETTER OF INTENT
Reduced sales charges apply to initial investments in Class A shares of
the Funds made pursuant to a non-binding Letter of Intent. A Letter of Intent
may be submitted by an individual, his or her spouse and children under the age
of 21, or a trustee or other fiduciary of a single trust estate or single
fiduciary account. (See the Account Application in the Prospectus.) Any investor
may submit a Letter of Intent stating that he or she will invest, over a period
of 13 months, at least $__________ in Class A shares of a Fund. A Letter of
Intent may be submitted at the time of an initial purchase of Class A shares of
the Fund or within 90 days of the initial purchase, in which case the Letter of
Intent will be backdated. A shareholder may include, as an accumulation credit,
the value (at the applicable offering price) of all Class A shares of the Funds
held of record by him or her as of the date of his or her Letter of Intent.
During the term of the Letter of Intent, IMSC will hold Class A shares
representing 5% of the indicated amount (less any accumulation credit value) in
escrow. The escrowed Class A shares will be released when the full indicated
amount has been purchased. If the full indicated amount is not purchased during
the term of the Letter of Intent, the investor is required to pay IMDI an amount
equal to the difference between the dollar amount of sales charge that he or she
has paid and that which he or she would have paid on his or her aggregate
purchases if the total of such purchases had been made at a single time. Such
payment will be made by an automatic liquidation of Class A shares in the escrow
account. A Letter of Intent does not obligate the investor to buy (or the Trust)
to sell the indicated amount of Class A shares, and the investor should read
carefully all the provisions of the letter before signing.
RETIREMENT PLANS
Shares of the Funds may be purchased in connection with several types
of tax-deferred retirement plans. Shares of more than one Fund may be purchased
in a single application establishing a single account under the plan, and shares
held in such an account may be exchanged among the Funds in accordance with the
terms of the applicable plan and the exchange privilege available to all
shareholders. Initial and subsequent purchase payments in connection with
tax-deferred retirement plans must be at least $25 per participant.
The following fees will be charged to individual shareholder accounts
as described in the retirement prototype plan document:
Retirement Plan New Account Fee no fee
Retirement Plan Annual Maintenance Fee $10.00 per fund account
For shareholders whose retirement accounts are diversified across
several Funds, the annual maintenance fee will be limited to not more than $20.
The following discussion describes some aspects of the tax treatment of
certain tax-deferred retirement plans under current Federal income tax law.
State income tax consequences may vary. An individual considering the
establishment of a retirement plan should consult with an attorney and/or an
accountant with respect to the terms and tax aspects of the plan.
INDIVIDUAL RETIREMENT ACCOUNTS: Shares of each Fund may be used as a
funding medium for an Individual Retirement Account ("IRA"). Eligible
individuals may establish an IRA by adopting a model custodial account available
from IMSC, who may impose a charge for establishing the account. Individuals
should consult their tax advisers before investing IRA assets in an Ivy fund if
that fund primarily distributes exempt-interest dividends.
An individual who has not reached age 70-1/2 and who receives
compensation or earned income is eligible to contribute to an IRA, whether or
not he or she is an active participant in a retirement plan. An individual who
receives a distribution from another IRA, a qualified retirement plan, a
qualified annuity plan or a tax-sheltered annuity or custodial account ("403(b)
plan") that qualifies for "rollover" treatment is also eligible to establish an
IRA by rolling over the distribution either directly or within 60 days after its
receipt. Tax advice should be obtained in connection with planning a rollover
contribution to an IRA.
In general, an eligible individual may contribute up to the lesser of
$2,000 or 100% of his or her compensation or earned income to an IRA each year.
If a husband and wife are both employed, and both are under age 70-1/2, each may
set up his or her own IRA within these limits. If both earn at least $2,000 per
year, the maximum potential contribution is $4,000 per year for both. For years
after 1996, the result is similar even if one spouse has no earned income; if
the joint earned income of the spouses is at least $4,000, a contribution of up
to $2,000 may be made to each spouse's IRA. Rollover contributions are not
subject to these limits.
An individual may deduct his or her annual contributions to an IRA in
computing his or her Federal income tax within the limits described above,
provided he or she (and his or her spouse, if they file a joint Federal income
tax return) is not an active participant in a qualified retirement plan (such as
a qualified corporate, sole proprietorship, or partnership pension, profit
sharing, 401(k) or stock bonus plan), qualified annuity plan, 403(b) plan,
simplified employee pension, or governmental plan. If he or she (or his or her
spouse) is an active participant, whether the individual's contribution to an
IRA is fully deductible, partially deductible or not deductible depends on (i)
adjusted gross income and (ii) whether it is the individual or the individual's
spouse who is an active participant, in the case of married individuals filing
jointly. Contributions may be made up to the maximum permissible amount even if
they are not deductible. Rollover contributions are not includible in income for
Federal income tax purposes and therefore are not deductible from it.
Generally, earnings on an IRA are not subject to current Federal income
tax until distributed. Distributions attributable to tax-deductible
contributions and to IRA earnings are taxed as ordinary income. Distributions of
non-deductible contributions are not subject to Federal income tax. There are
special rules for determining what portion of any distribution is allocable to
deductible and to non-deductible contributions. In general, distributions from
an IRA to an individual before he or she reaches age 59-1/2 are subject to a
nondeductible penalty tax equal to 10% of the taxable amount of the
distribution. The 10% penalty tax does not apply to amounts withdrawn from an
IRA after the individual reaches age 59-1/2, becomes disabled or dies, or if
withdrawn in the form of substantially equal payments over the life or life
expectancy of the individual and his or her designated beneficiary, if any, or
rolled over into another IRA, amounts withdrawn and used to pay for deductible
medical expenses, amounts withdrawn by certain unemployed individuals not in
excess of amounts paid for certain health insurance premiums, amounts used to
pay certain qualified higher education expenses, and amounts used within 120
days of the date the distribution is received to pay for certain first-time
homebuyer expenses. Distributions must begin to be withdrawn not later than
April 1 of the calendar year following the calendar year in which the individual
reaches age 70-1/2. Failure to take certain minimum required distributions will
result in the imposition of a 50% non-deductible penalty tax.
ROTH IRAs: Shares of the Funds also may be used as a funding medium for
a Roth Individual Retirement Account ("Roth IRA"). A Roth IRA is similar in
numerous ways to the regular (traditional) IRA, described above. Some of the
primary differences are as follows.
A single individual earning below $95,000 can contribute up to $2,000
per year to a Roth IRA. The maximum contribution amount diminishes and gradually
falls to zero for single filers with adjusted gross incomes ranging from $95,000
to $110,000. Married couples earning less than $150,000 combined, and filing
jointly, can contribute a full $4,000 per year ($2,000 per IRA). The maximum
contribution amount for married couples filing jointly phases out from $150,000
to $160,000. An individual whose adjusted gross income exceeds the maximum
phase-out amount cannot contribute to a Roth IRA.
An eligible individual can contribute money to a traditional IRA and a
Roth IRA as long as the total contribution to all IRAs does not exceed $2,000.
Contributions to a Roth IRA are not deductible. Contributions to a Roth IRA may
be made even after the individual for whom the account is maintained has
attained age 70 1/2.
No distributions are required to be taken prior to the death of the
original account holder. If a Roth IRA has been established for a minimum of
five years, distributions can be taken tax-free after reaching age 59 1/2, for a
first-time home purchase ($10,000 maximum, one time use), or upon death or
disability. All other distributions from a Roth IRA are taxable and subject to a
10% tax penalty unless an exception applies. Exceptions to the 10% penalty
include: disability, deductible medical expenses, certain purchases of health
insurance for an unemployed individual and qualified higher education expenses.
An individual with an income of less than $100,000 (who is not married
filing separately) can roll his or her existing IRA into a Roth IRA. However,
the individual must pay taxes on the taxable amount in his or her traditional
IRA. After 1998, all taxes on such a rollover will have to be paid in the tax
year in which the rollover is made.
QUALIFIED PLANS: For those self-employed individuals who wish to
purchase shares of one or more Ivy funds through a qualified retirement plan, a
Custodial Agreement and a Retirement Plan are available from IMSC. The
Retirement Plan may be adopted as a profit sharing plan or a money purchase
pension plan. A profit sharing plan permits an annual contribution to be made in
an amount determined each year by the self-employed individual within certain
limits prescribed by law. A money purchase pension plan requires annual
contributions at the level specified in the Custodial Agreement. There is no
set-up fee for qualified plans and the annual maintenance fee is $20.00 per
account.
In general, if a self-employed individual has any common law employees,
employees who have met certain minimum age and service requirements must be
covered by the Retirement Plan. A self-employed individual generally must
contribute the same percentage of income for common law employees as for himself
or herself.
A self-employed individual may contribute up to the lesser of $30,000
or 25% of compensation or earned income to a money purchase pension plan or to a
combination profit sharing and money purchase pension plan arrangement each year
on behalf of each participant. To be deductible, total contributions to a profit
sharing plan generally may not exceed 15% of the total compensation or earned
income of all participants in the plan, and total contributions to a combination
money purchase-profit sharing arrangement generally may not exceed 25% of the
total compensation or earned income of all participants. The amount of
compensation or earned income of any one participant that may be included in
computing the deduction is limited (generally to $150,000 for benefits accruing
in plan years beginning after 1993, with annual inflation adjustments). A
self-employed individual's contributions to a retirement plan on his or her own
behalf must be deducted in computing his or her earned income.
Corporate employers may also adopt the Custodial Agreement and
Retirement Plan for the benefit of their eligible employees. Similar
contribution and deduction rules apply to corporate employers.
Distributions from the Retirement Plan generally are made after a
participant's separation from service. A 10% penalty tax generally applies to
distributions to an individual before he or she reaches age 59-1/2, unless the
individual (1) has reached age 55 and separated from service; (2) dies; (3)
becomes disabled; (4) uses the withdrawal to pay tax-deductible medical
expenses; (5) takes the withdrawal as part of a series of substantially equal
payments over his or her life expectancy or the joint life expectancy of himself
or herself and a designated beneficiary; or (6) rolls over the distribution.
The Transfer Agent will arrange for Investors Bank & Trust to furnish
custodial services to the employer and any participating employees.
DEFERRED COMPENSATION FOR PUBLIC SCHOOLS AND CHARITABLE ORGANIZATIONS
("403(B)(7) ACCOUNT"): Section 403(b)(7) of the Code permits public school
systems and certain charitable organizations to use mutual fund shares held in a
custodial account to fund deferred compensation arrangements with their
employees. A custodial account agreement is available for those employers whose
employees wish to purchase shares of the Funds in conjunction with such an
arrangement. The special application for a 403(b)(7) Account is available from
IMSC.
Distributions from the 403(b)(7) Account may be made only following
death, disability, separation from service, attainment of age 59-1/2, or
incurring a financial hardship. A 10% penalty tax generally applies to
distributions to an individual before he or she reaches age 59-1/2, unless the
individual (1) has reached age 55 and separated from service; (2) dies or
becomes disabled; (3) uses the withdrawal to pay tax-deductible medical
expenses; (4) takes the withdrawal as part of a series of substantially equal
payments over his or her life expectancy or the joint life expectancy of himself
or herself and a designated beneficiary; or (5) rolls over the distribution.
There is no set-up fee for 403(b)(7) Accounts and the annual maintenance fee is
$20.00 per account.
SIMPLIFIED EMPLOYEE PENSION ("SEP") IRAs: An employer may deduct
contributions to a SEP up to the lesser of $30,000 or 15% of compensation. SEP
accounts generally are subject to all rules applicable to IRA accounts, except
the deduction limits, and are subject to certain employee participation
requirements. No new salary reduction SEPs ("SARSEPs") may be established after
1996, but existing SARSEPs may continue to be maintained, and non-salary
reduction SEPs may continue to be established as well as maintained after 1996.
SIMPLE PLANS: An employer may establish a SIMPLE IRA or a SIMPLE 401(k)
for years after 1996. An employee can make pre-tax salary reduction
contributions to a SIMPLE Plan, up to $6,000 a year (as indexed). Subject to
certain limits, the employer will either match a portion of employee
contributions, or will make a contribution equal to 2% of each employee's
compensation without regard to the amount the employee contributes. An employer
cannot maintain a SIMPLE Plan for its employees if any contributions or benefits
are credited to those employees under any other qualified retirement plan
maintained by the employer.
REINVESTMENT PRIVILEGE
Shareholders who have redeemed Class A shares of a Fund may reinvest
all or a part of the proceeds of the redemption back into Class A shares of the
Fund at net asset value (without a sales charge) within 60 days from the date of
redemption. This privilege may be exercised only once. The reinvestment will be
made at the net asset value next determined after receipt by IMSC of the
reinvestment order accompanied by the funds to be reinvested. No compensation
will be paid to any sales personnel or dealer in connection with the
transaction.
Any redemption is a taxable event. A loss realized on a redemption
generally may be disallowed for tax purposes if the reinvestment privilege is
exercised within 30 days after the redemption. In certain circumstances,
shareholders will be ineligible to take sales charges into account in computing
taxable gain or loss on a redemption if the reinvestment privilege is exercised.
See "Taxation."
REDUCED SALES CHARGES AND RIGHTS OF ACCUMULATION
A scale of reduced sales charges applies to any investment of $50,000
or more in Class A shares of the Funds. See "Initial Sales Charge Alternative --
Class A Shares" in the Prospectus. The reduced sales charge is applicable to
investments made at one time by an individual, his or her spouse and children
under the age of 21, or a trustee or other fiduciary of a single trust estate or
single fiduciary account (including a pension, profit sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code).
"Rights of Accumulation" are also applicable to current purchases of
all of the Funds by any of the persons enumerated above where the aggregate
quantity of Class A shares of the Funds and of any other investment company
distributed by IMDI previously purchased or acquired and currently owned,
determined at the higher of current offering price or amount invested, plus the
Class A shares being purchased, amounts to at least $50,000.
At the time an investment takes place, IMSC must be notified by the
investor or his or her dealer that the investment qualifies for the reduced
sales charge on the basis of previous investments. The reduced sales charge is
subject to confirmation of the investor's holdings through a check of the
particular Fund's records.
SYSTEMATIC WITHDRAWAL PLAN
A shareholder (other than a Class I shareholder) may establish a
Systematic Withdrawal Plan (a "Withdrawal Plan") by telephone instructions or by
delivery to IMSC of a written election to have his or her shares withdrawn
periodically, accompanied by a surrender to IMSC of all share certificates then
outstanding in such shareholder's name, properly endorsed by the shareholder. To
be eligible to elect a Withdrawal Plan, a shareholder must have at least $5,000
in his or her account. A Withdrawal Plan may not be established if the investor
is currently participating in the Automatic Investment Method. A Withdrawal Plan
may involve the depletion of a shareholder's principal, depending on the amount
withdrawn.
A redemption under a Withdrawal Plan is a taxable event. Shareholders
contemplating participating in a Withdrawal Plan should consult their tax
advisers.
Additional investments made by investors participating in a Withdrawal
Plan must equal at least $________ each while the Withdrawal Plan is in effect.
Making additional purchases while a Withdrawal Plan is in effect may be
disadvantageous to the investor because of applicable initial sales charges or
CDSCs.
An investor may terminate his or her participation in the Withdrawal
Plan at any time by delivering written notice to IMSC. If all shares held by the
investor are liquidated at any time, participation in the Withdrawal Plan will
terminate automatically. The Funds or IMSC may terminate the Withdrawal Plan
option at any time after reasonable notice to shareholders.
GROUP SYSTEMATIC INVESTMENT PROGRAM
Shares of the Funds may be purchased in connection with investment
programs established by employee or other groups using systematic payroll
deductions or other systematic payment arrangements. The Funds do not themselves
organize, offer or administer any such programs. However, they may, depending
upon the size of the program, waive the minimum initial and additional
investment requirements for purchases by individuals in conjunction with
programs organized and offered by others. Unless shares of the Funds are
purchased in conjunction with IRAs (see "How to Buy Shares" in the Prospectus),
such group systematic investment programs are not entitled to special tax
benefits under the Code. The Funds reserve the right to refuse purchases at any
time or suspend the offering of shares in connection with group systematic
investment programs, and to restrict the offering of shareholder privileges,
such as check writing, simplified redemptions and other optional privileges, to
shareholders using group systematic investment programs.
With respect to each shareholder account established on or after
September 15, 1972 under a group systematic investment program, the Funds and
IMI each currently charge a maintenance fee of $3.00 (or portion thereof) that
for each twelve-month period (or portion thereof) that the account is
maintained. The Funds may collect such fee (and any fees due to IMI) through a
deduction from distributions to the shareholders involved or by causing on the
date the fee is assessed a redemption in each such shareholder account
sufficient to pay such fee. The Funds reserves the right to change these fees
from time to time without advance notice.
Class A shares of the Funds are made available to Merrill Lynch Daily K
Plan (the "Plan") participants at NAV without an initial sales charge if:
(i) the Plan is recordkept on a daily valuation basis by Merrill
Lynch and, on the date the Plan Sponsor signs the Merrill
Lynch Recordkeeping Service Agreement, the Plan has $3 million
or more in assets invested in broker/dealer funds not advised
or managed by Merrill Lynch Asset Management, L.P. ("MLAM")
that are made available pursuant to a Service Agreement
between Merrill Lynch and the fund's principal underwriter or
distributor and in funds advised or managed by MLAM
(collectively, the "Applicable Investments");
(ii) the Plan is recordkept on a daily valuation basis by an
independent recordkeeper whose services are provided through a
contract or alliance arrangement with Merrill Lynch, and on
the date the Plan Sponsor signs the Merrill Lynch
Recordkeeping Service Agreement, the Plan has $3 million or
more in assets, excluding money market funds, invested in
Applicable Investments; or
(iii) the Plan has 500 or more eligible employees, as determined by
Merrill Lynch plan conversion manager, on the date the Plan
Sponsor signs the Merrill Lynch Recordkeeping Service
Agreement.
Alternatively, Class B shares of the Funds are made available to Plan
participants at NAV without a CDSC if the Plan conforms with the requirements
for eligibility set forth in (i) through (iii) above but either does not meet
the $3 million asset threshold or does not have 500 or more eligible employees.
Plans recordkept on a daily basis by Merrill Lynch or an independent
recordkeeper under a contract with Merrill Lynch that are currently investing in
Class B shares of the Funds convert to Class A shares once the Plan has reached
$5 million invested in Applicable Investments, or 10 years after the date of the
initial purchase by a participant under the Plan--the Plan will receive a Plan
level share conversion.
REDEMPTIONS
Shares of the Funds are redeemed at their net asset value next
determined after a proper redemption request has been received by IMSC, less any
applicable CDSC. Unless a shareholder requests that the proceeds of any
redemption be wired to his or her bank account, payment for shares tendered for
redemption is made by check within seven days after tender in proper form,
except that the Funds reserve the right to suspend the right of redemption or to
postpone the date of payment upon redemption beyond seven days (i) for any
period during which the Exchange is closed (other than customary weekend and
holiday closings) or during which trading on the Exchange is restricted, (ii)
for any period during which an emergency exists as determined by the SEC as a
result of which disposal of securities owned by the Funds is not reasonably
practicable or it is not reasonably practicable for a Fund to fairly determine
the value of its net assets, or (iii) for such other periods as the SEC may by
order permit for the protection of shareholders of the Funds.
The Trust may redeem those accounts of shareholders who have maintained
an investment, including sales charges paid, of less than $1,000 in the Funds
for a period of more than 12 months. All accounts below that minimum will be
redeemed simultaneously when MIMI deems it advisable. The $1,000 balance will be
determined by actual dollar amounts invested by the shareholder, unaffected by
market fluctuations. The Trust will notify any such shareholder by certified
mail of its intention to redeem such account, and the shareholder shall have 60
days from the date of such letter to invest such additional sums as shall raise
the value of such account above that minimum. Should the shareholder fail to
forward such sum within 60 days of the date of the Trust's letter of
notification, the Trust will redeem the shares held in such account and transmit
the redemption in value thereof to the shareholder. However, those shareholders
who are investing pursuant to the Automatic Investment Method will not be
redeemed automatically unless they have ceased making payments pursuant to the
plan for a period of at least six consecutive months, and these shareholders
will be given six-months' notice by the Trust before such redemption.
Shareholders in a qualified retirement, pension or profit sharing plan who wish
to avoid tax consequences must "rollover" any sum so redeemed into another
qualified plan within 60 days. The Trustees of the Trust may change the minimum
account size.
If a shareholder has given authorization for telephonic redemption
privilege, shares can be redeemed and proceeds sent by Federal wire to a single
previously designated bank account. The Funds may delay for up to seven days
delivery of the proceeds of a wire redemption request of $250,000 or more if
considered appropriate under then-current market conditions. The Trust reserves
the right to change this minimum or to terminate the telephonic redemption
privilege without prior notice. The Trust cannot be responsible for the
efficiency of the Federal wire system of the shareholder's dealer of record or
bank. The shareholder is responsible for any charges by the shareholder's bank.
The Funds employ reasonable procedures that require personal
identification prior to acting on redemption or exchange instructions
communicated by telephone to confirm that such instructions are genuine. In the
absence of such instructions, a Fund may be liable for any losses due to
unauthorized or fraudulent telephone instructions.
CONVERSION OF CLASS B SHARES
As described in the Prospectus, Class B shares of each Fund will
automatically convert to Class A shares of that Fund, based on the relative net
asset values per share of the two classes, no later than the month following the
eighth anniversary of the initial issuance of such Class B shares of each Fund
occurs. For the purpose of calculating the holding period required for
conversion of Class B shares, the date of initial issuance shall mean: (1) the
date on which such Class B shares were issued, or (2) for Class B shares
obtained through an exchange, or a series of exchanges, (subject to the exchange
privileges for Class B shares) the date on which the original Class B shares
were issued. For purposes of conversion of Class B shares, Class B shares
purchased through the reinvestment of dividends and capital gain distributions
paid in respect of Class B shares will be held in a separate sub-account. Each
time any Class B shares in the shareholder's regular account (other than those
shares in the sub-account) convert to Class A shares, a pro rata portion of the
Class B shares in the sub-account will also convert to Class A shares. The
portion will be determined by the ratio that the shareholder's Class B shares
converting to Class A shares bears to the shareholder's total Class B shares not
acquired through the reinvestment of dividends and capital gain distributions.
NET ASSET VALUE
The net asset value per share of each Fund is computed by dividing the
value of the Fund's aggregate net assets (i.e., its total assets less its
liabilities) by the number of the Fund's shares outstanding. A Fund's
liabilities, if not identifiable as belonging to a particular class of the Fund,
are allocated among that Fund's several classes based on their relative net
asset size. Liabilities attributable to a particular class are charged to that
class directly. The total liabilities for a class are then deducted from the
class's proportionate interest in the Fund's assets, and the resulting amount is
divided by the number of shares of the class outstanding to produce its net
asset value per share.
Each Fund's portfolio is valued (and net asset value per share is
determined) as of the close of regular trading on the New York Stock Exchange
(normally 4:00 p.m., eastern time) on each day the Exchange is open for trading.
The Exchange and the Trust's offices are expected to be closed, and net asset
value will not be calculated, on the following national business holidays: New
Year's Day, Martin Luther King, Jr. Day, Presidents Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. On those
days when either or both of the Funds' Custodian or the Exchange close early as
a result of a partial holiday or otherwise, the Funds reserve the right to
advance the time on that day by which purchase and redemption requests must be
received. The net asset value per share of each underlying fund will be
calculated and reported to each Fund that holds its shares by the underlying
fund's accounting agent. Any short-term securities with a remaining maturity of
sixty days or less are valued by the amortized cost method.
If the value of a portfolio asset as determined in accordance with
these procedures is not believed to represent the fair market value of the
portfolio asset, the value of the portfolio asset is taken to be an amount
which, in the opinion of the Funds' Valuation Committee, represents fair value
on the basis of all available information.
The sale of the Funds' shares will be suspended during any period when
the determination of net asset value is suspended pursuant to rules or orders of
the SEC and may be suspended by the Board whenever in its judgment it is in the
Funds' best interest to do so.
TAXATION
The following is a general discussion of certain tax rules thought to
be applicable with respect to the Funds. It is merely a summary and is not an
exhaustive discussion of all possible situations or of all potentially
applicable taxes. Accordingly, shareholders and prospective shareholders should
consult a competent tax adviser about the tax consequences to them of investing
in the Funds.
TAXATION OF THE FUNDS AND THEIR SHAREHOLDERS
Each Fund intends to be taxed as a regulated investment company under
Subchapter M of the Code. Accordingly, each Fund must, among other things, (a)
derive in each taxable year at least 90% of its gross income from dividends,
interest, payments with respect to certain securities loans, and gains from the
sale or other disposition of stock, securities or foreign currencies, or other
income derived with respect to its business of investing in such stock,
securities or currencies; and (b) diversify its holdings so that, at the end of
each fiscal quarter, (i) at least 50% of the market value of each Fund's assets
is represented by cash, U.S. Government securities, the securities of other
regulated investment companies and other securities, with such other securities
limited, in respect of any one issuer, to an amount not greater than 5% of the
value of each Fund's total assets and 10% of the outstanding voting securities
of such issuer, and (ii) not more than 25% of the value of its total assets is
invested in the securities of any one issuer (other than U.S. Government
securities and the securities of other regulated investment companies).
As a regulated investment company, each Fund generally will not be
subject to U.S. Federal income tax on its income and gains that it distributes
to shareholders, if at least 90% of its investment company taxable income (which
includes, among other items, dividends, interest and the excess of any
short-term capital gains over long-term capital losses) for the taxable year is
distributed. Each Fund intends to distribute all such income.
Amounts not distributed on a timely basis in accordance with a calendar
year distribution requirement are subject to a nondeductible 4% excise tax at
the Fund level. To avoid the tax, each Fund must distribute during each calendar
year, (1) at least 98% of its ordinary income (not taking into account any
capital gains or losses) for the calendar year (2) at least 98% of its capital
gains in excess of its capital losses (adjusted for certain ordinary losses) for
a one-year period generally ending on October 31 of the calendar year, and (3)
all ordinary income and capital gains for previous years that were not
distributed during such years. To avoid application of the excise tax, each Fund
intends to make distributions in accordance with the calendar year distribution
requirements. A distribution will be treated as paid on December 31 of the
current calendar year if it is declared by a Fund in October, November or
December of the year with a record date in such a month and paid by the Fund
during January of the following year. Such distributions will be taxable to
shareholders in the calendar year the distributions are declared, rather than
the calendar year in which the distributions are received.
DISTRIBUTIONS
Distributions of investment company taxable income are taxable to a
U.S. shareholder as ordinary income, whether paid in cash or shares. Dividends
paid by the Funds to a corporate shareholder, to the extent such dividends are
attributable to dividends received from U.S. corporations by an underlying fund,
may qualify for the dividends received deduction. However, the revised
alternative minimum tax applicable to corporations may reduce the value of the
dividends received deduction. Distributions of net capital gains (the excess of
net long-term capital gains over net short-term capital losses), if any,
designated by each Fund as capital gain dividends, are taxable to shareholders
as long-term capital gains whether paid in cash or in shares, and regardless of
how long the shareholder has held the Fund's shares; such distributions are not
eligible for the dividends received deduction. Shareholders receiving
distributions in the form of newly issued shares will have a cost basis in each
share received equal to the net asset value of a share of that Fund on the
distribution date. A distribution of an amount in excess of a Fund's current and
accumulated earnings and profits will be treated by a shareholder as a return of
capital, which is applied against and reduces the shareholder's basis in his or
her shares. To the extent that the amount of any such distribution exceeds the
shareholder's basis in his or her shares, the excess will be treated by the
shareholder as gain from a sale or exchange of the shares. Shareholders will be
notified annually as to the U.S. Federal tax status of distributions and
shareholders receiving distributions in the form of newly issued shares will
receive a report as to the net asset value of the shares received.
Income received by an underlying fund from sources within a foreign
country may be subject to withholding and other taxes imposed by that country.
If more than 50% of the value of an underlying fund's total assets at the close
of its taxable year consists of stock or securities of foreign corporations, the
underlying fund will be eligible and may elect to "pass-through" to its
shareholders, including a Fund, the amount of such foreign income and similar
taxes paid by the underlying fund. Pursuant to this election, the Fund would be
required to include in gross income (in addition to taxable dividends actually
received), its pro rata share of foreign income and similar taxes and to deduct
such amount in computing its taxable income or to use it as a foreign tax credit
against its U.S. federal income taxes, subject to limitations. A Fund would not,
however, be eligible to elect to "pass-through" to its shareholders the ability
to claim a deduction or credit with respect to foreign income and similar taxes
paid by the underlying fund.
If the net asset value of shares is reduced below a shareholder's cost
as a result of a distribution by a Fund, such distribution generally will be
taxable even though it represents a return of invested capital. Shareholders
should be careful to consider the tax implications of buying shares just prior
to a distribution. The price of shares purchased at this time may reflect the
amount of the forthcoming distribution. Those purchasing just prior to a
distribution will receive a distribution that generally will be taxable to them.
DISPOSITION OF SHARES
Upon a redemption, sale or exchange of his or her shares, a shareholder
will realize a taxable gain or loss depending upon his or her basis in the
shares. Such gain or loss will be treated as capital gain or loss if the shares
are capital assets in the shareholder's hands and, if so, will be long-term or
short-term, depending upon the shareholder's holding period for the shares. Any
loss realized on a redemption sale or exchange will be disallowed to the extent
the shares disposed of are replaced (including through reinvestment of
dividends) within a period of 61 days beginning 30 days before and ending 30
days after the shares are disposed of. In such a case, the basis of the shares
acquired will be adjusted to reflect the disallowed loss. Any loss realized by a
shareholder on the sale of Fund shares held by the shareholder for six months or
less will be treated for tax purposes as a long-term capital loss to the extent
of any distributions of capital gain dividends received or treated as having
been received by the shareholder with respect to such shares.
In some cases, shareholders will not be permitted to take all or
portion of their sales loads into account for purposes of determining the amount
of gain or loss realized on the disposition of their shares. This prohibition
generally applies where (1) the shareholder incurs a sales load in acquiring the
shares of a Fund, (2) the shares are disposed of before the 91st day after the
date on which they were acquired, and (3) the shareholder subsequently acquires
shares in the Fund or another regulated investment company and the otherwise
applicable sales charge is reduced under a "reinvestment right" received upon
the initial purchase of Fund shares. The term "reinvestment right" means any
right to acquire shares of one or more regulated investment companies without
the payment of a sales load or with the payment of a reduced sales charge. Sales
charges affected by this rule are treated as if they were incurred with respect
to the shares acquired under the reinvestment right. This provision may be
applied to successive acquisitions of fund shares.
BACKUP WITHHOLDING
Each Fund will be required to report to the Internal Revenue Service
("IRS") all taxable distributions as well as gross proceeds from the redemption
of that Fund's shares, except in the case of certain exempt shareholders. All
such distributions and proceeds will be subject to withholding of Federal income
tax at a rate of 31% ("backup withholding") in the case of non-exempt
shareholders if (1) the shareholder fails to furnish the Fund with and to
certify the shareholder's correct taxpayer identification number or social
security number, (2) the IRS notifies the shareholder or the Fund that the
shareholder has failed to report properly certain interest and dividend income
to the IRS and to respond to notices to that effect, or (3) when required to do
so, the shareholder fails to certify that he or she is not subject to backup
withholding. If the withholding provisions are applicable, any such
distributions or proceeds, whether reinvested in additional shares or taken in
cash, will be reduced by the amounts required to be withheld.
Distributions may also be subject to additional state, local and
foreign taxes depending on each shareholder's particular situation. Non-U.S.
shareholders may be subject to U.S. tax rules that differ significantly from
those summarized above. This discussion does not purport to deal with all of the
tax consequences applicable to the Funds or shareholders. Shareholders are
advised to consult their own tax advisers with respect to the particular tax
consequences to them of an investment in the Funds.
TAXATION OF THE UNDERLYING FUNDS
Each underlying fund intends to qualify annually and elects to be
treated as a regulated investment company under Subchapter M of the Code. In any
year in which an underlying fund qualifies as a regulated investment company and
timely distributes all of its taxable income, the underlying fund generally will
not pay any federal income or excise tax.
Distributions of an underlying fund's investment company taxable income
are taxable as ordinary income to a Fund which invests in the underlying fund.
Distributions of the excess of an underlying fund's net long-term capital gain
over its net short-term capital loss, which are properly designated as "capital
gain dividends," are taxable as long-term capital gain to a Fund which invests
in the underlying fund, regardless of how long the Fund held the underlying
fund's shares, and are not eligible for the corporate dividends-received
deduction. Upon the sale or other disposition by a Fund of shares of an
underlying fund, the Fund generally will realize a capital gain or loss which
will be long-term or short-term, generally depending upon the Fund's holding
period for the shares.
DISTRIBUTION SERVICES
Ivy Mackenzie Distributors, Inc. ("IMDI"), a wholly owned subsidiary of
MIMI, serves as the exclusive distributor of the Funds' shares pursuant to a
Distribution Agreement with the Funds dated , 1999 (the "Distribution
Agreement"). The Board approved the Distribution Agreement on March 18, 1999.
IMDI distributes shares of the Funds through broker-dealers who are members of
the National Association of Securities Dealers, Inc. and who have executed
dealer agreements with IMDI. IMDI distributes shares of the Funds continuously,
but reserves the right to suspend or discontinue distribution on that basis.
IMDI is not obligated to sell any specific amount of Funds shares.
Pursuant to the Distribution Agreement, IMDI is entitled to deduct a
commission on all Class A Fund shares sold equal to the difference, if any,
between the public offering price, as set forth in the Fund's then-current
prospectus, and the net asset value on which such price is based. Out of that
commission, IMDI may reallow to dealers such concession as IMDI may determine
from time to time. In addition, IMDI is entitled to deduct a CDSC on the
redemption of Class A shares sold without an initial sales charge and Class B
and Class C shares, in accordance with, and in the manner set forth in, the
Prospectus.
Under the Distribution Agreement, each Fund bears, among other
expenses, the expenses of registering and qualifying its shares for sale under
federal and state securities laws and preparing and distributing to existing
shareholders periodic reports, proxy materials and prospectuses.
As of the date of this each SAI, IMDI had not received any payments
under the Distribution Agreement with respect to any Fund.
The Distribution Agreement will continue in effect for each Fund for
successive one-year periods, provided that such continuance is specifically
approved at least annually by the vote of a majority of the Independent
Trustees, cast in person at a meeting called for that purpose and by the vote of
either a majority of the entire Board or a majority of the outstanding voting
securities of the Fund. The Distribution Agreement may be terminated with
respect to any Fund at any time, without payment of any penalty, by IMDI on 60
days' written notice to the Fund or by any Fund by vote of either a majority of
the outstanding voting securities of any Fund or a majority of the Independent
Trustees on 60 days' written notice to IMDI. The Distribution Agreement shall
terminate automatically in the event of its assignment.
RULE 18F-3 PLAN. On February 23, 1995, the SEC adopted Rule 18f-3 under
the 1940 Act, which permits a registered open-end investment company to issue
multiple classes of shares in accordance with a written plan approved by the
investment company's board of directors and filed with the SEC. At a meeting
held on March 18, 1999, the Trustees adopted a Rule 18f-3 plan on behalf of the
Funds. The key features of the Rule 18f-3 plan are as follows: (i) shares of
each class of each Fund represent an equal pro rata interest in that Fund and
generally have identical voting, dividend, liquidation, and other rights,
preferences, powers, restrictions, limitations, qualifications, terms and
conditions, except that each class bears certain class-specific expenses and has
separate voting rights on certain matters that relate solely to that class or in
which the interests of shareholders of one class differ from the interests of
shareholders of another class; (ii) subject to certain limitations described in
the Prospectus, shares of a particular class of each Fund may be exchanged for
shares of the same class of another Ivy fund; and (iii) each Fund's Class B
shares will convert automatically into Class A shares of that Fund after a
period of eight years, based on the relative net asset value of such shares at
the time of conversion.
RULE 12B-1 DISTRIBUTION PLANS. The Trust has adopted on behalf of each
Fund, in accordance with Rule 12b-1 under the 1940 Act, separate Rule 12b-1
distribution plans pertaining to each Fund's Class A, Class B and Class C shares
(each, a "Plan"). In adopting each Plan, a majority of the Independent Trustees
have concluded in accordance with the requirements of Rule 12b-1 that there is a
reasonable likelihood that each Plan will benefit the Fund and its shareholders.
The Trustees of the Trust believe that the Plans should result in greater sales
and/or fewer redemptions of each Fund's shares, although it is impossible to
know for certain the level of sales and redemptions of each Fund's shares in the
absence of a Plan or under an alternative distribution arrangement.
Under each Plan, the Funds each pay to IMDI a service fee, accrued
daily and paid monthly, at the annual rate of up to 0.25% of the average daily
net assets attributable to its Class A, Class B or Class C shares, respectively.
The services for which service fees may be paid include, among other things,
advising clients or customers regarding the purchase, sale or retention of Fund
shares, answering routine inquiries concerning the Funds and assisting
shareholders in changing options or enrolling in specific plans. Pursuant to
each Plan, service fee payments made out of or charged against the assets
attributable to a Fund's Class A, Class B or Class C shares must be in
reimbursement for services rendered for or on behalf of the affected class. The
expenses not reimbursed in any one month may be reimbursed in a subsequent
month. The Class A Plan does not provide for the payment of interest or carrying
charges as distribution expenses.
Under the Funds' Class B and Class C Plans, each Fund also pays IMDI a
distribution fee, accrued daily and paid monthly, at the annual rate of 0.75% of
the average daily net assets attributable to its Class B or Class C shares. IMDI
may reallow to dealers all or a portion of the service and distribution fees as
IMDI may determine from time to time. The distribution fees compensate IMDI for
expenses incurred in connection with activities primarily intended to result in
the sale of each Fund's Class B or Class C shares, including the printing of
prospectuses and reports for persons other than existing shareholders and the
preparation, printing and distribution of sales literature and advertising
materials. Pursuant to each Class B and Class C Plan, IMDI may include interest,
carrying or other finance charges in its calculation of distribution expenses,
if not prohibited from doing so pursuant to an order of or a regulation adopted
by the SEC.
Among other things, each Plan provides that (1) IMDI will submit to the
Board at least quarterly, and the Trustees will review, written reports
regarding all amounts expended under the Plan and the purposes for which such
expenditures were made; (2) each Plan will continue in effect only so long as
such continuance is approved at least annually, and any material amendment
thereto is approved, by the votes of a majority of the Board, including the
Independent Trustees, cast in person at a meeting called for that purpose; (3)
payments by each Fund under each Plan shall not be materially increased without
the affirmative vote of the holders of a majority of the outstanding shares of
the relevant class; and (4) while each Plan is in effect, the selection and
nomination of Trustees who are not "interested persons" (as defined in the 1940
Act) of the Funds shall be committed to the discretion of Trust who are not
"interested persons" of the Funds.
IMDI may make payments for distribution assistance and for
administrative and accounting services from resources that may include the
management fees paid by the Fund. IMDI also may make payments (such as the
service fee payments described above) to unaffiliated broker-dealers for
services rendered in the distribution of the Funds' shares. To qualify for such
payments, shares may be subject to a minimum holding period. However, no such
payments will be made to any dealer or broker if at the end of each year the
amount of shares held does not exceed a minimum amount. The minimum holding
period and minimum level of holdings will be determined from time to time by
IMDI.
A report of the amount expended pursuant to each Plan, and the purposes
for which such expenditures were incurred, must be made to the Board for its
review at least quarterly. As of the date of this SAI, no payments had been made
under the Plans with respect to each Fund.
Each Plan may be amended at any time with respect to the class of
shares of each Fund to which the Plan relates by vote of the Trustees, including
a majority of the Independent Trustees, cast in person at a meeting called for
the purpose of considering such amendment. Each Plan may be terminated at any
time with respect to the class of shares of each Fund to which the Plan relates,
without payment of any penalty, by vote of a majority of the Independent
Trustees, or by vote of a majority of the outstanding voting securities of that
class.
If the Distribution Agreement or any Plan is terminated (or not
renewed) with respect to any of the Funds (or class of shares thereof), each may
continue in effect with respect to any other Fund (or Class of shares thereof)
as to which they have not been terminated (or have been renewed).
PERFORMANCE INFORMATION
Performance information for the classes of shares of each Fund may be
compared, in reports and promotional literature, to: (i) the S&P 500 Index, the
Dow Jones Industrial Average ("DJIA"), or other unmanaged indices so that
investors may compare each Fund's results with those of a group of unmanaged
securities widely regarded by investors as representative of the securities
markets in general; (ii) other groups of mutual funds tracked by Lipper
Analytical Services, a widely used independent research firm that ranks mutual
funds by overall performance, investment objectives and assets, or tracked by
other services, companies, publications or other criteria; and (iii) the
Consumer Price Index (measure for inflation) to assess the real rate of return
from an investment in a Fund. Unmanaged indices may assume the reinvestment of
dividends but generally do not reflect deductions or administrative and
management costs and expenses. Performance rankings are based on historical
information and are not intended to indicate future performance.
YIELD. Quotations of yield for a specific class of shares of a Fund
will be based on all investment income attributable to that class earned during
a particular 30-day (or one month) period (including dividends and interest),
less expenses attributable to that class accrued during the period ("net
investment income"), and will be computed by dividing the net investment income
per share of that class earned during the period by the maximum offering price
per share (in the case of Class A shares) or the net asset value per share (in
the case of Class B and Class C shares) on the last day of the period, according
to the following formula:
YIELD = 2[({(a-b)/cd} + 1){superscript 6}-1]
Where: a = dividends and interest earned during the period
attributable to a specific class of shares,
b = expenses accrued for the period attributable to that
class (net of reimbursements),
c = the average daily number of shares of that class
outstanding during the period that were entitled to
receive dividends, and
d = the maximum offering price per
share (in the case of Class A
shares) or the net asset value per
share (in the case of Class B
shares, Class C shares and Class I
shares) on the last day of the
period.
AVERAGE ANNUAL TOTAL RETURN. Quotations of standardized average annual
total return ("Standardized Return") for a specific class of shares of a Fund
will be expressed in terms of the average annual compounded rate of return that
would cause a hypothetical investment in that class of the Fund made on the
first day of a designated period to equal the ending redeemable value ("ERV") of
such hypothetical investment on the last day of the designated period, according
to the following formula:
P(1 + T){superscript n} = ERV
Where: P = a hypothetical initial payment of $1,000 to
purchase shares of a specific class
T = the average annual total return of shares of
that class
n = the number of years
ERV = the ending redeemable value of a
hypothetical $1,000 payment made at
the beginning of the period.
For purposes of the above computation for a Fund, it is assumed that
all dividends and capital gains distributions made by the Fund are reinvested at
net asset value in additional shares of the same class during the designated
period. In calculating the ending redeemable value for Class A shares and
assuming complete redemption at the end of the applicable period, the maximum
______% sales charge is deducted from the initial $________ payment and, for
Class B and Class C shares, the applicable CDSC imposed upon redemption of Class
B or Class C shares held for the period is deducted. Standardized Return
quotations for each Fund do not take into account any required payments for
federal or state income taxes. Standardized Return quotations for Class B shares
for periods of over eight years will reflect conversion of the Class B shares to
Class A shares at the end of the eighth year. Standardized Return quotations are
determined to the nearest 1/100 of 1%.
The Funds may, from time to time, include in advertisements,
promotional literature or reports to shareholders or prospective investors total
return data that are not calculated according to the formula set forth above
("Non-Standardized Return"). Neither initial nor CDSCs are taken into account in
calculating Non-Standardized Return; a sales charge, if deducted, would reduce
the return.
CUMULATIVE TOTAL RETURN. Cumulative total return is the cumulative rate
of return on a hypothetical initial investment of $1,000 in a specific class of
shares of a Fund for a specified period. Cumulative total return quotations
reflect changes in the price of each Fund's shares and assume that all dividends
and capital gains distributions during the period were reinvested in the Fund
shares. Cumulative total return is calculated by computing the cumulative rates
of return of a hypothetical investment in a specific class of shares of a Fund
over such periods, according to the following formula (cumulative total return
is then expressed as a percentage):
C = (ERV/P) - 1
Where: C = cumulative total return
P = a hypothetical initial investment of $1,000 to
purchase shares of a specific class
ERV = ending redeemable value: ERV is
the value, at the end of the
applicable period, of a hypothetical
$1,000 investment made at the
beginning of the applicable period.
OTHER QUOTATIONS, COMPARISONS AND GENERAL INFORMATION. The foregoing
computation methods are prescribed for advertising and other communications
subject to SEC Rule 482. Communications not subject to this rule may contain a
number of different measures of performance, computation methods and
assumptions, including but not limited to: historical total returns; results of
actual or hypothetical investments; changes in dividends, distributions or share
values; or any graphic illustration of such data. These data may cover any
period of a Fund's existence and may or may not include the impact of sales
charges, taxes or other factors.
Performance quotations for the Funds will vary from time to time
depending on market conditions, the composition of the Funds' portfolios and
operating expenses of the Funds. These factors and possible differences in the
methods used in calculating performance quotations should be considered when
comparing performance information regarding the Funds' shares with information
published for other investment companies and other investment vehicles.
Performance quotations should also be considered relative to changes in the
value of the Funds' shares and the risks associated with the Funds' investment
objectives and policies. At any time in the future, performance quotations may
be higher or lower than past performance quotations and there can be no
assurance that any historical performance quotation will continue in the future.
The Funds may also cite endorsements or use for comparison its
performance rankings and listings reported in such newspapers or business or
consumer publications as, among others: AAII Journal, Barron's, Boston Business
Journal, Boston Globe, Boston Herald, Business Week, Consumer's Digest, Consumer
Guide Publications, Changing Times, Financial Planning, Financial World, Forbes,
Fortune, Growth Fund Guide, Houston Post, Institutional Investor, International
Fund Monitor, Investor's Daily, Los Angeles Times, Medical Economics, Miami
Herald, Money Mutual Fund Forecaster, Mutual Fund Letter, Mutual Fund Source
Book, Mutual Fund Values, National Underwriter, Nelson's Directory of Investment
Managers, New York Times, Newsweek, No Load Fund Investor, No Load Fund* X,
Oakland Tribune, Pension World, Pensions and Investment Age, Personal Investor,
Rugg and Steele, Time, U.S. News and World Report, USA Today, The Wall Street
Journal, and Washington Post.
FINANCIAL STATEMENTS
The Funds' Statement of Assets and Liabilities as of ____________, 1999
and the Notes thereto are attached hereto as Appendix A.
<PAGE>
APPENDIX A: STATEMENT OF ASSETS AND LIABILITIES AS OF____________, 1999
AND REPORT OF INDEPENDENT ACCOUNTANTS
INTERNATIONAL SOLUTIONS I - CONSERVATIVE GROWTH
STATEMENT OF ASSETS AND LIABILITIES
JUNE ___, 1999
ASSETS
Cash.................................................. $ 100,000
Prepaid blue sky fees................................. ______
------------
Total Assets...................................... ______
------------
LIABILITIES
Due to affiliate...................................... ______
------------
NET ASSETS................................................. $ ___
=======
CLASS A:
Net asset value and redemption price per share
($10 / 1 share outstanding)....................... $ 10.00
=======
Maximum offering price per share
($10.00 x 100 / 94.25)*........................... $ 10.61
=======
CLASS B:
Net asset value, offering price and redemption
price** per share
($10 / 1 share outstanding)....................... $ 10.00
=======
CLASS C:
Net asset value, offering price and redemption
price*** per share
($10 / 1 share outstanding)....................... $ 10.00
=======
CLASS I:
Net asset value, offering price and redemption
price per share
($10 / 1 share outstanding)....................... $ 10.00
=======
ADVISOR CLASS:
Net asset value, offering price and redemption
price per share
($10 / 1 share outstanding)....................... $ 10.00
=======
NET ASSETS CONSISTS OF:
Capital paid-in $ ____
=======
* On sales of more than $100,000 the offering price is reduced.
** Redemption price per share is equal to the net asset value per share
less any applicable contingent deferred sales charge, up to a maximum
of 5%.
*** Redemption price per share is equal to the net asset value per share
less any applicable contingent deferred sales charge, up to a maximum
of 1%.
(See Notes to Financial Statement)
<PAGE>
INTERNATIONAL SOLUTIONS I - CONSERVATIVE GROWTH
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
JUNE ___, 1999
1. ORGANIZATION: Ivy International Solutions I - Conservative Growth (the
"Fund") is a diversified series of shares of Mackenzie Solutions. The shares of
beneficial interest are assigned no par value and an unlimited number of shares
of Class A, Class B, Class C, Class I and Advisor Class are authorized.
Mackenzie Solutions was organized as a Massachusetts business trust under a
Declaration of Trust dated November 18, 1998 and is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company.
The Fund will commence operations on July ___, 1999. As of the date of this
report, operations have been limited to organizational matters and the issuance
of initial shares to Mackenzie Investment Management Inc.
