As filed with the Securities and Exchange Commission on June 28, 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. 3 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 3 [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.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
<PAGE>
MACKENZIE SOLUTIONS
CROSS REFERENCE SHEET
This Pre-Effective Amendment No. 3 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:
Investment Strategies and Risks
ITEM 3 RISK/RETURN SUMMARY: FEE TABLE: Fees and Expenses
ITEM 4 INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES, AND
RELATED RISKS: Investment Strategies
and 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
PROSPECTUS
JUNE 29, 1999
<TABLE>
<S> <C> <C>
INTERNATIONAL SOLUTIONS
International Solutions is an asset
allocation program currently INTERNATIONAL SOLUTIONS I CONSERVATIVE GROWTH
consisting of five separate
investment portfolios ("Funds"). The
Funds enable investors to tailor their INTERNATIONAL SOLUTIONS II BALANCED GROWTH
exposure to different investment
techniques in the international INTERNATIONAL SOLUTIONS III MODERATE GROWTH
securities markets and related risks
by investing primarily in the shares INTERNATIONAL SOLUTIONS IV LONG-TERM GROWTH
of other mutual funds that in turn
invest in a broad range of foreign INTERNATIONAL SOLUTIONS V AGGRESSIVE GROWTH
securities. No offer is made in this
Prospectus for shares of these other
funds.
</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.
MACKENZIE
<PAGE> 2
TABLE OF CONTENTS
INVESTMENT OBJECTIVES 3
INVESTMENT STRATEGIES AND RISKS 4
FEES AND EXPENSES 7
ADDITIONAL INFORMATION ABOUT INVESTMENT STRATEGIES AND RISKS 10
MANAGEMENT 15
SHAREHOLDER INFORMATION:
PRICING OF FUND SHARES 15
HOW TO BUY SHARES 15
HOW TO REDEEM SHARES 21
HOW TO EXCHANGE SHARES 22
DISTRIBUTIONS AND TAXES 23
INVESTMENT OBJECTIVES AND STRATEGIES OF THE UNDERLYING FUNDS 24
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"). Each Fund pursues its objective through a different mix of underlying
funds.
<TABLE>
<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
- 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
WHAT ARE EACH FUND'S PRINCIPAL STRATEGIES?
<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
CONSERVATIVE GROWTH funds and 50-65% in international conservative international investors
equity funds. seeking a prudent trade-off between
equity and fixed income investments.
INTERNATIONAL SOLUTIONS II - Invests 20-35% in international bond May be appropriate for international
BALANCED GROWTH funds and 65-80% in international investors with limited tolerance for
equity funds. year-to-year volatility.
INTERNATIONAL SOLUTIONS III - Invests 75-90% in international equi- May be appropriate for moderately
MODERATE GROWTH ty funds and 10-25% in international aggressive international investors who
bond funds. are willing to bear a moderate level of
volatility.
INTERNATIONAL SOLUTIONS IV - Invests exclusively in international May be appropriate for international
LONG-TERM GROWTH equity funds, with 20-35% invested investors who are willing to sustain
in emerging market equity funds. potentially significant fluctuations in
capital value in the short-term.
INTERNATIONAL SOLUTIONS V - Invests exclusively in international May be appropriate for aggressive
AGGRESSIVE GROWTH equity funds, with 35-50% international investors who have a longer
in emerging market equity funds. time horizon for their investments and are
willing to bear a higher level of risk.
</TABLE>
* 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.
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 that the Funds and their investors are exposed to indirectly, by
virtue of the investment activities of the underlying funds, appears in the
section entitled "Additional Information About Investment Strategies and Risks".
- INTERNATIONAL SOLUTIONS I - CONSERVATIVE GROWTH: By investing as much as 50%
of its assets in international fixed income funds, this Fund will be more
susceptible than the other Funds to losses caused by a downturn in the
international bond markets. Because fixed income investments fall in value as
interest rates rise, this Fund is also susceptible to losses at times of
rising interest rates.
- - INTERNATIONAL SOLUTIONS II - BALANCED GROWTH: This Fund's higher
emphasis (relative to the Conservative Growth Fund) on underlying funds
that invest in equity securities make it less susceptible to bond
market losses, but may lead to moderately increased volatility. This
Fund also may be susceptible to losses at times of rising interest
rates.
- INTERNATIONAL SOLUTIONS III - MODERATE GROWTH: The underlying funds that
comprise this Fund invest more in equity securities than fixed income
securities. This increases the Fund's exposure to downturns in the equity
markets and is likely to cause the Fund to experience greater fluctuations in
value. This Fund is less susceptible to losses at times of rising interest
rates.
- INTERNATIONAL SOLUTIONS IV - LONG-TERM GROWTH: By investing exclusively in
underlying funds that in turn invest heavily in equity securities, this Fund
is expected to be more volatile than those Funds with more balanced
portfolios. This Fund also has a moderate emerging markets exposure, and is
susceptible to the increased risks associated with those markets. (see
"Emerging Market Securities" in the "Additional Information About Investment
Strategies and Risks" section).
- INTERNATIONAL SOLUTIONS V - AGGRESSIVE GROWTH: Since this Fund invests
exclusively in equity underlying funds that may also have significant
holdings in emerging markets securities, it is more susceptible to wide
fluctuations in value than the other Funds. (see "Emerging Market Securities"
in the "Additional Information About Investment Strategies and Risks"
section).
FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay if you buy
and hold a Fund's shares:
SHAREHOLDER FEES (fees paid directly from your investment)
<TABLE>
<CAPTION>
Maximum Sales Maximum Deferred
Charge (Load) Sales Charge (Load) Maximum Sales
Imposed on Purchases (as a percentage of Charge (Load)
Fund (as a percentage of original purchase Imposed on Redemption Exchange
Class offering price) price) Reinvested Dividends Fee* Fee
----- -------------------- -------------------- -------------------- ---------- ---------
<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>
MANAGEMENT DISTRIBUTION AND/OR SERVICE OTHER TOTAL ANNUAL FUND
FEES (12B-1) FEES EXPENSES(1) OPERATING EXPENSES(1)(2)
---------- --------------------------- ----------- ------------------------
<S> <C> <C> <C> <C>
INTERNATIONAL SOLUTIONS I -
CONSERVATIVE GROWTH
Class A 0.25% 0.25% 0.38% 0.88%
Class B 0.25% 1.00% 0.38% 1.63%
Class C 0.25% 1.00% 0.38% 1.63%
Class I 0.25% None 0.30% 0.55%
Advisor Class 0.25% None 0.38% 0.63%
INTERNATIONAL SOLUTIONS II -
BALANCED GROWTH
Class A 0.25% 0.25% 0.38% 0.88%
Class B 0.25% 1.00% 0.38% 1.63%
Class C 0.25% 1.00% 0.38% 1.63%
Class I 0.25% None 0.30% 0.55%
Advisor Class 0.25% None 0.38% 0.63%
INTERNATIONAL SOLUTIONS III-
MODERATE GROWTH
Class A 0.25% 0.25% 0.38% 0.88%
Class B 0.25% 1.00% 0.38% 1.63%
Class C 0.25% 1.00% 0.38% 1.63%
Class I 0.25% None 0.30% 0.55%
Advisor Class 0.25% None 0.38% 0.63%
INTERNATIONAL SOLUTIONS IV -
LONG-TERM GROWTH
Class A 0.25% 0.25% 0.38% 0.88%
Class B 0.25% 1.00% 0.38% 1.63%
Class C 0.25% 1.00% 0.38% 1.63%
Class I 0.25% None 0.30% 0.55%
Advisor Class 0.25% None 0.38% 0.63%
INTERNATIONAL SOLUTIONS V -
AGGRESSIVE GROWTH
Class A 0.25% 0.25% 0.38% 0.88%
Class B 0.25% 1.00% 0.38% 1.63%
Class C 0.25% 1.00% 0.38% 1.63%
Class I 0.25% None 0.30% 0.55%
Advisor Class 0.25% None 0.38% 0.63%
</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 Expenses do not exceed the following amounts:
<TABLE>
<S> <C>
- International Solutions I: Class A - 0.64%; Class B - 1.39%; Class C - 1.39%; Class I - 0.31%; Advisor Class - 0.39%.
- International Solutions II: Class A - 0.58%; Class B - 1.33%; Class C - 1.33%; Class I - 0.25%; Advisor Class - 0.33%.
- International Solutions III: Class A - 0.48%; Class B - 1.23%; Class C - 1.23%; Class I - 0.15%; Advisor Class - 0.23%.
- International Solutions IV: Class A - 0.33%; Class B - 1.08%; Class C - 1.08%; Class I - 0.00%; Advisor Class - 0.08%.
- International Solutions V: Class A - 0.35%; Class B - 1.10%; Class C - 1.10%; Class I - 0.02%; Advisor Class - 0.10%.
</TABLE>
Each Fund's shareholders will bear indirectly the Fund's proportionate share
of fees and expenses charged by the underlying funds in which the Fund is
invested. The weighted average expense ratios borne by each Fund are derived
from the underlying funds' most recent shareholder reports. Based on the
expected portfolio composition of each Fund (which can change but is likely
to be relatively static), the weighted average expense ratios for each Fund
are estimated to fall within the following ranges: International Solutions I
- 1.28%-1.42%; International Solutions II - 1.34%-1.48%; International
Solutions III - 1.43%- 1.59%; International Solutions IV - 1.58%-1.74%;
International Solutions V - 1.56%-1.72%.
Each manager of an underlying fund has agreed to make a payment to IMI at an
annual rate of up to 0.25% of the average daily value of the shares of the
underlying fund held by a Fund during any calendar quarter. Such payments
will be used by IMI to reduce the expenses of the Fund. By effectively
lowering each Fund's expenses, the payments will also reduce the amount of
the reimbursement by IMI necessary to maintain each Fund's Annual Operating
Expense at the level stated above.
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>
ONE YEAR THREE YEARS
-------- -----------
<S> <C> <C>
INTERNATIONAL SOLUTIONS I -
CONSERVATIVE GROWTH
Class A* $660 $840
Class B $666 (1) $814 (2)
Class B (no redemption) $166 $514
Class C $266 (3) $514
Class C (no redemption) $166 $514
Class I** $ 56 $176
Advisor Class** $ 64 $202
INTERNATIONAL SOLUTIONS II -
BALANCED GROWTH
Class A* $660 $840
Class B $666 (1) $814 (2)
Class B (no redemption) $166 $514
Class C $266 (3) $514
Class C (no redemption) $166 $514
Class I** $ 56 $176
Advisor Class** $ 64 $202
INTERNATIONAL SOLUTIONS III -
MODERATE GROWTH
Class A* $660 $840
Class B $666 (1) $814 (2)
Class B (no redemption) $166 $514
Class C $266 (3) $514
Class C (no redemption) $166 $514
Class I** $ 56 $176
Advisor Class** $ 64 $202
INTERNATIONAL SOLUTIONS IV -
LONG-TERM GROWTH
Class A* $660 $840
Class B $666 (1) $814 (2)
Class B (no redemption) $166 $514
Class C $266 (3) $514
Class C (no redemption) $166 $514
Class I** $ 56 $176
Advisor Class** $ 64 $202
INTERNATIONAL SOLUTIONS V -
AGGRESSIVE GROWTH
Class A* $660 $840
Class B $666 (1) $814 (2)
Class B (no redemption) $166 $514
Class C $266 (3) $514
Class C (no redemption) $166 $514
Class I** $ 56 $176
Advisor Class** $ 64 $202
</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 various levels of risk tolerance by investing in a
broad array of mutual funds that are each managed separately and invest in many
different types of securities and foreign markets.
