As filed with the Securities and Exchange
Commission on
March
1, 1996 (File No. 2-17613)
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF
1933
Post-Effective Amendment No.
84 [ X ]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT
OF 1940
Amendment No. [ X ]
IVY FUND
(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
Keith J. Carlson
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
[ X ] It is proposed that this filing
become
effective on
April 30, 1996 pursuant to
paragraph (a)(1)
of Rule
485.
The Registrant has elected to register an
indefinite
number of
shares of beneficial interest under the
Securities Act
of 1933
pursuant to Rule 24f-2 under the Investment
Company Act
of 1940;
accordingly, no fee is payable herewith. The
Registrant filed on
February 28, 1996 its notice pursuant to Rule
24f-2 for
the
Registrant's most recent fiscal year ended
December 31,
1995.
The total number of pages is __________.
The exhibit index is on page __________.
THIS POST-EFFECTIVE AMENDMENT NO. 84 IS BEING FILED IN
ORDER TO
ADD CLASS C SHARES TO IVY BOND FUND, IVY CANADA FUND,
IVY CHINA
REGION FUND, IVY EMERGING GROWTH FUND, IVY GLOBAL FUND,
IVY
GROWTH FUND, IVY GROWTH WITH INCOME FUND, IVY
INTERNATIONAL FUND,
IVY INTERNATIONAL BOND FUND, IVY LATIN AMERICA STRATEGY
FUND AND
IVY NEW CENTURY FUND, AND TO UPDATE THE FINANCIAL AND
RELATED
INFORMATION FOR THESE ELEVEN FUNDS. THE PROSPECTUSES
AND
STATEMENTS OF ADDITIONAL INFORMATION THAT ARE INCLUDED
IN THIS
POST-EFFECTIVE AMENDMENT NO. 84 ARE TO BE USED
CONCURRENTLY WITH
AND SEPARATELY FROM EACH CURRENTLY EFFECTIVE PROSPECTUS
AND
STATEMENT OF ADDITIONAL INFORMATION FOR IVY MONEY
MARKET FUND AND
IVY SHORT-TERM BOND FUND (THE OTHER TWO SERIES OFFERED
BY THE
REGISTRANT), WHICH ARE NOT INCLUDED IN, BUT ARE
INCORPORATED BY
REFERENCE TO, THIS FILING.
IVY FUND
CROSS REFERENCE SHEET
Post-Effective Amendment No. 84 contains (i) the
Prospectus
and Statement of Additional Information to be used with
Ivy Bond
Fund, Ivy Emerging Growth Fund, Ivy Growth Fund and Ivy
Growth
with Income Fund; (ii) the Prospectus and Statement of
Additional
Information to be used with Ivy Canada Fund, Ivy China
Region
Fund, Ivy Global Fund, Ivy International Fund, Ivy
Latin America
Strategy Fund and Ivy New Century Fund; and (iii) the
Prospectus
and Statement of Additional Information to be used with
Ivy
International Bond Fund, eleven of the thirteen series
of Ivy
Fund (the "Trust").
Items Required by Form N-1A
PART A:
1 COVER PAGE: Cover Page
2 SYNOPSIS: Not Applicable
3 CONDENSED FINANCIAL INFORMATION: Schedule of
Fees; The
Funds' Financial Highlights
4 GENERAL DESCRIPTION OF REGISTRANT: Investment
Objectives
and Policies; Risk Factors and Investment
Techniques
5 MANAGEMENT OF THE FUND(S): Organization and
Management of
the Funds; Investment Manager
6 CAPITAL STOCK AND OTHER SECURITIES: Dividends and
Taxes
7 PURCHASE OF SECURITIES BEING OFFERED: How to Buy
Shares;
How Your Purchase Price is Determined; How Each
Fund Values
its Shares
8 REDEMPTION OR REPURCHASE: How to Redeem Shares;
Minimum
Account Balance Requirements; Tax Identification
Number;
Certificates; Exchange Privilege; Reinvestment
Privilege
9 PENDING LEGAL PROCEEDINGS: Not Applicable
PART B:
10 COVER PAGE: Cover Page
11 TABLE OF CONTENTS: Table of Contents
12 GENERAL INFORMATION AND HISTORY: Investment
Objectives and
Policies
13 INVESTMENT OBJECTIVES AND POLICIES: Investment
Objectives
and Policies; Investment Restrictions; Additional
Restrictions
14 MANAGEMENT OF THE FUND(S): Trustees and Officers;
Investment Advisory and Other Services
15 CONTROL PERSONS AND PRINCIPAL HOLDERS OF
SECURITIES:
Trustees and Officers; Capitalization and Voting
Rights
16 INVESTMENT ADVISORY AND OTHER SERVICES:
Investment Advisory
and Other Services
17 BROKERAGE ALLOCATION AND OTHER PRACTICES:
Brokerage
Allocation; Portfolio Turnover
18 CAPITAL STOCK AND OTHER SECURITIES:
Capitalization and
Voting Rights
19 PURCHASE, REDEMPTION AND PRICING OF SECURITIES
BEING
OFFERED: Net Asset Value; Redemptions
20 TAX STATUS: Taxation
21 UNDERWRITERS: Investment Advisory and Other
Services
22 CALCULATION OF PERFORMANCE DATA: Performance
Information
23 FINANCIAL STATEMENTS: Financial Statements
PROSPECTUS
April 30, 1996
[IVY
FUNDS LOGO]
Ivy Fund (the "Trust") is a registered investment
company
currently consisting of thirteen separate portfolios.
Four of
these portfolios, as identified below (the "Funds"),
are
described in this Prospectus. Each Fund has its own
investment
objective and policies, and a shareholder's interest is
limited
to the Fund in which he or she owns shares.
The four Funds are:
Ivy Bond Fund
Ivy Emerging Growth Fund
Ivy Growth Fund
Ivy Growth with Income Fund
This Prospectus sets forth concisely the
information about
the Funds that a prospective investor should know
before
investing and should be read carefully and retained for
future
reference. Additional information about the Funds is
contained
in the Statement of Additional Information for the
Funds dated
April 30, 1996 (the "SAI"), which has been filed with
the
Securities and Exchange Commission and is incorporated
by
reference into this Prospectus. The SAI is available
upon
request and without charge from the Trust at the
Distributor s
address and telephone number provided below.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A
CRIMINAL OFFENSE.
TABLE OF CONTENTS
Schedule of Fees . . . . . . . . . . . . . . . . . . .
. . . . .
The Funds' Financial Highlights . . . . . . . . . . . .
. . . . .
Investment Objectives and Policies . . . . . . . . . .
. . . . .
Risk Factors and Investment Techniques . . . . . . . .
. . . . .
Organization and Management of the Funds . . . . . . .
. . . . .
Investment Manager . . . . . . . . . . . . . . . . . .
. . . . .
Fund Administration and Accounting . . . . . . . . . .
. . . . .
Transfer Agent . . . . . . . . . . . . . . . . . . . .
. . . . .
Alternative Purchase Arrangements . . . . . . . . . . .
. . . . .
Dividends and Taxes . . . . . . . . . . . . . . . . . .
. . . . .
Performance Data . . . . . . . . . . . . . . . . . . .
. . . . .
How to Buy Shares . . . . . . . . . . . . . . . . . . .
. . . . .
How Your Purchase Price is Determined . . . . . . . . .
. . . . .
How Each Fund Values Its Shares . . . . . . . . . . . .
. . . . .
Initial Sales Charge Alternative - Class A Shares . . .
. . . . .
Contingent Deferred Sales Charge - Class A Shares . . .
. . . . .
Waiver of Contingent Deferred Sales Charge . . . . .
. . . . .
Qualifying for a Reduced Sales Charge . . . . . . . . .
. . . . .
Rights of Accumulation (ROA) . . . . . . . . . . . .
. . . . .
Letter of Intent (LOI) . . . . . . . . . . . . . . .
. . . . .
Purchases of Class A Shares At Net Asset Value . . .
. . . . .
Contingent Deferred Sales Charge Alternative - Class B
and Class
C Shares . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
Conversion of Class B Shares . . . . . . . . . . . .
. . . . .
Waiver of Contingent Deferred Sales Charge . . . . .
. . . . .
Arrangements With Broker-Dealers and Others . . . . .
. . . . .
How to Redeem Shares . . . . . . . . . . . . . . . . .
. . . . .
Minimum Account Balance Requirements . . . . . . . . .
. . . . .
Signature Guarantees . . . . . . . . . . . . . . . . .
. . . . .
Choosing a Distribution Option . . . . . . . . . . . .
. . . . .
Tax Identification Number . . . . . . . . . . . . . . .
. . . . .
Certificates . . . . . . . . . . . . . . . . . . . . .
. . . . .
Exchange Privilege . . . . . . . . . . . . . . . . . .
. . . . .
Reinvestment Privilege . . . . . . . . . . . . . . . .
. . . . .
Systematic Withdrawal Plan . . . . . . . . . . . . . .
. . . . .
Automatic Investment Method . . . . . . . . . . . . . .
. . . . .
Consolidated Account Statements . . . . . . . . . . . .
. . . . .
Retirement Plans . . . . . . . . . . . . . . . . . . .
. . . . .
Shareholder Inquiries . . . . . . . . . . . . . . . . .
. . . . .
BOARD OF TRUSTEES TRANSFER AGENT
John S. Anderegg, Jr. Mackenzie Ivy
Investor
Paul H. Broyhill Services Corp.
Stanley Channick P.O. Box 3022
Frank W. DeFriece, Jr. Boca Raton, FL
Roy J. Glauber 33431-0922
Michael G. Landry 1-800-777-6472
Michael R. Peers
Joseph G. Rosenthal AUDITORS
Richard N. Silverman Coopers & Lybrand
L.L.P.
J. Brendan Swan Ft. Lauderdale, FL
OFFICERS INVESTMENT MANAGER
Michael G. Landry, Ivy Management, Inc.
President 700 South Federal
Highway
Keith J. Carlson, Vice Boca Raton, FL 33432
President 1-800-456-5111
C. William Ferris
Secretary/Treasurer DISTRIBUTOR
Michael R. Peers, Chairman Mackenzie Ivy Funds
Distribution, Inc.
LEGAL COUNSEL Via Mizner Financial
Plaza
Dechert Price & Rhoads 700 South Federal
Highway
Boston, MA Boca Raton, FL 33432
1-800-456-5111
CUSTODIAN
Brown Brothers Harriman &
Co.
Boston, MA
SCHEDULE OF FEES
SHAREHOLDER TRANSACTION EXPENSES[#]
IVY BOND FUND
CLASS A CLASS B CLASS C
CLASS I
Maximum sales load
imposed on purchases (as
a percentage of offering
price) . . . . . . . . 4.75%(1) None None
None
Maximum contingent
deferred sales charge
(as a percentage of
original purchase price)
None(2) 5.00%(3) 1.00%(4) None
IVY EMERGING GROWTH FUND, IVY GROWTH FUND AND IVY
GROWTH WITH
INCOME FUND
CLASS A CLASS B
CLASS C
Maximum sales load imposed on
purchases (as a percentage of
offering price) . . . . . . . . . 5.75%(1) None
None
Maximum contingent deferred sales
charge (as a percentage of
original purchase price) . . . . None(2) 5.00%(3)
1.00%(4)
[#] None of the Funds charge a redemption fee, an
exchange fee,
or a sales load on reinvested dividends.
(1) Class A shares of the Funds may be purchased under
a variety
of plans that provide for the reduction or
elimination of
the sales charge.
(2) A contingent deferred sales charge may apply to
the
redemption of Class A shares that are purchased
without an
initial sales charge. See "Purchases of Class A
Shares at
Net Asset Value" and "Contingent Deferred Sales
Charge --
Class A Shares."
(3) The maximum contingent deferred sales charge on
Class B
shares applies to redemptions during the first
year after
purchase. The charge declines to 4% during the
second year;
3% during the third and fourth years; 2% during
the fifth
year; 1% during the sixth year; and 0% in the
seventh year
and thereafter.
(4) The maximum contingent deferred sales charge on
Class C
shares applies to redemptions during the first
year after
purchase.
ANNUAL FUND OPERATING EXPENSES
(as a percentage of daily net assets)
IVY BOND FUND
CLASS A CLASS B CLASS C[#]
CLASS I
Management Fees . . . 0.75% 0.75% 0.75%
0.75%
12b-1 Service/
Distribution Fees . . 0.25% 1.00%(1) 1.00%(1)
0.00%
Other Expenses . . . 0.54% 0.54% 0.54%
0.45%(2)
Total Fund Operating
Expenses . . . . . . 1.54% 2.29% 2.29%
1.20%
[#] The inception date for Class C shares is April 30,
1996.
Accordingly, the expenses shown are estimated
based on
amounts incurred by Class B shares of the Fund
during the
fiscal year ended December 31, 1995.
(1) Long-term investors may, as a result of the Fund's
12b-1
fees, pay more than the economic equivalent of the
maximum
front-end sales charge permitted by the Rules of
Fair
Practice of the National Association of Securities
Dealers,
Inc. ("NASD").
(2) The "Other Expenses" of Class I of the Fund are
lower than
such expenses for the Fund's other classes because
Class I
shares bear lower administrative services fees and
transfer
agency and shareholder services fees than Class A
and Class
B shares. See "Administrator" and "Transfer
Agent."
IVY EMERGING GROWTH FUND
CLASS A CLASS B CLASS
C[#]
Management Fees . . . . . 0.85% 0.85% 0.85%
12b-1 Service/Distribution
Fees . . . . . . . . . . 0.25% 1.00%(1)
1.00%(1)
Other Expenses . . . . . 0.85% 0.85% 0.85%
Total Fund Operating
Expenses . . . . . . . . 1.95% 2.70%(2)
2.70%(2)
[#] The inception date for Class C shares is April 30,
1996.
Accordingly, the expenses shown are estimated
based on
amounts incurred by Class B shares of the Fund
during the
fiscal year ended December 31, 1995.
(1) Long-term investors may, as a result of the Fund's
12b-1
fees, pay more than the economic equivalent of the
maximum
front-end sales charge permitted by the NASD's
Rules of Fair
Practice.
(2) Total Fund Operating Expenses for Class B and
Class C shares
are higher than related expenses for mutual funds
whose
investment objectives are similar to those of the
Fund.
IVY GROWTH FUND
CLASS A CLASS B CLASS
C[#]
Management Fees(1) . . . 0.85% 0.85% 0.85%
12b-1 Service/Distribution
Fees . . . . . . . . . . 0.04%(2) 1.00%(3)
1.00%(3)
Other Expenses . . . . . 0.71%(2) 0.71% 0.71%
Total Fund Operating
Expenses(4) . . . . . . . 1.60% 2.56% 2.56%
[#] The inception date for Class C shares is April 30,
1996.
Accordingly, the expenses shown are estimated
based on
amounts incurred by Class B shares of the Fund
during the
fiscal year ended December 31, 1995.
(1) Management Fees for the fiscal period ended
December 31,
1995 have been restated to reflect the termination
of the
voluntary expense reimbursement on February 1,
1995 (see
note (4) below).
(2) Rule 12b-1 Service Fees paid by Class A shares may
increase
in subsequent years, but are subject to a ceiling
of 0.25%.
See "Alternative Purchase Arrangements."
(3) Long-term investors may, as a result of the Fund's
12b-1
fees, pay more than the economic equivalent of the
maximum
front-end sales charge permitted by the NASD's
Rules of Fair
Practice.
(4) IMI had agreed to limit the Fund's Total Operating
Expenses
(excluding taxes, 12b-1 fees, brokerage
commissions,
interest, litigation and indemnification expenses
and other
extraordinary expenses) to an annual rate of 1.31%
of the
Fund's average daily net assets through January
31, 1995.
Effective February 1, 1995, the voluntary expense
limitation
has been terminated. Total Fund Operating Expenses
reflects
what annualized expenses for the year ended
December 31,
1995 would have been without any expense
reimbursements.
With expense reimbursements, Total Fund Operating
Expenses
for Class A and Class B was 1.59% and 2.55%,
respectively.
IVY GROWTH WITH INCOME FUND
CLASS A CLASS B
CLASS C[#]
Management Fees . . . . . . 0.85% 0.85%
0.85%
12b-1 Service/Distribution
Fees . . . . . . . . . . . 0.21%(1) 1.00%(2)
1.00%(2)
Other Expenses . . . . . . 0.90% 0.90%
0.90%
Total Fund Operating
Expenses . . . . . . . . . 1.96% 2.75%(3)
2.75%(3)
[#] The inception date for Class C shares is April 30,
1996.
Accordingly, the expenses shown are estimated
based on
amounts incurred by Class B shares of the Fund
during the
fiscal year ended December 31, 1995.
(1) Rule 12b-1 Service Fees paid by Class A shares may
increase
in subsequent years, but are subject to a ceiling
of 0.25%.
See "Alternative Purchase Arrangements."
(2) Long-term investors may, as a result of the Fund's
12b-1
fees, pay more than the economic equivalent of the
maximum
front-end sales charge permitted by the NASD's
Rules of Fair
Practice.
(3) Total Fund Operating Expenses for Class B and
Class C shares
are higher than related expenses for mutual funds
whose
investment objectives are similar to those of the
Fund.
EXAMPLES
Each of the following tables lists the expenses
that an
investor would pay on a $1,000 investment, assuming (1)
5% annual
return and (2) except as otherwise noted, redemption at
the end
of each time period. These examples further assume
reinvestment
of all dividends and distributions, and that the
percentage
amounts under "Total Fund Operating Expenses" (above)
remain the
same each year. THE FOLLOWING FIGURES SHOULD NOT BE
CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE
HIGHER OR LOWER THAN THOSE SHOWN.
IVY BOND FUND
1 YEAR 3 YEARS 5 YEARS
10 YEARS
Class A Shares* . . . . . $62 $94 $127
$222
Class B Shares . . . . . $73(1) $102(2) $143(3)
$244(4)
Class B Shares (no
redemption) . . . . . . $23 $72 $123
$244(4)
Class C Shares . . . . . $____(5) $_____ $_____
$_____
Class C Shares (no
redemption) . . . . . . $_____ $_____ $_____
$_____
Class I Shares[#] . . . . $12 $38 $66
$145
IVY EMERGING GROWTH FUND
1 YEAR 3 YEARS 5 YEARS
10 YEARS
Class A Shares** . . . $76 $115 $157
$272
Class B Shares . . . . $77(1) $114(2) $163(3)
$285(4)
Class B Shares (no
redemption) . . . . . $27 $84 $143
$285(4)
Class C Shares . . . . $____(5) $_____ $_____
$_____
Class C Shares (no
redemption) . . . . . $_____ $_____ $_____
$_____
IVY GROWTH FUND
1 YEAR 3 YEARS 5 YEARS
10 YEARS
Class A Shares** . . . . $73 $105 $140
$237
Class B Shares . . . . . $76(1) $110(2) $156(3)
$266(4)
Class B Shares (no
redemption) . . . . . . $26 $80 $136
$266(4)
Class C Shares . . . . . $____(5) $_____ $_____
$_____
Class C Shares (no
redemption) . . . . . . $_____ $_____ $_____
$_____
IVY GROWTH WITH INCOME FUND
1 YEAR 3 YEARS 5 YEARS
10 YEARS
Class A Shares** . . . $76 $115 $157
$273
Class B Shares . . . . $78(1) $115(2) $165(3)
$289(4)
Class B Shares (no
redemption) . . . . . . $28 $85 $145
$289(4)
Class C Shares . . . . $____(5) $_____ $_____
$_____
Class C Shares (no
redemption) . . . . . . $_____ $_____ $_____
$_____
* Assumes deduction of the maximum 4.75% initial
sales charge
at the time of purchase and no deduction of a
contingent
deferred sales charge at the time of redemption.
** Assumes deduction of the maximum 5.75% initial
sales charge
at the time of purchase and no deduction of a
contingent
deferred sales charge at the time of redemption.
[#] Class I Shares are not subject to an initial sales
charge at
the time of purchase, nor are they subject to the
deduction
of a contingent deferred sales charge at the time
of
redemption.
(1) Assumes deduction of a 5% contingent deferred
sales charge
at the time of redemption.
(2) Assumes deduction of a 3% contingent deferred
sales charge
at the time of redemption.
(3) Assumes deduction of a 2% contingent deferred
sales charge
at the time of redemption.
(4) Assumes conversion to Class A shares at the end of
the
eighth year, and therefore reflects Class A
expenses for
years nine and ten.
(5) Assumes deduction of a 1% contingent deferred
sales charge
at the time of redemption.
The purpose of the foregoing tables is to show the
various
costs and expenses that an investor in each Fund will
bear
directly or indirectly. The information presented in
the tables
does not reflect the charge of $10.00 per transaction
that would
apply if a shareholder elects to have redemption
proceeds wired
to his or her bank account. For a more detailed
discussion of the
Funds' fees and expenses, see the following sections of
this
Prospectus: "Organization and Management of the Funds,"
"Initial
Sales Charge Alternative -- Class A Shares,"
"Contingent Deferred
Sales Charge Alternative -- Class B and Class C
Shares," and "How
to Buy Shares," and the following section of the SAI:
"Investment
Advisory and Other Services."
THE FUNDS' FINANCIAL HIGHLIGHTS
The information in the following tables (i) for
Ivy Bond
Fund and Ivy Emerging Growth Fund through December 31,
1995 and
(ii) for Ivy Growth Fund and Ivy Growth with Income
Fund for the
years ended December 31, 1992, 1993, 1994 and 1995 has
been
audited by Coopers & Lybrand L.L.P., independent
accountants. The
information for Ivy Growth Fund and Ivy Growth with
Income Fund
for the year ended December 31, 1991 and prior periods
has been
audited by other independent accountants. (Ivy Bond
Fund operated
prior to its reorganization into the Trust on December
31, 1994
as Mackenzie Fixed Income Trust (d/b/a Ivy Bond Fund).)
The
report of Coopers & Lybrand L.L.P. on the Funds'
financial
statements appears in each Fund's Annual Report dated
December
31, 1995, which are incorporated by reference into the
SAI. Each
Fund's Annual Report contains further information about
and
management's discussion of the Fund's performance, and
is
available to shareholders upon request and without
charge from
the Distributor at the address and phone number
provided on the
cover of this Prospectus. The information presented
below should
be read in conjunction with each Fund's financial
statements and
the notes thereto.
The inception date for Class C shares of the Funds
is April
30, 1996, and as of December 31, 1995 no Class I shares
of Ivy
Bond Fund had been issued. Accordingly, no financial
information
for these shares is presented below.
IVY BOND FUND
CLASS A CLASS B
CLASS A
FOR THE FOR THE
FOR THE
YEAR YEAR
SIX MONTHS
ENDED ENDED
ENDED
DEC. 31, DEC. 31,
DEC. 31,
1995 1995
1994
Net asset value,
beginning of period . . . $ 9.01 $ 9.01 $
9.38
Income (loss) from
investment operations:
Net investment
income . . . . . . . . .67(a) .60(a)
.33(a)
Net gain (loss) on
investments (both
realized and
unrealized) . . . . . .84 .84
(.29)
Total from invest-
ment operations . . 1.51 1.44
.04
Less distributions from:
Net investment income .63 .56
.32
Net Realized Gain . . -- --
--
In Excess of Net
Realized Gain . . . . -- --
.09
Capital paid-in . . . .11 .11
--
Total distributions .74 .67
.41
Net asset value, end of
period . . . . . . . . . $ 9.78 $ 9.78 $
9.01
Total return(%) . . . . . 17.41(b) 16.54(b)
.43(c)
Ratios/supplemental data
Net assets, end of period
(in thousands) . . . . . $108,840 $5,184
$110,232
Ratio of expenses to
average daily net assets:
With expense
reimbursement(%) . . . 1.54 2.29
1.50(d)
Without expense
reimbursement(%) . . . 1.54 2.29
1.52(d)
Ratio of net investment
income (loss) to average
daily net assets(%) . . . 7.09(a) 6.34(a)
6.92(a)(d)
Portfolio turnover
rate(%) . . . . . . . . . 93 93
44(d)
CLASS B
CLASS B CLASS A
FOR THE
FOR THE FOR THE
APRIL 1,
SIX MONTHS YEAR
(COMMENCE-
ENDED ENDED
MENT)
DEC. 31, JUNE 30, TO
JUNE 30,
1994 1994
1994
Net asset value,
beginning of period . . . $ 9.38 $ 10.34 $
9.82
Income (loss) from
investment operations:
Net investment
income . . . . . . . . .30(a) .63
.10
Net gain (loss) on
investments (both
realized and
unrealized) . . . . . (.29) (.60)
(.32)
Total from invest-
ment operations . . .01 .03
(.22)
Less distributions from:
Net investment income .29 .61
.14
In Excess of Net
Investment Income . . -- --
--
Net Realized Gain . . -- .38
.08
In Excess of Net
Realized Gain . . . . .09 --
--
Capital paid-in . . . -- --
--
Total distributions .38 .99
.22
Net asset value, end of
period . . . . . . . . . $ 9.01 $ 9.38 $
9.38
Total return(%) . . . . . .06(c) 0.00(b)
(2.24)(c)
Ratios/supplemental data
Net assets, end of period
(in thousands) . . . . . $ 2,420 $120,073 $
761
Ratio of expenses to
average daily net assets:
With expense
reimbursement(%) . . . 2.25(d) --
--
Without expense
reimbursement(%) . . . 2.27(d) 1.45
2.20(d)
Ratio of net investment
loss to average daily
net assets(%) . . . . . . 6.17(a)(d) 6.19
5.44(d)
Portfolio turnover
rate(%) . . . . . . . . . 44(d) 78
78
CLASS A
FOR THE YEAR ENDED JUNE
30,
1993 1992
1991
Net asset value,
beginning of period . . . $ 9.95 $ 9.61 $
9.84
Income (loss) from
investment operations:
Net investment income .55 .63(a)
.62(a)
Net gain (loss) on
investments (both
realized and
unrealized) . . . . . 1.00 .73
.10
Total from invest-
ment operations . . 1.55 1.36
.72
Less distributions from:
Net investment income .64 .63
.62
Net realized gain . . .52 .25
.13
In excess of net
capital gain . . . . . -- --
--
Capital paid-in . . . -- .14
.20
Total distributions 1.16 1.02
.95
Net asset value,
end of period . . . . . . $ 10.34 $ 9.95 $
9.61
Total return(%) . . . . . 16.29(b) 14.77(b)
7.58(b)
Ratios/supplemental data:
Net assets, end of period
(in thousands) . . . . . $132,721 $102,328
$92,687
Ratio of expenses to
average daily net
assets:
With expense
reimbursement(%) . . . -- 1.50
1.50
Without expense
reimbursement(%) . . . 1.49 1.55
1.65
Ratio of net investment
income to average daily
net assets(%) . . . . . . 6.42 6.92(a)
6.77(a)
Portfolio turnover
rate(%) . . . . . . . . . 134(f) 129
118
CLASS A
FOR THE YEAR ENDED JUNE
30,
1990 1989
1988
Net asset value,
beginning of period . . . $ 10.59 $ 9.99 $
9.39
Income (loss) from
investment operations:
Net investment income .65(a) .77(a)
.58(a)
Net gain (loss) on
investments (both
realized and
unrealized) . . . . . (.40) .75
.81
Total from invest-
ment operations . . .25 1.52
1.39
Less distributions from:
Net investment income .65 .79
.60
In excess of net
investment income . . -- --
--
Net realized gain . . -- --
.19
In excess of net
capital gain . . . . . -- --
--
Capital paid-in . . . .35 .13
--
Total distributions 1.00 .92
.79
Net asset value, end of
period . . . . . . . . . $ 9.84 $ 10.59 $
9.99
Total return(%) . . . . . 2.54(b) 16.12(b)
16.31(b)
Ratios/supplemental data:
Net assets, end of period
(in thousands) . . . . . $70,670 $20,753
$5,075
Ratio of expenses to
average daily net
assets:
With expense
reimbursement(%) . . . 1.36 .20
1.37
Without expense
reimbursement(%) . . . 1.73 2.04
4.61
Ratio of net investment
income to average daily
net assets(%) . . . . . . 6.64 8.08
5.15
Portfolio turnover rate(%) 0 0
145
CLASS A
FOR THE YEAR ENDED
JUNE 30,
1987 1986(e)
Net asset value,
beginning of period . . . $ 9.35 $ 9.33*
Income (loss) from
investment operations:
Net investment income .36(a) .36(a)
Net gain (loss) on
investments (both
realized and
unrealized) . . . . . -- --
Total from invest-
ment operations . . .36 .36
Less distributions from:
Net investment income .32 .34
Net realized gain . . -- --
In excess of net
capital gain . . . . . -- --
Capital paid-in . . . -- --
Total distributions .32 .34
Net asset value, end of
period . . . . . . . . . $ 9.39 $ 9.35
Total return(%) . . . . . 2.92(b) 4.90(b)(d)
Ratios/supplemental data:
Net assets, end of period
(in thousands) . . . . . $ 217 $ 165
Ratio of expenses to
average daily net
assets
With expense
reimbursement . . . . 1.00 1.19(d)
Without expense
reimbursement . . . . 32.89 59.04(d)
Ratio of net investment
income to average daily
net assets(%) . . . . . . 3.80 4.58(d)
Portfolio turnover rate(%) 0% 0%
__________________
(a) Net investment income is net of expense reimbursed
from
Manager.
(b) Total return does not reflect a sales charge.
(c) Total return represents aggregate total and does
not reflect
a sales charge.
(d) Annualized.
(e) September 6, 1985 (commencement) to June 30, 1986.
(f) The portfolio turnover rate excludes sales of
portfolio
securities made following the February 1, 1993
reorganization between Ivy Bond Fund (formerly
Mackenzie
Fixed Income Trust) and American Investors Income
Fund, Inc.
to realign the Fund's portfolio and reflects an
adjustment
to the monthly average of the value of the
portfolio
securities owned by the Fund during the year ended
June 30,
1993.
* Price at inception excluding sales charge.
** Shares of the Fund outstanding as of March 31,
1994 were
designated Class A shares of the Fund.
IVY EMERGING GROWTH FUND
CLASS A
FOR THE
PERIOD MAR.
FOR THE FOR THE 3,
1993
YEAR YEAR
(COMMENCE-
ENDED ENDED
MENT)
DEC. 31, DEC. 31, TO
DEC. 31,
1995 1994
1993
Net asset value,
beginning of period . . . $ 18.38 $ 17.93 $
10.00
Income (loss) from
investment operations:
Net investment
loss . . . . . . . . . (.24) (.24)(a)
(.07)(a)
Net gain on investments
(both realized and
unrealized) . . . . . 7.90 .82
8.29
Total from invest-
ment operations . . 7.66 .58
8.22
Less distributions from:
Net realized gain . . 1.92 --
.29
Capital paid-in . . . -- .13
--
Total distributions 1.92 .13
.29
Net asset value, end of
period . . . . . . . . . $ 24.12 $ 18.38 $
17.93
Total return(%) . . . . . 42.07(b) 3.29(b)
45.33(c)
Ratios/supplemental data:
Net assets, end of period
(in thousands) . . . . . $39,456 $21,493
$14,212
Ratio of expenses to
average daily net assets:
With expense
reimbursement(%) . . . -- 2.20
1.93(d)
Without expense
reimbursement(%) . . . 1.95 2.22
2.33(d)
Ratio of net investment
loss to average daily
net assets(%) . . . . . . (1.39) (1.72)(a)
(1.30)(a)(d)
Portfolio turnover
rate(%) . . . . . . . . . 86 67
41(d)
CLASS B
FOR THE
PERIOD OCT.
FOR THE FOR THE
23, 1993
YEAR YEAR
(COMMENCE-
ENDED ENDED
MENT)
DEC. 31, DEC. 31, TO
DEC. 31,
1995 1994
1993
Net asset value,
beginning of period . . . $ 18.38 $ 17.93 $
18.21
Income (loss) from
investment operations:
Net investment
loss . . . . . . . . . (.35) (.29)(a)
(.04)(a)
Net gain on investments
(both realized and
unrealized) . . . . . 7.85 .74
.03
Total from invest-
ment operations . . 7.50 .45
(.01)
Less distributions:
Net realized gain . . 1.76 --
.27
Total distributions 1.76 --
.27
Net asset value, end of
period . . . . . . . . . $ 24.12 $ 18.38 $
17.93
Total return(%) . . . . . 41.03(b) 2.51(b)
.05(e)
Ratios/supplemental data:
Net assets, end of period
(in thousands) . . . . . $13,985 $ 5,015 $
1,216
Ratio of expenses to
average daily net assets:
With expense
reimbursement(%) . . . -- 2.95
2.68(d)
Without expense
reimbursement(%) . . . 2.70 2.97
3.08(d)
Ratio of net investment
loss to average daily
net assets(%) . . . . . . (2.14) (2.47)(a)
(2.05)(a)(d)
Portfolio turnover rate(%) 86 67
41(d)
_______________
(a) Net investment loss is net of expense reimbursed
by IMI.
(b) Total return does not reflect a sales charge.
(c) Total return represents aggregate total return
since April
30, 1993 and does not reflect a sales charge.
(d) Annualized.
(e) Total return represents aggregate total return and
does not
reflect a sales charge.
IVY GROWTH FUND
CLASS A
FOR THE YEAR ENDED
DECEMBER 31,
1995 1994
1993
Net asset value,
beginning of period . . . $ 13.91 $ 15.14 $
14.98
Income (loss) from
investment operations:
Net investment
income . . . . . . . . .05(a) .05(a)
.10(a)
Net gain (loss) on
investment transactions
and put options (both
realized and
unrealized) . . . . . 3.73 (.49)
1.74
Total from invest-
ment operations . . 3.78 (.44)
1.84
Less distributions from:
Net investment income .02 .05
.10
Net realized gain . . .89 .74
1.58
In excess of net
realized gain . . . . .03 --
--
Capital paid-in . . . -- --
--
Total distributions .94 .79
1.68
Net asset value, end of
period . . . . . . . . . $ 16.75 $ 13.91 $
15.14
Total return(%)(b) . . . 27.33 (2.97)
12.29
Ratios/supplemental data:
Net assets, end of period
(in thousands) . . . . . $289,954 $231,446
$268,533
Ratio of expenses to
average daily net assets:
With expense
reimbursement(%) . . . 1.59 1.38
1.33
Without expense
reimbursement(%) . . . 1.60 1.49
1.43
Ratio of net investment
loss to average daily
net assets(%) . . . . . . .32(a) .32(a)
.64(a)
Portfolio turnover
rate(%) . . . . . . . . . 41 39
77(c)
CLASS A
FOR THE YEAR ENDED
DECEMBER 31,
1992 1991
1990
Net asset value,
beginning of period . . . $ 16.91 $ 14.41 $
15.57
Income (loss) from
investment operations:
Net investment
income . . . . . . . . .17(a) .27
.31
Net gain (loss) on
investment transactions
and put options (both
realized and
unrealized) . . . . . .70 4.12
(.90)
Total from invest-
ment operations . . .87 4.39
(.59)
Less distributions from:
Net investment income .15 .27
.33
Net realized gain . . 2.65 1.62
.23
Capital paid-in . . . -- --
.01
Total distributions 2.80 1.89
.57
Net asset value, end of
period . . . . . . . . . $ 14.98 $ 16.91 $
14.41
Total return(%)(b) . . . 5.21 30.76
(3.76)
Ratios/supplemental data:
Net assets, end of period
(in thousands) . . . . . $226,068 $231,706
$185,511
Ratio of expenses to
average daily net assets:
With expense
reimbursement(%) . . . 1.32 --
--
Without expense
reimbursement(%) . . . 1.40 1.29
1.29
Ratio of net investment
loss to average daily
net assets(%) . . . . . . .98(a) 1.60
2.10
Portfolio turnover
rate(%) . . . . . . . . . 138 79
67
CLASS A
FOR THE YEAR ENDED
DECEMBER 31,
1989 1988
1987
Net asset value,
beginning of period . . . $ 13.21 $ 12.09 $
13.44
Income (loss) from
investment operations:
Net investment
income . . . . . . . . .44 .40
.32
Net gain (loss) on
investment transactions
and put options (both
realized and
unrealized) . . . . . 3.16 1.10
(.46)
Total from invest-
ment operations . . 3.60 1.50
(.14)
Less distributions from:
Net investment income .44 .38
.91
Net realized gain . . .80 --
.30
Capital paid-in . . . -- --
--
Total distributions 1.24 .38
1.21
Net asset value, end of
period . . . . . . . . . $ 15.57 $ 13.21 $
12.09
Total return(%)(b) . . . 27.24 12.40
(1.87)
Ratios/supplemental data:
Net assets, end of period
(in thousands) . . . . . $197,789 $172,163
$173,159
Ratio of expenses to
average daily net assets:
With expense
reimbursement(%) . . . -- --
--
Without expense
reimbursement(%) . . . 1.33 1.35
1.27
Ratio of net investment
loss to average daily
net assets(%) . . . . . . 2.7 2.8
2.4
Portfolio turnover
rate(%) . . . . . . . . . 86 84
74
CLASS A
FOR THE YEAR
ENDED DEC. 31,
1986
Net asset value,
beginning of period . . . $ 15.90
Income (loss) from
investment operations:
Net investment
income . . . . . . . . .61
Net gain (loss) on
investment transactions
and put options (both
realized and
unrealized) . . . . . 1.87
Total from invest-
ment operations . . 2.48
Less distributions from:
Net investment income .46
Net realized gain . . 4.48
Capital paid-in . . . --
Total distributions 4.94
Net asset value, end of
period . . . . . . . . . $ 13.44
Total return(%)(b) . . . 17.30
Ratios/supplemental data:
Net assets, end of period
(in thousands) . . . . . $158,133
Ratio of expenses to
average daily net assets:
With expense
reimbursement(%) . . . --
Without expense
reimbursement(%) . . . 1.29
Ratio of net investment
loss to average daily
net assets(%) . . . . . . 4.5
Portfolio turnover
rate(%) . . . . . . . . . 95
CLASS B
FOR THE
PERIOD
FROM OCT.