(MIMI).
2. ORGANIZATIONAL COSTS: The Fund incurred organizational expenses of $_____,
comprised of $2,500 for auditing and $_____ for legal. The full amount of
organizational expenses were assumed by MIMI and the Fund is not required to
reimburse MIMI.
3. OFFERING COSTS AND PREPAID BLUE SKY FEES: Blue sky fees will be amortized
over a one year period beginning July ___, 1999, the date the Fund is expected
to commence operations. Offering costs and blue sky fees have been paid by MIMI
and will be reimbursed by the Fund.
4. TRANSACTIONS WITH AFFILIATES: Ivy Management, Inc. (IMI), a wholly owned
subsidiary of MIMI, is the Manager and Investment Adviser of the Fund.
Currently, IMI voluntarily limits the Fund's total operating expenses (excluding
taxes, 12b-1 fees, brokerage commissions, interest, litigation and
indemnification expenses, and any other extraordinary expenses) to an annual
rate of ______% of its average net assets.
MIMI provides certain administrative, accounting and pricing services for the
Fund.
Ivy Mackenzie Distributors, Inc. (IMDI), a wholly owned subsidiary of MIMI, is
the underwriter and distributor of the Fund's shares, and as such, purchases
shares from the Fund at net asset value to settle orders from investment
dealers.
Ivy Mackenzie Services Corp. (IMSC), a wholly owned subsidiary of MIMI, is the
transfer and shareholder servicing agent for the Fund.
Officers of Mackenzie Solutions are officers and/or employees of MIMI, IMI, IMDI
and IMSC. Such individuals are not compensated by the Fund for services in their
capacity as officers of Mackenzie Solutions. Trustees of Mackenzie Solutions who
are not affiliated with MIMI or IMI receive compensation from the Fund.
<PAGE>
[PricewaterhouseCoopers letterhead]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of Mackenzie Solutions International Solutions I -
Conservative Growth (the "Fund"):
In our opinion, the accompanying statement of assets and liabilities of the Fund
presents fairly, in all material respects, the financial position of the Fund as
of July ___, 1999 in conformity with generally accepted accounting principles.
This financial statement is the responsibility of the Fund's management; our
responsibility is to express an opinion on this statement based on our audit. We
conducted our audit of this statement in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for the opinion expressed above.
Ft. Lauderdale, Florida
June ___, 1999
<PAGE>
INTERNATIONAL SOLUTIONS II - BALANCED GROWTH
STATEMENT OF ASSETS AND LIABILITIES
JUNE ___, 1999
ASSETS
Cash............................................... $ 100,000
Prepaid blue sky fees.............................. ______
------------
Total Assets................................... ______
------------
LIABILITIES
Due to affiliate................................... ______
------------
NET ASSETS.............................................. $ ___
=======
CLASS A:
Net asset value and redemption price
per share
($10 / 1 share outstanding).................... $ 10.00
=======
Maximum offering price per share
($10.00 x 100 / 94.25)*........................ $ 10.61
=======
CLASS B:
Net asset value, offering price and redemption
price** per share
($10 / 1 share outstanding).................... $ 10.00
=======
CLASS C:
Net asset value, offering price and redemption
price*** per share
($10 / 1 share outstanding).................... $ 10.00
=======
CLASS I:
Net asset value, offering price and redemption
price per share
($10 / 1 share outstanding).................... $ 10.00
=======
ADVISOR CLASS:
Net asset value, offering price and redemption
price per share
($10 / 1 share outstanding).................... $ 10.00
=======
NET ASSETS CONSISTS OF:
Capital paid-in $ ____
=======
* On sales of more than $100,000 the offering price is reduced.
** Redemption price per share is equal to the net asset value per share
less any applicable contingent deferred sales charge, up to a maximum
of 5%.
*** Redemption price per share is equal to the net asset value per share
less any applicable contingent deferred sales charge, up to a maximum
of 1%.
(See Notes to Financial Statement)
<PAGE>
INTERNATIONAL SOLUTIONS II - BALANCED GROWTH
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
JUNE ___, 1999
1. ORGANIZATION: Ivy International Solutions II - Balanced Growth (the "Fund")
is a diversified series of shares of Mackenzie Solutions. The shares of
beneficial interest are assigned no par value and an unlimited number of shares
of Class A, Class B, Class C, Class I and Advisor Class are authorized.
Mackenzie Solutions was organized as a Massachusetts business trust under a
Declaration of Trust dated November 18, 1998 and is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company.
The Fund will commence operations on July ___, 1999. As of the date of this
report, operations have been limited to organizational matters and the issuance
of initial shares to Mackenzie Investment Management Inc.
(MIMI).
2. ORGANIZATIONAL COSTS: The Fund incurred organizational expenses of $______,
comprised of $2,500 for auditing and $_____ for legal. The full amount of
organizational expenses were assumed by MIMI and the Fund is not required to
reimburse MIMI.
3. OFFERING COSTS AND PREPAID BLUE SKY FEES: Blue sky fees will be amortized
over a one year period beginning July ___, 1999, the date the Fund is expected
to commence operations. Offering costs and blue sky fees have been paid by MIMI
and will be reimbursed by the Fund.
4. TRANSACTIONS WITH AFFILIATES: Ivy Management, Inc. (IMI), a wholly owned
subsidiary of MIMI, is the Manager and Investment Adviser of the Fund.
Currently, IMI voluntarily limits the Fund's total operating expenses (excluding
taxes, 12b-1 fees, brokerage commissions, interest, litigation and
indemnification expenses, and any other extraordinary expenses) to an annual
rate of ______% of its average net assets.
MIMI provides certain administrative, accounting and pricing services for the
Fund.
Ivy Mackenzie Distributors, Inc. (IMDI), a wholly owned subsidiary of MIMI, is
the underwriter and distributor of the Fund's shares, and as such, purchases
shares from the Fund at net asset value to settle orders from investment
dealers.
Ivy Mackenzie Services Corp. (IMSC), a wholly owned subsidiary of MIMI, is the
transfer and shareholder servicing agent for the Fund.
Officers of Mackenzie Solutions are officers and/or employees of MIMI, IMI, IMDI
and IMSC. Such individuals are not compensated by the Fund for services in their
capacity as officers of Mackenzie Solutions. Trustees of Mackenzie Solutions who
are not affiliated with MIMI or IMI receive compensation from the Fund.
<PAGE>
[PricewaterhouseCoopers letterhead]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of Mackenzie Solutions International Solutions II -
Balanced Growth (the "Fund"):
In our opinion, the accompanying statement of assets and liabilities of the Fund
presents fairly, in all material respects, the financial position of the Fund as
of July ___, 1999 in conformity with generally accepted accounting principles.
This financial statement is the responsibility of the Fund's management; our
responsibility is to express an opinion on this statement based on our audit. We
conducted our audit of this statement in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for the opinion expressed above.
Ft. Lauderdale, Florida
July ___, 1999
<PAGE>
INTERNATIONAL SOLUTIONS III - MODERATE GROWTH
STATEMENT OF ASSETS AND LIABILITIES
JUNE ___, 1999
ASSETS
Cash.................................................. $ 100,000
Prepaid blue sky fees................................. ______
------------
Total Assets...................................... ______
------------
LIABILITIES
Due to affiliate...................................... ______
------------
NET ASSETS................................................. $ ___
=======
CLASS A:
Net asset value and redemption price
per share
($10 / 1 share outstanding)....................... $ 10.00
=======
Maximum offering price per share
($10.00 x 100 / 94.25)*........................... $ 10.61
=======
CLASS B:
Net asset value, offering price and redemption
price** per share
($10 / 1 share outstanding)....................... $ 10.00
=======
CLASS C:
Net asset value, offering price and redemption
price*** per share
($10 / 1 share outstanding)....................... $ 10.00
=======
CLASS I:
Net asset value, offering price and redemption
price per share
($10 / 1 share outstanding)....................... $ 10.00
=======
ADVISOR CLASS:
Net asset value, offering price and redemption
price per share
($10 / 1 share outstanding)....................... $ 10.00
=======
NET ASSETS CONSISTS OF:
Capital paid-in $ ____
=======
* On sales of more than $100,000 the offering price is reduced.
** Redemption price per share is equal to the net asset value per share
less any applicable contingent deferred sales charge, up to a maximum
of 5%.
*** Redemption price per share is equal to the net asset value per share
less any applicable contingent deferred sales charge, up to a maximum
of 1%.
(See Notes to Financial Statement)
<PAGE>
INTERNATIONAL SOLUTIONS III - MODERATVE GROWTH
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
JUNE ___, 1999
1. ORGANIZATION: Ivy International Solutions III - Moderate Growth (the "Fund")
is a diversified series of shares of Mackenzie Solutions. The shares of
beneficial interest are assigned no par value and an unlimited number of shares
of Class A, Class B, Class C, Class I and Advisor Class are authorized.
Mackenzie Solutions was organized as a Massachusetts business trust under a
Declaration of Trust dated November 18, 1998 and is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company.
The Fund will commence operations on July ___, 1999. As of the date of this
report, operations have been limited to organizational matters and the issuance
of initial shares to Mackenzie Investment Management Inc.
(MIMI).
2. ORGANIZATIONAL COSTS: The Fund incurred organizational expenses of $______,
comprised of $2,500 for auditing and $_____ for legal. The full amount of
organizational expenses were assumed by MIMI and the Fund is not required to
reimburse MIMI.
3. OFFERING COSTS AND PREPAID BLUE SKY FEES: Blue sky fees will be amortized
over a one year period beginning July ___, 1999, the date the Fund is expected
to commence operations. Offering costs and blue sky fees have been paid by MIMI
and will be reimbursed by the Fund.
4. TRANSACTIONS WITH AFFILIATES: Ivy Management, Inc. (IMI), a wholly owned
subsidiary of MIMI, is the Manager and Investment Adviser of the Fund.
Currently, IMI voluntarily limits the Fund's total operating expenses (excluding
taxes, 12b-1 fees, brokerage commissions, interest, litigation and
indemnification expenses, and any other extraordinary expenses) to an annual
rate of ______% of its average net assets.
MIMI provides certain administrative, accounting and pricing services for the
Fund.
Ivy Mackenzie Distributors, Inc. (IMDI), a wholly owned subsidiary of MIMI, is
the underwriter and distributor of the Fund's shares, and as such, purchases
shares from the Fund at net asset value to settle orders from investment
dealers.
Ivy Mackenzie Services Corp. (IMSC), a wholly owned subsidiary of MIMI, is the
transfer and shareholder servicing agent for the Fund.
Officers of Mackenzie Solutions are officers and/or employees of MIMI, IMI, IMDI
and IMSC. Such individuals are not compensated by the Fund for services in their
capacity as officers of Mackenzie Solutions. Trustees of Mackenzie Solutions who
are not affiliated with MIMI or IMI receive compensation from the Fund.
<PAGE>
[PricewaterhouseCoopers letterhead]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of Mackenzie Solutions International Solutions III -
Moderate Growth (the "Fund"):
In our opinion, the accompanying statement of assets and liabilities of the Fund
presents fairly, in all material respects, the financial position of the Fund as
of July ___, 1999 in conformity with generally accepted accounting principles.
This financial statement is the responsibility of the Fund's management; our
responsibility is to express an opinion on this statement based on our audit. We
conducted our audit of this statement in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for the opinion expressed above.
Ft. Lauderdale, Florida
July ___, 1999
<PAGE>
INTERNATIONAL SOLUTIONS IV - LONG-TERM GROWTH
STATEMENT OF ASSETS AND LIABILITIES
JUNE ___, 1999
ASSETS
Cash............................................... $ 100,000
Prepaid blue sky fees.............................. ______
------------
Total Assets................................... ______
------------
LIABILITIES
Due to affiliate................................... ______
------------
NET ASSETS.............................................. $ ___
=======
CLASS A:
Net asset value and redemption price per share
($10 / 1 share outstanding).................... $ 10.00
=======
Maximum offering price per share
($10.00 x 100 / 94.25)*........................ $ 10.61
=======
CLASS B:
Net asset value, offering price and redemption
price** per share
($10 / 1 share outstanding).................... $ 10.00
=======
CLASS C:
Net asset value, offering price and redemption
price*** per share
($10 / 1 share outstanding).................... $ 10.00
=======
CLASS I:
Net asset value, offering price and redemption
price per share
($10 / 1 share outstanding).................... $ 10.00
=======
ADVISOR CLASS:
Net asset value, offering price and redemption
price per share
($10 / 1 share outstanding).................... $ 10.00
=======
NET ASSETS CONSISTS OF:
Capital paid-in $ ____
=======
* On sales of more than $100,000 the offering price is reduced.
** Redemption price per share is equal to the net asset value per share
less any applicable contingent deferred sales charge, up to a maximum
of 5%.
*** Redemption price per share is equal to the net asset value per share
less any applicable contingent deferred sales charge, up to a maximum
of 1%.
(See Notes to Financial Statement)
<PAGE>
INTERNATIONAL SOLUTIONS IV - LONG-TERM GROWTH
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
JUNE ___, 1999
1. ORGANIZATION: Ivy International Solutions IV - Long-Term Growth (the "Fund")
is a diversified series of shares of Mackenzie Solutions. The shares of
beneficial interest are assigned no par value and an unlimited number of shares
of Class A, Class B, Class C, Class I and Advisor Class are authorized.
Mackenzie Solutions was organized as a Massachusetts business trust under a
Declaration of Trust dated November 18, 1998 and is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company.
The Fund will commence operations on July ___, 1999. As of the date of this
report, operations have been limited to organizational matters and the issuance
of initial shares to Mackenzie Investment Management Inc.
(MIMI).
2. ORGANIZATIONAL COSTS: The Fund incurred organizational expenses of $______,
comprised of $2,500 for auditing and $_____ for legal. The full amount of
organizational expenses were assumed by MIMI and the Fund is not required to
reimburse MIMI.
3. OFFERING COSTS AND PREPAID BLUE SKY FEES: Blue sky fees will be amortized
over a one year period beginning July ___, 1999, the date the Fund is expected
to commence operations. Offering costs and blue sky fees have been paid by MIMI
and will be reimbursed by the Fund.
4. TRANSACTIONS WITH AFFILIATES: Ivy Management, Inc. (IMI), a wholly owned
subsidiary of MIMI, is the Manager and Investment Adviser of the Fund.
Currently, IMI voluntarily limits the Fund's total operating expenses (excluding
taxes, 12b-1 fees, brokerage commissions, interest, litigation and
indemnification expenses, and any other extraordinary expenses) to an annual
rate of ______% of its average net assets.
MIMI provides certain administrative, accounting and pricing services for the
Fund.
Ivy Mackenzie Distributors, Inc. (IMDI), a wholly owned subsidiary of MIMI, is
the underwriter and distributor of the Fund's shares, and as such, purchases
shares from the Fund at net asset value to settle orders from investment
dealers.
Ivy Mackenzie Services Corp. (IMSC), a wholly owned subsidiary of MIMI, is the
transfer and shareholder servicing agent for the Fund.
Officers of Mackenzie Solutions are officers and/or employees of MIMI, IMI, IMDI
and IMSC. Such individuals are not compensated by the Fund for services in their
capacity as officers of Mackenzie Solutions. Trustees of Mackenzie Solutions who
are not affiliated with MIMI or IMI receive compensation from the Fund.
<PAGE>
[PricewaterhouseCoopers letterhead]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of Mackenzie Solutions International Solutions IV -
Long-Term Growth (the "Fund"):
In our opinion, the accompanying statement of assets and liabilities of the Fund
presents fairly, in all material respects, the financial position of the Fund as
of July ___, 1999 in conformity with generally accepted accounting principles.
This financial statement is the responsibility of the Fund's management; our
responsibility is to express an opinion on this statement based on our audit. We
conducted our audit of this statement in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for the opinion expressed above.
Ft. Lauderdale, Florida
July ___, 1999
<PAGE>
INTERNATIONAL SOLUTIONS V - AGGRESSIVE GROWTH
STATEMENT OF ASSETS AND LIABILITIES
JUNE ___, 1999
ASSETS
Cash....................................................... $ 100,000
Prepaid blue sky fees...................................... ______
------------
Total Assets........................................... ______
------------
LIABILITIES
Due to affiliate........................................... ______
------------
NET ASSETS...................................................... $ ___
=======
CLASS A:
Net asset value and redemption price per share
($10 / 1 share outstanding)............................ $ 10.00
=======
Maximum offering price per share
($10.00 x 100 / 94.25)*................................ $ 10.61
=======
CLASS B:
Net asset value, offering price and redemption
price** per share
($10 / 1 share outstanding)............................ $ 10.00
=======
CLASS C:
Net asset value, offering price and redemption
price*** per share
($10 / 1 share outstanding)............................ $ 10.00
=======
CLASS I:
Net asset value, offering price and redemption
price per share
($10 / 1 share outstanding)............................ $ 10.00
=======
ADVISOR CLASS:
Net asset value, offering price and redemption
price per share
($10 / 1 share outstanding)............................ $ 10.00
=======
NET ASSETS CONSISTS OF:
Capital paid-in $ ____
=======
* On sales of more than $100,000 the offering price is reduced.
** Redemption price per share is equal to the net asset value per share
less any applicable contingent deferred sales charge, up to a maximum
of 5%.
*** Redemption price per share is equal to the net asset value per share
less any applicable contingent deferred sales charge, up to a maximum
of 1%.
(See Notes to Financial Statement)
<PAGE>
INTERNATIONAL SOLUTIONS V - AGGRESSIVE GROWTH
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
JUNE ___, 1999
1. ORGANIZATION: Ivy International Solutions V - Aggressive Growth (the "Fund")
is a diversified series of shares of Mackenzie Solutions. The shares of
beneficial interest are assigned no par value and an unlimited number of shares
of Class A, Class B, Class C, Class I and Advisor Class are authorized.
Mackenzie Solutions was organized as a Massachusetts business trust under a
Declaration of Trust dated November 18, 1998 and is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company.
The Fund will commence operations on July ___, 1999. As of the date of this
report, operations have been limited to organizational matters and the issuance
of initial shares to Mackenzie Investment Management Inc.
(MIMI).
2. ORGANIZATIONAL COSTS: The Fund incurred organizational expenses of $______,
comprised of $2,500 for auditing and $_____ for legal. The full amount of
organizational expenses were assumed by MIMI and the Fund is not required to
reimburse MIMI.
3. OFFERING COSTS AND PREPAID BLUE SKY FEES: Blue sky fees will be amortized
over a one year period beginning July ___, 1999, the date the Fund is expected
to commence operations. Offering costs and blue sky fees have been paid by MIMI
and will be reimbursed by the Fund.
4. TRANSACTIONS WITH AFFILIATES: Ivy Management, Inc. (IMI), a wholly owned
subsidiary of MIMI, is the Manager and Investment Adviser of the Fund.
Currently, IMI voluntarily limits the Fund's total operating expenses (excluding
taxes, 12b-1 fees, brokerage commissions, interest, litigation and
indemnification expenses, and any other extraordinary expenses) to an annual
rate of ______% of its average net assets.
MIMI provides certain administrative, accounting and pricing services for the
Fund.
Ivy Mackenzie Distributors, Inc. (IMDI), a wholly owned subsidiary of MIMI, is
the underwriter and distributor of the Fund's shares, and as such, purchases
shares from the Fund at net asset value to settle orders from investment
dealers.
Ivy Mackenzie Services Corp. (IMSC), a wholly owned subsidiary of MIMI, is the
transfer and shareholder servicing agent for the Fund.
Officers of Mackenzie Solutions are officers and/or employees of MIMI, IMI, IMDI
and IMSC. Such individuals are not compensated by the Fund for services in their
capacity as officers of Mackenzie Solutions. Trustees of Mackenzie Solutions who
are not affiliated with MIMI or IMI receive compensation from the Fund.
<PAGE>
[PricewaterhouseCoopers letterhead]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of Mackenzie Solutions International Solutions V -
Aggressive Growth (the "Fund"):
In our opinion, the accompanying statement of assets and liabilities of the Fund
presents fairly, in all material respects, the financial position of the Fund as
of July ___, 1999 in conformity with generally accepted accounting principles.
This financial statement is the responsibility of the Fund's management; our
responsibility is to express an opinion on this statement based on our audit. We
conducted our audit of this statement in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for the opinion expressed above.
Ft. Lauderdale, Florida
July ___, 1999
<PAGE>
PART C. OTHER INFORMATION
ITEM 23: EXHIBITS
(a) ARTICLES OF INCORPORATION
(1) Declaration of Trust dated November 18, 1998 is filed herewith.
(2) Redesignation of Series and Establishment and Designation of Classes is
filed herewith.
(3) Written Instrument Increasing Number of Trustees and Appointing New
Trustees is filed herewith.
(b) BY-LAWS: Filed herewith.
(c) INSTRUMENTS DEFINING RIGHTS OF SECURITY HOLDERS: See Exhibits 23(a)
and 23(b).
(d) INVESTMENT ADVISORY CONTRACTS:
(1) Form of Master Business Management and Investment Advisory Agreement is
filed herewith.
(2) Form of Business Management And Investment Advisory Agreement
Supplement for International Solutions I - Conservative Growth is filed
herewith.
(3) Form of Business Management And Investment Advisory Agreement
Supplement for International Solutions II - Balanced Growth is filed herewith.
(4) Form of Business Management And Investment Advisory Agreement
Supplement for International Solutions III - Moderate Growth is filed herewith.
(5) Form of Business Management And Investment Advisory Agreement
Supplement for International Solutions IV - Long-Term Growth is filed herewith.
(6) Form of Business Management And Investment Advisory Agreement
Supplement for International Solutions V - Aggressive Growth is filed herewith.
(7) Form of Subadvisory Agreement is filed herewith.
(e) UNDERWRITING CONTRACTS:
(1) Form of Distribution Agreement is filed herewith.
(2) Form of Dealer Agreement is filed herewith.
(f) BONUS OR PROFIT SHARING CONTRACTS: Not applicable.
(g) CUSTODIAN AGREEMENTS:
(1) Form of Custodian Agreement is filed herewith.
(h) OTHER MATERIAL CONTRACTS:
(1) Form of Master Administrative Services Agreement is filed herewith.
(2) Form of Administrative Services Agreement Supplement is filed herewith.
(3) Form of Transfer Agency and Shareholder Servicing Agreement is filed
herewith.
(4) Form of Master Fund Accounting Services Agreement is filed herewith.
(5) Form of Fund Accounting Services Agreement Supplement is filed
herewith.
(6) Form of Reimbursement Agreement is filed herewith.
(i) LEGAL OPINION: To be filed in a subsequent pre-effective
amendment.
(j) OTHER OPINIONS: To be filed in a subsequent pre-effective
amendment.
(k) OMITTED FINANCIAL STATEMENTS: Not applicable.
(l) INITIAL CAPITAL AGREEMENTS:
(1) Form of Purchase Agreement is filed herewith.
(m) RULE 12B-1 PLAN:
(1) Form of Distribution Plan For Mackenzie Solutions Class A Shares is
filed herewith.
(2) Form of Distribution Plan For Mackenzie Solutions Class B Shares is
filed herewith.
(3) Form of Distribution Plan For Mackenzie Solutions Class C Shares is
filed herewith.
(n) FINANCIAL DATA SCHEDULE: Not applicable.
(o) RULE 18F-3 PLAN:
(1) Form of Plan Pursuant To Rule 18f-3 Under The Investment Company Act Of
1940 is filed herewith.
ITEM 24: PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND: Not
applicable.
ITEM 25: INDEMNIFICATION
A policy of insurance covering the Registrant and Ivy Management, Inc.
(the Registrant's investment manager) will insure the Registrant's trustees,
officers and others against liability arising by reason of an actual or alleged
breach of duty, neglect, error, misstatement, misleading statement, omission or
other negligent act. Reference is also made to Article IV of the Registrant's
Declaration of Trust, dated November 18, 1998 (filed with Registrant's initial
Registration Statement).
ITEM 26: BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Reference is made to the Form ADV of each of Ivy Management, Inc.
("IMI"), the Registrant's investment manager, and Garmaise Investment
Technologies ("GIT"), the Registrant's asset allocation consultant. The list
required by this Item 26 of officers and directors of IMI and GIT, respectively,
together with information as to any other business profession, vocation or
employment of a substantial nature engaged in by such officers and directors
during the past two years, is incorporated by reference to Schedules A and D of
each of IMI's and GIT's Form ADV.
ITEM 27: PRINCIPAL UNDERWRITERS
(a) Ivy Mackenzie Distribution, Inc. ("IMDI"), Via Mizner Financial
Plaza, 700 South Federal Highway, Suite 300, Boca Raton, Florida 33432,
Registrant's distributor, is a subsidiary of Mackenzie Investment Management
Inc. ("MIMI"), Via Mizner Financial Plaza, 700 South Federal Highway, Suite 300,
Boca Raton, Florida 33432. IMDI is the successor to MIMI's distribution
activities.
(b) The information required by this Item 27 regarding each director,
officer or partner of IMDI is incorporated by reference to Schedule A of Form BD
filed by IMDI pursuant to the Securities Exchange Act of 1934.
ITEM 28: LOCATION OF ACCOUNTS AND RECORDS
Ivy Mackenzie Services Corp., Via Mizner Financial Plaza, 700 South
Federal Highway, Suite 300, Boca Raton, Florida 33432, maintains on the
Registrant's behalf physical possession of each account, book, and other
document required to be maintained by section 31(a) of the Investment Company
Act of 1940 and the rules thereunder.
ITEM 29: MANAGEMENT SERVICES
Not applicable.
ITEM 30: UNDERTAKINGS
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Pre-Effective Amendment No. 2 to Registrant's Registration Statement to be
signed on its behalf by the undersigned, duly authorized, in the City of Boston,
and the Commonwealth of Massachusetts, on the 11th day of June, 1999.
MACKENZIE SOLUTIONS
By: /s/ KEITH J. CARLSON**
President
By: /s/ JOSEPH R. FLEMING
Joseph R. Fleming, Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE: TITLE: DATE:
/s/ MICHAEL G. LANDRY** Chairman and Trustee 6/11/99
(Chief Executive Officer)
/s/ KEITH J. CARLSON** President and Trustee 6/11/99
/s/ IAN CARMICHAEL** Trustee 6/11/99
/s/ P. RODNEY CUNNINGHAM** Trustee 6/11/99
/s/ GARY R. ELLIS** Trustee 6/11/99
/s/ C. WILLIAM FERRIS* Vice President, 6/11/99
Secretary/Treasurer
(Chief Financial Officer)
By: /s/ JOSEPH R. FLEMING
Joseph R. Fleming, Attorney-in-Fact
* Executed pursuant to power of attorney filed with Registrant's initial
Registration Statement.
** Executed pursuant to powers of attorney filed herewith.
<PAGE>
EXHIBIT INDEX
Exhibit (a)(1): Declaration of Trust dated November 18, 1998.
Exhibit (a)(2): Redesignation of Series and Establishment and
Designation of Classes.
Exhibit (a)(3): Written Instrument Increasing Number of Trustees and
Appointing New Trustees.
Exhibit (b): By-laws.
Exhibit (d)(1): Form of Master Business Management and Investment
Advisory Agreement.
Exhibit (d)(2): Form of Business Management And Investment Advisory
Agreement Supplement for International Solutions I -
Conservative Growth.
Exhibit (d)(3): Form of Business Management And Investment Advisory
Agreement Supplement for International Solutions II -
Balanced Growth.
Exhibit (d)(4): Form of Business Management And Investment Advisory
Agreement Supplement for International Solutions III
- Moderate Growth.
Exhibit (d)(5): Form of Business Management And Investment Advisory
Agreement Supplement for International Solutions IV
- Long-Term Growth.
Exhibit (d)(6): Form of Business Management And Investment Advisory
Agreement Supplement for International Solutions V -
Aggressive Growth.
Exhibit (d)(7): Form of Subadvisory Agreement.
Exhibit (e)(1): Form of Distribution Agreement.
Exhibit (e)(2): Form of Dealer Agreement.
Exhibit (g)(1): Form of Custodian Agreement.
Exhibit (h)(1): Form of Master Administrative Services Agreement.
Exhibit (h)(2): Form of Administrative Services Agreement Supplement.
Exhibit (h)(3): Form of Transfer Agency and Shareholder Servicing
Agreement.
Exhibit (h)(4): Form of Master Fund Accounting Services Agreement.
Exhibit (h)(5): Form of Fund Accounting Services Agreement Supplement.
Exhibit (h)(6): Form of Reimbursement Agreement.
Exhibit (l): Form of Purchase Agreement.
Exhibit (m)(1) Form of Distribution Plan for Mackenzie Solutions
Class A Shares.
Exhibit (m)(2) Form of Distribution Plan for Mackenzie Solutions
Class B Shares.
Exhibit (m)(3) Form of Distribution Plan for Mackenzie Solutions
Class C Shares.
Exhibit (o): Form of Plan Pursuant to Rule 18f-3 of the Investment
Company Act of 1940.
DECLARATION OF TRUST
OF
MACKENZIE SOLUTIONS
DATED: November 18, 1998
<PAGE>
TABLE OF CONTENTS
Name Page
ARTICLE I............................................................1
NAME AND DEFINITIONS.................................................1
Section 1.1. Name..........................................1
Section 1.2. Definitions...................................1
ARTICLE II...........................................................3
TRUSTEES 3
Section 2.1. General Powers................................3
Section 2.2. Investments...................................4
Section 2.3. Legal Title...................................5
Section 2.4. Issuance and Repurchase of Shares.............5
Section 2.5. Delegation; Committees........................6
Section 2.6. Collection and Payment........................6
Section 2.7. Expenses......................................6
Section 2.8. Manner of Acting; By-laws.....................6
Section 2.9. Miscellaneous Powers..........................7
Section 2.10. Principal Transactions.......................7
Section 2.11. Number of Trustees...........................7
Section 2.12. Election and Term............................8
Section 2.13. Resignation and Removal......................8
Section 2.14. Vacancies....................................8
Section 2.15. Delegation of Power to Other Trustees........9
Section 2.16. Shareholder Vote, etc........................9
Section 2.17. Independent Trustees.........................9
ARTICLE III..........................................................9
CONTRACTS............................................................9
Section 3.1. Distribution Contract.........................9
Section 3.2. Advisory or Management Contract...............9
Section 3.3. Affiliations of Trustees or Officers, Etc....10
Section 3.4. Compliance with 1940 Act.....................10
ARTICLE IV..........................................................11
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,...........................11
Section 4.1. No Personal Liability of Shareholders,
Trustees, Etc.......................................................11
Section 4.2. Non-Liability of Trustees, Etc...............11
Section 4.3. Mandatory Indemnification....................12
Section 4.4. No Bond Required of Trustees.................13
Section 4.5. No Duty of Investigation; Notice in Trust
Instruments, Etc.............................13
Section 4.6. Reliance on Experts, Etc.....................14
ARTICLE V...........................................................14
SHARES OF BENEFICIAL INTEREST.......................................14
Section 5.1. Beneficial Interest..........................14
Section 5.2. Rights of Shareholders.......................14
Section 5.3. Trust Only...................................14
Section 5.4. Issuance of Shares...........................15
Section 5.5. Register of Shares...........................15
Section 5.6. Transfer of Shares...........................15
Section 5.7. Notices, Reports.............................16
Section 5.8. Treasury Shares..............................16
Section 5.9. Voting Powers................................16
Section 5.10. Meetings of Shareholders....................17
Section 5.11. Quorum and Required Vote.....................17
Section 5.12. Action by Written Consent....................17
Section 5.13. Series Designation..........................17
Section 5.14. Assent to Declaration of Trust..............19
Section 5.15. Class Designation...........................19
ARTICLE VI..........................................................20
REDEMPTION AND REPURCHASE OF SHARES.................................20
Section 6.1. Redemption of Shares.........................20
Section 6.2. Price........................................20
Section 6.3. Payment......................................21
Section 6.4. Effect of Suspension of Determination
of Net Asset Value...........................21
Section 6.5. Repurchase by Agreement......................21
Section 6.6. Redemption at the Option of the Trust........21
Section 6.7. Reductions in Number of Outstanding Shares
Pursuant to Net Asset Value Formula..........22
Section 6.8. Suspension of Right of Redemption............22
ARTICLE VII.........................................................22
DETERMINATION OF NET ASSET VALUE,...................................22
Section 7.1. Net Asset Value..............................22
Section 7.2. Distributions to Shareholders................23
Section 7.3. Determination of Net Income; Constant Net
Asset Value; Reduction of Outstanding Shares.23
Section 7.4. Allocation Between Principal and Income......24
Section 7.5. Power to Modify Foregoing Procedures.........24
ARTICLE VIII........................................................24
DURATION; TERMINATION OF TRUST;.....................................25
Section 8.1. Duration.....................................25
Section 8.2. Termination of Trust or the Series of
the Trust....................................25
Section 8.3. Amendment Procedure..........................25
Section 8.4. Merger, Consolidation and Sale of Assets.....26
Section 8.5. Incorporation................................26
ARTICLE IX..........................................................27
MISCELLANEOUS.......................................................27
Section 9.1. Filing.......................................27
Section 9.2. Governing Law................................27
Section 9.3. Counterparts.................................27
Section 9.4. Reliance by Third Parties....................27
Section 9.5. Provisions in Conflict with Law or
Regulations..................................28
<PAGE>
DECLARATION OF TRUST
OF
MACKENZIE SOLUTIONS
DATED: NOVEMBER 18, 1998
DECLARATION OF TRUST made November 18, 1998 by the undersigned Trustee;
WHEREAS, the Trustees hereunder are desirous of forming a trust for the
purposes of carrying on the business of a management investment company;
WHEREAS, the Trust has a principal place of business at Via Mizner
Financial Plaza, 700 South Federal Highway, Suite 300, Boca Raton, Florida
33432; and
WHEREAS, in furtherance of such purposes, the Trustees are acquiring
and may hereafter acquire assets and properties, to hold and manage as trustees
of a Massachusetts voluntary association with transferable shares in accordance
with the provisions hereinafter set forth;
NOW, THEREFORE, the Trustees hereby declare that they will hold all
cash, securities and other assets and properties which they may from time to
time acquire in any manner as Trustees hereunder IN TRUST to manage and dispose
of the same upon the following terms and conditions for the pro rata benefit of
the holders from time to time of shares in this Trust as hereinafter set forth.
NOW, THEREFORE, the Trustees state the Declaration of Trust as follows:
ARTICLE I
NAME AND DEFINITIONS
Section 1.1. Name. The name of the trust created hereby is "Mackenzie
Solutions."
Section 1.2. Definitions. Wherever they are used herein, the following
terms have the following respective meanings:
(a) "By-laws" means the By-laws referred to in Section 2.8 hereof, as
from time to time amended. ---------
(b) "Class" means the two or more Classes as may be established and
designated from time to time by the Trustees pursuant to Section 5.15 hereof.
(c) The term "Commission" has the meaning given it in the 1940 Act. The
term "Interested Person" has the meaning given it in the 1940 Act, as modified
by any applicable order or orders of the Commission. Except as otherwise defined
by the Trustees in conjunction with the establishment of any series of Shares,
the term "vote of a majority of the Shares outstanding and entitled to vote"
shall have the same meaning as the term "vote of a majority of the outstanding
voting securities" given it in the 1940 Act.
(d) "Custodian" means any Person other than the Trust who has custody
of any Trust Property as required by Section 17(f) of the Investment Company Act
of 1940, but does not include a system for the central handling of securities
described in said Section 17(f).
(e) "Declaration" means this Declaration of Trust, as further amended
from time to time. Reference in this Declaration of Trust to "Declaration,"
"hereof," "herein," and "hereunder" shall be deemed to refer to this Declaration
rather than exclusively to the article or section in which such words appear.
(f) "Distributor" means the party, other than the Trust, to the
contract described in Section 3.1 hereof. -------------
(g) "His" shall include the feminine and neuter, as well as the
masculine, genders.
(h) "Investment Adviser" means the party, other than the Trust, to the
contract described in Section 3.2 hereof. --------------------
(i) "Municipal Bonds" means obligations issued by or on behalf of
states, territories of the United States and the District of Columbia and their
political subdivisions, agencies and instrumentalities or other issuers, the
interest from which is exempt from regular Federal income tax.
(j) The "1940 Act" means the Investment Company Act of 1940, as amended
from time to time.
(k) "Person" means and includes individuals, corporations,
partnerships, trusts, associations, joint ventures and other entities, whether
or not legal entities, and governments and agencies and political subdivisions
thereof.
(l) "Series" individually or collectively means the two or more Series
as may be established and designated from time to time by the Trustees pursuant
to Section 5.13 hereof. Unless the context otherwise requires, the term "Series"
shall include Classes into which shares of the Trust, or of a Series, may be
divided from time to time.
(m) "Shareholder" means a record owner of Outstanding Shares.
(n) "Shares" means the equal proportionate units of interest into which
the beneficial interest in the Trust shall be divided from time to time,
including the Shares of any and all Series and Classes which may be established
by the Trustees, and includes fractions of Shares as well as whole Shares.
"Outstanding Shares" means those Shares shown as of a time and from time to time
on the books of the Trust or its Transfer Agent as then issued and outstanding,
but shall not include Shares which have been redeemed or repurchased by the
Trust and which are at the time held in the treasury of the Trust.
(o) "Transfer Agent" means any one or more Persons other than the Trust
who maintains the Shareholder records of the Trust, such as the list of
Shareholders, the number of Shares credited to each account, and the like.
(p) The "Trust" means Mackenzie Solutions.
(q) The "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of the
Trust or the Trustees.
(r) The "Trustees" means the person or persons who has or have signed
this Declaration, so long as he or they shall continue in office in accordance
with the terms hereof, and all other persons who may from time to time or be
duly qualified and serving as Trustees in accordance with the provisions of
Article II hereof, and reference herein to a Trustee or the Trustees shall refer
to such person or persons in this capacity or their capacities as trustees
hereunder.
ARTICLE II
TRUSTEES
Section 2.1. General Powers. The Trustees shall have exclusive and
absolute control over the Trust Property and over the business of the Trust to
the same extent as if the Trustees were the sole owners of the Trust Property
and business in their own right, but with such powers of delegation as may be
permitted by this Declaration. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without the Commonwealth of Massachusetts,
in any and all states of the United States of America, in the District of
Columbia, and in any and all commonwealths, territories, dependencies, colonies,
possessions, agencies or instrumentalities of the United States of America and
of foreign governments, and to do all such other things and execute all such
instruments as they deem necessary, proper or desirable in order to promote the
interests of the Trust although such things are not herein specifically
mentioned. Any determination as to what is in the interests of the Trust made by
the Trustees in good faith shall be conclusive. In construing the provisions of
this Declaration, the presumption shall be in favor of a grant of power to the
Trustees.
The enumeration of any specific power herein shall not be construed as
limiting the aforesaid power. Such powers of the Trustees may be exercised
without order of or resort to any court.
Section 2.2. Investments. The Trustees shall have the power:
(a) To operate as and carry on the business of an investment
company, and exercise all the powers necessary and appropriate to the
conduct of such operations.
(b) To invest in, hold for investment, or reinvest in,
securities, including, but not limited to, shares of open-end
investment companies; common and preferred stocks; warrants; bonds,
debentures, bills, time notes and all other evidences of indebtedness;
negotiable or non-negotiable instruments; government securities,
including securities of any state, municipality or other political
subdivision thereof, or any governmental or quasi-governmental agency
or instrumentality; and money market instruments including bank
certificates of deposit, finance paper, commercial paper, bankers
acceptances and all kinds of repurchase agreements, of any corporation,
company, trust, association, firm or other business organization
however established, and of any country, state, municipality or other
political subdivision, or any governmental or quasi-governmental agency
or instrumentality.
(c) To acquire (by purchase, subscription or otherwise), to
hold, to trade in and deal in, to acquire any rights or options to
purchase or sell, to sell or otherwise dispose of, to lend, and to
pledge any such securities, and to enter into repurchase agreements and
forward foreign currency exchange contracts, to purchase and sell
futures contracts on securities, securities indices and foreign
currencies, to purchase or sell options on such contracts, foreign
currency contracts and foreign currencies, and to engage in all types
of hedging and risk management transactions.
(d) To exercise all rights, powers and privileges of ownership
or interest in all securities, repurchase agreements, futures contracts
and options and other assets included in the Trust Property, including
the right to vote thereon and otherwise act with respect thereto and to
do all acts for the preservation, protection, improvement and
enhancement in value of all such assets.
(e) To acquire (by purchase, lease or otherwise) and to hold,
use, maintain, develop and dispose of (by sale or otherwise) any
property, real or personal, including cash, and any interest therein.
(f) To borrow money and in this connection issue notes or
other evidence of indebtedness; to secure borrowings by mortgaging,
pledging or otherwise subjecting as security the Trust Property; to
endorse, guarantee, or undertake the performance of any obligation or
engagement of any other Person and to lend Trust Property.
(g) To aid by further investment any corporation, company,
trust, association or firm, any obligation of or interest in which is
included in the Trust Property or in the affairs of which the Trustees
have any direct or indirect interest; to do all acts and things
designed to protect, to preserve, improve or enhance the value of such
obligation or interest, and to guarantee or become surety on any or all
of the contracts, stocks, bonds, notes, debentures and other
obligations of any such corporation, company, trust, association or
firm.
(h) To enter into a plan of distribution and any related
agreements whereby the Trust may finance directly or indirectly any
activity which is primarily intended to result in the sale of Shares.
(i) To invest, through a transfer of cash, securities and
other assets or otherwise, all or a portion of the Trust Property, or
to sell all or a portion of the Trust Property and invest the proceeds
of such sales, in another investment company that is registered under
the 1940 Act.
(j) In general to carry on any other business in connection
with or incidental to any of the foregoing powers, to do everything
necessary, suitable or proper for the accomplishment of any purpose or
the attainment of any object or the furtherance of any power herein
before set forth, either alone or in association with others, and to do
every other act or thing incidental or appurtenant to or growing out of
or connected with the aforesaid business or purposes, objects or
powers.
The foregoing clauses shall be construed both as objects and powers,
and the foregoing enumeration of specific powers shall not be held to limit or
restrict in any manner the general powers of the Trustees.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust, nor shall the Trustees be limited
by any law limiting the investments which may be made by fiduciaries.
Section 2.3. Legal Title. Legal title to all the Trust Property,
including the property of any Series of the Trust, shall be vested in the
Trustees as joint tenants except that the Trustees shall have power to cause
legal title to any Trust Property to be held by or in the name of one or more of
the Trustees, or in the name of the Trust, or in the name of any other Person as
nominee, on such terms as the Trustees may determine, provided that the interest
of the Trust therein is deemed appropriately protected. The right, title and
interest of the Trustees in the Trust Property and the property of each Series
of the Trust shall vest automatically in each Person who may hereafter become a
Trustee. Upon the termination of the term of office, resignation, removal or
death of a Trustee he shall automatically cease to have any right, title or
interest in any of the Trust Property or the property of any Series of the
Trust, and the right, title and interest of such Trustee in the Trust Property
shall vest automatically in the remaining Trustees. Such vesting and cessation
of title shall be effective whether or not conveyancing documents have been
executed and delivered.
Section 2.4. Issuance and Repurchase of Shares. The Trustees shall have
the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of, transfer, and otherwise deal in Shares and, subject
to the provisions set forth in Articles VI and VII and Section 5.13 hereof, to
apply to any such repurchase, redemption, retirement, cancellation or
acquisition of Shares any funds or property of the particular Series of the
Trust with respect to which such Shares are issued, whether capital or surplus
or otherwise, to the full extent now or hereafter permitted by the laws of the
Commonwealth of Massachusetts governing business corporations.
Section 2.5. Delegation; Committees. The Trustees shall have power to
delegate from time to time to such of their number or to officers, employees or
agents of the Trust the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the Trustees or
otherwise as the Trustees may deem expedient, to the same extent as such
delegation is permitted by the 1940 Act.
Without limiting the generality of the foregoing provisions of this
Section 2.5, the Trustees shall have power to appoint by resolution a committee
consisting of at least one of the Trustees then in office to determine whether
(a) refusing a demand by a shareholder to initiate an action, suit, or
proceeding on behalf of the Trust, or (b) dismissing, settling, reviewing, or
investigating any action, suit, or proceeding that is brought or threatened to
be brought before any court, administrative agency or other adjudicatory body,
as the case may be, is in the best interests of the Trust. That committee shall
consist entirely of Trustees each of whom is not an "Interested Person" as the
term is defined in Section 1.2 hereof.
Section 2.6. Collection and Payment. The Trustees shall have power to
collect all property due to the Trust; to pay all claims, including taxes,
against the Trust Property; to prosecute, defend, compromise or abandon any
claims relating to the Trust Property; to foreclose any security interest
securing any obligations, by virtue of which any property is owed to the Trust;
and to enter into releases, agreements and other instruments.
Section 2.7. Expenses. The Trustees shall have the power to incur and
pay any expenses which in the opinion of the Trustees are necessary or
incidental to carry out any of the purposes of this Declaration, and to pay
reasonable compensation from the funds of the Trust to themselves as Trustees.
The Trustees shall fix the compensation of all officers, employees and Trustees.
Section 2.8. Manner of Acting; By-laws. Except as otherwise provided
herein or in the By-laws, any action to be taken by the Trustees may be taken by
a majority of the Trustees present at a meeting of Trustees (a quorum being
present), including any meeting held by means of a conference telephone circuit
or similar communications equipment by means of which all persons participating
in the meeting can hear each other, or by written consents of two-thirds of the
Trustees then in office. The Trustees may adopt By-laws not inconsistent with
this Declaration to provide for the conduct of the business of the Trust and may
amend or repeal such By-laws to the extent such power is not reserved to the
Shareholders.
Notwithstanding the foregoing provisions of this Section 2.8 and in
addition to such provisions or any other provision of this Declaration or of the
By-laws, the Trustees may by resolution appoint a committee consisting of less
than the whole number of Trustees then in office, which committee may be
empowered to act for and bind the Trustees and the Trust, as if the acts of such
committee were the acts of all the Trustees then in office, with respect to the
institution, prosecution, dismissal, settlement, review or investigation of any
action, suit or proceeding which shall be pending or threatened to be brought
before any court, administrative agency or other adjudicatory body.
Section 2.9. Miscellaneous Powers. Subject to Section 5.13, hereof, the
Trustees shall have the power to: (a) employ or contract with such Persons as
the Trustees may deem desirable for the transaction of the business of the
Trust; (b) enter into joint ventures, partnerships and any other combinations or
associations; (c) remove Trustees or fill vacancies in or add to their number,
elect and remove such officers and appoint and terminate such agents or
employees as they consider appropriate, and appoint from their own number, and
terminate, any one or more committees which may exercise some or all of the
power and authority of the Trustees as the Trustees may determine; (d) purchase,
and pay for out of Trust Property, insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, investment advisers, distributors,
selected dealers or independent contractors of the Trust against all claims
arising by reason of holding any such position or by reason of any action taken
or omitted by any such Person in such capacity, whether or not constituting
negligence, or whether or not the Trust would have the power to indemnify such
Person against such liability; (e) establish pension, profit-sharing, share
purchase, and other retirement, incentive and benefit plans for any Trustees,
officers, employees and agents of the Trust; (f) to the extent permitted by law,
indemnify any person with whom the Trust has dealings, including the Investment
Adviser, Distributor, Transfer Agent and selected dealers, to such extent as the
Trustees shall determine; (g) guarantee indebtedness or contractual obligations
of others; (h) determine and change the fiscal year of the Trust and the method
by which its accounts shall be kept; and (i) adopt a seal for the Trust, but the
absence of such seal shall not impair the validity of any instrument executed on
behalf of the Trust.
Section 2.10. Principal Transactions. Except in transactions not
permitted by the 1940 Act or rules and regulations adopted by the Commission,
the Trustees may, on behalf of the Trust, buy any securities from or sell any
securities to, or lend any assets of the Trust to, any Trustee or officer of the
Trust or any firm of which any such Trustee or officer is a member acting as
principal, or have any such dealings with the Investment Adviser, Distributor or
Transfer Agent or with any Interested Person of such Person; and the Trust may
employ any such Person, or firm or company in which such Person is an Interested
Person, as broker, dealer, legal counsel, registrar, Transfer Agent, dividend
disbursing agent or Custodian upon customary terms.
Section 2.11. Number of Trustees. The number of Trustees shall
initially be one (1), and thereafter shall be such number as shall be fixed from
time to time by a written instrument signed by a majority of the Trustees.
Section 2.12. Election and Term. Except for the Trustees named herein
or appointed to fill vacancies pursuant to Section 2.14 hereof, the Trustees
shall be elected by the Shareholders owning of record a plurality of the Shares
voting at a meeting of Shareholders. Such a meeting shall be held on a date
fixed by the Trustees. Except in the event of resignation or removals pursuant
to Section 2.13 hereof, each Trustee shall hold office until such time as less
than a majority of the Trustees holding office have been elected by
Shareholders, and thereafter until the holding of a Shareholders' meeting as
required by the next following sentence. In such event the Trustees then in
office will call a Shareholders' meeting for the election of Trustees within the
timeframe required by applicable law. Except for the foregoing circumstances,
the Trustees shall continue to hold office and may appoint successor Trustees.