The Funds' portfolios represent different points along a risk/return continuum,
ranging from lower risk and lower expected return to higher risk and higher
expected return. Each Fund's investments are determined by how the various
underlying funds' return and risk profiles combine at that point in the
continuum that best matches the Fund's investment objective. For example, since
bonds are generally perceived as less risky than stocks, Funds at the more
conservative end of the risk/return continuum (such as International Solutions I
and II) will invest in a higher proportion of bond underlying funds. In doing
so, however, these Funds are less likely to experience the higher potential
returns historically associated with equity investments. By contrast, Funds at
the more aggressive end of the continuum (such as International Solutions IV and
V) will invest in a higher proportion of underlying funds that hold common
stocks, but as a result are exposed to greater price volatility and similar
investment risks.
INTERNATIONAL SOLUTIONS I - CONSERVATIVE GROWTH: The primary investment
objective of the Conservative Growth Fund is capital preservation with moderate
current income, and secondarily capital appreciation. A number of the underlying
funds that make up the Conservative Growth Fund invest primarily in fixed income
securities, with limited exposure to equity securities and their associated
volatility. The Conservative Growth Fund has the highest weighting in foreign
bonds among the five Funds, and therefore is expected to bear the lowest
relative overall risk. The Fund will have a moderate degree of exposure to the
international equity markets, thus making the Fund potentially more volatile
than a mutual fund that invests exclusively in fixed income securities or has
some portion of its assets invested in the United States.
INTERNATIONAL SOLUTIONS II - BALANCED GROWTH: The primary investment
objective of the Balanced Growth Fund is a balance of capital appreciation and
capital preservation, with moderate current income. The Fund's portfolio of
underlying funds is designed to expose the Fund to the growth opportunities that
equity investing offers while preserving some degree of the stability
historically associated with fixed income securities. The Fund's higher emphasis
(relative to the Conservative Growth Fund) on underlying funds that invest in
equity securities may lead to moderately increased volatility, but its equal
emphasis on fixed income securities is expected to reduce its overall risk
relative to the Moderate Growth, Long-term Growth and Aggressive Growth Funds.
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 investment objective of
the Long-term Growth Fund is capital appreciation without regard to current
income. The underlying funds that make up the Long-term Growth Fund invest
primarily in equity securities, which are likely to cause greater fluctuations
in the Fund's share price than would be the case with the Conservative Growth,
Balanced Growth and Moderate Growth Funds (which have varying degrees of
exposure to the historically more stable fixed income markets). The Long-term
Growth Fund also has a moderate to high weighting in emerging markets (but less
than the Aggressive Growth Fund).
INTERNATIONAL SOLUTIONS V - AGGRESSIVE GROWTH: The investment objective of the
Aggressive Growth Fund is aggressive capital appreciation without regard to
current income. The underlying funds that comprise the Aggressive Growth Fund
may have significant holdings in emerging markets securities, which historically
have projected higher growth rates than established markets. However, emerging
market securities have historically experienced greater social, political and
economic risk than developed markets and are therefore more volatile.
Each Fund may from time to time take a temporary defensive position and invest
without limit in U.S. government securities and commercial paper. When a Fund
assumes such a defensive position it may not achieve its investment objective.
Of course, there can be no guarantee that a Fund will achieve its investment
objective even when it is not assuming a defensive position.
11
<PAGE> 12
UNDERLYING FUND RISKS
The main risks associated with investing in each Fund, such as "management
risk," "general market risk" and "foreign securities risk," are described on
page 6 of this Prospectus. Because the return on your investment is tied so
closely to the performance of the underlying funds, a description of the types
of securities in which the underlying funds principally invest and their
associated risks has been provided.
COMMON STOCKS: Many of the underlying funds invest primarily in common stock.
Common stock represents a proportionate ownership interest in the issuing
company, and so the value of common stock rises and falls with a company's
success or failure. The market value of common stock can fluctuate
significantly, with smaller companies being particularly susceptible to price
swings. Transaction costs in smaller company stocks may also be higher than
those of larger companies.
Most likely to be affected: ALL INTERNATIONAL SOLUTIONS FUNDS.
DEBT SECURITIES: Investment in debt securities involves both interest rate and
credit risk. Generally, the value of debt instruments rises and falls inversely
with fluctuations in interest rates. For example, as interest rates decline, the
value of debt securities generally increases. Conversely, rising interest rates
tend to cause the value of debt securities to decrease. A Fund's portfolio is
therefore susceptible to the decline in value of the fixed income funds in which
it invests in a rising interest rate environment. The market value of debt
securities also tends to vary according to the relative financial condition of
the issuer. Bonds with longer maturities tend to be more volatile than bonds
with shorter maturities.
Some of the underlying funds may invest a significant portion of their assets in
low-rated debt securities (sometimes referred to as "high yield" or "junk"
bonds). In general, low-rated debt securities offer higher yields due to the
increased risk that the issuer will be unable to meet its obligations of
interest or principal payments on time. For this reason, however, these bonds
are considered speculative and could significantly weaken the returns of any
underlying fund that holds them in its portfolio.
An underlying fund may also have significant holdings in sovereign debt. For a
variety of reasons (such as cash flow problems, limited foreign reserves, and
political constraints), the governmental entity that controls the repayment of
sovereign debt may not be able or willing to repay the principal or interest
when due. A governmental entity's ability to honor its debt obligations to an
underlying fund may also be contingent on its receipt from others (such as the
International Monetary Fund and more solvent foreign governments) of specific
disbursements. These disbursements may in turn be conditioned on the perceived
health of the governmental entity's economy and/or its implementation of
economic reforms. If any of these conditions fail, an underlying fund could lose
the entire value of its investment for an indefinite period of time.
Most likely to be affected: INTERNATIONAL SOLUTIONS I AND II.
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 of this Prospectus.
Other Important Information
YEAR 2000 RISKS: Many computer software and hardware systems in use today cannot
distinguish between the year 2000 and the year 1900 because of the way dates are
encoded and calculated (the "Year 2000 Problem"). The inability of
computer-based systems to make this distinction could have a seriously adverse
effect on the handling of securities trades, pricing and account services
worldwide. The Funds' service providers are taking steps that each believes are
reasonably designed to address the Year 2000 Problem with respect to the
computer systems that they use. Information about the year 2000 readiness of the
underlying funds is also taken into consideration during the investment decision
making process (though such information may be limited to public filings or
statements from representatives of the underlying funds that are not readily
verifiable). The Funds believe these steps will be sufficient to avoid any
material adverse impact on the Funds. At this time, however, there can be no
assurance that significant problems will not occur (which either directly or
indirectly could cause a Fund to lose money).
EUROPEAN MONETARY UNION: The Funds may have investments in Europe. On January 1,
1999, a new European currency called the "euro" was introduced and adopted for
use by eleven European countries. The transition to daily usage of the euro will
occur during the period from January 1, 1999 through December 31, 2001, at which
time euro bills and coins will be put into circulation. Certain European Union
members, including the United Kingdom, did not officially implement the euro on
January 1, 1999 and may cause market disruptions when and if they decide to do
so. Should this occur, the underlying funds (and hence the Funds that hold their
shares) could experience investment losses.
14
<PAGE> 15
DEPOSITORY INSTRUMENTS: Many of the underlying funds invest in foreign
securities through the mechanism of sponsored and unsponsored "depository
receipts" and "depository shares," which are instruments that evidence ownership
of underlying securities issued by a U.S. or foreign corporation. Unsponsored
depository programs are organized independently without the cooperation of the
issuer of the underlying securities. As a result, information concerning the
issuer may not be as current or as readily available as in the case of sponsored
depository instruments, and their prices may be more volatile than if they were
sponsored by the issuers of the underlying securities.
Most likely to be affected: ALL INTERNATIONAL SOLUTIONS FUNDS.
OTHER RISKS: The underlying funds can use a wide range of other investment
techniques to achieve their respective investment objectives. The risks
associated with these various techniques are described in each underlying fund's
prospectus, and some are summarized in the Funds' Statement of Additional
Information (which is available on request and without charge from the Funds'
distributor at the address printed on the back cover page). Any of these
investment techniques could cause an underlying fund to lose money if not used
successfully or if they are not practically available for investment purposes at
a time when their use would benefit the underlying fund.
The underlying funds that comprise each Fund's portfolio are listed in the
Fund's financial statements, which are available to shareholders upon request
and without charge as soon as they are available after the close of the annual
or semi-annual period to which they relate. The investment objectives and
principal investment strategies of the underlying funds are summarized on pages
24-27 of this Prospectus.
OTHER IMPORTANT INFORMATION
YEAR 2000 RISKS: Many computer software and hardware systems in use today cannot
distinguish between the year 2000 and the year 1900 because of the way dates are
encoded and calculated (the "Year 2000 Problem"). The inability of
computer-based systems to make this distinction could have a seriously adverse
effect on the handling of securities trades, pricing and account services
worldwide. The Funds' service providers are taking steps that each believes are
reasonably designed to address the Year 2000 Problem with respect to the
computer systems that they use. Information about the year 2000 readiness of the
underlying funds is also taken into consideration during the investment decision
making process (though such information may be limited to public filings or
statements from representatives of the underlying funds that are not readily
verifiable). The Funds believe these steps will be sufficient to avoid any
material adverse impact on the Funds. At this time, however, there can be no
assurance that significant problems will not occur (which either directly or
indirectly could cause a Fund to lose money).
EUROPEAN MONETARY UNION: The Funds may have investments in Europe. On January 1,
1999 a new European currency called the "euro" was introduced and adopted for
use by eleven European countries. The transition to daily usage of the euro will
occur during the period from January 1, 1999 through December 31, 2001, at which
time euro bills and coins will be put into circulation. Certain European Union
members, including the United Kingdom, did not officially implement the euro on
January 1, 1999 and may cause market disruptions when and if they decide to do
so. Should this occur, the underlying funds (and hence the Funds that hold their
shares) could experience investment losses.
14
<PAGE> 16
MANAGEMENT
Ivy Management, Inc. ("IMI"), located at Via Mizner Financial Plaza, 700 South
Federal Highway, Boca Raton, Florida 33432, provides investment advisory and
business management services to the Funds using a team approach. IMI's
responsibilities include making investment decisions; assisting with the
preparation of the Funds' financial statements, prospectuses and periodic
reports to shareholders, as well as Federal and state tax reporting; and
providing certain accounting and pricing services. IMI is an SEC-registered
investment advisor with over $5 billion in assets under management, and also
advises and provides business management services to the Ivy Funds.
Garmaise Investment Technologies (US) Inc. ("GIT"), 30 St. Clair Avenue West,
Suite 1110, Toronto, Ontario, Canada, M4V 3A1, provides asset allocation
consulting services to IMI in connection with the Funds pursuant to a
subadvisory contract with IMI. The president of GIT, an SEC-registered
investment advisor, has over 20 years of investment advisory experience and uses
a proprietary computer-based method of portfolio selection known as
"Optimization." GIT's responsibilities include making recommendations to IMI
regarding the underlying funds that comprise each Fund's portfolio and
determining when changing the relative mix of underlying funds within a Fund's
portfolio may be appropriate in light of prevailing market conditions.
For the combined services provided by IMI and GIT, each Fund pays a fee at the
annual rate of 0.25% of the Fund's average net assets.
SHAREHOLDER INFORMATION
PRICING OF FUND SHARES
Each Fund calculates its net asset value per share ("NAV") by dividing the value
of its net assets by the total number of its shares outstanding as of the close
of regular trading (usually 4:00 p.m. Eastern time) on the New York Stock
Exchange on each day the Exchange is open for trading (normally any weekday that
is not a national holiday). The value of a Fund's net assets on any given day is
based almost entirely on the NAV of the underlying funds whose shares are held
in the Fund's portfolio. Each underlying fund is responsible for determining its
own NAV on any given day.
The number of shares you receive when you place a purchase or exchange order,
and the payment you receive after submitting a redemption request, is based on
the Fund's net asset value next determined after your instructions are received
in proper form by Ivy Mackenzie Services Corp. ("IMSC"), the Funds' transfer
agent, or by your registered securities dealer. If you are buying Class A
shares, the number of shares you receive will be reduced by an amount that is
equal to the value of the front-end sales charge that applies to Class A shares
(see "Class A Shares" below).