23, 1993
(COMMENCE-
FOR THE YEAR
MENT)
ENDED DEC. 31, TO
DEC. 31,
1995 1994
1993
Net asset value,
beginning of period . . . $ 13.91 $ 15.14 $
16.42
Income (loss) from
investment operations:
Net investment
loss(c) . . . . . . . (.08) (.04)
--
Net gain (loss) on
investment transactions
and put options (both
realized and
unrealized) . . . . . 3.71 (.54)
.37
Total from invest-
ment operations . . 3.63 (.58)
.37
Less distributions from:
Net investment income -- --
.07
Net realized gain . . .73 .52
1.58
In excess of net
realized gain . . . . .06 .13
--
Total distributions .79 .65
1.65
Net asset value, end of
period . . . . . . . . . $ 16.75 $ 13.91 $
15.14
Total return(%) . . . . . 26.13(b) (3.90)(b)
2.34(d)
Ratios/supplemental data:
Net assets, end of period
(in thousands) . . . . . $ 2,669 $ 1,399 $
65
Ratio of expenses to
average daily net assets:
With expense
reimbursement(%) . . . 2.55 2.34
2.31(e)
Without expense
reimbursement(%) . . . 2.56 2.45
2.44(e)
Ratio of net investment
loss to average daily
net assets(%)(a) . . . . (.64) (.64)
(.33)(e)
Portfolio turnover
rate(%) . . . . . . . . . 41 39
77(c)
__________________
(a) Net investment income (loss) is net of expense
reimbursement
from IMI.
(b) Total return does not reflect a sales charge.
(c) The portfolio turnover rate excludes sales of
portfolio
securities made following the February 1, 1993
reorganization between Ivy Growth Fund and
American
Investors Growth Fund, Inc. to realign the Fund's
portfolio
and reflects an adjustment to the monthly average
of the
value of the portfolio securities owned by the
Fund during
the year ended December 31, 1993.
(d) Total return represents aggregate total return and
does not
reflect a sales charge.
(e) Annualized.
* When the Trust became a series investment company
on 3/1/84,
its then existing investment portfolio was
redesignated as
"Ivy Growth Fund." Ivy Growth Fund has had the
following
subadvisers: Marsh and Cunningham Inc. ("Marsh
and
Cunningham"), from 4/27/85 through 11/30/86;
Furman Selz
Capital Management, Inc. ("FSCM"), from 4/1/84
through
4/26/85; and Grantham, Mayo, Van Otterloo & Co.
("Grantham,
Mayo"), from 1/1/80 through 4/1/84.
IVY GROWTH WITH INCOME FUND
CLASS A
FOR THE YEAR ENDED
DECEMBER 31,
1995 1994
1993
Net asset value,
beginning of period . . . $ 9.08 $ 9.70 $
9.21
Income from investment
operations:
Net investment income
(loss) . . . . . . . . .11 .17
.08
Net gain (loss) on
investment transactions
(both realized and
unrealized) . . . . . 2.13 (.36)
1.30
Total from invest-
ment operations . . 2.24 (.19)
1.38
Less distributions from:
Net investment income .08 .17
.06
In excess of net
investment income . . -- .01
--
Net realized gain . . .26 .25
.83
Total distributions .34 .43
.89
Net asset value, end of
period . . . . . . . . . $ 10.98 $ 9.08 $
9.70
Total return(%)(e) . . . 24.93 (2.03)
15.07
Ratios/supplemental data:
Net assets, end of period
(in thousands) . . . . . $59,054 $26,017
$22,669
Ratio of expenses to
average daily net
assets(%) . . . . . . . . 1.96 1.84
2.14
Ratio of net investment
income to average daily
net assets(%) . . . . . . 1.06 1.83
.88
Portfolio turnover
rate(%) . . . . . . . . . 81 36
85
Class A
For the Year Ended
December 31,
1992 1991
1990
Net asset value,
beginning of period . . . $ 9.74 $ 7.79 $
8.13
Income from investment
operations:
Net investment income
(loss) . . . . . . . . .07 .09(a)
.16
Net gain (loss) on
investment transactions
(both realized and
unrealized) . . . . . .18 2.72
(.18)
Total from invest-
ment operations . . .25 2.81
(.02)
Less distributions from:
Net investment income .07 .09
.18
In excess of net
investment income . . -- --
--
Net realized gain . . .71 .77
.14
Total distributions .78 .86
.32
Net asset value, end of
period . . . . . . . . . $ 9.21 $ 9.74 $
7.79
Total return(%)(e) . . . 2.61 36.33
(.18)
Ratios/supplemental data:
Net assets, end of period
(in thousands) . . . . . $19,045 $17,063 $
9,989
Ratio of expenses to
average daily net
assets(%) . . . . . . . . 1.94 1.50(b)
1.48
Ratio of net investment
income to average daily
net assets(%) . . . . . . .73 1.10(a)
1.70
Portfolio turnover
rate(%) . . . . . . . . . 163 113
68
CLASS A
FOR THE YEAR ENDED
DECEMBER 31,
1989(d) 1988
1987
Net asset value,
beginning of period . . . $ 10.32 $ 9.05 $
12.56
Income from investment
operations:
Net investment income
(loss) . . . . . . . . .45 .55
.49
Net gain (loss) on
investment transactions
(both realized and
unrealized) . . . . . 1.42 1.44
(.28)
Total from invest-
ment operations . . 1.87 1.99
.21
Less distributions from:
Net investment income 1.08 .55
.92
In excess of net
investment income . . -- --
--
Net realized gain . . 2.98 .17
2.80
Total distributions 4.06 .72
3.72
Net asset value, end of
period . . . . . . . . . $ 8.13 $ 10.32 $
9.05
Total return(%)(e) . . . 18.06 21.96
.78
Ratios/supplemental data:
Net assets, end of period
(in thousands) . . . . . $21,258 $109,507
$100,080
Ratio of expenses to
average daily net
assets(%) . . . . . . . . 1.36 1.26
1.22
Ratio of net investment
income to average daily
net assets(%) . . . . . . 4.0 4.8
3.0
Portfolio turnover
rate(%) . . . . . . . . . 73 58
69
CLASS A
FOR THE YEAR
ENDED DEC. 31,
1986
Net asset value,
beginning of period $14.63
Income from investment
operations:
Net investment income
(loss) .45
Net gain (loss) on
investment transactions
(both realized and
unrealized) 2.17
Total from invest-
ment operations 2.62
Less distributions from:
Net investment income .62
In excess of net
investment income --
Net realized gain 4.07
Total distributions 4.69
Net asset value, end of
period $ 12.56
Total return(%)(e) 19.09
Ratios/supplemental data:
Net assets, end of period
(in thousands) $138,026
Ratio of expenses to
average daily net
assets(%) 1.22
Ratio of net investment
income to average daily
net assets 3.6
Portfolio turnover
rate(%) 104
* These figures are adjusted to reflect a ten-for-one
stock
split on June 30, 1989. Grantham, Mayo was
subadviser to Ivy
Growth with Income Fund from 4/1/84 through 6/30/89.
Ivy
Growth with Income Fund was formerly known as "Ivy
Institutional Investors Fund".
CLASS B
FOR THE
PERIOD
FROM OCT.
FOR THE FOR THE
23, 1993
YEAR YEAR
(COMMENCE-
ENDED ENDED
MENT)
DEC. 31, DEC. 31, TO
DEC. 31
1995 1994
1993
Net asset value,
beginning of period . . . $ 9.08 $ 9.70 $
10.43
Income (loss) from
investment operations:
Net investment income .03 .09
--
Net gain (loss) on
investment transactions
(both realized and
unrealized) . . . . . 2.13 (.36)
.05
Total from invest-
ment operations . . 2.16 (.27)
.05
Less distributions from:
Net investment income .01 .09
.01
In excess of net
investment income . . -- .01
--
Net realized gain . . .25 .25
.77
Total distributions .26 .35
.78
Net asset value, end of
period . . . . . . . . . $ 10.98 $ 9.08 $
9.70
Total return(%) . . . . . 23.94(e) (2.88)(e)
.61(f)
Ratios/supplemental data:
Net assets, end of period
(in thousands) . . . . . $ 8,868 $ 5,849 $
888
Ratio of expenses to
average daily net
assets(%) . . . . . . . . 2.75 2.70
3.09(c)
Ratio of net investment
income (loss) to average
daily net assets(%) . . . .27 .97
(.07)(c)
Portfolio turnover
rate(%) . . . . . . . . . 81 36
85
___________________
(a) Net investment income is net of expenses
reimbursed by IMI.
(b) The ratio of expenses to average daily net assets
is net of
the expense reimbursement from the Manager. If
the Manager
had not reimbursed expenses during the year ended
December 31, 1991, the ratio of expenses to
average daily
net assets would have been 1.61%.
(c) Annualized.
(d) Computed using average monthly shares.
(e) Total return does not reflect a sales charge.
(f) Total return represents aggregate total return and
does not
reflect a sales charge.
INVESTMENT OBJECTIVES AND POLICIES
Each Fund has its own investment objective and
policies,
which are described below. Each Fund's investment
objective is
fundamental and may not be changed without the approval
of a
majority of the outstanding voting shares of the Fund.
Except for
a Fund's investment objective and those investment
restrictions
specifically identified as fundamental, all investment
policies
and practices described in this Prospectus and in the
SAI are
non-fundamental, and may be changed by the Trustees
without
shareholder approval. There can be no assurance that a
Fund's
objective will be met. The different types of
securities and
investment techniques used by the Funds involve varying
degrees
of risk. For information about the particular risks
associated
with each type of investment, see "Risk Factors and
Investment
Techniques," below, and the SAI.
Whenever an investment objective, policy or
restriction of a
Fund described in this Prospectus or in the SAI states
a maximum
percentage of assets that may be invested in a security
or other
asset or describes a policy regarding quality
standards, that
percentage limitation or standard will, unless
otherwise
indicated, apply to the Fund only at the time a
transaction takes
place. Thus, for example, if a percentage limitation
is adhered
to at the time of investment, a later increase or
decrease in the
percentage that results from circumstances not
involving any
affirmative action by the Fund will not be considered a
violation.
IVY BOND FUND: Ivy Bond Fund seeks a high level
of current
income by investing primarily in (i) investment grade
corporate
bonds (i.e., those rated Aaa, Aa, A or Baa by Moody's
Investors
Services, Inc. ("Moody's") or AAA, AA, A or BBB by
Standard &
Poor's Corporation ("S&P"), or, if unrated, are
considered by IMI
to be of comparable quality) and (ii) U.S. Government
securities
(including mortgage-backed securities issued by U.S.
Government
agencies or instrumentalities) that mature in more than
13
months. As a fundamental policy, the Fund normally
invests at
least 65% of its total assets in these fixed income
securities.
For temporary defensive purposes, the Fund may invest
without
limit in U.S. Government securities maturing in 13
months or
less, certificates of deposit, bankers' acceptances,
commercial
paper and repurchase agreements. The Fund may also
invest up to
35% of its total assets in such securities in order to
meet
redemptions or to maximize income to the Fund when it
is
anticipating longer-term investments.
The Fund may invest less than 35% of its net
assets in debt
securities rated Ba or below by Moody's or BB or below
by S&P,
or, if unrated, are considered by IMI to be of
comparable quality
(commonly referred to as "high yield" or "junk" bonds).
The Fund
will not invest in debt securities rated less than C by
either
Moody's or S&P. During the six months ended December
31, 1995,
based upon the dollar-weighted average ratings of the
Fund's
portfolio holdings at the end of each month during that
period,
the Fund had the following percentages of its net
assets invested
in debt securities rated in the categories indicated
(all ratings
are by either S&P or Moody's, whichever rating is
higher): _____%
in securities rated AAA/Aaa; _____% in securities rated
AA/Aa;
_____% in securities rated A/A; _____% in securities
rated
BBB/Baa; _____% in securities rated BB/Ba; _____% in
securities
rated B/B; _____% in securities rated CCC/Caa; and
_____% in
securities that were unrated. The asset composition of
the Fund
subsequent to the period indicated may or may not
approximate
these figures. See Appendix A in the SAI for a
description of
Moody's and S&P's corporate bond ratings.
The Fund may invest up to 5% of its assets in
dividend
paying common and preferred stocks (including
adjustable rate
preferred stocks and securities convertible into common
stocks),
municipal bonds, investment-grade zero coupon bonds,
and
securities sold on a "when-issued" or firm commitment
basis. The
Fund may also lend its portfolio securities to increase
current
income (so long as the aggregate value of all
outstanding
securities loaned does not exceed 30% of the value of
the Fund's
total assets), and, as a temporary measure for
extraordinary or
emergency purposes, may borrow from banks (up to 10% of
the value
of its total assets).
The Fund may invest up to 20% of its net assets in
debt
securities of foreign issuers, including non-U.S.
dollar-
denominated debt securities, American Depository
Receipts
("ADRs"), Eurodollar securities and debt securities
issued,
assumed or guaranteed by foreign governments or
political
subdivisions or instrumentalities thereof. The Fund may
also
enter into forward foreign currency contracts, but not
for
speculative purposes. The Fund may not invest more than
10% of
the value of its net assets in illiquid securities,
such as
securities subject to legal or contractual restrictions
on resale
("restricted securities"), repurchase agreements
maturing in more
than seven days and other securities that are not
readily
marketable, and in any case may not invest more than 5%
of its
net assets in restricted securities.
The Fund may purchase put and call options,
provided the
premium paid for such options does not exceed 10% of
the Fund's
net assets. The Fund may also sell covered put options
with
respect to up to 50% of the value of its net assets,
and my
write covered call options so long as not more than 20%
of the
Fund's net assets is subject to being purchased upon
the exercise
of the calls. For hedging purposes only, the Fund may
engage in
transactions in interest rate futures contracts,
currency futures
contracts and options on interest rate futures and
currency
futures contracts.
IVY EMERGING GROWTH FUND, IVY GROWTH FUND AND IVY
GROWTH
WITH INCOME FUND: Each Fund's principal investment
objective is
long-term capital growth primarily through investment
in equity
securities, with current income being a secondary
consideration.
Ivy Growth with Income Fund has tended to emphasize
dividend-
paying stocks more than the other two Funds. Under
normal
conditions, each Fund invests at least 65% of its total
assets in
common stocks and securities convertible into common
stocks. Ivy
Growth Fund and Ivy Growth with Income Fund invest
primarily in
common stocks of domestic corporations with low
price-earnings
ratios and rising earnings, focusing on established,
financially
secure firms with capitalizations over $100 million and
more than
three years of operating history. Ivy Emerging Growth
Fund
invests primarily in common stocks (or securities with
similar
characteristics) of small and medium-sized companies,
both
foreign and domestic, that are in the early stages of
their life
cycle and that IMI believes have the potential to
become major
enterprises. All of the Funds may invest up to 25% of
their
assets in foreign securities, primarily those traded in
European,
Pacific Basin and Latin American markets. Individual
foreign
securities are selected based on value indicators, such
as a low
price-earnings ratio, and are reviewed for fundamental
financial
strength.
When circumstances warrant, each Fund may invest
without
limit in investment-grade debt securities (e.g., U.S.
Government
securities or other debt securities rated at least Baa
by Moody's
or BBB by S&P, or, if unrated, are considered by IMI to
be of
comparable quality), preferred stocks, or cash or cash
equivalents such as bank obligations (including
certificates of
deposit and bankers' acceptances), commercial paper,
short-term
notes and repurchase agreements.
Ivy Growth with Income Fund may invest less than
35% of its
net assets in debt securities rated rated Ba or below
by Moody's
or BB or below by S&P, or if unrated, are considered by
IMI to be
of comparable quality (commonly referred to as "high
yield" or
"junk" bonds). Ivy Growth Fund may invest up to 5% of
its net
assets in these low-rated debt securities. Neither Fund
will
invest in debt securities rated less than C by either
Moody's or
S&P.
Each Fund may borrow up to 10% of the value of its
total
assets, but only for up to 60 days and where it would
be
advantageous to do so from an investment standpoint.
All of the
Funds may invest up to 5% of their assets in warrants.
Ivy Growth
with Income Fund may not invest more than 10% of the
value of its
net assets in illiquid securities, such as securities
subject to
legal or contractual restrictions on resale
("restricted
securities"), repurchase agreements maturing in more
than seven
days and other securities that are not readily
marketable. None
of the Funds may invest more than 5% of their net
assets in
restricted securities. Ivy Growth with Income Fund may
also
invest in equity real estate investment trusts, and all
of the
Funds may enter into forward foreign currency
contracts.
Each of the Funds may purchase put options on
securities and
stock indices, and may write covered call options with
respect to
25% of the value of securities held in its portfolio.
For
hedging purposes only, each Fund may enter into stock
index
futures contracts as a means of regulating its exposure
to equity
markets. A Fund's aggregate investment in stock index
futures
contracts will not exceed 15% of its total assets.
RISK FACTORS AND INVESTMENT TECHNIQUES
BANK OBLIGATIONS: The bank obligations in which
the Funds
may invest include certificates of deposit, bankers'
acceptances,
and other short-term debt obligations. Investments in
certificates of deposit and bankers' acceptances are
limited to
obligations of (i) banks having total assets in excess
of $1
billion, and (ii) other banks if the principal amount
of the
obligation is fully insured by the Federal Deposit
Insurance
Corporation ("FDIC"). Investments in certificates of
deposit of
savings associations are limited to obligations of
Federal or
state-chartered institutions whose total assets exceed
$1 billion
and whose deposits are insured by the FDIC.
BORROWING: Borrowing may exaggerate the effect on
a Fund's
net asset value of any increase or decrease in the
value of the
Fund's portfolio securities. Money borrowed will be
subject to
interest costs (which may include commitment fees
and/or the cost
of maintaining minimum average balances).
COMMERCIAL PAPER: Commercial paper represents
short-term
unsecured promissory notes issued in bearer form by
bank holding
companies, corporations, and finance companies. Each
Fund's
investments in commercial paper are limited to
obligations rated
Prime-1 by companies having an outstanding debt issue
currently
rated Aaa or Aa by Moody's or AAA or AA by S&P.
CONVERTIBLE SECURITIES: The convertible securities
in which
the Funds may invest include corporate bonds, notes,
debentures
and other securities convertible into common stocks.
Because
convertible securities can be converted into equity
securities,
their values will normally vary in some proportion with
those of
the underlying equity securities. Convertible
securities usually
provide a higher yield than the underlying equity,
however, so
that the price decline of a convertible security may
sometimes be
less substantial than that of the underlying equity
security.
DEBT SECURITIES, IN GENERAL: Investment in debt
securities,
including municipal securities, involves both interest
rate and
credit risk. Generally, the value of debt instruments
rises and
falls inversely with interest rates. 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. Bonds with longer maturities generally are
more
volatile than bonds with shorter maturities. The market
value of
debt securities also varies according to the relative
financial
condition of the issuer. In general, lower-quality
bonds offer
higher yields due to the increased risk that the issuer
will be
unable to meet its obligations on interest or principal
payments
at the time called for by the debt instrument.
U.S. GOVERNMENT SECURITIES: U.S. Government
securities
are obligations of, or guaranteed by, the U.S.
Government, its
agencies or instrumentalities. Such securities include:
(1)
direct obligations of the U.S. Treasury (such as
Treasury bills,
notes, and bonds) and (2) Federal agency obligations
guaranteed
as to principal and interest by the U.S. Treasury (such
as GNMA
certificates, which are mortgage-backed securities).
When such
securities are held to maturity, the payment of
principal and
interest is unconditionally guaranteed by the U.S.
Government,
and thus they are of the highest possible credit
quality. U.S.
Government securities that are not held to maturity are
subject
to variations in market value caused by fluctuations in
interest
rates.
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. 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.
INVESTMENT GRADE DEBT SECURITIES: Bonds
rated Aaa by
Moody's and AAA by S&P are judged to be of the best
quality
(i.e., capacity to pay interest and repay principal is
extremely
strong). Bonds rated Aa/AA are considered to be of
high quality
(i.e., capacity to pay interest and repay interest is
very strong
and differs from the highest rated issues only to a
small
degree). Bonds rated A are viewed as having many
favorable
investment attributes, but elements may be present that
suggest a
susceptibility to the adverse effects of changes in
circumstances
and economic conditions than debt in higher rated
categories.
Bonds rated Baa/BBB (considered by Moody's to be
"medium grade"
obligations) are considered to have an adequate
capacity to pay
interest and repay principal, but certain protective
elements may
be lacking (i.e., such bonds lack outstanding
investment
characteristics and have some speculative
characteristics).
LOW-RATED DEBT SECURITIES: Securities rated
lower than
Baa by Moody's or BBB by S&P, and comparable unrated
securities
(commonly referred to as "high yield" or "junk" bonds),
are
considered to have predominately speculative
characteristics with
respect to the issuer's capacity to pay interest and
repay
principal. Investors (other than investors in Ivy
Emerging Growth
Fund) should be willing to accept the special risks
associated
with these securities.
While high yield debt securities are likely to
have some
quality and protective characteristics, these qualities
are
largely outweighed by the risk of exposure to adverse
conditions
and other uncertainties. Accordingly, investments in
such
securities, while generally providing for greater
income and
potential opportunity for gain than investments in
higher-rated
securities, also entail greater risk (including the
possibility
of default or bankruptcy of the issuer of such
securities) and
generally involve greater price volatility than
securities in
higher rating categories. IMI seeks to reduce risk
through
diversification (including investments in foreign
securities),
credit analysis and attention to current developments
and trends
in both the economy and financial markets. Should the
rating of a
portfolio security be downgraded, IMI will determine
whether it
is in the affected Fund's best interest to retain or
dispose of
the security (unless the security is downgraded below
the rating
of C, in which case IMI most likely would dispose of
the security
based on then existing market conditions). For
additional
information regarding the risks associated with
investing in high
yield bonds, see the SAI (and, in particular, Appendix
A, which
contains a more complete description of the ratings
assigned by
Moody's and S&P).
FOREIGN CURRENCY EXCHANGE TRANSACTIONS: The Funds
usually
effect their currency exchange transactions on a spot
(i.e.,
cash) basis at the spot rate prevailing in the foreign
exchange
market. However, some price spread on currency
exchange (e.g.,
to cover service charges) is usually incurred when a
Fund
converts assets from one currency to another. A Fund
may also be
affected unfavorably by the relative rates of exchange
between
the currencies of different nations.
FOREIGN SECURITIES: The foreign securities in
which the
Funds may invest include non-U.S. dollar-denominated
corporate
debt securities, Eurodollar securities, sponsored or
unsponsored
ADRs and debt securities issued, assumed or guaranteed
by foreign
governments (or political subdivisions or
instrumentalities
thereof). Investors should consider carefully the
special risks
that arise in connection with investing in securities
issued by
companies and governments of foreign nations, which are
in
addition to those risks that are associated with the
Funds'
investments, generally.
In many foreign countries, there is less
regulation of
business and industry practices, stock exchanges,
brokers and
listed companies than in the United States. For
example, foreign
companies are not generally subject to uniform
accounting and
financial reporting standards, and foreign securities
transactions may be subject to higher brokerage costs.
There also
tends to be less publicly available information about
issuers in
foreign countries, and foreign securities markets of
many of the
countries in which the Funds may invest may be smaller,
less
liquid and subject to greater price volatility than
those in the
United States. Securities issued in emerging market
countries,
such as Latin America and certain eastern European
countries, may
be even less liquid and more volatile than securities
of issuers
operating in more developed economies (e.g., countries
in other
parts of Europe). Generally, price fluctuations in the
Funds'
foreign security holdings are likely to be high
relative to those
of securities issued in the United States.
Other risks include the possibility of
expropriation,
nationalization or confiscatory taxes, foreign exchange
controls
(which may include suspension of the ability to
transfer currency
from a given country), default in foreign government
securities,
difficulties in enforcing foreign judgments, political
or social
instability, or other developments that could adversely
affect
the Funds' foreign investments. Investors should also
be aware
that many emerging markets countries have experienced
and
continue to experience high rates of inflation, which
can create
a negative interest rate environment and erode the
value of
outstanding financial assets in those countries.
FORWARD FOREIGN CURRENCY CONTRACTS: A forward
foreign
currency contract involves an obligation to purchase or
sell a
specific currency at a future date at a predetermined
price.
When a Fund enters into a forward foreign currency
contract, it
will hold cash, debt instruments or equity securities
in a
segregated account with its custodian in an amount
equal (on a
marked-to-market basis) to the amount of the
commitments under
the contract. Although these contracts are intended to
minimize
the risk of loss due to a decline in the value of the
hedged
currencies, they also tend to limit any potential gain
that might
result should the value of the currencies increase. In
addition,
there may be an imperfect correlation between a Fund's
portfolio
holdings of securities denominated in a particular
currency and
forward contracts entered into by the Fund, which may
prevent the
Fund from achieving the intended hedge or expose the
Fund to the
risk of currency exchange loss.
LENDING OF PORTFOLIO SECURITIES: Loans of
securities by a
Fund are collateralized by cash, letters of credit or
securities
issued or guaranteed by the U.S. Government or its
agencies or
instrumentalities. There may be risks of delay in
receiving
additional collateral, or risks of delay in recovery of
the
securities or even loss of rights in the collateral,
should the
borrower of the securities fail financially.
OPTIONS AND FUTURES TRANSACTIONS: The Funds may
use various
techniques to increase or decrease their exposure to
changing
security prices, interest rates, currency exchange
rates,
commodity prices, or other factors that affect the
value of their
securities. These techniques may involve derivative
transactions
such as purchasing put and call options, selling call
options,
and engaging in transactions in currency rate futures,
stock
index futures and related options.
Each Fund may invest in options on securities in
accordance
with its stated investment objective and policies (see
above). A
put option is a short-term contract that gives the
purchaser of
the option, in return for a premium, the right to sell
the
underlying security or currency to the seller of the
option at a
specified price during the term of the option. A call
option is a
short-term contract that gives the purchaser the right
to buy the
underlying security or currency from the seller of the
option at
a specified price during the term of the option. An
option on a
stock index gives the purchaser the right to receive
from the
seller cash equal to the difference between the closing
price of
the index and the exercise price of the option. When a
Fund
writes a put or call option, it will segregate assets,
such as
cash, U.S. Government securities or other high grade
debt
securities, or "cover" its position in accordance with
the
Investment Company Act of 1940, as amended (the "1940
Act").
Each Fund may also enter into futures transactions
in
accordance with its stated investment objective and
policies. An
interest rate futures contract is an agreement between
two
parties to buy or sell a specified debt security at a
set price
on a future date. A stock index futures contract is an
agreement
to take or make delivery of an amount of cash based on
the
difference between the value of the index at the
beginning and at
the end of the contract period. When a Fund enters into
a futures
contract, it will make any necessary "margin" deposits
and
segregate assets, such as cash, U.S. Government
securities or
other liquid high-grade debt obligations, to "cover"
its position
in accordance with the 1940 Act.
Investors should be aware that the risks
associated with
the use of options and futures are considerable.
Options and
futures transactions generally involve a small
investment of cash
relative to the magnitude of the risk assumed, and
therefore
could result in a significant loss to a Fund if IMI
judges market
conditions incorrectly or employs a strategy that does
not
correlate well with the Fund's investments. A Fund may
also
experience a significant loss if it is unable to close
a
particular position due to the lack of a liquid
secondary market.
For further information regarding the use of options
and futures
transactions and any associated risks, see the SAI.
REAL ESTATE INVESTMENT TRUSTS: Ivy Growth with
Income Fund
may invest in equity real estate investment trusts
("REITs").
Equity REITS are dependent upon management skill, may
not be
diversified and are subject to the risks of financing
projects.
Equity REITS are also subject to heavy cash flow
dependency,
defaults by borrowers, self-liquidation and the
possibility of
failing to qualify for tax-free pass-through of income
under the
Internal Revenue Code of 1986, as amended (the "Code")
and to
maintain exemption under the 1940 Act. By investing in
REITs
indirectly through the Fund, a shareholder will bear
not only his
or her proportionate share of the expenses of the Fund,
but also,
indirectly, similar expenses of the REITs.
REPURCHASE AGREEMENTS: Repurchase agreements are
agreements
under which a Fund buys a money market instrument and
obtains a
simultaneous commitment from the seller to repurchase
the
instrument at a specified time and agreed-upon yield.
Each Fund
may enter into repurchase agreements with banks or
broker-dealers
deemed to be creditworthy by IMI under guidelines
approved by the
Board of Trustees. A Fund could experience a delay in
obtaining
direct ownership of the underlying collateral, and
might incur a
loss if the value of the security should decline.
RESTRICTED AND ILLIQUID SECURITIES: There may be
a lapse of
time between a Fund's decision to sell a restricted or
illiquid
security and the point at which the Fund is permitted
or able to
sell the security. If adverse market conditions were to
develop
during that period, the Fund might obtain a price less
favorable
than the price that prevailed when it decided to sell.
In
addition, issuers of restricted and other illiquid
securities may
not be subject to the disclosure and other investor
protection
requirements that would apply if their securities were
publicly
traded.
SMALL COMPANIES: Investing in smaller company
stocks
involves certain special considerations and risks that
are not
usually associated with investing in larger, more
established
companies. For example, the securities of smaller
companies may
be subject to more abrupt or erratic market movements,
because
they tend to be thinly traded and are subject to a
greater degree
to changes in the issuer's earnings and prospects.
Transaction
costs in smaller company stocks also may be higher than
those of
larger companies.
"WHEN-ISSUED" SECURITIES AND FIRM COMMITMENTS:
Purchasing
securities on a "when-issued" basis involves a risk of
loss if
the value of the security to be purchased declines
prior to the
settlement date.
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. Since the interest on such bonds is, in effect,
compounded, they are subject to greater market value
fluctuations
in response to changing interest rates than debt
securities that
distribute income regularly. In addition, for Federal
income tax
purposes, a Fund generally recognizes and is required
to
distribute income generated by zero coupon bonds
currently in the
amount of the unpaid accrued interest, even though the
actual
income will not yet have been received by the Fund.
ORGANIZATION AND MANAGEMENT OF THE FUNDS
Each Fund is organized as a separate, diversified
portfolio
of the Trust, an open-end management investment company
organized
as a Massachusetts business trust on December 21, 1983.
The
business and affairs of each Fund are managed under the
direction
of the Trustees. Information about the Trustees, as
well as the
Trust's executive officers, may be found in the SAI.
The Trust
has an unlimited number of authorized shares of
beneficial
interest, and currently has 13 series of shares. Each
of the
Funds has three classes of shares designated as Class
A, Class B
and Class C, respectively. Ivy Bond Fund has a fourth
class of
shares designated as Class I. Shares of each Fund
entitle their
holders to one vote per share (with proportionate
voting for
fractional shares). The shares of each class represent
an
interest in the same portfolio of Fund investments.
Each class of
shares has a different Rule 12b-1 distribution policy
and bears
different distribution fees. In addition, Class I
shares of Ivy
Bond Fund bear lower administrative services and
transfer agency
fees than the Fund's Class A, Class B and Class C.
Shares of each
class have equal rights as to voting, redemption,
dividends and
liquidation but have exclusive voting rights with
respect to
their Rule 12b-1 distribution plans.
The Trust employs IMI to provide business
management and
investment advisory services, Mackenzie Investment
Management
Inc. ("MIMI") to provide administrative and accounting
services,
Mackenzie Ivy Funds Distribution, Inc. ("MIFDI") to
distribute
the Funds' shares and Mackenzie Ivy Investor Services
Corp.
("MIISC") to provide transfer agent and
shareholder-related
services for the Funds. IMI, MIFDI and MIISC are
wholly-owned
subsidiaries of MIMI. Until December 31, 1994, MIMI
served as
investment adviser to Ivy Bond Fund. As of
__________________,
1996, IMI and MIMI had approximately $____ million and
$____
million, respectively, in assets under management.
MIMI is a
subsidiary of Mackenzie Financial Corporation ("MFC"),
which has
been an investment counsel and mutual fund manager in
Toronto,
Ontario, Canada for more than 25 years.
INVESTMENT MANAGER
In exchange for IMI's business management and
investment
advisory services, each Fund pays IMI a monthly fee
based on the
Fund's average daily net assets during the preceding
month. Ivy
Bond Fund pays a fee that is equal, on an annual basis,
to 0.75%
of the first $500 million in average daily net assets,
reduced to
0.60% on the next $500 million and 0.40% on average
daily net
assets over $1 billion. For the fiscal year ended
December 31,
1995, Ivy Bond Fund paid IMI an investment management
fee of
____% of the Fund's average daily net assets. Ivy
Emerging Growth
Fund, Ivy Growth Fund and Ivy Growth with Income Fund
each pay a
fee that is equal, on an annual basis, to 0.85% of its
average
daily net assets. The fees paid by the Funds are higher
than the
average fees paid by other funds with similar
investment
objectives.
IMI pays all expenses that it incurs in rendering
management
services to the Funds. Each Fund bears its own
operational costs.
General expenses of the Trust that are not readily
identifiable
as belonging to a particular series of the Trust (or a
particular
class thereof) are allocated among and charged to each
series
based on its relative net asset size. Expenses that are
attributable to a particular Fund (or class thereof)
will be
borne by that Fund (or class) directly. The fees
payable to IMI
are subject to any reimbursement or fee waiver to which
IMI may
agree (and to any applicable state regulations that may
require
IMI to reimburse a Fund if its aggregate operating
expenses
exceed certain limitations).
The ratio of operating expenses (after expense
reimbursements) to average daily net assets for Class A
and Class
B shares of the Funds for the fiscal year ended
December 31, 1995
were ____% and ____%, respectively, for Ivy Bond Fund;
____% and
____%, respectively, for Ivy Emerging Growth Fund;
____% and
____%, respectively, for Ivy Growth Fund; and ____% and
____%,
respectively, for Ivy Growth with Income Fund. (No
expense data
is available for the same period for Class C shares,
since the
inception date for Class C shares is April 30,
1996.)
PORTFOLIO MANAGEMENT: The following individuals
have
responsibilities for management of the Funds: James W.
Broadfoot,
an Executive Vice President of IMI and MIMI, has been a
portfolio
manager for Ivy Growth Fund and Ivy Growth with Income
Fund since
1992, and Ivy Emerging Growth Fund since the Fund's
inception in
1993. Prior to joining MIMI in 1990 and IMI in 1992,
Mr.