Section 2.13. Resignation and Removal. Any Trustee may resign his trust
(without the need for any prior or subsequent accounting) by an instrument in
writing signed by him and delivered to the other Trustees and such resignation
shall be effective upon such delivery, or at a later date according to the terms
of the instrument. Any of the Trustees may be removed (provided the aggregate
number of Trustees after such removal shall not be less than one) with cause, by
the action of two-thirds of the remaining Trustees. Any Trustee may be removed
at any meeting of Shareholders by vote of two thirds of the Outstanding Shares.
The Trustees shall promptly call a meeting of the Shareholders for the purpose
of voting upon the question of removal of any such Trustee or Trustees when
requested in writing so to do by the holders of not less than ten percent (10%)
of the Outstanding Shares, and in that connection, the Trustees will assist
shareholder communications to the extent provided for in Section 16(c) under the
1940 Act. Upon the resignation or removal of a Trustee, or his otherwise ceasing
to be a Trustee, he shall execute and deliver such documents as the remaining
Trustees shall require for the purpose of conveying to the Trust or the
remaining Trustees any Trust Property or property of any Series of the Trust
held in the name of the resigning or removed Trustee. Upon the incapacity or
death of any Trustee, his legal representative shall execute and deliver on his
behalf such documents as the remaining Trustees shall require as provided in the
preceding sentence.
Section 2.14. Vacancies. The term of office of a Trustee shall
terminate and a vacancy shall occur in the event of the death, resignation,
removal, bankruptcy, adjudicated incompetence or other incapacity to perform the
duties of the office of a Trustee. No such vacancy shall operate to annul the
Declaration or to revoke any existing agency created pursuant to the terms of
the Declaration. In the case of an existing vacancy, including a vacancy
existing by reason of an increase in the number of Trustees, subject to the
provisions of Section 16(a) of the 1940 Act, the remaining Trustees shall fill
such vacancy by the appointment of such other person as they in their discretion
shall see fit, made by a written instrument signed by a majority of the Trustees
then in office. Any such appointment shall not become effective, however, until
the person named in the written instrument of appointment shall have accepted in
writing such appointment and agreed in writing to be bound by the terms of the
Declaration. An appointment of a Trustee may be made in anticipation of a
vacancy to occur at a later date by reason of retirement, resignation or
increase in the number of Trustees, provided that such appointment shall not
become effective prior to such retirement, resignation or increase in the number
of Trustees. Whenever a vacancy in the number of Trustees shall occur, until
such vacancy is filled as provided in this Section 2.14, the Trustees in office,
regardless of their number, shall have all the powers granted to the Trustees
and shall discharge all the duties imposed upon the Trustees by the Declaration.
A written instrument certifying the existence of such vacancy signed by a
majority of the Trustees in office shall be conclusive evidence of the existence
of such vacancy.
Section 2.15. Delegation of Power to Other Trustees. Any Trustee may,
by power of attorney, delegate his power for a period not exceeding six (6)
months at any one time to any other Trustee or Trustees; provided that in no
case shall less than two (2) Trustees personally exercise the powers granted to
the Trustees under this Declaration except as herein otherwise expressly
provided.
Section 2.16. Shareholder Vote, etc.
Not Required. Except to the extent specifically provided to the
contrary in this Declaration, the Trustees may exercise each of the powers
granted to them in this Declaration without the vote, approval or agreement of
the shareholders unless such a vote, approval, or agreement is required by the
1940 Act or applicable laws of the Commonwealth of Massachusetts.
Section 2.17. Independent Trustees.
A Trustee who with respect to the Trust is not an Interested Person
shall be deemed to be independent and disinterested when making any
determination or taking any action as Trustee.
ARTICLE III
CONTRACTS
Section 3.1. Distribution Contract. The Trustees may in their
discretion from time to time enter into an exclusive or non-exclusive
underwriting contract or contracts providing for the sale of Shares at a price
based on the net asset value of a Share, whereby the Trustees may either agree
to sell the Shares to the other party to the contract or appoint such other
party their sales agent for the Shares, and in either case on such terms and
conditions, if any, as may be prescribed in the By-laws; and such further terms
and conditions as the Trustees may in their discretion determine not
inconsistent with the provisions of this Article III or of the By-laws; and such
contract may also provide for the repurchase of the Shares by such other party
as agent of the Trustees.
Section 3.2. Advisory or Management Contract. The Trustees may in their
discretion from time to time enter into an investment advisory or management
contract or separate advisory contracts with respect to one or more Series
whereby the other party to such contract shall undertake to furnish to the Trust
such management, investment advisory, statistical and research facilities and
services and such other facilities and services, if any, and all upon such terms
and conditions as the Trustees may in their discretion determine, including the
grant of authority to such other party to determine what securities shall be
purchased or sold by the Trust and what portion of its assets shall be
uninvested, which authority shall include the power to make changes in the
investments of the Trust or any Series.
The Trustees may also employ, or authorize the Investment Adviser to
employ, one or more sub-advisers from time to time to perform such of the acts
and services of the Investment Adviser and upon such terms and conditions as may
be agreed upon between the Investment Adviser and such sub-advisers and approved
by the Trustees. Any reference in this Declaration to the Investment Adviser
shall be deemed to include such sub-advisers unless the context otherwise
requires.
Section 3.3. Affiliations of Trustees or Officers, Etc. The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust
is a shareholder, director, officer, partner, trustee, employee,
manager, adviser or distributor of or for any partnership, corporation,
trust, association or other organization or of or for any parent or
affiliate of any organization, with which a contract of the character
described in Sections 3.1 or 3.2 above or for services as Custodian,
Transfer Agent, accounting agent or disbursing agent or for related
services may have been or may hereafter be made, or that any such
organization, or any parent or affiliate thereof, is a Shareholder of
or has an interest in the Trust, or that
(ii) any partnership, corporation, trust, association or other
organization with which a contract of the character described in
Sections 3.1 or 3.2 above or for services as Custodian, Transfer Agent,
accounting agent or disbursing agent or for related services may have
been or may hereafter be made also has any one or more of such
contracts with one or more other partnerships, corporations, trusts,
associations or other organizations, or has other business or
interests,
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same or create any liability or accountability to the Trust or its Shareholders.
Section 3.4. Compliance with 1940 Act. Any contract entered into
pursuant to Sections 3.1 or 3.2 shall be consistent with and subject to the
requirements of Section 15 of the 1940 Act (including any amendment thereof or
other applicable act of Congress hereafter enacted), as modified by any
applicable order or orders of the Commission, with respect to its continuance in
effect, its termination and the method of authorization and approval of such
contract or renewal thereof.
ARTICLE IV
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS
Section 4.1. No Personal Liability of Shareholders, Trustees, Etc. No
Shareholder shall be subject to any personal liability whatsoever to any Person
in connection with Trust Property or the acts, obligations or affairs of the
Trust. No Trustee, officer, employee or agent of the Trust shall be subject to
any personal liability whatsoever to any Person, other than to the Trust or its
Shareholders, in connection with Trust Property or the affairs of the Trust,
save only that arising from bad faith, willful misfeasance, gross negligence or
reckless disregard of his duties with respect to such Person; and all such
Persons shall look solely to the Trust Property for satisfaction of claims of
any nature arising in connection with the affairs of the Trust. If any
Shareholder, Trustee, officer, employee, or agent, as such, of the Trust, is
made a party to any suit or proceeding to enforce any such liability of the
Trust, he shall not, on account thereof, be held to any personal liability. The
Trust shall indemnify and hold each Shareholder harmless from and against all
claims and liabilities, to which such Shareholder may become subject by reason
of his being or having been a Shareholder, and shall reimburse such Shareholder
for all legal and other expenses reasonably incurred by him in connection with
any such claim or liability. The indemnification and reimbursement required by
the preceding sentence shall be made only out of the assets of the one or more
Series of which the Shareholder who is entitled to indemnification or
reimbursement was a Shareholder at the time the act or event occurred which gave
rise to the claim against or liability of said Shareholder. The rights accruing
to a Shareholder under this Section 4.1 shall not impair any other right to
which such Shareholder may be lawfully entitled, nor shall anything herein
contained restrict the right of the Trust to indemnify or reimburse a
Shareholder in any appropriate situation even though not specifically provided
herein.
Section 4.2. Non-Liability of Trustees, Etc. No Trustee, officer,
employee or agent of the Trust shall be liable to the Trust, its Shareholders,
or to any Shareholder, Trustee, officer, employee, or agent thereof for any
action or failure to act (including without limitation the failure to compel in
any way any former or acting Trustee to redress any breach of trust) except for
his own bad faith, willful misfeasance, gross negligence or reckless disregard
of the duties involved in the conduct of his office.
Section 4.3. Mandatory Indemnification.
(a) Subject to the exceptions and limitations contained in paragraph
(b) below:
(i)....every person who is, or has been, a Trustee or
officer of the Trust shall be indemnified by the Trust to the fullest extent
permitted by law against all liability and against all expenses reasonably
incurred or paid by him in connection with any claim, action, suit or proceeding
in which he becomes involved as a party or otherwise by virtue of his being or
having been a Trustee or officer and against amounts paid or incurred by him in
the settlement thereof;
(ii)....the words "claim," "action," "suit," or "proceeding"
shall apply to all claims, actions, suits or proceedings (civil, criminal,
administrative or other, including appeals), actual or threatened; and the words
"liability" and "expenses" shall include, without limitation, attorneys' fees,
costs, judgments, amounts paid in settlement, fines, penalties and other
liabilities.
(b) No indemnification shall be provided hereunder to a Trustee or
officer:
(i)....against any liability to the Trust, a Series thereof,
or the Shareholders by reason of a final adjudication by a court or other body
before which a proceeding was brought that he engaged in willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office;
(ii)....with respect to any matter as to which he shall have
been finally adjudicated not to have acted in good faith in the reasonable
belief that his action was in the best interest of the Trust; or
(iii)....in the event of a settlement or other disposition not
involving a final adjudication as provided in paragraph (b)(i) or (b)(ii)
resulting in a payment by a Trustee or officer, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office:
(A) by the court or other body approving the
settlement or other disposition; or
(B) based upon a review of readily available facts
(as opposed to a full trial-type inquiry) by (x) vote of a
majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then
in office act on the matter), or (y) written opinion of
independent legal counsel.
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not
affect any other rights to which any Trustee or officer may now or hereafter be
entitled, shall continue as to a person who has ceased to be such Trustee or
officer and shall inure to the benefit of the heirs, executors, administrators
and assigns of such a person. Nothing contained herein shall affect any rights
to indemnification to which personnel of the Trust other than Trustees and
officers may be entitled by contract or otherwise under law.
(d) Expenses of preparation and presentation of a defense to any claim,
action, suit or proceeding of the character described in paragraph (a)
of this Section 4.3 may be advanced by the Trust prior to a final
disposition thereof upon receipt of an undertaking by or on behalf of
the recipient to repay such amount if it is ultimately determined that
he is not entitled to indemnification under this Section 4.3, provided
that either:
(i) such undertaking is secured by a surety bond or some other
appropriate security provided by the recipient, or the Trust shall be
insured against losses arising out of any such advances; or
(ii) a majority of the Disinterested Trustees acting on the
matter (provided that a majority of the Disinterested Trustees act on
the matter) or an independent legal counsel in a written opinion shall
determine, based upon a review of readily available facts (as opposed
to a full trial-type inquiry), that there is reason to believe that the
recipient ultimately will be found entitled to indemnification.
As used in this Section 4.3, a "Disinterested Trustee" is one who (i)
is not an Interested Person of the Trust (including anyone who has been exempted
from being an Interested Person by any rule, regulation or order of the
Commission), or (ii) is not involved in the claim, action, suit or proceeding.
Section 4.4. No Bond Required of Trustees. No Trustee shall be
obligated to give any bond or other security for the performance of any of
his duties hereunder.
Section 4.5. No Duty of Investigation; Notice in Trust Instruments,
Etc. No purchaser, lender, Transfer Agent or other Person dealing with the
Trustees or any officer, employee or agent of the Trust shall be bound to make
any inquiry concerning the validity of any transaction purporting to be made by
the Trustees or by said officer, employee or agent or be liable for the
application of money or property paid, loaned, or delivered to or on the order
of the Trustees or of said officer, employee or agent. Every obligation,
contract, instrument, certificate, Share, other security of the Trust or
undertaking, and every other act or thing whatsoever executed in connection with
the Trust shall be conclusively presumed to have been executed or done by the
executors thereof only in their capacity as Trustees under this Declaration or
in their capacity as officers, employees or agents of the Trust. Every written
obligation, contract, instrument, certificate, Share, other security of the
Trust or undertaking made or issued by the Trustees may recite that the same is
executed or made by them not individually, but as Trustees under the
Declaration, and that the obligations of the Trust under any such instrument are
not binding upon any of the Trustees or Shareholders individually, but bind only
the trust estate, and may contain any further recital which they or he may deem
appropriate, but the omission of such recital shall not operate to bind the
Trustees individually. The Trustees shall at all times maintain insurance for
the protection of the Trust Property, its Shareholders, Trustees, officers,
employees and agents in such amount as the Trustees shall deem adequate to cover
possible tort liability, and such other insurance as the Trustees in their sole
judgment shall deem advisable.
Section 4.6. Reliance on Experts, Etc. Each Trustee and officer or
employee of the Trust shall, in the performance of his duties, be fully and
completely justified and protected with regard to any act or any failure to act
resulting from reliance in good faith upon the books of account or other records
of the Trust, upon an opinion of counsel, or upon reports made to the Trust by
any of its officers or employees or by the Investment Adviser, the Distributor,
Transfer Agent, selected dealers, accountants, appraisers or other experts or
consultants selected with reasonable care by the Trustees, officers or employees
of the Trust, regardless of whether such counsel or expert may also be a
Trustee.
ARTICLE V
SHARES OF BENEFICIAL INTEREST
Section 5.1. Beneficial Interest. The interest of the beneficiaries
hereunder shall be divided into transferable Shares of beneficial interest, all
of one class, except as provided in Section 5.13 and Section 5.15 hereof,
without par value, provided that the par value of the outstanding, and
authorized but unissued, shares of any Series may be changed by a written
instrument referred to in Section 5.13 hereof. The number of Shares of
beneficial interest authorized hereunder is unlimited. All Shares issued
hereunder including, without limitation, Shares issued in connection with a
dividend in Shares or a split of Shares, shall be fully paid and non-assessable.
Section 5.2. Rights of Shareholders. The ownership of the Trust
Property and the property of each Series of the Trust of every description and
the right to conduct any business herein before described are vested exclusively
in the Trustees, and the Shareholders shall have no interest therein other than
the beneficial interest conferred by their Shares, and they shall have no right
to call for any partition or division of any property, profits, rights or
interests of the Trust nor can they be called upon to share or assume any losses
of the Trust or suffer an assessment of any kind by virtue of their ownership of
Shares. The Shares shall be personal property giving only the rights
specifically set forth in this Declaration. The Shares shall not entitle the
holder to preference, preemptive, appraisal, conversion or exchange rights,
except as the Trustees may determine with respect to any Series of Shares.
Section 5.3. Trust Only. It is the intention of the Trustees to create
only the relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees to create
a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a trust.
Nothing in this Declaration of Trust shall be construed to make the
Shareholders, either by themselves or with the Trustees, partners or members of
a joint stock association.
Section 5.4. Issuance of Shares. The Trustees in their discretion may,
from time to time without vote of the Shareholders, issue Shares, in addition to
the then issued and outstanding Shares and Shares held in the treasury, to such
party or parties and for such amount and type of consideration, including cash
or property, at such time or times and on such terms as the Trustees may deem
best, and may in such manner acquire other assets (including the acquisition of
assets subject to, and in connection with the assumption of liabilities) and
businesses. In connection with any issuance of Shares, the Trustees may issue
fractional Shares and Shares held in the treasury. The Trustees may from time to
time divide or combine the Shares into a greater or lesser number without
thereby changing the proportionate beneficial interests in the Trust.
Contributions to the Trust may be accepted for, and Shares shall be redeemed as,
whole Shares and/or 1/1,000ths of a Share or integral multiples thereof.
Section 5.5. Register of Shares. A register shall be kept at the
principal office of the Trust or an office of the Transfer Agent which shall
contain the names and addresses of the Shareholders and the number of Shares
held by them respectively and a record of all transfers thereof. Such register
shall be conclusive as to who are the holders of the Shares and who shall be
entitled to receive dividends or distributions or otherwise to exercise or enjoy
the rights of Shareholders. No Shareholder shall be entitled to receive payment
of any dividend or distribution, nor to have notice given to him as herein or in
the By-laws provided, until he has given his address to the Transfer Agent or
such other officer or agent of the Trustees as shall keep the said register for
entry thereon. It is not contemplated that certificates will be issued for the
Shares; however, the Trustees, in their discretion, may authorize the issuance
of share certificates and promulgate appropriate rules and regulations as to
their use.
Section 5.6. Transfer of Shares. Except as otherwise provided by the
Trustees, Shares shall be transferable on the records of the Trust only by the
record holder thereof or by his agent thereunto duly authorized in writing, upon
delivery to the Trustees or the Transfer Agent of a duly executed instrument of
transfer, together with such evidence of the genuineness of each such execution
and authorization and of other matters as may reasonably be required. Upon such
delivery the transfer shall be recorded on the register of the Trust. Until such
record is made, the Shareholder of record shall be deemed to be the holder of
such Shares for all purposes hereunder and neither the Trustees nor any Transfer
Agent or registrar nor any officer, employee or agent of the Trust shall be
affected by any notice of the proposed transfer.
Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to the Trustees or the Transfer
Agent, but until such record is made, the Shareholder of record shall be deemed
to be the holder of such Shares for all purposes hereunder and neither the
Trustees nor any Transfer Agent or registrar nor any officer or agent of the
Trust shall be affected by any notice of such death, bankruptcy or incompetence,
or other operation of law.
Section 5.7. Notices, Reports. Any and all notices to which any
Shareholder may be entitled and any and all communications shall be deemed duly
served or given if mailed, postage prepaid, addressed to any Shareholder of
record at his last known address as recorded on the register of the Trust. A
notice of a meeting, an annual report and any other communication to
Shareholders need not be sent to a Shareholder (i) if an annual report and a
proxy statement for two consecutive shareholder meetings have been mailed to
such Shareholder's address and have been returned as undeliverable, (ii) if all,
and at least two, checks (if sent by first class mail) in payment of dividends
on Shares during a twelve-month period have been mailed to such Shareholder's
address and have been returned as undeliverable or (iii) in any other case in
which a proxy statement concerning a meeting of security holders is not required
to be given pursuant to the Commission's proxy rules as from time to time in
effect under the Securities Exchange Act of 1934. However, delivery of such
proxy statements, annual reports and other communications shall resume if and
when such Shareholder delivers or causes to be delivered to the Trust written
notice setting forth such Shareholder's then current address.
Section 5.8. Treasury Shares. Shares held in the treasury shall, until
reissued pursuant to Section 5.4, not confer any voting rights on the Trustees,
nor shall such Shares be entitled to any dividends or other distributions
declared with respect to the Shares.
Section 5.9. Voting Powers. The Shareholders shall have power to vote
only (i) for the election of Trustees as provided in Section 2.12; (ii) for the
removal of Trustees as provided in Section 2.13; (iii) with respect to
termination of the Trust as provided in Section 8.2; (iv) with respect to any
amendment of this Declaration to the extent and as provided in Section 8.3; (v)
to the same extent as the stockholders of Massachusetts business corporation as
to whether or not a court action, proceeding or claim should or should not be
brought or maintained derivatively or as a class action on behalf of the Trust
or any Series or Class thereof or the Shareholders (provided, however, that a
Shareholder of a particular Series or Class shall not be entitled to bring a
derivative or class action on behalf of any other Series or Class (or
Shareholder of any other Series or Class) of the Trust); and (vi) with respect
to such additional matters relating to the Trust as may be required by this
Declaration, the By-laws or any registration of the Trust as an investment
company under the 1940 Act with the Commission (or any successor agency) or as
the Trustees may consider necessary or desirable. Each whole Share shall be
entitled to one vote as to any matter on which it is entitled to vote and each
fractional Share shall be entitled to a proportionate fractional vote.
Notwithstanding any other provision of this Declaration of Trust, on any matter
submitted to a vote of Shareholders, all Shares of the Trust then entitled to
vote shall be voted by individual series or Class, as appropriate, except (1)
when required by the 1940 Act, Shares shall be voted in the aggregate and not by
individual series or Classes, and (2) when the Trustees have determined that the
matter affects only the interests of one or more series or Classes, then only
Shareholders of such series or Classes shall be entitled to vote thereon. There
shall be no cumulative voting in the election of Trustees. Until Shares are
issued, the Trustees may exercise all rights of Shareholders and may take any
action required by law, this Declaration or the By-laws to be taken by
Shareholders. The By-laws may include further provisions for Shareholders' votes
and meetings and related matters.
Section 5.10. Meetings of Shareholders. Meetings of Shareholders may be
called at any time by the President, and shall be called by the President and
Secretary at the request in writing or by resolution, of a majority of Trustees,
or at the written request of the holder or holders of ten percent (10%) or more
of the total number of Shares then issued and outstanding of the Trust entitled
to vote at such meeting. Any such request shall state the purpose of the
proposed meeting.
Section 5.11. Quorum and Required Vote. A majority of Shares entitled
to vote shall be a quorum for the transaction of business at a Shareholders'
meeting, except that where any provisions of law or of this Declaration of Trust
permits or requires that holders of any series shall vote as a series or any
Class shall vote as a Class, then a majority of the aggregate number of Shares
of that series or Class entitled to vote shall be necessary to constitute a
quorum for the transaction of business by that series or Class. Any lesser
number shall be sufficient for adjournments. Any adjourned session or sessions
may be held, within a reasonable time after the date set for the original
meeting, without the necessity of further notice. Except when a larger vote is
required by any provision of this Declaration of Trust or the Bylaws, a majority
of the Shares voted shall decide any questions and a plurality shall elect a
Trustee, provided that where any provision of law or of this Declaration of
Trust permits or requires that the holders of any series or Class shall vote as
a series or Class, then a majority of the Shares of that series or Class voted
on the matter (or a plurality with respect to the election of a Trustee) shall
decide that matter insofar as that series or Class is concerned. Notwithstanding
anything to the contrary contained herein, a plurality of each series shall be
required to elect a Trustee.
Section 5.12. Action by Written Consent Any action taken by
Shareholders may be taken without a meeting if a majority of Shareholders
entitled to vote on the matter (or such larger proportion thereof as shall be
required by any express provision of this Declaration of Trust or the Bylaws)
consent to the action in writing and such written consents are filed with the
records of the meetings of Shareholders. Such consent shall be treated for all
purposes as a vote taken at a meeting of Shareholders.
Section 5.13. Series Designation. The Trustees, in their discretion,
may authorize the division of Shares into two or more Series, and the different
Series shall be established and designated, and the variations in the relative
rights and preferences as between the different Series shall be fixed and
determined, by the Trustees; provided, that all Shares shall be identical except
that there may be variations so fixed and determined between different Series as
to investment objective, purchase price, par value, allocation of expenses,
right of redemption, special and relative rights as to dividends and on
liquidation, conversion rights, and conditions under which the several Series
shall have separate voting rights. All references to Shares in this Declaration
shall be deemed to be Shares of any or all Series as the context may require.
Without limiting the authority of the Trustees to establish and
designate any additional Series of Shares (or Classes of Shares under Section
5.15 herein), there shall be established five initial series to be known,
respectively, as: (1) Income Portfolio; (2) Conservative Portfolio; (3) Balanced
Portfolio; (4) Growth and Income Portfolio; and (5) Growth Portfolio.
(a) All provisions herein relating to the Trust shall apply
equally to each Series of the Trust except, as the context requires
otherwise.
(b) The number of authorized Shares and the number of Shares
of each Series that may be issued shall be unlimited. The Trustees may
classify or reclassify any unissued Shares or any Shares previously
issued and reacquired of any Series into one or more Series that may be
established and designated from time to time. The Trustees may hold as
treasury Shares (of the same or some other Series), reissue for such
consideration and on such terms as they may determine, or cancel any
Shares of any Series reacquired by the Trust at their discretion from
time to time.
(c) All consideration received by the Trust for the issue or
sale of Shares of a particular Series, together with all assets in
which such consideration is invested or reinvested, all income,
earnings, profits, and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or
payments derived from any reinvestment of such proceeds in whatever
form the same may be, shall irrevocably belong to that Series for all
purposes, subject only to the rights of creditors of such Series and
except as may otherwise be required by applicable laws, and shall be so
recorded upon the books of account of the Trust. In the event that
there are any assets, income, earnings, profits, and proceeds thereof,
funds, or payments which are not readily identifiable as belonging to
any particular Series, the Trustees shall allocate them among any one
or more of the Series established and designated from time to time in
such manner and on such basis as they, in their sole discretion, deem
fair and equitable. Each such allocation by the Trustees shall be
conclusive and binding upon the Shareholders of all Series for all
purposes.
(d) The assets belonging to each particular Series shall be
charged with the liabilities of the Trust in respect of that Series and
with all expenses, costs, charges and reserves attributable to that
Series, and any general liabilities, expenses, costs, charges or
reserves of the Trust which are not readily identifiable as belonging
to any particular Series shall be allocated and charged by the Trustees
to and among any one or more of the Series established and designated
from time to time in such manner and on such basis as the Trustees in
their sole discretion deem fair and equitable. Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees
shall be conclusive and binding upon the Shareholders of all Series for
all purposes. The Trustees shall have full discretion, to the extent
not inconsistent with the 1940 Act, to determine which items are
capital; and each such determination and allocation shall be conclusive
and binding upon the Shareholders. The assets of a particular Series of
the Trust shall, under no circumstances, be charged with liabilities
attributable to any other Series of the Trust. All persons extending
credit to, or contracting with or having any claim against a particular
Series of the Trust shall look only to the assets of that particular
Series for payment of such credit, contract or claim. No Shareholder or
former Shareholder of any Series shall have any claim on or right to
any assets allocated or belonging to any other Series.
(e) Each Share of a Series of the Trust shall represent a
beneficial interest in the net assets of such Series. Each holder of
Shares of a Series shall be entitled to receive his pro rata share of
distributions of income and capital gains made with respect to such
Series, except as provided in Section 5.15 hereof. Upon redemption of
his Shares or indemnification for liabilities incurred by reason of his
being or having been a Shareholder of a Series, such Shareholder shall
be paid solely out of the funds and property of such Series of the
Trust. Upon liquidation or termination of a Series of the Trust,
Shareholders of such Series shall be entitled to receive a pro rata
share of the net assets of such Series, except as provided in Section
5.15 hereof. A Shareholder of a particular Series of the Trust shall
not be entitled to participate in a derivative or class action on
behalf of any other Series or the Shareholders of any other Series of
the Trust.
The establishment and designation of any Series of Shares shall be
effective upon the execution by a majority of the then Trustees of an instrument
setting forth such establishment and designation and the relative rights and
preferences of such Series, or as otherwise provided in such instrument. The
Trustees may by an instrument executed by a majority of their number abolish any
Series and the establishment and designation thereof. Except as otherwise
provided in this Article V, the Trustees shall have the power to determine the
designations, preferences, privileges, limitations and rights, of each Class and
Series of Shares. Each instrument referred to in this paragraph shall have the
status of an amendment to this Declaration.
Section 5.14. Assent to Declaration of Trust. Every Shareholder, by
virtue of having become a shareholder, shall be held to have expressly assented
and agreed to the terms hereof and to have become a party hereto.
Section 5.15. Class Designation. The Trustees, in their discretion, may
authorize the division of the Shares of the Trust, or, if any Series be
established, the Shares of any Series, into two or more Classes, and the
different Classes shall be established and designated, and the variations in the
relative rights and preferences as between the different Classes shall be fixed
and determined, by the Trustees; provided, that all Shares of the Trust or of
any Series shall be identical to all other Shares of the Trust or the same
Series, as the case may be, except that there may be variations between
different Classes as to allocation of expenses, right of redemption, special and
relative rights as to dividends and on liquidation, conversion rights, and
conditions under which the several Classes shall have separate voting rights.
All references to Shares in this Declaration shall be deemed to be Shares of any
or all Classes as the context may require.
(a) All provisions herein relating to the Trust, or
any Series of the Trust, shall apply equally to each Class of Shares of
the Trust or of any Series of the Trust, except as the context requires
otherwise.
(b) The number of Shares of each Class that may be
issued shall be unlimited. The Trustees may classify or reclassify any
Shares or any Series of any Shares into one or more Classes that may be
established and designated from time to time. The Trustees may hold as
treasury Shares (of the same or some other Class), reissue for such
consideration and on such terms as they may determine, or cancel any
Shares of any Class reacquired by the Trust at their discretion from
time to time.
(c) Liabilities, expenses, costs, charges and
reserves related to the distribution of, and other identified expenses
that should properly be allocated to, the Shares of a particular Class
may be charged to and borne solely by such Class and the bearing of
expenses solely by a Class of Shares may be appropriately reflected (in
a manner determined by the Trustees) and cause differences in the net
asset value attributable to, and the dividend, redemption and
liquidation rights of, the Shares of different Classes. Each allocation
of liabilities, expenses, costs, charges and reserves by the Trustees
shall be conclusive and binding upon the Shareholders of all Classes
for all purposes.
(d) The establishment and designation of any Class of
Shares shall be effective upon the execution by a majority of the then
Trustees of an instrument setting forth such establishment and
designation and the relative rights and preferences of such Class, or
as otherwise provided in such instrument. The Trustees may, by an
instrument executed by a majority of their number, abolish any Class
and the establishment and designation thereof. Each instrument referred
to in this paragraph shall have the status of an amendment to this
Declaration.
ARTICLE VI
REDEMPTION AND REPURCHASE OF SHARES
Section 6.1. Redemption of Shares. All Shares of the Trust shall be
redeemable, at the redemption price determined in the manner set out in this
Declaration. Redeemed or repurchased Shares may be resold by the Trust.
The Trust shall redeem the Shares upon the appropriately verified
written application of the record holder thereof (or upon such other form of
request as the Trustees may determine) at such office or agency as may be
designated from time to time for that purpose in the Trust's then effective
registration statement under the Securities Act of 1933. The Trustees may from
time to time specify additional conditions, not inconsistent with the 1940 Act,
regarding the redemption of Shares in the Trust's then effective registration
statement under the Securities Act of 1933.
Section 6.2. Price. Shares shall be redeemed at their net asset value
determined as set forth in Section 7.1 hereof as of such time as the Trustees
shall have theretofore prescribed by resolution. In the absence of such
resolution, the redemption price of Shares deposited shall be the net asset
value of such Shares next determined as set forth in Section 7.1 hereof after
receipt of such application.
Section 6.3. Payment. Payment for such Shares shall be made in cash or
in property out of the assets of the relevant Series of the Trust to the
Shareholder of record at such time and in the manner, not inconsistent with the
1940 Act or other applicable laws, as may be specified from time to time in the
Trust's then effective registration statement under the Securities Act of 1933,
subject to the provisions of Section 6.4 hereof.
Section 6.4. Effect of Suspension of Determination of Net Asset Value.
If, pursuant to Section 6.9 hereof, the Trustees shall declare a suspension of
the determination of net asset value, the rights of Shareholders (including
those who shall have applied for redemption pursuant to Section 6.1 hereof but
who shall not yet have received payment) to have Shares redeemed and paid for by
the Trust shall be suspended until the termination of such suspension is
declared. Any record holder who shall have his redemption right so suspended
may, during the period of such suspension, by appropriate written notice of
revocation at the office or agency where application was made, revoke any
application for redemption not honored and withdraw any certificates on deposit.
The redemption price of Shares for which redemption applications have not been
revoked shall be the net asset value of such Shares next determined as set forth
in Section 7.1 after the termination of such suspension, and payment shall be
made within seven (7) days after the date upon which the application was made
plus the period after such application during which the determination of net
asset value was suspended.
Section 6.5. Repurchase by Agreement. The Trust may repurchase Shares
directly, or through the Distributor or another agent designated for the
purpose, by agreement with the owner thereof at a price not exceeding the net
asset value per Share determined as of the time when the purchase or contract of
purchase is made or the net asset value as of any time which may be later
determined pursuant to Section 7.1 hereof, provided payment is not made for the
Shares prior to the time as of which such net asset value is determined.
Section 6.6. Redemption at the Option of the Trust. The Trust shall
have the right at its option and at any time to redeem Shares of any Shareholder
at the net asset value thereof as determined in accordance with the Bylaws, and
to refuse to transfer or issue new Shares or other securities of the Trust to
such Shareholder: (i) if at such time such Shareholder owns fewer Shares than,
or Shares having an aggregate net asset value of less than, an amount determined
from time to time by the Trustees; or (ii) to the extent that such Shareholder
owns Share of a particular series of Shares or Class thereof equal to or in
excess of a percentage of the outstanding Shares of that series or Class thereof
determined from time to time by the Trustees; or (iii) to the extent that such
Shareholder owns Shares of the Trust representing a percentage equal to or in
excess of such percentage of the aggregate number of outstanding Shares of the
Trust or the aggregate net asset value of the Trust determined from time to time
by the Trustees.
Section 6.7. Reductions in Number of Outstanding Shares Pursuant to Net
Asset Value Formula. The Trust may also reduce the number of Outstanding Shares
pursuant to the provisions of Section 7.3.
Section 6.8. Suspension of Right of Redemption. The Trust may declare a
suspension of the right of redemption or postpone the date of payment or
redemption for the whole or any part of any period (i) during which the New York
Stock Exchange is closed other than customary weekend and holiday closings, (ii)
during which trading on the New York Stock Exchange is restricted, (iii) during
which an emergency exists as a result of which disposal by the Trust of
securities owned by it is not reasonably practicable or it is not reasonably
practicable for the Trust fairly to determine the value of its net assets, or
(iv) during any other period when the Commission may for the protection of
Shareholders of the Trust by order permit suspension of the right of redemption
or postponement of the date of payment or redemption; provided that applicable
rules and regulations of the Commission shall govern as to whether the
conditions prescribed in (ii), (iii), or (iv) exist. Such suspension shall take
effect at such time as the Trust shall specify but not later than the close of
business on the business day next following the declaration of suspension, and
thereafter there shall be no right of redemption or payment on redemption until
the Trust shall declare the suspension at an end, except that the suspension
shall terminate in any event on the first day on which said stock exchange shall
have reopened or the period specified in (ii) or (iii) shall have expired as to
which in the absence of an official ruling by the Commission, the determination
of the Trust shall be conclusive). In the case of a suspension of the right of
redemption, a Shareholder may either withdraw his request for redemption or
receive payment based on the net asset value existing after the termination of
the suspension.
ARTICLE VII
DETERMINATION OF NET ASSET VALUE,
NET INCOME AND DISTRIBUTIONS
Section 7.1. Net Asset Value. The value of the assets of the Trust or
any Series of the Trust shall be determined by appraisal of the securities of
the Trust or allocated to such Series, such appraisal to be on the basis of such
method as shall be deemed to reflect the fair value thereof, determined in good
faith by or under the direction of the Trustees. From the total value of said
assets, there shall be deducted all indebtedness, interest, taxes, payable or
accrued, including estimated taxes on unrealized book profits, expenses and
management charges accrued to the appraisal date, net income determined and
declared as a distribution and all other items in the nature of liabilities
attributable to the Trust or such Series or Class thereof which shall be deemed
appropriate. The net asset value of a Share shall be determined by dividing the
net asset value of the Class, or if no Class has been established, of the
Series, or, if no Series has been established, of the Trust, by the number of
Shares of that Class, or Series, or of the Trust, as applicable, outstanding.
The net asset value of Shares of the Trust or any Class or Series of the Trust
shall be determined pursuant to the procedure and methods prescribed or approved
by the Trustees in their discretion and as set forth in the most recent
Registration Statement of the Trust as filed with the Securities and Exchange
Commission pursuant to the requirements of the Securities Act of 1933, as
amended, the 1940 Act, as amended, and the Rules thereunder. The net asset value
of the Shares shall be determined at least once on each business day, as of the
close of trading on the New York Stock Exchange or as of such other time or
times as the Trustees shall determine.
The power and duty to make the daily calculations may be delegated by
the Trustees to the Investment Adviser, the Custodian, the Transfer Agent or
such other Person as the Trustees may determine by resolution or by approving a
contract which delegates such duty to another Person. The Trustees may suspend
the daily determination of net asset value to the extent permitted by the 1940
Act.
Section 7.2. Distributions to Shareholders. The Trustees shall from
time to time distribute ratably among the Shareholders of the Trust or a Series
such proportion of the net profits, surplus (including paid-in surplus),
capital, or assets of the Trust or such Series held by the Trustees as they may
deem proper. Such distributions may be made in cash or property (including
without limitation any type of obligations of the Trust or such Series or any
assets thereof), and the Trustees may distribute ratably among the Shareholders
additional Shares of the Trust or such Series issuable hereunder in such manner,
at such times, and on such terms as the Trustees may deem proper. Such
distributions may be among the Shareholders of record at the time of declaring a
distribution or among the Shareholders of record at such other date or time or
dates or times as the Trustees shall determine. The Trustees may in their
discretion determine that, solely for the purposes of such distributions,
Outstanding Shares shall exclude Shares for which orders have been placed
subsequent to a specified time on the date the distribution is declared or on
the next preceding day if the distribution is declared as of a day on which
Boston banks are not open for business, all as described in the registration
statement under the Securities Act of 1933. The Trustees may always retain from
the net profits such amount as they may deem necessary to pay the debts or
expenses of the Trust or the Series or to meet obligations of the Trust or the
Series, or as they may deem desirable to use in the conduct of its affairs or to
retain for future requirements or extensions of the business. The Trustees may
adopt and offer to Shareholders such dividend reinvestment plans, cash dividend
payout plans or related plans as the Trustees shall deem appropriate. The above
provisions may be modified to the extent required by a plan adopted by the
Trustees to establish Classes of Shares of the Trust or of a Series.
Inasmuch as the computation of net income and gains for Federal income
tax purposes may vary from the computation thereof on the books, the above
provisions shall be interpreted to give the Trustees the power in their
discretion to distribute for any fiscal year as ordinary dividends and as
capital gains distributions, respectively, additional amounts sufficient to
enable the Trust or the Series to avoid or reduce liability for taxes.
Section 7.3. Determination of Net Income; Constant Net Asset Value;
Reduction of Outstanding Shares. Subject to Section 5.13 and Section 5.15
hereof, the net income of the Trust or any Series shall be determined in such
manner as the Trustees shall provide by resolution. Expenses of the Trust or a
Series, including the advisory or management fee, shall be accrued each day.
Such net income may be determined by or under the direction of the Trustees as
of the close of trading on the New York Stock Exchange on each day on which such
Exchange is open or as of such other time or times as the Trustees shall
determine, and, except as provided herein, all the net income of the Trust or
any Series, as so determined, may be declared as a dividend on the Outstanding
Shares of the Trust or such Series. If, for any reason, the net income of the
Trust or any Series, determined at any time is a negative amount, the Trustees
shall have the power with respect to the Trust or such Series (i) to offset each
Shareholder's pro rata share of such negative amount from the accrued dividend
account of such Shareholder, or (ii) to reduce the number of Outstanding Shares
of the Trust or such Series by reducing the number of Shares in the account of
such Shareholder by that number of full and fractional Shares which represents
the amount of such excess negative net income, or (iii) to cause to be recorded
on the books of the Trust or such Series an asset account in the amount of such
negative net income, which account may be reduced by the amount, provided that
the same shall thereupon become the property of the Trust or such Series with
respect to the Trust or such Series and shall not be paid to any Shareholder, of
dividends declared thereafter upon the Outstanding Shares of the Trust or such
Series on the day such negative net income is experienced, until such asset
account is reduced to zero; or (iv) to combine the methods described in clauses
(i) and (ii) and (iii) of this sentence, in order to cause the net asset value
per Share of the Trust or such Series to remain at a constant amount per
Outstanding Share immediately after each such determination and declaration. The
Trustees shall also have the power to fail to declare a dividend out of net
income for the purpose of causing the net asset value per Share to be increased
to a constant amount. The Trustees shall not be required to adopt, but may at
any time adopt, discontinue or amend the practice of maintaining the net asset
value per Share of the Trust or a Series at a constant amount.
Section 7.4. Allocation Between Principal and Income. The Trustees
shall have full discretion to determine whether any cash or property received
shall be treated as income or as principal and whether any item of expense shall
be charged to the income or the principal account, and their determination made
in good faith shall be conclusive upon the Shareholders. In the case of stock
dividends received, the Trustees shall have full discretion to determine, in the
light of the particular circumstances, how much, if any, of the value thereof
shall be treated as income, the balance, if any, to be treated as principal.
Section 7.5. Power to Modify Foregoing Procedures. Notwithstanding any
of the foregoing provisions of this Article VII, the Trustees may prescribe, in
their absolute discretion, such other bases and times for determining the per
Share net asset value or net income, or the declaration and payment of dividends
and distributions as they may deem necessary or desirable.
ARTICLE VIII
DURATION; TERMINATION OF TRUST;
AMENDMENT; MERGERS, ETC.
Section 8.1. Duration. The Trust shall continue without limitation
of time but subject to the provisions of this Article VIII.
Section 8.2. Termination of Trust or the Series of the Trust. (a) The
Trust or any Series of the Trust may be terminated by an instrument in writing
signed by a majority of the Trustees, or by the affirmative vote of the holders
of two-thirds of the Shares of the Trust or Series outstanding and entitled to
vote, at any meeting of Shareholders. Upon the termination of the Trust or any
Series,
(i) the Trust or any Series shall carry on no business
except for the purpose of winding up its affairs;
(ii) the Trustees shall proceed to wind up the affairs of the
Trust or Series and all of the powers of the Trustees under this
Declaration shall continue until the affairs of the Trust or Series
shall have been wound up, including the power to fulfill or discharge
the contracts of the Trust or Series, collect its assets, sell, convey,
assign, exchange, transfer or otherwise dispose of all or any part of
the remaining Trust Property or property of the Series to one or more
persons at public or private sale for consideration which may consist
in whole or in part of cash, securities or other property of any kind,
discharge or pay its liabilities, and do all other acts appropriate to
liquidate its business; and
(iii) after paying or adequately providing for the payment of
all liabilities, and upon receipt of such releases, indemnities and
refunding agreements as they deem necessary for their protection, the
Trustees may distribute the remaining Trust Property or property of the
Series, in cash or in kind or partly each, among the Shareholders of
the Trust or Series according to their respective rights.
(b) After termination of the Trust or any Series and distribution to
the Shareholders as herein provided, a majority of the Trustees shall execute
and lodge among the records of the Trust an instrument in writing setting forth
the fact of such termination, and the Trustees shall thereupon be discharged
from all further liabilities and duties hereunder, and the rights and interests
of all Shareholders of the Trust or Series shall thereupon cease.
Section 8.3. Amendment Procedure. (a) This Declaration may be amended
by a vote of the holders of a majority of the Shares outstanding and entitled to
vote, except that an amendment which shall affect the holders of one or more
series or Classes of Shares but not the holders of all outstanding series or
Classes shall be authorized by vote of the Shareholders holding a majority of
the Shares entitled to vote of each series or Class affected and no vote of
Shareholders of a series or Class not affected shall be required. Amendments
shall be effective upon the taking of action as provided in this section or at
such later time as shall be specified in the applicable vote or instrument. The
Trustees may also amend this Declaration without the vote or consent of
Shareholders if they deem it necessary to conform this Declaration to the
requirements of applicable federal or state laws or regulations or the
requirements of the regulated investment company provisions of the Internal
Revenue Code (including those provisions of such Code relating to the retention
of the exemption from federal income tax with respect to dividends paid by the
Trust out of interest income received on Municipal Bonds), but the Trustees
shall not be liable for failing so to do. The Trustees may also amend this
Declaration without the vote or consent of Shareholders if they deem it
necessary or desirable to change the name of the Trust, to supply any omission,
to cure, correct or supplement any ambiguous, defective or inconsistent
provision hereof, or to make any other changes in the Declaration which do not
materially adversely affect the rights of Shareholders hereunder.
(b) Nothing contained in this Declaration shall permit the amendment of
this Declaration so as to impair the exemption from personal liability of the
Shareholders, Trustees, officers, employees and agents of the Trust or to permit
assessments upon Shareholders.
(c) A certificate signed by a majority of the Trustees setting forth an
amendment and reciting that it was duly adopted by the Shareholders or by the
Trustees as aforesaid or a copy of the Declaration, as amended, and executed by
a majority of the Trustees, shall be conclusive evidence of such amendment when
lodged among the records of the Trust.
Notwithstanding any other provision hereof, until such time as a
Registration Statement under the Securities Act of 1933, as amended, covering
the first public offering of securities of the Trust shall have become
effective, this Declaration may be terminated or amended in any respect by the
affirmative vote of a majority of the Trustees or by an instrument signed by a
majority of the Trustees.
Section 8.4. Merger, Consolidation and Sale of Assets. The Trust or any
Series thereof may merge or consolidate with any other corporation, association,
trust or other organization or may sell, lease or exchange all or substantially
all of the Trust Property or the property of any Series, including its good
will, upon such terms and conditions and for such consideration when and as
authorized by an instrument in writing signed by a majority of the Trustees.
Section 8.5. Incorporation. When authorized by an instrument in writing
signed by a majority of the Trustees, the Trustees may cause to be organized or
assist in organizing a corporation or corporations under the laws of any
jurisdiction or any other trust, partnership, association or other organization
to take over all of the Trust Property or the property of any Series or to carry
on any business in which the Trust or the Series shall directly or indirectly
have any interest, and to sell, convey and transfer the Trust Property or the
property of any Series to any such corporation, trust, association or
organization in exchange for the Shares or securities thereof or otherwise, and
to lend money to, subscribe for the Shares or securities of, and enter into any
contracts with any such corporation, trust, partnership, association or
organization, or any corporation, partnership, trust, association or
organization in which the Trust or the Series holds or is about to acquire
shares or any other interest. The Trustees may also cause a merger or
consolidation between the Trust or any Series or any successor thereto and any
such corporation, trust, partnership, association or other organization if and
to the extent permitted by law, as provided under the law then in effect.
Nothing contained herein shall be construed as requiring approval of
Shareholders for the Trustees to organize or assist in organizing one or more
corporations, trusts, partnerships, associations or other organizations and
selling, conveying or transferring a portion of the Trust Property to such
organization or entities.
ARTICLE IX
MISCELLANEOUS
Section 9.1. Filing. This Declaration and any amendment hereto shall be
filed in the office of the Secretary of the Commonwealth of Massachusetts and in
such other places as may be required under the laws of the Commonwealth of
Massachusetts and may also be filed or recorded in such other places as the
Trustees deem appropriate. Unless the amendment is embodied in an instrument
signed by a majority of the Trustees, each amendment filed shall be accompanied
by a certificate signed and acknowledged by a Trustee stating that such action
was duly taken in a manner provided herein. A restated Declaration, integrating
into a single instrument all of the provisions of the Declaration which are then
in effect and operative, may be executed from time to time by a majority of the
Trustees and shall, upon filing with the Secretary of the Commonwealth of
Massachusetts, be conclusive evidence of all amendments contained therein and
may hereafter be referred to in lieu of the original Declaration and the various
amendments thereto. The restated Declaration may include any amendment which the
Trustees are empowered to adopt, whether or not such amendment has been adopted
prior to the execution of the restated Declaration.
Section 9.2. Governing Law. This Declaration is executed by the
Trustees and delivered in the Commonwealth of Massachusetts and with reference
to the internal laws thereof, and the rights of all parties and the validity and
construction of every provision hereof shall be subject to and construed
according to the internal laws of said State without regard to the choice of law
rules thereof.
Section 9.3. Counterparts. This Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts, together, shall constitute one and the same
instrument, which shall be sufficiently evidenced by any such original
counterpart.
Section 9.4. Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust appears to be a Trustee
hereunder, certifying to: (a) the number or identity of Trustees or
Shareholders, (b) the due authorization of the execution of any instrument or
writing, (c) the form of any vote passed at a meeting of Trustees or
Shareholders, (d) the fact that the number of Trustees or Shareholders present
at any meeting or executing any written instrument satisfies the requirements of
this Declaration, (e) the form of any By-laws adopted by or the identity of any
officers elected by the Trustees, or (f) the existence of any fact or facts
which in any manner relate to the affairs of the Trust, shall be conclusive
evidence as to the matters so certified in favor of any Person dealing with the
Trustees and their successors.
Section 9.5. Provisions in Conflict with Law or Regulations.