HOW TO BUY SHARES
The essential features of the Funds' different classes of shares are described
in the following table. If you do not specify on your Account Application which
class of shares you are purchasing, it will be assumed that you are purchasing
Class A shares.
15
<PAGE> 17
Each Fund has adopted separate distribution plans pursuant to Rule 12b-1 under
the 1940 Act for its Class A, B and C shares that allow the Fund to pay
distribution and other fees for the sale and distribution of its shares and for
services provided to shareholders. Because these fees are paid out of each
Fund's assets on an ongoing basis, over time they will increase the cost of your
investment and may cost you more than paying other types of sales charges.
The following table displays the various investment minimums, sales charges and
expenses that apply to each class:
<TABLE>
<CAPTION>
MINIMUM MINIMUM CONTINGENT
FUND INITIAL SUBSEQUENT INITIAL SALES DEFERRED SALES SERVICE AND
CLASS INVESTMENT* INVESTMENT* CHARGE CHARGE DISTRIBUTION FEES
- ------------- ----------- ----------- ---------------- -------------- -------------------
<S> <C> <C> <C> <C> <C>
Class A $ 1,000 $ 100 Maximum 5.75%, None, except on 0.25% Service fee
with options for certain NAV
a reduction. purchases
Class B $ 1,000 $ 100 None Maximum 5%, 0.25% Service fee
declining over six and 0.75%
years Distribution fee
Class C $ 1,000 $ 100 None 1% for the first 0.25% Service fee
year and 0.75%
Distribution fee
Class I $ 5,000,000 $ 10,000 None None None
$ 10,000
Advisor Class $ 250 None None None
</TABLE>
* Minimum initial and subsequent investments for retirement plans are $25.
Class A Shares
INITIAL SALES CHARGE
Class A shares are sold at a public offering price equal to their NAV plus an
initial sales charge, as set forth below (the sales charge is reduced as the
amount invested increases):
<TABLE>
<CAPTION>
SALES CHARGE SALES CHARGE PORTION OF PUBLIC
AS A PERCENTAGE OF AS A PERCENTAGE OF OFFERING PRICE
AMOUNT INVESTED PUBLIC OFFERING PRICE NET AMOUNT INVESTED RETAINED BY DEALER
--------------------- ------------------- ------------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than $100,000 5.25% 5.54% 4.50%
$100,000 but less than $250,000 4.50% 4.71% 3.75%
$250,000 but less than $500,000 3.00% 3.09% 2.50%
$500,000 or over 0.00% 0.00% 0.00%
</TABLE>
* A Contingent Deferred Sales Charge ("CDSC") of 0.50% may apply to Class A
shares that are redeemed within 12 months of the end of the month in which they
were purchased. Class A shares that are acquired through reinvestment of
dividends or distributions are not subject to an initial sales charge.
16
<PAGE> 18
HOW TO REDUCE YOUR INITIAL SALES CHARGE
- - "Rights of Accumulation" permits you to pay the sales charge that applies
to the cost or value (whichever is higher) of all International Solutions
Class A shares you own.
- - A "Letter of Intent" permits you to pay the sales charge that would apply
to your cumulative purchase of Fund shares over a 13-month period (certain
restrictions apply).
HOW TO ELIMINATE YOUR INITIAL SALES CHARGE
You may purchase Class A shares at NAV (without an initial sales charge or a
CDSC):
- - through certain investment advisors and financial planners who charge a
management, consulting or other fee for their services;
- - under certain qualified retirement plans;
- - as an employee or director of Mackenzie Investment Management Inc. or its
affiliates;
- - as an employee of a selected dealer; or
- - through the Merrill Lynch Daily K Plan (the "Plan"), provided the Plan has
at least $3 million in assets or over 500 or more eligible employees.
Certain trust companies, bank trust departments, credit unions, savings and
loans and other similar organizations may be also exempt from the initial sales
charge on Class A shares.
You may also purchase Class A shares at NAV if you are investing at least
$500,000 through a dealer or agent. Ivy Mackenzie Distributors, Inc. ("IMDI"),
the Funds' distributor, may pay the dealer or agent (out of IMDI's own
resources) for its distribution assistance according to the following schedule:
<TABLE>
<CAPTION>
PURCHASE AMOUNT COMMISSION
--------------- ----------
<S> <C>
First $3,000,000 0.50%
Next $2,000,000 0.25%
Over $5,000,000 0.10%
</TABLE>
IMDI may from time to time pay a bonus or other cash incentive to dealers (other
than IMDI) including, for example, those which employ a registered
representative who sells a minimum dollar amount of the shares of a Fund and/or
other funds distributed by IMDI during a specified time period.
Each Fund may, from time to time, waive the initial sales charge on its Class A
shares sold to clients of certain dealers meeting criteria established by IMDI.
This privilege will apply only to Class A shares of a Fund that are purchased
using proceeds obtained by such clients by redeeming another mutual fund's
shares on which a sales charge was paid. Purchases must be made within 60 days
of redemption from the other fund, and the Class A shares purchased are subject
to a 1.00% CDSC if redeemed within the first year after purchase.
SERVICE FEE
Class A shares are subject to an ongoing service fee at an annual rate of up to
0.25% of a Fund's average net assets attributable to its Class A shares.
17
<PAGE> 19
CLASS B AND CLASS C SHARES
CONTINGENT DEFERRED SALES CHARGE
Class B and Class C shares are not subject to an initial sales charge but are
subject to a CDSC. If you redeem your Class C shares within one year of purchase
they will be subject to a CDSC of 1.00%. Class B shares redeemed within six
years of purchase will be subject to a CDSC at the following rates:
<TABLE>
<CAPTION>
CDSC AS A PERCENTAGE
OF DOLLAR AMOUNT
YEAR SINCE PURCHASE SUBJECT TO CHARGE
---------------------- --------------------
<S> <C>
First 5.00%
Second 4.00%
Third 3.00%
Fourth 3.00%
Fifth 2.00%
Sixth 1.00%
Seventh and thereafter 0.00%
</TABLE>
The CDSC for both Class B and Class C shares will be assessed on an amount equal
to the lesser of the current market value or the original purchase cost of the
shares being redeemed. No charge will be assessed on increases in account value
above the original purchase price or on reinvested dividends and distributions.
Shares will be redeemed on a lot-by-lot basis in the following order:
- - shares held more than six years;
- - shares acquired through reinvestment of dividends and distributions;
- - shares subject to the lowest CDSC percentage, on a first-in, first-out
basis
(1) with the portion of the lot attributable to capital appreciation,
which is not subject to a CDSC, redeemed first; then
(2) the portion of the lot attributable to your original basis, which is
subject to a CDSC.
WAIVER OF THE CDSC
The CDSC for Class B shares is waived for:
- - certain post-retirement withdrawals from an IRA or other retirement plan if
you are over 59 1/2 years old.
- - redemptions by certain eligible 401(a) and 401(k) plans and certain
retirement plan rollovers.
- - redemption resulting from a tax-free return of excess contribution to an
IRA.
- - withdrawals resulting from shareholder death or disability provided that
the redemption is requested within one year of death or disability.
- - withdrawals through the Systematic Withdrawal Plan of up to 12% per year of
your account value at the time the plan is established.
- - redemptions through the Merrill Lynch Daily K Plan, if the Plan has less
than $3 million in assets or fewer than 500 eligible employees. For further
information see "Group Systematic Investment Program" in the SAI.
18
<PAGE> 20
SERVICE AND DISTRIBUTION FEE
Both Class B shares and Class C shares are subject to an ongoing service and
distribution fee at a combined annual rate of up to 1.00% of a Fund's average
net assets attributable to its Class B or Class C shares. The ongoing
distribution fees will cause these shares to have a higher expense ratio than
that of Class A, Class I and Advisor Class shares. IMDI uses the money that it
receives from the deferred sales charge and the distribution fees to cover
various promotional and sales related expenses, as well as expenses related to
providing distribution services, such as compensating selected dealers and
agents for selling these shares.
SHARE CONVERSION FEATURE
Approximately eight years after the original date of purchase, your Class B
shares will be converted automatically to Class A shares. Class A shares are
subject to lower annual expenses than Class B shares. The conversion from Class
B shares to Class A shares is not considered a taxable event for federal income
tax purposes. Class C shares do not have a similar conversion feature.
CLASS I AND ADVISOR CLASS SHARES
Class I and Advisor Class shares are not subject to an initial sales charge or a
CDSC, nor to ongoing service or distribution fees. Class I shares are offered
only to institutions and certain individuals. Advisor Class shares are offered
only to the following investors:
- - trustees or other fiduciaries purchasing shares for employee benefit plans
that are sponsored by organizations that have at least 1,000 employees;
- - any account with assets of at least $10,000 if (a) a financial planner,
trust company, bank trust department or registered investment adviser has
investment discretion, and where the investor pays such person as
compensation for his advice and other services an annual fee of at least
0.50% on the assets in the account, or (b) such account is established
under a "wrap fee" program and the account holder pays the sponsor of the
program an annual fee of at least 0.50% on the assets in the account;
- - officers and Trustees of Mackenzie Solutions (and their relatives);
- - directors or employees of Mackenzie Investment Management Inc. or its
affiliates; and
- - directors, officers, partners, registered representatives, employees and
retired employees (and their relatives) of dealers having a sales agreement
with IMDI (or trustees or custodians of any qualified retirement plan or
IRA established for the benefit of any such person).
19
<PAGE> 21
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> 22
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> 23
IMPORTANT REDEMPTION INFORMATION
- - A CDSC may apply to certain Class A share redemptions, to Class B shares
redeemed within 6 years of purchase, and to Class C shares that are
redeemed within one year of purchase.
- - All redemptions are made at the NAV next determined after a redemption
request has been received in good order. Requests for redemptions must be
received by IMSC by 4:00 p.m. Eastern time to be processed at the NAV for
that day. Any redemption request that is received after 4:00 p.m. Eastern
time will be processed at the price determined on the following business
day.
- - If you own shares of more than one class of a Fund, the Fund will redeem
first the shares having the highest 12b-1 fees, unless you instruct
otherwise.
- - Within a class of shares, any shares subject to a CDSC will be redeemed
last unless you specifically elect otherwise.
- - Class B and Class C shares will be redeemed in the order described under
"Class B and Class C Shares -- Contingent Deferred Sales Charge".
- - A Fund may (on 60 days' notice) redeem the accounts of shareholders whose
investment, including sales charges paid, has been less than $1,000 for
more than 12 months.
- - A Fund may take up to seven days (or longer in the case of shares recently
purchased by check) to send redemption proceeds.
HOW TO EXCHANGE SHARES
You may exchange your Fund shares for shares of another Fund, subject to certain
restrictions (see "Important Exchange Information" below).
SUBMITTING YOUR EXCHANGE ORDER
You may submit an exchange request to IMSC as follows:
- - BY MAIL - Send your written exchange request to IMSC at one of the
addresses on page 20 of this Prospectus. Be sure that all registered
owners listed on the account sign the request.
- - BY TELEPHONE - Call IMSC at (800) 821-4350 to authorize an exchange
transaction. To process your exchange order by telephone, you must have
telephone exchange privileges on your account (see section 6E of the
Account Application). IMSC employs reasonable procedures that require
personal identification prior to acting on exchange instructions
communicated by telephone to confirm that such instructions are genuine. In
the absence of such procedures, a Fund or IMSC may be liable for any losses
due to unauthorized or fraudulent telephone instructions.
IMPORTANT EXCHANGE INFORMATION
- - You must exchange into the same share class you currently own.
- - Exchanges are considered taxable events and may result in a capital gain or
a capital loss for tax purposes.