Broadfoot owned an investment counsel firm specializing
in small
capitalization companies. Mr. Broadfoot has 24 years
of
professional investment experience. Leslie A. Ferris,
a Senior
Vice President of MIMI and IMI and Managing Director -
Fixed
Income, has been portfolio manager for Ivy Growth Fund
since 1992
and Ivy Bond Fund since 1993. Ms. Ferris joined MIMI
in 1988 and
IMI in 1992 and has 13 years of professional investment
experience. She is a Chartered Financial Analyst and
holds an
MBA degree from the University of Chicago. Prior to
joining MIMI,
she was a portfolio manager at Kemper Financial
Services Inc.
from 1982 to 1988. Barbara Trebbi (Ivy Growth Fund,
Ivy Growth
with Income Fund), a Senior Vice President of MIMI and
IMI,
joined MIMI in 1988 and IMI in 1992 and has 7 years of
professional investment experience. Michael R. Peers,
the
Chairman and a Trustee of the Trust, has been a
portfolio manager
for Ivy Growth Fund since 1974 and Ivy Growth with
Income Fund
since 1984. Mr. Peers joined IMI in 1983 and has 26
years of
professional investment experience. Michael G. Landry,
the
President and a Director of IMI and MIMI and the
President and a
Trustee of the Trust, is the investment strategist for
Ivy
Emerging Growth Fund, Ivy Growth Fund and Ivy Growth
with Income
Fund. Mr. Landry joined MIMI in 1987 and IMI in 1992
and has
over 20 years of professional investment
experience.
FUND ADMINISTRATION AND ACCOUNTING
MIMI provides various administrative services for
the Funds,
such as maintaining the registration of Fund shares
under state
"Blue Sky" laws, and assisting with the preparation of
Federal,
state and local income tax returns and financial
statements and
periodic reports to shareholders. MIMI also assists the
Trust's
legal counsel with the filing of registration
statements, proxies
and other required filings under Federal and state law.
Under
this arrangement, the net assets attributable to each
Fund's
Class A, Class B and Class C shares are subject to a
monthly fee
at the annual rate of 0.10%. The net assets
attributable to Ivy
Bond Fund's Class I shares are subject to a monthly fee
at the
annual rate of 0.01%.
MIMI also provides certain accounting and pricing
services
for the Funds. For these services, each Fund pays MIMI
out-of-
pocket expenses as incurred and a monthly fee based
upon the
Fund's net assets at the end of the preceding month at
the
following rates: Ivy Bond Fund -- $1,000 when net
assets are $20
million and under, $1,500 when net assets are over $20
million to
$75 million, $4,000 when net assets are over $75
million to $100
million, and $6,000 when net assets are over $100
million; and
Ivy Emerging Growth Fund, Ivy Growth Fund and Ivy
Growth with
Income Fund -- $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.
TRANSFER AGENT
MIISC provides transfer agent, dividend-paying
agent, and
certain shareholder-related services for the Funds.
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
MIISC if the individual accounts that comprise the
omnibus
account were opened by their beneficial owners
directly. As
compensation for these services, MIISC pays the
broker-dealer a
per account fee for each open account within the
omnibus account,
or a fixed rate (e.g., .10%) based on the average daily
net asset
value of the omnibus account (or a combination
thereof).
ALTERNATIVE PURCHASE ARRANGEMENTS
CLASS A SHARES: Class A shares are subject to a
fixed
initial sales charge, unless (i) the amount you
purchase is
$500,000 or more (see "Contingent Deferred Sales Charge
-- Class
A Shares") or (ii) you qualify for a reduced initial
sales charge
(see "Qualifying for a Reduced Sales Charge"). Class A
shares are
subject to ongoing service fees at an annual rate of
0.25% of a
Fund's average daily net assets attributable to its
Class A
shares. If you do not specify on your account
application which
class of shares you are purchasing, it will be assumed
that you
are investing in Class A shares.
CLASS B AND CLASS C SHARES: Class B and Class C
shares are
not subject to an initial sales charge, but are subject
to a
contingent deferred sales charge ("CDSC") if redeemed
within six
years of purchase, in the case of Class B shares, or
within one
year of purchase, in the case of Class C shares. Both
classes of
shares are subject to ongoing service and distribution
fees at a
combined annual rate of up to 1.00% of a Fund's average
daily net
assets attributable to its Class B or Class C shares.
The ongoing
distribution fee will cause these shares to have a
higher expense
ratio than that of Class A shares. Also, to the extent
that a
Fund pays any dividends, these higher expenses will
result in
lower dividends than those paid on Class A shares.
CLASS I SHARES: Class I shares are offered by Ivy
Bond Fund
only to institutions and certain individuals, and are
not subject
to an initial sales charge or a CDSC, nor to ongoing
service or
distribution fees. Class I shares also bear lower
administrative
services fees and transfer agency fees than Class A,
Class B and
Class C shares.
FACTORS TO CONSIDER IN CHOOSING AN ALTERNATIVE:
The multi-
class structure of the Funds allows you to choose the
most
beneficial way to buy shares given the size of your
purchase and
the length of time you expect to hold your shares. You
should
consider whether, during the anticipated life of your
Fund
investment, the accumulated service and distribution
fees on
Class B and Class C shares would be less than the
initial sales
charge and accumulated service fees on Class A shares
purchased
at the same time, and to what extent this differential
would be
offset by the Class A shares' potentially higher yield.
Also,
sales personnel may receive different compensation
depending on
which class of shares they are selling. The tables
under the
caption "Annual Fund Operating Expenses" at the
beginning of this
Prospectus contain additional information that is
designed to
assist you in making this determination.
DIVIDENDS AND TAXES
Dividends and capital gain distributions that you
receive
from a Fund are reinvested in additional shares of the
same class
of a Fund unless you elect to receive them in cash (and
the U.S.
Postal Service is able to deliver your checks). Because
of the
higher expenses associated with Class B and Class C
shares, any
dividend on these shares will be lower than on Class A
shares.
Ivy Growth with Income Fund intends normally to
declare a
daily dividend, and pay accumulated dividends
quarterly. If a
shareholder of the Fund redeems all of his or her
shares at any
time prior to payment of a distribution, all
declarations accrued
to the date of redemption are paid in addition to the
redemption
proceeds. Ivy Emerging Growth Fund and Ivy Growth Fund
intend to
make a distribution for each fiscal year of any net
investment
income and net realized short-term capital gain, as
well as any
net long-term capital gain realized during the year.
In order to
provide steady cash flow to shareholders of Ivy Bond
Fund, the
Board of Trustees intends normally to make monthly
distributions
from the Fund's net investment income based on the
relative net
asset value of each class. The Fund intends to make a
final
distribution for each fiscal year of any remaining net
investment
income and net realized short-term capital gain, as
well as
undistributed net long-term capital gain realized
during the
year. For all of the Funds other than Ivy Growth with
Income
Fund, an additional distribution may be made of net
investment
income, net realized short-term capital gains and net
realized
long-term capital gains to comply with the calendar
year
distribution requirement under the excise tax
provisions of
Section 4982 of the Code.
TAXATION: The following discussion is intended
for general
information only. An investor should consult his or her
own tax
adviser as to the tax consequences of an investment in
a
particular Fund, including the status of distributions
from the
Fund under applicable state or local law.
Each Fund intends to qualify annually and elect to
be
treated as a regulated investment company under the
Code. To
qualify, each Fund must beet certain income,
distribution and
diversification requirements. In any year in which a
Fund
qualifies as a regulated investment company and timely
distributes all of its taxable income, the Fund
generally will
not pay any U.S. Federal income or excise tax.
Dividends paid out of a Fund's investment company
taxable
income (including dividends, interest and net
short-term capital
gains) will be taxable to a shareholder as ordinary
income. If a
portion of a Fund's income consists of dividends paid
by U.S.
corporations, a portion of the dividends paid by the
Fund may be
eligible for the corporate 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 as capital gain dividends are taxable as
long-term
capital gains, regardless of how long the shareholder
has held a
Fund's shares. Dividends are taxable to shareholders in
the same
manner whether received in cash or reinvested in
additional Fund
shares.
If, for any year, a Fund's total distributions
exceed its
earnings and profits, the excess will generally be
treated as a
return of capital. The amount treated as a return of
capital will
reduce a shareholder's adjusted basis in his or her
shares
(thereby increasing his or her potential gain or
reducing his or
her potential loss on the sale of his or her shares)
and, to the
extent that the amount exceeds this basis, will be
treated as a
taxable gain.
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 with a record date in such a month
and paid
by the Fund during January of the following calendar
year. Such
distributions will be taxable to shareholders in the
calendar
year in which the distributions are declared, rather
than the
calendar year in which the distributions are
received.
Investments in securities that are issued at a
discount will
result each year in income to a Fund equal to a portion
of the
excess of the face value of the securities over their
issue
price, even though the Fund receives no cash interest
payments
from the securities.
Income and gains received by a Fund from sources
within
foreign countries may be subject to foreign withholding
and other
taxes. Unless a Fund is eligible to and elects to "pass
through"
to its shareholders the amount of foreign income and
similar
taxes paid by the Fund, these taxes will reduce the
Fund's
investment company taxable income, and distributions of
investment company taxable income received from the
Fund will be
treated as U.S. source income.
Any gain or loss realized by a shareholder upon
the sale or
other disposition of shares of a Fund, or upon receipt
of a
distribution in complete liquidation of the Fund,
generally will
be a capital gain or loss which will be long-term or
short-term,
generally depending upon the shareholder's holding
period for the
shares.
A Fund may be required to withhold U.S. Federal
income tax
at the rate of 31% of all taxable distributions payable
to
shareholders who fail to provide the Fund with their
correct
taxpayer identification number or to make required
certifications, or who have been notified by the
Internal Revenue
Service that they are subject to backup withholding.
Backup
withholding is not an additional tax. Any amounts
withheld may be
credited against the shareholder's U.S. Federal income
tax
liability.
Fund distributions may be subject to state, local
and
foreign taxes. Distributions of a Fund which are
derived from
interest on obligations of the U.S. Government and
certain of its
agencies, authorities and instrumentalities may be
exempt from
state and local taxes in certain states. Further
information
relating to tax consequences is contained in the SAI.
PERFORMANCE DATA
Performance information (e.g., "total return" and
"yield")
is computed separately for each class of Fund shares in
accordance with formulas prescribed by the SEC.
Performance
information for each class may be compared in reports
and
promotional literature to indices such as the Standard
and Poor's
500 Stock Index, Dow Jones Industrial Average, and
Morgan Stanley
Capital International World Index. Advertisements,
sales
literature and communications to shareholders may also
contain
statements of a Fund's current yield, various
expressions of
total return and current distribution rate. Performance
figures
will vary in part because of the different expense
structures of
the Funds' different classes. ALL PERFORMANCE
INFORMATION IS
HISTORICAL AND IS NOT INTENDED TO SUGGEST FUTURE
RESULTS.
"Total return" is the change in value of an
investment in a
Fund for a specified period, and assumes the
reinvestment of all
distributions and imposition of the maximum applicable
sales
charge. "Average annual total return" represents the
average
annual compound rate of return of an investment in a
particular
class of Fund shares assuming the investment is held
for one
year, five years and ten years as of the end of the
most recent
calendar quarter. Where a Fund provides total return
quotations
for other periods, or based on investments at various
sales
charge levels or at net asset value, "total return" is
based on
the total of all income and capital gains paid to (and
reinvested
by) shareholders, plus (or minus) the change in the
value of the
original investment expressed as a percentage of the
purchase
price.
"Current yield" reflects the income per share
earned by a
Fund's portfolio investments, and is calculated by
dividing the
Fund's net investment income per share during a recent
30-day
period by the maximum public offering price on the last
day of
that period and then annualizing the result. Dividends
or
distributions that were paid to a Fund's shareholders
are
reflected in the "current distribution rate," which is
computed
by dividing the total amount of dividends per share
paid by a
Fund during the preceding 12 months by the Fund's
current maximum
offering price (which includes any applicable sales
charge). The
"current distribution rate" will differ from the
"current yield"
computation because it may include distributions to
shareholders
from sources other than dividends and interest, short
term
capital gain and net equalization credits and will be
calculated
over a different period of time.
HOW TO BUY SHARES
The minimum initial investment is $1,000; the
minimum
additional investment is $100. Initial or additional
investment
amounts for retirement accounts may be less. See
"Retirement
Plans." Accounts in Class I of Ivy Bond Fund can be
opened with a
minimum initial investment of $5,000,000; the minimum
additional
investment is $10,000. The minimum initial investment
in Class I
of Ivy Bond Fund may be spread over the thirteen-month
period
after an Institution or a high net worth individual
opens an
account and the Fund, at its discretion, may accept
initial and
additional investments of small amounts. All purchases
must be
made in U.S. dollars. Complete the Account Application
attached
to this Prospectus. Indicate whether you are purchasing
Class A,
Class B, Class C or Class I shares (in the case of Ivy
Bond
Fund). If you do not specify which class of shares you
are
purchasing, MIISC will assume you are investing in
Class A
shares. The Fund reserves the right to reject for any
reason any
purchase order or exchange (see "Exchange Privilege"
below).
OPENING AN ACCOUNT
By Check:
1. Make your check payable to the Fund in which
you are
investing.
2. Deliver the completed application and check
to your
registered representative or selling broker,
or mail it
directly to MIISC.
3. Our address is:
Mackenzie Ivy Investor Services Corp.
P.O. Box 3022
Boca Raton, FL 33431-0922
4. Our courier address is:
Mackenzie Ivy Investor Services Corp.
700 South Federal Highway, Suite 300
Boca Raton, FL 33432
By Wire
1. Deliver a completed fund application to your
registered
representative or selling broker, or mail it
directly
to MIISC. Before wiring any funds, please
contact MIISC
at 1-800-777-6472 to verify your account
number.
2. Instruct your bank to wire funds to:
Barnett Bank of Palm Beach County
ABA # 067008582
For deposit to The Ivy Mackenzie
Funds
a/c #1455031505
Name of your account
Your Ivy or Mackenzie account
number
The Ivy or Mackenzie Fund you are
buying
Your bank may charge a fee for wiring funds.
THROUGH A REGISTERED SECURITIES DEALER: You may
also place
an order to purchase shares through your Registered
Securities
Dealer.
BUYING ADDITIONAL SHARES
By Check:
1. Complete the investment stub attached to your
statement
or include a note with your investment
listing the name
of the Fund, the class of shares to purchase,
your
account number and the name(s) in which the
account is
registered.
2. Make your check payable to the fund in which
you are
investing.
3. Mail the account information and check to:
Mackenzie Ivy Investor Services Corp.
P.O. Box 3022
Boca Raton, FL 33431-0922
Our courier address is:
Mackenzie Ivy Investor Services Corp.
700 South Federal Highway, Suite 300
Boca Raton, FL 33432
or deliver it to your registered representative or
selling
broker.
By Wire
Instruct your bank to wire funds to:
Barnett Bank of Palm Beach County
ABA # 067008582
For deposit to
The Ivy Mackenzie Funds
a/c # 1455031505
Name of your account
Your Ivy or Mackenzie account number
The Ivy or Mackenzie fund you are buying
Your bank may charge a fee for wiring funds.
THROUGH A REGISTERED SECURITIES DEALER: You may
also place
an order to purchase shares through your Registered
Securities
Dealer.
BY AUTOMATIC INVESTMENT METHOD ("AIM")
1. Complete the "Automatic Investment Method"
and
"Wire/EFT Information" sections on the
Account
Application designating a bank account from
which funds
may be drawn. Please note that in order to
invest using
this method, your bank must be a member of
the
Automated Clearing House system ("ACH"). The
minimum
investment under this plan is $50 per month
($25 per
month for retirement plans). Please remember
to attach
a voided check to your account application.
2. At pre-specified intervals, your bank account
will be
debited and the proceeds will be credited to
your Ivy
Mackenzie Fund account.
HOW YOUR PURCHASE PRICE IS DETERMINED
Your purchase price for Class A shares of a Fund
is the net
asset value per share plus a sales charge, which may be
reduced
or eliminated in certain circumstances. The purchase
price per
share is known as the public offering price. Your
purchase price
for Class B and Class C shares (and Class I shares, in
the case
of Ivy Bond Fund) is the net asset value per share.
Share purchases will be made at the next
determined price
after your purchase order is received. The price is
effective for
orders received by MIISC or by your registered
securities dealer
prior to the time of the determination of the net asset
value.
Any orders received after the time of the determination
of the
net asset value will be entered at the next calculated
price.
Orders placed with a securities dealer before the
net asset
value is determined that are transmitted through the
facilities
of the National Securities Clearing Corporation by 7:00
p.m.
Eastern Time on the same day are confirmed at that
day's price.
Any loss resulting from the dealer's failure to submit
an order
by the deadline will be borne by that dealer.
You will receive an account statement after any
purchase,
exchange or full liquidation. Statements related to
reinvestment
of dividends, capital gains, automatic investment plans
(see the
SAI for further explanation) and/or systematic
withdrawal plans
will be sent quarterly.
HOW EACH FUND VALUES ITS SHARES
The net asset value ("NAV") per share is the value
of one
share. The NAV is determined in the following manner:
the total
of all liabilities, including accrued expenses and
taxes and any
necessary reserves, is deducted from the aggregate
value of all
assets, and the difference is divided by the number of
shares
outstanding at the time, adjusted to the nearest cent.
The NAV
per share is determined once every business day (as of
the close
of regular trading on each day the New York Stock
Exchange is
open, normally 4:00 p.m., Eastern time) (see the SAI
under "Net
Asset Value" for a detailed description of how the NAV
is
determined). Trading of foreign securities may not
occur on every
business day, and may occur on days when the New York
Stock
Exchange is closed.
INITIAL SALES CHARGE ALTERNATIVE -- CLASS A SHARES
Shares are purchased at a public offering price
equal to
their NAV per share plus a sales charge, as set forth
below.
Ivy Bond Fund:
SALES CHARGE
PORTION OF
AS A AS A
PUBLIC
PERCENTAGE PERCENTAGE
OFFERING
OF PUBLIC OF NET
PRICE
OFFERING AMOUNT
RETAINED
AMOUNT INVESTED PRICE INVESTED
BY DEALER
Less than $100,000 . . . 4.75% 4.99%
4.00%
$100,000 but less than
$250,000 . . . . . . . . 3.75% 3.90%
3.00%
$250,000 but less than
$500,000 . . . . . . . . 2.50% 2.56%
2.00%
$500,000 or over* . . . . 0.00% 0.00%
0.00%
Ivy Emerging Growth Fund, Ivy Growth Fund and Ivy
Growth with
Income Fund:
SALES CHARGE
PORTION OF
AS A AS A
PUBLIC
PERCENTAGE PERCENTAGE
OFFERING
OF PUBLIC OF NET
PRICE
OFFERING AMOUNT
RETAINED
AMOUNT INVESTED PRICE INVESTED BY
DEALER
Less than $50,000 . . . 5.75% 6.10%
5.00%
$50,000 but less than 5.25% 5.54%
4.50%
$100,000 . . . . . . .
$100,000 but less than 4.50% 4.71%
3.75%
$250,000 . . . . . . .
$250,000 but less than 3.00% 3.09%
2.50%
$500,000 . . . . . . .
$500,000 or over* . . . 0.00% 0.00%
0.00%
* A CDSC may apply to the redemption of Class A
shares that
are purchased without an initial sales charge. See
"Contingent Deferred Sales Charge -- Class A
Shares."
Sales charges are not applied to any dividends
that are
reinvested in additional shares of the Fund. An
investor may be
charged a transaction fee for Class A (and Class I
shares, in the
case of Ivy Bond Fund) purchased or redeemed at NAV
through a
broker or agent other than MIFDI.
With respect to purchases of $500,000 or more
through
dealers or agents, MIFDI may, at the time of purchase,
pay such
dealers or agents from its own resources a commission
to
compensate such dealers or agents for their
distribution
assistance in connection with such purchases. The
commission
would be computed at 0.50% of the first $3,000,000
invested;
0.25% of the next $2,000,000 invested; and 0.10% of the
amount
invested in excess of $5,000,000. Dealers who receive
90% or more
of the sales charge may be deemed to be "underwriters"
as that
term is defined in the 1933 Act.
MIFDI compensates participating brokers who sell
Class A
shares through the initial sales charge. MIFDI retains
that
portion of the initial sales charge that is not
reallowed to the
dealers, which it may use to distribute a Fund's Class
A shares.
Pursuant to a separate distribution plan for the Funds'
Class A,
Class B and Class C shares, MIFDI bears various
promotional and
sales related expenses, including the cost of printing
and
mailing prospectuses to persons other than
shareholders. Pursuant
to the Funds' Class A distribution plan, MIFDI
currently pays a
continuing service fee to qualified dealers at an
annual rate of
0.25% of qualified investments.
MIFDI may from time to time pay a bonus or other
incentive
to dealers (other than MIFDI) which employ a registered
representative who sells a minimum dollar amount of the
shares of
the fund and/or other funds distributed by MIFDI during
a
specified period of time. This bonus or other incentive
may take
the form of payment for travel expenses, including
lodging,
incurred in connection with trips taken by qualifying
registered
representatives and members of their families to places
within or
without the United States or other bonuses such as gift
certificates or the cash equivalent of such bonus or
incentive.
CONTINGENT DEFERRED SALES CHARGE -- CLASS A SHARES
Purchases of $500,000 or more of Class A shares
will be made
at NAV with no initial sales charge, but if the shares
are
redeemed within 24 months after the end of the calendar
month in
which the purchase was made (the CDSC period), a CDSC
of 1.00%
will be imposed.
In order to recover commissions paid to dealers on
NAV
transfers (as defined in "Purchases of Class A Shares
at Net
Asset Value"), Class A shares of a Fund are subject to
a CDSC of
1.00% for certain redemptions within 24 months after
the date of
purchase.
The charge will be assessed on an amount equal to
the lesser
of the current market value or the original purchase
cost of the
Class A shares redeemed. Accordingly, no CDSC will be
imposed on
increases in account value above the initial purchase
price,
including any dividends which have been reinvested in
additional
Class A shares.
In determining whether a CDSC applies to a
redemption, the
calculation will be determined in a manner that results
in the
lowest possible rate being charged. Therefore, it will
be assumed
that the redemption is first made from any shares in
your account
not subject to the CDSC. The CDSC is waived in certain
circumstances. See the discussion below under the
caption "Waiver
of Contingent Deferred Sales Charge."
WAIVER OF CONTINGENT DEFERRED SALES CHARGE: The
CDSC is
waived for (i) redemptions in connection with
distributions not
exceeding 12% annually of the initial account balance
(i.e., the
value of the shareholder's Class A Fund account at the
time of
the initial distribution) (a) following retirement
under a tax
qualified retirement plan, or (b) upon attaining age 59
1/2 in
the case of an IRA, a custodial account pursuant to
section
403(b)(7) of the Code or a Keogh Plan; (ii) redemption
resulting
from tax-free return of an excess contribution to an
IRA; or
(iii) any partial or complete redemption following the
death or
disability (as defined in Section 72(m)(7) of the Code)
of a
shareholder from an account in which the deceased or
disabled is
named, provided that the redemption is requested within
one year
of death or disability. The Distributor may require
documentation
prior to waiver of the CDSC.
Class A shareholders may exchange their Class A
shares
subject to a CDSC ("outstanding Class A shares") for
Class A
shares of another Ivy or Mackenzie Fund ("new Class A
shares") on
the basis of the relative NAV per Class A share,
without the
payment of any CDSC that would be due upon the
redemption of the
outstanding Class A shares. The original CDSC rate that
would
have been charged if the outstanding Class A shares
were redeemed
will carry over to the Class A shares received in the
exchange,
and will be charged accordingly at the time of
redemption.
QUALIFYING FOR A REDUCED SALES CHARGE
RIGHTS OF ACCUMULATION (ROA): Rights of
Accumulation
("ROA") is calculated by determining the current market
value of
all Class A shares in all Ivy or Mackenzie fund
accounts (except
Ivy Money Market Fund) owned by you, your spouse, and
your
children under 21 years of age. ROA is also applicable
to
accounts under a trustee or other single fiduciary
(including
retirement accounts qualified under Section 401 of the
Code). The
current market value of each of your accounts as
described above
is added together and then added to your current
purchase amount.
If the combined total is equal or greater than a
breakpoint
amount for a Fund, then you qualify for the reduced
sales charge.
To reduce or eliminate the sales charge, you must
complete
Section 4B of the new account application.
LETTER OF INTENT (LOI): A Letter of Intent
("LOI") is a
non-binding agreement that states your intention to
invest in
additional Class A shares, within a thirteen month
period after
the initial purchase, an amount equal to a breakpoint
amount for
a Fund. The LOI may be backdated up to 90 days. To sign
an LOI,
please complete Section 4B of the new account
application.
Should the LOI not be fulfilled within the
thirteen month
period, your account will be debited for the difference
between
the full sales charge that applies for the amount
actually
invested and the reduced sales charge actually paid on
purchases
placed under the terms of the LOI.
PURCHASES OF CLASS A SHARES AT NET ASSET VALUE:
An investor
who was a shareholder of any Ivy Fund on December 31,
1991 or a
shareholder of American Investors Income Fund, Inc. or
American
Investors Growth Fund, Inc. on October 31, 1988 and who
became a
shareholder of Ivy Bond Fund (formerly Mackenzie Fixed
Income
Trust) or Ivy Growth Fund as a result of the respective
reorganizations of the funds will be exempt from sales
charges on
the purchase of Class A shares of any Ivy or Mackenzie
Fund. This
privilege is also available to immediate family members
of a
shareholder (i.e., the shareholder's children, the
shareholder's
spouse and the children of the shareholder's spouse).
This no-
load privilege terminates for the investor if the
investor
redeems all shares owned. Shareholders and their
relatives as
described above should call 1-800-235-3322 for
information about
additional purchases or to inquire about their account.
Class A shares of a Fund may be purchased without
an initial
sales charge or CDSC by (i) officers and Trustees of
the Trust
(and their relatives), (ii) officers, directors,
employees,
retired employees, legal counsel and independent
accountants of
IMI, MIMI, and MFC (and their relatives), and (iii)
directors,
officers, partners, registered representatives,
employees and
retired employees (and their relatives) of dealers
having a sales
agreement with MIFDI (or trustees or custodians of any
qualified
retirement plan or IRA established for the benefit of
any such
person). In addition, certain investment advisors and
financial
planners who charge a management, consulting or other
fee for
their services and who place trades for their own
accounts and
the accounts of their clients may purchase Class A
shares of a
Fund without an initial sales charge or a CDSC,
provided such
purchases are placed through a broker or agent who
maintains an
omnibus account with that Fund. Also, clients of these
advisors
and planners may make purchases under the same
conditions if the
purchases are through the master account of such
advisor or
planner on the books of such broker or agent. THIS
PROVISION
APPLIES TO ASSETS OF RETIREMENT AND DEFERRED
COMPENSATION PLANS
AND TRUSTS USED TO FUND THOSE PLANS INCLUDING, BUT NOT
LIMITED
TO, THOSE DEFINED IN SECTION 401(a), 403(b) OR 457 OF
THE CODE
AND "RABBI TRUSTS" WHOSE ASSETS ARE USED TO PURCHASE
SHARES OF A
FUND THROUGH THE AFOREMENTIONED CHANNELS.
Class A shares of a Fund may be purchased at NAV
by
retirement plans qualified under section 401(a) or
403(b) of the
Code, subject to the Employee Retirement Income
Security Act of
1974, as amended, provided that: (i) either (a) the
sponsoring
organization must have at least 25 employees or (b) the
aggregate
purchases by the retirement plan of Class A shares of
the Ivy
funds must be in an amount of at least $250,000 within
a
reasonable period of time, as determined by MIFDI in
its sole
discretion; and (ii) a CDSC of 1.00% will be imposed on
such
purchases in the event of certain redemption
transactions within
24 months following such purchases.
If investments by retirement plans at NAV are made
through a
dealer who has executed a dealer agreement with respect
to a
Fund, MIFDI may, at the time of purchase, pay the
dealer out of
MIFDI's own resources a commission to compensate the
dealer for
its distribution assistance in connection with the
retirement
plan's investment. Commissions would be computed at
1.00% of the
first $3 million invested, 0.50% of the next $2 million
invested,
and 0.25% of the amount invested in excess of $5
million. Please
contact MIFDI for additional information.
Class A shares can also be purchased without an
initial
sales charge, but subject to a CDSC of 1.00% during the
first 24
months, by: (a) any state, county, city (or any
instrumentality,
department, authority or agency of such entities) that
is
prohibited by applicable investment laws from paying a
sales
charge or commission when purchasing shares of a
registered
investment management company (an "eligible
governmental
authority"), and (b) trust companies, bank trust
departments,
credit unions, savings and loans and other similar
organizations
in their fiduciary capacity or for their own accounts,
subject to
any minimum requirements set by MIFDI (currently, these
criteria
require that the amount invested or to be invested in
the
subsequent 13-month period totals at least $250,000).
In either
case, MIFDI may pay commissions to dealers that provide
distribution assistance on the same basis as in the
preceding
paragraph.
Class A shares of a Fund may also be purchased
without a
sales charge in connection with certain liquidation,
merger or
acquisition transactions involving other investment
companies or
personal holding companies.
Each Fund may, from time to time, waive the
initial sales
charge on its Class A shares sold to clients of various
broker-
dealers with which MIFDI has a selling relationship.
This
privilege will apply only to Class A Shares of a Fund
that are
purchased using all or a portion of the proceeds
obtained by such
clients through redemptions of shares (on which a
commission has
been paid) of an investment company (other than
Mackenzie Series
Trust or the Trust), unit investment trust or limited
partnership
("NAV transfers"). Some dealers may elect not to
participate in
this program. Those dealers that do elect to
participate in the
program must complete certain forms required by MIFDI.
The normal
service fee, as described in the "Initial Sales Charge
Alternative -- Class A Shares" and "Contingent Deferred
Sales
Charge Alternative -- Class B and Class C Shares"
sections of
this Prospectus, will be paid to dealers in connection
with these
purchases. Additional information on reductions or
waivers may be
obtained from MIFDI at the address listed on the cover
of the
Prospectus.
CONTINGENT DEFERRED SALES CHARGE ALTERNATIVE --
CLASS B AND
CLASS C SHARES
Class B and Class C shares are offered at NAV per
share
without a front end sales charge. However, Class C
shares
redeemed within one year of purchase will be subject to
a CDSC of
1%, and Class B shares redeemed within six years of
purchase will
be subject to a CDSC at the rates set forth below. This
charge
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. Accordingly, you will not be assessed a CDSC
on
increases in account value above the initial purchase
price,
including shares derived from dividend reinvestment. In
determining whether a CDSC applies to a redemption, the
calculation will be determined in a manner that results
in the
lowest possible rate being charged. It will be assumed
that your
redemption comes first from shares you have held beyond
the
requisite maximum holding period or those you acquire
through
reinvestment of dividends or distributions, and next
from the
shares you have held the longest during the requisite
holding
period.
Proceeds from the CDSC are paid to MIFDI. MIFDI
uses them,
in whole or in part, to defray its expenses related to
providing
each Fund with distribution services in connection with
the sale
of Class B and Class C shares, such as compensating
selected
dealers and agents for selling these shares. The
combination of
the CDSC and the distribution and service fees makes it
possible
for a Fund to sell Class B or Class C shares without
deducting a
sales charge at the time of the purchase.
In the case of Class B shares, the amount of the
CDSC, if
any, will vary depending on the number of years from
the time you
purchase your Class B shares until the time you redeem
them.
Solely for purposes of determining this holding period,
any
payments you make during the quarter will be aggregated
and
deemed to have been made on the last day of the
quarter.
Class B Shares:
CONTINGENT
DEFERRED
SALES
CHARGE AS
A
PERCENTAGE OF
DOLLAR
AMOUNT
YEAR SINCE PURCHASE SUBJECT
TO CHARGE
First . . . . . . . . . . . . . . . . . . .
5%
Second . . . . . . . . . . . . . . . . . .
4%
Third . . . . . . . . . . . . . . . . . . .
3%
Fourth . . . . . . . . . . . . . . . . . .
3%
Fifth . . . . . . . . . . . . . . . . . . .
2%
Sixth . . . . . . . . . . . . . . . . . . .
1%
Seventh and thereafter . . . . . . . . . .
0%
MIFDI currently intends to pay to dealers a sales
commission
of 4% of the sale price of Class B shares they have
sold, and
will receive the entire amount of the CDSC paid by
shareholders
on the redemption of Class B shares to finance the 4%
commission
and related marketing expenses.
With respect to Class C shares, MIFDI currently
intends to
pay to dealers a sales commission of 1% of the sale
price of
Class C shares that they have sold, a portion of which
is to
compensate the dealers for Class C shareholder account
services
during the first year of investment. MIFDI will receive
the
entire amount of the CDSC paid by shareholders on the
redemption
of Class C shares to finance the 1% commission and
related
marketing expenses.
Pursuant to separate distribution plans for the
Funds' Class
B and Class C shares, MIFDI bears various promotional
and sales
related expenses, including the cost of printing and
mailing
prospectuses to persons other than shareholders. Under
the Funds'
Class B Plan, MIFDI currently retains 0.75% of the
continuing
1.00% service/distribution fee assessed to Class B
shareholders,
and pays a continuing service fee to qualified dealers
at an
annual rate of 0.25% of qualified investments. Under
the Class C
Plan, MIFDI pays continuing service/distribution fees
to
qualified dealers at an annual rate of 1.00% of
qualified
investments after the first year of investment (0.25%
of which
represents a service fee).
CONVERSION OF CLASS B SHARES: Your Class B shares
and an
appropriate portion of both reinvested dividends and
capital
gains on those shares will be converted into Class A
shares
automatically no later than the month following eight
years after
the shares were purchased, resulting in lower annual
distribution
fees. If you exchanged Class B shares into a Fund from
Class B
shares of another Ivy or Mackenzie fund, the
calculation will be
based on the time the shares in the original fund were
purchased.
WAIVER OF CONTINGENT DEFERRED SALES CHARGE: The
CDSC is
waived for (i) redemptions in connection with
distributions not
exceeding 12% annually of the initial account balance
(i.e., the
value of the shareholder's Class B or Class C Fund
account at the
time of the initial distribution) (a) following
retirement under
a tax qualified retirement plan, or (b) upon attaining
age 59 1/2
in the case of an IRA, a custodial account pursuant to
section
403(b)(7) of the Code or a Keogh Plan; (ii) redemption
resulting
from tax-free return of an excess contribution to an
IRA; or
(iii) any partial or complete redemption following the
death or
disability (as defined in Section 72(m)(7) of the Code)
of a
shareholder from an account in which the deceased or
disabled is
named, provided that the redemption is requested within
one year
of death or disability. The Distributor may require
documentation
prior to waiver of the CDSC.
ARRANGEMENTS WITH BROKER-DEALERS AND OTHERS:
MIFDI may, at
its own expense, pay concessions in addition to those
described
above to dealers that satisfy certain criteria
established from
time to time by MIFDI. These conditions relate to
increasing
sales of shares of the Funds over specified periods and
to
certain other factors. These payments may, depending
on the
dealer's satisfaction of the required conditions, be
periodic and
may be up to (i) 0.25% of the value of Fund shares sold
by the
dealer during a particular period, and (ii) 0.10% of
the value of
Fund shares held by the dealer's customers for more
than one
year, calculated on an annual basis.
HOW TO REDEEM SHARES
You may redeem your Fund shares through your
registered
securities representative, by mail, by telephone or by
Federal
Funds wire. A CDSC may apply to certain Class A share
redemptions, to Class B share redemptions prior to
conversion 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 4:00 p.m. Eastern Time
to be
processed at the NAV for that day. Any redemption
request in good
order that is received after 4:00 p.m. Eastern Time
will be
processed at the price determined on the following
business day.
IF SHARES TO BE REDEEMED WERE PURCHASED BY CHECK,
PAYMENT OF THE
REDEMPTION MAY BE DELAYED UNTIL THE CHECK HAS CLEARED
OR FOR UP
TO 15 DAYS AFTER THE DATE OF PURCHASE, WHICHEVER IS
LESS. 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; any
shares
subject to a CDSC will be redeemed last unless you
specifically
elect otherwise.
When shares are redeemed, a Fund generally sends
you payment
on the next business day. Under unusual circumstances,
a Fund may
suspend redemptions or postpone payment to the extent
permitted
by Federal securities laws. The proceeds of the
redemption may be
more or less than the purchase price of your shares,
depending
upon, among other factors, the market value of the
Fund's
securities at the time of the redemption. If the
redemption is
for over $50,000, or the proceeds are to be sent to an
address
other than the address of record, or an address change
has
occurred in the last 30 days, it must be requested in
writing
with a signature guarantee. See "Signature Guarantees,"
below.
If you are not certain of the requirements for a
redemption,
please contact MIISC at 1-800-777-6472.
THROUGH YOUR REGISTERED SECURITIES DEALER: The
Dealer is
responsible for promptly transmitting redemption
orders.