(a) The provisions of this Declaration are severable, and if the
Trustees shall determine, with the advice of counsel, that any of such
provisions is in conflict with the 1940 Act, the regulated investment company
provisions of the Internal Revenue Code or with other applicable laws and
regulations, the conflicting provision shall be deemed never to have constituted
a part of this Declaration; provided, however, that such determination shall not
affect any of the remaining provisions of this Declaration or render invalid or
improper any action taken or omitted prior to such determination.
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provisions in any other jurisdiction or any other provision of this
Declaration in any jurisdiction.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
18th day of November, 1998.
Joseph R. Fleming, Trustee
Dechert Price & Rhoads
Ten Post Office Square South
Boston, MA 02109
THE COMMONWEALTH OF MASSACHUSETTS
County of Suffolk November 18, 1998
Then personally appeared the above-named Joseph R. Fleming, who
acknowledged the foregoing instrument to be of his own free act and deed.
Before me,
Notary Public
My commission expires:
MACKENZIE SOLUTIONS
Redesignation of Series and
Establishment and Designation of Classes
of Shares of Beneficial Interest,
No Par Value Per Share
The undersigned, being at least a majority of the duly elected and
qualified Trustees of Mackenzie Solutions, a Massachusetts business trust (the
"Trust"), acting pursuant to Article II and Article V of the Declaration of
Trust of Mackenzie Solutions dated November 18, 1998 (the "Declaration of
Trust"), duly approve, adopt and consent to the following resolutions as actions
of the Trustees of the Trust:
WHEREAS, the shares of beneficial interest of the Trust are currently
divided into five separate series and such initial series of the Trust were
originally established and designated in Section 5.13 of the Declaration of
Trust;
WHEREAS, the Trustees have decided to redesignate the five initial series
of the Trust; and
WHEREAS, the Trustees have decided to divide the shares of beneficial
interest of each of the five initial series into five separate classes, no par
value per share;
NOW, THEREFORE, IT IS HEREBY:
RESOLVED, that Section 5.13 of the Declaration of Trust is hereby
amended to redesignate the five initial series of the Trust as follows:
(i) the series designated "Income Portfolio" is redesignated
"International Solutions I - Conservative Growth", (ii) the series
designated "Conservative Portfolio" is redesignated "International
Solutions II - Balanced Growth", (iii) the series designated "Balanced
Portfolio" is redesignated "International Solutions III - Moderate
Growth", (iv) the series designated "Growth and Income Portfolio" is
redesignated "International Solutions IV - Long-Term Growth" and (v)
the series designated "Growth Portfolio" is redesignated "International
Solutions V - Aggressive Growth" (each a "Fund" and, collectively, the
"Funds").
FURTHER RESOLVED, that all other terms and conditions regarding the
designation of the Funds contained in Section 5.13 of the Declaration
of Trust remain in effect.
FURTHER RESOLVED, that, pursuant to Section 5.15 of the Declaration of
Trust, the shares of beneficial interest of each Fund are hereby
divided into five classes, no par value per share, to be designated as
follows: (i) "Class A", (ii) "Class B", (iii) "Class C", (iv) "Class I"
and (v) "Advisor Class" (each a "Class" and, collectively, the
"Classes").
FURTHER RESOLVED, that the number of authorized shares of each Class of
each Fund shall be unlimited. Each Fund and each of its Classes of
shares shall be subject to all provisions of the Declaration of Trust
relating to shares of the Trust generally, and shall have the following
special and relative rights:
A. A Fund shall be authorized to hold cash and invest in securities and
instruments and use investment techniques as described in the Trust's
registration statement under the Securities Act of 1933, as amended from
time to time. Each share of beneficial interest, no par value per share, of
a Fund shall be redeemable as provided in the Declaration of Trust, shall
be entitled to one vote (or fraction thereof in respect of a fractional
share) on matters on which shares of the Fund shall be entitled to vote and
shall represent a pro rata beneficial interest in the assets allocated to
the Fund. The proceeds of sales of shares of a Fund, together with any
income and gain thereon, less any diminution or expenses thereof, shall
irrevocably belong to the Fund, unless otherwise required by law. Each
share of a Fund shall be entitled to receive its pro rata share of net
assets of the Fund upon the Fund's liquidation. Upon redemption of a
shareholder's shares, or indemnification for liabilities incurred by reason
of a shareholder being or having been a shareholder of a Fund, such
shareholder shall be paid solely out of the property of the Fund.
B. Shareholders of a Fund shall vote separately as a series on any matter to
the extent required by applicable federal or state law. Shareholders of
each Class of a Fund shall have (i) exclusive voting rights with respect to
matters on which the holders of each such class shall be entitled to
exclusive voting rights under applicable federal or state law, and (ii) no
voting rights with respect to matters on which the holders of another class
of shares of the Fund or the holders of another series (or class thereof)
shall be entitled to exclusive voting rights under applicable federal or
state law.
C. The assets and liabilities of the Trust shall be allocated among all series
and classes thereof in accordance with Article V of the Declaration of
Trust, except as provided below:
(1) Costs incurred by the Trust on behalf of each Fund in connection with
the organization, registration and public offering of shares of that
Fund shall be allocated to the Fund and shall be amortized by the Fund
in accordance with applicable law and generally accepted accounting
principles.
(2) The Trust may from time to time in particular cases make specific
allocations of assets or liabilities among the series.
D. The Trustees (including any successor Trustees) shall have the right at any
time and from time to time to reallocate assets and expenses or to change
the designation of any series (or class thereof) now or hereafter created,
or to otherwise change the special and relative rights of any such series
(or class), provided that such change shall not adversely affect the rights
of shareholders of that series (or class).
E. The dividends and distributions with respect to each class of shares shall
be in such amount as may be declared from time to time by the Trust's Board
of Trustees in accordance with the Declaration of Trust and applicable law.
F. (1) Each Class B share of a Fund, other than a share purchased through the
automatic reinvestment of a dividend or a distribution with respect to
Class B shares, shall be converted automatically, and without any
action or choice on the part of the holder thereof, into and be
reclassified as a Class A share of the Fund on the date that is the
first business day following the last calendar day of the month in
which the eighth anniversary date of the date of the issuance of such
Class B share falls (the "Conversion Date") on the basis of the
relative net asset values of the two classes, without the imposition
of any sales load, fee or other charge;
(2) Each Class B share purchased through the automatic reinvestment of a
dividend or a distribution with respect to Class B shares shall be
segregated in a separate sub-account. Each time any Class B shares of
a Fund in a shareholder's Fund account (other than those in the
sub-account) convert to Class A shares of the Fund, a pro rata portion
of the Class B shares then in the sub-account will also convert to
Class A shares. The portion will be determined by the ratio that the
shareholder's Class B shares converting to Class A shares bears to the
shareholder's total Class B shares not acquired through the
reinvestment of dividends and distributions;
(3) The conversion of Class B shares into Class A shares may be suspended
if (i) a ruling of the Internal Revenue Service to the effect that the
conversion of Class B shares does not constitute a taxable event under
Federal income tax law is revoked or (ii) an opinion of counsel on
such tax matter is withdrawn or (iii) the Board of Trustees determines
that continuing such conversions would have material, adverse tax
consequences for a Fund or its shareholders; and
(4) On the Conversion Date, the Class B shares converted into Class A
shares shall cease to accrue dividends and shall no longer be deemed
outstanding and the rights of the holders thereof (except the right to
receive the number of Class A shares into which the Class B shares
have been converted and any declared but unpaid dividends to the
Conversion Date) shall cease. Certificates representing Class A shares
of a Fund resulting from the conversion of Class B shares need not be
issued until certificates representing the Class B shares converted,
if issued, have been received by Ivy Fund or its agent duly endorsed
for transfer.
FURTHER RESOLVED, that the preceding resolutions shall constitute an
Amendment to the Declaration of Trust, effective upon execution, and
that the officers of the Trust be, and they hereby are, authorized to
file such Amendment to the Declaration of Trust in the offices of the
Commonwealth of Massachusetts and at any other place required by law or
by the Declaration of Trust.
IN WITNESS WHEREOF, the undersigned have set their hand this 18th day of March,
1999.
KEITH J. CARLSON_________ IAN CARMICHAEL_________
Keith J. Carlson Ian Carmichael
P. RODNEY CUNNINGHAM_ GARY R.ELLIS____________
P. Rodney Cunningham Gary R. Ellis
MICHAEL G. LANDRY______
Michael G. Landry
MACKENZIE SOLUTIONS
Written Instrument Increasing Number
of Trustees and Appointing New Trustees
The undersigned, being the sole trustee of Mackenzie Solutions, a
Massachusetts business trust (the "Trust"), acting pursuant to Article II of the
Fund's Declaration of Trust executed on November 18, 1998 (the "Declaration of
Trust"), hereby increases the number of Trustees and appoints Trustees to fill
vacancies as follows:
1. Pursuant to the provisions of Section 2.11 of the Declaration
of Trust, the number of Trustees of the Trust is hereby
increased to five (5).
2. Pursuant to the provisions of Section 2.14 of the Declaration
of Trust, Michael G. Landry, Keith J. Carlson, Ian Carmichael,
P. Rodney Cunningham and Gary R. Ellis be, and each hereby is,
appointed a Trustee of the Trust to fill the vacancies
existing by reason of an increase in the number of Trustees
and the resignation of the undersigned.
3. The selection of all Trustees shall be submitted to Mackenzie
Investment Management Inc., as the sole shareholder of the
Trust, for approval.
Dated: March 18, 1999
C. WILLIAM FERRIS___________
C. William Ferris, Trustee
BY-LAWS
OF
MACKENZIE SOLUTIONS
<PAGE>
TABLE OF CONTENTS
Name ......... Page
ARTICLE I.............................................................4
OFFICES...............................................................4
Section 1. Declaration of Trust.............................4
Section 2. Principal Office.................................4
Section 3. Other Offices....................................4
ARTICLE I.............................................................4
DEFINITIONS...........................................................4
ARTICLE III...........................................................4
SHAREHOLDERS..........................................................4
Section 1. Meetings.........................................4
Section 3. Record Date for Meetings and Other Purposes......5
Section 4. Proxies..........................................5
Section 5. Inspection of Records............................5
Section 6. Action Without Meeting...........................5
ARTICLE IV............................................................6
TRUSTEES 6
Section 1. Meetings of the Trustees.........................6
Section 2. Form of Meetings; Written Consent................6
Section 3. Quorum and Manner of Acting......................6
ARTICLE V.............................................................6
COMMITTEES............................................................6
Section 1. Executive and Other Committees...................6
Section 2. Meetings, Quorum and Manner of Acting............7
ARTICLE VI............................................................7
OFFICERS 7
Section 1. General Provisions; Execution of Documents.......7
Section 2. Term of Office and Qualifications................7
Section 3. Resignation and Removal..........................8
Section 4. Powers and Duties of the President...............8
Section 5. Powers and Duties of Vice Presidents.............8
Section 6. Powers and Duties of the Treasurer...............8
Section 7. Powers and Duties of the Secretary...............8
Section 8. Powers and Duties of Assistant Treasurers........9
Section 9. Powers and Duties of Assistant Secretaries.......9
Section 10. Compensation of Officers and Trustees and
Members of the Advisory Board...................9
ARTICLE VII...........................................................9
FISCAL YEAR...........................................................9
ARTICLE VIII..........................................................9
SEAL..................................................................9
ARTICLE IX............................................................9
WAIVERS OF NOTICE.....................................................9
ARTICLE X............................................................10
AMENDMENTS...........................................................10
<PAGE>
ARTICLE I
DECLARATION OF TRUST; OFFICES
Section 1. Declaration of Trust. These By-laws shall be subject to the
Declaration of Trust dated November 18, 1998, as amended from time to time (the
"Declaration of Trust"), of Mackenzie Solutions, the Massachusetts business
trust established by the Declaration of Trust.
Section 2. Principal Office. Until changed by the Trustees, the principal
office of the Trust in the Commonwealth of Massachusetts shall be in the City of
Boston, County of Suffolk.
Section 3. Other Offices. The Trust may have offices in such other places
outside as well as within the Commonwealth as the Trustees from time to time may
determine.
ARTICLE II
DEFINITIONS
The terms "Commission", "Custodian", "Distributor", "Investment
Adviser", "1940 Act", "Shareholder", "Shares", "Transfer Agent", "Trust", and
"Trustees", shall have the respective meanings given them in the Declaration of
Trust.
ARTICLE III
SHAREHOLDERS
Section 1. Meetings. Meetings of Shareholders shall be held as provided
in the Declaration of Trust at such place within or outside the Commonwealth of
Massachusetts as the Trustees shall designate. The holders of a majority of the
outstanding Shares present in person or by proxy shall constitute a quorum at
any meeting of the Shareholders.
Section 2. Notice of Meetings. Notice of all meetings of Shareholders,
stating the time, place and purposes of the meeting, shall be given personally
or by mail to each Shareholder (except as provided in Section 5.7 in the
Declaration of Trust with respect to notice given pursuant to the Commission's
proxy rules under the Securities Exchange Act of 1934) at his/her address as
recorded on the register of the Trust mailed at least ten (10) days, and not
more than sixty (60) days, before the meeting. Notice by mail shall be deemed to
be duly given when deposited in the U.S. mail to the Shareholder at the
Shareholder's address as it appears on the records of the Trust with postage
thereon prepaid. Only the business stated in the notice of the meeting shall be
considered at such meeting. Any adjourned meeting may be held as adjourned
without further notice. No notice need be given to any Shareholder who shall
have failed to inform the Trust of the Shareholder's current address or if a
written waiver of notice, executed before or after the meeting by the
Shareholder or the Shareholder's attorney thereunto authorized, is filed with
the records of the meeting.
Section 3. Record Date for Meetings and Other Purposes. For the purpose
of determining the Shareholders who are entitled to notice of and to vote at any
meeting, to participate in any dividend or other distribution, or for the
purpose of any other action, the Trustees may from time to time close the
transfer books for such period, not exceeding sixty (60) days, as the Trustees
may determine; or without closing the transfer books the Trustees may fix a date
not more than sixty (60) days prior to the date of any meeting of Shareholders
or distribution or other action as a record date for the determinations of the
persons to be treated as Shareholders of record for such purposes, except for
dividend payments which shall be governed by the Declaration of Trust.
Section 4. Proxies. At any meeting of Shareholders, any holder of
Shares entitled to vote thereat may vote by proxy, provided that no proxy shall
be voted at any meeting unless it shall have been placed on file with the
Secretary, or with such other officer or agent of the Trust as the Secretary may
direct, for verification prior to the time at which such vote shall be taken.
Proxies may be solicited in the name of one or more Trustees or one or more of
the officers of the Trust. Only Shareholders of record shall be entitled to
vote. Each whole share shall be entitled to one vote as to any matter on which
it is entitled by the Declaration of Trust to vote, and each fractional Share
shall be entitled to a proportionate fractional vote. When any Share is held
jointly by several persons, any one of them may vote at any meeting in person or
by proxy in respect of such Share, but if more than one of them shall be present
at such meeting in person or by proxy, and such joint owners or their proxies so
present disagree as to any vote to be cast, such vote shall not be received in
respect of such Share. A proxy purporting to be executed by or on behalf of a
Shareholder shall be deemed valid unless challenged at or prior to its exercise,
and the burden of proving invalidity shall rest on the challenger. If the holder
of any such share is a minor or a person of unsound mind, and subject to
guardianship or the legal control of any other person as regards the charge or
management of such Share, he/she may vote by his/her guardian or such other
person appointed or having such control, and such vote may be given in person or
by proxy.
Section 5. Inspection of Records. The records of the Trust shall be opened
to inspection by Shareholders to the same extent as is permitted shareholders of
a Massachusetts business corporation.
Section 6. Action Without Meeting. Any action which may be taken by
Shareholders may be taken without a meeting if a majority of Shareholders
entitled to vote on the matter (or such larger proportion thereof as shall be
required by law, the Declaration of Trust or these By-laws for approval of such
matter) consent to the action in writing and the written consents are filed with
the records of the meetings of Shareholders. Such consents shall be treated for
all purposes as a vote taken at a meeting of Shareholders.
ARTICLE IV
TRUSTEES
Section 1. Meetings of the Trustees. The Trustees may in their
discretion provide for regular or stated meetings of the Trustees. Notice of
regular or stated meetings need not be given. Meetings of the Trustees other
than regular or stated meetings ("special meetings") shall be held whenever
called by the President, or by any two or more of the Trustees, at the time
being in office. Notice of the time and place of each special meeting shall be
given by the Secretary or an Assistant Secretary or by the officer or Trustees
calling the special meeting, and shall be (i) mailed to each Trustee at least
two days before the special meeting, or (ii) telegraphed, cabled, or sent by
facsimile or other communication leaving a visual record to each Trustee at
his/her last known business or residential address, or personally delivered to
him/her or communicated to him/her telephonically, at least one day before the
special meeting. Such notice may be waived by any Trustee. Notice of a special
meeting need not be given to any Trustee if a written waiver of notice, executed
by him/her before or after the special meeting, is filed with the records of the
special meeting, or to any Trustee who attends the special meeting without
protesting prior thereto or at its commencement the lack of notice to him/her. A
notice or waiver of notice need not specify the purpose of any special meeting.
Section 2. Form of Meetings; Written Consent. Meetings can be held in
conjunction with investment companies having the same investment adviser or an
affiliated investment adviser. The Trustees may meet by means of a telephone
conference circuit or similar communications equipment by means of which all
persons participating in the meeting shall be deemed, unless otherwise
prohibited by law, to have been present in person at a place designated by the
Trustees at the meeting. Any action required or permitted to be taken at any
meeting of the Trustees may be taken by the Trustees without a meeting if
two-thirds of the Trustees consent to the action in writing and the written
consents are filed with the records of the Trustees' meetings. Such consents
shall be treated as a vote for all purposes.
Section 3. Quorum and Manner of Acting. A majority of the Trustees
shall be present in person at any regular or special meeting of the Trustees in
order to constitute a quorum for the transaction of business at such meeting,
and (except as otherwise required by law, the Declaration of Trust or these
By-laws) the act of a majority of the Trustees present at any such meeting, at
which a quorum is present, shall be an act of the Trustees. In the absence of a
quorum, a majority of the Trustees present may adjourn the meeting from time to
time until a quorum shall be present. Notice of an adjourned meeting need not be
given.
ARTICLE V
COMMITTEES
Section 1. Executive and Other Committees. The Trustees, by vote of a
majority thereof, may elect from their own number an Executive Committee to
consist of not less than three (3) members to hold office at the pleasure of the
Trustees, which shall have the power to conduct the current and ordinary
business of the Trust while the Trustees are not in session, including, but not
limited to, the purchase and sale of securities and the designation of
securities to be delivered upon redemption of Shares of the Trust and such other
powers of the Trustees as the Trustees may, from time to time, delegate to them
(except those powers which by law, the Declaration of Trust or these By-laws
they are prohibited from delegating). The Executive Committee shall keep regular
minutes of its meetings and records of decisions taken without a meeting and
cause them to be recorded in a book designated for that purpose and kept in the
Office of the Trust. The Trustees, by vote of a majority thereof, may also elect
from their own number other Committees from time to time, the number composing
such Committees, the powers conferred upon them (subject to the same limitations
as with respect to the Executive Committee), the term of membership on such
Committees, and the recording of any decisions thereof, to be determined by the
Trustees. The Trustees may designate a chairperson of any such Committee. In the
absence of such designation, the Committee may elect its own chairperson.
Section 2. Meetings, Quorum and Manner of Acting. The Trustees may (1)
provide for stated meetings of any Committee, (2) specify the manner of calling
and notice required for special meetings of any Committee, and (3) authorize the
making of decisions to exercise specified powers by written assent of the
requisite number of members of a Committee without a meeting. Unless the
Trustees determine otherwise, a majority of the members of any Committee shall
constitute a quorum for the transaction of business, and any action of such a
Committee may be taken at a meeting by a vote of a majority of the members
present (a quorum being present) or evidenced by one or more writings signed by
such a majority. Members of a Committee may participate in a meeting of the
Committee by means of a conference telephone or other communications equipment
by means of which all persons participating in the meeting can hear each other
at the same time and participation by such means shall constitute presence in
person at a meeting.
ARTICLE VI
OFFICERS
Section 1. General Provisions; Execution of Documents. The officers of
the Trust shall be a Chairman of the Trustees, a President, a Treasurer and a
Secretary, who shall be elected by the Trustees. The Trustees may elect or
appoint such other officers or agents as the business of the Trust may require,
including one or more Vice Presidents, one or more Assistant Secretaries, and
one or more Assistant Treasurers. The Trustees may delegate to any officer or
Committee the power to appoint any subordinate officers or agents. Except as the
Trustees may generally or in particular cases authorize the execution thereof in
some other manner, all deeds, leases, contracts, notes and other obligations
made by the Trustees shall be signed by the President or by the Treasurer and
need not bear the seal of the Trust.
Section 2. Term of Office and Qualifications. Except as otherwise
provided by law, the Declaration of Trust or these By-laws, the President, the
Treasurer and the Secretary shall each hold office until his/her successor shall
have been duly elected and qualified, and all other officers shall hold office
at the pleasure of the Trustees. The President shall hold no other office. Any
officer may be, but none need be, a Trustee or Shareholder.
Section 3. Resignation and Removal. Any Trustee or officer may resign
at any time by written instrument signed by him/her and delivered to the
President or the Secretary or to a meeting of the Trustees. Such resignation
shall be effective upon receipt unless specified to be effective at some other
time. The Trustees may remove any officer with or without cause by a vote of a
majority of the Trustees then in office. Any officer or agent appointed by an
officer or Committee may be removed with or without cause by such appointing
officer or Committee. Except to the extent expressly provided in a written
agreement with the Trust, no Trustee or officer resigning and no officer removed
shall have any right to any compensation for any period following his/her
resignation or removal, or any right to damages on account of such removal.
Section 4. Powers and Duties of the President. The President may call
meetings of the Trustees and of any Committee thereof when he/she deems it
necessary and may preside at all meetings of the Shareholders and at all
meetings of the Trustees. Subject to the control of the Trustees and to the
control of any Committee of the Trustees, within their respective spheres, as
provided by the Trustees, he/she shall at all times exercise general supervision
and direction over the affairs of the Trust. He/She shall have the power to
employ attorneys and counsel for the Trust and to employ such subordinate
officers, agents, clerks and employees as he/she may find necessary to transact
the business of the Trust, and shall have such other powers and duties as from
time to time may be conferred upon or assigned to him/her by the Trustees.
Section 5. Powers and Duties of Vice Presidents. In the absence or
disability of the President, the Vice President or, if there be more than one
Vice President, any Vice President designated by the Trustees shall perform all
the duties and may exercise any of the powers of the President, subject to the
control of the Trustees. Each Vice President shall perform such duties as may be
assigned to him/her from time to time by the Trustees and the President.
Section 6. Powers and Duties of the Treasurer. The Treasurer shall be
the principal financial and accounting officer of the Trust. He/She shall
deliver all funds of the Trust that may come into his/her hands to such
Custodian as the Trustees may employ. He/She shall render a statement of
condition of the finances of the Trust to the Trustees as often as they shall
require the same and he/she shall in general perform all the duties incident to
the office of Treasurer and such other duties as from time to time may be
assigned to him/her by the Trustees.
Section 7. Powers and Duties of the Secretary. The Secretary shall (i)
keep the minutes of all meetings of the Trustees and of the Shareholders in
proper books provided for that purpose, (ii) have custody of the seal of the
Trust, and (iii) have charge of the Share transfer books, lists and records,
unless the same are in the charge of the Transfer Agent. He/She shall attend to
the giving and serving of all notices by the Trust in accordance with the
provisions of these By-laws and as required by law, and subject to these
By-laws, he/she shall in general perform all duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him/her
by the Trustees.
Section 8. Powers and Duties of Assistant Treasurers. In the absence or
disability of the Treasurer, any Assistant Treasurer designated by the Trustees
shall perform all the duties, and may exercise any of the powers, of the
Treasurer. Each Assistant Treasurer shall perform such other duties as from time
to time may be assigned to him/her by the Trustees.
Section 9. Powers and Duties of Assistant Secretaries. In the absence
or disability of the Secretary, any Assistant Secretary designated by the
Trustees shall perform all the duties, and may exercise any of the powers, of
the Secretary. Each Assistant Secretary shall perform such other duties as from
time to time may be assigned to him/her by the Trustees.
Section 10. Compensation of Officers and Trustees and Members of the
Advisory Board. Subject to any applicable provisions of the Declaration of
Trust, the compensation of the officers and Trustees and members of any Advisory
Board shall be fixed from time to time by the Trustees or, in the case of
officers, by any Committee or officer upon whom such power may be conferred by
the Trustees. No officer shall be prevented from receiving such compensation as
such officer by reason of the fact that he/she is also a Trustee.
ARTICLE VII
FISCAL YEAR
The fiscal year of the Trust shall be established by the Trustees and
the Trustees may from time to time change the fiscal year.
ARTICLE VIII
SEAL
The Trustees may adopt a seal which shall be in such form and shall
have such inscription thereon as the Trustees may from time to time prescribe.
ARTICLE IX
WAIVERS OF NOTICE
Whenever any notice whatsoever is required to be given by law, the
Declaration of Trust or these By-laws, a waiver thereof in writing, signed by
the person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto. A notice shall be deemed to
have been telegraphed, cabled or sent by facsimile or other communication
leaving a visual record for the purposes of these By-laws when it has been
delivered to a representative of any telegraph, cable or facsimile or other such
communications company with instructions that it be telegraphed, cabled or sent
by facsimile or other communication leaving a visual record.
ARTICLE X
AMENDMENTS
These By-laws, or any of them, may be altered, amended or repealed, or
new By-laws may be adopted, by a majority of the Trustees; provided, however,
that no By-law may be amended, adopted or repealed by the Trustees if such
amendment, adoption or repeal requires, pursuant to law, the Declaration of
Trust or these By-laws, a vote of the Shareholders.
MASTER BUSINESS MANAGEMENT AND
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this ____ day of June, 1999, by Mackenzie Solutions (the
"Trust") and Ivy Management, Inc. (the "Manager").
WHEREAS, the Trust is an open-end investment company organized as a
Massachusetts business trust and consists of one or more separate investment
portfolios as may be established and designated from time to time;
WHEREAS, the Trust desires the services of the Manager as business
manager and investment adviser with respect to such separate investment
portfolios of the Trust as shall be designated in supplements to this Agreement
as further agreed between the Trust and the Manager (the "Funds"); and
WHEREAS, the Trust engages in the business of investing and reinvesting
the assets of the Funds in the manner and in accordance with the investment
objectives and restrictions specified in the currently effective prospectus and
statement of additional information (the "Prospectus") relating to the Funds
included in the Trust's Registration Statement, as amended from time to time,
filed by the Trust under the Investment Company Act of 1940 (the "1940 Act") and
the Securities Act of 1933;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties agree as follows:
1. Appointment. The Trust hereby appoints the Manager to provide the
business management and investment advisory services specified in this Agreement
with regard to the Funds, and the Manager hereby accepts such appointment.
2. Investment Advisory Services.
(a) As investment adviser to the Funds, the Manager shall make
investments for the account of each Fund in accordance with the Manager's best
judgment and within the investment objectives and restrictions set forth in the
Prospectus applicable to the Funds, the 1940 Act and the provisions of the
Internal Revenue Code of 1986 relating to regulated investment companies,
subject to any policy decisions adopted by the Trust's Board of Trustees.
(b) The Manager will determine the securities to be purchased
or sold by each Fund and will place orders pursuant to its determinations with
any broker or dealer who deals in such securities. The Manager also shall (i)
comply with all reasonable requests of the Trust for information, including
information required in connection with the Trust's filings with the Securities
and Exchange Commission (the "SEC") and any state securities commissions, and
(ii) provide such other services as the Manager shall from time to time
determine to be necessary or useful to the administration of the Funds.
(c) The Manager shall furnish to the Trust's Board of Trustees
periodic reports on the investment performance of each Fund and on the
performance of its obligations under this Agreement and shall supply such
additional reports and information as the Trust's officers or Board of Trustees
shall reasonably request.
(d) On occasions when the Manager deems the purchase or sale
of a security to be in the best interest of a Fund as well as other customers,
the Manager, to the extent permitted by applicable law, may aggregate the
securities to be so sold or purchased in order to obtain the best execution or
lower brokerage commissions, if any. The Manager also may purchase or sell a
particular security for one or more customers in different amounts. On either
occasion, and to the extent permitted by applicable law and regulations,
allocation of the securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Manager in the manner it
considers to be the most equitable and consistent with its fiduciary obligations
to the Funds involved and to such other customers.
3. Business Management Services.
(a) The Manager shall supervise the Funds' business and
affairs and shall provide such services reasonably necessary for the operation
of the Funds as are not provided by employees or other agents engaged by the
Funds, provided that the Manager shall not have any obligation to provide under
this Agreement any direct or indirect services to the Funds' shareholders, any
services related to the distribution of the Funds' shares, or any other services
which are the subject of a separate agreement or arrangement between the Funds
and the Manager. Subject to the foregoing, in providing business management
services hereunder, the Manager shall, at its expense, (1) coordinate with the
Funds' Custodian and monitor the services it provides to the Funds; (2)
coordinate with and monitor any other third parties furnishing services to the
Funds; (3) provide the Funds with the necessary office space, telephones and
other communications facilities as are adequate for the Funds' needs; (4)
provide the services of individuals competent to perform administrative and
clerical functions which are not performed by employees or other agents engaged
by the Funds or by the Manager acting in some other capacity pursuant to a
separate agreement or arrangement with the Funds; (5) maintain or supervise the
maintenance by third parties of such books and records of the Trust as may be
required by applicable Federal or state law; (6) authorize and permit the
Manager's directors, officers and employees who may be elected or appointed as
trustees or officers of the Trust to serve in such capacities; and (7) take such
other action with respect to the Trust, after approval by its Board of Trustees,
as may be required by applicable law, including without limitation the rules and
regulations of the SEC and of state securities commissions and other regulatory
agencies.
(b) The Manager may retain third parties to provide these
services to the Trust, at the Manager's own cost and expense. The Manager shall
make periodic reports to the Trust's Board of Trustees on the performance of its
obligations under this Agreement, other than services provided to the Trust by
third parties retained in accordance with the previous sentence.
4. Expenses of the Trust. Except as provided in paragraph 3 or as
provided in any separate agreement between the Funds and the Manager, the Trust
shall be responsible for all of its expenses and liabilities, including: (1) the
fees and expenses of the Trust's Trustees who are not parties to this Agreement
or "interested persons" (as defined in the 1940 Act) of any such party
("Independent Trustees"); (2) the salaries and expenses of any of the Trust's
officers or employees who are not affiliated with the Manager; (3) interest
expenses; (4) taxes and governmental fees, including any original issue taxes or
transfer taxes applicable to the sale or delivery of shares or certificates
therefor; (5) brokerage commissions and other expenses incurred in acquiring or
disposing of portfolio securities; (6) the expenses of registering and
qualifying shares for sale with the SEC and with various state securities
commissions; (7) accounting and legal costs; (8) insurance premiums; (9) fees
and expenses of the Trust's Custodian and Transfer Agent and any related
services; (10) expenses of obtaining quotations of portfolio securities and of
pricing shares; (11) expenses of maintaining the Trust's legal existence and of
shareholders' meetings; (12) expenses of preparing and distributing to existing
shareholders periodic reports, proxy materials and prospectuses; and (13) fees
and expenses of membership in industry organizations.
5. Standard of Care. The Manager shall give the Trust the benefit of
the Manager's best judgment and efforts in rendering business management and
investment advisory services pursuant to paragraphs 2 and 3 of this Agreement.
As an inducement to the Manager's undertaking to render these services, the
Trust agrees that the Manager shall not be liable under this Agreement for any
mistake in judgment or in any other event whatsoever except for lack of good
faith, provided that nothing in this Agreement shall be deemed to protect or
purport to protect the Manager against any liability to the Funds or their
shareholders to which the Manager would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of the
Manager's duties under this Agreement or by reason of the Manager's reckless
disregard of its obligations and duties hereunder.
6. Fees. In consideration of the services to be rendered by the Manager
pursuant to paragraph 2 and 3 of this Agreement, each Fund shall pay the Manager
a monthly fee on the first business day of each month, based on the average
daily value (as determined on each business day at the time set forth in the
Prospectus of that Fund for determining net asset value per share) of the net
assets of that Fund during the preceding month, at the annual rates set forth in
a supplement to this Agreement with respect to each Fund. If the fees payable to
the Manager pursuant to this paragraph 6 begin to accrue before the end of any
month, or if this Agreement terminates before the end of any month, the fees for
the period from that date to the end of that month or from the beginning of that
month to the date of termination, as the case may be, shall be prorated
according to the proportion which the period bears to the full month in which
the effectiveness or termination occurs. For purposes of calculating the monthly
fees, the value of the net assets of a Fund shall be computed in the manner
specified in that Fund's Prospectus of the computation of net asset value. For
purposes of this Agreement, a "business day" is any day on which the New York
Stock Exchange is open for trading.
7. Expense Limitation. If the aggregate expenses of every character
incurred by, or allocated to, a Fund in any fiscal year, other than interest,
taxes, distribution expenses, brokerage commissions and other portfolio
transaction expenses, other expenditures which are capitalized in accordance
with generally accepted accounting principles and any extraordinary expense
(including, without limitation, litigation and indemnification expenses), but
including the fees provided for in paragraph 6 ("includible expenses"), shall
exceed the expense limitations applicable to the Fund imposed by state
securities laws or regulations thereunder, as these limitations may be raised or
lowered from time to time, the Manager shall pay to that Fund an amount equal to
that excess. With respect to any portion of a fiscal year in which this
Agreement shall be in effect, the foregoing limitations shall be prorated
according to the proportion which that portion of the fiscal year bears to the
full fiscal year. At the end of each month of the Trust's fiscal year, the
Manager will review the includible expenses accrued during that fiscal year to
the end of the period and shall estimate the contemplated includible expenses
for the balance of that fiscal year. If, as a result of that review and
estimation, it appears likely that the includible expenses will exceed the
limitations referred to in this paragraph 7 for a fiscal year with respect to a
Fund, the Manager shall pay that Fund, subject to a later reimbursement to
reflect actual expenses, an amount equal to a pro rata portion (prorated on the
basis of remaining months of the fiscal year, including the month just ended) of
the amount by which the includible expenses for the fiscal year (less an amount
equal to the aggregate of actual reductions made pursuant to this provision with
respect to prior months of the fiscal year) are expected to exceed the
limitations provided in this paragraph 7. For the purposes of the foregoing, the
value of the net assets of the Fund shall be computed in the manner specified in
paragraph 6, and any payments required to be made by the Manager shall be made
once a year promptly after the end of the Trust's fiscal year.
8. Ownership of Records. All records required to be maintained and
preserved by the Funds pursuant to rules or regulations of the SEC, including
but not limited to Section 31(a) of the 1940 Act, and maintained and preserved
by the Manager on behalf of the Funds are the property of the Funds and shall be
surrendered by the Manager promptly on request by the Funds; provided, that the
Manager may at its own expense make and retain copies of any such records.
9. Duration and Termination.
(a) This Agreement shall become effective as of the date first
set forth above, subject to prior shareholder approval thereof as required by
the 1940 Act, and shall continue in effect for a period of two (2) years from
the that date; provided, that the Agreement will continue in effect with respect
to a Fund for more than two (2) years only so long as the continuance is
specifically approved at least annually (i) by the vote of a majority of the
outstanding voting securities of that Fund (as defined in the 1940 Act) or by
the Trust's entire Board of Trustees, and (ii) by the vote, cast in person at a
meeting called for that purpose, of a majority of the Trust's Independent
Trustees.
(b) This Agreement may be terminated with respect to a Fund at
any time, without the payment of any penalty, by a vote of a majority of the
outstanding voting securities of that Fund (as defined in the 1940 Act) or by a
vote of majority of the Trust's entire Board of Trustees on sixty (60) days'
written notice to the Manager or by the Manager on sixty (60) days' written
notice to the Trust. This Agreement shall terminate automatically in the event
of its assignment (as defined in the 1940 Act).
10. Retention of Sub-Advisers. Subject to a Fund's obtaining any
initial and periodic approvals that are required under Section 15 of the 1940
Act, the Manager may retain a sub-adviser with respect to that Fund, at the
Manager's own cost and expense.
11. Services to Other Clients. Nothing herein contained shall limit the
freedom of the Manager or any affiliated person of the Manager to render
investment supervisory and administrative services to other investment
companies, to act as investment adviser or investment counselor to other
persons, firms or corporations, or to engage in other business activities.
12. Miscellaneous.
(a) This Agreement shall be construed in accordance with the
laws of the State of Florida, provided that nothing herein shall be construed in
a manner inconsistent with the 1940 Act.
(b) The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
(c) The Trust's Agreement and Declaration of Trust has been
filed with the Secretary of State of the Commonwealth of Massachusetts. The
obligations of the Trust are not personally binding upon, nor shall resort be
had to the private property of, any of the Trustees, shareholders, officers,
employees or agents of the Trust, but only the Trust's property shall be bound.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
MACKENZIE SOLUTIONS
By: ________________________________
Keith J. Carlson, President
IVY MANAGEMENT, INC.
By: ________________________________
Michael G. Landry, President
2
MACKENZIE SOLUTIONS
BUSINESS MANAGEMENT AND INVESTMENT
ADVISORY AGREEMENT SUPPLEMENT
International Solutions I - Conservative Growth
AGREEMENT made as of the day of June, 1999, by and between Mackenzie
Solutions (the "Trust") and Ivy Management, Inc. (the "Manager").
WHEREAS, the Trust is an open-end investment company organized as a
Massachusetts business trust, and consists of such separate investment
portfolios as have been or may be established and designated by the Trustees of
the Trust from time to time;
WHEREAS, a separate class of shares of the Trust is offered to
investors with respect to each investment portfolio;
WHEREAS, the Trust has adopted a Master Business Management and
Investment Advisory Agreement ("Master Agreement") dated June ___, 1999,
pursuant to which the Trust has appointed the Manager to provide the business
management and investment advisory services specified in that Master Agreement;
and
WHEREAS, International Solutions I - Conservative Growth (the "Fund")
is a separate investment portfolio of the Trust:
NOW, THEREFORE, the Trustees of the Trust hereby take the following
actions, subject to the conditions set forth:
1. As provided for in the Master Agreement, the Trust hereby adopts the
Master Agreement with respect to the Fund, and the Manager hereby acknowledges
that the Master Agreement shall pertain to the Fund, the terms and conditions of
such Master Agreement being hereby incorporated herein by reference.
2. The term "Fund" as used in the Master Agreement shall, for purposes
of this Supplement, pertain to the Fund.
3. As provided in the Master Agreement and subject to further
conditions as set forth therein, the Fund shall pay the Manager a monthly fee at
an annual rate of 0.25% of the Fund's average net assets.
<PAGE>
4. This Supplement and the Master Agreement (together, the "Agreement")
shall become effective with respect to the Fund as of the date specified above
and shall remain in effect with respect to the Fund for a period to be
determined as provided in the Master Agreement.
MACKENZIE SOLUTIONS, on behalf of
International Solutions I - Conservative Growth
By:
Keith J. Carlson, President
IVY MANAGEMENT, INC.
By:
Michael G. Landry, President
MACKENZIE SOLUTIONS
BUSINESS MANAGEMENT AND INVESTMENT
ADVISORY AGREEMENT SUPPLEMENT
International Solutions II - Balanced Growth
AGREEMENT made as of the day of June, 1999, by and between Mackenzie
Solutions (the "Trust") and Ivy Management, Inc. (the "Manager").
WHEREAS, the Trust is an open-end investment company organized as a
Massachusetts business trust, and consists of such separate investment
portfolios as have been or may be established and designated by the Trustees of
the Trust from time to time;
WHEREAS, a separate class of shares of the Trust is offered to
investors with respect to each investment portfolio;
WHEREAS, the Trust has adopted a Master Business Management and
Investment Advisory Agreement ("Master Agreement") dated June ___, 1999,
pursuant to which the Trust has appointed the Manager to provide the business
management and investment advisory services specified in that Master Agreement;
and
WHEREAS, International Solutions II - Balanced Growth (the "Fund") is a
separate investment portfolio of the Trust:
NOW, THEREFORE, the Trustees of the Trust hereby take the following
actions, subject to the conditions set forth:
1. As provided for in the Master Agreement, the Trust hereby adopts the
Master Agreement with respect to the Fund, and the Manager hereby acknowledges
that the Master Agreement shall pertain to the Fund, the terms and conditions of
such Master Agreement being hereby incorporated herein by reference.
2. The term "Fund" as used in the Master Agreement shall, for purposes
of this Supplement, pertain to the Fund.
3. As provided in the Master Agreement and subject to further
conditions as set forth therein, the Fund shall pay the Manager a monthly fee at
an annual rate of 0.25% of the Fund's average net assets.
<PAGE>
4. This Supplement and the Master Agreement (together, the "Agreement")
shall become effective with respect to the Fund as of the date specified above
and shall remain in effect with respect to the Fund for a period to be
determined as provided in the Master Agreement.
MACKENZIE SOLUTIONS, on behalf of
International Solutions II - Balanced Growth
By:
Keith J. Carlson, President
IVY MANAGEMENT, INC.
By:
Michael G. Landry, President
MACKENZIE SOLUTIONS
BUSINESS MANAGEMENT AND INVESTMENT
ADVISORY AGREEMENT SUPPLEMENT
International Solutions III - Moderate Growth
AGREEMENT made as of the day of June, 1999, by and between Mackenzie
Solutions (the "Trust") and Ivy Management, Inc. (the "Manager").
WHEREAS, the Trust is an open-end investment company organized as a
Massachusetts business trust, and consists of such separate investment
portfolios as have been or may be established and designated by the Trustees of
the Trust from time to time;
WHEREAS, a separate class of shares of the Trust is offered to
investors with respect to each investment portfolio;
WHEREAS, the Trust has adopted a Master Business and Investment
Advisory Agreement ("Master Agreement") dated June , 1999, pursuant to which the
Trust has appointed the Manager to provide the business management and
investment advisory services specified in that Master Agreement; and
WHEREAS, International Solutions III - Moderate Growth (the "Fund") is
a separate investment portfolio of the Trust:
NOW, THEREFORE, the Trustees of the Trust hereby take the following
actions, subject to the conditions set forth:
1. As provided for in the Master Agreement, the Trust hereby adopts the
Master Agreement with respect to the Fund, and the Manager hereby acknowledges
that the Master Agreement shall pertain to the Fund, the terms and conditions of
such Master Agreement being hereby incorporated herein by reference.
2. The term "Fund" as used in the Master Agreement shall, for purposes
of this Supplement, pertain to the Fund.
3. As provided in the Master Agreement and subject to further
conditions as set forth therein, the Fund shall pay the Manager a monthly fee at
an annual rate of 0.25% of the Fund's average net assets.
<PAGE>
4. This Supplement and the Master Agreement (together, the "Agreement")
shall become effective with respect to the Fund as of the date specified above
and shall remain in effect with respect to the Fund for a period to be
determined as provided in the Master Agreement.
MACKENZIE SOLUTIONS, on behalf of
International Solutions III - Moderate Growth
By:
Keith J. Carlson, President
IVY MANAGEMENT, INC.
By:
Michael G. Landry, President
MACKENZIE SOLUTIONS
BUSINESS MANAGEMENT AND INVESTMENT
ADVISORY AGREEMENT SUPPLEMENT
International Solutions IV - Long-term Growth
AGREEMENT made as of the day of June, 1999, by and between Mackenzie
Solutions (the "Trust") and Ivy Management, Inc. (the "Manager").
WHEREAS, the Trust is an open-end investment company organized as a
Massachusetts business trust, and consists of such separate investment
portfolios as have been or may be established and designated by the Trustees of
the Trust from time to time;
WHEREAS, a separate class of shares of the Trust is offered to
investors with respect to each investment portfolio;
WHEREAS, the Trust has adopted a Business Management and Investment
Advisory Services Agreement ("Master Agreement") dated June , 1999, pursuant to
which the Trust has appointed the Manager to provide the business management and
investment advisory services specified in that Master Agreement; and
WHEREAS, International Solutions IV - Long-term Growth (the "Fund") is
a separate investment portfolio of the Trust:
NOW, THEREFORE, the Trustees of the Trust hereby take the following
actions, subject to the conditions set forth:
1. As provided for in the Master Agreement, the Trust hereby adopts the
Master Agreement with respect to the Fund, and the Manager hereby acknowledges
that the Master Agreement shall pertain to the Fund, the terms and conditions of
such Master Agreement being hereby incorporated herein by reference.
2. The term "Fund" as used in the Master Agreement shall, for purposes
of this Supplement, pertain to the Fund.
3. As provided in the Master Agreement and subject to further
conditions as set forth therein, the Fund shall pay the Manager a monthly fee
based as an annual rate of 0.25% of the Fund's average net assets.
<PAGE>
4. This Supplement and the Master Agreement (together, the "Agreement")
shall become effective with respect to the Fund as of the date specified above
and shall remain in effect with respect to the Fund for a period to be
determined as provided in the Master Agreement.
MACKENZIE SOLUTIONS, on behalf of
International Solutions IV - Long-term Growth
By:
Keith J. Carlson, President
IVY MANAGEMENT, INC.
By:
Michael G. Landry, President
MACKENZIE SOLUTIONS
BUSINESS MANAGEMENT AND INVESTMENT
ADVISORY AGREEMENT SUPPLEMENT
International Solutions V - Aggressive Growth
AGREEMENT made as of the day of June, 1999, by and between Mackenzie
Solutions (the "Trust") and Ivy Management, Inc. (the "Manager").
WHEREAS, the Trust is an open-end investment company organized as a
Massachusetts business trust, and consists of such separate investment
portfolios as have been or may be established and designated by the Trustees of
the Trust from time to time;
WHEREAS, a separate class of shares of the Trust is offered to
investors with respect to each investment portfolio;
WHEREAS, the Trust has adopted a Business Management and Investment
Advisory Services Agreement ("Master Agreement") dated June , 1999, pursuant to
which the Trust has appointed the Manager to provide the business management and
investment advisory services specified in that Master Agreement; and
WHEREAS, International Solutions V - Aggressive Growth (the "Fund") is
a separate investment portfolio of the Trust:
NOW, THEREFORE, the Trustees of the Trust hereby take the following
actions, subject to the conditions set forth:
1. As provided for in the Master Agreement, the Trust hereby adopts the
Master Agreement with respect to the Fund, and the Manager hereby acknowledges
that the Master Agreement shall pertain to the Fund, the terms and conditions of
such Master Agreement being hereby incorporated herein by reference.
2. The term "Fund" as used in the Master Agreement shall, for purposes
of this Supplement, pertain to the Fund.
3. As provided in the Master Agreement and subject to further
conditions as set forth therein, the Fund shall pay the Manager a monthly fee
based at an annual rate of 0.25% of the Fund's average net assets.
<PAGE>
4. This Supplement and the Master Agreement (together, the "Agreement")
shall become effective with respect to the Fund as of the date specified above
and shall remain in effect with respect to the Fund for a period to be
determined as provided in the Master Agreement.
MACKENZIE SOLUTIONS, on behalf of
International Solutions V - Aggressive Growth
By:
Keith J. Carlson, President
IVY MANAGEMENT, INC.
By:
Michael G. Landry, President
FORM OF
SUBADVISORY AGREEMENT
AGREEMENT made as of the ____ day of ___________, 1999, between IVY
MANAGEMENT, INC., 700 South Federal Highway, Boca Raton, Florida 33432 U.S.A., a
Massachusetts corporation (hereinafter called the "Manager"), and GARMAISE
INVESTMENT TECHNOLOGIES (US) INC., 30 St. Clair Avenue West, Suite 1110,
Toronto, Ontario M4V 3A1 Canada, a Delaware corporation (hereinafter called the
"Subadviser").
WHEREAS, Mackenzie Solutions (the "Trust") is a Massachusetts business
trust organized with one or more series of shares, and is registered as an
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Manager has entered into a Master Business and Investment
Advisory Agreement dated [ ], 1999, as amended (the "Advisory Agreement"), with
the Trust, pursuant to which the Manager acts as investment adviser to the
portfolio assets of certain series of the Trust listed on Schedule A hereto, as
amended from time to time (each a "Fund" and, collectively, the "Funds"); and
WHEREAS, the Manager desires to utilize the services of the Subadviser
as investment subadviser with respect to each Fund; and
WHEREAS, the Subadviser is willing to perform such services on the
terms and conditions hereinafter set forth:
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
1. Duties of the Subadviser. The Subadviser will serve the Manager as
investment subadviser with respect to each Fund.