- - It is the policy of the Funds to discourage the use of the exchange
privilege for the purpose of timing short-term market fluctuations. A Fund
may therefore limit the frequency of exchanges by a shareholder or cancel a
shareholder's exchange privilege if at any time it appears that such market
timing strategies are being used. For example, shareholders exchanging more
than five times in a 12-month period may be considered to be using
market-timing strategies.
22
<PAGE> 24
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> 25
INVESTMENT OBJECTIVES AND STRATEGIES
OF THE UNDERLYING FUNDS
Following is a brief description of the investment objectives and principal
investment strategies of the underlying funds. The risks associated with certain
of these investment practices are described in "Additional Information About
Investment Strategies and Risks" and in the SAI. The following information and
the risk information contained in this Prospectus and in the SAI is merely a
summary and should not be relied upon as a complete statement of the investment
techniques that the underlying funds may use to achieve their respective
investment objectives. Additional information about the Ivy Funds may be
obtained by calling or writing to IMDI (which distributes the Ivy Fund's shares)
at the phone number and address printed on the back cover page of this
Prospectus. Contact information relating to the other underlying funds is also
available through IMDI.
EQUITY UNDERLYING FUNDS
BT INVESTMENT INTERNATIONAL EQUITY PORTFOLIO, managed by Bankers Trust, has
an investment objective of long-term capital appreciation from investment in
foreign equity securities (or other securities with equal characteristics); the
production of any current income is incidental to this objective. The Portfolio
invests at least 65% of the value of its total assets in the equity securities
of foreign issuers, consisting of common stock and other securities with equity
characteristics. These issuers are primarily established companies based in
developed countries outside the United States. However, the Portfolio may also
invest in securities of issuers in underdeveloped countries. The Portfolio will
at all times be invested in the securities of issuers based in at least three
countries other than the United States.
IVY INTERNATIONAL FUND II's principal investment objective is long-term capital
growth. Consideration of current income is secondary to this principal
objective. The Fund invests at least 65% of its assets in equity securities
principally traded in European, Pacific Basin and Latin American markets. To
control its exposure to certain risks, the Fund might engage in foreign currency
exchange transactions and forward foreign currency contracts.
IVY INTERNATIONAL SMALL COMPANIES FUND seeks long-term growth. Consideration of
current income is secondary to this principal objective. The Fund invests at
least 65% of its assets in the common stock of foreign issuers having total
market capitalization of less than $1 billion. The Fund might engage in foreign
currency exchange transactions and forward foreign currency contracts to control
its exposure to certain risks.
IVY PAN-EUROPE FUND's principal investment objective is long-term capital
growth. Consideration of current income is secondary to this principal
objective. The Fund invests at least 65% of its assets in the equity securities
of large and medium-sized European companies.
THE JAPAN FUND, INC., managed by Scudder Kemper Investments, seeks to provide
long-term capital appreciation. The Fund pursues its objective by investing at
least 80% of its assets in Japanese securities (including American Depository
Receipts). The Fund invests primarily in the common stock of Japanese companies.
It anticipates that most equity securities of Japanese companies in which it
invests will be listed on Japanese securities exchanges. However, the Fund may
also invest up to 30% of its net assets in equity securities that are traded in
an over-the-counter market.
LAZARD INTERNATIONAL EQUITY PORTFOLIO is a non-diversified fund that seeks
long-term capital appreciation. The Portfolio invests primarily in equity
securities, principally common stocks, of relatively large non-U.S. companies
with market capitalizations in the range of the Morgan Stanley Capital
International (MSCI) Europe, Australasia and Far East Index. The percentage
24
<PAGE> 26
of the Portfolio's assets invested in particular geographic sectors may shift
from time to time based on the investment manager's judgment. Ordinarily, the
Portfolio invests in at least three different foreign countries.
LAZARD INTERNATIONAL SMALL CAP PORTFOLIO is a non-diversified fund that seeks
long-term capital appreciation. The Portfolio invests primarily in equity
securities, principally common stocks, of relatively small, non-U.S. companies
in the range of the Morgan Stanley Capital International (MSCI) Europe,
Australasia and Far East Small Cap Index. The percentage of the Portfolio's
assets invested in particular geographic sectors may shift from time to time
based on the investment manager's judgment. Ordinarily, the Portfolio invests in
at least three different foreign countries.
MONTGOMERY INTERNATIONAL GROWTH FUND seeks long-term capital appreciation by
investing in medium- and large-cap companies in developed stock markets outside
the United States. The Fund invests at least 65% of its total assets in the
common stocks of companies outside the United States whose shares have a stock
market value (market capitalization) of more than $1 billion. The Fund currently
concentrates its investments in the stock markets of western Europe,
particularly the United Kingdom, France, Germany, Italy and the Netherlands, as
well as developed markets in Asia, such as Japan and Hong Kong. The Fund
typically invests in at least three countries outside the United States, with no
more than 40% of its assets in any one country.
SCUDDER GREATER EUROPE GROWTH FUND is a non-diversified fund that seeks to
provide long-term growth of capital. The Fund seeks to achieve its investment
objective by investing at least 80% of its total assets in the equity securities
of European companies. The Fund expects that it will invest primarily in the
more established and liquid countries of Western and Southern Europe. However,
the Fund may also invest in the lesser developed Southern and Eastern European
markets as well as in the former communist countries of the Soviet Union. The
Fund intends to allocate its investments among at least three countries.
SCUDDER INTERNATIONAL FUND seeks long-term growth of capital primarily from
foreign equity securities. The Fund invests in companies, wherever organized,
which do business primarily outside the United States. The Fund intends to
diversify investments among several countries and to have represented in this
portfolio, in substantial proportions, business activities in not less than
three different countries other than the U.S.
WARBURG PINCUS INTERNATIONAL EQUITY FUND seeks long-term capital appreciation.
Under normal market conditions, the Fund will invest at least 65% of assets in
equity securities of issuers from at least three foreign countries. The Fund
intends to diversify its investments across different countries, although at
times it may invest a significant part of its assets in a single country.
Although the Fund emphasizes developed countries, it may also invest in emerging
markets.
WARBURG PINCUS JAPAN GROWTH FUND seeks long-term growth of capital. The Fund may
invest in companies of any size, whether traded on an exchange or
over-the-counter. Under normal market conditions, the Fund will invest at least
65% of assets in equity securities of Japanese issuers. The remaining portion
may be invested in securities of other Asian issuers.
WARBURG PINCUS JAPAN SMALL COMPANY FUND seeks long-term capital appreciation.
Under normal market conditions, the Fund will invest at least 65% of assets in
equity securities of small Japanese companies. Once the 65% policy is met, the
Fund may invest in Japanese or other Asian companies of any size. The Fund will
not invest more than 10% of assets in any one country except Japan.
EMERGING MARKET UNDERLYING FUNDS
IVY ASIA PACIFIC FUND's principal investment objective is long-term growth.
Consideration of current income is secondary to this principal objective. The
Fund invests at least 65% of its assets in
25
<PAGE> 27
equity securities issued in Asia Pacific countries, which include China, Hong
Kong, India, Indonesia, Malaysia, Pakistan, the Philippines, Singapore, Sri
Lanka, South Korea, Taiwan, Thailand and Vietnam.
IVY CHINA REGION FUND's principal investment objective is long-term capital
growth. Consideration of current income is secondary to this principal
objective. The Fund invests at least 65% of its assets in the equity securities
of companies that are located or have a substantial business presence in the
China Region, which includes China, Hong Kong, Taiwan, South Korea, Singapore,
Malaysia, Thailand, Indonesia and the Philippines. The Fund may also invest in
equity securities of companies whose current or expected performance is
considered to be strongly associated with the China Region. A large portion of
the Fund is likely to be invested in equity securities of companies that trade
in Hong Kong.
IVY DEVELOPING NATIONS FUND's principal investment objective is long-term
growth. Consideration of current income is secondary to this principal
objective. The Fund invests at least 65% of its assets in equity securities of
companies that are located in, or are expected to profit from, countries whose
markets are generally considered to be "developing" or "emerging". The Fund may
invest more than 25% of its assets in a single country, but usually will hold
securities from at least three emerging market countries in its portfolio.
IVY SOUTH AMERICA FUND is a non-diversified fund with a principal investment
objective of long-term growth. Consideration of current income is secondary to
this principal objective. The Fund invests at least 65% of its assets in equity
securities and government and corporate debt securities issued throughout South
America, Central America and the Spanish-speaking islands of the Caribbean. The
Fund is likely to have significant investments in Argentina, Brazil, Chile,
Colombia, Peru and Venezuela. The Fund may invest in low rated debt securities
to increase its potential yield.
LAZARD EMERGING MARKETS PORTFOLIO is a non-diversified fund that seeks long-term
capital appreciation. The Portfolio invests primarily in equity securities,
principally common stocks, of non-U.S. companies whose principal activities are
in emerging market countries. Emerging market countries include all countries
represented by the Morgan Stanley Capital International Emerging Markets (Free)
Index, which currently includes: Argentina, Brazil, Chile, China, Colombia, the
Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Israel, Jordan, Korea,
Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Russia, Sri
Lanka, South Africa, Taiwan, Thailand, Turkey and Venezuela.
MONTGOMERY EMERGING MARKETS FUND seeks long-term capital appreciation by
investing in companies based or operating primarily in developing economies
throughout the world. The Fund invests at least 65% of its total assets in the
stocks of companies based in the world's developing economies, and typically
maintains investments in at least six different countries (with no more than 35%
of its assets in any single one of them). The geographic regions in which the
Fund may focus its investments include Latin America, Asia, Europe, the Middle
East and Africa.
SCUDDER EMERGING MARKETS GROWTH FUND is a non-diversified fund that seeks
long-term growth of capital. The Fund seeks to achieve its objective by
investing at least 65% of its total assets in the equity securities of emerging
market issuers around the globe. The Fund currently weights its investments more
heavily in countries in Latin America. However, the Fund may pursue investment
opportunities in Asia, Africa, the Middle East and the developing countries of
Europe, primarily in Eastern Europe.
SCUDDER LATIN AMERICA FUND is a non-diversified fund that seeks long-term
capital appreciation. The Fund pursues its investment objective by investing at
least 65% of its total assets in the securities of Latin American issuers, and
50% of the Fund's total assets will be invested in Latin American equity
securities. To meet its objective, the Fund normally invests at least 65% of its
total
26
<PAGE> 28
assets in equity securities. The Fund defines Latin America as Mexico, Central
America, South America and the Spanish-speaking islands of the Caribbean. The
Fund expects to focus its investments in Argentina, Brazil, Chile, Colombia,
Mexico and Peru and may invest in other Latin American countries when the
portfolio management team deems it appropriate. The Fund intends to allocate its
assets among at least three countries.
SCUDDER PACIFIC OPPORTUNITIES FUND is a non-diversified fund that seeks to
provide long-term growth of capital. The Fund pursues its objective by investing
at least 65% of its total assets in equity securities of Pacific Basin
companies, excluding Japan. Pacific Basin countries include Australia, the
Peoples Republic of China, India, Indonesia, Malaysia, New Zealand, the
Philippines, Sri Lanka, Pakistan and Thailand, as well as Hong Kong, Singapore,
South Korea and Taiwan. The Fund may invest in the securities of other Pacific
Basin countries when the markets in such countries become sufficiently
developed. The Fund will not invest in Japanese securities. The Fund intends to
invest in at least three countries.
FIXED INCOME UNDERLYING FUNDS
IVY INTERNATIONAL STRATEGIC BOND FUND seeks total return and, consistent with
that objective, to maximize current income. The Fund invests at least 65% of its
assets in a managed portfolio of foreign bonds. The Fund may also invest in U.S.
bonds. The types of debt securities the Fund may hold include corporate,
government, and mortgage or asset backed securities. At least 65% of the value
of the Fund's portfolio is expected to be rated in the four highest rating
categories used by Moody's and S&P. Among the other securities and investment
techniques that the Fund's manager considers important in achieving the Fund's
investment objective (or in controlling the Fund's exposure to risk) are low
rated debt securities (commonly referred to as "high yield" or "junk" bonds) and
derivative investment techniques (such as options, futures, interest rate and
credit swaps, and foreign currency exchange transactions).