Redemptions requested by dealers will be made at the
NAV (less
any applicable CDSC) determined at the close of regular
trading
(4:00 p.m. Eastern Time) on the day that a redemption
request is
received in good order by MIISC.
BY MAIL: Requests for redemption in writing are
considered
to be in "proper or good order" if they contain the
following:
- Any outstanding certificate(s) for shares
being
redeemed.
- A letter of instruction, including the fund
name, the
account number, the account name(s), the
address and
the dollar amount or number of shares to be
redeemed.
- Signatures of all registered owners whose
names appear
on the account.
- Any required signature guarantees.
- Other supporting legal documentation, if
required (in
the case of estates, trusts, guardianships,
corporations, retirement plans or other
representative
capacities).
The dollar amount or number of shares indicated
for
redemption must not exceed the available shares or NAV
of your
account at the next-determined prices. If your request
exceeds
these limits, then the trade will be rejected in its
entirety.
Mail your request to:
Mackenzie Ivy Investor Services Corp.
P.O. Box 3022
Boca Raton, FL 33431-0922
Our courier address is:
Mackenzie Ivy Investor Services Corp.
700 South Federal Highway, Suite 300
Boca Raton, FL 33432
By Telephone: Individual and joint accounts may
redeem up
to $50,000 per day over the telephone by contacting
MIISC at 1-
800-777-6472. In times of unusual economic or market
changes, the
telephone redemption privilege may be difficult to
implement. If
you are unable to execute your transaction by telephone
(for
example, during such times), you may want to consider
placing the
order in writing and sending it by mail or overnight
courier.
Checks will be made payable to the current account
registration and sent to the address of record. If
there has been
a change of address in the last 30 days, please use the
instructions for redemption requests by mail described
above. A
signature guarantee would be required.
Requests for telephone redemptions will be
accepted from the
registered owner of the account, the designated
registered
representative or his/her assistant.
Shares held in certificate form cannot be redeemed
by
telephone.
If Section 6E of the new account application is
not
completed, telephone redemption privileges will be
provided
automatically. Although telephone redemptions may be a
convenient
feature, you should realize that you may be giving up a
measure
of security that you may otherwise have if you
terminated the
privilege and redeemed your shares in writing. If you
do not wish
to make telephone redemptions or let your registered
representative or his/her assistant do so on your
behalf, you
must notify MIISC in writing.
Each Fund 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 may be liable for any losses due to unauthorized
or
fraudulent telephone instructions. For shareholders who
established this feature at the time they opened their
new
account, telephone instructions will be accepted for
redemption
of amounts up to $50,000 and proceeds will be wired on
the next
business day to a predesignated bank account.
In order to add this feature to an existing
account or to
change existing bank account information, please submit
a letter
of instructions including your bank information to
MIISC at the
address provided above. The letter must be signed by
all
registered owners, and their signatures must be
guaranteed.
Your account will be charged a fee of $10 each
time that
redemption proceeds are wired to your bank.
Neither IMI nor any of the Funds can be
responsible for the
efficiency of the Federal Funds wire system or the
shareholder's
bank.
MINIMUM ACCOUNT BALANCE REQUIREMENTS
Due to the high cost of maintaining small accounts
and
subject to state law requirements, a Fund may redeem
the accounts
of shareholders whose investment, including sales
charges paid,
has been less than $1,000 for more than 12 months. The
Fund will
not redeem an account unless the shareholder has been
given at
least 60 days' advance notice of the Fund's intention
to do so.
No redemption will be made if a shareholder's account
falls below
the minimum due to a reduction in the value of the
Fund's
portfolio securities. This provision does not apply to
IRAs,
other retirement accounts and UGMA/UTMA accounts.
SIGNATURE GUARANTEES
For your protection, and to prevent fraudulent
redemptions,
we require a signature guarantee in order to
accommodate the
following requests:
- Redemption requests over $50,000.
- Requests for redemption proceeds to be sent
to someone
other than the registered shareholder.
- Requests for redemption proceeds to be sent
to an
address other than the address of record.
- Registration transfer requests.
- Requests for redemption proceeds to be wired
to your
bank account (if this option was not selected
on your
original application, or if you are changing
the bank
wire information).
A signature guarantee may be obtained only from an
eligible
guarantor institution as defined in Rule 17Ad-15 of the
Securities Exchange Act of 1934, as amended. An
eligible
guarantor institution includes banks, brokers, dealers,
municipal
securities dealers, government securities dealers,
government
securities brokers, credit unions, national securities
exchanges,
registered securities associations, clearing agencies
and savings
associations. The signature guarantee must not be
qualified in
any way. Notarizations from notary publics are not the
same as
signature guarantees, and are not accepted.
Circumstances other than those described above may
require a
signature guarantee. Please contact MIISC at
1-800-777-6472 for
more information.
CHOOSING A DISTRIBUTION OPTION
You have the option of selecting the dividend and
capital
gain distribution option that best suits your needs:
1. AUTOMATIC REINVESTMENT OPTION -- Both dividends
and capital
gains are automatically reinvested at NAV in
additional
shares of the same class of a Fund unless you
specify one of
the other options.
2. INVESTMENT IN ANOTHER IVY OR MACKENZIE FUND --
Both
dividends and capital gains are automatically
invested at
NAV in another Ivy or Mackenzie Fund of the same
class.
3. DIVIDENDS IN CASH/CAPITAL GAINS REINVESTED --
Dividends will
be paid in cash. Capital gains will be reinvested
at NAV in
additional shares of the same class of a Fund or
another Ivy
or Mackenzie Fund of the same class.
4. DIVIDENDS AND CAPITAL GAINS IN CASH -- Both
dividends and
capital gains will be paid in cash.
If you wish to have your cash distributions
deposited
directly to your bank account via electronic funds
transfer, or
if you wish to change your distribution option, please
contact
MIISC at 1-800-777-6472.
If you wish to have your cash distributions go to
an address
other than the address of record, a signature guarantee
is
required.
TAX IDENTIFICATION NUMBER
In general, to avoid being subject to a 31%
Federal backup
withholding tax on dividends, capital gains
distributions and
redemption proceeds, you must furnish a Fund with your
certified
tax identification number ("TIN") and certify that you
are not
subject to backup withholding due to prior
underreporting of
interest and dividends to the Internal Revenue Service.
If you
fail to provide a certified TIN, or such other
tax-related
certifications as a Fund may require, within 30 days of
opening
your new account, each Fund reserves the right to
involuntarily
redeem your account and send the proceeds to your
address of
record.
You can avoid the above withholding and/or
redemption by
correctly furnishing your TIN, and making certain
certifications,
in Section 2 of the new account application at the time
you open
your new account, unless the IRS requires that backup
withholding
be applied to your account.
Certain payees, such as corporations, generally
are exempt
from backup withholding. Please complete IRS Form W-9
with the
new account application to claim this exemption. If the
registration is for an UGMA/UTMA account, please
provide the
social security number of the minor. Non-U.S. investors
who do
not have a TIN must provide, with their new account
application,
a completed IRS Form W-8.
CERTIFICATES
In order to facilitate transfers, exchanges and
redemptions,
most shareholders elect not to receive certificates.
Should you
wish to have a certificate issued, please contact MIISC
at 1-800-
777-6472 and request that one be sent to you.
(Retirement plan
accounts are not eligible for this service.) Please
note that if
you were to lose your certificate, you would incur an
expense to
replace it.
Certificates requested by telephone for shares
valued up to
$50,000 will be issued to the current registration and
mailed to
the address of record. Should you wish to have your
certificates
mailed to a different address, or registered
differently from the
current registration, you must provide a letter of
instruction
signed by all registered owners with signatures
guaranteed. The
letter of instruction would be sent to MACKENZIE IVY
INVESTOR
SERVICES CORP., P.O. BOX 3022, BOCA RATON, FL
33431-0922.
EXCHANGE PRIVILEGE
Shareholders of a Fund have an exchange privilege
with other
Ivy and Mackenzie Funds. Class A shareholders may
exchange their
outstanding Class A shares for Class A shares of
another Ivy or
Mackenzie Fund on the basis of the relative NAV per
Class A
share, plus an amount equal to the difference 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.
Class B and Class C shareholders may exchange
their
outstanding Class B (or Class C) shares for Class B (or
Class C)
shares of another Ivy or Mackenzie Fund on the basis of
the
relative NAV per Class B (or Class C) share, without
the payment
of any CDSC that would otherwise be due upon the
redemption of
Class B (or Class C) shares. Class B shareholders who
exercise
the exchange privilege would continue to be subject to
the
original Fund's CDSC schedule (or period) following an
exchange
if such schedule is higher (or longer) than the CDSC
for the new
Class B shares.
Class I shareholders may exchange their
outstanding Class I
shares for Class I shares of another Ivy or Mackenzie
Fund on the
basis of the relative NAV per Class I share, without
the
imposition of any sales charges.
Shares resulting from the reinvestment of
dividends and
other distributions will not be charged an initial
sales charge
or a CDSC when exchanged into another Ivy or Mackenzie
Fund.
Exchanges are considered to be taxable events, and
may
result in a capital gain or a capital loss for tax
purposes.
Before executing an exchange, you should obtain and
read the
prospectus and consider the investment objective of the
fund to
be purchased. Shares must be uncertificated in order to
execute a
telephone exchange. Exchanges are available only in
states where
they can be legally made. This privilege is not
intended to
provide shareholders a means by which to speculate on
short-term
movements in the market. Exchanges are accepted only if
the
registrations of the two accounts are identical.
Amounts to be
exchanged must meet minimum investment requirements for
the Ivy
or Mackenzie Fund into which the exchange is made.
With respect to shares subject to a CDSC, if less
than all
of an investment is exchanged out of a 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.
An investor who was a shareholder of American
Investors
Income Fund, Inc. or American Investors Growth Fund,
Inc. prior
to October 31, 1988, or a shareholder of the Ivy Funds
prior to
December 31, 1991, who became a shareholder of the Fund
as a
result of a reorganization or merger between the Funds
may
exchange between funds without paying a sales charge.
An investor
who was a shareholder of American Investors Income
Fund, Inc. or
American Investors Growth Fund, Inc. on or after
October 31,
1988, who became a shareholder of the Fund as a result
of the
reorganization between the Funds will receive credit
toward any
applicable sales charge imposed by any Ivy or Mackenzie
Fund into
which an exchange is made.
In calculating the sales charge assessed on an
exchange,
shareholders will be allowed to use the Rights of
Accumulation
privilege.
EXCHANGES BY TELEPHONE: When you fill out the
application
for your purchase of Fund shares, if Section 6E of the
new
account application is not completed, telephone
exchange
privileges will be provided automatically. Although
telephone
exchanges may be a convenient feature, you should
realize that
you may be giving up a measure of security that you may
otherwise
have if you terminated the privilege and exchanged your
shares in
writing. If you do not wish to make telephone exchanges
or let
your registered representative or his/her assistant do
so on your
behalf, you must notify MIISC in writing.
In order to execute an exchange, please contact
MIISC at 1-
800-777-6472. Have the account number of your current
fund and
the exact name in which it is registered available to
give to the
telephone representative.
Each Fund 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 may
be liable
for any losses due to unauthorized or fraudulent
telephone
instructions.
EXCHANGES IN WRITING: In a letter, request an
exchange and
provide the following information:
- The name and class of the fund whose shares you
currently
own.
- Your account number.
- The name(s) in which the account is registered.
- The name of the fund in which you wish your
exchange to be
invested.
- The number of shares, all shares or the dollar
amount you
wish to exchange.
The request must be signed by all registered
owners.
Mail the request and information to:
Mackenzie Ivy Investor Services Corp.
P.O. Box 3022
Boca Raton, FL 33431-0922
REINVESTMENT PRIVILEGE
Investors who have redeemed Class A shares of a
Fund have a
one-time privilege of reinvesting all or a part of the
proceeds
of the redemption back into Class A shares of that Fund
at NAV
(without a sales charge) within 60 days after the date
of
redemption. IN ORDER TO REINVEST WITHOUT A SALES
CHARGE,
SHAREHOLDERS OR THEIR BROKERS MUST INFORM MIISC THAT
THEY ARE
EXERCISING THE REINVESTMENT PRIVILEGE AT THE TIME OF
REINVESTMENT. The tax status of a gain realized on a
redemption
generally will not be affected by the exercise of the
reinvestment privilege, but a loss realized on a
redemption
generally may be disallowed by the IRS if the
reinvestment
privilege is exercised within 30 days after the
redemption. In
addition, upon a reinvestment, the shareholder may not
be
permitted to take into account sales charges incurred
on the
original purchase of shares in computing their taxable
gain or
loss.
SYSTEMATIC WITHDRAWAL PLAN
You may elect the Systematic Withdrawal Plan at
any time by
completing the Account Application, which is attached
to this
Prospectus. You can also obtain this application by
contacting
your registered representative or MIISC at
1-800-777-6472. To be
eligible, you must have at least $5,000 in your
account. Payments
(minimum distribution amount -- $50) from your account
can be
made monthly, quarterly, semi-annually, annually or on
a selected
monthly basis, to yourself or any other designated
payee. You may
elect to have your systematic withdrawal paid directly
to your
bank account via electronic funds transfer ("EFT").
Share
certificates must be unissued (i.e., held by a Fund)
while the
plan is in effect. A Systematic Withdrawal Plan may not
be
established if you are currently participating in the
Automatic
Investment Method. For more information, please contact
MIISC at
1-800-777-6472.
If payments you receive through the Systematic
Withdrawal
Plan exceed the dividends and capital appreciation of
your
account, you will be reducing the value of your
account.
Additional investments made by shareholders
participating in the
Systematic Withdrawal Plan must equal at least $1,000
while the
plan is in effect. However, it may not be advantageous
to
purchase additional Class A, Class B or Class C shares
when you
have a Systematic Withdrawal Plan, because you may be
subject to
an initial sales charge on your purchase of Class A
shares or to
a CDSC imposed on your redemptions of Class B or Class
C shares.
In addition, redemptions are taxable events.
Amounts paid to you through the Systematic
Withdrawal Plan
are derived from the redemption of shares in your
account. Any
applicable CDSC will be assessed upon the redemptions.
A CDSC
will not be assessed on withdrawals not exceeding 12%
annually of
the initial account balance when the Systematic
Withdrawal Plan
was started.
Should you wish at any time to add a Systematic
Withdrawal
Plan to an existing account or change payee
instructions, you
will need to submit a written request, signed by all
registered
owners, with signatures guaranteed.
Retirement accounts are eligible for Systematic
Withdrawal
Plans. Please contact MIISC at 1-800-777-6472 to obtain
the
necessary paperwork to establish a plan.
If the U.S. Postal Service cannot deliver your
checks, or if
deposits to a bank account are returned for any reason,
your
redemptions will be discontinued.
AUTOMATIC INVESTMENT METHOD
You may authorize an investment to be
automatically drawn
each month from your bank for investment in Fund shares
under the
"Automatic Investment Method" and "Fed Wire/EFT"
sections of the
Account Application. There is no charge to you for this
program.
You may terminate or suspend your Automatic
Investment
Method by telephone at any time by contacting MIISC at
1-800-777-
6472.
If you have investments being withdrawn from a
bank account
and we are notified that the account has been closed,
your
Automatic Investment Method will be discontinued.
CONSOLIDATED ACCOUNT STATEMENTS
Shareholders with two or more Ivy or Mackenzie
fund accounts
will receive a single quarterly account statement,
unless
otherwise specified. This feature consolidates the
activity for
each account onto one statement. Requests for quarterly
consolidated statements for all other accounts must be
submitted
in writing and must be signed by all registered owners.
RETIREMENT PLANS
The Ivy and Mackenzie family of funds offer
several tax-
sheltered retirement plans that may fit your needs:
- IRA (Individual Retirement Account)
- 401(k) Plan
Money Purchase Pension Plan
Profit Sharing Plan
- SEP-IRA (Simplified Employee Pension Plan)
- 403(b)(7) Plan
Minimum initial and subsequent investments for
retirement
plans are $25.00.
Investors Bank & Trust, which serves as custodian
or trustee
under the retirement plan prototypes available from
each Fund,
charges certain nominal fees for annual maintenance. A
portion of
these fees is remitted to MIMI, as compensation for its
services
to the retirement plan accounts maintained with each
Fund.
Distributions from retirement plans are subject to
certain
requirements under the Code, including withholding
requirements,
and various documents (available from MIISC), including
IRS Form
W-4P, and information must be provided before the
distribution
may be made. The Ivy and Mackenzie family of funds and
MIISC
assume no responsibility to determine whether a
distribution
satisfies the conditions of applicable tax laws, and
will not be
responsible for any penalties assessed. For additional
information, please contact your broker, tax adviser or
MIISC.
Please call MIISC at 1-800-777-6472 for complete
information
kits describing the plans, their benefits,
restrictions,
provisions and fees.
SHAREHOLDER INQUIRIES
Inquiries regarding the Funds should be directed
to MIISC at
1-800-777-6472.
PROSPECTUS
April 30, 1996
[IVY
FUNDS LOGO]
Ivy Fund (the "Trust") is a registered investment
company
currently consisting of thirteen separate portfolios.
Six of
these portfolios, as identified below (the "Funds"),
are
described in this Prospectus. Each Fund has its own
investment
objective and policies, and a shareholder's interest is
limited
to the Fund in which he or she owns shares.
The six Funds are:
Ivy Canada Fund
Ivy China Region Fund
Ivy Global Fund
Ivy International Fund
Ivy Latin America Strategy Fund
Ivy New Century Fund
This Prospectus sets forth concisely the
information about
the Funds that a prospective investor should know
before
investing and should be read carefully and retained for
future
reference. Additional information about the Funds is
contained
in the Statement of Additional Information for the
Funds dated
April 30, 1996 (the "SAI"), which has been filed with
the
Securities and Exchange Commission and is incorporated
by
reference into this Prospectus. The SAI is available
upon
request and without charge from the Trust at the
Distributor s
address and telephone number provided below.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A
CRIMINAL OFFENSE.
TABLE OF CONTENTS
Schedule of Fees . . . . . . . . . . . . . . . . . . .
. . . . .
The Funds' Financial Highlights . . . . . . . . . . . .
. . . . .
Investment Objectives and Policies . . . . . . . . . .
. . . . .
Risk Factors and Investment Techniques . . . . . . . .
. . . . .
Organization and Management of the Funds . . . . . . .
. . . . .
Investment Manager . . . . . . . . . . . . . . . . . .
. . . . .
Fund Administration and Accounting . . . . . . . . . .
. . . . .
Transfer Agent . . . . . . . . . . . . . . . . . . . .
. . . . .
Alternative Purchase Arrangements . . . . . . . . . . .
. . . . .
Dividends and Taxes . . . . . . . . . . . . . . . . . .
. . . . .
Performance Data . . . . . . . . . . . . . . . . . . .
. . . . .
How to Buy Shares . . . . . . . . . . . . . . . . . . .
. . . . .
How Your Purchase Price is Determined . . . . . . . . .
. . . . .
How Each Fund Values Its Shares . . . . . . . . . . . .
. . . . .
Initial Sales Charge Alternative - Class A Shares . . .
. . . . .
Contingent Deferred Sales Charge - Class A Shares . . .
. . . . .
Waiver of Contingent Deferred Sales Charge . . . .
. . . . .
Qualifying for a Reduced Sales Charge . . . . . . . . .
. . . . .
Rights of Accumulation (ROA) . . . . . . . . . . .
. . . . .
Letter of Intent (LOI) . . . . . . . . . . . . . .
. . . . .
Purchases of Class A Shares At Net Asset Value . .
. . . . .
Contingent Deferred Sales Charge Alternative - Class B
and Class
C Shares . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
Conversion of Class B Shares . . . . . . . . . . .
. . . . .
Waiver of Contingent Deferred Sales Charge . . . .
. . . . .
Arrangements with Broker-Dealers and Others . . .
. . . . .
How to Redeem Shares . . . . . . . . . . . . . . . . .
. . . . .
Minimum Account Balance Requirements . . . . . . . . .
. . . . .
Signature Guarantees . . . . . . . . . . . . . . . . .
. . . . .
Choosing a Distribution Option . . . . . . . . . . . .
. . . . .
Tax Identification Number . . . . . . . . . . . . . . .
. . . . .
Certificates . . . . . . . . . . . . . . . . . . . . .
. . . . .
Exchange Privilege . . . . . . . . . . . . . . . . . .
. . . . .
Reinvestment Privilege . . . . . . . . . . . . . . . .
. . . . .
Systematic Withdrawal Plan . . . . . . . . . . . . . .
. . . . .
Automatic Investment Method . . . . . . . . . . . . . .
. . . . .
Consolidated Account Statements . . . . . . . . . . . .
. . . . .
Retirement Plans . . . . . . . . . . . . . . . . . . .
. . . . .
Shareholder Inquiries . . . . . . . . . . . . . . . . .
. . . . .
BOARD OF TRUSTEES TRANSFER AGENT
John S. Anderegg, Jr. Mackenzie Ivy
Investor
Paul H. Broyhill Services Corp.
Stanley Channick P.O. Box 3022
Frank W. DeFriece, Jr. Boca Raton, FL
Roy J. Glauber 33431-0922
Michael G. Landry 1-800-777-6472
Michael R. Peers
Joseph G. Rosenthal AUDITORS
Richard N. Silverman Coopers & Lybrand
L.L.P.
J. Brendan Swan Ft. Lauderdale, FL
OFFICERS INVESTMENT MANAGER
Michael G. Landry, Ivy Management, Inc.
President 700 South Federal
Highway
Keith J. Carlson, Vice Boca Raton, FL 33432
President 1-800-456-5111
C. William Ferris
Secretary/Treasurer DISTRIBUTOR
Michael R. Peers, Chairman Mackenzie Ivy Funds
Distribution, Inc.
LEGAL COUNSEL Via Mizner Financial
Plaza
Dechert Price & Rhoads 700 South Federal
Highway
Boston, MA Boca Raton, FL 33432
1-800-456-5111
CUSTODIAN
Brown Brothers Harriman &
Co.
Boston, MA
SCHEDULE OF FEES
SHAREHOLDER TRANSACTION EXPENSES[#]
CLASS A CLASS B CLASS C
CLASS I
Maximum sales load
imposed on purchases
(as a percentage of
offering price) . . . 5.75%(1) None None
None
Maximum contingent
deferred sales charge
(as a percentage of
original purchase
price) . . . . . . . None(2) 5.00%(3) 1.00%(4)
None
[#] None of the Funds charge a redemption fee, an
exchange fee,
or a sales load on reinvested dividends.
(1) Class A shares of the Funds may be purchased under
a variety
of plans that provide for the reduction or
elimination of
the sales charge.
(2) A contingent deferred sales charge may apply to
the
redemption of Class A shares that are purchased
without an
initial sales charge. See "Purchases of Class A
Shares at
Net Asset Value" and "Contingent Deferred Sales
Charge --
Class A Shares."
(3) The maximum contingent deferred sales charge on
Class B
shares applies to redemptions during the first
year after
purchase. The charge declines to 4% during the
second year;
3% during the third and fourth years; 2% during
the fifth
year; 1% during the sixth year; and 0% in the
seventh year
and thereafter.
(4) The maximum contingent deferred sales charge on
Class C
shares applies to redemptions during the first
year after
purchase.
ANNUAL FUND OPERATING EXPENSES
(as a percentage of daily net assets)
IVY CANADA FUND
CLASS A CLASS B
CLASS C[#]
Management Fees(1) . . . 0.52% 0.52%
0.52%
12b-1 Service/Distribution
Fees . . . . . . . . . . 0.40% 1.00%(2)
1.00%(2)
Other Expenses . . . . . 1.98% 1.98%
1.98%
Total Fund Operating
Expenses . . . . . . . . 2.90%* 3.50%*(3)
3.50%*(3)
* Total Fund Operating Expenses reflect expense
reimbursement
by Ivy Management, Inc. ("IMI"). Without expense
reimbursement, Total Fund Operating Expenses for
Class A
would have been 3.23%, and for Class B and Class C
would
have been 3.83%.
IVY CHINA REGION FUND
CLASS A CLASS B CLASS
C[#]
Management Fees(1) . . . 0.47% 0.47% 0.47%
12b-1 Service/Distribution
Fees . . . . . . . . . . 0.25% 1.00%(2)
1.00%(2)
Other Expenses . . . . . 1.48% 1.48% 1.48%
Total Fund Operating
Expenses . . . . . . . . 2.20%* 2.95%*(3)
2.95%*(3)
* Total Fund Operating Expenses reflect voluntary
expense
reimbursement by IMI. Without expense
reimbursement, Total
Fund Operating Expenses for Class A would have
been 2.73%,
and for Class B and Class C would have been 3.48%.
IVY GLOBAL FUND
CLASS A CLASS B
CLASS C[#]
Management Fees(1) . . . 0.74% 0.74%
0.74%
12b-1 Service/Distribution
Fees . . . . . . . . . . 0.25% 1.00%(2)
1.00%(2)
Other Expenses . . . . . 1.21% 1.21%
1.21%
Total Fund Operating
Expenses . . . . . . . . 2.20%* 2.95%*(3)
2.95%*(3)
* Total Fund Operating Expenses reflect voluntary
expense
reimbursement by IMI. Without expense
reimbursement, Total
Fund Operating Expenses for Class A would have
been 2.46%,
and for Class B and Class C would have been 3.21%.
IVY INTERNATIONAL FUND
CLASS A CLASS B CLASS C[#]
CLASS I
Management Fees . . . 1.00% 1.00% 1.00%
1.00%
12b-1
Service/Distribution
Fees . . . . . . . . 0.08%(4) 1.00%(2) 1.00%(2)
0.00%
Other Expenses . . . 0.44% 0.44% 0.44%
0.35%(5)
Total Fund Operating
Expenses . . . . . . 1.52% 2.44%(3) 2.44%(3)
1.35%
IVY LATIN AMERICA STRATEGY FUND AND IVY NEW CENTURY
FUND
CLASS A CLASS B CLASS
C
Management Fees(1) . . . 0.00% 0.00% 0.00%
12b-1 Service/Distribution
Fees . . . . . . . . . . 0.25% 1.00%(2)
1.00%(2)
Other Expenses . . . . . 1.95% 1.95% 1.95%
Total Fund Operating
Expenses . . . . . . . . 2.20%* 2.95%*(3)
2.95%*(3)
* Total Fund Operating Expenses reflect voluntary
expense
reimbursement by IMI. Without expense
reimbursement, Total
Fund Operating Expenses for Ivy Latin America
Strategy Fund
would have been 9.26% for Class A and 10.01% for
Class B and
Class C, and Ivy New Century Fund would have been
7.18% for
Class A and 7.93% for Class B and Class C.
___________________________
[#] The inception date for Class C shares is April 30,
1996.
Accordingly, the expenses shown are estimated
based on
amounts incurred by Class B shares of the Fund
during the
fiscal year ended December 31, 1995.
(1) Management Fees reflect expense reimbursements
(see note
appearing directly below above tables, where
applicable).
Without expense reimbursements, the Management Fee
for each
class would have been 0.85% for Ivy Canada Fund
and 1.00%
for Ivy China Region Fund, Ivy Global Fund, Ivy
Latin
America Strategy Fund and Ivy New Century Fund.
(2) Long-term investors may, as a result of the Fund's
12b-1
fees, pay more than the economic equivalent of the
maximum
front-end sales charge permitted by the NASD's
Rules of Fair
Practice.
(3) Total Fund Operating Expenses for Class B and
Class C shares
are generally higher than related expenses for
mutual funds
whose investment objectives are similar to those
of the
Fund.
(4) Rule 12b-1 Service Fees paid by Class A shares may
increase
in subsequent years, but are subject to a ceiling
of 0.25%.
(5) Class I shares of Ivy International Fund bear
lower
administrative service fees and transfer agency
and
shareholder services fees than the other
classes.
EXAMPLES
Each of the following tables lists the expenses
that an
investor would pay on a $1,000 investment, assuming (1)
5% annual
return and (2) except as otherwise noted, redemption at
the end
of each time period. These examples further assume
reinvestment
of all dividends and distributions, and that the
percentage
amounts under "Total Fund Operating Expenses" (above)
remain the
same each year. THE FOLLOWING FIGURES SHOULD NOT BE
CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE
HIGHER OR LOWER THAN THOSE SHOWN.
IVY CANADA FUND
1 YEAR 3 YEARS 5 YEARS 10
YEARS
Class A Shares* . . $85 $142 $202 $361
Class B Shares . . $85(1) $137(2) $202(3)
$364(4)
Class B Shares (no
redemption) . . . $35 $107 $182
$364(4)
Class C Shares . . $____(5) $______ $______
$______
Class C Shares (no
redemption) . . . $_____ $______ $______
$______
These figures assume that the current voluntary
limitation
for Ivy Canada Fund is in place for each of the time
periods
indicated. Ivy Management, Inc. ("IMI") as investment
advisor,
has the right to terminate or revise this voluntary
expense
limitation at any time, which may affect the results in
years
one, three, five and ten in the preceding example. If
the
voluntary expense limitation is terminated, the
expenses for the
one, three, five and ten year periods are estimated to
be the
following: for Class A - $88, $151, $217 and $390,
respectively;
for Class B - $89, $147, $217 and $393, respectively;
for Class C
- $_____, $_____, $_____ and $_____, respectively; for
Class B
(no redemption) - $39, $117, $197 and $393,
respectively; for
Class C (no redemption) - $_____, $_____, $_____ and
$_____,
respectively.
IVY CHINA REGION FUND, IVY GLOBAL FUND, IVY LATIN
AMERICA
STRATEGY FUND, IVY NEW CENTURY FUND
1 YEAR 3 YEARS 5 YEARS 10
YEARS
Class A Shares* . . $79 $122 $169 $296
Class B Shares . . $80(1) $121(2) $175(3)
$309(4)
Class B Shares (no
redemption) . . . $30 $91 $155
$309(4)
Class C Shares . . $____(5) $______ $______
$______
Class C Shares (no
redemption) . . . $_____ $______ $______
$______
These figures assume that the current voluntary
expense
limitations for Ivy China Region Fund, Ivy Global Fund,
Ivy Latin
America Strategy Fund and Ivy New Century Fund are in
place for
each of the time periods indicated. IMI, as investment
advisor,
has the right to terminate or revise these voluntary
expense
limitations at any time, which may affect the results
in years
one, three, five and ten in the preceding example. If
the
voluntary expense limitation is terminated, the
expenses for the
one, three, five and ten year periods are estimated to
be the
following:
Ivy China Region Fund: for Class A - $84, $137,
$194 and
$346, respectively; for Class B - $85, $137, $201
and $359,
respectively; for Class C - $_____, $_____, $_____
and
$_____, respectively; for Class B (no redemption)
- $35,
$107, $181 and $359, respectively; for Class C (no
redemption) - $_____, $_____, $_____ and $_____,
respectively.
Ivy Global Fund: for Class A - $81, $130, $181 and
$321,
respectively; for Class B - $82, $129, $188 and
$334,
respectively; for Class C - $_____, $_____, $_____
and
$_____, respectively; for Class B (no redemption)
- $32,
$99, $168 and $334, respectively; for Class C (no
redemption) - $_____, $_____, $_____ and $_____,
respectively.
Ivy Latin America Strategy Fund: for Class A -
$143, $303,
$450 and $765, respectively; for Class B - $148,
$308, $461
and $774, respectively; for Class C - $_____,
$_____, $_____
and $_____, respectively; for Class B (no
redemption) - $98,
$278, $441 and $774, respectively; for Class C (no
redemption) - $_____, $_____, $_____ and $_____,
respectively.
Ivy New Century Fund: for Class A - $124, $254,
$378 and
$665, respectively; for Class B - $128, $258, $388
and $675,
respectively; for Class C - $_____, $_____, $_____
and
$_____, respectively; for Class B (no redemption)
- $78,
$228, $368 and $675, respectively; for Class C (no
redemption) - $_____, $_____, $_____ and $_____,
respectively.
IVY INTERNATIONAL FUND
1 YEAR 3 YEARS 5 YEARS 10
YEARS
Class A Shares* . . $72 $103 $136 $228
Class B Shares . . $75(1) $106(2) $150(3)
$255(4)
Class B Shares (no
redemption) . . . . $25 $76 $130
$255(4)
Class C Shares . . $____(5) $______ $______
$______
Class C Shares (no
redemption) . . . $_____ $______ $______
$______
Class I Shares[#] . $14 $43 $74 $162
* Assumes deduction of the maximum 5.75% initial
sales charge
at the time of purchase and no deduction of a
contingent
deferred sales charge at the time of redemption.
[#] Class I Shares are not subject to an initial sales
charge at
the time of purchase, nor are they subject to the
deduction
of a contingent deferred sales charge at the time
of
redemption.
(1) Assumes deduction of a 5% contingent deferred
sales charge
at the time of redemption.
(2) Assumes deduction of a 3% contingent deferred
sales charge
at the time of redemption.
(3) Assumes deduction of a 2% contingent deferred
sales charge
at the time of redemption.
(4) With respect to Class B shares, assumes conversion
to Class
A shares at the end of the eighth year, and
therefore
reflects Class A expenses for years nine and
ten.
The purpose of the foregoing tables is to show the
various
costs and expenses that an investor in each Fund will
bear
directly or indirectly. The information presented in
the tables
does not reflect the charge of $10.00 per transaction
that would
apply if a shareholder elects to have redemption
proceeds wired
to his or her bank account. For a more detailed
discussion of the
Funds' fees and expenses, see the following sections of
this
Prospectus: "Organization and Management of the Funds,"
"Initial
Sales Charge Alternative -- Class A Shares,"
"Contingent Deferred
Sales Charge Alternative -- Class B and Class C
Shares," and "How
to Buy Shares," and the following section of the SAI:
"Investment
Advisory and Other Services."
THE FUNDS' FINANCIAL HIGHLIGHTS
The information in the following tables (i) for
all of the
Funds, other than Ivy International Fund, through
December 31,
1995 and (ii) for Ivy International Fund for the years
ended
December 31, 1992, 1993, 1994 and 1995 has been audited
by
Coopers & Lybrand L.L.P., independent accountants. The
information for Ivy International Fund for the year
ended
December 31, 1991 and prior periods has been audited by
other
independent accountants. (Ivy Canada Fund and Ivy
Global Fund
operated prior to their reorganization into the Trust
on January
27, 1995 as Mackenzie Canada Fund (d/b/a Ivy Canada
Fund) and
Mackenzie Global Fund (d/b/a Ivy Global Fund),
respectively.) The
report of Coopers & Lybrand L.L.P. on the Funds'
financial
statements appears in each Fund's Annual Report dated
December
31, 1995, which are incorporated by reference into the
SAI. Each
Fund's Annual Report contains further information about
and
management's discussion of the Fund's performance, and
is
available to shareholders upon request and without
charge from
the Distributor at the address and phone number
provided on the
cover of this Prospectus. The information presented
below should
be read in conjunction with each Fund's financial
statements and
the notes thereto.
The inception date for Class C shares of the Funds
is April
30, 1996. Accordingly, no financial information for
these shares
is presented below.