(a) As investment subadviser to the Funds, the Subadviser hereby agrees,
in accordance with the Subadviser's best judgment and subject to the
stated investment objectives, policies and restrictions of the Funds
as set forth in the current prospectuses and statements of additional
information of the Trust (including amendments) and in accordance with
the Trust's Declaration of Trust, as amended, and By-laws governing
the offering of its shares (collectively, the "Trust Documents"), the
1940 Act and the provisions of the Internal Revenue Code of 1986, as
amended (the "Internal Revenue Code"), relating to regulated
investment companies, and subject to such resolutions as from time to
time may be adopted by the Trust's Board of Trustees, to render
investment advice to the Manager as to the selection of the investment
companies that shall comprise each Fund's portfolio (the "underlying
funds") and the re-balancing twice yearly of each Fund's assets in
underlying funds compatible with the investment objectives, policies
and restrictions of the Funds as stated in the aforesaid prospectuses.
The Subadviser shall have no responsibility for the implementation or
execution of transactions which it recommends to the Manager for any
Fund, such responsibility being solely with the Manager. The
Subadviser shall dedicate approximately 75 hours per year of its time
in connection with rendering investment advice to the Manager under
this Agreement. Time involved in travel in connection with services
provided under this Agreement will count towards the 75 hours.
(b) The Subadviser shall (i) comply with all reasonable requests of the
Trust for information, including information required in connection
with the Trust's filings with the Securities and Exchange Commission
(the "SEC") and state securities commissions, and (ii) provide such
other services as the Subadviser shall from time to time determine to
be necessary or useful to the administration of the Funds.
(c) The Subadviser shall furnish to the Trust's Board of Trustees periodic
reports on the performance of its obligations under this Agreement and
shall supply such additional reports and information as the Trust's
officers or Board of Trustees shall reasonably request.
(d) The investment advisory services provided by the Subadviser under this
Agreement are not to be deemed exclusive and the Subadviser shall be
free to render similar services to others, as long as such services do
not impair the ability of the Subadviser to provide the services
described herein.
2. Delivery of Documents to the Manager. The Subadviser has furnished the
Manager with copies of each of the following documents:
(a) The Subadviser's current Form ADV and any amendments thereto;
(b) The Subadviser's most recent balance sheet; and
(c) The Code of Ethics of the Subadviser as currently in effect.
The Subadviser will furnish the Manager from time to time with
copies, properly certified or otherwise authenticated, of all
material amendments of or supplements to the foregoing, if
any. Additionally, the Subadviser will provide to the Manager
such other documents relating to its services under this
Agreement as the Manager may reasonably request on a periodic
basis. Such amendments or supplements to items (a) through (c)
above will be provided within 30 days of the time such
materials became available to the Subadviser.
3. Expenses. The Subadviser shall pay all of its expenses arising from the
performance of its obligations under Section 1, other than expenses
incurred in connection with travel by the Subadviser to the Manager's
offices relating to the provision of services under this Agreement. Such
travel expenses will be reimbursed by the Manager or an affiliate of the
Manager.
4. Compensation. The Manager shall pay to the Subadviser for its services
hereunder, and the Subadviser agrees to accept as full compensation
therefor, a fee of US$50,000 per year. Such fee shall be paid quarterly in
arrears in equal installments of US$12,500. If the Subadviser shall serve
hereunder for less than the whole of any year, the fee hereunder shall be
prorated accordingly. To the extent that the Subadviser dedicates more than
75 hours per year in connection with rendering services under this
Agreement, the Manager shall pay the Subadviser for such additional time at
an hourly rate of US$____. The Subadviser will notify the Manager promptly
if it appears that the Subadviser will dedicate more than 75 hours per year
to providing services under this Agreement.
5. Independent Contractor. In the performance of its duties hereunder, the
Subadviser is and shall be an independent contractor and except as
expressly provided herein or otherwise authorized in writing, shall have no
authority to act for or represent the Trust, the Funds, any other series of
the Trust or the Manager in any way or otherwise be deemed to be an agent
of the Trust, the Funds, any other series of the Trust or the Manager.
6. Term of Agreement. This Agreement shall continue in full force and effect
until ____________, 2001, and from year to year -----------------
thereafter if such continuance is approved in the manner required by the
1940 Act if the Subadviser shall not have notified the Manager in writing
at least 60 days prior to such ____________ or prior to ____________ of any
year thereafter that it does not desire such continuance. This Agreement
may be terminated at any time, without payment of penalty by a Fund, by
vote of the Trust's Board of Trustees or a majority of the outstanding
voting securities of the applicable Fund (as defined by the 1940 Act), or
by the Manager or by the Subadviser upon 60 days' written notice. This
Agreement will automatically terminate in the event of its assignment (as
defined by the 1940 Act) or upon the termination of the Advisory Agreement.
7. Amendments. This Agreement may be amended by consent of the parties hereto
provided that the consent of the applicable Fund is obtained in accordance
with the requirements of the 1940 Act.
8. Confidential Treatment. It is understood that any information or
recommendation supplied by the Subadviser in connection with the
performance of its obligations hereunder is to be regarded as confidential
and for use only by the Manager, the Trust or such persons as the Manager
may designate in connection with the Funds. It is also understood that any
information supplied to the Subadviser in connection with the performance
of its obligations hereunder, particularly, but not limited to, any list of
securities which, on a temporary basis, may not be bought or sold for the
Funds, is to be regarded as confidential and for use only by the Subadviser
in connection with its obligation to provide investment advice and other
services to the Funds.
9. Representations and Warranties. The Subadviser hereby represents and
warrants as follows:
(a) The Subadviser is registered with the SEC as an investment adviser
under the Investment Advisers Act of 1940, as amended (the "Advisers
Act"), and such registration is current, complete and in full
compliance with all material applicable provisions of the Advisers Act
and the rules and regulations thereunder;
(b) The Subadviser has all requisite authority to enter into, execute,
deliver and perform the Subadviser's obligations under this Agreement;
(c) The Subadviser's performance of its obligations under this Agreement
does not conflict with any law, regulation or order to which the
Subadviser is subject; and
(d) The Subadviser has reviewed the portion of (i) the registration
statement filed with the SEC, as amended from time to time, for the
Funds ("Registration Statement"), and (ii) each Fund's prospectuses
and statements of additional information (including amendments)
thereto, in each case in the form received from the Manager with
respect to the disclosure about the Subadviser and the Funds of which
the Subadviser has knowledge ("Subadviser and Fund Information") and
except as advised in writing to the Manager such Registration
Statement, prospectuses and statements of additional information
(including amendments) contain, as of their respective dates, no
untrue statement of any material fact of which the Subadviser has
knowledge and do not omit any statement of a material fact of which
the Subadviser has knowledge which was required to be stated therein
or necessary to make the statements contained therein not misleading.
10. Covenants. The Subadviser hereby covenants and agrees that, so long as
this Agreement shall remain in effect:
(a) The Subadviser shall maintain the Subadviser's registration as an
investment adviser under the Advisers Act, and such registration shall
at all times remain current, complete and in full compliance with all
material applicable provisions of the Advisers Act and the rules and
regulations thereunder;
(b) The Subadviser's performance of its obligations under this Agreement
shall not conflict with any law, regulation or order to which the
Subadviser is then subject;
(c) The Subadviser shall at all times comply with the Advisers Act and the
1940 Act, and all rules and regulations thereunder, and all other
applicable laws and regulations, and the Registration Statement,
prospectuses and statements of additional information (including
amendments) and with any applicable procedures adopted by the Trust's
Board of Trustees, provided that such procedures are identified in
writing to the Subadviser;
(d) The Subadviser shall promptly notify the Manager and the Funds upon
the occurrence of any event that might disqualify or prevent the
Subadviser from performing its duties under this Agreement. The
Subadviser shall promptly notify the Manager and the Funds if there
are any changes to its organizational structure or the Subadviser has
become the subject of any adverse regulatory action imposed by any
regulatory body or self-regulatory organization. The Subadviser
further agrees to notify the Manager of any changes relating to it or
the provision of services by it that would cause the Registration
Statement, prospectuses or statements of additional information
(including amendments) for the Funds to contain any untrue statement
of a material fact or to omit to state a material fact which is
required to be stated therein or is necessary to make the statements
contained therein not misleading, in each case relating to Subadviser
and Fund Information; and
(e) The Subadviser will render advice to the Manager regarding the
investment of each Fund's assets which is consistent with maintaining
the Fund's status as a regulated investment company under Subchapter M
of the Internal Revenue Code.
11. Use of Names.
(a) The Subadviser acknowledges and agrees that the names "Mackenzie
Solutions," "International Solutions" and "Ivy Management, Inc.," and
abbreviations or logos associated with those names, are not the
property of the Subadviser; and that the Subadviser shall use the
names "Mackenzie Solutions," "International Solutions" and "Ivy
Management, Inc.," and associated abbreviations and logos, only in
connection with the Subadviser's performance of its duties hereunder.
Further, in any communication with the public and in any marketing
communications of any sort, Subadviser agrees to obtain prior written
approval from Manager before using or referring to "Mackenzie
Solutions," "International Solutions" and "Ivy Management, Inc.," or
the Funds or any abbreviations or logos associated with those names.
(b) The Manager acknowledges that "Garmaise," "Garmaise Investment
Technologies (US) Inc." and "Garmaise Investment Technologies," and
abbreviations or logos associated with those names, are valuable
property of the Subadviser and its affiliates and are distinctive in
connection with investment advisory and related services provided by
the Subadviser, the "Garmaise" name is a property right of the
Subadviser, and the "Garmaise," "Garmaise Investment Technologies (US)
Inc." and "Garmaise Investment Technologies" names are understood to
be used by each Fund upon the conditions hereinafter set forth;
provided that each Fund may use such names only so long as the
Subadviser shall be retained as the investment subadviser of the Fund
pursuant to the terms of this Agreement.
(c) The Subadviser acknowledges that each Fund and its agents may use the
"Garmaise," "Garmaise Investment Technologies (US) Inc." and "Garmaise
Investment Technologies" names in connection with accurately
describing the activities of the Fund, including use with marketing
and other promotional and informational material relating to the Fund
with the prior written approval always of the Subadviser. In the event
that the Subadviser shall cease to be the investment subadviser of a
Fund, then the Fund at its own or the Manager's expense, upon the
Subadviser's written request: (i) shall cease to use the Subadviser's
name for any commercial purpose; and (ii) shall use its best efforts
to cause the Fund's officers and trustees to take any and all actions
which may be necessary or desirable to effect the foregoing and to
reconvey to the Subadviser all rights which a Fund may have to such
name. Manager agrees to take any and all reasonable actions as may be
necessary or desirable to effect the foregoing and Subadviser agrees
to allow the Funds and their agents a reasonable time to effectuate
the foregoing.
(d) The Subadviser hereby agrees and consents to the use of the
Subadviser's name upon the foregoing terms and conditions.
12. Reports by the Subadviser and Records of the Funds. The Subadviser shall
furnish the Manager information and reports necessary to the operation of
the Funds, including information required to be disclosed in the Trust's
Registration Statement, in such form as may be mutually agreed. The
Subadviser shall immediately notify and forward to both the Manager and
legal counsel for the Trust any legal process served upon it on behalf of
the Manager or the Trust.
In compliance with the requirements of Rule 31a-3 under the 1940 Act, the
Subadviser agrees that all records it maintains for the Trust are the
property of the Trust and further agrees to surrender promptly to the Trust
or the Manager any such records upon the Trust's or the Manager's request.
The Subadviser further agrees to maintain for the Trust the records the
Trust is required to maintain under Rule 31a-1(b) insofar as such records
relate to the investment affairs of each Fund. The Subadviser further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940
Act the records it maintains for the Trust.
13. Indemnification. The Subadviser agrees to indemnify and hold harmless the
Manager, any affiliated person within the meaning of Section 2(a)(3) of the
1940 Act ("affiliated person") of the Manager and each person, if any, who,
within the meaning of Section 15 of the Securities Act of 1933, as amended
(the "1933 Act"), controls ("controlling person") the Manager, against any
and all losses, claims, damages, liabilities or litigation (including
reasonable legal and other expenses), to which the Manager, the Trust or
such affiliated person or controlling person may become subject under the
1933 Act, the 1940 Act, the Advisers Act, under any other statute, at
common law or otherwise, arising out of Subadviser's responsibilities as
subadviser of the Funds only (1) to the extent of and as a result of the
willful misconduct, bad faith, or gross negligence of the Subadviser, any
of the Subadviser's employees or representatives or any affiliate of or any
person acting on behalf of the Subadviser, or (2) as a result of any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, prospectuses or statements of additional
information covering the Funds or the Trust or any amendment thereof or any
supplement thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statement therein not misleading, if such a statement or omission was made
in reliance upon written information furnished by the Subadviser to the
Manager, the Trust or any affiliated person of the Manager or the Trust
expressly for use in the Trust's Registration Statement, or upon verbal
information confirmed by the Subadviser in writing expressly for use in the
Trust's Registration Statement; provided, however, that in no case is the
Subadviser's indemnity in favor of the Manager or any affiliated person or
controlling person of the Manager deemed to protect such person against any
liability to which any such person would otherwise be subject by reason of
willful misconduct, bad faith, or gross negligence in the performance of
its duties or by reason of its reckless disregard of its obligations and
duties under this Agreement.
The Manager agrees to indemnify and hold harmless the Subadviser, any
affiliated person of the Subadviser and each controlling person of the
Subadviser, against any and all losses, claims, damages, liabilities or
litigation (including reasonable legal and other expenses), to which the
Subadviser or such affiliated person or controlling person may become
subject under the 1933 Act, the 1940 Act, the Advisers Act, under any other
statute, at common law or otherwise, arising out of the Manager's
responsibilities as investment manager of the Funds only (1) to the extent
of and as a result of the willful misconduct, bad faith, or gross
negligence of the Manager, any of the Manager's employees or
representatives or any affiliate of or any person acting on behalf of the
Manager, or (2) as a result of any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement,
prospectuses or statements of additional information covering the Funds or
the Trust or any amendment thereof or any supplement thereto or the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statement therein not
misleading, if such a statement or omission was made by the Trust other
than in reliance upon written information furnished by the Subadviser, or
any affiliated person of the Subadviser, expressly for use in the Trust's
Registration Statement or other than upon verbal information confirmed by
the Subadviser in writing expressly for use in the Trust's Registration
Statement; provided, however, that in no case is the Manager's indemnity in
favor of the Subadviser or any affiliated person or controlling person of
the Subadviser deemed to protect such person against any liability to which
any such person would otherwise be subject by reason of willful misconduct,
bad faith, or gross negligence in the performance of its duties or by
reason of its reckless disregard of its obligations and duties under this
Agreement. In addition, the Manager shall indemnify the Subadviser from
liability for any actions commenced against the Subadviser by shareholders
of a Fund which are unrelated to the services provided by the Subadviser
under this Agreement or which do not relate to a breach by the Subadviser
of its standard of care under this Agreement.
14. Notices. All notices or other communications required or permitted to be
given hereunder shall be in writing and shall be delivered or sent by
pre-paid first class letter post to the following addresses or to such
other address as the relevant addressee shall hereafter specify for such
purpose to the others by notice in writing and shall be deemed to have been
given at the time of delivery.
If to the Manager: IVY MANAGEMENT, INC.
Via Mizner Financial Plaza
700 South Federal Highway
Boca Raton, FL 33432, U.S.A.
Attention: C. William Ferris
If to the Trust: Mackenzie Solutions
Via Mizner Financial Plaza
700 South Federal Highway
Boca Raton, FL 33432, U.S.A.
Attention: C. William Ferris
If to the Subadviser: GARMAISE INVESTMENT TECHNOLOGIES (US) INC.
30 St. Clair Avenue West, Suite 1110
Toronto, Ontario M4V 3A1, Canada
Attention: Gordon Garmaise
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts. Anything
herein to the contrary notwithstanding, this Agreement shall not be
construed to require, or to impose any duty upon either of the parties, to
do anything in violation of any applicable laws or regulations.
16. Severability. Should any part of this Agreement be held invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall
not be affected thereby. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors.
17. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, and all such counterparts shall
constitute a single instrument.
IN WITNESS WHEREOF, IVY MANAGEMENT, INC. AND GARMAISE INVESTMENT
TECHNOLOGIES (US) INC. have each caused this instrument to be signed in
duplicate on its behalf by the officer designated below thereunto duly
authorized.
IVY MANAGEMENT, INC.
By: ________________________________
Title
GARMAISE INVESTMENT
TECHNOLOGIES (US) INC.
By: ________________________________
Title
<PAGE>
SCHEDULE A
TO SUBADVISORY AGREEMENT BETWEEN
IVY MANAGEMENT, INC. AND GARMAISE INVESTMENT TECHNOLOGIES (US) INC.
DATED [ ], 1999
Funds:
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
Ivy Mackenzie Distributors, Inc.
700 South Federal Highway, Suite 300
Boca Raton, Florida 33432
MACKENZIE SOLUTIONS
DISTRIBUTION AGREEMENT
Dear Sirs:
This will confirm the agreement between the undersigned (the "Trust")
and you (the "Distributor") as follows:
1. The Trust is an open-end management investment company that currently has
five investment portfolios and that may create additional portfolios in the
future. One or more separate classes of shares of beneficial interest in the
Trust is offered to investors with respect to each portfolio. This Agreement
relates to each of the Trust's portfolios: 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 (the "Initial Funds"); and to such
other portfolios as shall be designated from time to time by the Board of
Trustees in any supplement to the Plan (together with the Initial Funds, the
"Funds"). The Trust engages in the business of investing and reinvesting the
assets of a Fund in the manner and in accordance with the investment objectives
and restrictions specified in the currently effective Prospectus (the
"Prospectus") relating to the Funds included in the Trust's Registration
Statement, as amended from time to time (the "Registration Statement"), filed by
the Fund under the Investment Company Act of 1940, as amended, (the "1940 Act")
and the Securities Act of 1933, as amended (the "1933 Act"). Copies of the
documents referred to in the preceding sentence have been furnished to the
Distributor. Any amendments to those documents shall be furnished to the
Distributor promptly. The Trust has adopted a separate Distribution Plan (the
"Plan") for Class A, Class B, and Class C of each of the Initial Funds pursuant
to Rule 12b-1 under the 1940 Act.
2. As the Trust's agent, the Distributor shall be the exclusive distributor for
the unsold portion of shares of beneficial interest in the Initial Funds (the
"Shares") which may from time to time be registered under the 1933 Act.
3. The Trust shall sell the Shares to eligible investors as described in the
Prospectus through the Distributor, as the Trust's agent. All orders for Shares
received by the Distributor shall be subject to acceptance and confirmation by
the Trust. The Trust shall have the right, at its election, to deliver either
(i) Shares issued upon original issue or (ii) treasury shares.
4. As the Trust's agent, the Distributor may sell and distribute the Shares in
such manner not inconsistent with the provisions hereof and the Trust's
Prospectus as the Distributor may determine from time to time. In this
connection, the Distributor shall comply with all laws, rules and regulations
applicable to it, including, without limiting the generality of the foregoing,
all applicable rules or regulations under the 1940 Act and of any securities
association registered under the Securities Exchange Act of 1934, as amended
(the "1934 Act").
5. To the extent permitted by its then effective Prospectus, the Trust reserves
the right to sell the Shares to purchasers to the extent that it or the transfer
agent for the Shares receives purchase requests therefor. The Trust reserves the
right to refuse at any time or times to sell any Shares for any reason deemed
adequate by it.
6. All Shares offered for sale and sold by the Distributor shall be offered for
sale and sold by the Distributor to designated investors at the price per Share
specified and determined as provided in the Funds' Prospectus, including any
applicable reduction or elimination of sales charges with respect to Class A
Shares of the Initial Funds as provided in the Initial Funds' Prospectus (the
"Offering Price"). The Trust shall determine and promptly furnish to the
Distributor a statement of the Offering Price at least once on each day on which
the New York Stock Exchange is open for trading. Each Offering Price shall
become effective at the time and shall remain in effect during the period
specified in the statement. Each such statement shall show the basis of its
computation.
7. (a) The Distributor shall be entitled to deduct a commission on all Class A
Shares sold equal to the difference, if any, between the Offering Price and the
net asset value on which such price is based. If any such commission is received
by a Fund, it will pay such commission to the Distributor. Out of such
commission, the Distributor may allow to dealers such concession as the
Distributor may determine from time to time. Notwithstanding anything in this
Agreement otherwise provided, sales may be made at net asset value as provided
in the Prospectus for the Funds.
(b) The Distributor shall be entitled to deduct a contingent
deferred sales charge ("CDSC") on the redemption of certain Class A, Class B and
Class C Shares in accordance with, and in the manner set forth in, the Initial
Funds' Prospectus. The Distributor may reallow any or all of such contingent
deferred sales charges to dealers as the Distributor may determine from time to
time. Notwithstanding anything in this Agreement otherwise provided, the
Distributor may waive the contingent deferred sales charge as disclosed in the
Initial Funds' Prospectus.
(c) The Trust shall pay to the Distributor distribution and/or
service fees for Class A, Class B and Class C shares of the Initial Funds at the
rate set forth in the Plans, as amended from time to time. The Distributor may
reallow any or all of such distribution fees to dealers as the Distributor may
determine from time to time.
8. The Trust shall furnish the Distributor from time to time, for use in
connection with the sale of Shares, such information with respect to the Trust
as the Distributor may reasonably request. The Trust represents and warrants
that such information, when signed by one of its officers, shall be true and
correct. The Trust also shall furnish to the Distributor copies of its reports
to its shareholders and such additional information regarding the Trust's
financial condition as the Distributor may reasonably request from time to time.
9. The Registration Statement and the Prospectus have been or will be, as the
case may be, prepared in conformity with the 1933 Act, the 1940 Act and the
rules and regulations of the Securities and Exchange Commission (the "SEC"). The
Trust represents and warrants to the Distributor that the Registration Statement
and the Prospectus contain or will contain all statements required to be stated
therein in accordance with the 1933 Act, the 1940 Act and the rules and
regulations thereunder, that all statements of fact contained or to be contained
therein are or will be true and correct at the time indicated or the effective
date, as the case may be, and that neither the Registration Statement nor the
Prospectus, when they shall become effective under the 1933 Act or be authorized
for use, shall include any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading to a purchaser of Shares. The Trust shall from
time to time file such amendment or amendments to the Registration Statement and
the Prospectus as, in the light of future developments, shall, in the opinion of
the Trust's counsel, be necessary in order to have the Registration Statement
and the Prospectus at all times contain all material facts required to be stated
therein or necessary to make the statements therein not misleading to a
purchaser of Shares. The Trust represents and warrants to the Distributor that
any amendment to the Registration or the Prospectus filed hereafter by the Trust
will, when it becomes effective under the 1933 Act, contain all statements
required to be stated therein in accordance with the 1933 Act, the 1940 Act and
the rules and regulations thereunder, that all statements of fact contained
therein will, when the same shall become effective, be true and correct, and
that no such amendment, when it becomes effective, will include an untrue
statement of a material fact or will omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading to
a purchaser of Shares.
10. The Trust shall prepare and furnish to the Distributor from time to time
such number of copies of the most recent form of the Prospectus for the Funds
filed with the SEC as the Distributor may reasonably request. The Trust
authorizes the Distributor to use the Prospectus, in the form furnished to the
Distributor from time to time, in connection with the sale of Shares. The Trust
shall indemnify, defend and hold harmless the Distributor, its officers and
directors and any person who controls the Distributor within the meaning of the
1933 Act, from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) that the
Distributor, its officers and directors or any such controlling person may incur
under the 1933 Act, the 1940 Act, the common law or otherwise, arising out of or
based upon any alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus or arising out of or based upon any
alleged omission to state a material fact required to be stated in either or
necessary to make the statements in either not misleading. This contract shall
not be construed to protect the Distributor against any liability to the Trust
or its shareholders to which the Distributor would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of its reckless disregard of its obligations and
duties under this contract. This indemnity agreement and the Trust's
representations and warranties in this contract shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
the Distributor, its officers and directors or any such controlling person. This
indemnity agreement shall inure exclusively to the benefit of the Distributor
and its successors, the Distributor's officers and directors and their
respective estates and any such controlling persons and their successors and
estates.
11. The Distributor agrees to indemnify, defend and hold harmless the Trust, its
officers and Trustees and any person who controls the Trust within the meaning
of the 1933 Act, from and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending such claims, demands
or liabilities and any counsel fees incurred in connection therewith) that the
Trust, its officers or Trustees or any such controlling person, may incur under
the 1933 Act, the 1940 Act, the common law or otherwise, but only to the extent
that such liability or expenses incurred by the Trust, its officers or Trustees
or such controlling person resulting from such claims or demands shall arise out
of or be based upon any untrue statement of a material fact contained in
information furnished in writing by the Distributor to the Trust specifically
for use in the Registration Statement or the Prospectus or shall arise out of or
based upon any omission to state a material fact in connection with such
information required to be stated in the Registration Statement or the
Prospectus or necessary to make such information not misleading.
12. No Shares shall be sold through the Distributor or by the Trust under this
contract and no orders for the purchase of Shares shall be confirmed or accepted
by the Trust if and so long as the effectiveness of the Registration Statement
shall be suspended under any of other provisions of the 1933 Act. Nothing
contained in this paragraph 12 shall in any way restrict, limit or have any
application to or bearing upon the Trust's obligation to redeem Shares from any
shareholder in accordance with the provisions of its Declaration of Trust. The
Trust will use its best efforts at all times to have the Shares effectively
registered under the 1933 Act.
13. The Trust agrees to advise the Distributor immediately:
(a) of any request by the SEC for amendments to the Registration Statement
or the Funds' Prospectus or for additional information;
(b) in the event of the issuance by the SEC of any stop order suspending
the effectiveness of the Registration Statement or the Funds'
Prospectus under the 1933 Act or the initiation of any proceedings for
that purpose;
(c) of the happening of any material event that makes untrue any statement
made in the Registration Statement or the Funds' Prospectus or that
requires the making of a change in either thereof in order to make the
statements therein not misleading; and
(d) of all actions of the SEC with respect to any amendments to the
Registration Statement or the Funds' Prospectus that may from time to
time be filed with the SEC under the 1933 Act or the 1940 Act.
14. Insofar as they concern the Trust, the Trust shall comply with all
applicable laws, rules and regulations, including, without limiting the
generality of the foregoing, all rules and regulations made or adopted pursuant
to the 1933 Act, the 1940 Act or by any securities association registered under
the 1934 Act.
15. The Distributor may, if it desires and at its own cost and expense, appoint
or employ agents to assist it in carrying out its obligations under this
contract, but no such appointment or employment shall relieve the Distributor of
any of its responsibilities or obligations to the Trust under this contract.
16. (a) The Distributor shall from time to time employ or associate with it such
persons as it believes necessary to assist it in carrying out its obligations
under this contract. The compensation of such persons shall be paid by the
Distributor.
(b) The Trust shall execute all documents and furnish any information that
may be reasonably necessary in connection with the qualification of the Shares
for sale in jurisdictions designated by the Distributor.
17. The Distributor shall pay all expenses incurred in connection with its
qualification as a dealer or broker under Federal or state law. It is understood
and agreed that, so long as any Plan continues in effect, any expenses incurred
by the Distributor hereunder (as well as any other expenses that may be
permitted to be paid pursuant to a Plan) may be paid from amounts received by it
from the Trust under such Plan. The Trust shall be responsible for all of its
expenses and liabilities, including: (i) the fees and expenses of the Trust's
Trustees who are not interested persons (as defined in the 1940 Act) of the
Trust; (ii) the salaries and expenses of any of the Trust's officers or
employees who are not affiliated with the Distributor; (iii) interest expenses;
(iv) taxes and governmental fees, including an original issue taxes or transfer
taxes applicable to the sale or delivery of Shares or certificates therefor; (v)
brokerage commissions and other expenses incurred in acquiring or disposing of
portfolio securities; (vi) the expenses of registering and qualifying Shares for
sale with the SEC and with various state securities commissions; (vii)
accounting and legal costs; (viii) insurance premiums; (ix) fees and expenses of
the Trust's Custodian and Transfer Agent and any related services; (x) expenses
of obtaining quotations of portfolio securities and of pricing Shares; (xi)
expenses of maintaining the Trust's legal existence and of shareholders'
meetings; (xii) expenses of preparing and distributing to existing shareholders
periodic reports, proxy materials and Prospectuses; (xiii) fees and expenses of
membership in industry organizations; and (xiv) expenses of qualification of the
Trust as a foreign corporation authorized to do business in any jurisdiction if
the distributor determines that such qualification is necessary or desirable.
18. This contract shall continue in effect automatically for successive annual
periods, provided such continuance is specifically approved at least annually
(i) by a vote of a majority of the Trustees who are not parties to the contract
or interested persons (as defined in the 1940 Act) of any such party and who
have no director or indirect financial interest in the operation of the Plans or
in any related agreement (the "Independent Trustees"), by vote cast in person at
a meeting called for the purpose of voting on such approval and (ii) either (a)
by the vote of a majority of the outstanding voting securities (as defined in
the 1940 Act) of the Funds or (b) by the vote of a majority of the entire Board
of Trustees. This contract may be terminated with respect to a Fund at any time,
without payment of any penalty, by a vote of a majority of the outstanding
voting securities of that Fund (as defined in the 1940 Act) or by a vote of a
majority of the Independent Trustees of the Trust on 60 days' written notice to
the Distributor or by the Distributor on 60 days' written notice to the Trust.
This contract shall terminate automatically in the event of its assignment (as
defined in the 1940 Act).
19. Except to the extent necessary to perform the Distributor's obligations
under this contract, nothing herein shall be deemed to limit or restrict the
right of the Distributor, or any affiliate of the Distributor, or any employee
of the Distributor, to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to any other
corporation, firm, individual or association.
20. This contract shall be construed in accordance with the laws of the State of
Florida to the extent such laws are consistent with the 1940 Act.
21. The Trust's Declaration of Trust has been filed with the Secretary of State
of The Commonwealth of Massachusetts. The obligations of the Trust are not
personally binding upon, nor shall resort be had to the private property of any
of the Trustees, shareholders, officers, employees or agents of the Trust, but
only the Trust's property shall be bound.
If the foregoing correctly sets forth the agreement between the Trust and the
Distributor, please so indicate by signing and returning to the Trust the
enclosed copy hereof.
Very truly yours,
MACKENZIE SOLUTIONS
By: ___________________________
Keith J. Carlson, President
ACCEPTED:
IVY MACKENZIE DISTRIBUTORS, INC.
By: _______________________________
Keith J. Carlson, President
Dated: June ____, 1999
DEALER AGREEMENT
Ivy Mackenzie Distributors, Inc.. ("IMDI"), is the Principal Underwriter for the
shares (the "Shares") of investment companies registered under the Investment
Company Act of 1940 (the "Act"). Each of the investment companies consists of
multiple funds (referred to individually as a "Fund" and collectively as the
"Funds") that represent "Ivy Funds" and "International Solutions." Subject to
the terms of this Agreement, we hereby offer to appoint you as a nonexclusive
distributor for the sale of shares of Ivy Funds and International Solutions for
which we are now, or for which we become, a principal underwriter in the
jurisdictions, in compliance with the applicable laws, in which you are
registered as a dealer, subject in all cases to the delivery preceding or
accompanying such sales of the currently effective U.S. prospectus.
SALE OF SHARES - Subject to applicable legal restrictions, you agree to use your
best efforts to solicit investors for orders to purchase the Shares. In all
sales of Shares made by you, you shall act as dealer with respect to investors
and in no transactions shall you have any authority to act as agent for any of
the Funds or for us, and nothing in this Agreement shall constitute either you
or us the agent of the other or shall constitute you or any of the Funds the
agent of the other.
No person is authorized to make any representation concerning any of the Funds
or the Shares except those contained in the then effective prospectuses and
statements of additional information ("Prospectuses"). In purchasing Shares from
us, you shall rely solely on the representations contained in the Prospectuses.
We shall provide you with copies of Prospectuses, reports to Shareholders and
available printed information in reasonable quantities upon request. You may
solicit orders for Shares only at prices calculated as described in the
Prospectuses.
ORDERS, CONFIRMATIONS AND PAYMENT FOR SHARES - Orders submitted by you shall be
accepted by us at the public offering price applicable to each order, except for
transactions at net asset value, determined as described in the applicable
Prospectus. The minimum dollars purchase of Shares of each Fund (including
Shares being acquired by your customers pursuant to the Exchange Privilege or
the Reinvestment Privilege as described in the Prospectus) shall be the
applicable minimum amounts described in the applicable Prospectus and no order
for less than such amounts will be accepted. The public offering price shall be
as specified in the then current applicable Prospectus. All orders are subject
to acceptance by us and we reserve the right in our sole discretion to reject
any order. We will not purchase Shares from the Funds except to cover purchase
orders already received by us from broker-dealers.
You may place orders by transmitting them to Ivy Mackenzie Services Corp. (the
"Transfer Agent") through the facilities of the National Securities Clearing
Corporation ("NSCC"). All orders placed with you before the close of business of
the New York Stock Exchange will be transmitted by you to the NSCC by the daily
cutoff time, (currently 7:00 p.m. Eastern time) on the same day. With respect to
these orders, you will furnish the investor's name, state or country of
residence, the gross amount of each order or the number of Shares being
purchased, and the Fund or Funds selected for investment.
Orders may also be placed by mail to the Transfer Agent at 700 South Federal
Highway, Suite 300, Boca Raton, FL 33432, or by telephone, (561) 393-8900 or
(800) 456-5111. Shares purchased by mail will be held in escrow for 15 days.
With respect to telephone orders, you will notify us each day of orders prior to
the close of the New York Stock Exchange, furnishing the investor's name, state
or country of residence, the gross amount of each order or the number of Shares
being purchased, and the Fund or Funds selected for investment.
The Transfer Agent will mail you a confirmation for each order placed, showing
your name, the gross amount of each order and the name of the Fund. You will
make payment to the Transfer Agent of the net amount, after deduction of your
concession, within three (3) business days of placing the order. If such payment
is not so received, we reserve the right, without notice, to cancel the sale,
and we may hold you responsible for any loss, including loss of profit, suffered
by us or by the Fund resulting from your failure to make such payment. After
receipt by the Transfer Agent of instructions for an order and payment, the
Transfer Agent will send a "Transaction Advice" to the investor, as well as a
duplicate copy of the transaction advice to you.
If any Shares sold under the terms of this Agreement are repurchased or redeemed
by the Fund within seven (7) business days after the date of our confirmation,
it is agreed that you shall forthwith refund to us the full concession and any
other fees specified in this Agreement received by you on such sale. Upon
receipt, we will remit your refund to the Fund(s). All sales are made subject to
receipt of Shares by us from the Fund. We reserve the right at our discretion,
without notice, to suspend the sale of Shares or withdraw the offering of Shares
entirely.
In the event you effect a telephonic redemption, or telephonic exchange of Fund
Shares for Shares of another Fund on behalf of your customer, you agree to
indemnify the Funds, us and the Transfer Agent for any loss, injury, damage,
expense or liability as a result of acting or relying upon your telephone
instructions and information.
This agreement shall replace any prior agreement between us. Your first order
placed with us for the purchase of Shares will represent your acceptance of this
Agreement.
SALES CONCESSION - The sales charge applicable to any sale of Fund Shares by you
and the dealer concession applicable to any order from you for the purchase of
Fund Shares shall be as described in the Prospectus.
Individual purchases are considered to include single sales to "any person" as
defined in the Act and the rules and regulations thereunder. A scale of reduced
sales commissions and dealer concessions may be applied on a cumulative basis to
subsequent sales where the dollar amount of the subsequent sale, when added to
the value (calculated at current offering price) of any other Shares of the Fund
and/or Shares of the other Funds distributed by us (except the money market
fund) then owned by the investor, is sufficient to qualify for the reduced sales
charge. (See the Prospectus for details.)
You may be deemed to be an underwriter in connection with sales by you of Shares
of a Fund where you receive the entire sales charge as set forth in the
Prospectus, and therefore you may be subject to applicable provisions of the
Securities Act of 1933. The amount of the total sales commission or the dealer
concession or both may be changed at any time.
DISTRIBUTION SERVICES - Certain of the Funds (as well as certain classes
thereof) have adopted Distribution Plans pursuant to which IMDI, on behalf of
each such Fund, will pay a service fee and, in certain cases, a commission to
dealers in accordance with the provisions of such Funds' Distribution Plans. The
provisions and terms of the Funds' Distribution Plans are described in their
then current Prospectuses, and you hereby agree that we have made no
representations to you with respect to the Distribution Plans of such Funds in
addition to, or conflicting with, the description set forth in their then
current Prospectuses. The provisions of this paragraph may be terminated with
respect to any Fund in accordance with the provisions of Rule 12b-1 under the
Act and thereafter no such fee will be paid to you.
APPLICABLE LAWS AND PROCEDURES - This Agreement is conditioned upon your
representation and warranty that you are a member of the National Association of
Securities Dealers, Inc. ("NASD") or, in the alternative, that you are a foreign
dealer not eligible for membership in that Association. You and we agree to
abide by the rules and regulations of the NASD, including Rule 2830 of its
Conduct Rules, and all applicable state and Federal laws, rules and regulations,
as well as the rules and regulations of the government and all authorized
agencies having jurisdiction over the sales of shares made by you. You agree to
indemnify and hold the Funds, their investment advisors and us harmless from
loss or damage resulting from any failure on your part to comply with the
applicable laws.
The Funds generally maintain effective registrations in all of the United
States. If it is necessary to register or qualify the Shares in other
jurisdictions in which you intend to offer the Shares, it will be your
responsibility to arrange for and to pay the cost of such registration or
qualification; prior to any such registration or qualification, you will notify
us of your intent and of any limitations that might be imposed on the Funds, and
you agree not to proceed with such registration or qualification without the
written consent of the Funds and of us.
TAX REPORTING - IMDI and the Transfer Agent, on behalf of the Funds, will be
responsible for reporting dividends and distributions to registered owners of
the Shares. If you are a registered owner of Shares held in "street name," you
will be required to prepare and send to each beneficial owner of such Shares,
dividend and distribution reports relating to the Shares owned by such
beneficial owners.
RECORDS - You agree to maintain records of all sales of Shares made through you
and to furnish us with copies of each record on request.
TERMINATION - This agreement may be terminated by either party, at any time,
upon written notice. You agree (notwithstanding the provisions of the prior
sentence hereof) that this Agreement shall automatically terminate without
notice upon you: (a) filing of a petition in bankruptcy or a petition seeking
any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future bankruptcy,
reorganization, insolvency or similar statute, law or regulation; or (b) seeking
the appointment of any trustee, conservator, receiver, custodian or liquidator
for you or for all or substantially all of your properties. Likewise, you agree
(notwithstanding the first sentence of this TERMINATION section) that: (w) if a
proceeding is commenced against you seeking relief or an appointment of a type
described in the immediately preceding two sentences; or (x) if a trustee,
conservator, receiver, custodian or liquidator is appointed for you or for all
or substantially all of your properties; or (y) if an application for a
protective decree under the provisions of the Securities Investor Protection Act
of 1970 shall have been filed against you; or (z) if you are a registered
broker-dealer and (i) the Securities and Exchange Commission (the "SEC") shall
revoke or suspend your registration as a broker-dealer, (ii) any national
securities exchange or national securities association shall revoke or suspend
your membership, or (iii) under any applicable net capital rule of the SEC or of
any national securities exchange, your aggregate indebtedness shall exceed 1000%
of your net capital, this Agreement shall automatically terminate. You agree
that you will immediately advise us of any such proceeding, appointment,
application, revocation, suspension or indebtedness level. We reserve the right,
without notice, to amend or modify this Agreement.
NOTICES AND COMMUNICATIONS - All communications to us shall be sent to the
address listed on this document. Any notice to you shall be duly given if mailed
or telegraphed to you at the address set forth below (or such other addresses of
which you shall notify us in writing).
ACCEPTANCE AND ACKNOWLEDGMENT - By signing this Agreement, you hereby accept the
offers contained herewith and agree to abide by the foregoing terms and
conditions. The undersigned hereby acknowledges receipt of this Agreement.
Dealer: IVY MACKENZIE DISTRIBUTORS, INC.
Address: By:
Keith J. Carlson, President
City/State/Zip:
Date:
Phone:
By:
Signature of Principal
By:
Name and Title of Principal (Please Print)
Date: ______________________________________
FORM OF
CUSTODIAN AGREEMENT
THIS AGREEMENT, dated as of ______, 1999, between Mackenzie Solutions,
an open-end management investment company organized under the laws of the
Commonwealth of Massachusetts and registered with the Commission under the 1940
Act (the Fund), and BROWN BROTHERS HARRIMAN & CO., a limited partnership formed
under the laws of the State of New York (BBH&Co. or the Custodian),
W I T N E S S E T H:
WHEREAS, the Fund wishes to employ BBH&Co. to act as custodian for the Fund
and to provide related services, all as provided herein, and BBH&Co. is willing
to accept such employment, subject to the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the Fund and BBH&Co. hereby agree, as follows:
1. Appointment of Custodian. The Fund hereby appoints BBH&Co. as the Fund's
custodian, and BBH&Co. hereby accepts such appointment. All Investments of the
Fund delivered to the Custodian or its agents or Subcustodians shall be dealt
with as provided in this Agreement. With respect to uncertificated shares of the
series of the Ivy Fund, the holding of confirmation statements that identify the
shares as being recorded in the Custodian's name on behalf of the Fund will be
deemed custody for the purposes hereof. The duties of the Custodian with respect
to the Fund's Investments shall be only as set forth expressly in this
Agreement, which duties are generally comprised of safekeeping and various
administrative duties that will be performed in accordance with Instructions and
as reasonably required to effect Instructions.
2. Representations, Warranties and Covenants of the Fund. The Fund hereby
represents, warrants and covenants each of the following:
2.1 This Agreement has been, and at the time of delivery of
each Instruction such Instruction will have been, duly authorized,
executed and delivered by the Fund. This Agreement does not violate any
Applicable Law or conflict with or constitute a default under the
Fund's prospectus or other organic document, agreement, judgment, order
or decree to which the Fund is a party or by which it or its
Investments is bound.
2.2 By providing an Instruction with respect to the first
acquisition of an Investment in a jurisdiction other than the United
States of America, the Fund shall be deemed to have confirmed to the
Custodian that the Fund has (a) assessed and accepted all material
Country or Sovereign Risks (as defined in Section 9.1) and accepted
responsibility for their occurrence, (b) made all determinations
required to be made by the Fund under the 1940 Act, and (iii)
appropriately and adequately disclosed to its shareholders, other
investors and all persons who have rights in or to such Investments,
all material investment risks, including those relating to the custody
and settlement infrastructure or the servicing of securities in such
jurisdiction.
2.3 The Fund shall safeguard and shall solely be responsible
for the safekeeping of any testkeys, identification codes, passwords,
other security devices or statements of account with which the
Custodian provides it. In furtherance and not limitation of the
foregoing, in the event the Fund utilizes any on-line service offered
by the Custodian, each of the Fund and the Custodian shall be fully
responsible for the security of its connecting terminal, access thereto
and the proper and authorized use thereof and the initiation and
application of continuing effective safeguards in respect thereof.
Additionally, if the Fund uses any on-line or similar communications
service made available by the Custodian, the Fund shall be solely
responsible for ensuring the security of its access to the service and
for the use of the service, and shall only attempt to access the
service and the Custodian's computer systems as directed by the
Custodian. If the Custodian provides any computer software to the Fund
relating to the services described in this Agreement, the Fund will
only use the software for the purposes for which the Custodian provided
the software to the Fund, and will abide by the license agreement
accompanying the software and any other security policies which the
Custodian provides to the Fund.
3. Representation and Warranty of BBH&Co. BBH&Co. hereby represents and warrants
that this Agreement has been duly authorized, executed and delivered by BBH&Co.
and does not and will not violate any Applicable Law or conflict with or
constitute a default under BBH&Co.'s limited partnership agreement or any
agreement, instrument, judgment, order or decree to which BBH&Co. is a party or
by which it is bound.
4. Instructions. Unless otherwise explicitly indicated herein, the Custodian
shall perform its duties pursuant to Instructions. As used herein, the term
Instruction shall mean a directive initiated by the Fund, acting directly or
through its board of trustees, officers or other Authorized Persons, which
directive shall conform to the requirements of this Section 4.
4.1 Authorized Persons. For purposes hereof, an Authorized Person
shall be a person or entity authorized to give Instructions for or on
behalf of the Fund by written notices to the Custodian or otherwise in
accordance with procedures delivered to and acknowledged by the Custodian,
including without limitation the Fund's Investment Adviser or Foreign
Custody Manager. The Custodian may treat any Authorized Person as having
full authority of the Fund to issue Instructions hereunder unless the
notice of authorization contains explicit limitations as to said authority.
The Custodian shall be entitled to rely upon the authority of Authorized
Persons until it receives appropriate written notice from the Fund to the
contrary. 4.2 Form of Instruction. Each Instruction shall be transmitted by
such secured or authenticated electro-mechanical means as the Custodian
shall make available to the Fund from time to time unless the Fund shall
elect to transmit such Instruction in accordance with Subsections 4.2.1
through 4.2.3 of this Section.
4.2.1 Fund Designated Secured-Transmission Method. Instructions may be
transmitted through a secured or tested electro-mechanical means identified
by the Fund or by an Authorized Person entitled to give Instructions and
acknowledged and accepted by the Custodian; it being understood that such
acknowledgment shall authorize the Custodian to receive and process such
means of delivery but shall not represent a judgment by the Custodian as to
the reasonableness or security of the method determined by the Authorized
Person.
4.2.2 Written Instructions. Instructions may be transmitted in a
writing that bears the manual signature of an Authorized Person.
4.2.3 Other Forms of Instruction. Instructions may also be
transmitted by another means determined by the Fund or Authorized
Persons and acknowledged and accepted by the Custodian (subject to the
same limits as to acknowledgements as is contained in Subsection
4.2.1, above) including Instructions given orally or by SWIFT, telex
or telefax (whether tested or untested).
When an Instruction is given by means established under Subsections 4.2.1
through 4.2.3, it shall be the responsibility of the Custodian to use reasonable
care to adhere to any security or other procedures established in writing
between the Custodian and the Authorized Person with respect to such means of
Instruction, but such Authorized Person shall be solely responsible for
determining that the particular means chosen is reasonable under the
circumstances. Telephonic or other oral instructions given by facsimile
transmission may be given by any Authorized Person and will be considered proper
Instructions if the Custodian reasonably believes them to have been given by an
Authorized Person. Oral Instructions communicated as described in the preceding
sentence will be confirmed by tested telex or in writing in the manner set forth
above but the lack of such confirmation shall in no way affect any action taken
by the Custodian in reliance upon such oral Instruction communicated as
described above. With respect to telefax instructions, the parties agree and
acknowledge that receipt of legible instructions cannot be assured, that the
Custodian cannot verify that authorized signatures on telefax instructions are
original or properly affixed, and that the Custodian shall not be liable for
losses or expenses incurred through actions taken in reliance on inaccurately
stated, or unauthorized telefax instructions. The provisions of Section 4A of
the Uniform Commercial Code shall apply to Funds Transfers performed in
accordance with Instructions. In the event that a Funds Transfer Services
Agreement is executed between the Fund or an Authorized Person and the
Custodian, such an agreement shall comprise a designation of form of a means of
delivering Instructions for purposes of this Section 4.2.
4.3 Completeness and Contents of Instructions. The Authorized Person
shall be responsible for assuring the adequacy and accuracy of Instructions.
Particularly, upon any acquisition or disposition or other dealing in the Fund's
Investments and upon any delivery and transfer of any Investment or moneys, the
person initiating such Instruction shall give the Custodian an Instruction with
appropriate detail, including, without limitation:
4.3.1 The transaction date and the date and location of
settlement;
4.3.2 The specification of the type of transaction;
4.3.4 A description of the Investments or moneys in question,
including, as appropriate, quantity, price per unit, amount of money
to be received or delivered and currency information. Where an
Instruction is communicated by electronic means, or otherwise where an
Instruction contains an identifying number such as a CUSIP, SEDOL or
ISIN number, the Custodian shall be entitled to rely on such number as
controlling notwithstanding any inconsistency contained in such
Instruction, particularly with respect to Investment description;
4.3.5 The name of the broker or similar entity concerned with
execution of the transaction.
If the Custodian shall determine that an Instruction is either unclear or
incomplete, the Custodian shall give prompt notice of such determination to the
Fund, and the Fund shall thereupon amend or otherwise reform such Instruction.
In such event, the Custodian shall have no obligation to take any action in
response to the Instruction initially delivered until the redelivery of an
amended or reformed Instruction.
4.4 Timeliness of Instructions. In giving an Instruction, the Fund
shall take into consideration delays which may occur due to the involvement
of a Subcustodian or agent, differences in time zones, and other factors
particular to a given market, exchange or issuer. When the Custodian has
established specific timing requirements or deadlines with respect to
particular classes of Instruction, or when an Instruction is received by
the Custodian at such a time that it could not reasonably be expected to
have acted on such instruction due to time zone differences or other
factors beyond its reasonable control, the execution of any Instruction
received by the Custodian after such deadline or at such time (including
any modification or revocation of a previous Instruction) shall be at the
risk of the Fund.