LAZARD INTERNATIONAL FIXED-INCOME PORTFOLIO is a non-diversified fund that seeks
maximum total return from a combination of capital appreciation and current
income. The Portfolio generally invests at least 80% of its total assets in
fixed-income securities of companies within, or governments, their agencies or
instrumentalities of, at least three different non-U.S. countries. The
investment manager of the Fund currently intends to invest the Portfolio's
assets primarily in companies within, or governments of, Continental Europe, the
United Kingdom, Canada and the Pacific Basin. The Portfolio generally invests at
least 85% of its total assets in investment grade fixed-income securities and
may invest up to 15% of its total assets in fixed-income securities rated below
investment grade ("junk bonds"). Under normal market conditions, the Portfolio's
effective duration (a measure of interest rate sensitivity) will range between
two and eight years.
SCUDDER INTERNATIONAL BOND FUND is a non-diversified fund with a primary
objective of income. As a secondary objective, the Fund seeks protection and
possible enhancement of principal. The Fund pursues its investment objectives by
investing at least 65% of its total assets in high-quality bonds denominated in
foreign currencies with credit ratings within the three highest rating
categories of one or more nationally recognized rating associations, or, if
unrated, considered to be of comparable quality by the adviser. The Fund may
invest up to 15% of its net assets in bonds rated below investment-grade.
Securities rated below investment-grade (commonly referred to as "junk bonds"),
entail greater risks than investment-grade bonds.
ALL UNDERLYING FUNDS
For temporary or emergency purposes or to assume a defensive position when
market conditions warrant, an underlying fund may, to the extent described in
its prospectus, (i) borrow money from banks and (ii) invest without limit in
cash, U.S. government securities, commercial paper and similar money market
securities.
27
<PAGE> 29
HOW TO RECEIVE MORE INFORMATION
Additional information about the Funds and their investments is contained in the
Statement of Additional Information for the Funds dated June 29, 1999 (the
"SAI"), which is incorporated by reference into this Prospectus and is available
upon request and without charge from IMDI at the distributor's address below.
Information about the Funds (including the SAI) may also be reviewed and copied
at the SEC's Public Reference Room in Washington, D.C. (please call
1-800-SEC-0330 for further details). Copies of this information may be obtained,
upon payment of a copying fee, by writing the Public Reference Section of the
SEC, Washington, D.C. 20549-6009. Information about the Funds is also available
on the SEC's Internet Website (www.sec.gov).
SHAREHOLDER INQUIRIES
Please call Ivy Mackenzie Services Corp., the Funds' transfer agent, at the
phone number listed below for other information or shareholder inquiries about
the Funds.
BOARD OF TRUSTEES OFFICERS
Keith J. Carlson Michael G. Landry, Chairman
Ian Carmichael Keith J. Carlson, President
P. Rodney Cunningham Ted A. Parkhill, Vice President
Gary D. Ellis C. William Ferris, Secretary/Treasurer
Michael G. Landry
LEGAL COUNSEL AUDITORS
Dechert Price & Rhoads PricewaterhouseCoopers LLP
Boston, Massachusetts Fort Lauderdale, Florida
CUSTODIAN INVESTMENT MANAGER
Brown Brothers Harriman & Co. Ivy Management, Inc.
Boston, Massachusetts Boca Raton, Florida
TRANSFER AGENT DISTRIBUTOR
Ivy Mackenzie Services Corp. Ivy Mackenzie Distributors, Inc.
PO Box 3022 700 South Federal Highway
Boca Raton, Florida 33431-0922 Boca Raton, Florida 33432
(800) 821-4350 (800) 821-4347
Investment Company Act File No. 811-09107
IS0799PR01 (International
Solutions Logo)
<PAGE> 30
(INTERNATIONAL SOLUTIONS)
ACCOUNT APPLICATION
PLEASE MAIL APPLICATIONS AND CHECKS TO: Ivy Mackenzie Services Corp., P.O. Box
3022, Boca Raton, FL 33431-0922
Make sure both pages of this application are included.
This application should not be used for retirement accounts for which
Mackenzie Solutions (IBT) is custodian.
FUND USE ONLY
- ---------------------- ------------------------ ------------------------
ACCOUNT NUMBER DEALER/BRANCH/REP ACCOUNT TYPE/SOC CD
1. REGISTRATION
[ ] Individual [ ] Estate [ ] Corporation [ ] Sole Proprietor
[ ] Joint Tenant [ ] UGMA/UTMA [ ] Partnership
[ ] Trust --------------------- [ ] Other -----------------------
- -------------------------------------------------------------------------------
Owner, Custodian or Trustee
- -------------------------------------------------------------------------------
Co-owner or Minor
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Street
- -------------------------------------------------------------------------------
City State Zip Code
<TABLE>
<S> <C>
- - - -
------------------------------------------ ------------------------------------------
Phone Number -- Day Phone Number -- Evening
</TABLE>
2. TAX ID NUMBER
<TABLE>
<S> <C>
- - or -
-------------------------------------- -----------------------------------
Social Security Number Tax Identification Number
<CAPTION>
<S> <C> <C>
Citizenship: [ ] U.S.
[ ] Other
-----------------------------
</TABLE>
<TABLE>
<S> <C> <C>
UNDER PENALTY OF PERJURY, I CERTIFY BY SIGNING IN SECTION 8 BELOW THAT: (1) THE NUMBER SHOWN IN
THIS SECTION IS MY CORRECT TAXPAYER IDENTIFICATION NUMBER (TIN), AND (2) I AM NOT SUBJECT TO BACKUP
WITHHOLDING BECAUSE: (A) I HAVE NOT BEEN NOTIFIED BY THE INTERNAL REVENUE SERVICE (IRS) THAT I AM
SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF A FAILURE TO REPORT ALL INTEREST OR DIVIDENDS, OR (B)
THE IRS HAS NOTIFIED ME THAT I AM NO LONGER SUBJECT TO BACKUP WITHHOLDING. (CROSS OUT ITEM (2) IF
YOU HAVE BEEN NOTIFIED BY THE IRS THAT YOU ARE CURRENTLY SUBJECT TO BACKUP WITHHOLDING BECAUSE OF
UNDERREPORTING INTEREST OR DIVIDENDS ON YOUR TAX RETURN.) PLEASE SEE THE "TAX CONSEQUENCES" SECTION
OF THE PROSPECTUS FOR ADDITIONAL INFORMATION.
</TABLE>
3. DEALER INFORMATION
<TABLE>
<S> <C> <C>
The undersigned ("Dealer") agrees to all applicable provisions in this Application, guarantees the
signature and legal capacity of the Shareholder, and agrees to notify Ivy Mackenzie Services Corp.
of any purchases made under a Letter of Intent or Rights of Accumulation.
----------------------------------------------- -----------------------------------------------
Dealer Name Representative's Name and Number
----------------------------------------------- -----------------------------------------------
Branch Office Address Representative's Phone Number
----------------------------------------------- -----------------------------------------------
City State Zip Code Authorized Signature of Dealer
</TABLE>
<PAGE> 31
4. INVESTMENTS
<TABLE>
<S> <C> <C> <C>
A. Enclosed is my check ($1,000 minimum) for $ --------------- made payable to the appropriate
International Solutions fund.*
B. Please invest in [ ] Class A [ ] Class B [ ] Class C [ ] Class I [ ] Advisor Class of the
following fund(s):
$ --------------- International Solutions I - Conservative Growth
$ --------------- International Solutions II - Balanced Growth
$ --------------- International Solutions III - Moderate Growth
$ --------------- International Solutions IV - Long-term Growth
$ --------------- International Solutions V - Aggressive Growth
C. I qualify for a reduction or elimination of the sales charge due to the following privilege (applies
only to Class A Shares):
[ ] New Letter of Intent (if ROA or 90-day backdate privilege is applicable, provide account(s)
information below.)
[ ] ROA, with the account(s) listed below.
[ ] Existing Letter of Intent, with accounts listed below.
Fund Name ------------------------------- Account Number------------------------------
Fund Name ------------------------------- Account Number------------------------------
In establishing a Letter of Intent, you will need to purchase Class A shares over a 13-month period
in accordance with the provisions in the Prospectus. The aggregate amount of these purchases will be
at least equal to the amount indicated below (see Prospectus for minimum amount required for reduced
sales charges.)
[ ] $50,000 [ ] $100,000 [ ] $250,000 [ ] $500,000
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
D. FOR DEALER USE ONLY
Confirmed trade orders:
--------------------- --------------------- ---------------------
Confirm Number Number of Shares Trade Date
*If investing in more than one Fund, make your check payable to "International Solutions".
</TABLE>
5. DISTRIBUTION OPTIONS
I would like to reinvest dividends and capital gains into additional shares of
the same class in this account at net asset value unless a different option is
checked below:
<TABLE>
<S> <C> <C> <C>
A. [ ] Reinvest all dividends and capital gains into additional shares of the same class of a different
International Solutions fund.
Fund Name ------------------------------- Account Number ------------------------------
B. [ ] Pay all dividends in cash and reinvest capital gains into additional shares of the same class of
this Fund, or in a different International Solutions fund.
Fund Name ------------------------------- Account Number ------------------------------
C. [ ] Pay all dividends and capital gains in cash.
I REQUEST THE ABOVE CASH DISTRIBUTION, SELECTED IN B OR C ABOVE, TO BE SENT TO:
[ ] the account address of record listed in Section 1.
[ ] the special payee listed in Section 7A (by mail).
[ ] the special payee listed in Section 7B (by EFT).
</TABLE>
<PAGE> 32
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> 33
7. SPECIAL PAYEE
If you would like to receive your redemption proceeds at an address different
than the one listed in Section 1 of this application, complete Section 7A
and/or 7B below.
<TABLE>
<S> <C> <C> <C>
A. SPECIAL PAYEE MAILING ADDRESS
----------------------------------------------------------------------------------------------------
Name of Bank or Individual
----------------------------------------------------------------------------------------------------
Account Number (if applicable)
----------------------------------------------------------------------------------------------------
Street
----------------------------------------------------------------------------------------------------
City/State/Zip
---------------------------------------------------------------------------------------------------------
B. SPECIAL PAYEE FED WIRE / E.F.T. INFORMATION
----------------------------------------------------------------------------------------------------
Financial Institution
--------------------------------------------- ---------------------------------------------------
ABA # Account Number
----------------------------------------------------------------------------------------------------
Street
----------------------------------------------------------------------------------------------------
City/State/Zip
(Please attach a voided check)
</TABLE>
8. SIGNATURES
Investors should be aware that failure to check "No" under Section 6D or 6E of
this application means that the Telephone Exchange or Telephone Redemption
Privileges will be provided. The Funds employ reasonable procedures that require
personal identification prior to acting on exchange/redemption instructions
communicated by telephone to confirm that such instructions are genuine. In the
absence of such procedures, a Fund may be liable for any losses due to
unauthorized or fraudulent telephone instructions. Please see "How to Exchange
Shares" and "How to Redeem Shares" in the Prospectus for more information on
these privileges.
I certify to my legal capacity to purchase or redeem shares of the Fund for my
own account or for the account of the organization named in Section 1. I have
received a current Prospectus and understand its terms are incorporated in this
application by reference. I am certifying my taxpayer information as stated in
Section 2.
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF
THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP
WITHHOLDING.