IVY CANADA FUND
CLASS A CLASS B
CLASS A
FOR THE FOR THE
FOR THE
YEAR YEAR
SIX MONTHS
ENDED ENDED
ENDED
DEC. 31, DEC. 31,
DEC. 31,
1995 1995
1994
Net asset value,
beginning of period . . . $ 8.90 $ 8.90
$ 9.85
Income (loss) from
investment operations:
Net investment income
(loss) . . . . . . . . (.19)(a) (.20)(a)
(.11)
Net gain (loss) on
investment transactions
(both realized and
unrealized) . . . . . .75 .71
(.81)
Total from invest-
ment operations . . .56 .51
(.92)
Less distributions from:
Net investment income -- --
--
Net realized gain . . .25 .20
--
Capital paid-in . . . -- --
.03
Total distributions .25 .20
.03
Net asset value, end of
period . . . . . . . . . $ 9.21 $ 9.21
$ 8.90
Total return(%) . . . . . 6.37(c) 5.74(c)
(9.38)(d)
Ratios/supplemental data
Net assets, end of period
(in thousands) . . . . . $19,353 $1,142
$23,296
Ratio of expenses to
average daily net assets:
With expense
reimbursement(%) . . . 2.90 3.50
2.44(b)
Without expense
reimbursement(%) . . . . . .3.23 3.83
--
Ratio of net investment
income (loss) to average
daily net assets(%) . . . (2.13)(a) (2.73)(a)
(1.85)(b)
Portfolio turnover
rate(%) . . . . . . . . . 21 21
36(b)
CLASS B
FOR
THE
CLASS B CLASS A
PERIOD
FOR THE FOR THE
APRIL 1,
SIX MONTHS YEAR
1994
ENDED ENDED
(COMMENCE-
DEC. 31, JUNE 30,
MENT) TO
1994 1994
JUNE 30, 1994
Net asset value,
beginning of period . . . 9.85 $ 10.04 $
10.16
Income (loss) from
investment operations:
Net investment income
(loss) . . . . . . . . (.09) (.11)
(.02)
Net gain (loss) on
investment transactions
(both realized and
unrealized) . . . . . (.86) .24
(.29)
Total from invest-
ment operations . . (.95) .13
(.31)
Less distributions from:
Net investment income -- --
--
Net realized gain . . -- .31
--
Capital paid-in . . . -- .01
--
Total distributions -- .32
--
Net asset value, end of
period . . . . . . . . . $ 8.90 $ 9.85 $
9.85
Total return(%) . . . . . (9.64)(d) 1.05(c)
(3.05)(d)
Ratios/supplemental data
Net assets, end of period
(in thousands) . . . . . $ 741 $34,549
$ 227
Ratio of expenses to
average daily net assets:
With expense
reimbursement(%) . . . -- --
--
Without expense
reimbursement(%) . . . . . . 3.03(b)
2.05
2.68(b)
Ratio of net investment
income (loss) to average
daily net assets(%) . . . (2.44)(b) (1.09)
(1.72)(b)
Portfolio turnover
rate(%) . . . . . . . . . 36 62
62(b)
CLASS A
FOR
THE EIGHT
FOR THE YEAR
MONTHS ENDED
ENDED JUNE 30,
JUNE 30,
1993 1992
1991
Net asset value,
beginning of period . . . $ 7.43 $ 8.89 $
8.55
Income (loss) from
investment operations:
Net investment income
(loss) . . . . . . . . (.01) (.12)
(.03)
Net gain (loss) on
investment transactions
(both realized and
unrealized) . . . . . 3.35 (1.34)
.41
Total from invest-
ment operations . . 3.34 (1.46)
.38
Less distributions from:
Net investment income -- --
--
Net realized gain . . .73 --
.04
Capital paid-in . . . -- --
--
Total distributions .73 --
.04
Net asset value, end of
period . . . . . . . . . $ 10.04 $ 7.43 $
8.89
Total return(%) . . . . . 47.10(c) (16.42)(c)
(6.59)(b)(c)
Ratios/supplemental data
Net assets, end of period
(in thousands) . . . . . $30,971 $11,280
$14,369
Ratio of expenses to
average daily net assets:
With expense
reimbursement(%) . . . -- -- --
Without expense
reimbursement(%) . . . 2.63 2.70
2.78(b)
Ratio of net investment
income (loss) to average
daily net assets(%) . . . (1.41) (1.39)
(.52)(b)
Portfolio turnover
rate(%) . . . . . . . . . 32 2
4(b)
CLASS A
FOR
THE PERIOD
NOV.
18, 1987
FOR THE YEAR
(COMMENCEMENT)
ENDED OCT. 31, TO
OCT. 31,
1990 1989 1988
Net asset value,
beginning of period . . . $ 10.53 $ 10.15 $
9.50*
Income (loss) from
investment operations:
Net investment income
(loss) . . . . . . . . .02 .15(a)
.17(a)
Net gain (loss) on
investment transactions
(both realized and
unrealized) . . . . . (1.98) .50
.57
Total from invest-
ment operations . . (1.96) .65
.74
Less distributions from:
Net investment income .02 .24
.07
Net realized gain . . -- .03
.02
Capital paid-in . . . -- --
Total distributions .02 .27
.09
Net asset value, end of
period . . . . . . . . . $ 8.55 $ 10.53 $
10.15
Total return(%) . . . . . (18.69)(c) 6.41(c)
8.15(b)(c)
Ratios/supplemental data
Net assets, end of period
(in thousands) . . . . . $14,268 $16,807
$5,360
Ratio of expenses to
average daily net assets:
With expense
reimbursement(%) . . . -- 2.36
1.91(b)
Without expense
reimbursement(%) . . . 2.89 3.14
5.05(b)
Ratio of net investment
income (loss) to average
daily net assets(%) . . . .16 1.57
1.86(b)
Portfolio turnover
rate(%) . . . . . . . . . 0 2
3
____________________________
(a) Net investment income (loss) is net of expense
reimbursement
from Manager.
(b) Annualized.
(c) Total return does not reflect a sales charge.
(d) Total return represents aggregate total and does
not reflect
a sales charge.
* Price at inception excluding sales charge.
** Shares of the Fund outstanding as of March 31,
1994 were
designated Class A shares of the Fund.
IVY CHINA REGION FUND
CLASS A
FOR
THE
PERIOD OCT.
FOR THE FOR THE 23,
1993
YEAR YEAR
(COMMENCE-
ENDED ENDED
MENT) TO
DEC. 31, DEC. 31,
DEC. 31,
1995 1994
1993
Net asset value,
beginning of period . . . $ 8.61 $ 11.55 $
10.00
Income (loss) from
investment operations:
Net investment income
(loss)(a) . . . . . . .14 .05
(.01)
Net gain (loss) on
investment transactions
(both realized and
unrealized) . . . . . (.01) (2.91)
1.57
Total from invest-
ment operations . . .13 (2.86)
1.56
Less distributions from:
Net investment income .14 .05
--
In excess of net
investment income . . -- .03
--
In excess of net
realized gain . . . . .02 --
--
Capital paid-in . . . -- --
.01
Total distributions .16 .08
.01
Net asset value, end of
period . . . . . . . . . $ 8.58 $ 8.61 $
11.55
Total return(%) . . . . . 1.59(b) (24.88)(b)
15.65(c)
Ratios/supplemental data:
Net assets, end of period
(in thousands) . . . . . $12,855 $13,180 $
8,371
Ratio of expenses to
average daily net assets:
With expense
reimbursement(%) . . . 2.20 2.20
1.98(d)
Without expense
reimbursement(%) . . . 2.73 2.76
2.45(d)
Ratio of net investment
income (loss) to average
daily net assets(%)(a) . 1.61 .55
(.91)(d)
Portfolio turnover
rate(%) . . . . . . . . . 25 4
0
CLASS B
FOR
THE
PERIOD OCT.
FOR THE FOR THE 23,
1993
YEAR YEAR
(COMMENCE-
ENDED ENDED
MENT) TO
DEC. 31, DEC. 31,
DEC. 31,
1995 1994
1993
Net asset value,
beginning of period . . . $ 8.61 $ 11.55 $
10.00
Income (loss) from
investment operations:
Net investment income
(loss)(a) . . . . . . .08 (.02)
(.02)
Net gain (loss) on
investment transactions
(both realized and
unrealized) . . . . . (.02) (2.92)
1.57
Total from invest-
ment operations . . .06 (2.94)
1.55
Less distributions from:
Net investment income .08 --
--
In excess of net
realized gain . . . . .01 --
--
Total distributions .09 --
--
Net asset value, end of
period . . . . . . . . . $ 8.58 $ 8.61 $
11.55
Total return(%) . . . . . .83(b) (24.45)(b)
15.50(c)
Ratios/supplemental data:
Net assets, end of period
(in thousands) . . . . . $ 6,905 $ 7,336 $
3,565
Ratio of expenses to
average daily net assets:
With expense
reimbursement(%) . . . 2.95 2.95
2.74(d)
Without expense
reimbursement(%) . . . 3.48 3.51
3.20(d)
Ratio of net investment
income (loss) to average
daily net assets(%) (a) . .86 (.20)
(1.66)(d)
Portfolio turnover rate(%) 25 4
0
_________________
(a) Net investment income (loss) is net of expense
reimbursed by
Manager.
(b) Total return does not reflect a sales charge.
(c) Total return represents aggregate total return and
does not
reflect a sales charge.
(d) Annualized.
IVY GLOBAL FUND
CLASS A CLASS
B
FOR THE YEAR ENDED
DECEMBER 31,
1995 1995
Net asset value,
beginning of period . . . $ 11.23 $
11.23
Income (loss) from
investment operations:
Net investment income
(loss)(a) . . . . . . .09 --
Net gain (loss) on
investments (both realized
and unrealized) . . . 1.25
1.25
Total from invest-
ment operations . . . 1.34
1.25
Less distributions from:
Net investment income .04
--
Net realized gain . . .49
.45
In excess of net realized
gain . . . . . . . . . .07
.06
Capital paid-in . . . --
--
Total distributions .60
.51
Net asset value, end of
period . . . . . . . . . $ 11.97 $
11.97
Total return(%) . . . . . 12.08(e)
11.25(e)
Ratios/supplemental data:
Net assets, end of period
(in thousands) . . . . . $21,264 $
4,811
Ratio of expenses to
average daily net
assets:
With expense
reimbursement(%) . . . 2.20
2.95
Without expense
reimbursement(%) . . . 2.46
3.21
Ratio of net investment
income to average daily
net assets (%)(a) . . . . .71
(.04)
Portfolio turnover
rate(%) . . . . . . . . . 53
53
CLASS A CLASS
B
FOR THE SIX MONTHS
ENDED DECEMBER 31,
1994 1994
Net asset value,
beginning of period . . . $ 11.52 $
11.52
Income (loss) from
investment operations:
Net investment income
(loss)(a) . . . . . . --
(.03)
Net gain (loss) on
investments (both realized
and unrealized) . . . (.10)
(.12)
Total from invest-
ment operations . . . (.10)
(.15)
Less distributions from:
Net investment income -- --
Net realized gain . . .09
.08
In excess of net
realized gain . . . . -- --
Capital paid-in . . . .10
.06
Total distributions .19
.14
Net asset value, end of
period . . . . . . . . . $ 11.23 $
11.23
Total return(%) . . . . . (1.00)(f)
(1.37)(f)
Ratios/supplemental data:
Net assets, end of period
(in thousands) . . . . . $ 19,327 $
2,956
Ratio of expenses to
average daily net
assets:
With expense
reimbursement(%) . . . 2.20(b)
2.95(b)
Without expense
reimbursement(%) . . . 2.34(b)
3.09(b)
Ratio of net investment
income to average daily
net assets (%)(a) . . . . (.06)(b)
(.81)(b)
Portfolio turnover
rate(%) . . . . . . . . . 23(b)
23(b)
CLASS A CLASS B
FOR THE
PERIOD
APRIL
1, 1994
FOR THE YEAR
(COMMENCEMENT)
ENDED JUNE 30, TO JUNE
30,
1994 1994
Net asset value,
beginning of period . . . $ 10.62 $
12.12
Income (loss) from
investment operations:
Net investment income
(loss)(a) . . . . . . --
(.01)
Net gain (loss) on
investments (both realized
and unrealized) . . . 1.79
(.04)
Total from invest-
ment operations . . . 1.79
(.05)
Less distributions from:
Net investment income .01
--
Net realized gain . . .88
.55
In excess of net
realized gain . . . . --
--
Capital paid-in . . . --
--
Total distributions .89
.55
Net asset value, end of
period . . . . . . . . . $ 11.52 $
11.52
Total return(%) . . . . . 16.71(e)
(.38)(f)
Ratios/supplemental data:
Net assets, end of period
(in thousands) . . . . . $17,393 $
376
Ratio of expenses to
average daily net
assets:
With expense
reimbursement(%) . . . 2.20
2.95(b)
Without expense
reimbursement(%) . . . 2.42
3.17(b)
Ratio of net investment
income to average daily
net assets(%)(a) . . . . .01
(.74)(b)
Portfolio turnover
rate(%) . . . . . . . . . 85
85
CLASS A
FOR THE YEAR ENDED JUNE
30,
1993 1992
1991(D)
Net asset value,
beginning of period . $ 10.55 $ 9.40 $
10.00*
Income (loss) from
investment operations:
Net investment income
(loss)(a) . . . . .03 .06
.02
Net gain (loss) on
investments (both
realized and
unrealized) . . . .44 1.79
(.61)
Total from invest-
ment operations . .47 1.85
(.59)
Less distributions from:
Net investment income .03 .06
.01
Net realized gain .37 .62
--
In excess of net
realized gain . . -- --
--
Capital paid-in . -- .02
--
Total distributions .40 .70
.01
Net asset value, end of
period . . . . . . . $ 10.62 $ 10.55 $
9.40
Total return (%) . . 4.54(e) 19.91(e)
(24.65)(b)(e)
Ratios/supplemental data:
Net assets, end of period
(in thousands) . . . $12,391 $ 8,780 $
1,667
Ratio of expenses to
average daily net
assets:
With expense
reimbursement(%) . 1.95 2.02
2.50(b)
Without expense
reimbursement(%) . 2.76 2.97
11.70(b)
Ratio of net investment
income to average daily
net assets (%)(a) . . .38 .82
.81(b)
Portfolio turnover
rate(%) . . . . . . . 67 59
24(b)
___________________
(a) Net investment income is net of expense
reimbursements from
Manager.
(b) Annualized.
(c) Effective November 2, 1991 MIMI voluntarily
reimburses the
Fund for expenses (excluding 12b-1 fees) in excess
of 1.95%
of its average daily net assets. Prior to
November 1, 1991
the reimbursement rate was 2.35%. The voluntary
portion of
the expense reimbursement may be terminated or
revised at
any time.
(d) April 18, 1991 (commencement) to June 30, 1991.
(e) Total return does not reflect a sales charge.
(f) Total return represents aggregate total return and
does not
reflect a sales charge.
* Price at inception excluding sales charge.
** Shares of the Fund outstanding as of March 31,
1994 were
redesignated Class A shares of the Fund.
IVY INTERNATIONAL FUND
CLASS A
FOR THE YEAR ENDED
DECEMBER 31,
1995 1994
1993
Net asset value,
beginning of period . . . . $ 27.60 $ 27.71
$ 18.88
Income (loss) from
investment operations:
Net investment income . .25 .07
.12
Net gain (loss) on
investment transactions
(both realized and
unrealized) . . . . . . 3.22 1.01
9.01
Total from investment
operations . . . . . . 3.47 1.08
9.13
Less distributions from:
Net investment income . .25 .07
.08
Net realized gain . . . .12 1.11
.22
In excess of net realized
gain . . . . . . . . . . .03 --
--
Capital Paid-in . . . . -- .01
--
Total distributions . .40 1.19
.30
Net asset value, end of
period . . . . . . . . . . $ 30.67 $ 27.60
$ 27.71
Total return(%)(d) . . . . 12.65 3.92
48.37
Ratios/supplemental data:
Net assets, end of period
(in thousands) . . . . . . $475,989 $229,586
$172,539
Ratio of expenses to
average daily net
assets(%) . . . . . . . . . 1.52 1.58
1.61
Ratio of net investment
income to average daily
net assets(%) . . . . . . . .97 .30
.56
Portfolio turnover
rate(%) . . . . . . . . . . 6 7
19
CLASS A
FOR THE YEAR ENDED
DECEMBER 31,
1992 1991
1990
Net asset value,
beginning of period . . . . $ 19.37 $ 16.98
$ 20.31
Income (loss) from
investment operations:
Net investment income . .27(a) .26
.50
Net gain (loss) on
investment transactions
(both realized and
unrealized) . . . . . . (.26) 2.61
(3.13)
Total from investment
operations . . . . . . .01 2.87
(2.63)
Less distributions from:
Net investment income . .27 .26
.51
Net realized gain . . . .23 .22
.19
In excess of net
realized gain . . . . . -- --
--
Capital Paid-in . . . . -- --
--
Total distributions . .50 .48
.70
Net asset value, end of
period . . . . . . . . . . $ 18.88 $ 19.37
$ 16.98
Total return(%)(d) . . . . .07 16.93
(12.97)
Ratios/supplemental data:
Net assets, end of period
(in thousands) . . . . . . $109,637 $ 97,486
$ 64,651
Ratio of expenses to
average daily net
assets(%) . . . . . . . . . 1.71(b) 1.64
1.66
Ratio of net investment
income to average daily
net assets(%) . . . . . . . 1.36(a) 1.50
2.50
Portfolio turnover
rate(%) . . . . . . . . . . 20 27
29
CLASS A
FOR THE YEAR ENDED
DECEMBER 31,
1989 1988
1987
Net asset value,
beginning of period . . . . $ 16.62 $ 12.90
$ 12.40
Income (loss) from
investment operations:
Net investment income . .27 .12
.04
Net gain (loss) on
investment transactions
(both realized and
unrealized) . . . . . . 4.43 3.71
2.38
Total from investment
operations . . . . . . 4.70 3.83
2.42
Less distributions from:
Net investment income . .17 .11
.05
Net realized gain . . . .84 --
1.87
In excess of net
realized gain . . . . . -- --
--
Capital Paid-in . . . . -- --
--
Total distributions . 1.01 .11
1.92
Net asset value, end of
period . . . . . . . . . . $ 20.31 $ 16.62
$ 12.90
Total return(%)(d) . . . . 28.26 29.72
19.51
Ratios/supplemental data:
Net assets, end of period
(in thousands) . . . . . . $ 58,469 $ 23,637
$ 21,146
Ratio of expenses to
average daily net
assets(%) . . . . . . . . . 1.80 1.93
1.88
Ratio of net investment
income to average daily
net assets(%) . . . . . . . 1.20 .80
.40
Portfolio turnover
rate(%) . . . . . . . . . . 23 45
47
CLASS A
FOR THE YEAR ENDED
DECEMBER 31,
1986
Net asset value,
beginning of period . . . . $ 10.07
Income (loss) from
investment operations:
Net investment income . .03
Net gain (loss) on
investment transactions
(both realized and
unrealized) . . . . . . 2.37
Total from investment
operations . . . . . . 2.40
Less distributions from:
Net investment income . .07
Net realized gain . . . --
In excess of net
realized gain . . . . . --
Capital Paid-in . . . . --
Total distributions . .07
Net asset value, end of
period . . . . . . . . . . $ 12.40
Total return(%)(d) . . . . 11.21(e)
Ratios/supplemental data:
Net assets, end of period
(in thousands) . . . . . . $ 9,587
Ratio of expenses to
average daily net
assets(%) . . . . . . . . . 2.00
Ratio of net investment
income to average daily
net assets(%) . . . . . . . .30
Portfolio turnover
rate(%) . . . . . . . . . . 20
CLASS B
FOR
THE
PERIOD OCT.
FOR THE FOR THE 23,
1993
YEAR YEAR
(COMMENCE-
ENDED ENDED
MENT) TO
DEC. 31, DEC. 31,
DEC. 31,
1995 1994
1993
Net asset value,
beginning of period . . . $ 27.60 $ 27.71 $
25.86
Income (loss) from
investment operations:
Net investment income
(loss) . . . . . . . . .01 (.10)
(.01)
Net gain (loss) on
investment transactions
(both realized and
unrealized) . . . . . 3.20 .91
2.12
Total from investment
operations . . . . .
3.21 .81 2.11
Less distributions from:
Net investment income .01 --
.04
Net realized gain . . .10 .90
.22
In excess of net realized
gain . . . . . . . . . .03 --
--
Capital Paid-in . . . -- .02
--
Total distributions .14 .92
.26
Net asset value, end of
period . . . . . . . . . $ 30.67 $ 27.60 $
27.71
Total return(%) . . . . . 11.62(d) 2.96(d)
7.65(f)
Ratios/supplemental data:
Net assets, end of period
(in thousands) . . . . . $ 74,650 $ 30,143 $
2,846
Ratio of expenses to
average daily net
assets(%) . . . . . . . . 2.44 2.50
2.59(c)
Ratio of net investment
income (loss) to average
daily net assets(%) . . . .05 (.62)
(.42)(c)
Portfolio turnover
rate(%) . . . . . . . . . 6 7
19
CLASS I
FOR THE
PERIOD
OCT. 6,
1993
FOR THE YEAR
(COMMENCEMENT)
ENDED DEC. 31, TO DEC.
31.
1995 1994
Net asset value,
beginning of period . . . $ 27.60 $
29.06
Income (loss) from
investment operations:
Net investment income
(loss) . . . . . . . . .30
.03
Net gain (loss) on
investment transactions
(both realized and
unrealized) . . . . . 3.22
(.49)
Total from investment
operations . . . . . 3.52
(.46)
Less distributions from:
Net investment income .30
.03
Net realized gain . . .12
.92
In excess of net realized
gain . . . . . . . . . .03
--
Capital Paid-in . . . --
.05
Total distributions .45
1.00
Net asset value, end of
period . . . . . . . . . $ 30.67 $
27.60
Total return(%) . . . . . 12.85(d)
(1.64)(f)
Ratios/supplemental data:
Net assets, end of period
(in thousands) . . . . . $ 13,020 $
4,921
Ratio of expenses to
average daily net
assets(%) . . . . . . . . 1.35
1.41(c)
Ratio of net investment
income (loss) to average
daily net assets(%) . . . 1.14
.47(c)
Portfolio turnover
rate(%) . . . . . . . . . 6
7
_________________________
(a) Net investment income is net of expense
reimbursements from
IMI.
(b) The ratio of expenses to average daily net assets
is net of
expense reimbursements from IMI. If IMI had not
reimbursed
expenses during the year ended December 31, 1992,
the ratio
of expenses to average daily net assets would have
been
1.80%.
(c) Annualized.
(d) Total return does not reflect a sales charge.
(e) For the period 4/1/86 through 12/31/86.
(f) Total return represents aggregate total return
(not
annualized) and does not reflect a sales charge.
* Ivy International Fund's subadviser is Northern
Cross
Investments Limited. Ivy International Fund has
had the
following subadvisers: Boston Overseas Investors,
Inc.,
from 7/1/90 through 3/31/93; and Marsh &
Cunningham, from
11/15/85 through 6/30/90.
IVY LATIN AMERICA STRATEGY FUND
CLASS A
FOR THE
PERIOD
NOV. 1,
1994
FOR THE YEAR
(COMMENCEMENT)
ENDED DEC. 31, TO DEC.
31,
1995 1994
Net asset value,
beginning of period . . . . . $ 8.37 $
10.00
Loss from investment
operations:
Net investment income (a) . .01
--
Net loss on investment
transactions (both
realized and unrealized) . (1.45)
(1.63)
Total from investment
operations . . . . . . . . (1.44)
(1.63)
Less distributions from:
Capital paid-in . . . . . . .05
--
Total distributions . . . .05
--
Net asset value, end of
period . . . . . . . . . . . $ 6.88 $
8.37
Total return(%) . . . . . . . (17.28)(c)
(16.10)(b)
Ratios/supplemental data:
Net assets, end of period
(in thousands) . . . . . . . $ 2,015 $
571
Ratio of expenses to average
daily net assets
With expense reimbursement
and fees paid indirectly
(%)(e) . . . . . . . . . . 2.20
2.20(d)
Without expense reim-
bursement and fees paid
indirectly(%)(e) . . . . . 9.26
16.22(d)
Ratio of net investment
income to average daily
net assets(%)(a) . . . . . . .22
.21(d)
Portfolio turnover rate(%) . 45
82(d)
CLASS B
FOR THE
PERIOD
NOV. 1,
1994
FOR THE YEAR
(COMMENCEMENT)
ENDED DEC. 31, TO DEC.
31,
1995 1994
Net asset value,
beginning of period . . . . . $ 8.37 $
10.00
Loss from investment
operations:
Net investment loss (a) . . (.02)
(.01)
Net loss on investment
transactions (both
realized and unrealized) . (1.47)
(1.62)
Total from investment
operations . . . . . . . (1.49)
(1.63)
Net asset value, end of
period . . . . . . . . . . . $ 6.88 $
8.37
Total return(%) . . . . . . . (17.90)(c)
(16.20)(b)
Ratios/supplemental data:
Net assets, end of period
(in thousands) . . . . . . . $ 684 $
122
Ratio of expenses to average
daily net assets
With expense reimbursement
and fees paid indirectly
(%)(e) . . . . . . . . . . 2.95
2.95(d)
Without expense reim-
bursement and fees paid
indirectly(%)(e) . . . . . 10.01
16.97(d)
Ratio of net investment
loss to average daily
net assets(%)(a) . . . . . . (.53)
(.54)(d)
Portfolio turnover rate(%) . 45
82(d)
_________________________
(a) Net investment income (loss) is net of expenses
reimbursed
by Manager.
(b) Total return represents aggregate total return and
does not
reflect a sales charge.
(c) Total return does not reflect a sales charge.
(d) Annualized.
(e) Beginning in 1995, total expenses include fees
paid
indirectly through an expense offset
arrangement.
IVY NEW CENTURY FUND
CLASS A
FOR THE
PERIOD
NOV. 1,
1994
FOR THE YEAR
(COMMENCEMENT)
ENDED DEC. 31, TO DEC.
31,
1995 1994
Net asset value, beginning
of period . . . . . . . . $ 8.64 $
10.00
Income (loss) from
investment operations:
Net investment income(a). .01
--
Net gain (loss) on
investment transactions
(both realized and
unrealized) . . . . . .54
(1.36)
Total from investment
operations . . . . . .55
(1.36)
Less distribution from:
Net investment income .01
--
Net realized gain . . .10
--
In excess of net realized
gain . . . . . . . . . .03
--
Total distributions .14
--
Net asset value, end of
period . . . . . . . . . $ 9.05 $
8.64
Total return(%) . . . . . 6.40(b)
(13.50)(c)
Ratios/supplemental data
Net assets, end of period
(in thousands) . . . . . $ 3,435 $
611
Ratio of expenses to average
daily net assets:
With expense
reimbursement(%)(e) . 2.20
2.20(d)
Without expense
reimbursement(%)(e) . 7.18
20.74(d)
Ratio of net investment income
to average daily net assets(%)(a) .24
.52(d)
Portfolio turnover rate(%) 14
0(d)
CLASS B
FOR THE
PERIOD
NOV. 1,
1994
FOR THE YEAR
(COMMENCEMENT)
ENDED DEC. 31, TO DEC.
31,
1995 1994
Net asset value, beginning
of period . . . . . . . . $ 8.64 $
10.00
Income (loss) from investment
operations:
Net investment loss(a) (.02) --
Net gain (loss) on
investment transactions
(both realized and
unrealized) . . . . . .51
(1.36)
Total from investment
operations . . . . . .49
(1.36)
Less distributions from:
Net realized gain . . .08 --
Total distributions .08 --
Net asset value, end of
period . . . . . . . . . $ 9.05 $
8.64
Total return(%) . . . . . 5.62(b)
(13.60)(c)
Ratios/supplemental data
Net assets, end of period
(in thousands) . . . . . $ 945 $
121
Ratio of expenses to average
daily net assets:
With expense reimbursement(%)(e) 2.95
2.95(d)
Without expense
reimbursement(%)(e) . 7.93
21.49(d)
Ratio of net investment income
(loss) to average daily net
assets(%)(a) . . . . . . (.51)
(.23)(d)
Portfolio turnover rate(%)
14 0(d)
________________
(a) Net investment income (loss) is net of expenses
reimbursed
by Manager.
(b) Total return does not reflect a sales charge.
(c) Total return represents aggregate total return and
does not
reflect a sales charge.
(d) Annualized.
(e) Beginning in 1995, total expenses include fees
paid
indirectly through an expense offset
arrangement.
INVESTMENT OBJECTIVES AND POLICIES
Each Fund has its own investment objective and
policies,
which are described below. Each Fund's investment
objective is
fundamental and may not be changed without the approval
of a
majority of the outstanding voting shares of the Fund.
Except for
a Fund's investment objective and those investment
restrictions
specifically identified as fundamental, all investment
policies
and practices described in this Prospectus and in the
SAI are
non-fundamental, and may be changed by the Trustees
without
shareholder approval. There can be no assurance that a
Fund's
objective will be met. The different types of
securities and
investment techniques used by the Funds involve varying
degrees
of risk. For information about the particular risks
associated
with each type of investment, see "Risk Factors and
Investment
Techniques," below, and the SAI.
Whenever an investment objective, policy or
restriction of a
Fund described in this Prospectus or in the SAI states
a maximum
percentage of assets that may be invested in a security
or other
asset or describes a policy regarding quality
standards, that
percentage limitation or standard will, unless
otherwise
indicated, apply to the Fund only at the time a
transaction takes
place. Thus, for example, if a percentage limitation
is adhered
to at the time of investment, a later increase or
decrease in the
percentage that results from circumstances not
involving any
affirmative action by the Fund will not be considered a
violation.
IVY CANADA FUND: Ivy Canada Fund seeks long-term
capital
appreciation by investing primarily in equity
securities of
Canadian companies. Canada is one of the world's
leading
industrial countries and a major exporter of
agricultural
products. The country is rich in natural resources such
as zinc,
uranium, nickel, gold, silver, aluminum, iron and
copper, and
forest covers over 44% of land areas, making Canada a
leading
world producer of newsprint. Canada is also a major
producer of
hydroelectricity, oil and gas.
To meet its objective, the Fund normally invests
at least
65% of its total assets in Canadian equity securities
(i.e.,
common and preferred stock, securities convertible into
common
stock and common stock purchase warrants) listed on
Canadian
stock exchanges or traded over-the-counter in Canada.
Canadian
issuers are companies (i) organized under the laws of
Canada,
(ii) for which the principal securities trading market
is in
Canada, (iii) which derive at least 50% of their
revenues or
profits from goods produced or sold, investments made
or services
performed in Canada, or (iv) which have at least 50% of
their
assets situated in Canada. The balance of the Fund's
assets
ordinarily are invested in (i) bills and bonds of the
Canadian
Government and the governments of the provinces or
municipalities
of Canada, (ii) high quality notes and debentures of
Canadian
companies (i.e., those rated Aaa or Aa by Moody's
Investor
Services, Inc. ("Moody's) or AAA or AA by Standard and
Poor's
Corporation ("S&P"), or if not rated, judged to be of
comparable
quality by Mackenzie Financial Corporation ("MFC"), the
Fund's
Adviser), (iii) foreign securities (including sponsored
or
unsponsored American Depository Receipts ("ADRs")),
(iv) U.S.
Government securities, (v) equity securities and
investment-grade
debt securities (i.e., those rated Baa or higher by
Moody's or
BBB or higher by S&P, or if unrated, are considered by
MFC to be
of comparable quality) of U.S. companies, and (vi) zero
coupon
bonds that meet these credit quality standards.
The Fund may purchase securities on a
"when-issued" or firm
commitment basis, engage in currency exchange
transactions and
enter into forward foreign currency contracts. The
Fund may also
invest up to 10% of its assets in (i) other investment
companies
and (ii) restricted and other illiquid securities
(although the
Fund may not invest more than 5% of its assets in
restricted
securities).
For temporary defensive purposes, the Fund may
invest
without limit in U.S. or Canadian dollar-denominated
money market
securities issued by entities organized in the U.S. or
Canada,
such as (i) obligations issued or guaranteed by the
Canadian
Government or the governments of the provinces or
municipalities
of Canada (or their agencies or instrumentalities), (i)
finance
company and corporate commercial paper (and other
short-term
corporate obligations rated Prime-1 by Moody's or A or
better by
S&P, or if not rated, considered by MFC to be of
comparable
quality), (iii) obligations of banks (i.e.,
certificates of
deposit, time deposits and bankers' acceptances) of
banks
considered creditworthy by MFC under guidelines
approved by the
Trust's Board of Trustees, and (iv) repurchase
agreements with
broker-dealers and banks. For temporary or emergency
purposes,
the Fund may also borrow up to 10% of the value of its
total
assets from banks.
IVY CHINA REGION FUND: 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 seeks to meet its objective primarily by investing
in the
equity securities of companies that are expected to
benefit from
the economic development and growth of China, Hong Kong
and
Taiwan. A significant percentage of the Fund's assets
may also
be invested in the securities markets of South Korea,
Singapore,
Malaysia, Thailand, Indonesia and the Philippines
(collectively,
with China, Hong Kong and Taiwan, the "China Region").
The Fund normally invests at least 65% of its
total assets
in "Greater China growth companies," defined as
companies (a)
that are organized in or for which the principal
securities
trading markets are the China Region; (b) that have at
least 50%
of their assets in one or more China Region countries
or derive
at least 50% of their gross sales revenues or profits
from
providing goods or services to or from within one or
more China
Region countries; or (c) that have at least 35% of
their assets
in China, Hong Kong or Taiwan, derive at least 35% of
their gross
sales revenues or profits from providing goods or
services to or
from within these three countries, or have significant
manufacturing or other operations in these countries.
IMI's
determination as to whether a company qualifies as a
Greater
China growth company is based primarily on information
contained
in financial statements, reports, analyses and other
pertinent
information (some of which may be obtained directly
from the
company). The Fund may invest 25% or more of its total
assets in
the securities of issuers located in any one China
Region
country, and currently expects to invest more than 50%
of its
total assets in Hong Kong.
The balance of the Fund's assets ordinarily are
invested in
(i) certain investment-grade debt securities and (ii)
the equity
securities of "China Region associated companies,"
which are
companies that do not meet the definition of a Greater
China
growth company, but whose current or expected
performance, based
on certain identified factors (such as the growth
trends in the
location of a company's assets and the sources of its
revenues
and profits), is judged by IMI to be strongly
associated with the
China Region. The investment-grade debt securities in
which the
Fund may invest include (a) obligations of the U.S.
Government or
its agencies or instrumentalities, (b) obligations of
U.S. banks
and other banks organized and existing under the laws
of Hong
Kong, Taiwan or countries that are members of the
Organization
for Economic Cooperation and Development ("OECD"), and
(c)
obligations denominated in any currency issued by
international
development institutions and Hong Kong, Taiwan and OECD
member
governments and their agencies and instrumentalities,
as well as
repurchase agreements with respect to any of the
foregoing
instruments. The Fund may also invest in zero coupon
bonds, and
corporate bonds rated Baa or higher by Moody's or BBB
or higher
by S&P (or if unrated, are considered by IMI to be of
comparable
quality).
The Fund may invest less than 35% of its net
assets in debt
securities rated Ba or below by Moody's or BB or below
by S&P,
or, if unrated, are considered by IMI to be of
comparable quality
(commonly referred to as "high yield" or "junk" bonds).
The Fund
will not invest in debt securities rated less than C by
either
Moody's or S&P. (As of the fiscal year ended December
31, 1995,
the Fund held no low-rated debt securities in its
portfolio.)
The Fund may lend portfolio securities valued at
not more
than 30% of the Fund's total assets, invest in
warrants, purchase
securities on a "when-issued" or firm commitment basis,
engage in
currency exchange transactions and enter into forward
foreign
currency contracts. The Fund may also invest up to 10%
of its
assets in (i) other investment companies that invest in
equity
securities of Greater China growth companies or China
Region
associated companies, and (ii) restricted and other
illiquid
securities (although the Fund may not invest more than
5% of its
assets in restricted securities).
For temporary defensive purposes and during
periods when IMI
believes that circumstances warrant, the Fund may
reduce its
position in Greater China growth companies and Greater
China
associated companies and increase its investment in
cash and
liquid debt securities, such as U.S. Government
securities, bank
obligations, commercial paper, short-term notes and
repurchase
agreements. For temporary or emergency purposes, the
Fund may
also borrow up to 10% of the value of its total assets
from
banks.
The Fund may purchase put and call options on
securities and
stock indices, provided the premium paid for such
options does
not exceed 5% of the Fund's net assets. The Fund may
also sell
covered put options with respect to up to 10% of the
value of
its net assets, and my write covered call options so
long as not
more than 25% of the Fund's net assets is subject to
being
purchased upon the exercise of the calls. For hedging
purposes
only, the Fund may engage in transactions in stock
index futures
contracts, provided that the Fund's aggregate
investment in such
contracts does not exceed 15% of its total assets.
IVY GLOBAL FUND: The Fund seeks long-term capital
growth
through a flexible policy of investing in stocks and
debt
obligations of companies and governments of any nation.
Any
income realized will be incidental. Under normal
conditions, the
Fund invests at least 65% of its total assets in
issuers
domiciled in at least three different nations
(including the
United States). Although the Fund generally invests in
common
stock, it may also invest in preferred stocks,
sponsored or
unsponsored ADRs and investment-grade debt securities
(i.e.,
those rated Baa or higher by Moody's or BBB or higher
by S&P, or
if unrated, are considered by IMI to be of comparable
quality),
including corporate bonds, notes, debentures,
convertible bonds
and zero coupon bonds.