5. Safekeeping of Fund Assets. The Custodian shall hold Investments delivered to
it or Subcustodians for the Fund in accordance with the provisions of this
Section. The Custodian shall not be responsible for (a) the safekeeping of
Investments not delivered or that are not caused to be issued to it or its
Subcustodians, except that the holding of confirmation statements from Ivy
Mackenzie Service Corp. in accordance with Section 5.1.1 hereof that identify
uncertificated shares of the series of Ivy Fund as being recorded in the
Custodian's name on behalf of the Fund will be deemed custody for the purposes
hereof; or, (b) pre-existing faults or defects in Investments that are delivered
to the Custodian, or its Subcustodians. The Custodian is hereby authorized to
hold with itself or a Subcustodian, and to record in one or more accounts, all
Investments delivered to and accepted by the Custodian, any Subcustodian or
their respective agents pursuant to an Instruction or in consequence of any
corporate action. The Custodian shall hold Investments for the account of the
Fund and shall segregate Investments from assets belonging to the Custodian and
shall cause its Subcustodians to segregate Investments from assets belonging to
the Subcustodian in an account held for the Fund or in an account maintained by
the Subcustodian generally for non-proprietary assets of the Custodian. The Fund
shall receive periodic reports with respect to the safekeeping of the Fund's
assets, including, but not limited to, notification of any transfer to or from
the Fund's account or an account maintained by the Subcustodian generally for
the non-proprietary assets of the Custodian. 5.1 Use of Securities Depositories.
The Custodian may deposit and maintain Investments in any Securities Depository,
either directly or through one or more Subcustodians appointed by the Custodian.
Investments held in a Securities Depository shall be held (a) subject to the
agreement, rules, statement of terms and conditions or other document or
conditions effective between the Securities Depository and the Custodian or the
Subcustodian, as the case may be, and (b) in an account for the Fund or in bulk
segregation in an account maintained for the non-proprietary assets of the
entity holding such Investments in the Depository. The Fund shall receive
periodic reports with respect to the safekeeping of the Fund's assets including,
but not limited to, notification of any transfer to or from the Fund's account
or an account maintained in bulk segregation for the non-proprietary assets of
the entity holding such Investments in the Depository. If market practice or the
rules and regulations of the Securities Depository prevent the Custodian, the
Subcustodian or any agent of either from holding its client assets in such a
separate account, the Custodian, the Subcustodian or other agent shall, as
appropriate, segregate such Investments for benefit of the Fund or for benefit
of clients of the Custodian generally on its own books. 5.1.1 Deposit of Fund
Assets with Ivy Mackenzie Service Corp.
The Custodian may keep securities of the Fund with Ivy
Mackenzie Service Corp. provided that such securities are maintained in an
account on the books and records of Ivy Mackenzie Service Corp. in the name of
the Custodian, on behalf of the Fund, and provided further that such account
shall be maintained separately from the account of any other customer of Ivy
Mackenzie Service Corp.
The Custodian shall (i) pay for securities purchased for the
account of the Fund upon receipt of advice from Ivy Mackenzie Service Corp. that
such securities have been transferred to the account of the Custodian, on behalf
of the Fund, on the books and records of Ivy Mackenzie Service Corp., and (ii)
shall credit the account of the Custodian, on behalf of the Fund, for the
redemption of shares upon receipt of an advice from Ivy Mackenzie Service Corp.
that securities have been redeemed. Copies of all advices from Ivy Mackenzie
Service Corp. of purchases and sales of securities for the account of the Fund
shall identify the Fund, be maintained for the Fund by the Custodian and be
provided to the Fund at its request.
5.2 Certificated Assets. Investments which are certificated may be
held in registered or bearer form: (a) in the Custodian's vault; (b) in the
vault of a Subcustodian or agent of the Custodian or a Subcustodian; or (c)
in an account maintained by the Custodian, Subcustodian or agent at a
Securities Depository; all in accordance with customary market practice in
the jurisdiction in which such certificated Investments are held.
5.3 Registered Assets. Investments which are registered may be
registered in the name of the Custodian, a Subcustodian, or in the name of
the Fund or a nominee for any of the foregoing, and may be held in any
manner set forth in paragraph 5.2 above with or without any identification
of fiduciary capacity in such registration. 5.4 Book Entry Assets.
Investments which are represented by book-entry may be so held in an
account maintained by the Book-Entry Agent on behalf of the Custodian, a
Subcustodian or another agent of the Custodian, or a Securities Depository.
5.5 Replacement of Lost Investments. In the event of a loss of Investments
for which the Custodian is responsible under the terms of this Agreement,
the Custodian shall replace such Investment, or in the event that such
replacement cannot be effected, the Custodian shall pay to the Fund the
fair market value of such Investment based on the last available price as
of the close of business in the relevant market on the date that a claim
was first made to the Custodian with respect to such loss, or, if less,
such other amount as shall be agreed by the parties as the date for
settlement.
6. Administrative Duties of the Custodian. The Custodian shall perform the
following administrative duties with respect to Investments of the Fund.
6.1 Purchase of Investments. Pursuant to Instruction, Investments
purchased for the account of the Fund shall be paid for (a) against
delivery thereof to the Custodian or a Subcustodian, as the case may be,
either directly or through a Clearing Corporation or a Securities
Depository (in accordance with the rules of such Securities Depository or
such Clearing Corporation), or (b) otherwise in accordance with an
Instruction, Section 5.1.1 herein, Applicable Law, generally accepted trade
practices, or the terms of the instrument representing such Investment.
6.2 Sale of Investments. Pursuant to Instruction, Investments sold for
the account of the Fund shall be delivered (a) against payment therefor in
cash, by check or by bank wire transfer, (b) by credit to the account of
the Custodian or the applicable Subcustodian, as the case may be, with a
Clearing Corporation or a Securities Depository (in accordance with the
rules of such Securities Depository or such Clearing Corporation), or (c)
otherwise in accordance with an Instruction, Section 5.1.1 herein,
Applicable Law, generally accepted trade practices, or the terms of the
instrument representing such Investment. 6.3 Delivery in Connection with
Borrowings of the Fund or other Collateral and Margin Requirements.
Pursuant to Instruction, the Custodian may deliver Investments or cash of
the Fund in connection with borrowings and other collateral and margin
requirements.
6.4 Futures and Options. If, pursuant to an Instruction, the Custodian
shall become a party to an agreement with the Fund and a futures commission
merchant regarding margin (Tri-Party Agreement), the Custodian shall (a)
receive and retain, to the extent the same are provided to the Custodian,
confirmations or other documents evidencing the purchase or sale by the
Fund of exchange-traded futures contracts and commodity options, (b) when
required by such Tri-Party Agreement, deposit and maintain in an account
opened pursuant to such Agreement (Margin Account), segregated either
physically or by book-entry in a Securities Depository for the benefit of
any futures commission merchant, such Investments as the Fund shall have
designated as initial, maintenance or variation "margin" deposits or other
collateral intended to secure the Fund's performance of its obligations
under the terms of any exchange-traded futures contracts and commodity
options; and (c) thereafter pay, release or transfer Investments into or
out of the margin account in accordance with the provisions of the such
Agreement. Alternatively, the Custodian may deliver Investments, in
accordance with an Instruction, to a futures commission merchant for
purposes of margin requirements in accordance with Rule 17f-6. The
Custodian shall in no event be responsible for the acts and omissions of
any futures commission merchant to whom Investments are delivered pursuant
to this Section; for the sufficiency of Investments held in any Margin
Account; or, for the performance of any terms of any exchange-traded
futures contracts and commodity options. 6.4.1 Segregated Account. The
Custodian shall upon receipt of Instructions establish and maintain on its
books a segregated account or accounts for and on behalf of the Fund, into
which account or accounts may be transferred cash and/or securities of the
Fund, including securities maintained by the Custodian pursuant to Section
5.1 hereof, said account to be (i) maintained in accordance with the
provisions of any agreement among the Fund, the Custodian and a
broker-dealer registered under the Securities Exchange Act of 1934 and a
member of the National Association of Securities Dealers Inc., (or any
futures commission merchant registered under the Commodity Exchange Act)
relating to compliance with the rules of the Options Clearing Corporation
and of any registered national securities exchange (or the Commodity
Futures Trading Commission or any registered contract market), or any
similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Fund, (ii) for purposes
of segregating cash or securities in connection with options thereon
purchased, sold or written by the Fund, or commodity futures contracts or
options thereon purchased or sold by the Fund or in connection with
borrowings by the Fund (iii) for the purpose of compliance with the
procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange Commission
relating to the maintenance of segregated accounts by registered investment
companies, and (iv) as mutually agreed from time to time between the Fund
and the Custodian.
6.5 Contractual Obligations and Similar Investments. From time to
time, the Fund's Investments may include Investments that are not ownership
interests as may be represented by certificate (whether registered or
bearer), by entry in a Securities Depository or by book entry agent,
registrar or similar agent for recording ownership interests in the
relevant Investment. If the Fund shall at any time acquire such
Investments, including without limitation uncertificated shares of the
series of Ivy Fund as described in Section 5.1.1, deposit obligations, loan
participations, repurchase agreements and derivative arrangements, the
Custodian shall (a) receive and retain, to the extent the same are provided
to the Custodian, confirmations or other documents evidencing the
arrangement; and (b) perform on the Fund's account in accordance with the
terms of the applicable arrangement, but only to the extent directed to do
so by Instruction. The Custodian shall have no responsibility for
agreements running to the Fund as to which it is not a party, other than to
retain, to the extent the same are provided to the Custodian, documents or
copies of documents evidencing the arrangement and, in accordance with
Instruction, to include such arrangements in reports made to the Fund. 6.6
Exchange of Securities. Unless otherwise directed by Instruction, the
Custodian shall: (a) exchange securities held for the account of the Fund
for other securities in connection with any reorganization,
recapitalization, conversion, split-up, change of par value of shares or
similar event, and (b) deposit any such securities in accordance with the
terms of any reorganization or protective plan. 6.7 Surrender of
Securities. Unless otherwise directed by Instruction, the Custodian may
surrender securities: (a) in temporary form for definitive securities; (b)
for transfer into the name of an entity allowable under Section 5.3; and
(c) for a different number of certificates or instruments representing the
same number of shares or the same principal amount of indebtedness. 6.8
Rights, Warrants, Etc. Pursuant to Instruction, the Custodian shall (a)
deliver warrants, puts, calls, rights or similar securities to the issuer
or trustee thereof, or to any agent of such issuer or trustee, for purposes
of exercising such rights or selling such securities, and (b) deposit
securities in response to any invitation for the tender thereof. 6.9
Mandatory Corporate Actions. Unless otherwise directed by Instruction, the
Custodian shall: (a) comply with the terms of all mandatory or compulsory
exchanges, calls, tenders, redemptions or similar rights of securities
ownership affecting securities held on the Fund's account and promptly
notify the Fund of such action, and (b) collect all stock dividends, rights
and other items of like nature with respect to such securities. 6.10 Income
Collection. Unless otherwise directed by Instruction, the Custodian shall
collect any amount due and payable to the Fund with respect to Investments
and promptly credit the amount collected to a Principal or Agency Account;
provided, however, that the Custodian shall not be responsible for: (a) the
collection of amounts due and payable with respect to Investments that are
in default, or (b) the collection of cash or share entitlements with
respect to Investments that are not registered in the name of the Custodian
or its Subcustodians. The Custodian is hereby authorized to endorse and
deliver any instrument required to be so endorsed and delivered to effect
collection of any amount due and payable to the Fund with respect to
Investments. 6.11 Ownership Certificates and Disclosure of the Fund's
Interest. The Custodian is hereby authorized to execute on behalf of the
Fund ownership certificates, affidavits or other disclosure required under
Applicable Law or established market practice in connection with the
receipt of income, capital gains or other payments by the Fund with respect
to Investments, or in connection with the sale, purchase or ownership of
Investments. 6.12 Proxy Materials. The Custodian shall deliver, or cause to
be delivered, to the Fund proxy forms, notices of meeting, and any other
notices or announcements materially affecting or relating to Investments
received by the Custodian or any nominee. With respect to tender or
exchange offers, rights offerings or similar corporate actions ("Offers"),
the Custodian shall transmit promptly to the Fund all written information
received by the Custodian from issuers of the securities involved and from
the party (or its agents) making the Offer. If the Fund desires to take
action with respect to any Offer, the Fund shall notify the Custodian prior
to the last day on which the Custodian is able to take timely action
pursuant to the terms of such Offer. 6.13. Taxes. The Custodian shall,
where applicable, assist the Fund in the reclamation of taxes withheld on
dividends and interest payments received by the Fund. In the performance of
its duties with respect to tax withholding and reclamation, the Custodian
shall be entitled to rely on the advice of counsel and upon information and
advice regarding the Fund's tax status that is received from or on behalf
of the Fund without duty of separate inquiry. 6.14 Other Dealings. The
Custodian shall otherwise act as directed by Instruction, including without
limitation effecting the free payments of moneys or the free delivery of
securities, provided that such Instruction shall indicate the purpose of
such payment or delivery and that the Custodian shall record the party to
whom such payment or delivery is made.
The Custodian shall attend to all nondiscretionary details in
connection with the sale or purchase or other administration of Investments,
except as otherwise directed by an Instruction, and may make payments to itself
or others for minor expenses of administering Investments under this Agreement;
provided that the Fund shall have the right to request an accounting with
respect to such expenses.
In fulfilling the duties set forth in Sections 6.6 through 6.10 above,
the Custodian shall provide to the Fund all material information pertaining to a
corporate action which the Custodian actually receives; provided that the
Custodian shall not be responsible for the completeness or accuracy of such
information. Any advance credit of cash or shares expected to be received as a
result of any corporate action shall be subject to actual collection and may,
when the Custodian deems collection unlikely, be reversed by the Custodian,
after it has provided notification of the same to the Fund.
The Custodian, subject to the general liability provisions contained in
Section 9, may at any time or times in its discretion appoint (and may at any
time remove) agents (other than Subcustodians) to carry out some or all of the
administrative provisions of this Agreement (Agents), provided, however, that
the appointment of such agent shall not relieve the Custodian of its
responsibilities under this Agreement. 7. Cash Accounts, Deposits and Money
Movements. Subject to the terms and conditions set forth in this Section 7, the
Fund hereby authorizes the Custodian to open and maintain, with itself or with
Subcustodians, cash accounts in United States Dollars, in such other currencies
as are the currencies of the countries in which the Fund maintains Investments
or in such other currencies as the Fund shall from time to time request by
Instruction.
7.1 Types of Cash Accounts. Cash accounts opened on the books of the
Custodian (Principal Accounts) shall be opened in the name of the Fund. Such
accounts collectively shall be a deposit obligation of the Custodian and shall
be subject to the terms of this Section 7 and the general liability provisions
contained in Section 9. Cash accounts opened on the books of a Subcustodian may
be opened in the name of the Fund or the Custodian or in the name of the
Custodian for its customers generally (Agency Accounts). Such deposits shall be
obligations of the Subcustodian and shall be treated as an Investment of the
Fund. Accordingly, the Custodian shall be responsible for exercising reasonable
care in the administration of such accounts but shall not be liable for their
repayment in the event such Subcustodian, by reason of its bankruptcy,
insolvency or otherwise, fails to make repayment, unless the Fund experiences a
loss due to such bankruptcy or insolvency and the Custodian negligently failed
to take appropriate action in light of facts it knew or in the exercise of
reasonable care should have known regarding the Suscustodian's bankruptcy or
insolvency.
7.2 Payments and Credits with Respect to the Cash Accounts. The
Custodian shall make payments from or deposits to any of said accounts in the
course of carrying out its administrative duties, including but not limited to
income collection with respect to the Fund's Investments, and otherwise in
accordance with Instructions. The Custodian and its Subcustodians shall be
required to credit amounts to the cash accounts only when moneys are actually
received in cleared funds in accordance with banking practice in the country and
currency of deposit. Any credit made to any Principal or Agency Account before
actual receipt of cleared funds shall be provisional and may be reversed by the
Custodian, upon written notice to the Fund, in the event such payment is not
actually collected. Unless otherwise specifically agreed in writing by the
Custodian or any Subcustodian, all deposits shall be payable only at the branch
of the Custodian or Subcustodian where the deposit is made or carried.
7.3 Currency and Related Risks. The Fund bears the risks of holding or
transacting in any currency. The Custodian shall not be liable for any loss or
damage arising from the applicability of any law or regulation now or hereafter
in effect, or from the occurrence of any event, which may delay or affect the
transferability, convertibility or availability of any currency in the country
(a) in which such Principal or Agency Accounts are maintained or (b) in which
such currency is issued, and in no event shall the Custodian be obligated to
make payment of a deposit denominated in a currency during the period during
which its transferability, convertibility or availability has been affected by
any such law, regulation or event. Without limiting the generality of the
foregoing, neither the Custodian nor any Subcustodian shall be required to repay
any deposit made at a foreign branch of either the Custodian or Subcustodian if
such branch cannot repay the deposit due to a cause for which the Custodian
would not be responsible in accordance with the terms of Section 9 of this
Agreement unless the Custodian or such Subcustodian expressly agrees in writing
to repay the deposit under such circumstances. All currency transactions in any
account opened pursuant to this Agreement are subject to exchange control
regulations of the United States and of the country where such currency is the
lawful currency or where the account is maintained. Any taxes, costs, charges or
fees imposed on the convertibility of a currency held by the Fund shall be for
the account of the Fund.
7.4 Foreign Exchange Transactions. The Custodian shall, subject to the
terms of this Section, settle foreign exchange transactions (including
contracts, futures, options and options on futures) on behalf and for the
account of the Fund with such currency brokers or banking institutions,
including Subcustodians, as the Fund may direct pursuant to Instructions. The
Custodian may act as principal in any foreign exchange transaction with the Fund
in accordance with Section 7.4.2 of this Agreement. The obligations of the
Custodian in respect of all foreign exchange transactions (whether or not the
Custodian shall act as principal in such transaction) shall be contingent on the
free, unencumbered transferability of the currency transacted on the actual
settlement date of the transaction.
7.4.1 Third Party Foreign Exchange Transactions. The Custodian
shall process foreign exchange transactions (including without
limitation contracts, futures, options, and options on futures) where
any third party acts as principal counterparty to the Fund on the same
basis it performs duties as agent for the Fund with respect to any
other of the Fund's Investments. Accordingly, the Custodian shall only
be responsible for delivering or receiving currency on behalf of the
Fund in respect of such contracts pursuant to Instructions. Foreign
exchange transactions, other than those executed with the Custodian as
principal, but including those executed with Subcutsodians, shall be
deemed to be Investments of the Fund and the responsibility of the
Custodian therefor shall be the same as and no greater than the
Custodian's responsibility in respect of other Investments of the
Fund. The Custodian (a) shall transmit cash and Instructions to and
from the currency broker or banking institution with which a foreign
exchange contract or option has been executed pursuant hereto, (b) may
make free outgoing payments of cash in the form of Dollars or foreign
currency without receiving confirmation of a foreign exchange contract
or option or confirmation that the countervalue currency completing
the foreign exchange contract has been delivered or received or that
the option has been delivered or received, and (c) shall hold all
confirmations, certificates and other documents and agreements
received by the Custodian and evidencing or relating to such foreign
exchange transactions in safekeeping. The Fund accepts full
responsibility for its use of third-party foreign exchange dealers and
for execution of said foreign exchange contracts and options and
understands that the Fund shall be responsible for any and all costs
and interest charges which may be incurred by the Fund or the
Custodian as a result of the failure or delay of third parties to
deliver foreign exchange.
7.4.2 Foreign Exchange with the Custodian as Principal. The
Custodian may undertake foreign exchange transactions with the Fund as
principal as the Custodian and the Fund may agree from time to time.
In such event, the foreign exchange transaction will be performed in
accordance with the particular agreement of the parties, or in the
event a principal foreign exchange transaction is initiated by
Instruction in the absence of specific agreement, such transaction
will be performed in accordance with the usual commercial terms of the
Custodian. The responsibility of the Custodian with respect to foreign
exchange transactions executed with the Custodian as principal shall
be that of a U.S. bank with respect to similar foreign exchange
transactions.
7.5 Delays. If no event of Force Majeure shall have occurred and
be continuing and in the event that a delay shall have been caused by
the negligence or willful misconduct of the Custodian in carrying out
an Instruction to credit or transfer cash, the Custodian shall be
liable to the Fund: (a) with respect to Principal Accounts, for
interest to be calculated at the rate customarily paid on such deposit
and currency by the Custodian on overnight deposits at the time the
delay occurs for the period from the day when the transfer should have
been effected until the day it is in fact effected; and, (b) with
respect to Agency Accounts, for interest to be calculated at the rate
customarily paid on such deposit and currency by the Subcustodian on
overnight deposits at the time the delay occurs for the period from
the day when the transfer should have been effected until the day it
is in fact effected. The Custodian shall not be liable for delays in
carrying out such Instructions to transfer cash which are not due to
the Custodian's own negligence or willful misconduct, or that of a
Subcustodian or Agent utilized by the Custodian.. 7.6 Advances. If,
for any reason in the conduct of its safekeeping duties pursuant to
Section 5 hereof or its administration of the Fund's assets pursuant
to Section 6 hereof, the Custodian or any Subcustodian advances monies
to facilitate settlement or otherwise for benefit of the Fund (whether
or not any Principal or Agency Account shall be overdrawn either
during or at the end of any Business Day), the Fund hereby does:
7.6.1 acknowledge that the Fund shall have no right or title to
any Investments purchased with such Advance save a right to receive
such Investments upon: (a) the debit of the Principal or Agency
Account; or, (b) if such debit would produce an overdraft in such
account, other reimbursement of the associated Advance;
7.6.2 grant to the Custodian a security interest in certain
specified Investments; and,
7.6.3 agree that the Custodian may secure the resulting Advance
by perfecting a security interest in such specified Investments under
Applicable Law.
Neither the Custodian nor any Subcustodian shall be obligated to advance monies
to the Fund, and in the event that such Advance occurs, any transaction giving
rise to an Advance shall be for the account and risk of the Fund and shall not
be deemed to be a transaction undertaken by the Custodian for its own account
and risk. If such Advance shall have been made by a Subcustodian or any other
person, the Custodian may assign the security interest and any other rights
granted to the Custodian hereunder to such Subcustodian or other person. If the
Fund shall fail to repay when due the principal balance of an Advance and
accrued and unpaid interest thereon, the Custodian or its assignee, as the case
may be, shall be entitled to utilize the available cash balance in any Agency or
Principal Account and to dispose of the specified Investments to the extent
necessary to recover payment of all principal of, and interest on, such Advance
in full. The Custodian may assign any rights it has hereunder to a Subcustodian
or third party. Any security interest in Investments taken hereunder shall be
treated as financial assets credited to securities accounts under Articles 8 and
9 of the Uniform Commercial Code (1997). Accordingly, the Custodian shall have
the rights and benefits of a secured creditor that is a securities intermediary
under such Articles 8 and 9.
7.7 Integrated Account. For purposes hereof, deposits maintained in
all Principal Accounts (whether or not denominated in Dollars) shall
collectively constitute a single and indivisible current account with
respect to the Fund's obligations to the Custodian, or its assignee, and
balances in such Principal Accounts shall be available for satisfaction of
the Fund's obligations under this Section 7. The Custodian shall further
have a right of offset against the balances in any Agency Account
maintained hereunder to the extent that the aggregate of all Principal
Accounts is overdrawn.
8. Subcustodians and Securities Depositories. Subject to the provisions
hereinafter set forth in this Section 8, the Fund hereby authorizes the
Custodian to utilize Securities Depositories to act on behalf of the Fund and to
appoint from time to time and to utilize Subcustodians. With respect to
securities and funds held by a Subcustodian, either directly or indirectly
(including by a Securities Depository or Clearing Corporation), notwithstanding
any provisions of this Agreement to the contrary, payment for securities
purchased and delivery of securities sold may be made prior to receipt of
securities or payment, respectively, and securities or payment may be received
in a form, in accordance with (a) governmental regulations, (b) rules of
Securities Depositories and clearing agencies, (c) generally accepted trade
practice in the applicable local market, (d) the terms and characteristics of
the particular Investment, or (e) the terms of Instructions.
8.1 Domestic Subcustodians and Securities Depositories. The Custodian
may deposit and/or maintain, either directly or through one or more agents
appointed by the Custodian, Investments of the Fund in any Securities
Depository in the United States, including The Depository Trust Company,
provided such Depository meets applicable requirements of the Federal
Reserve Bank or of the Securities and Exchange Commission. The Custodian
may, at any time and from time to time, appoint any bank as defined in
Section 2(a)(5) of the 1940 Act meeting the requirements of a custodian
under Section 17(f) of the 1940 Act and the rules and regulations
thereunder, to act on behalf of the Fund as a Subcustodian for purposes of
holding Investments of the Fund in the United States. 8.2 Foreign
Subcustodians and Securities Depositories. The Custodian may deposit and/or
maintain non-U.S. Investments of the Fund in any non-U.S. Securities
Depository provided such Securities Depository meets the requirements of an
"eligible foreign custodian" under Rule 17f-5 promulgated under the 1940
Act, or any successor rule or regulation ("Rule 17f-5") or which by order
of the Securities and Exchange Commission is exempted therefrom.
Additionally, the Custodian may, at any time and from time to time, appoint
(a) any bank, trust company or other entity meeting the requirements of an
Eligible Foreign Custodian under Rule 17f-5 or which by order of the
Securities and Exchange Commission is exempted therefrom, or (b) any bank
as defined in Section 2(a)(5) of the 1940 Act meeting the requirements of a
custodian under Section 17(f) of the 1940 Act and the rules and regulations
thereunder, to act on behalf of the Fund as a Subcustodian for purposes of
holding Investments of the Fund outside the United States. Such appointment
of foreign Subcustodians shall be subject to approval of the Fund in
accordance with Subsections 8.2.1 and 8.2.2.
8.2.1 Board Approval of Foreign Subcustodians. Unless and
except to the extent that review of certain matters concerning the
appointment of Subcustodians shall have been delegated to the Custodian
pursuant to Subsection 8.2.2, the Custodian shall, prior to the
appointment of any Subcustodian for purposes of holding Investments of
the Fund outside the United States, obtain written confirmation of the
approval of the Board of Trustees of the Fund with respect to (a) the
identity of a Subcustodian, (b) the country or countries in which, and
the Securities Depositories, if any, through which, any proposed
Subcustodian is authorized to hold Investments of the Fund, and (c) the
Subcustodian agreement which shall govern such appointment. Each such
duly approved country, Subcustodian and Securities Depository shall be
listed on Appendix A attached hereto as the same may from time to time
be amended.
8.2.2 Delegation of Board Review of Subcustodians. From time
to time, the Custodian may offer to perform, and the Fund may accept
that the Custodian perform, certain reviews of Subcustodians and of
Subcustodian Contracts as delegate of the Fund's Board. In such event,
the Custodian's duties and obligations with respect to this delegated
review will be performed in accordance with the terms of [SCHEDULE ***
of this Agreement/the separate delegation agreement between the Fund
and the Custodian].
8.3 Responsibility for Subcustodians. With respect to securities and
funds held by a Subcustodian, either directly or indirectly (including by a
Foreign Depository, Securities System or foreign clearing agency),
including demand deposit and interest bearing deposits, currencies or other
deposits and foreign exchange contracts as referred to herein, the
Custodian shall be liable to the Fund if and only to the extent that such
Subcustodian is liable to the Custodian and the Custodian recovers under
the applicable subcustodian agreement. The Custodian shall nevertheless be
liable to the Fund for its own negligence in transmitting to any such
Subcustodian any Instructions received by it from the Fund and for its own
negligence in connection with the delivery of any Investments or moneys
held by it to any such Subcustodian.
In the event that any Subcustodian appointed pursuant to the provisions
of this Section 8.3 fails to perform any of its obligations under the terms and
conditions of the applicable subcustodian agreement, the Custodian shall use its
best efforts to cause such Subcustodian to perform such obligations. In the
event that the Custodian is unable to cause such Subcustodian to perform fully
its obligations thereunder, the Custodian shall forthwith upon the Fund's
request terminate such Subcustodian in accordance with the termination
provisions under the applicable subcustodian agreement and, if necessary or
desirable, appoint another Subcustodian in accordance with the provisions of
Section 8 herein. At the election of the Fund, it shall have the right to
enforce, to the extent permitted by the subcustodian agreement and applicable
law, the Custodian's rights against any such Subcustodian for loss or damage
caused the Fund by such Subcustodian.
The Custodian may at any time and from time to time make non-material,
administrative amendments to any subcustodian agreement without notice to the
Fund. The Custodian may at any time and from time to time, make material
amendments to any subcustodian agreement provided that the Custodian give notice
to the Fund of such amendments as soon as reasonably practicable after such
amendments.
The Custodian may, at any time in its discretion upon notification to
the Fund, terminate any Subcustodian of the Fund in accordance with the
termination provisions under the applicable subcustodian agreement, and at the
written request of the Fund, the Custodian will terminate any Subcustodian in
accordance with the termination provisions under the applicable subcustodian
agreement.
If necessary or desirable, the Custodian may appoint another
Subcustodian to replace a Subcustodian terminated pursuant to the foregoing
provisions of this Section 8.3, such appointment to be made upon approval of the
successor Subcustodian by the Fund's board of trustees in accordance with
Section 8.2.1, unless such duty shall have been delegated to the Custodian in
accordance with Section 8.2.2.
8.4 New Countries. The Fund shall be responsible for informing the
Custodian sufficiently in advance of a proposed Investment which is to be held
in a country in which no Subcustodian is authorized to act in order that the
Custodian shall, if it deems appropriate to do so, have sufficient time to
establish a subcustodial arrangement in accordance herewith. In the event,
however, the Custodian is unable to establish such arrangements prior to the
time such investment is to be acquired, the Custodian is authorized to designate
at its discretion a local safekeeping agent, and the use of such local
safekeeping agent shall be at the sole risk of the Fund, and, accordingly, the
Custodian shall be responsible to the Fund for the actions of such agent if and
only to the extent the Custodian shall have recovered from such agent for any
damages caused the Fund by such agent. At the request of the Fund, the Custodian
agrees to remove any securities held on behalf of the Fund by such agent, if
practical, to an approved Subcustodian.
9. Responsibility of the Custodian. In performing its duties and obligations
hereunder, the Custodian shall use reasonable care and diligence under the facts
and circumstances prevailing in the market where performance is effected.
Subject to the specific provisions of this Section, the Custodian shall be
liable for any direct damages incurred by the Fund in consequence of the
Custodian's negligence, bad faith or willful misconduct. It is agreed that the
Custodian shall have no duty to assess the risks inherent in the Fund's
Investments or to provide investment advice with respect to such Investments and
that the Fund as principal shall bear any risks attendant to particular
Investments such as failure of counterparty or issuer.
9.1 Limitations of Performance. The Custodian shall not be responsible
under this Agreement for any failure to perform its duties, and shall not
liable hereunder for any loss or damage in association with such failure to
perform, for or in consequence of the following causes:
9.1.1 Force Majeure. Force Majeure shall mean any circumstance
or event which is beyond the reasonable control of the Custodian, a
Subcustodian or any agent of the Custodian or a Subcustodian and which
adversely affects the performance by the Custodian of its obligations
hereunder, by the Subcustodian of its obligations under its Subcustody
Agreement or by any other agent of the Custodian or the Subcustodian,
including any event caused by, arising out of or involving (a) an act
of God, (b) accident, fire, water damage or explosion, (c) any
computer, system or other equipment failure or malfunction caused by
any computer virus or the malfunction or failure of any communications
medium, other than a computer failure attributable to the Custodian's
inability to process properly and calculate date-related information
and data from and after January 1, 2000 (the "Year 2000 Problem"), (d)
any interruption of the power supply or other utility service, (e) any
strike or other work stoppage, whether partial or total, (f) any delay
or disruption resulting from or reflecting the occurrence of any
Sovereign Risk, (g) any disruption of, or suspension of trading in, the
securities, commodities or foreign exchange markets, whether or not
resulting from or reflecting the occurrence of any Sovereign Risk, (h)
any encumbrance on the transferability of a currency or a currency
position on the actual settlement date of a foreign exchange
transaction, whether or not resulting from or reflecting the occurrence
of any Sovereign Risk, or (i) any other cause similarly beyond the
reasonable control of the Custodian.
9.1.2 Country Risk. Country Risk shall mean, with respect to
the acquisition, ownership, settlement or custody of Investments
in a jurisdiction, all risks relating to, or arising in
consequence of, systemic and markets factors affecting the
acquisition, payment for or ownership of Investments including
(a) the prevalence of crime and corruption, (b) the inaccuracy or
unreliability of business and financial information, (c) the
instability or volatility of banking and financial systems, or
the absence or inadequacy of an infrastructure to support such
systems, (d) custody and settlement infrastructure of the market
in which such Investments are transacted and held, (e) the acts,
omissions and operation of any Securities Depository, (f) the
risk of the bankruptcy or insolvency of banking agents,
counterparties to cash and securities transactions, registrars or
transfer agents, and (g) the existence of market conditions which
prevent the orderly execution or settlement of transactions or
which affect the value of assets.
9.1.3 Sovereign Risk. Sovereign Risk shall mean, in respect
of any jurisdiction, including the United States of America,
where Investments are acquired or held hereunder or under a
Subcustody Agreement, (a) any act of war, terrorism, riot,
insurrection or civil commotion, (b) the imposition of any
investment, repatriation or exchange control restrictions by any
Governmental Authority, (c) the confiscation, expropriation or
nationalization of any Investments by any Governmental Authority,
whether de facto or de jure, (iv) any devaluation or revaluation
of the currency, (d) the imposition of taxes, levies or other
charges affecting Investments, (vi) any change in the Applicable
Law, or (e) any other economic or political risk incurred or
experienced.
9.2. Limitations on Liability. The Custodian shall not be liable for
any loss, claim, damage or other liability arising from the following
causes:
9.2.1 Failure of Third Parties. Except as specifically
stated to the contrary in this Agreement, the failure of any
third party including: (a) any issuer of Investments or
book-entry or other agent of an issuer; (b) any counterparty with
respect to any Investment, including any issuer of
exchange-traded or other futures, option, derivative or
commodities contract; (c) failure of an Investment Adviser,
Foreign Custody Manager or other agent of the Fund; or (d)
failure of other third parties similarly beyond the control or
choice of the Custodian.
9.2.2 Information Sources. The Custodian may rely upon
information received from issuers of Investments or agents of
such issuers, information received from Subcustodians and from
other commercially reasonable sources such as commercial data
bases and the like, but shall not be responsible for specific
inaccuracies in such information, provided that the Custodian has
relied upon such information in good faith, or for the failure of
any commercially reasonable information provider.
9.2.3 Reliance on Instruction. Action by the Custodian or
the Subcustodian in accordance with an Instruction, even when
such action conflicts with, or is contrary to any provision of,
the Fund's declaration of trust or by-laws, Applicable Law, or
actions by the trustees or shareholders of the Fund.
9.2.4 Restricted Securities. The limitations inherent in the
rights, transferability or similar investment characteristics of
a given Investment of the Fund.
10. Indemnification. The Fund hereby indemnifies the Custodian and each
Subcustodian, and their respective agents, nominees and their partners,
employees, officers and directors, and agrees to hold each of them harmless from
and against all claims and liabilities, including counsel fees and taxes,
incurred or assessed against any of them in connection with the performance of
this Agreement and any Instruction, except such as may arise from the
Custodian's or Subcustodian's breach of the relevant standard of conduct set
forth herein. If a Subcustodian or any other person indemnified under the
preceding sentence, gives written notice of claim to the Custodian, the
Custodian shall promptly give written notice to the Fund. Not more than thirty
days following the date of such notice, unless the Custodian shall be liable
under Section 8 hereof in respect of such claim, the Fund will pay the amount of
such claim or reimburse the Custodian for any payment made by the Custodian in
respect thereof.
10.1 Limitation of Liability. The Fund is organized as a Massachusetts
business trust, and references in this Agreement to the Fund mean and refer to
the Trustees from time to time serving under its Declaration of Trust on file
with the Secretary of State of The Commonwealth of Massachusetts, as may be
amended from time to time, pursuant to which the Fund conducts its business. It
is expressly agreed that the obligations of the Fund hereunder shall not be
binding upon any of the Trustees, shareholders, nominees, officers, agents or
employees of the Fund, as provided in said Declaration of Trust. Moreover, if
the Fund has more than one series, no series other than the series on whose
behalf a specified transaction shall have been undertaken shall be responsible
for the obligations of the Fund, and persons engaging in transactions with the
Fund shall look only to the assets of that series to satisfy those obligations.
The execution and delivery of this Agreement has been authorized by the Trustees
and signed by an authorized officer of the Fund, acting as such, and neither
such authorization by such Trustees nor such execution by such officer shall be
deemed to have been made by any of them but shall bind only the trust property
of the Fund as provided in such Declaration of Trust.
11. Reports and Records. The Custodian shall:
11.1 create and maintain records relating to the performance of its
obligations under this Agreement;
11.2 make available to the Fund, its auditors, agents and employees,
during regular business hours of the Custodian, upon reasonable request and
during normal business hours of the Custodian, all records maintained by
the Custodian pursuant to paragraph (a) above, subject, however, to all
reasonable security requirements of the Custodian then applicable to the
records of its custody customers generally; and
11.3 make available to the Fund all Electronic Reports; it being
understood that the Custodian shall not be liable hereunder for the
inaccuracy or incompleteness thereof or for errors in any information
included therein.
All such records will be the property of the Fund and in the event of
termination of this Agreement shall be delivered to the successor custodian.
11.4 Opinion of Fund's Independent Certified Public Accountants. The
Custodian shall take all reasonable action as the Fund may request to
obtain from year to year favorable opinions from the Fund's independent
certified public accountants with respect to the Custodians activities
hereunder in connection with the preparation of any periodic reports to or
filings with the Securities and Exchange Commission ("SEC") and with
respect to any other requirements of the SEC.
11.5 Reports of the Custodian's Independent Certified Public
Accountants. At the request of the Fund, the Custodian shall deliver to the
Fund a written report prepared by the Custodian's independent certified
public accountants with respect to the services provided by the Custodian
under this Agreement, including, without limitation, the Custodian's
accounting system, internal accounting controls and procedures for
safeguarding cash, securities and other assets, including cash, securities
and other assets deposited and/or maintained in a Securities Depository or
with a Subcustodian. Such report shall be of sufficient scope and in
sufficient detail as may reasonably be required by the Fund and as may be
obtained by the Custodian.
The Fund shall examine all records, howsoever produced or transmitted,
promptly upon receipt thereof and notify the Custodian promptly of any
discrepancy or error therein. Unless the Fund delivers written notice of any
such discrepancy or error within a reasonable time after its receipt thereof,
such records shall be deemed to be true and accurate. It is understood that the
Custodian now obtains and will in the future obtain information on the value of
assets from outside sources which may be utilized in certain reports made
available to the Fund. The Custodian deems such sources to be reliable but it is
acknowledged and agreed that the Custodian does not verify nor represent nor
warrant as to the accuracy or completeness of such information and accordingly
shall be without liability in selecting and using such sources and furnishing
such information, unless the Custodian was negligent in the selection and use of
such sources or furnishing such information.
12. Miscellaneous.
12.1 Proxies, etc. The Fund will promptly execute and deliver, upon
request, such proxies, powers of attorney or other instruments as may be
necessary or desirable for the Custodian to provide, or to cause any
Subcustodian to provide, custody services. 12.2 Entire Agreement. Except as
specifically provided herein, this Agreement constitutes the entire
agreement between the Fund and the Custodian with respect to the subject
matter hereof. Accordingly, this Agreement supersedes any custody agreement
or other oral or written agreements heretofore in effect between the Fund
and the Custodian with respect to the custody of the Fund's Investments.
12.3 Waiver and Amendment. No provision of this Agreement may be waived,
amended or modified, and no addendum to this Agreement shall be or become
effective, or be waived, amended or modified, except by an instrument in
writing executed by the party against which enforcement of such waiver,
amendment or modification is sought; provided, however, that an Instruction
shall, whether or not such Instruction shall constitute a waiver, amendment
or modification for purposes hereof, be deemed to have been accepted by the
Custodian when it commences actions pursuant thereto or in accordance
therewith. 12.4 GOVERNING LAW AND JURISDICTION. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND BE GOVERNED BY THE LAWS OF, THE STATE OF
NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW OF SUCH STATE. THE
PARTIES HERETO IRREVOCABLY CONSENT TO THE EXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK AND THE FEDERAL COURTS LOCATED IN NEW YORK
CITY IN THE BOROUGH OF MANHATTAN. 12.5 Notices. Notices and other writings
contemplated by this Agreement, other than Instructions, shall be delivered
(a) by hand, (b) by first class registered or certified mail, postage
prepaid, return receipt requested, (c) by a nationally recognized overnight
courier or (d) by facsimile transmission, provided that any notice or other
writing sent by facsimile transmission shall also be mailed, postage
prepaid, to the party to whom such notice is addressed. All such notices
shall be addressed, as follows: If to the Fund: Mackenzie Solutions C/O Ivy
Management, Inc. Via Mizner Financial Plaza 700 South Federal Highway,
Suite 300 Boca Raton, FL 33432 Attn: C. William Ferris
Telephone: 800-456-5111
Facsimile: 561-391-4955
If to the Custodian:
Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
Attn: Manager, Securities Department
Telephone: (617) 772-1818
Facsimile: (617) 772-2263,
or such other address as the Fund or the Custodian may have designated in
writing to the other.
12.6 Headings. Paragraph headings included herein are for convenience
of reference only and shall not modify, define, expand or limit any of the
terms or provisions hereof.
12.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original. This Agreement
shall become effective when one or more counterparts have been signed and
delivered by the Fund and the Custodian.
12.8 Confidentiality. The parties hereto agree that each shall treat
confidentially the terms and conditions of this Agreement and all
information provided by each party to the other regarding its business and
operations. All confidential information provided by a party hereto shall
be used by any other party hereto solely for the purpose of rendering or
obtaining services pursuant to this Agreement and, except as may be
required in carrying out this Agreement, shall not be disclosed to any
third party without the prior consent of such providing party. The
foregoing shall not be applicable to any information that is publicly
available when provided or thereafter becomes publicly available other than
through a breach of this Agreement, or that is required to be disclosed by
or to any bank examiner of the Custodian or any Subcustodian, any
Regulatory Authority, any auditor of the parties hereto, or by judicial or
administrative process or otherwise by Applicable Law.
12.8.1 Request by Regulatory Authority. In the event that the
Custodian receives a request for information from any regulatory
authority or governmental body in relation to the Investments and/or
cash held by the Custodian, Subcustodians or Agents for the Fund, the
Custodian shall notify the Fund of the identity of the agency making
such request and the information to be provided as soon as reasonably
practicable after receipt of such request. Unless otherwise required
by applicable law, the Custodian shall not release such information
until receipt of proper Instructions from the Fund.
12.9 Counsel. In fulfilling its duties hereunder, the Custodian shall
be entitled to receive and act upon the advice of (i) counsel regularly
retained by the Custodian in respect of such matters, (ii) counsel for the
Fund or (iii) such counsel as the Fund and the Custodian may agree upon,
with respect to all matters, and the Custodian shall be without liability
for any action reasonably taken or omitted pursuant to such advice.
12.10 Additional Portfolios. If the Fund shall issue shares of more
than one series during the term hereof, the Custodian agrees that all
Investments of the Fund will be segregated by series and all books and
records, account values or actions shall be maintained, held, made or
taken, as the case may be, separately for each series. Other than as
encompassed by the preceding sentence, references in this Agreement to "the
Fund" are applicable either to the entire trust or to a particular series,
as the context may make reasonable and appropriate. If the Fund has more
than one series, Instructions shall designate the series to which they
apply.
13. Definitions. The following defined terms will have the respective meanings
set forth below.
13.1 Advance shall mean any extension of credit by or through the
Custodian or by or through any Subcustodian and shall include amounts paid
to third parties for account of the Fund or in discharge of any expense,
tax or other item payable by the Fund.
13.2 Agency Account shall mean any deposit account opened on the books
of a Subcustodian or other banking institution in accordance with Section
7.1.
13.3 Agent shall have the meaning set forth in the last paragraph of
Section 6.
13.4 Applicable Law shall mean with respect to each jurisdiction, all
(a) laws, statutes, treaties, regulations, guidelines (or their
equivalents); (b) orders, interpretations, licenses and permits; and (c)
judgments, decrees, injunctions, writs, orders and similar actions by a
court of competent jurisdiction; compliance with which is required or
customarily observed in such jurisdiction.
13.5 Authorized Person shall mean any person or entity authorized to
give Instructions on behalf of the Fund in accordance with Section 4.1.
13.6 Book-entry Agent shall mean an entity acting as agent for the
issuer of Investments for purposes of recording ownership or similar
entitlement to Investments, including without limitation a transfer agent
or registrar.
13.7 Clearing Corporation shall mean any entity or system established
for purposes of providing securities settlement and movement and associated
functions for a given market.
13.8 Delegation Agreement shall mean any separate agreement entered
into between the Custodian and the Fund or its authorized representative
with respect to certain matters concerning the appointment and
administration of Subcustodians delegated to the Custodian pursuant to Rule
17f-5.
13.9 Foreign Custody Manager shall mean the Fund's foreign custody
manager appointed pursuant to Rule 17f-5 of the 1940 Act.
13.10 Funds Transfer Services Agreement shall mean any separate
agreement entered into between the Custodian and the Fund or its authorized
representative with respect to certain matters concerning the processing of
payment orders from Principal Accounts of the Fund.
13.11 Instruction(s) shall have the meaning assigned in Section 4.
13.12 Investment Adviser shall mean any person or entity who is an
Authorized Person to give Instructions with respect to the investment and
reinvestment of the Fund's Investments.
13.13 Investments shall mean any investment asset of the Fund,
including without limitation securities, bonds, notes, and debentures as
well as receivables, derivatives, contractual rights or entitlements and
other intangible assets.
13.14 Margin Account shall have the meaning set forth in Section 6.4
hereof.
13.15 Principal Account shall mean deposit accounts of the Fund
carried on the books of BBH&Co. as principal in accordance with Section 7.
13.16 Safekeeping Account shall mean an account established on the
books of the Custodian or any Subcustodian for purposes of segregating the
interests of the Fund (or clients of the Custodian or Subcustodian) from
the assets of the Custodian or any Subcustodian.
13.17 Securities Depository shall mean a central or book entry system
or agency established under Applicable Law for purposes of recording the
ownership and/or entitlement to investment securities for a given market.
For the purposes of this Agreement, Securities Depository shall also
include Ivy Mackenzie Service Corp.
13.18 Subcustodian shall mean each foreign bank appointed by the
Custodian pursuant to Section 8, but shall not include Securities
Depositories.
13.19 Tri-Party Agreement shall have the meaning set forth in Section
6.4 hereof.
13.20 1940 Act shall mean the Investment Company Act of 1940.
14. Compensation. The Fund agrees to pay to the Custodian (a) a fee in an amount
set forth in the fee letter between the Fund and the Custodian in effect on the
date hereof or as amended from time to time, and (b) all out-of-pocket expenses
incurred by the Custodian, including the fees and expenses of all Subcustodians,
and payable from time to time. Amounts payable by the Fund under and pursuant to
this Section 14 shall be payable by wire transfer to the Custodian at BBH&Co. in
New York, New York.
15. Termination. This Agreement may be terminated by either party in accordance
with the provisions of this Section. The provisions of this Agreement and any
other rights or obligations incurred or accrued by any party hereto prior to
termination of this Agreement shall survive any termination of this Agreement.
15.1 Notice and Effect. This Agreement may be terminated by either
party by written notice effective no sooner than seventy-five days
following the date that notice to such effect shall be delivered to other
party at its address set forth in paragraph 12.5 hereof.
15.2 Successor Custodian. In the event of the appointment of a
successor custodian, it is agreed that the Investments of the Fund held by
the Custodian or any Subcustodian shall be delivered to the successor
custodian in accordance with reasonable Instructions. The Custodian agrees
to cooperate with the Fund in the execution of documents and performance of
other actions necessary or desirable in order to facilitate the succession
of the new custodian. If no successor custodian shall be appointed, the
Custodian shall in like manner transfer the Fund's Investments in
accordance with Instructions.
15.3 Delayed Succession. If no Instruction has been given as of the
effective date of termination, Custodian may at any time on or after such
termination date and upon ten days' written notice to the Fund either (a)
deliver the Investments of the Fund held hereunder to the Fund at the
address designated for receipt of notices hereunder; or (b) deliver any
investments held hereunder to a bank or trust company having a
capitalization of $2M USD equivalent and operating under the Applicable Law
of the jurisdiction where such Investments are located, such delivery to be
at the risk of the Fund. In the event that Investments or moneys of the
Fund remain in the custody of the Custodian or its Subcustodians after the
date of termination owing to the failure of the Fund to issue Instructions
with respect to their disposition or owing to the fact that such
disposition could not be accomplished in accordance with such Instructions
despite diligent efforts of the Custodian, the Custodian shall be entitled
to compensation for its services with respect to such Investments and
moneys during such period as the Custodian or its Subcustodians retain
possession of such items and the provisions of this Agreement shall remain
in full force and effect until disposition in accordance with this Section
is accomplished.IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be duly executed as of the date first above written.