<TABLE>
<S> <C>
- ------------------------------------------------------------ -------------------------------------
Signature of Owner, Custodian, Trustee or Corporate Officer Date
- ------------------------------------------------------------ -------------------------------------
Signature of Joint Owner, Co-Trustee or Corporate Officer Date
</TABLE>
(REMEMBER TO SIGN SECTION 8)
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
June 28, 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 June 28, 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. ("IMI")
Via Mizner Financial Plaza, Suite 300
700 South Federal Highway
Boca Raton, Florida 33432
Telephone: (800) 777-6472
DISTRIBUTOR
Ivy Mackenzie Distributors, Inc. ("IMDI")
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....................................3
INVESTMENT OBJECTIVES AND STRATEGIES.............................4
RISKS...........................................................19
INVESTMENT RESTRICTIONS..................................................23
MANAGEMENT OF THE FUNDS..................................................23
TRUSTEES AND OFFICERS...........................................23
COMPENSATION TABLE..............................................26
INVESTMENT ADVISORY AND OTHER SERVICES...................................27
INVESTMENT MANAGER..............................................27
ASSET ALLOCATION CONSULTANT.....................................29
TERM AND TERMINATION OF ADVISORY AGREEMENT
AND SUBADVISORY AGREEMENT.......................................29
PERSONAL INVESTMENTS BY EMPLOYEES OF IMI AND GIT................29
CUSTODIAN.......................................................30
FUND ACCOUNTING SERVICES........................................30
TRANSFER AGENT AND DIVIDEND PAYING AGENT........................30
ADMINISTRATOR...................................................30
AUDITORS 31
BROKERAGE ALLOCATION.....................................................31
CAPITALIZATION AND VOTING RIGHTS.........................................31
SPECIAL RIGHTS AND PRIVILEGES............................................33
AUTOMATIC INVESTMENT METHOD.....................................33
EXCHANGE OF SHARES..............................................33
INITIAL SALES CHARGE SHARES............................33
CONTINGENT DEFERRED SALES CHARGE SHARES................33
CLASS A 33
CLASS B 34
CLASS C 34
CLASS I AND ADVISOR CLASS..............................34
ALL CLASSES............................................34
LETTER OF INTENT................................................35
RETIREMENT PLANS................................................35
INDIVIDUAL RETIREMENT ACCOUNTS.........................36
ROTH IRAs..............................................37
QUALIFIED PLANS........................................38
DEFERRED COMPENSATION FOR PUBLIC SCHOOLS
AND CHARITABLE ORGANIZATIONS ("403(B)(7) ACCOUNT").....39
SIMPLIFIED EMPLOYEE PENSION ("SEP") IRAs...............39
SIMPLE PLANS...........................................39
REINVESTMENT PRIVILEGE..........................................40
REDUCED SALES CHARGES AND RIGHTS OF ACCUMULATION................40
SYSTEMATIC WITHDRAWAL PLAN......................................40
GROUP SYSTEMATIC INVESTMENT PROGRAM.............................41
REDEMPTIONS.....................................................42
CONVERSION OF CLASS B SHARES....................................43
NET ASSET VALUE..........................................................43
TAXATION 44
TAXATION OF THE FUNDS AND THEIR SHAREHOLDERS....................44
DISTRIBUTIONS...................................................45
DISPOSITION OF SHARES...........................................46
BACKUP WITHHOLDING..............................................47
TAXATION OF THE UNDERLYING FUNDS................................47
DISTRIBUTION SERVICES....................................................47
RULE 18F-3 PLAN........................................48
RULE 12B-1 DISTRIBUTION PLANS..........................49
PERFORMANCE INFORMATION..................................................50
YIELD 51
AVERAGE ANNUAL TOTAL RETURN............................51
CUMULATIVE TOTAL RETURN................................52
OTHER QUOTATIONS, COMPARISONS AND
GENERAL INFORMATION....................................52
FINANCIAL STATEMENTS.....................................................53
APPENDIX A...............................................................54
<PAGE>
GENERAL INFORMATION
The Funds are separately managed diversified series of the Trust, an
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
international equity mutual funds that invest largely in stocks to achieve
growth. Other underlying funds are international 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. Their managers also use a range of investment styles (such as
"value" or "growth").
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 is expected to reduce 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
subject, in seeking to achieve 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.
IMI and IMDI serve as manager and distributor, respectively, of each Ivy Fund.
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 in the
Fund's prospectus or SAI, 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 Fund's portfolio managers believe have
above-average earnings growth potential.
In evaluating a particular investment, the Fund's management considers
a number of factors, including the size of the company; the depth and quality of
the company's management, the company's product line, business strategy or
competitive position in its industry, marketing and technical strengths,
research and development efforts, financial strength, cost structure, revenue
and earnings growth potential, and price-earnings ratios and other stock
valuation measures.
A security is typically sold when, in the opinion of the Fund's
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 ("S&P") or Baa by Moody's Investors
Service, Inc. ("Moody's) or, if unrated, are of equivalent quality as determined
by the Fund's 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 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 that the Portfolio's
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 Portfolio's 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 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 Europe, Australasia and
Far East Small Cap Index (the "MSCI EAFE Small Cap Index") that the Portfolio's
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.
In choosing stocks for the Portfolio, its investment manager looks for
smaller, well managed non-U.S. companies that have the potential to grow. 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 its investment manager's judgment and 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 Fund's 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 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 defines a European company as a company organized under the
laws of a European country or for which the principal securities trading market
is in Europe; or 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 Fund's 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
"high yield" or "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 its
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 Fund's 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.
The Fund currently intends to invest at least 80% of assets in equity
securities of Japanese issuers. Equity holdings may consist of common and
preferred stocks, rights and warrants, securities convertible into or
exchangeable for common stocks, and American Depositary Receipts ("ADRs"). To a
limited extent, the Fund may also engage in other investment practices.
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 JASDAQ Index, Second Section of the
Tokyo Stock Exchange or 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.
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. 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 is a non-diversified fund with a principal 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.
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 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 that the Portfolio's 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 Portfolio's
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
Latin America (Argentina, Brazil, Chile, Colombia, Costa Rica, Jamaica, Mexico,
Peru, Trinidad and Tobago, Uruguay and Venezuela), Asia (Bangladesh, China/Hong
Kong, India, Indonesia, Malaysia, Pakistan, the Philippines, Singapore, South
Korea, Sri Lanka, Taiwan, Thailand and Vietnam), Europe (Czech Republic, Greece,
Hungary, Kazakhstan, Poland, Portugal, Romania, Russia, Slovakia, Slovenia,
Turkey and Ukraine), the Middle East (Israel and Jordan), and 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 in the Fund's prospectus or SAI, 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 the issuer is organized under the
laws of an emerging market country, the issuer's principal securities trading
market is in an emerging market; or 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 Fund's 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 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 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 securities
of companies organized under the laws of a Latin American country or for which
the principal securities trading market is in Latin America, 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,
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 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 Fund's 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 is a non-diversified fund that 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
People's 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 securities of
companies organized under the laws of a Pacific Basin country or for which the
principal securities trading market in the Pacific Basin, or 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 Fund's 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 UNDERLYING 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 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).
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 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
Portfolio's 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 Portfolio's 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 Portfolio's 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 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 its adviser.
The Fund's 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 "high yield" or "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 PRINCIPAL OCCUPATIONS
TRUST
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 IMI
(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,
1812 Sabal Palm Circle, Inc. (sales and service of
Boca Raton, FL 33432 computer products) (1983-
Age: 51 present).
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 Ivy
Mackenzie Services
Corp. ("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 IMSC (1993- present); Chairman and
Director of IMDI
(1994-present);
Director and
President of IMDI
(1993-1994);
Chairman and
Trustee of Ivy Fund
(1996-present);
President and
Trustee of Ivy Fund
(1992-1996);
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 Senior Vice President of IMDI (1998-present);
700 South Federal Hwy. Marketing Manager of Investors Group Inc.
Suite 300 (1996-1998); National Group Sales Manager of
Boca Raton, FL 33432 Investors Group Inc. (1994-1996); Manager,
Age: 34 Advanced Sales of Investors Group Inc. (1993-1994).
</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> <C>
NAME/POSITION AGGREGATE PENSION OR ESTIMATED ANNUAL TOTAL COMPENSATION FROM
COMPENSATION RETIREMENT BENEFITS BENEFITS UPON TRUST AND FUND COMPLEX
FROM TRUST* ACCRUED AS A PART RETIREMENT PAID TO TRUSTEES**
OF FUND EXPENSES
Keith J. Carlson, N/A N/A N/A N/A
President and Trustee
Ian Carmichael, Trustee $5,000 N/A N/A N/A
P. Rodney Cunningham, $5,000 N/A N/A N/A
Trustee
Gary R. Ellis, Trustee $5,000 N/A N/A N/A
Michael G. Landry, N/A N/A N/A N/A
Chairman and Trustee
(Chief Executive Officer)
C. William Ferris/ Vice N/A N/A N/A N/A
President and Secretary/
Treasurer
Ted A. Parkhill, N/A N/A N/A N/A
Vice President
</TABLE>
* Estimated for the Funds' initial fiscal year ending December 31, 1999.
** Estimated for the Funds' initial fiscal year ending December 31, 1999. The
Fund complex consists of International Solutions and Ivy Fund. During the fiscal
year ending December 31, 1998, none of the listed Trustees received compensation
from Ivy Fund.
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 June 24, 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. Certain of the underlying
funds are managed by IMI. IMI also receives management fees from these
affiliated underlying funds.
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 each 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 an
underlying fund that are held by the Fund during any calendar quarter. 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 each
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 June 24, 1999.
Before that, the Subadvisory Agreement was approved at a meeting held on May 27,
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 June 28,
1999. The initial term of the Subadvisory Agreement is two years from July 1,
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 Policy (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 pays a monthly fee
at an annual rate of $20.00 for each open Class A, Class B, Class C, and Advisor
Class 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 six series, five of which each represent a Fund, and
the sixth of which represents an investment Portfolio for which a registration
statement has not yet been filed. 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 for Class A, B and C shares, and $250 per month for Advisor Class shares
(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 $1,000 ($10,000 in the case
of Advisor Class 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 $1,000 ($10,000 in the case of Advisor Class
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 $50,000 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. The minimum distribution amount is $50 ($250 for Advisor Class
accounts), 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 ($10,000 for Advisor Class accounts). 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 $1,000 each ($250 for Advisor Class accounts) 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
($10,000 for Advisor Class accounts) 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 ($10,000 for Advisor Class accounts) 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 June 28, 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.
Each Fund has authorized IMDI to accept purchase and redemption orders
on its behalf. IMDI is also authorized to designate other intermediaries to
accept purchase and redemption orders on each Fund's behalf. Each Fund will be
deemed to have received a purchase or redemption order when an authorized
intermediary or, if applicable, an intermediary's authorized designee, accepts
the order. Client orders will be priced at each Fund's Net Asset Value next
computed after an authorized intermediary or the intermediary's authorized
designee accepts them.
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 all other 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 all other
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
5.75% sales charge is deducted from the initial $1,000 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' Statements of Assets and Liabilities as of June 22, 1999 and
the Notes thereto are attached hereto as Appendix A.
<PAGE>
APPENDIX A
STATEMENT OF ASSETS AND LIABILITIES
AS OF JUNE 22, 1999
AND REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
INTERNATIONAL SOLUTIONS I - CONSERVATIVE GROWTH
STATEMENT OF ASSETS AND LIABILITIES
JUNE 22, 1999
ASSETS
Cash.......................................................... $ 100,040
Prepaid offering costs........................................ 29,000
Prepaid blue sky fees......................................... 42,000
------------
Total Assets.............................................. 171,040
------------
LIABILITIES
Due to affiliate.............................................. 71,000
------------
NET ASSETS......................................................... $100,040
=======
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
($100,000 / 10,000 shares outstanding).................... $10.00
=======
NET ASSETS CONSISTS OF:
Capital paid-in $100,040
=======
<PAGE>
* On sales of more than $50,000 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%.
The accompanying notes are an integral part of the financial statement.