The Fund may lend portfolio securities valued at
not more
than 30% of the Fund's total assets, invest in
warrants, purchase
securities on a "when-issued" or firm commitment basis,
engage in
currency exchange transactions and enter into forward
foreign
currency contracts. The Fund may also invest up to 10%
of its
assets in (i) other investment companies and (ii)
restricted and
other illiquid securities (although the Fund may not
invest more
than 5% of its assets in restricted securities).
For temporary defensive purposes and during
periods when IMI
believes that circumstances warrant, the Fund may
invest without
limit in U.S. Government securities, obligations issued
by
domestic or foreign banks (including certificates of
deposit,
time deposits and bankers' acceptances), and domestic
or foreign
commercial paper (which, if issued by a corporation,
must be
rated Prime-1 by Moody's or A-1 by S&P, or if unrated
has been
issued by a company that at the time of investment has
an
outstanding debt issue rated AAA or AA by S&P or Aaa or
Aa by
Moody's). The Fund may also enter into repurchase
agreements,
and, for temporary or emergency purposes, may borrow up
to 10% of
the value of its total assets from banks.
The Fund may purchase put and call options stock
indices,
provided the premium paid for such options does not
exceed 10% of
the Fund's net assets. The Fund may also sell covered
put options
with respect to up to 50% of the value of its net
assets, and my
write covered call options so long as not more than 20%
of the
Fund's net assets is subject to being purchased upon
the exercise
of the calls. For hedging purposes only, the Fund may
engage in
transactions in (and options on) stock index and
foreign currency
futures contracts, provided that the Fund's aggregate
investment
in such contracts does not exceed 20% of its total
assets.
IVY INTERNATIONAL FUND: The Fund's principal
objective is
long-term capital growth primarily through investment
in equity
securities. Consideration of current income is
secondary to this
principal objective. It is anticipated that at least
65% of the
Fund's total assets will be invested in common stocks
(and
securities convertible into common stocks) principally
traded in
European, Pacific Basin and Latin America markets. For
temporary
defensive purposes, the Fund may also invest in equity
securities
principally traded in U.S. markets. The Fund's
subadviser,
Northern Cross Investments Limited (the "Subadviser"),
invests
the Fund's assets in a variety of economic sectors,
industry
segments and individual securities in order to reduce
the effects
of price volatility in any one area and to enable
shareholders to
participate in markets that do not necessarily move in
concert
with U.S. markets. The Subadviser seeks to identify
rapidly
expanding foreign economies, and then searches out
growing
industries and corporations, focusing on companies with
established records. Individual securities ares
selected based
on value indicators, such as a low price-earnings
ratio, and are
reviewed for fundamental financial strength. Companies
in which
investments are made will generally have at least $100
million in
capitalization and a solid history of operations.
When economic or market conditions warrant, the
Fund may
invest without limit in U.S. Government securities,
investment-
grade debt securities (i.e., those rated Baa or higher
by Moody's
or BBB or higher by S&P, or if unrated, are considered
by the
Subadviser to be of comparable quality), preferred
stocks,
warrants, or cash or cash equivalents such as bank
obligations
(including certificates of deposit and banders'
acceptances),
commercial paper, short-term notes and repurchase
agreements.
For temporary or emergency purposes, the Fund may
borrow up to
10% of the value of its total assets from banks.
The Fund may lend portfolio securities valued at
not more
than 30% of the Fund's total assets, engage in currency
exchange
transactions and enter into forward foreign currency
contracts.
The Fund may also invest up to 10% of its assets in (i)
other
investment companies and (ii) restricted and other
illiquid
securities (although the Fund may not invest more than
5% of its
assets in restricted securities).
The Fund may purchase put and call options on
securities and
stock indices, provided the premium paid for such
options does
not exceed 5% of the Fund's net assets. The Fund may
also sell
covered put options with respect to up to 10% of the
value of its
net assets, and my write covered call options so long
as not more
than 25% of the Fund's net assets is subject to being
purchased
upon the exercise of the calls. For hedging purposes
only, the
Fund may engage in transactions in (and options on)
stock index
and foreign currency futures contracts, provided that
the Fund's
aggregate investment in such contracts does not exceed
15% of its
total assets.
IVY LATIN AMERICA STRATEGY FUND: The Fund has a
principal
investment objective of long-term capital growth.
Consideration
of current income is secondary to this principal
objective.
Under normal conditions the Fund invests at least 65%
of its
total assets in securities issued in Latin America,
which for
purposes of this Prospectus is defined as Mexico,
Central
America, South America and the Spanish-speaking islands
of the
Caribbean. Securities of Latin American issuers
include (a)
securities of companies organized under the laws of a
Latin
American country or for which the principal securities
trading
market is in Latin America; (b) securities that are
issued or
guaranteed by the government of a Latin American
country, its
agencies or instrumentalities, political subdivisions
or the
country's central bank; (c) securities of a company,
wherever
organized, where at least 50% of the 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
Latin
America; or (d) any of the preceding types of
securities in the
form of depository shares. The Fund may participate in
markets
throughout Latin America, and it is expected that the
Fund will
be invested at all times in at least three countries.
Under
present conditions, the Fund expects to focus its
investments in
Argentina, Brazil, Chile, Mexico and Venezuela, which
IMI
believes are the most developed capital markets in
Latin America.
The Fund does not expect to concentrate its investments
in any
particular industry.
The Fund's equity investments consist of common
stock,
preferred stock (either convertible or
non-convertible),
sponsored or unsponsored depository receipts (including
ADRs,
American Depository Shares, and Global Depository
Shares) and
warrants (any of which may be purchased through
rights). The
Fund's equity securities may be listed on securities
exchanges,
traded over-the-counter, or have no organized market.
The Fund may invest in debt securities (including
zero
coupon bonds) when IMI anticipates that the potential
for capital
appreciation from debt securities is likely to equal or
exceed
that of equity securities (e.g., a favorable change in
relative
foreign exchange rates, interest rate levels or the
creditworthiness of issuers). These include debt
securities
issued by Latin American Governments ("Sovereign
Debt"). Most of
the debt securities in which the Fund may invest are
not rated,
and those that are rated are expected to be below
investment-
grade (i.e., rated Ba or below by Moody's or BB or
below by S&P,
or considered by IMI to be of comparable quality), and
are
commonly referred to as "high yield" or "junk" bonds.
(As of the
fiscal year ended December 31, 1995, the Fund held no
debt
securities in its portfolio.)
To meet redemptions, or while the Fund is
anticipating
investments in Latin American securities, the Fund may
hold cash
or cash equivalents such as bank obligations (including
certificates of deposit and banders' acceptances),
commercial
paper, short-term notes and repurchase agreements. For
temporary
defensive or emergency purposes, the Fund may (i)
invest without
limit in such instruments, and (ii) borrow up to
one-third of the
value of its total assets from banks (but may not
purchase
securities at any time during which the value of the
Fund's
outstanding loans exceeds 10% of the value of the
Fund's
assets).
The Fund may lend portfolio securities valued at
not more
than 30% of the Fund's total assets, invest in
warrants, purchase
securities on a "when-issued" or firm commitment basis,
engage in
currency exchange transactions and enter into forward
foreign
currency contracts. The Fund may also invest up to 10%
of its
assets in (i) other investment companies that invest in
Latin
American securities, and (ii) restricted and other
illiquid
securities (although the Fund may not invest more than
5% of its
assets in restricted securities). The Fund will treat
any Latin
American securities that are subject to restrictions on
repatriation for more than seven days, as well as any
securities
issued in connection with Latin American debt
conversion programs
that are restricted to remittance of invested capital
or profits,
as illiquid securities for purposes of this
limitation.
The Fund may purchase put and call options on
securities and
stock indices, provided the premium paid for such
options does
not exceed 5% of the Fund's net assets. The Fund may
also sell
covered put options with respect to up to 10% of the
value of
its net assets, and my write covered call options so
long as not
more than 25% of the Fund's net assets is subject to
being
purchased upon the exercise of the calls. For hedging
purposes
only, the Fund may engage in transactions in (and
options on)
stock index and foreign currency futures contracts,
provided that
the Fund's aggregate investment in such contracts does
not exceed
15% of its total assets.
IVY NEW CENTURY FUND: The Fund's principal
objective is
long-term growth. Consideration of current income is
secondary
to this principal objective. In pursuing its objective,
the Fund
invests primarily in the equity securities of companies
that IMI
believes will benefit from the economic development and
growth of
emerging markets. The Fund considers countries having
emerging
markets to be those that (i) are generally considered
to be
"developing" or "emerging" by the World Bank and the
International Finance Corporation, or (ii) are
classified by the
United Nations (or otherwise regarded by their
authorities) as
"emerging." Under normal market conditions, the Fund
invests at
least 65% of its total assets in equity securities
(including
common and preferred stocks, convertible debt
obligations,
warrants, options, rights and depository receipts that
are listed
on stock exchanges or traded over-the-counter) of
"Emerging
Market growth companies," which are defined as
companies (a) for
which the principal securities trading market is an
emerging
market (as defined above), (b) that (alone or on a
consolidated
basis) derives 50% or more of its total revenue either
from
goods, sales or services in emerging markets, or (c)
that are
organized under the laws of (and with a principal
office in) an
emerging market country.
In recent years, many emerging market countries
around the
world have undergone political changes that have
reduced
government's role in economic and personal affairs and
have
stimulated investment and growth. Historically, there
is a strong
direct correlation between economic growth and stock
market
returns. While this is no guarantee of future
performance, IMI
believes that investment opportunities (particularly in
the
energy, environmental services, natural resources,
basic
materials, power, telecommunications and transportation
industries) may result within the evolving economies of
emerging
market countries from which the Fund and its
shareholders will
benefit.
The Fund normally invests its assets in the
securities of
issuers located in at least three emerging market
countries, and
may invest 25% or more of its total assets in the
securities of
issuers located in any one country. IMI's
determination as to
whether a company qualifies as a Emerging Markets
growth company
is based primarily on information contained in
financial
statements, reports, analyses and other pertinent
information
(some of which may be obtained directly from the
company).
For purposes of capital appreciation, the Fund may
invest up
to 35% of its assets in (i) debt securities of
government or
corporate issuers in emerging market countries, (ii)
equity and
debt securities of issuers in developed countries
(including the
United States), and (iii) cash or cash equivalents such
as bank
obligations (including certificates of deposit and
banders'
acceptances), commercial paper, short-term notes and
repurchase
agreements. For temporary defensive purposes, the Fund
may invest
without limit in such instruments. The Fund may also
invest in
zero coupon bonds and purchase securities on a
"when-issued" or
firm commitment basis.
The Fund will not invest more than 20% of its
total assets
in debt securities rated Ba or lower by Moody's or BB
or lower by
S&P, or if unrated, are considered by IMI to be of
comparable
quality (commonly referred to as "high yield" or "junk"
bonds).
(As of the fiscal year ended December 31, 1995, the
Fund held no
low-rated debt securities in its portfolio.)
For temporary or emergency purposes, the Fund may
borrow up
to one-third of the value of its total assets from
banks, but may
not purchase securities at any time during which the
value of the
Fund's outstanding loans exceeds 10% of the value of
the Fund's
assets. The Fund may lend portfolio securities valued
at not
more than 30% of the Fund's total assets, engage in
currency
exchange transactions and enter into forward foreign
currency
contracts. The Fund may also invest (i) other
investment
companies that invest in Emerging Markets growth
companies, and
(ii) up to 15% of its assets in restricted and other
illiquid
securities (although the Fund may not invest more than
5% of its
assets in restricted securities).
The Fund may purchase put and call options on
securities and
stock indices, provided the premium paid for such
options does
not exceed 5% of the Fund's net assets. The Fund may
also sell
covered put options with respect to up to 10% of the
value of
its net assets, and my write covered call options so
long as not
more than 25% of the Fund's net assets is subject to
being
purchased upon the exercise of the calls. For hedging
purposes
only, the Fund may engage in transactions in (and
options on)
stock index and foreign currency futures contracts,
provided that
the Fund's aggregate investment in such contracts does
not exceed
15% of its total assets.
RISK FACTORS AND INVESTMENT TECHNIQUES
SPECIAL CONSIDERATIONS RELATED TO IVY CANADA FUND:
The
economy of Canada is strongly influenced by the
activities of
companies involved in the production and processing of
natural
resources, particularly those involved in the energy
industry,
industrial materials (e.g., chemicals, base metals,
timber and
paper) and agricultural materials (e.g., grain
cereals). The
securities of companies in the energy industry are
subject to
changes in value and dividend yield, which depend, to a
large
extent, on the price and supply of energy fuels. Rapid
price and
supply fluctuations may be caused by events relating to
international politics, energy conservation and the
success of
exploration projects.
SPECIAL CONSIDERATIONS RELATED TO IVY CHINA REGION
FUND:
Investors should realize that China Region countries
may be
subject to a greater degree of economic, political and
social
instability than is the case in the United States or
other
developed countries. Among the factors causing this
instability
are (i) authoritarian governments or military
involvement in
political and economic decision making, (ii) popular
unrest
associated with demands for improved political,
economic and
social conditions, (iii) internal insurgencies, (iv)
hostile
relations with neighboring countries, (v) ethnic,
religious and
racial disaffection, and (vi) changes in trading
status, any one
of which could disrupt the principal financial markets
in which
the Fund invests and adversely affect the value of its
assets.
In addition, several China Region countries have had
hostile
relations with neighboring nations. For example, China
continues
to claim sovereignty over Taiwan, and is scheduled to
assume
sovereignty over Hong Kong in 1997.
China Region countries tend to be heavily
dependent on
international trade, as a result of which their markets
are
highly sensitive to protective trade barriers and the
economic
conditions of their principal trading partners (i.e.,
the United
States, Japan and Western European countries).
Protectionist
trade legislation, reduction of foreign investment in
China
Region economies and general declines in the
international
securities markets could have a significant adverse
effect on the
China Region securities markets. In addition, certain
China
Region countries have in the past failed to recognize
private
property rights and have at times nationalized or
expropriated
the assets of private companies. There is a heightened
risk in
these countries that such adverse actions might be
repeated.
To take advantage of potential growth
opportunities, the
Fund might have significant investments in companies
with
relatively small market capitalization. Securities of
smaller
companies may be subject to more abrupt or erratic
market
movements than the securities of larger more
established
companies, both because they tend to be traded in lower
volume
and because the companies are subject to greater
business risk.
In addition, to the extent that any China Region
country
experiences rapid increases in its money supply or
investment in
equity securities for speculative purposes, the equity
securities
traded in such countries may trade at price-earning
multiples
higher than those of comparable companies trading on
securities
markets in the United States, which may not be
sustainable.
Finally, restriction on foreign investment exists to
varying
degrees in some China Region countries. Where such
restrictions
apply, investments may be limited and may increase the
Fund's
expenses. The SAI contains additional information
concerning the
risks associated with investing in the China Region.
"Selected
Economic and Market Data" for China Region countries
also appears
in an Appendix to this Prospectus.
SPECIAL CONSIDERATIONS RELATED TO IVY GLOBAL FUND
AND IVY
INTERNATIONAL FUND, AND IVY NEW CENTURY FUND: The
risks of
investing in foreign securities (described below) are
likely to
be intensified in the case of investments in issuers
domiciled or
doing substantial business in countries with emerging
or
developing economies ("emerging markets"). For example,
countries
with emerging markets may have relatively unstable
governments
and therefore be susceptible to sudden adverse
government action
(such as nationalization of businesses, restrictions on
foreign
ownership or prohibitions against repatriation of
assets).
Security prices in emerging markets can also be
significantly
more volatile than in the more developed nations of the
world,
and communications between the U.S. and emerging market
countries
may be unreliable, increasing the risk of delayed
settlements of
portfolio transactions or loss of certificates for
portfolio
securities. Delayed settlements could cause a Fund to
miss
attractive investment opportunities or impair its
ability to
dispose of portfolio securities, resulting in a loss if
the value
of the securities subsequently declines. Finally, many
emerging
markets have experienced and continue to experience
high rates of
inflation. In certain countries, inflation has at
times
accelerated rapidly to hyperinflationary levels,
creating a
negative interest rate environment and sharply eroding
the value
of outstanding financial assets in those countries. In
light of
the Ivy New Century Fund's concentration in equity
securities of
Emerging Market growth companies (as defined above), an
investment in the Fund should be considered
speculative.
SPECIAL CONSIDERATIONS RELATED TO IVY LATIN
AMERICA STRATEGY
FUND: The securities markets of Latin American
countries are
substantially smaller, less developed, less liquid and
more
volatile than the major securities markets in the
United States.
This could cause prices to be erratic for reasons apart
from
factors that affect the quality of the securities. For
example,
limited market size may cause prices to be unduly
influenced by
traders who control large positions. Adverse publicity
and
investor perception, whether or not based on
fundamental
analysis, may decrease the value and liquidity of
portfolio
securities, especially in these markets.
For many years, most Latin American countries have
experienced substantial (and in some periods extremely
high)
rates of inflation, which have had and may continue to
have very
negative effects on the economies and securities
markets of these
countries. In addition, certain Latin American
countries are
among the largest debtors to commercial banks and
foreign
governments, and some have declared moratoria on the
payment of
principal and/or interest on external debt.
Accordingly, the
Sovereign Debt instruments in which the Fund may invest
involve a
high degree of risk and should be considered equivalent
in
quality to debt securities rated below investment-grade
by
Moody's and S&P.
The Fund is classified as a non-diversified
investment
company under the 1940 Act, and therefore may invest,
with
respect to 50% of its assets, more than 5% its assets
in the
securities of any one issuer. Consequently, the
performance of a
single issuer in which the Fund has invested may have a
more
significant effect on the overall performance of the
Fund than if
the Fund was a diversified company.
BANK OBLIGATIONS: The bank obligations in which
the Funds
may invest include certificates of deposit, bankers'
acceptances,
and other short-term debt obligations. Investments in
certificates of deposit and bankers' acceptances are
limited to
obligations of (i) banks having total assets in excess
of $1
billion, and (ii) other banks if the principal amount
of the
obligation is fully insured by the Federal Deposit
Insurance
Corporation ("FDIC"). Investments in certificates of
deposit of
savings associations are limited to obligations of
Federal or
state-chartered institutions whose total assets exceed
$1 billion
and whose deposits are insured by the FDIC.
BORROWING: Borrowing may exaggerate the effect on
a Fund's
net asset value of any increase or decrease in the
value of the
Fund's portfolio securities. Money borrowed will be
subject to
interest costs (which may include commitment fees
and/or the cost
of maintaining minimum average balances).
COMMERCIAL PAPER: Commercial paper represents
short-term
unsecured promissory notes issued in bearer form by
bank holding
companies, corporations, and finance companies. Each
Fund's
investments in commercial paper are limited to
obligations rated
Prime-1 by companies having an outstanding debt issue
currently
rated Aaa or Aa by Moody's or AAA or AA by S&P.
CONVERTIBLE SECURITIES: The convertible securities
in which
the Funds may invest include corporate bonds, notes,
debentures
and other securities convertible into common stocks.
Because
convertible securities can be converted into equity
securities,
their values will normally vary in some proportion with
those of
the underlying equity securities. Convertible
securities usually
provide a higher yield than the underlying equity,
however, so
that the price decline of a convertible security may
sometimes be
less substantial than that of the underlying equity
security.
DEBT SECURITIES, IN GENERAL: Investment in debt
securities,
including municipal securities, involves both interest
rate and
credit risk. Generally, the value of debt instruments
rises and
falls inversely with interest rates. 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. Bonds with longer maturities generally are
more
volatile than bonds with shorter maturities. The market
value of
debt securities also varies according to the relative
financial
condition of the issuer. In general, lower-quality
bonds offer
higher yields due to the increased risk that the issuer
will be
unable to meet its obligations on interest or principal
payments
at the time called for by the debt instrument.
U.S. GOVERNMENT SECURITIES: U.S. Government
securities
are obligations of, or guaranteed by, the U.S.
Government, its
agencies or instrumentalities. Such securities include:
(1)
direct obligations of the U.S. Treasury (such as
Treasury bills,
notes, and bonds) and (2) Federal agency obligations
guaranteed
as to principal and interest by the U.S. Treasury (such
as GNMA
certificates, which are mortgage-backed securities).
When such
securities are held to maturity, the payment of
principal and
interest is unconditionally guaranteed by the U.S.
Government,
and thus they are of the highest possible credit
quality. U.S.
Government securities that are not held to maturity are
subject
to variations in market value caused by fluctuations in
interest
rates.
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. 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.
INVESTMENT-GRADE DEBT SECURITIES: Bonds
rated Aaa by
Moody's and AAA by S&P are judged to be of the best
quality
(i.e., capacity to pay interest and repay principal is
extremely
strong). Bonds rated Aa/AA are considered to be of
high quality
(i.e., capacity to pay interest and repay interest is
very strong
and differs from the highest rated issues only to a
small
degree). Bonds rated A are viewed as having many
favorable
investment attributes, but elements may be present that
suggest a
susceptibility to the adverse effects of changes in
circumstances
and economic conditions than debt in higher rated
categories.
Bonds rated Baa/BBB (considered by Moody's to be
"medium grade"
obligations) are considered to have an adequate
capacity to pay
interest and repay principal, but certain protective
elements may
be lacking (i.e., such bonds lack outstanding
investment
characteristics and have some speculative
characteristics).
LOW-RATED DEBT SECURITIES: Securities rated
lower than
Baa or BBB, and comparable unrated securities (commonly
referred
to as "high yield" or "junk" bonds), are considered by
major
credit-rating organizations to have predominately
speculative
characteristics with respect to the issuer's capacity
to pay
interest and repay principal. Investors in Ivy Latin
America
Strategy Fund and Ivy New Century Fund, in particular,
should be
willing to accept the special risks associated with
these
securities.
While high yield debt securities are likely to
have some
quality and protective characteristics, these qualities
are
largely outweighed by the risk of exposure to adverse
conditions
and other uncertainties. Accordingly, investments in
such
securities, while generally providing for greater
income and
potential opportunity for gain than investments in
higher-rated
securities, also entail greater risk (including the
possibility
of default or bankruptcy of the issuer of such
securities) and
generally involve greater price volatility than
securities in
higher rating categories. IMI seeks to reduce risk
through
diversification (including investments in foreign
securities),
credit analysis and attention to current developments
and trends
in both the economy and financial markets. Should the
rating of a
portfolio security be downgraded, IMI will determine
whether it
is in the affected Fund's best interest to retain or
dispose of
the security (unless the security is downgraded below
the rating
of C, in which case IMI most likely would dispose of
the security
based on then existing market conditions). For
additional
information regarding the risks associated with
investing in high
yield bonds, see the SAI (and, in particular, Appendix
A, which
contains a more complete description of the ratings
assigned by
Moody's and S&P).
FOREIGN SECURITIES: The foreign securities in
which the
Funds invest may include non-U.S. dollar-denominated
corporate
debt securities, Eurodollar securities, sponsored or
unsponsored
ADRs and debt securities issued, assumed or guaranteed
by foreign
governments (or political subdivisions or
instrumentalities
thereof). Investors should consider carefully the
special risks
that arise in connection with investing in securities
issued by
companies and governments of foreign nations, which are
in
addition to those risks that are associated with the
Funds'
investments, generally.
In many foreign countries, there is less
regulation of
business and industry practices, stock exchanges,
brokers and
listed companies than in the United States. For
example, foreign
companies are not generally subject to uniform
accounting and
financial reporting standards, and foreign securities
transactions may be subject to higher brokerage costs.
There also
tends to be less publicly available information about
issuers in
foreign countries, and foreign securities markets of
many of the
countries in which the Funds may invest may be smaller,
less
liquid and subject to greater price volatility than
those in the
United States. These risks may be intensified in
certain emerging
markets countries (e.g., in Latin America and parts of
Europe).
Generally, price fluctuations in the Funds' foreign
security
holdings are likely to be high relative to those of
securities
issued in the United States.
Other risks include the possibility of
expropriation,
nationalization or confiscatory taxes, foreign exchange
controls
(which may include suspension of the ability to
transfer currency
from a given country), default in foreign government
securities,
high rates of inflation (especially in emerging markets
countries) difficulties in enforcing foreign judgments,
political
or social instability, or other developments that could
adversely
affect the Funds' foreign investments.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS: A Fund
usually
effects its currency exchange transactions on a spot
(i.e., cash)
basis at the spot rate prevailing in the foreign
exchange market.
However, some price spread on currency exchange (e.g.,
to cover
service charges) is usually incurred when a Fund
converts assets
from one currency to another. A Fund may also be
affected
unfavorably by the relative rates of exchange between
the
currencies of different nations.
FORWARD FOREIGN CURRENCY CONTRACTS: A forward
foreign
currency contract involves an obligation to purchase or
sell a
specific currency at a future date at a predetermined
price.
When a Fund enters into a forward foreign currency
contract, it
will hold cash, debt instruments or equity securities
in a
segregated account with its custodian in an amount
equal (on a
marked-to-market basis) to the amount of the
commitments under
the contract. Although these contracts are intended to
minimize
the risk of loss due to a decline in the value of the
hedged
currencies, they also tend to limit any potential gain
that might
result should the value of the currencies increase. In
addition,
there may be an imperfect correlation between a Fund's
portfolio
holdings of securities denominated in a particular
currency and
forward contracts entered into by the Fund, which may
prevent the
Fund from achieving the intended hedge or expose the
Fund to the
risk of currency exchange loss.
LENDING OF PORTFOLIO SECURITIES: Loans of
securities by a
Fund are collateralized by cash, letters of credit or
securities
issued or guaranteed by the U.S. Government or its
agencies or
instrumentalities. There may be risks of delay in
receiving
additional collateral, or risks of delay in recovery of
the
securities or even loss of rights in the collateral,
should the
borrower of the securities fail financially.
OPTIONS AND FUTURES TRANSACTIONS: The Funds may
use various
techniques to increase or decrease their exposure to
changing
security prices, currency exchange rates, commodity
prices, or
other factors that affect the value of the Funds'
securities.
These techniques may involve derivative transactions
such as
purchasing put and call options, selling call options,
and
engaging in transactions in currency rate futures,
stock index
futures and related options.
A Fund may invest in options on securities in
accordance
with its stated investment objective and policies (see
above). A
put option is a short-term contract that gives the
purchaser of
the option, in return for a premium, the right to sell
the
underlying security or currency to the seller of the
option at a
specified price during the term of the option. A call
option is a
short-term contract that gives the purchaser the right
to buy the
underlying security or currency from the seller of the
option at
a specified price during the term of the option. An
option on a
stock index gives the purchaser the right to receive
from the
seller cash equal to the difference between the closing
price of
the index and the exercise price of the option. When a
Fund
writes a put or call option, it will segregate assets,
such as
cash, U.S. Government securities or other high grade
debt
securities, or "cover" its position in accordance with
the
Investment Company Act of 1940, as amended (the "1940
Act").
A Fund may also enter into futures transactions in
accordance with its stated investment objective and
policies. An
interest rate futures contract is an agreement between
two
parties to buy or sell a specified debt security at a
set price
on a future date. A stock index futures contract is an
agreement
to take or make delivery of an amount of cash based on
the
difference between the value of the index at the
beginning and at
the end of the contract period. When a Fund enters into
a futures
contract, it will make any necessary "margin" deposits
and
segregate assets, such as cash, U.S. Government
securities or
other liquid high- grade debt obligations, to "cover"
its
position in accordance with the 1940 Act.
Investors should be aware that the risks
associated with
the use of options and futures are considerable.
Options and
futures transactions generally involve a small
investment of cash
relative to the magnitude of the risk assumed, and
therefore
could result in a significant loss to a Fund if IMI
judges market
conditions incorrectly or employs a strategy that does
not
correlate well with the Fund's investments. A Fund may
also
experience a significant loss if it is unable to close
a
particular position due to the lack of a liquid
secondary market.
For further information regarding the use of options
and futures
transactions and any associated risks, see the SAI.
REPURCHASE AGREEMENTS: Repurchase agreements are
agreements
under which a Fund buys a money market instrument and
obtains a
simultaneous commitment from the seller to repurchase
the
instrument at a specified time and agreed-upon yield.
Each Fund
may enter into repurchase agreements with banks or
broker-dealers
deemed to be creditworthy by IMI under guidelines
approved by the
Board of Trustees. A Fund could experience a delay in
obtaining
direct ownership of the underlying collateral, and
might incur a
loss if the value of the security should decline.
RESTRICTED AND ILLIQUID SECURITIES: There may be
a lapse of
time between a Fund's decision to sell a restricted or
illiquid
security and the point at which the Fund is permitted
or able to
sell the security. If adverse market conditions were
to develop
during that period, the Fund might obtain a price less
favorable
than the price that prevailed when it decided to sell.
In
addition, issuers of restricted and other illiquid
securities may
not be subject to the disclosure and other investor
protection
requirements that would apply if their securities were
publicly
traded.
SHARES OF OTHER INVESTMENT COMPANIES: As a
shareholder of
an investment company, a Fund will bear its ratable
share o f the
investment company's expenses (including management
fees, in the
case of a management investment company).
"WHEN-ISSUED" SECURITIES AND FIRM COMMITMENTS:
Purchasing
securities on a "when-issued" basis involves a risk of
loss if
the value of the security to be purchased declines
prior to the
settlement date.
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. Since the interest on such bonds is, in effect,
compounded, they are subject to greater market value
fluctuations
in response to changing interest rates than debt
securities that
distribute income regularly. In addition, for Federal
income tax
purposes a Fund generally recognizes and is required to
distribute income generated by zero coupon bonds
currently in the
amount of the unpaid accrued interest, even though the
actual
income will not yet have been received by the Fund.
ORGANIZATION AND MANAGEMENT OF THE FUNDS
Each of the Funds, other than Ivy Latin America
Strategy
Fund, is organized as a separate, diversified portfolio
of the
Trust, an open-end management investment company
organized as a
Massachusetts business trust on December 21, 1983. Ivy
Latin
America Strategy Fund is organized as a non-diversified
portfolio
(see "Special Considerations Related to Ivy Latin
America
Strategy Fund," above). The business and affairs of
each Fund are
managed under the direction of the Trustees.
Information about
the Trustees, as well as the Trust's executive
officers, may be
found in the SAI. The Trust has an unlimited number of
authorized
shares of beneficial interest, and currently has 13
series of
shares. Each of the Funds has three classes of shares
designated
as Class A, Class B and Class C, respectively. Ivy
International
Fund has a fourth class of shares designated as Class
I. Shares
of each Fund entitle their holders to one vote per
share (with
proportionate voting for fractional shares). The shares
of each
class represent an interest in the same portfolio of
Fund
investments. Each class of shares has a different Rule
12b-1
distribution policy and bears different distribution
fees. In
addition, Class I shares of Ivy International Fund bear
lower
administrative services and transfer agency fees than
the Fund's
Class A, Class B and Class C. Shares of each class have
equal
rights as to voting, redemption, dividends and
liquidation but
have exclusive voting rights with respect to their Rule
12b-1
distribution plans.
The Trust employs IMI to provide business
management
services to the Funds, and investment advisory services
to all of
the Funds other than Ivy Canada Fund (which is advised
by MFC).
Mackenzie Investment Management Inc. ("MIMI") provides
administrative and accounting services to the Funds;
Mackenzie
Ivy Funds Distribution, Inc. ("MIFDI") distributes the
Funds'
shares; Mackenzie Ivy Investor Services Corp. ("MIISC")
provides
transfer agent and shareholder-related services for the
Funds;
and Brown Brothers Harriman & Co. serves as the Funds'
custodian.
IMI, MIFDI and MIISC are wholly-owned subsidiaries of
MIMI. Until
January 31, 1995, MIMI served as investment adviser to
Ivy Canada
Fund and Ivy Global Fund. As of __________________,
1996, IMI
and MIMI had approximately $____ million and $____
million,
respectively, in assets under management. MIMI is a
subsidiary
of MFC, which has been an investment counsel and mutual
fund
manager in Toronto, Ontario, Canada for more than 25
years.
INVESTMENT MANAGER
IVY CANADA FUND: For IMI's business management
services,
the Fund pays IMI a monthly fee calculated on the basis
of the
Fund's average daily net assets during the preceding
month at an
annual rate of 0.50%. The Fund pays MFC a monthly fee
for
advisory services at the annual rate of 0.35% of the
Fund's
average daily net assets. The fees paid by the Fund
are higher
than the average fees paid by most funds.
IVY CHINA REGION FUND, IVY INTERNATIONAL FUND IVY,
LATIN
AMERICA STRATEGY FUND AND IVY NEW CENTURY FUND: In
exchange for
IMI's business management and investment advisory
services, each
Fund pays IMI a monthly fee, based on its average daily
net
assets during the preceding month, that is equal, on an
annual
basis, to 1.00% of its average daily net assets. The
fees paid by
the Funds are higher than the fees paid by other funds
with
similar investment objectives.
IMI voluntarily limits the total operating
expenses for Ivy
China Region Fund, Ivy Latin America Strategy Fund and
Ivy New
Century Fund (excluding Rule 12b-1 fees, interest
taxes,
brokerage commissions, litigation, indemnification, and
extraordinary expenses) to an annual rate of 1.95% of
the Funds'
average daily net assets, which may lower each Fund's
expenses
and increase its yield. This voluntary expense
limitation may be
terminated at any time, at which point the affected
Fund's
expenses may increase and its yield may be reduced
(depending on
the value of the Fund's total assets when the
termination
occurs).
Northern Cross Investments Limited ("Northern
Cross")
currently serves as subadviser for Ivy International
Fund, for
which the Fund pays a fee at the rate of 0.60% of the
Fund's
average annualized net assets. From July 1, 1990
through March
31, 1993 and from November 18, 1985 through June 30,
1990,
Boston Overseas Investors, Inc. ("BOI") and March &
Cunningham,
Inc., respectively, provided subadvisory services to
the Fund,
based on the same investment strategy and program
currently
employed by Northern Cross.
IVY GLOBAL FUND: In exchange for IMI's business
management
and investment advisory services, the Fund pays IMI a
monthly fee
(based on its average daily net assets during the
preceding
month) at the annual rate of 0.75% of the first $500
million in
average daily net assets and 0.75% on average daily net
assets
over $500 million. For the fiscal year ended December
31, 1995,
the Fund paid IMI an investment management fee of ____%
of the
Fund's average daily net assets. The fees paid by the
Fund are
higher than the average fees paid by other funds with
similar
investment objectives.
IMI voluntarily limits the Fund's total operating
expenses
(excluding Rule 12b-1 fees, interest taxes, brokerage
commissions, litigation, indemnification, and
extraordinary
expenses) to an annual rate of 1.95% of the Fund's
average daily
net assets, which may lower the Fund's expenses and
increase its
yield. This voluntary expense limitation may be
terminated at
any time, at which point the Fund's expenses may
increase and its
yield may be reduced (depending on the value of the
Fund's total
assets when the termination occurs).
ALL FUNDS: IMI pays all expenses that it incurs
in
rendering management services to the Funds. Each Fund
bears its
own operational costs. General expenses of the Trust
that are not
readily identifiable as belonging to a particular
series of the
Trust (or a particular class thereof) are allocated
among and
charged to each series based on its relative net asset
size.
Expenses that are attributable to a particular Fund (or
class
thereof) will be borne by that Fund (or class)
directly. The fees
payable to IMI are subject to any reimbursement or fee
waiver to
which IMI may agree (and to any applicable state
regulations that
may require IMI to reimburse a Fund if its aggregate
operating
expenses exceed certain limitations).
The ratio of operating expenses (after expense
reimbursements or fee waivers, where applicable) to
average daily
net assets for Class A and Class B shares of the Funds
(and Class
I, in the case of Ivy International Fund) for the
fiscal year
ended December 31, 1995 were ____% and ____%,
respectively, for
Ivy Canada Fund; ____% and ____%, respectively, for Ivy
China
Region Fund; ____% and ____%, respectively, for Ivy
Global Fund;
____%, ____% and ____%, respectively, for Ivy
International Fund;
____% and ____%, respectively, for Ivy Latin America
Strategy
Fund; and ____% and ____%, respectively, for Ivy New
Century
Fund. (No expense data is available for the same period
for Class
C shares, since the inception date for Class C shares
is April
30, 1996.)
PORTFOLIO MANAGEMENT: The following individuals
have
responsibilities for management of the Funds:
- Frederick Sturm, a Vice President of MFC, is the
portfolio
manager for Ivy Canada Fund. Mr. Sturm joined MFC
in 1983
and has 11 years of professional investment
experience.