Mackenzie Solutions
By:_______________________________
BROWN BROTHERS HARRIMAN & CO.
By: ________________________________
MASTER ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made as of the ___ day of June, 1999, by Mackenzie Solutions
(the "Trust") and Mackenzie Investment Management Inc. ("MIMI").
WHEREAS, the Trust is an open-end investment company organized as a
Massachusetts business trust and consists of one or more separate investment
portfolios (the "Funds") as may be established and designated from time to time;
WHEREAS, the Trust desires certain administrative services of MIMI with
respect to such Funds as shall be designated in supplements to this Agreement as
further agreed between the Trust and MIMI; and
WHEREAS, MIMI has developed the capability to provide certain of the
administrative services required by the Funds.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties agree as follows:
1. Appointment. The Trust hereby appoints MIMI to provide the
administrative services specified in this Agreement with regard to such Funds as
shall be designated in supplements to this Agreement, and MIMI hereby accepts
such appointment.
2. Administrative Services.
(a) MIMI shall at its expense provide such of the following
administrative services as are required by the Funds:
(i) maintaining the registration or
qualification of the Funds and their
shares under state "Blue Sky" or
securities laws and regulations,
provided that the Funds shall pay all
related filing fees and registration or
qualification fees;
(ii) soliciting and gathering shareholder proxies;
(iii) preparing the Funds' U.S. Federal, state
and local income tax returns, provided
that the Funds shall pay all charges for
services and expenses of the Funds'
independent accountants in reviewing
such returns;
(iv) preparing the financial information for
the Funds' prospectuses, statements of
additional information and periodic
reports to shareholders, provided that
the Funds shall pay all charges for
services and expenses of the Funds'
independent accountants;
<PAGE>
(v) preparing the semi-annual report on Form
N-SAR or on such other substitute form
as the Securities and Exchange
Commission (the "SEC") from time to time
may prescribe under Section 30(b) of the
Investment Company Act of 1940, as
amended (the "1940 Act");
(vi) assisting the Funds' legal counsel with
the preparation and filing with the SEC
of the Funds' registration statement
(including prospectuses and statements
of additional information), and any
amendments or supplements that may be
made from time to time, and with the
preparation and filing with the SEC of
notices and proxy materials for meetings
of shareholders;
(vii) setting in type the Funds' prospectuses,
periodic reports to shareholders and
proxy materials; and
(viii) providing executive, clerical and
secretarial personnel competent to carry
out the above responsibilities.
(b) MIMI shall provide such other services required by the Funds as the
parties from time to time may agree in writing are appropriate to be provided
under this Agreement. In the event that MIMI provides any services to the Funds
or pays or assumes any expenses of the Funds which MIMI is not obligated to
provide, pay or assume under this Agreement, MIMI shall not be obligated hereby
to provide the same or any similar services to the Funds or to pay or assume the
same or any similar expenses of the Funds in the future; provided, that nothing
herein contained shall be deemed to relieve MIMI of any obligations to the Funds
under any separate agreement or arrangement between the parties.
3. Standard of Care. MIMI shall give the Funds the benefit of MIMI's
best judgment and efforts in rendering the Funds' administrative services
pursuant to paragraph 2 of this Agreement. As an inducement to MIMI's
undertaking to render these services, the Funds agree that MIMI shall not be
liable under this Agreement for any mistake in judgment or in any other event
whatsoever except for lack of good faith, provided that nothing in this
Agreement shall be deemed to protect or purport to protect MIMI against any
liability to the Funds or their shareholders to which MIMI would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in the
performance of MIMI's duties under this Agreement or by reason of MIMI's
reckless disregard of its obligations and duties hereunder.
4. Consideration. MIMI shall render the services described in paragraph
2 of this Agreement in consideration of the Trust's appointment of MIMI's
affiliate, Ivy Mackenzie Services Corp., as transfer agent for the Funds.
5. Records. All records required to be maintained and preserved by the
Funds pursuant to the provisions or rules or regulations of the SEC under
Section 31(a) of the 1940 Act and maintained and preserved by MIMI on behalf of
the Funds, including any such records maintained by MIMI in connection with the
performance of its obligations hereunder, are the property of the Funds and
shall be surrendered by MIMI promptly on request by the Funds; provided, that
MIMI at its own expense may make and retain copies of any such records.
6. Software and Related Materials. All computer programs, written
procedures, and similar items developed or acquired and used by MIMI in
performing its obligations under this Agreement shall be the property of MIMI,
and the Funds will not acquire any ownership interest therein or property rights
with respect thereto.
7. Services to Other Clients. Nothing herein contained shall limit the
freedom of MIMI or any affiliated person of MIMI to render services of the types
contemplated hereby to other persons, firms or corporations, including but not
limited to other investment companies, or to engage in other business
activities.
8. Term. The term of this Agreement shall begin on the date first set
forth above, and unless sooner terminated as hereinafter provided, this
Agreement shall remain in effect for a period of two years from that date.
Thereafter, this Agreement shall continue in effect with respect to a Fund from
year to year, subject to the termination provisions and all other terms and
conditions hereof; provided, that such continuance with respect to that Fund is
approved at least annually by the Trust's Board of Trustees, including the vote
or written consent of a majority of the Trust's trustees who are not interested
persons of MIMI or the Trust (the "Independent Trustees"). MIMI shall furnish to
the Funds, promptly upon their request, such information (including MIMI's costs
of delivering the services provided to the Fund hereunder) as may reasonably be
necessary to enable the Trust's Board of Trustees to evaluate the terms of this
Agreement or any extension, renewal or amendment hereof. MIMI shall permit the
Funds and their accountants, counsel or other representatives to review its
books and records relating to the services provided hereunder at reasonable
intervals during normal business hours upon reasonable notice requesting such
review.
9. Assignment. This Agreement may not be assigned by MIMI, and MIMI may
not assign or transfer any interest hereunder, voluntarily, by operation of law
or otherwise, without the prior written consent of the Funds. Any consent by the
Funds to any assignment hereof or assignment or transfer of any interest
hereunder by MIMI shall not be effective unless and until authorized by the
Trust's Board of Trustees, including the vote or written consent of a majority
of the Trust's Independent Trustees.
10. Termination of Agreement. This Agreement may be terminated with
respect to a Fund, without the payment of any penalty, by MIMI upon at least
sixty (60) days' prior written notice to the Trust, or by a Fund upon at least
sixty (60) days' prior written notice to MIMI; provided, that in the case of
termination by a Fund, such action shall have been authorized by the Trust's
Board of Trustees, including the vote or written consent of a majority of the
Trust' Independent Trustees. This Agreement shall automatically and immediately
terminate in the event of its assignment by MIMI, or MIMI's assignment or
transfer of any interest hereunder, without the prior written consent of the
Funds as provided in paragraph 9 hereof.
11. Interpretation and Definition of Terms. Any question or
interpretation of any term or provision of this Agreement having a counterpart
in or otherwise derived from a term or provision of the 1940 Act shall be
resolved by reference to such term or provision of the 1940 Act and to
interpretation thereof, if any. Specifically, the terms "interested persons,"
"assignment" and "affiliated person," as used in this Agreement, shall have the
meanings assigned to them by Section 2(a) of the 1940 Act.
12. Miscellaneous.
(a) This Agreement shall be construed in accordance with the
laws of the State of Florida, provided that nothing herein shall be construed in
a manner inconsistent with the 1940 Act.
(b) The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
(c) The Trust's Agreement and Declaration of Trust has been
filed with the Secretary of State of the Commonwealth of Massachusetts. The
obligations of the Trust are not personally binding upon, nor shall resort be
had to the private property of, any of the trustees, shareholders, officers,
employees or agents of the Trust, but only the Trust's property shall be bound.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
MACKENZIE SOLUTIONS
By:
Keith J. Carlson, President
MACKENZIE INVESTMENT MANAGEMENT INC.
By:
Michael G. Landry, President
MACKENZIE SOLUTIONS
ADMINISTRATIVE SERVICES AGREEMENT SUPPLEMENT
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
AGREEMENT made as of the day of June, 1999, by and between Mackenzie
Solutions (the "Trust") and Mackenzie Investment Management Inc. ("MIMI").
WHEREAS, the Trust is an open-end investment company organized as a
Massachusetts business trust and consists of such separate investment portfolios
as have been or may be established and designated by the Trustees of the Trust
from time to time;
WHEREAS, a separate class of shares of the Trust is offered to
investors with respect to each investment portfolio;
WHEREAS, the Trust has adopted a Master Administrative Services
Agreement (the "Master Agreement") dated June , 1999, pursuant to which the
Trust has appointed MIMI to provide the administrative services specified in the
Master Agreement; and
WHEREAS, International Solutions I - Conservative Growth, International
Solutions II - Balanced Growth, International Solutions III - Moderate Growth,
International Solutions IV - Long-Term Growth and International Solutions V -
Aggressive Growth (the "Funds") are separate investment portfolios of the Trust:
NOW, THEREFORE, the Trustees of the Trust hereby take the following
actions, subject to the conditions set forth:
1. As provided for in the Master Agreement, the Trust hereby adopts the
Master Agreement with respect to each Fund, and MIMI hereby acknowledges that
the Master Agreement shall pertain to each Fund, the terms and conditions of
such Master Agreement being hereby incorporated herein by reference.
2. The term "Fund" as used in the Master Agreement shall, for purposes
of this Supplement, pertain to the Funds.
3. MIMI shall render the services described in paragraph 2 of the
Master Agreement to the Funds in consideration of the Trust's appointment of
MIMI's affiliate, Ivy Mackenzie Services Corp., as transfer agent for the Funds.
4. This Supplement and the Master Agreement (together, the "Agreement")
shall become effective with respect to the Funds as of the date specified above
and shall remain in effect with respect to each Fund for a period to be
determined as provided in the Master Agreement.
IN WITNESS WHEREOF, the parties have cause this Supplement to be
executed as of the date first above written.
MACKENZIE SOLUTIONS,
on behalf of International Solutions
I - Conservative Growth,
International Solutions II -
Balanced Growth, International
Solutions III - Moderate Growth,
International Solutions IV -
Long-Term Growth and International
Solutions V - Aggressive Growth
By:
Keith J. Carlson, President
MACKENZIE INVESTMENT MANAGEMENT INC.
By:
Michael G. Landry, President
TRANSFER AGENCY AND SHAREHOLDER
SERVICES AGREEMENT
Agreement made as of the ____ day of June, 1999, by Mackenzie Solutions
(the "Trust") and Ivy Mackenzie Services Corp. ("IMSC"). Unless otherwise noted,
capitalized terms used herein shall have the meanings set forth in Section 15
hereof.
WHEREAS, the Trust is an open-end investment company organized as a
Massachusetts business trust and consists of one or more separate investment
portfolios (the "Funds") as may be established and designated from time to time;
WHEREAS, the Trust desires transfer agency functions for the purpose of
recording the transfer, issuance and redemption of shares and funds,
transferring shares, disbursing dividends and other distributions to
shareholders of the Trust and performing such other services as further agreed
between the Trust and IMSC; and
WHEREAS, the Trust desires certain shareholder services of IMSC with
respect to such Funds as further agreed between the Trust and IMSC;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants herein contained, the parties agree as follows:
1. Appointment. The Trust hereby appoints IMSC to provide the transfer agency
and shareholder services specified in this Agreement and any schedules to this
Agreement with regard to such Funds as are agreed upon, currently consisting of
International Solutions I - Conservative Growth; International Solutions II -
Balanced Growth; International Solutions III - Moderate Growth; International
Solutions IV - Long-Term Growth; and International Solutions V - Aggressive
Growth, and IMSC hereby accepts such appointment. If the Board of Trustees of
the Trust, pursuant to its Agreement and Declaration of Trust, hereafter
establishes and designates a new Fund, IMSC agrees that it will act as transfer
agent for that Fund according to the terms set forth herein. The Trustees shall
cause a written notice to be sent to IMSC to the effect that it has established
a new Fund and that it appoints IMSC as transfer agent and shareholder servicing
agent for the new Fund. Such written notice must be received by IMSC in a
reasonable period of time prior to the commencement of operations of the new
Fund to allow IMSC, in the ordinary course of its business, to prepare to
perform its duties for such new Fund.
2. Compensation.
(a) The Trust will compensate IMSC for the performance of its obligations
hereunder in accordance with the fees set forth in the written schedule of fees
attached hereto as Schedule A and incorporated by reference herein. Schedule A
does not include out-of-pocket expenses of IMSC, for which the Trust will
reimburse IMSC monthly.
Out-of-pocket disbursements shall include, but shall not be limited
to, the items specified in the written schedule of out-of-pocket charges
attached hereto as Schedule B and incorporated by reference herein. Schedule B
may be modified by IMSC upon not less than 60 days prior written notice to the
Trust, as mutually agreed upon. Unspecified out-of-pocket expenses shall be
limited to those out-of-pocket expenses reasonably incurred by IMSC in the
performance of its obligations hereunder.
(b) Any compensation agreed to hereunder may be adjusted from time to time by
replacing Schedule A of this Agreement with a revised Fee Schedule, dated and
signed by a duly authorized officer of each party hereto.
3. Duties of IMSC.
(a) IMSC shall be responsible for administering and/or performing transfer agent
functions; for acting as service agent in connection with dividend and
distribution functions; and for providing certain shareholder services. The
operating standards and procedures to be followed shall be determined by
agreement between IMSC and the Trust and shall be expressed in a written
schedule of the duties of IMSC, attached hereto as Schedule C and incorporated
by reference herein.
(b) In addition to the duties expressly set forth in Schedule C to this
Agreement, IMSC shall perform such other duties and functions, and shall be paid
such amounts therefor, as may from time to time be agreed upon in writing
between the Trust and IMSC. Such other duties and functions shall be reflected
in a written amendment to Schedule C, dated and signed by a duly authorized
officer of each party hereto. The compensation for such other duties and
functions shall be reflected in a written amendment to Schedule A pursuant to
subparagraph 2(b) hereof.
(c) In rendering the services required under this Agreement, IMSC may, at its
expense, employ, consult or associate with itself such person or persons as it
believes necessary to assist it in carrying out its obligation under this
Agreement; provided that any such action shall not relieve IMSC of its
responsibilities hereunder.
(d) In the event that IMSC provides any services to the Funds or pays or assumes
any expenses of the Funds that IMSC is not obligated to provide, pay or assume
under this Agreement, IMSC shall not be obligated hereby to provide the same or
any similar service to the Funds or to pay or assume the same or any similar
expenses of the Funds in the future; provided that nothing contained herein
shall be deemed to relieve IMSC of any obligations to the Funds under any
separate agreement or arrangement between the parties.
4. Documents. In connection with the appointment of IMSC (or as soon as
practicable thereafter), the Trust shall furnish IMSC with the following
documents:
(a) A copy of the resolutions of the Trustees authorizing the
execution and delivery of this Agreement;
(b) Specimens of all account application forms and other documents relating to
Shareholder accounts or to any plan, program or service offered by the Trust;
(c) A list of shareholders of the Funds for which IMSC provides services
hereunder with the name, address and taxpayer identification number of each
Shareholder, and the number of shares of the Funds held by each, certificate
numbers and denominations (if any certificates have been issued) and lists of
any accounts against which stop transfer orders have been placed, together with
the reasons therefor; and
(d) A signature card bearing the signatures of any officer of the Trust or other
Authorized Person who will sign Written Instructions.
5. Further Documentation. The Trust will also furnish from time to time the
following documents:
(a) Each resolution of the Trustees authorizing the original issuance of
shares and the establishment and designation of any new Fund;
(b) The Registration Statement of the Trust and all pre-effective and
post-effective amendments thereto filed with the Securities and Exchange
Commission (the "SEC");
(c) A copy of each amendment to the Declaration of Trust and the By-laws of
the Trust;
(d) Copies of each vote of the Trustees designating Authorized Persons;
(e) Certificates as to any change in any officer or Trustee of the Trust;
and
(f) Such other certificates, documents or opinions as IMSC reasonably deems
appropriate or necessary for the proper performance of its duties hereunder.
6. Records. All records required to be maintained and preserved by the Funds
pursuant to the provisions or rules or regulations of the SEC under Section
31(a) of the Investment Company Act of 1940 (the "1940 Act") and maintained and
preserved by IMSC on behalf of the Funds, including any such records maintained
by IMSC in connection with the performance of its obligations hereunder, are the
property of the Funds and shall be surrendered by IMSC promptly on request by
the Funds; provided, that IMSC may at its own expense make and retain copies of
any such records.
7. Software and Related Materials. All computer programs, written procedures,
and similar items developed or acquired and used by IMSC in performing its
obligations under this Agreement shall be the property of IMSC, and the Funds
will not acquire any ownership interest therein or property rights with respect
thereto.
8. Services to Other Clients. Nothing contained herein shall limit the freedom
of IMSC or any affiliated person of IMSC to render services of the types
contemplated hereby to other persons, firms or corporations, including but not
limited to other investment companies, or to engage in other business
activities.
9. Standard of Care. IMSC shall give the Funds the benefit of IMSC's best
judgment and efforts in rendering to the Funds transfer agency and shareholder
services pursuant to paragraph 3 of this Agreement. As an inducement to IMSC's
undertaking to render these services, the Funds agree that IMSC shall not be
liable under this Agreement for any mistake in judgment or in any other event
whatsoever, except for lack of good faith, provided that nothing in this
Agreement shall be deemed to protect or purport to protect IMSC against any
liability to the Funds or their shareholders to which IMSC would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in the
performance of IMSC's duties under this Agreement or by reason of IMSC's
reckless disregard of its obligations and duties hereunder.
10. Standard by IMSC; Instructions.
(a) IMSC will be protected in acting upon Written or Oral Instructions
reasonably believed to have been executed or orally communicated by an
Authorized Person and will not be held to have any notice of any change of
authority of any person until receipt of a Written Instruction thereof from the
Trust. IMSC will also be protected in processing Share Certificates that it
reasonably believes to bear the proper manual or facsimile signatures of a duly
authorized officer of the Trust and that bear the proper countersignature of
IMSC.
(b) IMSC may at any time apply to any Authorized Person of the
Trust for Written Instructions and may consult legal counsel for the Trust, or
its own legal counsel, with respect to any matter arising in connection with
this Agreement, and it shall not be liable for any action taken or not taken or
suffered by it in good faith in accordance with such Written Instructions or in
accordance with the opinion of counsel for the Trust. Written Instructions
requested by IMSC will be provided by the Trust within a reasonable period of
time.
(c) Notwithstanding any of the foregoing provisions of this
Agreement, IMSC shall be under no duty or obligation to inquire into, and shall
not be liable for: (i) the legality of the issuance or sale of any Shares or the
sufficiency of the amount to be received therefor; (ii) the legality of the
redemption of any Shares, or the propriety of the amount to be paid therefor;
(iii) the legality of the declaration of any dividend by the Trustees, or the
legality of the issuance of any Shares in payment of any dividend; or (iv) the
legality of any recapitalization or readjustment of the Shares.
11. Indemnification. The Trust will indemnify IMSC against and hold it harmless
from any and all losses, claims, damages, liabilities or expenses resulting from
any claim, demand, action or suit not resulting from the bad faith or negligence
of IMSC or its agents or subcontractors, and arising out of, or in connection
with, its duties on behalf of the Trust hereunder. Except for any losses,
claims, damages, liabilities or expenses resulting from the willful misfeasance,
bad faith or gross negligence of IMSC or its agents or subcontractors, the Trust
will indemnify IMSC against and hold it harmless from any and all losses,
claims, damages liabilities or expenses resulting from any claim, demand, action
or suit as a result of: (i) any action taken in accordance with Written or Oral
Instructions, or any other instructions, or share certificates reasonably
believed by IMSC to be genuine and to be signed, countersigned or executed, or
orally communicated by an Authorized Person; (ii) any action taken in accordance
with written or oral advice reasonably believed by IMSC to have been given by
counsel for the Trust; or (iii) any action taken as a result of any error or
omission caused by the Trust or any of its authorized agents in any record
(including but not limited to magnetic tapes, computer printouts, hard copies
and microfilm copies) delivered, or caused to be delivered by the Trust to IMSC
in connection with this Agreement provided that said information was not
contingent on transfer agent records.
In any case in which the Trust may be asked to indemnify or hold IMSC
harmless, the Trust shall be advised of all pertinent facts concerning the
situation in question and IMSC will use reasonable care to identify and notify
the Trust promptly concerning any situation which presents or appears likely to
present a claim for indemnification against the Trust. The Trust shall have the
option to defend IMSC against any claim that may be the subject of any such
indemnification, and, in the event that the Trust so elects, such defense shall
be conducted by counsel chosen by the Trust and satisfactory to IMSC, and
thereupon the Trust shall take over complete defense of the claim and IMSC shall
sustain no further legal or other expenses in such situation for which it seeks
indemnification under this section 11. IMSC will not confess any claim or make
any compromise in any case in which the Trust will be asked to provide
indemnification, except with the Trust's prior written consent. The obligations
of the parties pursuant to this section shall survive the termination of this
Agreement.
12. Amendment. Except as may be provided otherwise herein, this Agreement may
not be amended or modified in any manner except by a written agreement executed
by both parties.
13. Assignment.
(a) Except as provided in Section 13(c) below, neither this Agreement nor any
rights or obligations hereunder may be assigned by either party without the
written consent of the other party.
(b) This Agreement shall inure to the benefit of and be binding upon the parties
and their respective permitted successors and assigns.
(c) IMSC may, with notice to and consent on the part of the Trust, which consent
shall not be unreasonably withheld, subcontract for the performance of certain
services under this Agreement to qualified service providers, which shall be
registered as transfer agents under Section 17A of the Securities Exchange Act
of 1934 if such registration is required; provided, however, that IMSC shall be
as fully responsible to the Trust for the acts and omissions of any
subcontractor as it is for its own acts and omissions.
14. Termination of Agreement. This Agreement may be terminated with respect to a
Fund, without the payment of any penalty, by IMSC upon at least ninety (90) days
prior written notice to the Trust, or by a Fund upon at least sixty (60) days
prior written notice to IMSC; provided, that in the case of termination by a
Fund, such action shall have been authorized by the Trust's Board of Trustees,
including the vote or written consent of a majority of the Trust's Independent
Trustees. This Agreement shall automatically and immediately terminate in the
event of its assignment by IMSC, or IMSC's assignment or transfer of any
interest hereunder, without the prior written consent of the Funds as provided
in section 13 hereof.
15. Interpretation and Definition of Terms. Any question or interpretation of
any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be resolved by reference
to such term or provision of the 1940 Act and to interpretation thereof, if any.
Specifically, the terms "interested persons," "assignment" and "affiliated
person," as used in this Agreement, shall have the meanings assigned to them by
Section 2(a) of the 1940 Act. In addition, whenever used in this Agreement, the
following words and phrases, unless the context requires, shall have the
following meaning.
(a) "Authorized Person" shall be deemed to include the President, any Vice
President, the Secretary or an Assistant Secretary, or the Treasurer or an
Assistant Treasurer of the Trust, or any other person, whether or not such
person is an officer or employee of the Trust, duly authorized to give Oral
Instructions or Written Instructions on behalf of the Trust.
(b) "Custodian" refers to the custodian and any subcustodian of all securities
and other property that the Trust may from time to time deposit, or cause to be
deposited or held under the name or account of such custodian;
(c) "Agreement and Declaration of Trust" shall mean the Declaration of Trust of
the Trust dated November 20, 1998, as amended from time to time;
(d) "Oral Instructions" shall mean instructions, other than Written
Instructions, actually received by IMSC from a person reasonably believed by
IMSC to be an Authorized Person;
(e) "Prospectus" shall mean the Trust's current prospectus and statement of
additional information relating to the registration of the Trust's Shares under
the Securities Act of 1933, as amended, and the 1940 Act;
(f) "Shares" refers to shares of beneficial interest of each Fund of the Trust;
(g) "Shareholder" means a record owner of Shares; and
(h) "Written Instructions" shall mean a written communication signed by a person
reasonably believed by IMSC to be an Authorized Person and actually received by
IMSC.
16. Miscellaneous.
(a) This Agreement shall be construed in accordance with the laws of the State
of Florida, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act.
(b) The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or otherwise
affect their construction or effect.
(c) The Trust's Agreement and Declaration of Trust has been filed with the
Secretary of State of the Commonwealth of Massachusetts. The obligations of the
Trust are not personally binding upon, nor shall resort be had to the private
property of, any of the trustees, shareholders, officers, employees or agents of
the Trust, but only the Trust's property shall be bound.
(d) This Agreement may be executed by the parties hereto in any number of
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
MACKENZIE SOLUTIONS
By:
Keith J. Carlson, President
IVY MACKENZIE SERVICES CORP.
By:
C. William Ferris, President
<PAGE>
Schedule A
Monthly Fee Schedule
Class of Shares Annual Fee Rate per Account
A $20.00 (open accounts)
$ 4.58 (closed accounts)
B $20.00 (open accounts)
$ 4.58 (closed accounts)
C $20.00 (open accounts)
$ 4.58 (closed accounts)
I $10.25 (open accounts)
$ 4.58 (closed accounts)
Advisor $20.00 (open accounts)
$ 4.58 (closed accounts)
<PAGE>
Schedule B
OUT-OF-POCKET EXPENSES
The Trust shall reimburse IMSC monthly for the following out-of-pocket
expenses:
o postage and mailing (of shareholder statements, confirmations,
dividend checks, year-end tax information returns, and other
shareholder or custodian communications)
o mailing including labor charges
o forms (statement stock, envelopes, internal forms)
o proxy mailings
o outgoing wire charges
o checkwriting drafts
o National Securities Clearing Corporation transactions
o Fed check clearing charges
o dedicated toll-free telephone charges
o if applicable, magnetic tape and freight
o long-term off-site retention of records
o microfilm/microfiche
o stationery
o terminals, transmitting lines and any expenses incurred in
connection with such terminals and lines (between IMSC and the
Custodian)
o any other miscellaneous expenses reasonably incurred by IMSC as
mutually agreed upon.
The Trust agrees that postage and mailing expenses will be paid on the day of or
prior to mailing as agreed with IMSC. In addition, the Trust will promptly
reimburse IMSC for any other expenses incurred by IMSC as to which the Trust and
IMSC mutually agree in writing that such expenses are not otherwise properly
borne by IMSC as part of its duties and obligations under the Agreement.
<PAGE>
Schedule C
DUTIES OF IMSC
(See Exhibit 1 for Summary of Services)
1. Shareholder Information. IMSC shall maintain a record of the number of Shares
held by each holder of record which shall include their addresses and taxpayer
identification numbers and which shall indicate whether such shares are held in
certificated or uncertificated form.
2. Shareholder Services. IMSC shall at its expense provide such of the following
shareholder and shareholder-related services as are required by the Funds or
their shareholders:
(i) processing wire order purchase and redemption
requests transmitted or delivered to IMSC's (or
Mackenzie Investment Management Inc.'s ("MIMI's"))
office;
(ii) coordinating and monitoring purchase, redemption and
transfer requests transmitted by dealers to IMSC (or
MIMI) through the facilities of the National
Securities Clearing Corporation;
(iii) responding to written, telephonic and in-person
inquiries from existing shareholders requesting
information regarding matters such as shareholder
account or transaction status, the net asset value of
a Fund's shares, a Fund's performance, a Fund's
services and options, a Fund's investment policies
and portfolio holdings, and a Fund's distribution and
the taxation thereof.
(iv) resolving shareholder account problems that are identified by either
shareholders or brokers;
(v) dealing with shareholder complaints and other correspondence directed
to or brought to the attention of IMSC (or MIMI);
(vi) generating or developing and distributing special data, notices, reports,
programs and literature required by large shareholders, by shareholders
with specialized informational needs, or by shareholders generally in
light of developments such as changes in tax or securities laws; and
(vii) providing executive, clerical and secretarial personnel competent to carry
out the above responsibilities.
3. State Registration Reports. IMSC shall furnish the Trust on a state-by-state
basis, sales reports, such periodic and special reports as the Trust may
reasonably request, and such other information, including Shareholder lists and
statistical information concerning accounts, as may be agreed upon from time to
time between the Trust and IMSC. Additionally, state-by-state sales information
shall be supplied in a manner and form which will support the existing blue sky
system owned by the Trust.
4. Share Certificates.
(a) At the expense of the Trust, IMSC shall maintain an adequate supply of blank
share certificates for each Fund to meet Ivy's Management's requirements
therefor. Such share certificates shall be properly signed by facsimile. The
Trust agrees that, notwithstanding the death, resignation, or removal of any
officer of the Trust whose signature appears on such certificates, IMSC may
continue to countersign certificates which bear such signatures until otherwise
directed by the Trust.
(b) IMSC shall issue replacement share certificates in lieu of certificates
which have been lost, stolen or destroyed without any further action by the
Board of Trustees or any officer of the Trust, upon receipt by IMSC of properly
executed affidavits and lost certificate bonds, in form satisfactory to IMSC,
with the Trust and IMSC as obligees under the bond.
(c) IMSC shall also maintain a record of each certificate issued, the number of
Shares represented thereby and the holder of record. With respect to shares held
in open accounts or uncertificated form, i.e., no certificate being issued with
respect thereto, IMSC shall maintain comparable records of the record holders
thereof, including their names, addresses and taxpayer identification numbers.
IMSC shall further maintain a stop transfer record on lost and/or replaced
certificates.
5. Mailing Communications to Shareholders: Proxy Materials. IMSC will address
and mail to Shareholders of the Trust, all reports to Shareholders, dividend and
distribution notices and proxy material for the Trust's meetings of
Shareholders. In connection with meetings of Shareholders, IMSC will prepare
Shareholder lists, mail and certify as to the mailing of proxy materials,
process and tabulate returned proxy cards, report on proxies voted prior to
meetings, act as inspector of election at meetings and certify Shares voted at
meetings.
6. Sales of Shares.
(a) Processing of Investment Checks or Other Investments. Upon receipt of any
check or other instrument drawn or endorsed to it as agent for, or identified as
being for the account of the Trust, or drawn or endorsed to the Trust or
Mackenzie Investment Management Inc. as the distributor of the Trust's Shares
for the purchase of Shares, IMSC shall stamp the check with the date of receipt,
shall forthwith process the same for collection and, shall record the number of
Shares sold, the trade date and price per Share, and the amount of money to be
delivered to the Custodian for the sale of such Shares.
(b) Issuance of Shares. Upon receipt of notification that the Custodian has
received the amount of money specified in the immediately preceding paragraph,
IMSC shall issue to and hold in the account of the purchases/shareholder, or if
no account is specified therein, in a new account established in the name of the
purchases, the number of Shares such purchaser is entitled to receive, as
determined in accordance with applicable laws or regulations.
(c) Confirmation. IMSC shall send to the purchaser/shareholder a confirmation of
each purchase which will show the new share balance, the Shares held under a
particular plan, if any, for withdrawing investments, the amount invested and
the price paid for the newly purchased Shares, or will be in such other form as
the Trust and IMSC may agree from time to time.
(d) Suspension of Sales of Shares. IMSC shall not be required to issue any
Shares of the Trust where it has received a Written Instruction from the Trust
or written notice from any appropriate Federal or state authority that the sale
of the Shares of the Trust has been suspended or discounted, and IMSC shall be
entitled to rely upon such Written Instructions or written notification.
(e) Taxes in Connection with Issuance of Shares. Upon the issuance of any Shares
in accordance with the foregoing provisions of this paragraph, IMSC shall not be
responsible for the payment of any original issue or other taxes required to be
paid in connection with such issuance.
(f) Returned Checks. In the event that any check or other order for the payment
of money is returned unpaid for any reason, IMSC shall: (i) give prompt notice
of such return to the Trust or its designee; (ii) place a stop transfer order
against all Shares issued as a result of such check or order; and (iii) take
such actions as IMSC may from time to time deem appropriate.
7. Redemptions.
(a) Requirements for Transfer of Redemption of Shares. IMSC shall process all
requests from shareholders to transfer or redeem Shares in accordance with the
procedures set forth in the Trust's Prospectus or as authorized by the Trust
pursuant to Written Instructions, including, but not limited to, all requests
from shareholders to redeem Shares of each Fund and all determinations of the
number of Shares required to be redeemed to fund designated monthly payments,
automatic payments or any other such distribution or withdrawal plan.
IMSC will transfer or redeem Shares upon receipt of Written
Instructions and Share certificates, if any, properly endorsed for transfer or
redemption, accompanied by such documents as IMSC reasonably may deem necessary
to evidence the authority of the person making such transfer or redemption, and
bearing satisfactory evidence of the payment of stock transfer taxes, if any.
IMSC reserves the right to refuse to transfer or redeem Shares until
it is satisfied that the endorsement on the instructions is valid and genuine,
and for that purpose it will require a guarantee of signature by a guarantor
meeting eligibility standards as may be adopted by IMSC from time to time in
accordance with applicable law. IMSC also reserves the right to refuse to
transfer or redeem Shares until it is satisfied that the requested transfer or
redemption is legally authorized, and it shall incur no liability for the
refusal, in good faith, to make transfers or redemptions which IMSC, in its good
judgment, deems improper or unauthorized, or until it is reasonably satisfied
that there is no basis to any claims adverse to such transfer or redemption.
IMSC may, in effecting transactions, rely upon the provisions of the
Uniform Act for the Simplification of Fiduciary Security Transfers or the
provisions of Article 8 of the Uniform Commercial Code, as the same may be
amended from time to time in the Commonwealth of Massachusetts, which in the
opinion of legal counsel for the Trust or of its own legal counsel protect it in
not requiring certain documents in connection with the transfer or redemption of
Shares. The Trust may authorize IMSC to waive the signature guarantee in certain
cases by Written Instructions.
(b) Notice to Custodian and Trust. When Shares are redeemed, IMSC shall, upon
receipt of the instructions and documents in proper form, deliver to the
Custodian and the Trust a notification setting forth the applicable Fund and the
number of Shares to be redeemed. Such redemptions shall be reflected on
appropriate accounts maintained by IMSC reflecting outstanding Shares of the
Trust and Shares attributed to individual accounts and, if applicable, any
individual withdrawal or distribution plan.
(c) Payment of Redemption Proceeds. IMSC shall, upon receipt of the moneys paid
to it by the Custodian for the redemption of Shares, pay to the Shareholder, or
his authorized agent or legal representative, such moneys are received from the
Custodian, all in accordance with the redemption procedures described in the
Trust's Prospectus. The Trust shall indemnify IMSC for any payment of redemption
proceeds or refusal to make such payment if the payment or refusal to pay is in
accordance with said written procedures.
IMSC shall not process or effect any redemptions pursuant to a plan of
distribution or redemption or in accordance with any other shareholder request
upon the receipt by IMSC of notification of the suspension of the determination
of the Trust's net asset value.
8. Dividends.
(a) Notice to IMSC and Custodian. Upon the declaration of each dividend and/or
distribution by the Trust with respect to Shares of a Fund, the Trust shall
notify IMSC, with respect to Shares of such Fund, of (i) the date of the
declaration of such dividend or distribution, (ii) the ex-dividend date, (iii)
the date of payment thereof, (iv) the record date as of which shareholders
entitled to payment shall be determined, (v) the amount payable per Share to the
Shareholders of record as of that date, (vi) the total amount payable to IMSC on
the payment date and (vii) whether such dividend or distribution is to be paid
in Shares of such class at net asset value.
On or before the payment date, the Trust will direct the Custodian of
the Trust to pay to IMSC sufficient cash to make payment of the dividend and/or
distribution to the shareholders of record as of such payment date.
(b) Payment of Dividends by IMSC. Unless otherwise elected by a shareholder,
IMSC will, on the designated payment date, automatically reinvest all dividends
in additional Shares at net asset value (determined on dividend reinvestment
valuation date established by the Trust), and mail to each shareholder at his
address of record, or such other address as the shareholder may have designated,
a statement showing the number of full and fractional Shares (rounded to three
decimal places) then currently owned by the shareholder and the net asset value
of the Shares so credited to the shareholder's account. All other dividends
shall be paid in cash, by check, to shareholders or their designees.
(c) Insufficient Funds for Payments. If IMSC does not receive sufficient cash
from the Custodian to make total dividend and/or distribution payments to all
shareholders of a Fund of the Trust as of the record date, IMSC will, upon
notifying the Trust, withhold payment to all shareholders of record as of the
record date until such sufficient cash is provided to IMSC.
(d) Information Returns. It is understood that IMSC shall file such appropriate
information returns concerning the payment of dividends, return of capital and
capital gain distributions with the proper Federal, state and local authorities
as are required by law to be filed and shall be responsible for the withholding
of taxes, if any, due on such dividends or distributions to Shareholders when
required to withhold taxes under applicable law.
<PAGE>
EXHIBIT 1
(to Schedule C)
Summary of Services
The services to be performed by IMSC shall be as follows:
A. DAILY RECORDS
Maintain daily on disc the following information with respect
to each shareholder account as received:
- - Name and Address (Zip Code)
- - Balance of Shares held by IMSC
- - State of residence code
- - Beneficial owner code: i.e., male, female, joint tenant, etc.
- - Dividend code (reinvestment)
- - Number of Shares held in certificate form
- - Telephone number
- - Tax information (certified tax information number, any back-up
withholding)
B. OTHER DAILY ACTIVITY
- - Answer written inquiries received by IMSC relating to
shareholder accounts (matters relating to portfolio
management, distribution of Shares and other
management policy questions will be referred to
Trust).
- - Furnish a Statement of Additional Information to any
shareholder who requests (in writing or by telephone)
such statement from IMSC.
- - Examine and process Share purchase applications in accordance with the
Prospectus.
- - Furnish Forms W-9 and W-8 to all shareholders whose initial
subscriptions for Shares did not include taxpayer identification
numbers.
- - Process additional payments into established shareholder accounts in
accordance with the Prospectus.
- - Upon receipt of proper instructions and all required documentation,
process requests for redemption of Shares.
- - Accounting for the Trust's front-end sales commissions and brokers'
commissions.
- - Identify redemption requests made with respect to accounts in which
Shares have been purchased within an agreed-upon period of time for
determining whether good funds have been collected with respect to such
purchase and process as agreed by IMSC and the Trust.
- - Examine and process all transfers of Shares, ensuring that all transfer
requirements and legal documents have been supplied.
- - Issue and mail replacement checks.
C. REPORTS PROVIDED TO THE TRUST
Furnish the following reports to the Trust:
- - Daily financial totals
- - Monthly Form N-SAR information (sales/redemption)
- - Monthly report of outstanding Shares
- - Monthly analysis of accounts by beneficial owner code
- - Monthly analysis of accounts by share range
D. DIVIDEND ACTIVITY
- - Calculate and process Share dividends and distributions as instructed
by the Trust.
- - Compute, prepare and mail all necessary reports to
shareholders, federal and/or state authorities as
requested by the Trust.
E. MEETINGS OF SHAREHOLDERS
- - Cause to be mailed proxy and related material for all meetings of
shareholders. Tabulate returned proxies (proxies must be adaptable
to mechanical equipment of IMSC or its agents) and supply daily reports
when proxies are being solicited.
- - Prepare and submit to the Trust an Affidavit of Mailing.
- - At the time of the meeting, furnish a certified list of shareholders,
hard copy, microfilm and/or microfiche, if requested by the Trust.
F. PERIODIC ACTIVITIES
- - Cause to be mailed reports, Prospectuses, and any other enclosures
requested by the Trust (material must be adaptable to mechanical
equipment of IMSC or its agents).
MASTER FUND ACCOUNTING SERVICES AGREEMENT
AGREEMENT made as of the _______ day of June, 1999 by Mackenzie
Solutions (the "Trust") and Mackenzie Investment Management Inc. (the "Agent").
WHEREAS, the Trust is an open-end investment company organized as a
Massachusetts business trust and consists of one or more separate investment
portfolios (the "Funds") as may be established and designated from time to time;
WHEREAS, the Trust desires certain accounting and pricing services of
the Agent with respect to such Funds as shall be designated in supplements to
this Agreement as further agreed between the Trust and the Agent; and
WHEREAS, the Agent has developed the capability to provide certain of
the accounting and pricing services required by the Funds.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties agree as follows:
1. Duties of Agent - General.
The Agent is authorized to act under the terms of this Agreement as the
Trust's agent, and as such will:
a. Maintain and preserve the Funds' accounts, books, records and
other documents as are required of the Trust under Section 31
of the Investment Company Act of 1940 and Rules 31a-1 and
31a-2 thereunder;
b. Record the current day's trading activity and such other
proper bookkeeping entries as are necessary for determining
that day's net asset value for the Funds;
c. Render statements or copies of records for the Funds from time
to time as requested by the Trust (see Exhibit A);
d. Facilitate audits of accounts by the Trust's auditors or by
any other auditors employed or engaged by the Trust or by any
regulatory body with jurisdiction over the Trust; and
e. Compute each Fund's net asset value per share and, if
applicable, its public offering price, total returns and
yields, and notify the Trust and such other persons as the
Trust may reasonably request of the net asset value per share,
the public offering price and/or the total return or yield.
2. Valuation of Securities.
Securities will be valued in accordance with the specific provisions of
each Fund's Prospectus.
3. Computation of Net Asset Value, Public Offering Price, Total Returns
and Yields.
The Agent will compute each Fund's net asset value in a manner
consistent with the specific provisions of the Fund's prospectus. In general,
such computation will be made by dividing the value of the Fund's portfolio
securities, cash and any other assets, less its liabilities, by the number of
shares of the Fund outstanding, adjusted to the nearest cent. Such computation
will be made as of the close of regular trading on the New York Stock Exchange
(normally 4:00 p.m., Eastern time) on each day that the New York Stock Exchange
is open for trading. If applicable, the Agent will also compute the public
offering price by dividing the net asset value per share by the appropriate
factor as provided by the Fund; the total return; and the yield.
Each Fund's liabilities are allocated between its classes. The total of
such liabilities allocated to a class plus that class's distribution fee and any
other expenses specially allocated to that class are then deducted from the
class's proportionate interest in the Fund's assets, and the resulting amount
for each class is divided by the number of shares of that class outstanding to
produce the "net asset value" per share.
4. Agent's Reliance on Instructions and Advice.
In maintaining the Funds' books of account and making the necessary
computations, the Agent shall be entitled to receive, and may rely upon, (i)
information furnished by a pricing or other similar service pursuant to an
agreement between the Agent, on behalf of a Fund, and such service provider,
approved by the Trust's Board of Trustees, and (ii) information furnished it by
any authorized officer of the Trust relating to:
a. The manner and amount of accrual of expenses other than
management fees to be recorded on the books of the Funds;
b. If applicable, the source of quotations to be used for such
portfolio securities as may not be available through the
Agent's normal pricing services;
c. If applicable, the value to be assigned to any portfolio
security or other asset for which no price quotations are
readily available;
d. If applicable, the manner of computation of the public
offering price and such other computations as may be
necessary; and
e. Notification of transactions in portfolio securities.
The Agent shall be entitled to rely upon any certificate, letter or
other instrument or telephone call reasonably believed by the Agent to be
genuine and to have been properly made or signed by an officer or other
authorized agent of the Trust, on behalf of a Fund, and shall be entitled to
receive as conclusive proof of any fact or matter required to be ascertained by
it hereunder a certificate signed by an officer of the Trust, on behalf of a
Fund or any other person authorized by the Trust's Board of Trustees.
The Agent shall be entitled to receive and act upon advice of counsel
(which may be counsel for the Trust) at the expense of the Trust and shall be
without liability for any action taken or thing done in good faith in reliance
upon such advice.
The Trust agrees to furnish the Agent with a copy of each Fund's
Prospectus as in effect from time to time.
5. Duty of Care and Indemnification.
The Agent shall at all times use reasonable care and act in good faith
in performing its duties hereunder. The Agent shall incur no liability to the
Trust or a Fund in connection with its performance of services hereunder, except
to the extent that it does not comply with the foregoing standards.
The Trust agrees to indemnify and hold harmless the Agent and its
employees, agents and nominees from all taxes, charges, expenses, assessments,
claims and liabilities (including attorney's fees) incurred or assessed against
them in connection with the performance of this Agreement, except such as may
arise from their own willful misfeasance, bad faith or gross negligence. The
foregoing notwithstanding, the Agent will in no event be liable for any loss
resulting from the acts, omissions, lack of financial responsibility, or failure
to perform the obligations of any person or organization designated by the Trust
to be the authorized agent of the Trust as a party to the transaction.
The Agent's responsibility for damage or loss arising from military
power, war, insurrection, or nuclear fission, fusion or radioactivity shall be
limited to the use of the Agent's best efforts to recover the Funds' records
determined to be lost, missing or destroyed.
6. Compensation and Agent's Expenses.
The Agent shall be paid for its services pursuant to this Agreement
such compensation as may from time to time be agreed upon in writing between the
two parties. The Agent shall be entitled to recover its reasonable telephone,
delivery and other out-of-pocket expenses as incurred.
Each Fund shall pay the Agent a monthly fee based upon the rate(s) set
forth in a Fee Schedule attached to a Supplement to this Agreement with respect
to such Fund. A Fund shall be responsible for fees incurred in connection with a
pricing or other similar service furnishing information pursuant to Section 4 of
this Agreement.
If the fees payable to the Agent pursuant to this Section begin to
accrue before the end of any month or if this Agreement terminates before the
end of any month, the fees for the period from that date to the end of that
month or for the period from the beginning of that month to the date of
termination, as the case may be, shall be prorated according to the proportion
which the period bears to the full month in which the effectiveness or
termination occurs. For purposes of calculating the monthly fees, the value of
the net assets of a Fund shall be computed in the manner specified in the Fund's
Prospectus for the computation of its net asset value.
7. Termination of Agreement.
This Agreement may be terminated with respect to a Fund, without the
payment of any penalty, by the Agent upon at least ninety (90) days' prior
written notice to the Trust, or by a Fund upon at least ninety (90) days' prior
written notice to the Agent; provided, that in the case of termination by the
Fund, such action shall have been authorized by the Trust's Board of Trustees,
including the vote or written consent of a majority of the Trust's Independent
Trustees. Any termination date is to be no earlier than four months from the
effective date hereof. Upon termination, the Agent will turn over to the Trust
and cease to retain in the Agent's files, records of the calculations of the net
asset value of the Fund and other records pertaining to its services hereunder.
8. Reports and Maintenance of Records by Agent.
The Agent will furnish to the Trust and to properly authorized
auditors, examiners, distributors, dealers, underwriters, salesmen, insurance
companies, investors, and others designated by the Trust in writing, such books,
records, and reports at such times as are prescribed for each service in Exhibit
A attached hereto. The Trust shall examine or shall cause any other authorized
recipient to examine promptly each such book, record, or report, or copy
thereof, and shall report or shall cause to be reported any errors or
discrepancies therein, but the Trust's failure to observe or report any such
error or discrepancy shall not relieve the Agent of its responsibilities or
liabilities as agreed to under the terms of this Agreement. The Agent may at its
option at any time and shall forthwith upon the Trust's demand turn over to the
Trust and cease to retain in the Agent's files, records and documents created
and maintained by the Agent pursuant to this Agreement that are no longer needed
by the Agent in the performance of its services or for its protection.
If not so turned over to the Trust, such documents and reports will be
retained by the Agent for six years from the year of creation, during the first
two of which the same will be in readily accessible form. At the end of six
years, such records and documents shall be turned over to the Trust by the Agent
unless the Trust authorizes their destruction.
9. Term.
The term of this Agreement shall begin as of the date first set forth
above and unless sooner terminated as hereinafter provided, this Agreement shall
remain in effect for a period of one year from that date. Thereafter, this
Agreement shall continue in effect with respect to a Fund from year to year,
subject to the termination provisions and all other terms and conditions hereof;
provided, that such continuance with respect to that Fund is approved at least
annually by the Trust's Board of Trustees, including the vote or written consent
of a majority of the Trust's trustees who are not interested persons of Ivy
Management, Inc., the Agent or the Trust (the "Independent Trustees"). The Agent
shall furnish to the Funds, promptly upon their request, such information
(including the Agent's costs of delivering the services provided to the Funds
hereunder) as may reasonably be necessary to enable the Trust's Board of
Trustees to evaluate the terms of this Agreement or any extension, renewal or
amendment hereof. The Agent shall permit the Trust and its accountants, counsel
or other representatives to review its books and records relating to the
services provided hereunder at reasonable intervals during normal business hours
upon reasonable notice requesting such review.
10. Interpretation and Definition of Terms.
Any question or interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the Investment Company Act of 1940, as amended (the "1940 Act") shall be
resolved by reference to such term or provision of the 1940 Act and to
interpretation thereof, if any. Specifically, the terms "interested persons,"
"affiliated person," and "assignment," as used in this Agreement, shall have the
meanings assigned to them by Section 2(a) of the 1940 Act.