INTERNATIONAL SOLUTIONS I - CONSERVATIVE GROWTH
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
JUNE 22, 1999
1. ORGANIZATION: 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 is expected to commence operations on July 1, 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 $24,000,
comprised of $2,500 for auditing and $21,500 for legal and consulting. 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: Offering costs and blue sky fees
will be amortized over a one year period beginning July 1, 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 0.39% of its average net assets. In addition, shareholders will bear
indirectly the Fund's proportionate share of fees and expenses charged by the
underlying funds in which the Fund is invested.
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>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholder and Board of Trustees of
Mackenzie Solutions:
In our opinion, the accompanying statement of assets and liabilities
presents fairly, in all material respects, the financial position of
International Solutions I - Conservative Growth (the "Fund") of Mackenzie
Solutions at June 22, 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 financial
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.
PricewaterhouseCoopers LLP
Ft. Lauderdale, Florida
June 22, 1999
<PAGE>
INTERNATIONAL SOLUTIONS II - BALANCED GROWTH
STATEMENT OF ASSETS AND LIABILITIES
JUNE 22, 1999
ASSETS
Cash............................................................ $ 100,040
Prepaid offering costs.......................................... 29,000
Prepaid blue sky fees........................................... 42,000
-----------
Total Assets................................................ 171,040
-----------
LIABILITIES
Due to affiliate................................................ 71,000
------------
NET ASSETS........................................................... $100,040
=======
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
($100,000 / 10,000 shares outstanding)...................... $10.00
=======
NET ASSETS CONSISTS OF:
Capital paid-in $100,040
=======
<PAGE>
* On sales of more than $50,000 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%.
The accompanying notes are an integral part of the financial statement.
INTERNATIONAL SOLUTIONS II - BALANCED GROWTH
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
JUNE 22, 1999
1. ORGANIZATION: 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 is expected to commence operations on July 1, 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 $24,000,
comprised of $2,500 for auditing and $21,500 for legal and consulting. The full
amount of organizational expenses was assumed by MIMI and the Fund is not
required to reimburse MIMI.
3. OFFERING COSTS AND PREPAID BLUE SKY FEES: Offering costs and blue sky fees
will be amortized over a one year period beginning July 1, 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.
5. 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 0.33% of its average net assets. In addition, shareholders will bear
indirectly the Fund's proportionate share of fees and expenses charged by the
underlying funds in which the Fund is invested.
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>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholder and Board of Trustees
Mackenzie Solutions:
In our opinion, the accompanying statement of assets and liabilities
presents fairly, in all material respects, the financial position of
International Solutions II - Balanced Growth (the "Fund") of Mackenzie Solutions
at June 22, 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 financial 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.
PricewaterhouseCoopers LLP
Ft. Lauderdale, Florida
June 22, 1999
<PAGE>
INTERNATIONAL SOLUTIONS III - MODERATE GROWTH
STATEMENT OF ASSETS AND LIABILITIES
JUNE 22, 1999
ASSETS
Cash.......................................................... $ 100,040
Prepaid offering costs........................................ 29,000
Prepaid blue sky fees......................................... 42,000
------------
Total Assets.............................................. 171,040
------------
LIABILITIES
Due to affiliate.............................................. 71,000
------------
NET ASSETS......................................................... $100,040
=======
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
($100,000 / 10,000 shares outstanding).................... $10.00
=======
NET ASSETS CONSISTS OF:
Capital paid-in $100,040
=======
<PAGE>
* On sales of more than $50,000 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%.
The accompanying notes are an integral part of
the financial statement.
INTERNATIONAL SOLUTIONS III - MODERATE GROWTH
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
JUNE 22, 1999
1. ORGANIZATION: 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 is expected to commence operations on July 1, 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 $24,000,
comprised of $2,500 for auditing and $21,500 for legal and consulting. The full
amount of organizational expenses was assumed by MIMI and the Fund is not
required to reimburse MIMI.
3. OFFERING COSTS AND PREPAID BLUE SKY FEES: Offering costs and blue sky fees
will be amortized over a one year period beginning July 1, 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.
6. 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 0.23% of its average net assets. In addition, shareholders will bear
indirectly the Fund's proportionate share of fees and expenses charged by the
underlying funds in which the Fund is invested.
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>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholder and Board of Trustees of
Mackenzie Solutions:
In our opinion, the accompanying statement of assets and liabilities
presents fairly, in all material respects, the financial position of
International Solutions III - Moderate Growth (the "Fund") of Mackenzie
Solutions at June 22, 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 financial
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.
PricewaterhouseCoopers LLP
Ft. Lauderdale, Florida
June 22, 1999
<PAGE>
INTERNATIONAL SOLUTIONS IV - LONG-TERM GROWTH
STATEMENT OF ASSETS AND LIABILITIES
JUNE 22, 1999
ASSETS
Cash.......................................................... $ 100,040
Prepaid offering costs........................................ 29,000
Prepaid blue sky fees......................................... 42,000
-----------
Total Assets.............................................. 171,040
------------
LIABILITIES
Due to affiliate.............................................. 71,000
------------
NET ASSETS......................................................... $100,040
=======
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
($100,000 / 10,000 shares outstanding).................... $10.00
=======
NET ASSETS CONSISTS OF:
Capital paid-in $100,040
=======
<PAGE>
* On sales of more than $50,000 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%.
The accompanying notes are an integral part of
the financial statement.
INTERNATIONAL SOLUTIONS IV - LONG-TERM GROWTH
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
JUNE 22, 1999
1. ORGANIZATION: 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 is expected to commence operations on July 1, 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 $24,000,
comprised of $2,500 for auditing and $21,500 for legal and consulting. The full
amount of organizational expenses was assumed by MIMI and the Fund is not
required to reimburse MIMI.
3. OFFERING COSTS AND PREPAID BLUE SKY FEES: Offering costs and blue sky fees
will be amortized over a one year period beginning July 1, 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.
7. 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 0.08% of its average net assets. In addition, shareholders will bear
indirectly the Fund's proportionate share of fees and expenses charged by the
underlying funds in which the Fund is invested.
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>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholder and Board of Trustees of
Mackenzie Solutions:
In our opinion, the accompanying statement of assets and liabilities
presents fairly, in all material respects, the financial position of
International Solutions IV - Long-term Growth (the "Fund") of Mackenzie
Solutions at June 22, 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 financial
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.
PricewaterhouseCoopers LLP
Ft. Lauderdale, Florida
June 22, 1999
<PAGE>
INTERNATIONAL SOLUTIONS V - AGGRESSIVE GROWTH
STATEMENT OF ASSETS AND LIABILITIES
JUNE 22, 1999
ASSETS
Cash......................................................... $ 100,040
Prepaid offering costs....................................... 29,000
Prepaid blue sky fees........................................ 42,000
------------
Total Assets............................................. 171,040
------------
LIABILITIES
Due to affiliate............................................. 71,000
------------
NET ASSETS........................................................ $100,040
=======
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
($100,000 / 10,000 shares outstanding)................... $10.00
=======
NET ASSETS CONSISTS OF:
Capital paid-in $100,040
=======
<PAGE>
* On sales of more than $50,000 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%.
The accompanying notes are an integral part of
the financial statement.
INTERNATIONAL SOLUTIONS V - AGGRESSIVE GROWTH
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
JUNE 22, 1999
1. ORGANIZATION: 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 is expected to commence operations on July 1, 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 $24,000,
comprised of $2,500 for auditing and $21,500 for legal and consulting. The full
amount of organizational expenses was assumed by MIMI and the Fund is not
required to reimburse MIMI.
3. OFFERING COSTS AND PREPAID BLUE SKY FEES: Offering costs and blue sky fees
will be amortized over a one year period beginning, 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.
8. 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 0.10% of its average net assets. In addition, shareholders will bear
indirectly the Fund's proportionate share of fees and expenses charged by the
underlying funds in which the Fund is invested.
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>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholder and Board of Trustees of
Mackenzie Solutions:
In our opinion, the accompanying statement of assets and liabilities
presents fairly, in all material respects, the financial position of
International Solutions V - Aggressive Growth (the "Fund") of Mackenzie
Solutions at June 22, 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 financial
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.
PricewaterhouseCoopers LLP
Ft. Lauderdale, Florida
June 22, 1999
<PAGE>
PART C. OTHER INFORMATION
ITEM 23: EXHIBITS
(a) ARTICLES OF INCORPORATION
(1) Declaration of Trust dated November 18, 1998, filed with
Pre-Effective Amendment No. 2 to Registration Statement No.
333-67705 (the "Registration Statement") and incorporated by
reference herein.
(2) Redesignation of Series and Establishment and Designation of
Classes, filed with Pre-Effective Amendment No. 2 to the
Registration Statement and incorporated by reference herein.
(3) Written Instrument Increasing Number of Trustees and Appointing
New Trustees, filed with Pre-Effective Amendment No. 2 to the
Registration Statement and incorporated by reference herein.
(b) BY-LAWS: Filed with Pre-Effective Amendment No. 2 to the
Registration Statement and incorporated by reference herein.
(c) INSTRUMENTS DEFINING RIGHTS OF SECURITY HOLDERS: See Exhibits 23(a)
and 23(b).
(d) INVESTMENT ADVISORY CONTRACTS:
(1) Master Business Management and Investment Advisory Agreement is
filed herewith.
(2) Business Management And Investment Advisory Agreement Supplement
for International Solutions I - Conservative Growth is filed
herewith.
(3) Business Management And Investment Advisory Agreement Supplement
for International Solutions II - Balanced Growth is filed
herewith.
(4) Business Management And Investment Advisory Agreement Supplement
for International Solutions III - Moderate Growth is filed
herewith.
(5) Business Management And Investment Advisory Agreement Supplement
for International Solutions IV - Long-Term Growth is filed
herewith.
(6) 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) 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) Master Administrative Services Agreement is filed herewith.
(2) Administrative Services Agreement Supplement is filed herewith.
(3) Transfer Agency and Shareholder Servicing Agreement is filed
herewith.
(4) Master Fund Accounting Services Agreement is filed herewith.
(5) Fund Accounting Services Agreement Supplement is filed herewith.
(6) Form of Reimbursement Agreement is filed herewith.
(i) LEGAL OPINION: Filed herewith.
(j) OTHER OPINIONS:
(1) Consent of independent accountants is filed herewith.
(2) Report of independent accountants is filed herewith.
(k) OMITTED FINANCIAL STATEMENTS: Not applicable.
(l) INITIAL CAPITAL AGREEMENTS:
(1) Purchase Agreement is filed herewith.
(m) RULE 12B-1 PLAN:
(1) Distribution Plan For Mackenzie Solutions Class A Shares is filed
herewith.
(2) Distribution Plan For Mackenzie Solutions Class B Shares is filed
herewith.
(3) Distribution Plan For Mackenzie Solutions Class C Shares is filed
herewith.
(n) FINANCIAL DATA SCHEDULE: Not applicable.
(o) RULE 18F-3 PLAN:
(1) 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. 3 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 28th 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 6/28/99
(Chief Executive Officer)
/s/ KEITH J. CARLSON** President and Trustee 6/28/99
/s/ IAN CARMICHAEL** Trustee 6/28/99
/s/ P. RODNEY CUNNINGHAM** Trustee 6/28/99
/s/ GARY R. ELLIS** Trustee 6/28/99
/s/ C. WILLIAM FERRIS* Vice President, 6/28/99
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 with Pre-Effective
Amendment No. 2 to Registrant's Registration Statement.
<PAGE>
EXHIBIT INDEX
Exhibit (d)(1): Master Business Management and Investment Advisory Agreement.
Exhibit (d)(2): Business Management And Investment Advisory Agreement
Supplement for International Solutions I - Conservative Growth.
Exhibit (d)(3): Business Management And Investment Advisory Agreement
Supplement for International Solutions II - Balanced Growth.
Exhibit (d)(4): Business Management And Investment Advisory Agreement
Supplement for International Solutions III - Moderate Growth.
Exhibit (d)(5): Business Management And Investment Advisory Agreement
Supplement for International Solutions IV - Long-Term Growth.