- Michael G. Landry, the President and a Director of
IMI and
MIMI and the President and a Trustee of the Trust,
is the
investment strategist for all of the Funds other
than Ivy
Canada Fund. Mr. Landry joined MIMI in 1987 and
IMI in 1992
and was previously a senior vice president and
portfolio
manager with the Templeton organization. He has
over 20
years of professional investment experience, and
is a
graduate of Carleton University.
- Barbara Trebbi, a Senior Vice President of MIMI
and IMI, is
the portfolio manager for Ivy China Region Fund
and Ivy
Global Fund and is one of several portfolio
managers of Ivy
New Century Fund. Ms. Trebbi joined MIMI in 1988
and IMI in
1992 and has 7 years of professional investment
experience.
- Hakan Castegren, President of Northern Cross, has
been the
portfolio manager for Ivy International Fund since
1986 and
has 36 years of professional investment
experience.
- Juan C. Dominguez is the portfolio manager for Ivy
Latin
America Strategy Fund and is one of several
portfolio
managers of Ivy New Century Fund. Prior to
joining MIMI and
IMI in 1994, Mr. Dominguez was the Latin American
analyst at
Gabelli & Company.
- Leslie A. Ferris, a Senior Vice President of MIMI
and IMI,
has been a portfolio manager of Ivy New Century
Fund since
the Fund's inception in 1994. Ms. Ferris joined
MIMI in
1988 and IMI in 1992 and has 13 years of
professional
investment experience. She is a Chartered
Financial Analyst
and holds an MBA degree from the University of
Chicago.
Prior to joining MIMI, she was a portfolio manager
at Kemper
Financial Services Inc. from 1982 to 1988.
FUND ADMINISTRATION AND ACCOUNTING
MIMI provides various administrative services for
the Funds,
such as maintaining the registration of Fund shares
under state
"Blue Sky" laws, and assisting with the preparation of
Federal,
state and local income tax returns and financial
statements and
periodic reports to shareholders. MIMI also assists the
Trust's
legal counsel with the filing of registration
statements, proxies
and other required filings under Federal and state law.
Under
this arrangement, the net assets attributable to each
Fund's
Class A, Class B and Class C shares are subject to a
monthly fee
at the annual rate of 0.10%. The net assets
attributable to Ivy
International Fund's Class I shares are subject to a
monthly fee
at the annual rate of 0.01%.
MIMI also provides certain accounting and pricing
services
for the Funds. For these services, each Fund pays MIMI
out-of-
pocket expenses as incurred and a monthly fee based
upon the
Fund's net assets at the end of the preceding month 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.
TRANSFER AGENT
MIISC provides transfer agent, dividend-paying
agent, and
certain shareholder-related services for the Funds.
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
MIISC if the individual accounts that comprise the
omnibus
account were opened by their beneficial owners
directly. As
compensation for these services, MIISC pays the
broker-dealer a
per account fee for each open account within the
omnibus account,
or a fixed rate (e.g., .10%) based on the average daily
net asset
value of the omnibus account (or a combination
thereof).
ALTERNATIVE PURCHASE ARRANGEMENTS
CLASS A SHARES: Class A shares are subject to a
fixed
initial sales charge, unless (i) the amount you
purchase is
$500,000 or more (see "Contingent Deferred Sales Charge
-- Class
A Shares") or (ii) you qualify for a reduced initial
sales charge
(see "Qualifying for a Reduced Sales Charge"). Class A
shares are
subject to ongoing service fees at an annual rate of
0.25% of a
Fund's average daily net assets attributable to its
Class A
shares. If you do not specify on your account
application which
class of shares you are purchasing, it will be assumed
that you
are investing in Class A shares.
CLASS B AND CLASS C SHARES: Class B and Class C
shares are
not subject to an initial sales charge, but are subject
to a
contingent deferred sales charge ("CDSC") if redeemed
within six
years of purchase, in the case of Class B shares, or
within one
year of purchase, in the case of Class C shares. Both
classes of
shares are subject to ongoing service and distribution
fees at a
combined annual rate of up to 1.00% of a Fund's average
daily net
assets attributable to its Class B or Class C shares.
The ongoing
distribution fee will cause these shares to have a
higher expense
ratio than that of Class A shares. Also, to the extent
that a
Fund pays any dividends, these higher expenses will
result in
lower dividends than those paid on Class A shares.
CLASS I SHARES: Class I shares are offered by Ivy
International Fund only to institutions and certain
individuals,
and are not subject to an initial sales charge or a
CDSC, nor to
ongoing service or distribution fees. Class I shares
also bear
lower administrative services fees and transfer agency
fees than
Class A, Class B and Class C shares.
FACTORS TO CONSIDER IN CHOOSING AN ALTERNATIVE:
The multi-
class structure of the Funds allows you to choose the
most
beneficial way to buy shares given the size of your
purchase and
the length of time you expect to hold your shares. You
should
consider whether, during the anticipated life of your
Fund
investment, the accumulated service and distribution
fees on
Class B and Class C shares would be less than the
initial sales
charge and accumulated service fees on Class A shares
purchased
at the same time, and to what extent this differential
would be
offset by the Class A shares' potentially higher yield.
Also,
sales personnel may receive different compensation
depending on
which class of shares they are selling. The tables
under the
caption "Annual Fund Operating Expenses" at the
beginning of this
Prospectus contain additional information that is
designed to
assist you in making this determination.
DIVIDENDS AND TAXES
Dividends and capital gain distributions that you
receive
from a Fund are reinvested in additional shares of the
same class
of a Fund unless you elect to receive them in cash (and
the U.S.
Postal Service is able to deliver your checks). Because
of the
higher expenses associated with Class B and Class C
shares, any
dividend on these shares will be lower than on Class A
shares.
Each Fund intends to make a distribution for each
fiscal
year of any net investment income and net realized
short-term
capital gain, as well as any net long-term capital gain
realized
during the year. An additional distribution may be
made of net
investment income, net realized short-term capital
gains and net
realized long-term capital gains to comply with the
calendar year
distribution requirement under the excise tax
provisions of
Section 4982 of the Code.
TAXATION: The following discussion is intended
for general
information only. An investor should consult his or her
own tax
adviser as to the tax consequences of an investment in
a
particular Fund, including the status of distributions
from the
Fund under applicable state or local law.
Each Fund intends to qualify annually and elect to
be
treated as a regulated investment company under the
Code. To
qualify, each Fund must beet certain income,
distribution and
diversification requirements. In any year in which a
Fund
qualifies as a regulated investment company and timely
distributes all of its taxable income, the Fund
generally will
not pay any U.S. Federal income or excise tax.
Dividends paid out of a Fund's investment company
taxable
income (including dividends, interest and net
short-term capital
gains) will be taxable to a shareholder as ordinary
income. If a
portion of a Fund's income consists of dividends paid
by U.S.
corporations, a portion of the dividends paid by the
Fund may be
eligible for the corporate 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 as capital gain dividends are taxable as
long-term
capital gains, regardless of how long the shareholder
has held a
Fund's shares. Dividends are taxable to shareholders in
the same
manner whether received in cash or reinvested in
additional Fund
shares.
If, for any year, a Fund's total distributions
exceed its
earnings and profits, the excess will generally be
treated as a
return of capital. The amount treated as a return of
capital will
reduce a shareholder's adjusted basis in his or her
shares
(thereby increasing his or her potential gain or
reducing his or
her potential loss on the sale of his or her shares)
and, to the
extent that the amount exceeds this basis, will be
treated as a
taxable gain.
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 with a record date in such a month
and paid
by the Fund during January of the following calendar
year. Such
distributions will be taxable to shareholders in the
calendar
year in which the distributions are declared, rather
than the
calendar year in which the distributions are
received.
Investments in securities that are issued at a
discount will
result each year in income to a Fund equal to a portion
of the
excess of the face value of the securities over their
issue
price, even though the Fund receives no cash interest
payments
from the securities.
Income and gains received by a Fund from sources
within
foreign countries may be subject to foreign withholding
and other
taxes. Unless a Fund is eligible to and elects to "pass
through"
to its shareholders the amount of foreign income and
similar
taxes paid by the Fund, these taxes will reduce the
Fund's
investment company taxable income, and distributions of
investment company taxable income received from the
Fund will be
treated as U.S. source income.
Any gain or loss realized by a shareholder upon
the sale or
other disposition of shares of a Fund, or upon receipt
of a
distribution in complete liquidation of the Fund,
generally will
be a capital gain or loss which will be long-term or
short-term,
generally depending upon the shareholder's holding
period for the
shares.
A Fund may be required to withhold U.S. Federal
income tax
at the rate of 31% of all taxable distributions payable
to
shareholders who fail to provide the Fund with their
correct
taxpayer identification number or to make required
certifications, or who have been notified by the
Internal Revenue
Service that they are subject to backup withholding.
Backup
withholding is not an additional tax. Any amounts
withheld may be
credited against the shareholder's U.S. Federal income
tax
liability.
Fund distributions may be subject to state, local
and
foreign taxes. Distributions of a Fund which are
derived from
interest on obligations of the U.S. Government and
certain of its
agencies, authorities and instrumentalities may be
exempt from
state and local taxes in certain states. Further
information
relating to tax consequences is contained in the SAI.
PERFORMANCE DATA
Performance information (e.g., "total return" and
"yield")
is computed separately for each class of Fund shares in
accordance with formulas prescribed by the SEC.
Performance
information for each class may be compared in reports
and
promotional literature to indices such as the Standard
and Poor's
500 Stock Index, Dow Jones Industrial Average, and
Morgan Stanley
Capital International World Index. Advertisements,
sales
literature and communications to shareholders may also
contain
statements of a Fund's current yield, various
expressions of
total return and current distribution rate. Performance
figures
will vary in part because of the different expense
structures of
the Funds' different classes. ALL PERFORMANCE
INFORMATION IS
HISTORICAL AND IS NOT INTENDED TO SUGGEST FUTURE
RESULTS.
"Total return" is the change in value of an
investment in a
Fund for a specified period, and assumes the
reinvestment of all
distributions and imposition of the maximum applicable
sales
charge. "Average annual total return" represents the
average
annual compound rate of return of an investment in a
particular
class of Fund shares assuming the investment is held
for one
year, five years and ten years as of the end of the
most recent
calendar quarter. Where a Fund provides total return
quotations
for other periods, or based on investments at various
sales
charge levels or at net asset value, "total return" is
based on
the total of all income and capital gains paid to (and
reinvested
by) shareholders, plus (or minus) the change in the
value of the
original investment expressed as a percentage of the
purchase
price.
"Current yield" reflects the income per share
earned by a
Fund's portfolio investments, and is calculated by
dividing the
Fund's net investment income per share during a recent
30-day
period by the maximum public offering price on the last
day of
that period and then annualizing the result. Dividends
or
distributions that were paid to a Fund's shareholders
are
reflected in the "current distribution rate," which is
computed
by dividing the total amount of dividends per share
paid by a
Fund during the preceding 12 months by the Fund's
current maximum
offering price (which includes any applicable sales
charge). The
"current distribution rate" will differ from the
"current yield"
computation because it may include distributions to
shareholders
from sources other than dividends and interest, short
term
capital gain and net equalization credits and will be
calculated
over a different period of time.
HOW TO BUY SHARES
The minimum initial investment is $1,000; the
minimum
additional investment is $100. Initial or additional
investment
amounts for retirement accounts may be less. See
"Retirement
Plans." Accounts in Class I of Ivy International Fund
can be
opened with a minimum initial investment of $5,000,000;
the
minimum additional investment is $10,000. The minimum
initial
investment in Class I of Ivy International Fund may be
spread
over the thirteen-month period after an Institution or
a high net
worth individual opens an account and the Fund, at its
discretion, may accept initial and additional
investments of
small amounts. All purchases must be made in U.S.
dollars.
Complete the Account Application attached to this
Prospectus.
Indicate whether you are purchasing Class A, Class B,
Class C or
Class I shares (in the case of Ivy International Fund).
If you do
not specify which class of shares you are purchasing,
MIISC will
assume you are investing in Class A shares. The Fund
reserves the
right to reject for any reason any purchase order or
exchange
(see "Exchange Privilege" below).
OPENING AN ACCOUNT
By Check:
1. Make your check payable to the Fund in which
you are
investing.
2. Deliver the completed application and check
to your
registered representative or selling broker,
or mail it
directly to MIISC.
3. Our address is:
Mackenzie Ivy Investor Services Corp.
P.O. Box 3022
Boca Raton, FL 33431-0922
4. Our courier address is:
Mackenzie Ivy Investor Services Corp.
700 South Federal Highway, Suite 300
Boca Raton, FL 33432
By Wire
1. Deliver a completed fund application to your
registered
representative or selling broker, or mail it
directly
to MIISC. Before wiring any funds, please
contact MIISC
at 1-800-777-6472 to verify your account
number.
2. Instruct your bank to wire funds to:
Barnett Bank of Palm Beach County
ABA # 067008582
For deposit to The Ivy Mackenzie
Funds
a/c #1455031505
Name of your account
Your Ivy or Mackenzie account
number
The Ivy or Mackenzie Fund you are
buying
Your bank may charge a fee for wiring funds.
THROUGH A REGISTERED SECURITIES DEALER: You may
also place
an order to purchase shares through your Registered
Securities
Dealer.
BUYING ADDITIONAL SHARES
By Check:
1. Complete the investment stub attached to your
statement
or include a note with your investment
listing the name
of the Fund, the class of shares to purchase,
your
account number and the name(s) in which the
account is
registered.
2. Make your check payable to the fund in which
you are
investing.
3. Mail the account information and check to:
Mackenzie Ivy Investor Services Corp.
P.O. Box 3022
Boca Raton, FL 33431-0922
Our courier address is:
Mackenzie Ivy Investor Services Corp.
700 South Federal Highway, Suite 300
Boca Raton, FL 33432
or deliver it to your registered representative or
selling
broker.
By Wire
Instruct your bank to wire funds to:
Barnett Bank of Palm Beach County
ABA # 067008582
For deposit to
The Ivy Mackenzie Funds
a/c # 1455031505
Name of your account
Your Ivy or Mackenzie account number
The Ivy or Mackenzie fund you are buying
Your bank may charge a fee for wiring funds.
THROUGH A REGISTERED SECURITIES DEALER: You may
also place
an order to purchase shares through your Registered
Securities
Dealer.
BY AUTOMATIC INVESTMENT METHOD ("AIM")
1. Complete the "Automatic Investment Method"
and
"Wire/EFT Information" sections on the
Account
Application designating a bank account from
which funds
may be drawn. Please note that in order to
invest using
this method, your bank must be a member of
the
Automated Clearing House system ("ACH"). The
minimum
investment under this plan is $50 per month
($25 per
month for retirement plans). Please remember
to attach
a voided check to your account application.
2. At pre-specified intervals, your bank account
will be
debited and the proceeds will be credited to
your Ivy
Mackenzie Fund account.
HOW YOUR PURCHASE PRICE IS DETERMINED
Your purchase price for Class A shares of a Fund
is the net
asset value per share plus a sales charge, which may be
reduced
or eliminated in certain circumstances. The purchase
price per
share is known as the public offering price. Your
purchase price
for Class B and Class C shares (and Class I shares, in
the case
of Ivy International Fund) is the net asset value per
share.
Share purchases will be made at the next
determined price
after your purchase order is received. The price is
effective for
orders received by MIISC or by your registered
securities dealer
prior to the time of the determination of the net asset
value.
Any orders received after the time of the determination
of the
net asset value will be entered at the next calculated
price.
Orders placed with a securities dealer before the
net asset
value is determined that are transmitted through the
facilities
of the National Securities Clearing Corporation by 7:00
p.m.
Eastern Time on the same day are confirmed at that
day's price.
Any loss resulting from the dealer's failure to submit
an order
by the deadline will be borne by that dealer.
You will receive an account statement after any
purchase,
exchange or full liquidation. Statements related to
reinvestment
of dividends, capital gains, automatic investment plans
(see the
SAI for further explanation) and/or systematic
withdrawal plans
will be sent quarterly.
HOW EACH FUND VALUES ITS SHARES
The net asset value ("NAV") per share is the value
of one
share. The NAV is determined in the following manner:
the total
of all liabilities, including accrued expenses and
taxes and any
necessary reserves, is deducted from the aggregate
value of all
assets, and the difference is divided by the number of
shares
outstanding at the time, adjusted to the nearest cent.
The NAV
per share is determined once every business day (as of
the close
of regular trading on each day the New York Stock
Exchange is
open, normally 4:00 p.m., Eastern time) (see the SAI
under "Net
Asset Value" for a detailed description of how the NAV
is
determined). Trading of foreign securities may not
occur on every
business day, and may occur on days when the New York
Stock
Exchange is closed.
INITIAL SALES CHARGE ALTERNATIVE -- CLASS A SHARES
Shares are purchased at a public offering price
equal to
their NAV per share plus a sales charge, as set forth
below.
SALES CHARGE
PORTION OF
AS A AS A
PUBLIC
PERCENTAGE PERCENTAGE
OFFERING
OF PUBLIC OF NET
PRICE
OFFERING AMOUNT
RETAINED
AMOUNT INVESTED PRICE INVESTED
BY DEALER
Less than $50,000 . . . 5.75% 6.10%
5.00%
$50,000 but less than 5.25% 5.54%
4.50%
$100,000 . . . . . . .
$100,000 but less than 4.50% 4.71%
3.75%
$250,000 . . . . . . .
$250,000 but less than 3.00% 3.09%
2.50%
$500,000 . . . . . . .
$500,000 or over* . . . 0.00% 0.00%
0.00%
* A CDSC may apply to the redemption of Class A
shares that
are purchased without an initial sales charge. See
"Contingent Deferred Sales Charge -- Class A
Shares."
Sales charges are not applied to any dividends
that are
reinvested in additional shares of the Fund. An
investor may be
charged a transaction fee for Class A and Class I
shares (in the
case of Ivy International Fund) purchased or redeemed
at NAV
through a broker or agent other than MIFDI.
With respect to purchases of $500,000 or more
through
dealers or agents, MIFDI may, at the time of purchase,
pay such
dealers or agents from its own resources a commission
to
compensate such dealers or agents for their
distribution
assistance in connection with such purchases. The
commission
would be computed at 0.50% of the first $3,000,000
invested;
0.25% of the next $2,000,000 invested; and 0.10% of the
amount
invested in excess of $5,000,000. Dealers who receive
90% or more
of the sales charge may be deemed to be "underwriters"
as that
term is defined in the 1933 Act.
MIFDI compensates participating brokers who sell
Class A
shares through the initial sales charge. MIFDI retains
that
portion of the initial sales charge that is not
reallowed to the
dealers, which it may use to distribute the Fund's
Class A
shares. Pursuant to separate distribution plans for the
Fund's
Class A, Class B and Class C shares, MIFDI bears
various
promotional and sales related expenses, including the
cost of
printing and mailing prospectuses to persons other than
shareholders. Pursuant to the Fund's distribution plans
applicable to its Class A, Class B and Class C shares,
MIFDI
currently pays a continuing service fee to qualified
dealers at
an annual rate of 0.25% of qualified investments.
MIFDI may from time to time pay a bonus or other
incentive
to dealers (other than MIFDI) which employ a registered
representative who sells a minimum dollar amount of the
shares of
the fund and/or other funds distributed by MIFDI during
a
specified period of time. This bonus or other incentive
may take
the form of payment for travel expenses, including
lodging,
incurred in connection with trips taken by qualifying
registered
representatives and members of their families to places
within or
without the United States or other bonuses such as gift
certificates or the cash equivalent of such bonus or
incentive.
CONTINGENT DEFERRED SALES CHARGE -- CLASS A SHARES
Purchases of $500,000 or more of Class A shares
will be made
at NAV with no initial sales charge, but if the shares
are
redeemed within 24 months after the end of the calendar
month in
which the purchase was made (the CDSC period), a CDSC
of 1.00%
will be imposed (0.50%, in the case of Ivy
International Fund).
In order to recover commissions paid to dealers on
NAV
transfers (as defined in "Purchases of Class A Shares
at Net
Asset Value"), Class A shares of a Fund are subject to
a CDSC of
1.00% for certain redemptions within 24 months after
the date of
purchase.
The charge will be assessed on an amount equal to
the lesser
of the current market value or the original purchase
cost of the
Class A shares redeemed. Accordingly, no CDSC will be
imposed on
increases in account value above the initial purchase
price,
including any dividends which have been reinvested in
additional
Class A shares.
In determining whether a CDSC applies to a
redemption, the
calculation will be determined in a manner that results
in the
lowest possible rate being charged. Therefore, it will
be assumed
that the redemption is first made from any shares in
your account
not subject to the CDSC. The CDSC is waived in certain
circumstances. See the discussion below under the
caption "Waiver
of Contingent Deferred Sales Charge."
WAIVER OF CONTINGENT DEFERRED SALES CHARGE: The
CDSC is
waived for (i) redemptions in connection with
distributions not
exceeding 12% annually of the initial account balance
(i.e., the
value of the shareholder's Class A Fund account at the
time of
the initial distribution) (a) following retirement
under a tax
qualified retirement plan, or (b) upon attaining age 59
1/2 in
the case of an IRA, a custodial account pursuant to
section
403(b)(7) of the Code or a Keogh Plan; (ii) redemption
resulting
from tax-free return of an excess contribution to an
IRA; or
(iii) any partial or complete redemption following the
death or
disability (as defined in Section 72(m)(7) of the Code)
of a
shareholder from an account in which the deceased or
disabled is
named, provided that the redemption is requested within
one year
of death or disability. The Distributor may require
documentation
prior to waiver of the CDSC.
Class A shareholders may exchange their Class A
shares
subject to a CDSC ("outstanding Class A shares") for
Class A
shares of another Ivy or Mackenzie Fund ("new Class A
shares") on
the basis of the relative NAV per Class A share,
without the
payment of any CDSC that would be due upon the
redemption of the
outstanding Class A shares. The original CDSC rate that
would
have been charged if the outstanding Class A shares
were redeemed
will carry over to the Class A shares received in the
exchange,
and will be charged accordingly at the time of
redemption.
QUALIFYING FOR A REDUCED SALES CHARGE
RIGHTS OF ACCUMULATION (ROA): Rights of
Accumulation
("ROA") is calculated by determining the current market
value of
all Class A shares in all Ivy or Mackenzie fund
accounts (except
Ivy Money Market Fund) owned by you, your spouse, and
your
children under 21 years of age. ROA is also applicable
to
accounts under a trustee or other single fiduciary
(including
retirement accounts qualified under Section 401 of the
Code). The
current market value of each of your accounts as
described above
is added together and then added to your current
purchase amount.
If the combined total is equal or greater than a
breakpoint
amount for a Fund, then you qualify for the reduced
sales charge.
To reduce or eliminate the sales charge, you must
complete
Section 4B of the new account application.
LETTER OF INTENT (LOI): A Letter of Intent
("LOI") is a
non-binding agreement that states your intention to
invest in
additional Class A shares, within a thirteen month
period after
the initial purchase, an amount equal to a breakpoint
amount for
a Fund. The LOI may be backdated up to 90 days. To sign
an LOI,
please complete Section 4B of the new account
application.
Should the LOI not be fulfilled within the
thirteen month
period, your account will be debited for the difference
between
the full sales charge that applies for the amount
actually
invested and the reduced sales charge actually paid on
purchases
placed under the terms of the LOI.
PURCHASES OF CLASS A SHARES AT NET ASSET VALUE:
An investor
who was a shareholder of any Ivy Fund on December 31,
1991 or a
shareholder of American Investors Income Fund, Inc. or
American
Investors Growth Fund, Inc. on October 31, 1988 and who
became a
shareholder of Ivy Bond Fund (formerly Mackenzie Fixed
Income
Trust) or Ivy Growth Fund as a result of the respective
reorganizations of the funds will be exempt from sales
charges on
the purchase of Class A shares of any Ivy or Mackenzie
Fund. This
privilege is also available to immediate family members
of a
shareholder (i.e., the shareholder's children, the
shareholder's
spouse and the children of the shareholder's spouse).
This no-
load privilege terminates for the investor if the
investor
redeems all shares owned. Shareholders and their
relatives as
described above should call 1-800-235-3322 for
information about
additional purchases or to inquire about their account.
Class A shares of a Fund may be purchased without
an initial
sales charge or CDSC by (i) officers and Trustees of
the Trust
(and their relatives), (ii) officers, directors,
employees,
retired employees, legal counsel and independent
accountants of
IMI, MIMI, and MFC (and their relatives), and (iii)
directors,
officers, partners, registered representatives,
employees and
retired employees (and their relatives) of dealers
having a sales
agreement with MIFDI (or trustees or custodians of any
qualified
retirement plan or IRA established for the benefit of
any such
person). In addition, certain investment advisors and
financial
planners who charge a management, consulting or other
fee for
their services and who place trades for their own
accounts and
the accounts of their clients may purchase Class A
shares of a
Fund without an initial sales charge or a CDSC,
provided such
purchases are placed through a broker or agent who
maintains an
omnibus account with that Fund. Also, clients of these
advisors
and planners may make purchases under the same
conditions if the
purchases are through the master account of such
advisor or
planner on the books of such broker or agent. THIS
PROVISION
APPLIES TO ASSETS OF RETIREMENT AND DEFERRED
COMPENSATION PLANS
AND TRUSTS USED TO FUND THOSE PLANS INCLUDING, BUT NOT
LIMITED
TO, THOSE DEFINED IN SECTION 401(a), 403(b) OR 457 OF
THE CODE
AND "RABBI TRUSTS" WHOSE ASSETS ARE USED TO PURCHASE
SHARES OF A
FUND THROUGH THE AFOREMENTIONED CHANNELS.
Class A shares of a Fund may be purchased at NAV
by
retirement plans qualified under section 401(a) or
403(b) of the
Code, subject to the Employee Retirement Income
Security Act of
1974, as amended, provided that: (i) either (a) the
sponsoring
organization must have at least 25 employees or (b) the
aggregate
purchases by the retirement plan of Class A shares of
the Ivy
funds must be in an amount of at least $250,000 within
a
reasonable period of time, as determined by MIFDI in
its sole
discretion; and (ii) a CDSC of 1.00% will be imposed on
such
purchases in the event of certain redemption
transactions within
24 months following such purchases.
If investments by retirement plans at NAV are made
through a
dealer who has executed a dealer agreement with respect
to a
Fund, MIFDI may, at the time of purchase, pay the
dealer out of
MIFDI's own resources a commission to compensate the
dealer for
its distribution assistance in connection with the
retirement
plan's investment. Commissions would be computed at
1.00% of the
first $3 million invested, 0.50% of the next $2 million
invested,
and 0.25% of the amount invested in excess of $5
million. Please
contact MIFDI for additional information
Class A shares can also be purchased without an
initial
sales charge, but subject to a CDSC of 1.00% during the
first 24
months, by: (a) any state, county, city (or any
instrumentality,
department, authority or agency of such entities) that
is
prohibited by applicable investment laws from paying a
sales
charge or commission when purchasing shares of a
registered
investment management company (an "eligible
governmental
authority"), and (b) trust companies, bank trust
departments,
credit unions, savings and loans and other similar
organizations
in their fiduciary capacity or for their own accounts,
subject to
any minimum requirements set by MIFDI (currently, these
criteria
require that the amount invested or to be invested in
the
subsequent 13-month period totals at least $250,000).
In either
case, MIFDI may pay commissions to dealers that provide
distribution assistance on the same basis as in the
preceding
paragraph.
Class A shares of a Fund may also be purchased
without a
sales charge in connection with certain liquidation,
merger or
acquisition transactions involving other investment
companies or
personal holding companies.
Each Fund may, from time to time, waive the
initial sales
charge on its Class A shares sold to clients of various
broker-
dealers with which MIFDI has a selling relationship.
This
privilege will apply only to Class A Shares of a Fund
that are
purchased using all or a portion of the proceeds
obtained by such
clients through redemptions of shares (on which a
commission has
been paid) of an investment company (other than
Mackenzie Series
Trust or the Trust), unit investment trust or limited
partnership
("NAV transfers"). Some dealers may elect not to
participate in
this program. Those dealers that do elect to
participate in the
program must complete certain forms required by MIFDI.
The normal
service fee, as described in the "Initial Sales Charge
Alternative -- Class A Shares" and "Contingent Deferred
Sales
Charge Alternative -- Class B and Class C Shares"
sections of
this Prospectus, will be paid to dealers in connection
with these
purchases. Additional information on reductions or
waivers may be
obtained from MIFDI at the address listed on the cover
of the
Prospectus.
CONTINGENT DEFERRED SALES CHARGE ALTERNATIVE --
CLASS B AND
CLASS C SHARES
Class B and Class C shares are offered at NAV per
share
without a front end sales charge. However, Class C
shares
redeemed within one year of purchase will be subject to
a CDSC of
1%, and Class B shares redeemed within six years of
purchase will
be subject to a CDSC at the rates set forth below. This
charge
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. Accordingly, you will not be assessed a CDSC
on
increases in account value above the initial purchase
price,
including shares derived from dividend reinvestment. In
determining whether a CDSC applies to a redemption, the
calculation will be determined in a manner that results
in the
lowest possible rate being charged. It will be assumed
that your
redemption comes first from shares you have held beyond
the
requisite maximum holding period or those you acquire
through
reinvestment of dividends or distributions, and next
from the
shares you have held the longest during the requisite
holding
period.
Proceeds from the CDSC are paid to MIFDI. MIFDI
uses them,
in whole or in part, to defray its expenses related to
providing
each Fund with distribution services in connection with
the sale
of Class B and Class C shares, such as compensating
selected
dealers and agents for selling these shares. The
combination of
the CDSC and the distribution and service fees makes it
possible
for a Fund to sell Class B or Class B shares without
deducting a
sales charge at the time of the purchase.
In the case of Class B shares, the amount of the
CDSC, if
any, will vary depending on the number of years from
the time you
purchase your Class B shares until the time you redeem
them.
Solely for purposes of determining this holding period,
any
payments you make during the quarter will be aggregated
and
deemed to have been made on the last day of the
quarter.
Class B Shares:
CONTINGENT
DEFERRED SALES
CHARGE AS A
PERCENTAGE OF
DOLLAR
AMOUNT
YEAR SINCE PURCHASE SUBJECT
TO CHARGE
First . . . . . . . . . . . . . . . . . . . .
5%
Second . . . . . . . . . . . . . . . . . . .
4%
Third . . . . . . . . . . . . . . . . . . . .
3%
Fourth . . . . . . . . . . . . . . . . . . .
3%
Fifth . . . . . . . . . . . . . . . . . . . .
2%
Sixth . . . . . . . . . . . . . . . . . . . .
1%
Seventh and thereafter . . . . . . . . . . .
0%
MIFDI currently intends to pay to dealers a sales
commission
of 4% of the sale price of Class B shares that they
have sold,
and will receive the entire amount of the CDSC paid by
shareholders on the redemption of Class B shares to
finance the
4% commission and related marketing expenses.
With respect to Class C shares, MIFDI currently
intends to
pay to dealers a sales commission of 1% of the sale
price of
Class C shares that they have sold, a portion of which
is to
compensate the dealers for providing Class C
shareholder account
services during the first year of investment. MIFDI
will receive
the entire amount of the CDSC paid by shareholders on
the
redemption of Class C shares to finance the 1%
commission and
related marketing expenses.
Pursuant to separate distribution plans for the
Funds' Class
B and Class C shares, MIFDI bears various promotional
and sales
related expenses, including the cost of printing and
mailing
prospectuses to persons other than shareholders. Under
the Funds'
Class B Plan, MIFDI retains 0.75% of the continuing
1.00%
service/distribution fee assessed to Class B
shareholders, and
pays a continuing service fee to qualified dealers at
an annual
rate of 0.25% of qualified investments. Under the
Class C Plan,
MIFDI pays continuing service/distribution fees to
qualified
dealers at an annual rate of 1.00% of qualified
investments after
the first year of investment (0.25% of which represents
a service
fee).
CONVERSION OF CLASS B SHARES: Your Class B shares
and an
appropriate portion of both reinvested dividends and
capital
gains on those shares will be converted into Class A
shares
automatically no later than the month following eight
years after
the shares were purchased, resulting in lower annual
distribution
fees. If you exchanged Class B shares into a Fund from
Class B
shares of another Ivy or Mackenzie fund, the
calculation will be
based on the time the shares in the original fund were
purchased.
WAIVER OF CONTINGENT DEFERRED SALES CHARGE: The
CDSC is
waived for (i) redemptions in connection with
distributions not
exceeding 12% annually of the initial account balance
(i.e., the
value of the shareholder's Class B or Class C Fund
account at the
time of the initial distribution) (a) following
retirement under
a tax qualified retirement plan, or (b) upon attaining
age 59 1/2
in the case of an IRA, a custodial account pursuant to
section
403(b)(7) of the Code or a Keogh Plan; (ii) redemption
resulting
from tax-free return of an excess contribution to an
IRA; or
(iii) any partial or complete redemption following the
death or
disability (as defined in Section 72(m)(7) of the Code)
of a
shareholder from an account in which the deceased or
disabled is
named, provided that the redemption is requested within
one year
of death or disability. The Distributor may require
documentation
prior to waiver of the CDSC.
ARRANGEMENTS WITH BROKER-DEALERS AND OTHERS:
MIFDI may, at
its own expense, pay concessions in addition to those
described
above to dealers that satisfy certain criteria
established from
time to time by MIFDI. These conditions relate to
increasing
sales of shares of the Funds over specified periods and
to
certain other factors. These payments may, depending
on the
dealer's satisfaction of the required conditions, be
periodic and
may be up to (i) 0.25% of the value of Fund shares sold
by the
dealer during a particular period, and (ii) 0.10% of
the value of
Fund shares held by the dealer's customers for more
than one
year, calculated on an annual basis.
HOW TO REDEEM SHARES
You may redeem your Fund shares through your
registered
securities representative, by mail, by telephone or by
Federal
Funds wire. A CDSC may apply to certain Class A share
redemptions, to Class B share redemptions prior to
conversion 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 4:00 p.m. Eastern Time
to be
processed at the NAV for that day. Any redemption
request in good
order that is received after 4:00 p.m. Eastern Time
will be
processed at the price determined on the following
business day.
IF SHARES TO BE REDEEMED WERE PURCHASED BY CHECK,
PAYMENT OF THE
REDEMPTION MAY BE DELAYED UNTIL THE CHECK HAS CLEARED
OR FOR UP
TO 15 DAYS AFTER THE DATE OF PURCHASE, WHICHEVER IS
LESS. 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; any
shares
subject to a CDSC will be redeemed last unless you
specifically
elect otherwise.
When shares are redeemed, a Fund generally sends
you payment
on the next business day. Under unusual circumstances,
a Fund may
suspend redemptions or postpone payment to the extent
permitted
by Federal securities laws. The proceeds of the
redemption may be
more or less than the purchase price of your shares,
depending
upon, among other factors, the market value of the
Fund's
securities at the time of the redemption. If the
redemption is
for over $50,000, or the proceeds are to be sent to an
address
other than the address of record, or an address change
has
occurred in the last 30 days, it must be requested in
writing
with a signature guarantee. See "Signature Guarantees,"
below.
If you are not certain of the requirements for a
redemption,
please contact MIISC at 1-800-777-6472.
THROUGH YOUR REGISTERED SECURITIES DEALER: The
Dealer is
responsible for promptly transmitting redemption
orders.
Redemptions requested by dealers will be made at the
NAV (less
any applicable CDSC) determined at the close of regular
trading
(4:00 p.m. Eastern Time) on the day that a redemption
request is
received in good order by MIISC.
BY MAIL: Requests for redemption in writing are
considered
to be in "proper or good order" if they contain the
following:
Any outstanding certificate(s) for shares
being
redeemed.
A letter of instruction, including the fund
name, the
account number, the account name(s), the
address and
the dollar amount or number of shares to be
redeemed.
Signatures of all registered owners whose
names appear
on the account.
Any required signature guarantees.
Other supporting legal documentation, if
required (in
the case of estates, trusts, guardianships,
corporations, retirement plans or other
representative
capacities).
The dollar amount or number of shares indicated
for
redemption must not exceed the available shares or NAV
of your
account at the next- determined prices. If your request
exceeds
these limits, then the trade will be rejected in its
entirety.
Mail your request to:
Mackenzie Ivy Investor Services Corp.