11. Software and Related Materials.
All computer programs, written procedures, and similar items developed
or acquired and used by the Agent in performing its obligations under this
Agreement shall be the property of the Agent, and neither the Trust nor the
Funds will acquire any ownership interest therein or property rights with
respect thereto.
12. Services to Other Clients.
Nothing herein contained shall limit the freedom of the Agent or any
affiliated person of the Agent to render services of the types contemplated
hereby to other persons, firms or corporations, including but not limited to
other investment companies, or to engage in other business activities.
13. Miscellaneous.
(a) This agreement shall be governed and construed in accordance with the
laws of Florida, provided that nothing herein shall be construed in a
manner inconsistent with the 1940 Act.
(b) This Agreement may not be assigned by the Agent without the consent of
the Trust as authorized or approved by resolution of its Board of
Trustees.
(c) The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
(d) The Trust's Amended and Restated Declaration of Trust has been filed
with the Secretary of State of the Commonwealth of Massachusetts. The
obligations of the Trust or any Fund are not personally binding upon,
nor shall resort be had to the private property of, any of the
trustees, shareholders, officers, employees or agents of the Trust or
the Fund, but only that Fund's property shall be bound.
(e) In connection with the operation of this Agreement, the Trust and the
Agent may agree from time to time on such provisions interpretive of or
in addition to the provisions of this Agreement as in their joint
opinions may be consistent with the general tenor of this Agreement.
Any such interpretive or additional provisions are to be signed by both
parties and annexed hereto, but no such provision shall be deemed to be
an amendment of this Agreement.
(f) Nothing in this Agreement shall give or be construed to give any
shareholder of the Trust any rights against the Agent.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized as of the date first
written above.
MACKENZIE SOLUTIONS
By:_________________________________
KEITH J. CARLSON, PRESIDENT
MACKENZIE INVESTMENT MANAGEMENT INC.
By:_________________________________
MICHAEL G. LANDRY, PRESIDENT
<PAGE>
EXHIBIT A
Fund Accounting Services Agreement
Standard Reports and Availability
The following reports will be provided to the Fund on a regular basis with
availability as indicated:
A. Daily
1. Printed Trial Balance
2. Net Asset Value Worksheet
3. Cash Forecast
4. Yield Computation, if applicable
B. Weekly - Tax Lot Ledgers
C. Monthly
1. Tax Lot Ledgers as of month-end
2. Working Appraisal as of month-end
3. Purchase and Sale Journal for the month
4. Summary of Gains and Losses on Securities for the month 5. Dividend
Ledger for the month (Receivable as of month-end and earned) 6.
Interest Income Analysis for the month (receivable as of month-end and
earned) 7. Trial Balance as of month-end 8. Net Asset Value Worksheet
as of month-end 9. Open Trades (payable and receivable for unsettled
securities transactions)
D. Annually
1. Purchase and Sale Journal for the year
2. Summary of Gains and Losses on Securities for the year
3. Broker Allocation Report for the year
MACKENZIE SOLUTIONS
FUND ACCOUNTING SERVICES AGREEMENT SUPPLEMENT
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
AGREEMENT made as of the day of June, 1999, by and between Mackenzie
Solutions (the "Trust") and Mackenzie Investment Management Inc. (the "Agent").
WHEREAS, the Trust is an open-end investment company organized as a
Massachusetts business trust and consists of such separate investment portfolios
as have been or may be established and designated by the Trustees of the Trust
from time to time;
WHEREAS, a separate class of shares of the Trust is offered to
investors with respect to each investment portfolio;
WHEREAS, the Trust has adopted a Master Fund Accounting Services
Agreement (the "Master Agreement") dated June , 1999, pursuant to which the
Trust has appointed the Agent to provide the fund accounting services specified
in the Master Agreement; and
WHEREAS, International Solutions I - Conservative Growth, International
Solutions II -Balanced Growth, International Solutions III - Moderate Growth,
International Solutions IV - Long-Term Growth and International Solutions V -
Aggressive Growth (the "Funds") are separate investment portfolios of the Trust:
NOW, THEREFORE, the Trustees of the Trust hereby take the following
actions, subject to the conditions set forth:
1. As provided for in the Master Agreement, the Trust hereby adopts the
Master Agreement with respect to each Fund, and the Agent hereby acknowledges
that the Master Agreement shall pertain to each Fund, the terms and conditions
of such Master Agreement being hereby incorporated herein by reference.
2. The term "Fund" as used in the Master Agreement shall, for purposes
of this Supplement, pertain to the Funds.
3. As provided in the Master Agreement and subject to further
conditions as set forth therein, the Fund shall pay the Agent a monthly fee
based upon the rate(s) set forth in the Fee Schedule attached hereto as Annex 1.
4. This Supplement and the Master Agreement (together, the "Agreement")
shall become effective with respect to the Funds as of the date specified above
and unless sooner terminated as hereinafter provided, the Agreement shall remain
in effect with respect to each Fund for a period of more than one (1) year from
such date only so long as the continuance is specifically approved at least
annually by the Trust's Board of Trustees, including the vote or written consent
of a majority of the Trust's Independent Trustees. This Agreement may be
terminated with respect to a Fund, without payment of any penalty, by the Fund
upon at least ninety (90) days' prior written notice to the Agent or by the
Agent upon at least ninety (90) days' prior written notice to the Trust;
provided, that in the case of termination by a Fund, such action shall have been
authorized by the Trust's Board of Trustees, including the vote or written
consent of a majority of the Trust's Independent Trustees.
MACKENZIE SOLUTIONS,
on behalf of 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
By:
Keith J. Carlson, President
MACKENZIE INVESTMENT MANAGEMENT INC.
By:
Michael G. Landry, President
<PAGE>
ANNEX 1
FUND ACCOUNTING SERVICES AGREEMENT
FEE SCHEDULE
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
Net Assets of Fund at Preceding Month's End Monthly Fee
Less than or equal to $10 million $1,250
Between $10 million and $40 million $2,500
Between $40 million and $75 million $5,000
Over $75 million $6,500
REIMBURSEMENT AGREEMENT
THIS AGREEMENT is made as of the _______ day of ___________________,
1999, by and among Ivy Management, Inc., a _____________ corporation with its
principal office at Via Mizner Financial Plaza, 700 South Federal Highway, Boca
Raton, Florida 33432 ("IMI"), and
_______________________________________________, a _______________ corporation
with its principal office at _________________________ (the "Adviser").
WHEREAS, Mackenzie Solutions (the "Trust"), an open-end management
investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), consists of separate portfolios (each a "Portfolio
and, collectively, the "Portfolios"), each of which may invest a portion of its
assets in some or all of the registered investment companies listed on Schedule
A hereto (each an "Underlying Fund" and, collectively, the "Underlying Funds");
WHEREAS, IMI serves as investment adviser of each Portfolio;
WHEREAS, the Adviser serves as investment adviser of each Underlying Fund;
WHEREAS, the Trust and the Portfolios are expected to provide a means
by which the Underlying Funds can eliminate shareholder accounts that are or
would be invested directly in the Underlying Funds and such shareholder account
reductions can reduce the expenses of the Underlying Funds that would otherwise
be incurred by the Underlying Funds and payable to the Underlying Funds'
transfer and dividend paying agent (the "Transfer Agent") and any other provider
of shareholder services ("Service Provider") under their respective agreements
with the Underlying Funds ("Agreements"); and
WHEREAS, the Adviser and the Underlying Funds are expected to benefit
from increased public recognition from the use by IMI and the Portfolios of the
names, logos, and trademarks of the Adviser and the Underlying Funds in
connection with the Portfolios (the "Publicity Benefits") and the increased
assets under management resulting from the investment by the Portfolios in the
Underlying Funds;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. Services and Savings. Pursuant to each Agreement, an Underlying Fund pays
its Transfer Agent and Service Provider for providing, generally, transfer
agency, recording and shareholder services with respect to each shareholder
account in the Underlying Fund. The level of services provided by the
Transfer Agent and each other Service Provider to an Underlying Fund and
the amount of the fees that the Underlying Fund must pay the Transfer Agent
and each other Service Provider for its services correlates to the number
of shareholder accounts maintained on the books of the Underlying Fund. A
Portfolio's investment in an Underlying Fund can eliminate shareholder
accounts that are or would be invested directly in the Underlying Fund and
can, therefore, reduce the fees that the Underlying Fund must pay to the
Transfer Agent and each other Service Provider under the Underlying Fund's
Agreements (such reductions in fees are referred to herein as "Savings").
2. Compensation. In consideration of the increased revenue to the Adviser
resulting from the increase in assets under management in each Underlying
Fund due to the investment by the Portfolios and the Savings and Publicity
Benefits to the Underlying Funds provided by IMI as described herein, the
Adviser agrees to pay to IMI a fee (the "Service Fee") at an annual rate
equal to twenty-five (25) basis points (0.25%) of the average daily value
of the shares of each Underlying Fund held by any Portfolio during the
relevant quarter. Such payments will be made quarterly in arrears, provided
however, that such payments shall only be payable for each calendar quarter
during any portion of which the shares of any Underlying Fund are held by
any Portfolio. For the quarterly period in which this Agreement becomes
effective or terminates, there shall be an appropriate proration of any
Service Fee payable on the basis of the number of days that this Agreement
is in effect during the quarter. For purposes of computing the payment to
IMI under this paragraph 2, the average daily value of the shares of an
Underlying Fund held by any Portfolio over a quarterly period shall be
computed by totaling the Portfolios' aggregate investment in the Underlying
Fund (share net asset value multiplied by total number of Underlying Fund
shares held by the Portfolios) on each business day during the calendar
quarter, and dividing by the total number of business days during such
quarter. The payment to IMI under this paragraph 2 shall be calculated by
IMI, at the end of each calendar quarter and will be paid to IMI within 30
days thereafter.
3. Use of Proceeds. Compensation received by IMI hereunder shall be used by
IMI to reduce the expenses of the Portfolios payable to any provider of
services to the Portfolios that is not an "affiliated person" of IMI or the
Portfolios, as that term is defined under the 1940 Act;
4. Use of Underlying Fund Marks. On behalf of each Underlying Fund, the
Adviser hereby grants to IMI and the Portfolios a nonexclusive right to use
the name, logos and trademarks of the Adviser and the Underlying Funds in
connection with the Portfolios, for so long as this Agreement, or any
extension, renewal or amendment of this Agreement remains in effect. Such
right includes, but is not limited to, the right to use the names, logos
and trademarks of the Adviser and the Underlying Funds in the Portfolios'
marketing materials and advertisements. IMI, on its own behalf and on
behalf of the Portfolios, agrees not to make any representation regarding
the Adviser and the Underlying Funds inconsistent with the Underlying
Funds' prospectuses and other material filed with the Securities and
Exchange Commission.
5. Prospectus and Statement of Additional Information Disclosure. On behalf of
each Underlying Fund, the Adviser hereby authorizes IMI and the Portfolios
to include in the current Prospectus and Statement of Additional
Information of the Portfolios (the "Prospectus" and "SAI", respectively)
the disclosure relating to the Underlying Funds which has been provided to
Adviser for its review. IMI agrees that, except as otherwise permitted
herein, neither IMI nor the Portfolios will use any other written material
regarding the Underlying Funds without the Adviser's prior written consent.
The Adviser hereby acknowledges that the disclosure relating to the
Underlying Funds contained in the Prospectus and SAI needs to remain
accurate, and agrees to notify IMI in writing at the address set forth in
the preamble hereto of any filing with the Securities and Exchange
Commission, not less than 15 days before the effective date thereof,
relating to a change or changes to the investment objectives and/or
policies of one or more of the Underlying Funds that would affect the
accuracy of such disclosure. Any such notice shall include revised
disclosure relating to each affected Underlying Fund. The Adviser agrees to
indemnify IMI and the Portfolios and any affiliate thereof for any losses
caused by the Adviser's failure to provide such notice.
6. Term. This Agreement shall remain in full force and effect for an initial
term of one year, and shall automatically renew for successive one year
periods. This Agreement may be terminated by either party hereto upon 60
days' written notice to the other party hereto. Notwithstanding the
termination of this Agreement, the Adviser will continue to pay the fees of
IMI in accordance with paragraph 2 so long as any Portfolio continues to
hold Underlying Fund shares, provided such continued payment is permitted
in accordance with applicable law and regulation.
7. Amendment. This Agreement may be amended only upon mutual agreement of the
parties hereto in writing.
8. Assignment. Neither this Agreement nor any rights or obligations hereunder
may be assigned or delegated by either party without the written consent of
the other party.
9. Florida Law to Apply. This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of the State of
Florida, without regard to conflicts of laws principles.
In witness whereof, the parties have caused their duly authorized
officers to execute this Reimbursement Agreement.
IVY MANAGEMENT, INC.
ADVISER
By: Ted Parkhill By: __________________
Title: Senior Vice President Title: __________________
Date: __________________ Date: __________________
PURCHASE AGREEMENT
Purchase Agreement dated __________________, 1999 between Mackenzie
Solutions, a business trust organized under the laws of the State of
Massachusetts (the "Trust") on behalf of International Solutions I Conservative
Growth, International Solutions II - Balanced Growth, International Solutions
III - Moderate Growth, International Solutions IV - Long-Term Growth and
International Solutions V - Aggressive Growth (each a series of the Trust and
referred herein as a "Fund"), and Mackenzie Investment Management Inc. ("MIMI"),
a corporation organized under the laws of The Commonwealth of Massachusetts.
WHEREAS, the Trust is an investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Trust proposes to issue and sell shares of the Series'
beneficial interest, no par value per share, to the public pursuant to a
Registration Statement on Form N-1A (the "Registration Statement") filed with
the Securities and Exchange Commission; and
WHEREAS, Section 14(a) of the 1940 Act requires each registered
investment company to have a net worth of at least $100,000 before making a
public offering of its securities;
NOW, THEREFORE, the Trust and MIMI agree as follows:
1. The Trust on behalf of the Funds offers to sell to MIMI, and
MIMI agrees to purchase from each Fund, such number of shares
of beneficial interest in each of the five classes of shares
offered by the respective Fund (the "Shares") as specified in
the attached allocation schedule ("Schedule A"), on a date to
be specified by the Trust, prior to the effective date of the
Registration Statement.
2. MIMI represents and warrants to the Trust that MIMI is
acquiring the Shares for investment purposes only and not with
a view to resale or further distribution.
3. MIMI's right under this Purchase Agreement to purchase the Shares is not
assignable.
IN WITNESS WHEREOF, the Trust and MIMI have caused their duly
authorized officers to execute this Purchase Agreement as of the date first
above written.
MACKENZIE INVESTMENT MANAGEMENT INC.
By: ___________________________________
Michael G. Landry, President
MACKENZIE SOLUTIONS
on behalf of International Solutions
I - Conservative Growth,
International Solutions II -
Balanced Growth, International
Solutions III - Moderate Growth,
International Solutions IV -
Long-Term Growth and International
Solutions V - Aggressive Growth
By: ________________________
Keith J. Carlson, President
<PAGE>
SCHEDULE A
Fund Value of Beneficial Interest
International Solutions I - Conservative Growth $100,000 ($20,000 per Class)
International Solutions II - Balanced Growth $100,000 ($20,000 per Class)
International Solutions III - Moderate Growth $100,000 ($20,000 per Class)
International Solutions IV - Long-Term Growth $100,000 ($20,000 per Class)
International Solutions V - Aggressive Growth $100,000 ($20,000 per Class)
- --------------------------------------------- ----------------------------
TOTAL: $500,000
DISTRIBUTION PLAN
FOR MACKENZIE SOLUTIONS CLASS A SHARES
WHEREAS, Mackenzie Solutions (the "Trust") is registered as an open-end
investment company under the Investment Company Act of 1940 (the "Act") and
consists of one or more separate investment portfolios (the "Funds") as may be
established and designated from time to time;
WHEREAS, the Trust and Ivy Mackenzie Distributors Inc. (the
"Distributor"), a broker-dealer registered under the Securities Exchange Act of
1934, have entered into a Distribution Agreement pursuant to which the
Distributor acts as a distributor of shares of the Funds for sale to the public;
and
WHEREAS, the Board of Trustees of the Trust has determined to adopt a
Plan (the "Plan"), in accordance with the requirements of the Act and has
determined that there is a reasonable likelihood that the Plan will benefit the
Trust and its shareholders:
NOW THEREFORE, the Trust hereby adopts the Plan with respect to Class A
shares on the following terms and conditions:
1. The Plan will pertain to the Class A shares of 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; and to the
Class A shares of such other Funds as shall be designated from time to time by
the Board of Trustees in any supplement to the Plan ("Supplement").
2. The Trust will reimburse the Distributor for payments made to
brokers, banks, investment advisers, financial institutions and other entities
which are unaffiliated with the Distributor, for account maintenance and
personal service to shareholders (the "Service Fee"). In addition, the Trust may
make Service Fee payments to the Distributor for account maintenance and
personal services that it provides directly to shareholders. The services for
which Service Fees may be made include, among others, advising clients or
customers regarding the purchase, sale or retention of Class A shares of a Fund,
answering routine inquiries concerning a Fund, assisting shareholders in
changing options or enrolling in specific plans and providing shareholders with
information regarding the Fund and related developments. The Distributor will be
reimbursed for such payments, subject to any applicable restriction imposed by
Rules of the National Association of Securities Dealers, Inc., on a monthly
basis up to an amount equal on an annual basis to 0.25% of the average daily net
asset value of outstanding Class A shares of a Fund that are registered in the
name of a broker as nominee or held in a shareholder account that designates a
broker as broker of record. Payments made out of or charged against the assets
attributable to the Class A shares of a Fund must be in reimbursement for
distribution services rendered for or on behalf of that Fund. The costs and
expenses not reimbursed in any one given month may be reimbursed in a subsequent
month. The Plan does not provide for payment of interest or carrying charges as
distribution expenses.
3. The Plan shall not take effect with respect to Class A shares of a
Fund until it has been approved by a vote of at least a majority (as defined in
the Act) of the outstanding voting securities of Class A of that Fund. With
respect to the submission of the Plan for such a vote, it shall have been
effectively approved with respect to Class A of a Fund if a majority of the
outstanding voting securities of Class A of that Fund votes for approval of the
Plan, notwithstanding that the matter has not been approved by a majority of the
outstanding voting securities of the Trust or of any other Fund or class.
4. The Plan shall not take effect until it has been approved, together
with any related agreements and supplements, by votes of a majority of both (a)
the Board of Trustees of the Trust, and (b) those Trustees of the Trust who are
not "interested persons" (as defined in the Act) and have no direct or indirect
financial interest in the operation of the Plan or any agreements related to it
(the "Plan Trustees"), cast in person at a meeting (or meetings) called for the
purpose of voting on the Plan and such related agreements.
5. The Plan shall continue in effect so long as such continuance is
specifically approved at least annually in the manner provided for approval of
the Plan in paragraph 4.
6. Any person authorized to direct the disposition of monies paid or
payable by the Trust pursuant to the Plan or any related agreement shall provide
to the Trust's Board of Trustees, and the Board shall review, at least
quarterly, a written report of the amounts so expended and the purposes for
which such expenditures were made.
7. Any agreement related to the Plan shall be in writing and shall
provide: (a) that such agreement may be terminated at any time as to a Fund,
without payment of any penalty, by vote of a majority of the Plan Trustees or by
vote of a majority of the outstanding voting securities of Class A of the Fund,
on not more than sixty (60) days' written notice to any other party to the
agreement; and (b) that such agreement shall terminate automatically in the
event of its assignment.
8. The Plan may be terminated at any time with respect to a Fund,
without payment of any penalty, by vote of a majority of the Plan Trustees, or
by vote of a majority of the outstanding voting securities of Class A of the
Fund. If the Plan is terminated with respect to a Fund, that Fund will not be
obligated to reimburse the Distributor for any unreimbursed trail fee payments.
9. The Plan may be amended at any time with respect to a Fund by the
Board of Trustees, provided that (a) any amendment to increase materially the
costs which the Fund may bear for distribution pursuant to the Plan shall be
effective only upon approval by a vote of a majority of the outstanding voting
securities of Class A of the Fund, and (b) any material amendments to the terms
of the Plan shall become effective only upon approval in the manner provided for
approval of the Plan in paragraph 4.
10. While the Plan is in effect, the selection and nomination of
Trustees who are not interested persons (as defined in the Act) of the Trust
shall be committed to the discretion of the Trustees who are not interested
persons.
11. The Trust shall preserve copies of the Plan, any related agreement
and any report made pursuant to paragraph 6 hereof, for a period of not less
than six (6) years form the date of the Plan, such agreement or report, as the
case may be, the first two (2) years of which shall be in an easily accessible
place.
12. It is understood and expressly stipulated that neither the holders
of shares of the Trust nor any Trustee, officer, agent or employees of the Trust
shall be personally liable hereunder, nor shall any resort be had to other
private property for the satisfaction of any claim or obligation hereunder, but
the Trust only shall be liable.
IN WITNESS WHEREOF, the Trust has adopted this Distribution Plan on the
____ day of June, 1999.
MACKENZIE SOLUTIONS
By:
Keith J. Carlson, President
DISTRIBUTION PLAN
FOR MACKENZIE SOLUTIONS CLASS B SHARES
WHEREAS, Mackenzie Solutions (the "Trust") is registered as an open-end
investment company under the Investment Company Act of 1940 (the "Act") and
consists of one or more separate investment portfolios (the "Funds") as may be
established and designated from time to time;
WHEREAS, the Trust and Ivy Mackenzie Distributors Inc. (the
"Distributor"), a broker-dealer registered under the Securities Exchange Act of
1934, have entered into a Distribution Agreement pursuant to which the
Distributor acts as a distributor of shares of the Funds for sale to the public;
and
WHEREAS, the Board of Trustees of the Trust has determined to adopt a
Plan (the "Plan"), in accordance with the requirements of the Act and has
determined that there is a reasonable likelihood that the Plan will benefit the
Trust and its shareholders:
NOW, THEREFORE, the Trust hereby adopts the Plan with respect to Class
B shares on the following terms and conditions:
1. The Plan will pertain to the Class B shares of International Solutions I -
Conservative Growth; International Solutions II - Balanced Growth; International
Solutions III - Moderate Growth; International Solutions IV - Long-term Growth;
and International Solutions V - Aggressive Growth; and to the Class B shares of
such Funds as shall be designated from time to time by the Board of Trustees in
any supplement to the Plan ("Supplement").
2. The Trust shall pay the Distributor a fee for distribution of the Class B
shares of each Fund at the annual rate of 0.75 % of the average daily net assets
attributable to that Fund's Class B shares. Such fee shall be calculated and
accrued daily and paid monthly or at such other intervals as the Trustees shall
determine, subject to any applicable restriction imposed by rules of the
National Association of Securities Dealers, Inc. If this Plan is terminated, the
Trust will owe no payments to the Distributor other than any portion of the
distribution fee accrued through the effective date of termination but unpaid as
of such date.
3. The amount set forth in paragraph 2 of this Plan shall be paid for the
Distributor's services as distributor of the Class B shares of a Fund in
connection with any activities or expenses primarily intended to result in the
sale of the Class B shares of that Fund, including, but not limited to,
compensation to broker-dealers; bonuses and other incentives paid to
broker-dealers; compensation to and expenses of employees of the Distributor who
engage in or support distribution of a Fund's Class B shares; compensation to
banks, investment advisers, financial institutions and certain other entities
which are unaffiliated with the Distributor; telephone expenses; interest
expenses; printing of prospectuses and reports for other than existing
shareholders; preparation, printing and distribution of sales literature and
advertising materials; and profit on the foregoing.
4. The Trust will reimburse the Distributor for payments made to brokers, banks,
investment advisers, financial institutions and other entities which are
unaffiliated with the Distributor, for account maintenance and personal service
to shareholders (the "Service Fee"). In addition, the Trust may make Service Fee
payments to the Distributor for account maintenance and personal services that
it provides directly to shareholders. The services for which Service Fees may be
made include, among others, advising clients or customers regarding the
purchase, sale or retention of Class B shares of a Fund, answering routine
inquiries concerning a Fund, assisting shareholders in changing options or
enrolling in specific plans and providing shareholders with information
regarding the Fund and related developments. The Distributor will be reimbursed
for such payments, subject to any applicable restriction imposed by Rules of the
National Association of Securities Dealers, Inc., on a monthly basis up to an
amount equal on an annual basis to 0.25% of the average daily net asset value of
outstanding Class B shares of a Fund that are registered in the name of a broker
as nominee or held in a shareholder account that designates a broker as broker
of record. Payments made out of or charged against the assets attributable to
the Class B shares of a Fund must be in reimbursement for distribution services
rendered for or on behalf of that Fund. The costs and expenses not reimbursed in
any one given month may be reimbursed in a subsequent month. The Plan does not
provide for payment of interest or carrying charges as distribution expenses.
5. The Plan shall not take effect with respect to Class B shares of a Fund until
it has been approved by a vote of at least a majority (as defined in the Act) of
the outstanding voting securities of Class B of that Fund. With respect to the
submission of the Plan for such a vote, it shall have been effectively approved
with respect to a Fund if a majority of the outstanding voting securities of
Class B of the Fund votes for approval of the Plan, notwithstanding that the
matter has not been approved by a majority of the outstanding voting securities
of the Trust or of any other Fund or class.
6. The Plan shall not take effect until it has been approved, together with any
related agreements and supplements, by votes of a majority of both (a) the Board
of Trustees of the Trust, and (b) those Trustees of the Trust who are not
"interested persons" (as defined in the Act) and have no direct or indirect
financial interest in the operation of the Plan or any agreements related to it
(the "Plan Trustees"), cast in person at a meeting (or meetings) called for the
purpose of voting on the Plan and such related agreement.
7. The Plan shall continue in effect so long as such continuance is specifically
approved at least annually in the manner provided for approval of the Plan in
paragraph 6 hereof.
8. Any person authorized to direct the disposition of monies paid or payable by
the Trust pursuant to the Plan or any related agreements shall provide to the
Trust's Board of Trustees, and the Board shall review, at least quarterly, a
written report of the amounts so expended and the purposes for which such
expenditures were made.
9. Any agreement related to the Plan shall be in writing and shall provide: (a)
that such agreement may be terminated at any time as to a Fund, without payment
of any penalty, by vote of a majority of the Plan Trustees or by vote of a
majority of the outstanding voting securities of Class B of the Fund, on not
more than sixty (60) days' written notice to any other party to the agreement;
and (b) that such agreement shall terminate automatically in the event of its
assignment.
10. The Plan may be terminated at any time with respect to a Fund, without
payment of any penalty, by vote of a majority of the Plan Trustees, or by vote
of a majority of the outstanding voting securities of Class B of the Fund.
11. The Plan may be amended at any time with respect to a Fund by the Board of
Trustees, provided that (a) any amendment to increase materially the costs which
the Fund may bear for distribution (including the Service Fee) pursuant to the
Plan shall be effective only upon approval by a vote of a majority of the
outstanding voting securities of Class B of the Fund, and (b) any material
amendments of the terms of the Plan shall become effective only upon approval as
provided in paragraph 6 hereof.
12. While the Plan is in effect, the selection and nomination of Trustees who
are not interested persons (as defined in the Act) of the Trust shall be
committed to the discretion of the Trustees who are not interested persons.
13. The Fund shall preserve copies of the Plan, any related agreement and any
report made pursuant to paragraph 8 hereof, for a period of not less than six
(6) years from the date of the Plan, such agreement or report, as the case may
be, the first two (2) years of which shall be in an easily accessible place.
14. It is understood and expressly stipulated that neither the holders of shares
of the Trust nor any Trustee, officer, agent or employees of the Trust shall be
personally liable hereunder, nor shall any resort be had to other private
property for the satisfaction of any claim or obligation hereunder, but the
Trust only shall be liable.
IN WITNESS WHEREOF, the Trust has adopted this Distribution
Plan effective as of the ____ day of June, 1999.
MACKENZIE SOLUTIONS
By:
Keith J. Carlson, President
DISTRIBUTION PLAN
FOR MACKENZIE SOLUTIONS CLASS C SHARES
WHEREAS, Mackenzie Solutions (the "Trust") is registered as an open-end
investment company under the Investment Company Act of 1940, as amended (the
"Act"), and consists of one or more separate investment portfolios (the "Funds")
as may be established and designated from time to time;
WHEREAS, the Trust and Ivy Mackenzie Distributors, Inc. (the
"Distributor"), a broker-dealer registered under the Securities Exchange Act of
1934, have entered into a Distribution Agreement pursuant to which the
Distributor acts as a distributor of shares of the Funds for sale to the public;
and
WHEREAS, the Board of Trustees of the Trust has determined to adopt a
Plan (the "Plan"), in accordance with the requirements of the Act, and
determined that there is a reasonable likelihood that the Plan will benefit the
Trust and its shareholders.
NOW THEREFORE, the Trust hereby adopts the Plan with respect to Class C
shares on the following terms and conditions:
1. The Plan will pertain to the Class C shares of International
Solutions I - Conservative Growth; International Solutions II - Balanced Growth;
International Solutions III - Moderate Growth; International Solutions IV -
Long-term Growth; and International Solutions V - Aggressive Growth; and to the
Class C shares of such other Funds as shall be designated from time to time by
the Board of Trustees in any supplement to the Plan ("Supplement").
2. The Trust shall pay the Distributor a fee for distribution of the
Class C shares of each Fund at the annual rate of 0.75% of the average daily net
assets attributable to that Fund's Class C shares. Such fee shall be calculated
and accrued daily and paid monthly or at such other intervals as the Trustees
shall determine, subject to any applicable restriction imposed by rules of the
National Association of Securities Dealers, Inc. If this Plan is terminated, the
Trust will owe no payments to the Distributor other than any portion of the
distribution fee accrued through the effective date of termination but unpaid as
of such date.
3. The amount set forth in paragraph 2 of this Plan shall be paid for
the Distributor's services as distributor of the Class C shares of a Fund in
connection with any activities or expenses primarily intended to result in the
sale of the Class C shares of a Fund, including, but not limited to,
compensation to broker-dealers, bonuses and other incentives paid to
broker-dealers, compensation to and expenses of employees of the Distributor who
engage in or support distribution of a Fund's Class C shares; compensation to
banks, investment advisers, financial institutions and certain other entities
which are unaffiliated with the Distributor; telephone expenses; interest
expenses; printing of prospectuses and reports for other than existing
shareholders; preparation, printing and distribution of sales literature and
advertising materials; and profit on the foregoing.
4. The Trust will reimburse the Distributor for payments made to
brokers, banks, investment advisers, financial institutions and other entities
which are unaffiliated with the Distributor, for account maintenance and
personal service to shareholders (the "Service Fee"). In addition, the Trust may
make Service Fee payments to the Distributor for account maintenance and
personal services that it provides directly to shareholders. The services for
which Service Fees may be made include, among others, advising clients or
customers regarding the purchase, sale or retention of Class C shares of a Fund,
answering routine inquiries concerning a Fund, assisting shareholders in
changing options or enrolling in specific plans and providing shareholders with
information regarding the Fund and related developments. The Distributor will be
reimbursed for such payments, subject to any applicable restriction imposed by
Rules of the National Association of Securities Dealers, Inc., on a monthly
basis up to an amount equal on an annual basis to 0.25% of the average daily net
asset value of outstanding Class C shares of a Fund that are registered in the
name of a broker as nominee or held in a shareholder account that designates a
broker as broker of record. Payments made out of or charged against the assets
attributable to the Class C shares of a Fund must be in reimbursement for
distribution services rendered for or on behalf of that Fund. The costs and
expenses not reimbursed in any one given month may be reimbursed in a subsequent
month. The Plan does not provide for payment of interest or carrying charges as
distribution expenses.
5. The Plan shall not take effect with respect to Class C shares of a
Fund until it has been approved by a vote of at least a majority (as defined in
the Act) of the outstanding voting securities of Class C of that Fund. With
respect to the submission of the Plan for such a vote, it shall have been
effectively approved with respect to a Fund if a majority of the outstanding
voting securities of Class C of the Fund votes for approval of the Plan,
notwithstanding that the matter has not been approved by a majority of the
outstanding voting securities of the Trust or of any other Fund or class.
6. The Plan shall not take effect until it has been approved, together
with any related agreements and supplements, by votes of a majority of both (a)
the Board of Trustees of the Trust, and (b) those Trustees of the Trust who are
not "interested persons" (as defined in the Act) and who have no direct or
indirect financial interest in the operation of the Plan or any agreements
related to it (the "Plan Trustees") cast in person at a meeting (or meetings)
called for the purpose of voting on the Plan and such related agreements.
7. The Plan shall continue in effect so long as such continuance is
specifically approved at least annually in the manner provided for approval of
the Plan in paragraph 6 hereof.
8. Any person authorized to direct the disposition of monies paid or
payable by the Trust pursuant to the Plan or any related agreement shall provide
to the Trust's Board of Trustees, and the Board shall review, at least
quarterly, a written report of the amounts so expended and the purposes for
which such expenditures were made.
9. Any agreement related to the Plan shall be in writing and shall
provide: (a) that such agreement may be terminated at any time as to a Fund,
without payment of any penalty, by vote of a majority of the Plan Trustees or by
vote of a majority of the outstanding voting securities of Class C of the Fund,
on not more than sixty (60) days' written notice to any other party to the
agreement; and (b) that such agreement shall terminate automatically in the
event of its assignment.
10. The Plan may be terminated at any time with respect to Class C of a
Fund, without payment of any penalty, by vote of a majority of the Plan
Trustees, or by vote of a majority of the outstanding voting securities of Class
C of the Fund.
11. The Plan may be amended at any time with respect to Class C of a
Fund by the Board of Trustees, provided that (a) any amendment to increase
materially the costs which the Fund may bear for distribution (including the
Service Fee) pursuant to the Plan shall be effective only upon approval by a
vote of a majority of the outstanding voting securities of Class C of the Fund,
and (b) any material amendments of the terms of the Plan shall become effective
only upon approval in the manner provided in paragraph 6 hereof.
12. While the Plan is in effect, the selection and nomination of
Trustees who are not interested persons (as defined in the Act) of the Trust
shall be committed to the discretion of the Trustees who are not interested
persons.
13. The Trust shall preserve copies of the Plan, any related agreement
and any report made pursuant to paragraph 8 hereof, for a period of not less
than six (6) years from the date of the Plan, such agreement or report, as the
case may be, the first two (2) years of which shall be in an easily accessible
place.
14. It is understood and expressly stipulated that neither the holders
of shares of the Trust nor any Trustee, officer, agent or employees of the Trust
shall be personally liable hereunder, nor shall any resort be had to other
private property for the satisfaction of any claim or obligation hereunder, but
the Trust only shall be liable.
IN WITNESS WHEREOF, the Trust has adopted this Distribution Plan as of
the _____ day of June, 1999.
MACKENZIE SOLUTIONS
By:
------------------------------------
Keith J. Carlson, President
MACKENZIE SOLUTIONS
PLAN PURSUANT TO RULE 18F-3
UNDER THE
INVESTMENT COMPANY ACT OF 1940
I. INTRODUCTION
In accordance with Rule 18f-3 under the Investment Company Act of 1940,
as amended (the "1940 Act"), this Plan describes the multi-class structure that
will apply to certain series of Mackenzie Solutions (each a "Fund" and,
collectively, the "Funds"), including the separate class arrangements for the
service and distribution of shares, the method for allocating the expenses and
income of each Fund among its classes, and any related exchange privileges and
conversion features that apply to the different classes.
II. THE MULTI-CLASS STRUCTURE
Each of the following Funds is authorized to issue five classes of
shares identified as Class A, Class B, Class C, Class I and an Advisor Class:
International Solutions I - Conservative Growth; International Solutions II -
Balanced Growth; International Solutions III - Moderate Growth; International
Solutions IV - Long-term Growth; and International Solutions V - Aggressive
Growth.
Shares of each class of a Fund represent an equal pro-rata interest in
the underlying assets of that Fund, and generally have identical voting,
dividend, liquidation, and other rights, preferences, powers, restrictions,
limitations, qualifications and terms and conditions, except that: (a) each
class shall have a different designation; (b) each class shall bear certain
class-specific expenses, as described more fully in Section III.C.2., below; (c)
each class shall have exclusive voting rights on any matter submitted to
shareholders that relates solely to its arrangement; and (d) each class shall
have separate voting rights on any matter submitted to shareholders in which the
interests of one class differ from the interests of any other class. Each class
of shares shall also have the distinct features described in Section III, below.
III. CLASS ARRANGEMENTS
A. FRONT-END SALES CHARGES AND CONTINGENT DEFERRED SALES CHARGES
Class A shares shall be offered at net asset value plus a front-end
sales charge. The front-end sales charge shall be in such amount as is disclosed
in each Fund's current prospectus and shall be subject to reductions for larger
purchases and such waivers or reductions as are determined or approved by the
Board of Trustees. Class A shares generally will not be subject to a contingent
deferred sales charge (a "CDSC"), although a CDSC may be imposed in certain
limited cases as disclosed in each Fund's current prospectus or prospectus
supplement.
Class B and Class C shares shall be offered at net asset value without
the imposition of a front-end sales charge. A CDSC in such amount as is
described in each Fund's current prospectus or prospectus supplement shall be
imposed on Class B and Class C shares, subject to such waivers or reductions as
are determined or approved by the Board of Trustees.
Advisor Class and Class I shares are not subject to a front-end sales
charge or a CDSC.
B. RULE 12B-1 PLANS
Each Fund has adopted a service and distribution plan pursuant to Rule
12b-1 under the 1940 Act (a "12b-1 plan") under which it pays to Ivy Mackenzie
Distributors, Inc. (the "Distributor") an annual fee based on the average daily
net assets value of the Fund's outstanding Class A, Class B and Class C shares,
respectively. 1 The maximum fees currently charged to each Fund under its 12b-1
plan are set forth in the table below, and are expressed as a percentage of the
Fund's average daily net assets. 2
The services that the Distributor provides in connection with each Rule
12b-1 plan for which service fees3 are paid include, among other things,
advising clients or customers regarding the purchase, sale or retention of a
Fund's Class A, Class B or Class C shares, answering routine inquiries
concerning the Fund, assisting shareholders in changing options or enrolling in
specific plans and providing shareholders with information regarding the Fund
and related developments.
The other distribution services provided by the Distributor in
connection with each Fund's Rule 12b-1 plan include any activities primarily
intended to result in the sale of the Fund's Class B and Class C shares. For
such distribution services, the Distributor is paid for, among other things,
compensation to broker-dealers; bonuses and other incentives paid to
broker-dealers or such other entities; compensation to and expenses of employees
of the Distributor who engage in or support distribution of a Fund's Class B or
Class C shares; compensation to banks, investment advisers, financial
institutions and certain other entities which are unaffiliated with the
Distributor; telephone expenses; interest expense (only to the extent not
prohibited by a regulation or an order of the SEC); printing of prospectuses and
reports for other than existing shareholders; and preparation, printing and
distribution of sales literature and advertising materials.
<PAGE>
RULE 12b-1 FEES
CLASS B AND
CLASS A CLASS A CLASS C SHARES
SHARES SHARES (SERVICE AND
(SERVICE (DISTRIBUTION DISTRIBUTION
FUND NAME FEES) FEES) FEES)
International Solutions I - 0.25% 0.00% 1.00%
Conservative Growth
International Solutions II - 0.25% 0.00% 1.00%
Balanced Growth
International Solutions III - 0.25% 0.00% 1.00%
Moderate Growth
International Solutions IV - 0.25% 0.00% 1.00%
Long-term Growth
International Solutions V - 0.25% 0.00% 1.00%
Aggressive Growth
C. ALLOCATION OF EXPENSES AND INCOME
1. "TRUST" AND "FUND" EXPENSES
The gross income, realized and unrealized capital gains and losses and
expenses (other than "Class Expenses," as defined below) of each Fund shall be
allocated to each class on the basis of its net asset value relative to the net
asset value of the Fund. Expenses so allocated include expenses of Mackenzie
Solutions that are not attributable to a particular Fund or class of a Fund
("Trust Expenses") and expenses of a Fund not attributable to a particular class
of the Fund ("Fund Expenses"). Trust Expenses include, but are not limited to,
Trustees' fees and expenses; insurance costs; certain legal fees; expenses
related to shareholder reports; and printing expenses. Fund Expenses include,
but are not limited to, certain registration fees (i.e., state registration fees
imposed on a Fund-wide basis and SEC registration fees); custodial fees;
transfer agent fees; advisory fees; fees related to the preparation of separate
documents of a particular Fund, such as a separate prospectus; and other
expenses relating to the management of the Fund's assets.
2. "CLASS" EXPENSES
The types of expenses attributable to a particular class ("Class
Expenses") include: (a) payments pursuant to the Rule 12b-1 plan for that class;
4 (b) transfer agent fees attributable to a particular class; (c) printing and
postage expenses related to preparing and distributing shareholder reports,
prospectuses and proxy materials; (d) registration fees (other than those set
forth in Section C.1. above); (e) the expense of administrative personnel and
services as required to support the shareholders of a particular class; 5 (f)
litigation or other legal expenses relating solely to a particular class; (g)
Trustees' fees incurred as a result of issues relating to a particular class;
and (h) the expense of holding meetings solely for shareholders of a particular
class. Expenses described in subpart (a) of this paragraph must be allocated to
the class for which they are incurred. All other expenses described in this
paragraph may (but need not) be allocated as Class Expenses, but only if
Mackenzie Solutions's Board of Trustees determines, or Mackenzie Solutions's
President and Secretary/Treasurer have determined, subject to ratification by
the Board of Trustees, that the allocation of such expenses by class is
consistent with applicable legal principles under the 1940 Act and the Internal
Revenue Code of 1986, as amended.
In the event that a particular expense is no longer reasonably
allocable by class or to a particular class, it shall be treated as a Trust
Expense or Fund Expense, and in the event a Trust Expense or Fund Expense
becomes reasonably allocable as a Class Expense, it shall be so allocated,
subject to compliance with Rule 18f-3 and to approval or ratification by the
Board of Trustees.
3. WAIVERS OR REIMBURSEMENTS OF EXPENSES
Expenses may be waived or reimbursed by any adviser to Mackenzie
Solutions, by Mackenzie Solutions's underwriter or any other provider of
services to Mackenzie Solutions without the prior approval of Mackenzie
Solutions's Board of Trustees.
D. EXCHANGE PRIVILEGES
Shareholders of each Fund have exchange privileges with the other Funds.6
1. CLASS A:
INITIAL SALES CHARGE SHARES. Class A shareholders may exchange their
Class A shares ("outstanding Class A shares") for Class A shares of another Fund
(or for shares of another Fund that currently offers only a single class of
shares) ("new Class A Shares") on the basis of the relative net asset value per
Class A share, plus an amount equal to the difference, if any, between the sales
charge previously paid on the outstanding Class A shares and the sales charge
payable at the time of the exchange on the new Class A shares. Incremental sales
charges are waived for outstanding Class A shares that have been invested for 12
months or longer.
CONTINGENT DEFERRED SALES CHARGE SHARES. Class A shareholders may
exchange their Class A shares subject to a contingent deferred sales charge
("CDSC"), as described in the Prospectus ("outstanding Class A shares"), for
Class A shares of another Fund (or for shares of another Fund that currently
offers only a single class of shares) ("new Class A shares") on the basis of the
relative net asset value per Class A share, without the payment of a CDSC that
would otherwise be due upon the redemption of the outstanding Class A shares.
Class A shareholders of a Fund exercising the exchange privilege will continue
to be subject to the Fund's CDSC schedule (or period) following an exchange,
unless the CDSC schedule that applies to the new Class A shares is higher (or
such period is longer) than the CDSC schedule (or period), if any, applicable to
the outstanding Class A shares, in which case the schedule (or period) of the
Fund into which the exchange is made shall apply.
2. CLASS B AND CLASS C:
Shareholders may exchange their Class B or Class C shares ("outstanding
Class B shares" or "outstanding Class C shares," respectively) for the same
class of shares of another Fund ("new Class B shares" or "new Class C shares,"
respectively) on the basis of the net asset value per Class B or Class C share,
as the case may be, without the payment of any CDSC that would otherwise be due
upon the redemption of the outstanding Class B or Class C shares. Class B and
Class C shareholders of a Fund exercising the exchange privilege will continue
to be subject to the Fund's CDSC schedule (or period) following an exchange,
unless, in the case of Class B shareholders, the CDSC schedule that applies to
the new Class B shares is higher (or such period is longer) than the CDSC
schedule (or period) applicable to the outstanding Class B shares, in which case
the schedule (or period) of the Fund into which the exchange is made shall
apply.
3. ADVISOR CLASS AND CLASS I:
Advisor Class and Class I shareholders may exchange their outstanding
Advisor Class or Class I shares for shares of the same class of another Fund on
the basis of the net asset value per Advisor Class or Class I share, as the case
may be.
4. GENERAL:
Shares resulting from the reinvestment of dividends and other
distributions will not be charged an initial sales charge or CDSC when exchanged
into another Fund.
With respect to Fund shares subject to a CDSC, if less than all of an
investment is exchanged out of the Fund, the shares exchanged will reflect,
pro-rata, the cost, capital appreciation and/or reinvestment of distributions of
the original investment as well as the original purchase date, for purposes of
calculating any CDSC for future redemptions of the exchanged shares.
E. CONVERSION FEATURE
Class B shares of a Fund convert automatically to Class A shares of the
Fund as of the close of business on the first business day after the last day of
the calendar quarter in which the eighth anniversary of the purchase date of the
Class B shares occurs. The conversion will be based on the relative net asset
values per share of the two classes, without the imposition of any sales load,
fee or other charge. For purposes of calculating the eight year holding period,
the "purchase date" shall mean the date on which the Class B shares were
initially purchased, regardless of whether the Class B shares that are subject
to the conversion were obtained through an exchange (or series of exchanges)
from a different Fund. For purposes of conversion of Class B shares, Class B
shares acquired through the reinvestment of dividends and capital gain
distributions paid in respect of Class B shares will be held in a separate
sub-account. Each time any Class B shares in the shareholder's regular account
(other than those shares in the sub-account) convert to Class A shares, a
pro-rata portion of the Class B shares in the sub-account will also convert to
Class A shares. The portion will be determined by the ratio that the
shareholder's Class B shares converting to Class A shares bears to the
shareholder's total Class B shares not acquired through the reinvestment of
dividends and capital gain distributions.
IV. BOARD REVIEW
A. INITIAL APPROVAL
The Board of Trustees of Mackenzie Solutions, including a majority of
the Trustees who are not interested persons of Mackenzie Solutions, as defined
under the 1940 Act (the "Independent Trustees"), at a meeting held on March 18,
1999, has approved this Plan based on a determination that the Plan, including
the expense allocation, is in the best interests of each class of shares of each
Fund individually and Mackenzie Solutions as a whole.
B. APPROVAL OF AMENDMENTS
Before any material amendments to this Plan, Mackenzie Solutions's
Board of Trustees, including a majority of the Independent Trustees, must find
that the Plan, as proposed to be amended (including any proposed amendments to
the method of allocating Class and/or Fund Expenses), is in the best interests
of each class of shares of each Fund individually and Mackenzie Solutions as a
whole. In considering whether to approve any proposed amendment, the Trustees of
Mackenzie Solutions shall request and evaluate such information as they consider
reasonably necessary to evaluate the proposed amendment. Such information shall
address, at a minimum, the issue of whether any waivers or reimbursements of
advisory or administrative fees could be considered a cross-subsidization of one
class by another, and other potential conflicts of interest between classes.
C. PERIODIC REVIEW
The Board of Trustees of Mackenzie Solutions shall review the Plan as
frequently as it deems necessary, consistent with applicable legal requirements.
V. EFFECTIVE DATE
The Plan first became effective as of June ___, 1999.
1 Advisor Class and Class I shares are not subject to Rule 12b-1 service
or distribution fees.
2 Fees for services in connection with the Rule 12b-1 plans will be
consistent with any applicable restriction imposed by the National
Association of Securities Dealers, Inc.
3 Each Fund pays the Distributor at the annual rate of up to 0.25% of the
average daily net asset value attributable to its Class A, Class B and
Class C shares, respectively. In addition, each Fund pays the
Distributor a fee for other distribution services at the annual rate of
0.75% of the Fund's average daily net assets attributable to its Class
B and Class C shares.
4 Advisor Class and Class I shares bear no distribution or service fees.
5 Class I shares bear lower administrative services fees relative to
these Funds' other classes of shares (i.e., Class I shares of the Funds
pay a monthly administrative services fee based upon each Fund's
average daily net assets at the annual rate of only 0.01%, while Class
A, Class B, Class C and Advisor Class shares pay a fee at the annual
rate of 0.10%).
6 Other exchange privileges, not described herein, exist under certain
other circumstances, as described in each Fund's current prospectus or
prospectus supplement.