Exhibit (d)(6): Business Management And Investment Advisory Agreement
Supplement for International Solutions V - Aggressive Growth.
Exhibit (d)(7): Form of Subadvisory Agreement.
Exhibit (e)(1): Distribution Agreement.
Exhibit (e)(2): Form of Dealer Agreement.
Exhibit (g)(1): Form of Custodian Agreement.
Exhibit (h)(1): Master Administrative Services Agreement.
Exhibit (h)(2): Administrative Services Agreement Supplement.
Exhibit (h)(3): Transfer Agency and Shareholder Servicing Agreement.
Exhibit (h)(4): Master Fund Accounting Services Agreement.
Exhibit (h)(5): Fund Accounting Services Agreement Supplement.
Exhibit (h)(6): Form of Reimbursement Agreement.
Exhibit (i): Opinion and consent of counsel.
Exhibit (j)(1): Consent of independent accountants.
Exhibit (j)(2): Report of independent accountants.
Exhibit (l)(1): Purchase Agreement.
Exhibit (m)(1) Distribution Plan for Mackenzie Solutions Class A Shares.
Exhibit (m)(2) Distribution Plan for Mackenzie Solutions Class B Shares.
Exhibit (m)(3) Distribution Plan for Mackenzie Solutions Class C Shares.
Exhibit (o): Plan Pursuant to Rule 18f-3 of the Investment Company Act of 1940.
EXHIBIT (d)(1)
MASTER BUSINESS MANAGEMENT AND
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the 28th 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: /s/ KEITH J. CARLSON
Keith J. Carlson, President
IVY MANAGEMENT, INC.
By: /s/ MICHAEL G. LANDRY
Michael G. Landry, President
EXHIBIT (d)(2)
MACKENZIE SOLUTIONS
BUSINESS MANAGEMENT AND INVESTMENT
ADVISORY AGREEMENT SUPPLEMENT
International Solutions I - Conservative Growth
AGREEMENT made as of the 28th 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 as of June 28th, 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: /s/ KEITH J. CARLSON
Keith J. Carlson, President
IVY MANAGEMENT, INC.
By: /s/ MICHAEL G. LANDRY
Michael G. Landry, President
EXHIBIT (d)(3)
MACKENZIE SOLUTIONS
BUSINESS MANAGEMENT AND INVESTMENT
ADVISORY AGREEMENT SUPPLEMENT
International Solutions II - Balanced Growth
AGREEMENT made as of the 28th 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 as of June 28th, 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: /s/ KEITH J. CARLSON
Keith J. Carlson, President
IVY MANAGEMENT, INC.
By: /s/ MICHAEL G. LANDRY
Michael G. Landry, President
EXHIBIT (d)(4)
MACKENZIE SOLUTIONS
BUSINESS MANAGEMENT AND INVESTMENT
ADVISORY AGREEMENT SUPPLEMENT
International Solutions III - Moderate Growth
AGREEMENT made as of the 28th 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 as of June 28th, 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: /s/ KEITH J. CARLSON
Keith J. Carlson, President
IVY MANAGEMENT, INC.
By: /s/ MICHAEL G. LANDRY
Michael G. Landry, President
EXHIBIT (d)(5)
MACKENZIE SOLUTIONS
BUSINESS MANAGEMENT AND INVESTMENT
ADVISORY AGREEMENT SUPPLEMENT
International Solutions IV - Long-term Growth
AGREEMENT made as of the 28th 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 as of June 28th, 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: /s/ KEITH J. CARLSON
Keith J. Carlson, President
IVY MANAGEMENT, INC.
By: /s/ MICHAEL G. LANDRY
Michael G. Landry, President
EXHIBIT (d)(6)
MACKENZIE SOLUTIONS
BUSINESS MANAGEMENT AND INVESTMENT
ADVISORY AGREEMENT SUPPLEMENT
International Solutions V - Aggressive Growth
AGREEMENT made as of the 28th 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 as of June 28th, 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: /s/ KEITH J. CARLSON
Keith J. Carlson, President
IVY MANAGEMENT, INC.
By: /s/ MICHAEL G. LANDRY
Michael G. Landry, President
EXHIBIT (d)(7)
FORM OF
SUBADVISORY AGREEMENT
AGREEMENT made as of the 1st day of July, 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 as of June 25, 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. 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$667. 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.
If the Subadviser serves hereunder for less than the whole of any year, the
fee hereunder shall be prorated as follows: The Subadviser shall be
entitled to the full quarterly payment described above for the quarter in
which the Agreement is terminated; provided, however, that if the
Subadviser has completed more than 18.75 hours of work under this Agreement
per quarter multiplied by the number of quarters concluded (the quarter in
which such termination takes place counting as a full quarter), then the
Subadviser shall be compensated for such additional hours at the hourly
rate specified in the preceding paragraph.
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 July 1, 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 July 1
or prior to July 1 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 AS OF JULY 1, 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
EXHIBIT (e)(1)
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: /s/ KEITH J. CARLSON
Keith J. Carlson, President
ACCEPTED:
IVY MACKENZIE DISTRIBUTORS, INC.
By: /s/ C. WILLIAM FERRIS
C. William Ferris, Secretary/Treasurer
Dated: June 28th, 1999
EXHIBIT e(2)
FORM OF
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
Name and Title of Principal (Please Print)
Date: ______________________________________
EXHIBIT (g)(1)
FORM OF
CUSTODIAN AGREEMENT
THIS AGREEMENT, dated as of June 28, 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;
4.3.3. 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;
4.3.4. 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 Subcustodian'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.
<PAGE>
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: ________________________________
EXHIBIT (h)(1)
MASTER ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made as of the 28th 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: /s/ KEITH J. CARLSON
Keith J. Carlson, President
MACKENZIE INVESTMENT MANAGEMENT INC.
By: /s/ MICHAEL G. LANDRY
Michael G. Landry, President
EXHIBIT (h)(2)
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 28th 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 as of June 28th, 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: /s/ KEITH J. CARLSON
Keith J. Carlson, President
MACKENZIE INVESTMENT MANAGEMENT INC.
By: /s/ MICHAEL G. LANDRY
Michael G. Landry, President
EXHIBIT (h)(3)
TRANSFER AGENCY AND SHAREHOLDER
SERVICES AGREEMENT
Agreement made as of the 28th 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: /s/ KEITH J. CARLSON
Keith J. Carlson, President
IVY MACKENZIE SERVICES CORP.
By: /s/ C. WILLIAM FERRIS
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).
EXHIBIT (h)(4)
MASTER FUND ACCOUNTING SERVICES AGREEMENT
AGREEMENT made as of the 28th 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: /s/ KEITH J. CARLSON
KEITH J. CARLSON, PRESIDENT
MACKENZIE INVESTMENT MANAGEMENT INC.
By: /s/ MICHAEL G. LANDRY
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
EXHIBIT (h)(5)
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 28th 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 as of June 28th, 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: /s/ KEITH J. CARLSON
Keith J. Carlson, President
MACKENZIE INVESTMENT MANAGEMENT INC.
By: /s/ MICHAEL G. LANDRY
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
EXHIBIT (h)(6)
FORM OF
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: __________________
EXHIBIT (i)
DECHERT PRICE & RHOADS
TEN POST OFFICE SQUARE -- SOUTH
SUITE 1230
BOSTON, MASSACHUSETTS 02109-4603
June 28th, 1999
Mackenzie Solutions
Via Mizner Financial Plaza
700 South Federal Highway
Suite 300
Boca Raton, Florida 33432
Dear Sirs:
As counsel for Mackenzie Solutions (the "Trust"), we are familiar with
the registration of the Trust under the Investment Company Act of 1940, as
amended (the "1940 Act") (File No. 811-09107), and the Prospectus contained in
Pre-Effective Amendment No. 3 to the Trust's registration statement relating to
the shares of beneficial interest (the "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 (the "Funds") being filed
under the Securities Act of 1933, as amended (File No. 333-67705)
("Pre-Effective Amendment No. 3"). We have also examined such other records of
the Trust, agreements, documents and instruments as we deemed appropriate.
Based upon the foregoing, it is our opinion that the Shares have been
duly authorized and, when issued and sold at the public offering price
contemplated by the Prospectus for the Funds and delivered by the Trust against
receipt of the net asset value of the Shares, will be issued as fully paid and
nonassessable shares of the Trust.
We consent to the filing of this opinion on behalf of the Trust with
the Securities and Exchange Commission in connection with the filing of
Pre-Effective Amendment No. 3.
Very truly yours,
/s/DECHERT PRICE & RHOADS
EXHIBIT (j)(1)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Trustees of
Mackenzie Solutions:
We hereby consent to the inclusion in Pre-Effective Amendment No. 3 to the
Registration Statement under the Securities Act of 1933 on Form N-1A (File No.
333-67705, hereafter the "Registration Statement") of Mackenzie Solutions (the
"Trust") of our reports dated June 22, 1999 on our audits of the Statements of
Assets and Liabilities at June 22, 1999 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, appearing in the Registration
Statement. We also consent to the reference to our Firm under the caption
"Auditors" in the Trust's Prospectus and Statement of Additional Information.
PRICEWATERHOUSECOOPERS LLP
Fort Lauderdale, Florida
June 22, 1999
EXHIBIT (j)(2)
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholder and Board of Trustees
of Mackenzie Solutions:
In our opinion, the accompanying statement of assets and liabilities presents
fairly, in all material respects, the financial position of International
Solutions I - Conservative Growth (the "Fund") of Mackenzie Solutions at June
22, 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 financial 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.
PricewaterhouseCoopers LLP
Ft. Lauderdale, Florida
June 22, 1999
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholder and Board of Trustees
of Mackenzie Solutions:
In our opinion, the accompanying statement of assets and liabilities presents
fairly, in all material respects, the financial position of International
Solutions II - Balanced Growth (the "Fund") of Mackenzie Solutions at June 22,
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 financial 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.
PricewaterhouseCoopers LLP
Ft. Lauderdale, Florida
June 22, 1999
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholder and Board of Trustees
of Mackenzie Solutions:
In our opinion, the accompanying statement of assets and liabilities presents
fairly, in all material respects, the financial position of International
Solutions III - Moderate Growth (the "Fund") of Mackenzie Solutions at June 22,
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 financial 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.
PricewaterhouseCoopers LLP
Ft. Lauderdale, Florida
June 22, 1999
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholder and Board of Trustees
of Mackenzie Solutions:
In our opinion, the accompanying statement of assets and liabilities presents
fairly, in all material respects, the financial position of International
Solutions IV - Long-term Growth (the "Fund") of Mackenzie Solutions at June 22,
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 financial 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.
PricewaterhouseCoopers LLP
Ft. Lauderdale, Florida
June 22, 1999
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholder and Board of Trustees
of Mackenzie Solutions:
In our opinion, the accompanying statement of assets and liabilities presents
fairly, in all material respects, the financial position of International
Solutions V - Aggressive Growth (the "Fund") of Mackenzie Solutions at June 22,
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 financial 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.
PricewaterhouseCoopers LLP
Ft. Lauderdale, Florida
June 22, 1999
EXHIBIT (l)(1)
PURCHASE AGREEMENT
Purchase Agreement dated as of June 18th, 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 Funds'
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: /s/ MICHAEL G. LANDRY
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: /s/ KEITH J. CARLSON
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
EXHIBIT (m)(1)
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 as of
the 28th day of June, 1999.
MACKENZIE SOLUTIONS
By: /s/ KEITH J. CARLSON
Keith J. Carlson, President
EXHIBIT (m)(2)
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 28th day of June, 1999.
MACKENZIE SOLUTIONS
By: /s/ KEITH J. CARLSON
Keith J. Carlson, President
EXHIBIT (m)(3)
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 28th day of June, 1999.
MACKENZIE SOLUTIONS
By:
/s/ KEITH J. CARLSON
Keith J. Carlson, President
EXHIBIT (o)(1)
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.
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 is effective as of June 28th, 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.