P.O. Box 3022
Boca Raton, FL 33431-0922
Our courier address is:
Mackenzie Ivy Investor Services Corp.
700 South Federal Highway, Suite 300
Boca Raton, FL 33432
By Telephone: Individual and joint accounts may
redeem up
to $50,000 per day over the telephone by contacting
MIISC at 1-
800-777-6472. In times of unusual economic or market
changes, the
telephone redemption privilege may be difficult to
implement. If
you are unable to execute your transaction by telephone
(for
example, during such times), you may want to consider
placing the
order in writing and sending it by mail or overnight
courier.
Checks will be made payable to the current account
registration and sent to the address of record. If
there has been
a change of address in the last 30 days, please use the
instructions for redemption requests by mail described
above. A
signature guarantee would be required.
Requests for telephone redemptions will be
accepted from the
registered owner of the account, the designated
registered
representative or his/her assistant.
Shares held in certificate form cannot be redeemed
by
telephone.
If Section 6E of the new account application is
not
completed, telephone redemption privileges will be
provided
automatically. Although telephone redemptions may be a
convenient
feature, you should realize that you may be giving up a
measure
of security that you may otherwise have if you
terminated the
privilege and redeemed your shares in writing. If you
do not wish
to make telephone redemptions or let your registered
representative or his/her assistant do so on your
behalf, you
must notify MIISC in writing.
Each Fund 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 may be liable for any losses due to unauthorized
or
fraudulent telephone instructions. For shareholders who
established this feature at the time they opened their
new
account, telephone instructions will be accepted for
redemption
of amounts up to $50,000 and proceeds will be wired on
the next
business day to a predesignated bank account.
In order to add this feature to an existing
account or to
change existing bank account information, please submit
a letter
of instructions including your bank information to
MIISC at the
address provided above. The letter must be signed by
all
registered owners, and their signatures must be
guaranteed.
Your account will be charged a fee of $10 each
time that
redemption proceeds are wired to your bank.
Neither IMI nor any of the Funds can be
responsible for the
efficiency of the Federal Funds wire system or the
shareholder's
bank.
MINIMUM ACCOUNT BALANCE REQUIREMENTS
Due to the high cost of maintaining small accounts
and
subject to state law requirements, a Fund may redeem
the accounts
of shareholders whose investment, including sales
charges paid,
has been less than $1,000 for more than 12 months. The
Fund will
not redeem an account unless the shareholder has been
given at
least 60 days' advance notice of the Fund's intention
to do so.
No redemption will be made if a shareholder's account
falls below
the minimum due to a reduction in the value of the
Fund's
portfolio securities. This provision does not apply to
IRAs,
other retirement accounts and UGMA/UTMA accounts.
SIGNATURE GUARANTEES
For your protection, and to prevent fraudulent
redemptions,
we require a signature guarantee in order to
accommodate the
following requests:
- Redemption requests over $50,000.
- Requests for redemption proceeds to be sent
to someone
other than the registered shareholder.
- Requests for redemption proceeds to be sent
to an
address other than the address of record.
- Registration transfer requests.
- Requests for redemption proceeds to be wired
to your
bank account (if this option was not selected
on your
original application, or if you are changing
the bank
wire information).
A signature guarantee may be obtained only from an
eligible
guarantor institution as defined in Rule 17Ad-15 of the
Securities Exchange Act of 1934, as amended. An
eligible
guarantor institution includes banks, brokers, dealers,
municipal
securities dealers, government securities dealers,
government
securities brokers, credit unions, national securities
exchanges,
registered securities associations, clearing agencies
and savings
associations. The signature guarantee must not be
qualified in
any way. Notarizations from notary publics are not the
same as
signature guarantees, and are not accepted.
Circumstances other than those described above may
require a
signature guarantee. Please contact MIISC at
1-800-777-6472 for
more information.
CHOOSING A DISTRIBUTION OPTION
You have the option of selecting the dividend and
capital
gain distribution option that best suits your needs:
1. AUTOMATIC REINVESTMENT OPTION -- Both dividends
and capital
gains are automatically reinvested at NAV in
additional
shares of the same class of a Fund unless you
specify one of
the other options.
2. INVESTMENT IN ANOTHER IVY OR MACKENZIE FUND --
Both
dividends and capital gains are automatically
invested at
NAV in another Ivy or Mackenzie Fund of the same
class.
3. DIVIDENDS IN CASH/CAPITAL GAINS REINVESTED --
Dividends will
be paid in cash. Capital gains will be reinvested
at NAV in
additional shares of the same class of a Fund or
another Ivy
or Mackenzie Fund of the same class.
4. DIVIDENDS AND CAPITAL GAINS IN CASH -- Both
dividends and
capital gains will be paid in cash.
If you wish to have your cash distributions
deposited
directly to your bank account via electronic funds
transfer, or
if you wish to change your distribution option, please
contact
MIISC at 1-800-777-6472.
If you wish to have your cash distributions go to
an address
other than the address of record, a signature guarantee
is
required.
TAX IDENTIFICATION NUMBER
In general, to avoid being subject to a 31%
Federal backup
withholding tax on dividends, capital gains
distributions and
redemption proceeds, you must furnish a Fund with your
certified
tax identification number ("TIN") and certify that you
are not
subject to backup withholding due to prior
underreporting of
interest and dividends to the Internal Revenue Service.
If you
fail to provide a certified TIN, or such other
tax-related
certifications as a Fund may require, within 30 days of
opening
your new account, each Fund reserves the right to
involuntarily
redeem your account and send the proceeds to your
address of
record.
You can avoid the above withholding and/or
redemption by
correctly furnishing your TIN, and making certain
certifications,
in Section 2 of the new account application at the time
you open
your new account, unless the IRS requires that backup
withholding
be applied to your account.
Certain payees, such as corporations, generally
are exempt
from backup withholding. Please complete IRS Form W-9
with the
new account application to claim this exemption. If the
registration is for an UGMA/UTMA account, please
provide the
social security number of the minor. Non-U.S. investors
who do
not have a TIN must provide, with their new account
application,
a completed IRS Form W-8.
CERTIFICATES
In order to facilitate transfers, exchanges and
redemptions,
most shareholders elect not to receive certificates.
Should you
wish to have a certificate issued, please contact MIISC
at 1-800-
777-6472 and request that one be sent to you.
(Retirement plan
accounts are not eligible for this service.) Please
note that if
you were to lose your certificate, you would incur an
expense to
replace it.
Certificates requested by telephone for shares
valued up to
$50,000 will be issued to the current registration and
mailed to
the address of record. Should you wish to have your
certificates
mailed to a different address, or registered
differently from the
current registration, you must provide a letter of
instruction
signed by all registered owners with signatures
guaranteed. The
letter of instruction would be sent to MACKENZIE IVY
INVESTOR
SERVICES CORP., P.O. BOX 3022, BOCA RATON, FL
33431-0922.
EXCHANGE PRIVILEGE
Shareholders of a Fund have an exchange privilege
with other
Ivy and Mackenzie Funds. Class A shareholders may
exchange their
outstanding Class A shares for Class A shares of
another Ivy or
Mackenzie Fund on the basis of the relative NAV per
Class A
share, plus an amount equal to the difference 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.
Class B and Class C shareholders may exchange
their
outstanding Class B (or Class C) shares for Class B (or
Class C)
shares of another Ivy or Mackenzie Fund on the basis of
the
relative NAV per Class B (or Class C) share, without
the payment
of any CDSC that would otherwise be due upon the
redemption of
Class B (or Class C) shares. Class B shareholders who
exercise
the exchange privilege would continue to be subject to
the
original Fund's CDSC schedule (or period) following an
exchange
if such schedule is higher (or longer) than the CDSC
for the new
Class B shares.
Class I shareholders may exchange their
outstanding Class I
shares for Class I shares of another Ivy or Mackenzie
Fund on the
basis of the relative NAV per Class I share, without
the
imposition of any sales charges.
Shares resulting from the reinvestment of
dividends and
other distributions will not be charged an initial
sales charge
or a CDSC when exchanged into another Ivy or Mackenzie
Fund.
Exchanges are considered to be taxable events, and
may
result in a capital gain or a capital loss for tax
purposes.
Before executing an exchange, you should obtain and
read the
prospectus and consider the investment objective of the
fund to
be purchased. Shares must be uncertificated in order to
execute a
telephone exchange. Exchanges are available only in
states where
they can be legally made. This privilege is not
intended to
provide shareholders a means by which to speculate on
short-term
movements in the market. Exchanges are accepted only if
the
registrations of the two accounts are identical.
Amounts to be
exchanged must meet minimum investment requirements for
the Ivy
or Mackenzie Fund into which the exchange is made.
With respect to shares subject to a CDSC, if less
than all
of an investment is exchanged out of a 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.
An investor who was a shareholder of American
Investors
Income Fund, Inc. or American Investors Growth Fund,
Inc. prior
to October 31, 1988, or a shareholder of the Ivy Funds
prior to
December 31, 1991, who became a shareholder of the Fund
as a
result of a reorganization or merger between the Funds
may
exchange between funds without paying a sales charge.
An investor
who was a shareholder of American Investors Income
Fund, Inc. or
American Investors Growth Fund, Inc. on or after
October 31,
1988, who became a shareholder of the Fund as a result
of the
reorganization between the Funds will receive credit
toward any
applicable sales charge imposed by any Ivy or Mackenzie
Fund into
which an exchange is made.
In calculating the sales charge assessed on an
exchange,
shareholders will be allowed to use the Rights of
Accumulation
privilege.
EXCHANGES BY TELEPHONE: When you fill out the
application
for your purchase of Fund shares, if Section 6E of the
new
account application is not completed, telephone
exchange
privileges will be provided automatically. Although
telephone
exchanges may be a convenient feature, you should
realize that
you may be giving up a measure of security that you may
otherwise
have if you terminated the privilege and exchanged your
shares in
writing. If you do not wish to make telephone exchanges
or let
your registered representative or his/her assistant do
so on your
behalf, you must notify MIISC in writing.
In order to execute an exchange, please contact
MIISC at 1-
800-777-6472. Have the account number of your current
fund and
the exact name in which it is registered available to
give to the
telephone representative.
Each Fund 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 may
be liable
for any losses due to unauthorized or fraudulent
telephone
instructions.
EXCHANGES IN WRITING: In a letter, request an
exchange and
provide the following information:
The name and class of the fund whose shares you
currently
own.
Your account number.
The name(s) in which the account is registered.
The name of the fund in which you wish your
exchange to be
invested.
The number of shares, all shares or the dollar
amount you
wish to exchange.
The request must be signed by all registered
owners.
Mail the request and information to:
Mackenzie Ivy Investor Services Corp.
P.O. Box 3022
Boca Raton, FL 33431-0922
REINVESTMENT PRIVILEGE
Investors who have redeemed Class A shares of a
Fund have a
one-time privilege of reinvesting all or a part of the
proceeds
of the redemption back into Class A shares of that Fund
at NAV
(without a sales charge) within 60 days after the date
of
redemption. IN ORDER TO REINVEST WITHOUT A SALES
CHARGE,
SHAREHOLDERS OR THEIR BROKERS MUST INFORM MIISC THAT
THEY ARE
EXERCISING THE REINVESTMENT PRIVILEGE AT THE TIME OF
REINVESTMENT. The tax status of a gain realized on a
redemption
generally will not be affected by the exercise of the
reinvestment privilege, but a loss realized on a
redemption
generally may be disallowed by the IRS if the
reinvestment
privilege is exercised within 30 days after the
redemption. In
addition, upon a reinvestment, the shareholder may not
be
permitted to take into account sales charges incurred
on the
original purchase of shares in computing their taxable
gain or
loss.
SYSTEMATIC WITHDRAWAL PLAN
You may elect the Systematic Withdrawal Plan at
any time by
completing the Account Application, which is attached
to this
Prospectus. You can also obtain this application by
contacting
your registered representative or MIISC at
1-800-777-6472. To be
eligible, you must have at least $5,000 in your
account. Payments
(minimum distribution amount -- $50) from your account
can be
made monthly, quarterly, semi-annually, annually or on
a selected
monthly basis, to yourself or any other designated
payee. You may
elect to have your systematic withdrawal paid directly
to your
bank account via electronic funds transfer ("EFT").
Share
certificates must be unissued (i.e., held by a Fund)
while the
plan is in effect. A Systematic Withdrawal Plan may not
be
established if you are currently participating in the
Automatic
Investment Method. For more information, please contact
MIISC at
1-800-777-6472.
If payments you receive through the Systematic
Withdrawal
Plan exceed the dividends and capital appreciation of
your
account, you will be reducing the value of your
account.
Additional investments made by shareholders
participating in the
Systematic Withdrawal Plan must equal at least $1,000
while the
plan is in effect. However, it may not be advantageous
to
purchase additional Class A, Class B or Class C shares
when you
have a Systematic Withdrawal Plan, because you may be
subject to
an initial sales charge on your purchase of Class A
shares or to
a CDSC imposed on your redemptions of Class B or Class
C shares.
In addition, redemptions are taxable events.
Amounts paid to you through the Systematic
Withdrawal Plan
are derived from the redemption of shares in your
account. Any
applicable CDSC will be assessed upon the redemptions.
A CDSC
will not be assessed on withdrawals not exceeding 12%
annually of
the initial account balance when the Systematic
Withdrawal Plan
was started.
Should you wish at any time to add a Systematic
Withdrawal
Plan to an existing account or change payee
instructions, you
will need to submit a written request, signed by all
registered
owners, with signatures guaranteed.
Retirement accounts are eligible for Systematic
Withdrawal
Plans. Please contact MIISC at 1-800-777-6472 to obtain
the
necessary paperwork to establish a plan.
If the U.S. Postal Service cannot deliver your
checks, or if
deposits to a bank account are returned for any reason,
your
redemptions will be discontinued.
AUTOMATIC INVESTMENT METHOD
You may authorize an investment to be
automatically drawn
each month from your bank for investment in Fund shares
under the
"Automatic Investment Method" and "Fed Wire/EFT"
sections of the
Account Application. There is no charge to you for this
program.
You may terminate or suspend your Automatic
Investment
Method by telephone at any time by contacting MIISC at
1-800-777-
6472.
If you have investments being withdrawn from a
bank account
and we are notified that the account has been closed,
your
Automatic Investment Method will be discontinued.
CONSOLIDATED ACCOUNT STATEMENTS
Shareholders with two or more Ivy or Mackenzie
fund accounts
will receive a single quarterly account statement,
unless
otherwise specified. This feature consolidates the
activity for
each account onto one statement. Requests for quarterly
consolidated statements for all other accounts must be
submitted
in writing and must be signed by all registered owners.
RETIREMENT PLANS
The Ivy and Mackenzie family of funds offer
several tax-
sheltered retirement plans that may fit your needs:
IRA (Individual Retirement Account)
401(k) Plan
Money Purchase Pension Plan
Profit Sharing Plan
SEP-IRA (Simplified Employee Pension Plan)
403(b)(7) Plan
Minimum initial and subsequent investments for
retirement
plans are $25.00.
Investors Bank & Trust, which serves as custodian
or trustee
under the retirement plan prototypes available from
each Fund,
charges certain nominal fees for annual maintenance. A
portion of
these fees is remitted to MIMI, as compensation for its
services
to the retirement plan accounts maintained with each
Fund.
Distributions from retirement plans are subject to
certain
requirements under the Code, including withholding
requirements,
and various documents (available from MIISC), including
IRS Form
W-4P, and information must be provided before the
distribution
may be made. The Ivy and Mackenzie family of funds and
MIISC
assume no responsibility to determine whether a
distribution
satisfies the conditions of applicable tax laws, and
will not be
responsible for any penalties assessed. For additional
information, please contact your broker, tax adviser or
MIISC.
Please call MIISC at 1-800-777-6472 for complete
information
kits describing the plans, their benefits,
restrictions,
provisions and fees.
SHAREHOLDER INQUIRIES
Inquiries regarding the Funds should be directed
to MIISC at
1-800-777-6472.
APPENDIX
SELECTED ECONOMIC AND MARKET DATA
FOR CHINA REGION COUNTRIES
The information set forth in this Appendix has
been
extracted from various government and private
publications. Ivy
China Region Fund and the Trust's Board of Trustees
make no
representation as to the accuracy of such information,
nor has
the Fund or the Trust's Board of Trustees attempted to
verify it.
The China Region, one of the fastest growing areas
of the
world, is diverse, dynamic and evolving. In terms of
population,
this region is almost ten times the size of the United
States and
is five times the size of Europe.
Countries in this region are at various stages of
economic
development. Hong Kong and Singapore are at a more
advanced
stage of economic growth while countries such as
Indonesia and
China are at the early stages of economic development.
GDP per
capita data presented below illustrates this point.
The
following table shows the GDP, population and per
capita GDP of
the China Region countries and, for comparison
purposes, the
United States.
1994
Per
GDP
Capita
($US Population
GDP
Billions) (Millions)
($US)
Hong Kong . . . . . . . . ________ __________
________
Korea . . . . . . . . . . ________ __________
________
Singapore . . . . . . . . ________ __________
________
Taiwan . . . . . . . . . ________ __________
________
Thailand . . . . . . . . ________ __________
________
Malaysia . . . . . . . . ________ __________
________
Indonesia . . . . . . . . ________ __________
________
Philippines . . . . . . . ________ __________
________
China . . . . . . . . . . ________ __________
________
China Region . . . . . . ________ __________
________
USA . . . . . . . . . . . ________ __________
________
Source: International Marketing Data and Statistics,
19th Ed.
(Euromonitor 1995).
Total GDP for the China Region was about $_____
billion in
1994, approximately one quarter of the GDP of the
United States.
Year over year growth in GDP for the China Region is
significant,
averaging ______% for the five-year period 1990-1994
compared
with only ______% for the United States for the same
period. The
following tables show the annual change in real GDP and
inflation, as measured by the Consumer Price Indexes
(CPI), in
1990-1994 and the average for the five-year period
1990-1994.
CHANGE IN REAL GROSS DOMESTIC PRODUCT
Average
1990 1991 1992 1993 1994
1990-94
Hong Kong . 2.99% 3.94% 14.31% 14.75% ____%
______%
Korea . . . 6.14% 9.05% 8.38% 4.68% ____%
______%
Singapore . 9.18% 8.37% 6.79% 14.49% ____%
______%
Taiwan . . 7.60% 5.00% 7.30% 11.70% ____%
______%
Thailand . 12.24% 10.27% 8.00% 8.50% ____%
______%
Malaysia . 9.37% 9.95% 8.90% 22.32% ____%
______%
Indonesia . 7.37% 6.99% 6.35% 9.05% ____%
______%
Philippines 6.04% 2.44% -1.02% 16.50% ____%
______%
China . . . 4.34% 5.37% 6.42% 14.85% ____%
______%
United States 2.68% 0.64% -1.34% 5.81% ____%
______%
Sources: 1989-1991 China Region countries, except
Taiwan: World
Tables 1993, A World Bank Book; 1989-1991
Taiwan:
Baring Securities, Pacific Rim Stock Market
Review,
July 1993; 1992-1993 China Region countries:
International Marketing Data and Statistics,
19th Ed.
(Euromonitor 1995).
CHANGE IN CONSUMER PRICE INDEXES
Average
1990 1991 1992 1993 1994
1990-94
Hong Kong . 9.76% 10.98% 9.40% 8.54% ____%
_____%
Korea . . . 8.56% 9.59% 6.30% 4.84% ____%
_____%
Singapore . 3.46% 3.44% 2.30% 2.42% ____%
_____%
Taiwan . . 4.10% 3.60% 4.40% * ____%
_____%
Thailand . 5.94% 5.69% 4.10% 3.31% ____%
_____%
Malaysia . 2.66% 4.34% 4.80% 3.59% ____%
_____%
Indonesia . 7.39% 9.31% 7.20% 9.23% ____%
_____%
Philippines 14.18% 18.74% 8.90% 7.60% ____%
_____%
China . . . 1.35% 2.90% 5.40% * ____%
_____%
United States 5.41% 4.26% 3.00% 3.00% ____%
_____%
Sources: 1989-91 China Region countries, except Taiwan
and 1991-
1992 China: World Tables 1993, A World Bank
Book;
1989-1991 Taiwan: Baring Securities, Pacific
Rim Stock
Market Review, July 1993; 1991-1992 China:
China
Statistical Yearbook; 1992 China Region
countries:
Morgan Stanley Investment Research Japan &
Asia/Pacific
June/July, 1993; 1993 China Region countries,
except
Taiwan and China: International Marketing
Data and
Statistics, 19th Ed. (Euromonitor 1995).
* Not available. Average reflects data from years
_________.
As the economic in the China Region have
experienced
different levels of growth, so too have their stock
markets.
Countries in the China Region now account for nearly
9.4% of
world stock market capitalization. The following
tables show the
capitalization of the stock markets, and the changes in
stock
prices as measured by the local stock indexes.
STOCK MARKET CAPITALIZATION ($US MILLIONS)
1990 1991 1992 1993
1994
China . . . . -- 2,028 18,255 40,567
________
Hong Kong . . 83,397 121,986 172,106 385,247
________
Korea . . . . 110,594 96,373 107,448 139,420
________
Singapore . . 34,308 47,637 48,818 132,742
________
Taiwan . . . 100,710 124,864 101,124 195,191
________
Thailand . . 23,896 35,815 58,259 130,510
________
Malaysia . . 48,611 58,627 94,004 220,328
________
Indonesia . . 8,081 6,823 12,038 32,953
________
Philippines . 5,927 10,197 13,794 40,327
________
Sources: Emerging Stock Market Fact Book 1994,
International
Finance Corp.
ANNUAL PERCENTAGE CHANGES IN LOCAL
STOCK MARKET INDEXES
1990 1991 1992 1993
1994
China . . . . -- 192.80% 166.53% 6.84%
______%
Hong Kong . . 6.63% 42.08% 28.27% 115.70%
______%
Korea . . . . -23.48% -12.24% 11.05% 27.67%
______%
Singapore . . -22.06% 29.12% 2.26% 48.30%
______%
Taiwan . . . -52.93% 1.56% -26.60% 79.76%
______%
Thailand . . -30.29% 16.07% 25.59% 88.36%
______%
Malaysia . . -10.02% 9.94% 15.77% 98.04%
______%
Indonesia . . 4.53% -40.79% 10.89 114.61%
______%
Philippines . -45.10% 94.77% 5.27% 166.60%
______%
Sources: China Region countries, except Singapore,
Emerging
Stock Market Fact Book 1994, International
Finance
Corp.; Hong Kong and Singapore 1988-1992:
Baring
Securities, Pacific Rim Stock Market Review,
July 1993;
Hong Kong and Singapore 1993: Jardine
Fleming, January
1994.
Equity valuations in the China Region, as measured
by
price/earnings ratios, also vary from country to
country
according to economic growth forecasts, corporate
earnings growth
forecasts, the outlook for inflation, exchange rates
and overall
investor sentiment.
PRICE/EARNINGS RATIOS
1990 1991 1992 1993 1994
Hong Kong . . 10.5 12.9 15.8 * ______
Korea . . . . 16.4 21.3 21.4 25.1 ______
Singapore . . 16.3 17.7 16.1 * ______
Taiwan . . . 25.0 22.3 16.6 34.7 ______
Thailand . . 8.7 12.0 13.9 27.5 ______
Malaysia . . 23.6 21.3 21.8 43.5 ______
Indonesia . . 20.3 11.6 12.2 28.9 ______
Philippines . 11.3 11.3 14.1 38.8 ______
Sources: 1989-1992 Hong Kong and Singapore: Morgan
Stanley;
1989-1993 all other China Region countries:
Emerging
Stock Market Fact Book 1994, International
Finance
Corp.
* Not available.
The following table shows changes in the exchange
rate of
the currency of each China Region country relative to
the U.S.
dollar for the years ended December 31, 1990-1994.
CURRENCY MOVEMENTS VERSUS US DOLLAR (%
CHANGE)
Year Ended December 31,
1990 1991 1992 1993
1994
Hong Kong . . . 0.10% 0.30% 0.50% 0.20%
______%
Korea . . . . . -5.19% -5.83% -3.77% -2.44%
______%
Singapore . . . 9.20% 7.40% -1.20% 2.30%
______%
Taiwan . . . . -2.18% 4.43% 1.31% -4.51%
______%
Thailand . . . 1.20% 1.00% -1.70% -0.20%
______%
Malaysia . . . 0.01% -0.82% 4.03% -2.90%
______%
Indonesia . . . -4.87% -4.79% -3.85% -1.88%
______%
Philippines . . -19.96% 4.02% 2.15% -5.19%
______%
China (Official) -9.80% -3.10% -7.50% -0.90%
______%
China (SWAP) . 3.70% -4.10% -19.80% -11.50%
______%
Sources: China Region countries, except Hong Kong,
Singapore and
China: Emerging Stock Market Fact Book 1994,
International Finance Corp.; Hong Kong,
Singapore and
China, 1988-1992: Baring Securities, Pacific
Rim Stock
Market Review, July 1993; 1993 Hong Kong and
Singapore:
Jardine Fleming; 1993 China: Mees Pierson
Securities,
Inc.
IVY INTERNATIONAL BOND FUND
PROSPECTUS
Class A, Class B and Class C Shares
April 30, 1996
______________________________________________________________
Ivy Fund (the "Trust") is a registered investment
company
currently consisting of thirteen separate portfolios.
One
portfolio of the Trust, Ivy International Bond Fund
(the "Fund"),
is described in this Prospectus.
This Prospectus sets forth concisely the information
about the
Fund that a prospective investor should know before
investing and
should be read carefully and retained for future
reference.
Additional information about the Fund is contained in
the
Statement of Additional Information ("SAI") for the
Fund. The
SAI, dated April 30, 1996, has been filed with the
Securities and
Exchange Commission ("SEC") and is available upon
request and
without charge from the Trust at the Distributor's
address and
telephone number provided below. The SAI is
incorporated by
reference into this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A
CRIMINAL OFFENSE.
_________________________________________________________________
BOARD OF TRUSTEES: John S. Anderegg, Jr.; Paul H.
Broyhill;
Stanley Channick; Frank W. DeFriece, Jr.; Roy J.
Glauber; Michael
G. Landry; Michael R. Peers; Joseph G. Rosenthal;
Richard N.
Silverman; J. Brendan Swan
LEGAL COUNSEL: Dechert Price & Rhoads, Boston, MA
OFFICERS: Michael G. Landry, President; Keith J.
Carlson, Vice
President; C. William Ferris, Secretary/Treasurer;
Michael R.
Peers, Chairman
CUSTODIAN: Brown Brothers Harriman & Co., Boston, MA
TRANSFER AGENT: Mackenzie Ivy Investor Services Corp.,
P.O. Box
3022, Boca Raton, FL 33431-0922 (800) 777-6472
AUDITORS: Coopers & Lybrand L.L.P., Ft. Lauderdale, FL
INVESTMENT MANAGER: Ivy Management, Inc., Boca Raton,
FL
DISTRIBUTOR: Mackenzie Ivy Funds Distribution, Inc.,
Via Mizner
Financial Plaza; 700 South Federal Highway; Boca Raton,
FL 33432
(800) 456-5111
TABLE OF CONTENTS
SCHEDULE OF FEES . . . . . . . . . . . . . . . . . . .
. . .
EXPENSE DATA TABLE . . . . . . . . . . . . . . . . . .
. . .
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . .
. . .
INVESTING IN INTERNATIONAL BOND MARKETS . . . . . . . .
. . .
RISK FACTORS AND INVESTMENT TECHNIQUES . . . . . . . .
. . .
ADDITIONAL INFORMATION ABOUT POLICIES AND INVESTMENTS .
. . .
RISKS . . . . . . . . . . . . . . . . . . . . . . . . .
. . .
BONDS . . . . . . . . . . . . . . . . . . . . . .
. . .
NON-DIVERSIFIED INVESTMENT COMPANIES . . . . . . .
. . .
REPURCHASE AGREEMENTS . . . . . . . . . . . . . .
. . .
ZERO COUPON SECURITIES . . . . . . . . . . . . . .
. . .
OPTIONS, FUTURES CONTRACTS AND FORWARD CONTRACTS .
. . .
LENDING . . . . . . . . . . . . . . . . . . . . .
. . .
ORGANIZATION OF THE FUND . . . . . . . . . . . . . . .
. . .
INVESTMENT MANAGER . . . . . . . . . . . . . . . .
. . .
INVESTMENT MANAGEMENT EXPENSES . . . . . . . . . .
. . .
ADMINISTRATOR . . . . . . . . . . . . . . . . . .
. . .
FUND ACCOUNTING . . . . . . . . . . . . . . . . .
. . .
CUSTODIAN . . . . . . . . . . . . . . . . . . . .
. . .
TRANSFER AGENT . . . . . . . . . . . . . . . . . .
. . .
PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . .
. . .
ALTERNATIVE PURCHASE AGREEMENTS . . . . . . . . . . . .
. . .
CLASS A SHARES . . . . . . . . . . . . . . . . . .
. . .
CLASS B SHARES . . . . . . . . . . . . . . . . . .
. . .
CLASS C SHARES . . . . . . . . . . . . . . . . . .
. . .
FACTORS TO CONSIDER IN CHOOSING AN ALTERNATIVE . . . .
. . .
DIVIDENDS AND TAXES . . . . . . . . . . . . . . . . . .
. . .
TAXATION . . . . . . . . . . . . . . . . . . . . .
. . .
PERFORMANCE DATA . . . . . . . . . . . . . . . . . . .
. . .
HOW TO BUY SHARES . . . . . . . . . . . . . . . . . . .
. . .
OPENING AN ACCOUNT . . . . . . . . . . . . . . . .
. . .
BUYING ADDITIONAL SHARES . . . . . . . . . . . . .
. . .
HOW YOUR PURCHASE PRICE IS DETERMINED . . . . . . . . .
. . .
HOW THE FUND VALUES ITS SHARES . . . . . . . . . . . .
. . .
INITIAL SALES CHARGE ALTERNATIVE--CLASS A SHARES . . .
. . .
CONTINGENT DEFERRED SALES CHARGE--CLASS A SHARES . . .
. . .
WAIVER OF CONTINGENT DEFERRED SALES CHARGE . . . .
. . .
QUALIFYING FOR A REDUCED SALES CHARGE . . . . . . . . .
. . .
RIGHTS OF ACCUMULATION (ROA) . . . . . . . . . . .
. . .
LETTER OF INTENT (LOI) . . . . . . . . . . . . . .
. . .
PURCHASES OF CLASS A SHARES AT NET ASSET VALUE . .
. . .
CONTINGENT DEFERRED SALES CHARGE ALTERNATIVE--CLASS B
AND
CLASS C SHARES . . . . . . . . . . . . . . . . . .
. . .
CONVERSION OF CLASS B SHARES . . . . . . . . . . .
. . .
WAIVER OF CONTINGENT DEFERRED SALES CHARGE . . . .
. . .
ARRANGEMENTS WITH BROKER/DEALERS AND OTHERS . . .
. . .
HOW TO REDEEM SHARES . . . . . . . . . . . . . . . . .
. . .
MINIMUM ACCOUNT BALANCE REQUIREMENTS . . . . . . . . .
. . .
SIGNATURE GUARANTEES . . . . . . . . . . . . . . . . .
. . .
CHOOSING A DISTRIBUTION OPTION . . . . . . . . . . . .
. . .
TAX IDENTIFICATION NUMBER . . . . . . . . . . . . . . .
. . .
CERTIFICATES . . . . . . . . . . . . . . . . . . . . .
. . .
EXCHANGE PRIVILEGE . . . . . . . . . . . . . . . . . .
. . .
EXCHANGES BY TELEPHONE . . . . . . . . . . . . . .
. . .
EXCHANGES IN WRITING . . . . . . . . . . . . . . .
. . .
REINVESTMENT PRIVILEGE . . . . . . . . . . . . . . . .
. . .
SYSTEMATIC WITHDRAWAL PLAN ("SWP") . . . . . . . . . .
. . .
AUTOMATIC INVESTMENT METHOD ("AIM") . . . . . . . . . .
. . .
CONSOLIDATED ACCOUNT STATEMENTS . . . . . . . . . . . .
. . .
RETIREMENT PLANS . . . . . . . . . . . . . . . . . . .
. . .
SHAREHOLDER INQUIRIES . . . . . . . . . . . . . . . . .
. . .
SCHEDULE OF FEES
SHAREHOLDER TRANSACTION EXPENSES
CLASS A CLASS B
CLASS C
Maximum sales load imposed on
purchases(as a percentage of
offering price at time of
purchase) 4.75%(1) None
None
Maximum contingent deferred
sales charge(as a percentage
of original purchase price) None(2) 5.00%(3)
1.00%(4)
(The Fund has no sales load on reinvested dividends, no
redemption fees and no exchange fees.)
(1) Class A shares of the Fund may be purchased under
a variety
of plans that provide for reduced sales charges.
(2) A contingent deferred sales charge may apply to
the
redemption of Class A shares that are purchased
without an
initial sales charge. See "Purchases of Class A
Shares at
Net Asset Value" and "Contingent Deferred Sales
Charge--
Investments of $500,000 or More in Class A
Shares."
(3) The maximum contingent deferred sales charge on
Class B
shares applies to redemptions during the first
year after
purchase. The charge declines to 4% during the
second year;
3% during the third and fourth years; 2% during
the fifth
year; 1% during the sixth year; and 0% in the
seventh year
and thereafter.
(4) The maximum contingent deferred sales charge on
Class C
shares applies to redemptions during the first
year after
purchase.
EXPENSE DATA TABLE
ANNUAL FUND OPERATING EXPENSES[*]
(estimated as a percentage of average daily net
assets)
CLASS A CLASS B CLASS
C[#]
Management Fees(1) . 0.75% 0.75% 0.75%
12b-1
Service/Distribution
Fees . . . . . . . . 0.25% 1.00%(4) 1.00%
Other Expenses . . . 0.50%(2) 0.50%(2) 0.50%
Total Fund Operating
Expenses(1) . . . . . 1.50% 2.25%(3)
2.25%(3)
[*] As of April 30, 1996, the date of this Prospectus,
no shares
of the Fund have been issued.
[#] The inception date for Class C shares is April 30,
1996.
[1] Ivy Management, Inc. ("IMI"), the Fund's
investment manager,
currently intends to limit the Fund's Total Fund
Operating
Expenses (excluding taxes, 12b-1 fees, brokerage
commissions, interest, litigation and
indemnification
expenses and other extraordinary expenses) to an
annual rate
of 1.50% of the Fund's average daily net assets,
as
described in this Prospectus under "Organization
of the
Fund."
[2] The "Other Expenses" of the Fund are based on
estimated
amounts for the current fiscal year.
[3] Total Fund Operating Expenses for Class B and
Class C shares
of the Fund are higher than such expenses for
other mutual
funds with similar investment objectives.
[4] Long-term investors may, as a result of the Fund's
12b-1
Fees, pay more than the economic equivalent of the
maximum
front-end sales charge permitted by the Rules of
Fair
Practice of the National Association of Securities
Dealers,
Inc.
EXAMPLE
CLASS A SHARES
You would pay the following expenses on a $1,000
investment in
the Fund, assuming (1) 5% annual return and (2)
redemption at the
end of each time period:
1 YEAR(1) 3 YEARS
$62[*] $92[*]
[*] These figures assume that the current expense
limitation is
in place for each of the time periods indicated.
IMI, as
investment adviser, has reserved the right to
terminate or
revise this expense limitation at any time, which
may affect
the results in years one and three in the
preceding Example.
[1] Assumes deduction of the maximum 4.75% initial
sales charge
at the time of purchase and no deduction of a
contingent
deferred sales charge at the time of redemption.
EXAMPLE (1 OF 2)
CLASS B SHARES
You would pay the following expenses on a $1,000
investment
in the Fund, assuming (1) 5% annual return and (2)
redemption at
the end of each time period:
1 YEAR[1] 3 YEARS[2]
$73[**] $100[**]
EXAMPLE (2 OF 2)
CLASS B SHARES
You would pay the following expenses on a $1,000
investment in
the Fund, assuming (1) 5% annual return and (2) no
redemption:
1 YEAR[1] 3 YEARS
$23[**] $70[**]
[**] These figures assume that the current expense
limitation is
in place for each of the time periods indicated.
IMI, as
investment adviser, has reserved the right to
terminate or
revise this expense limitation at any time, which
may affect
the results in years one and three in the
preceding
Examples.
[1] Assumes deduction of a 5% contingent deferred
sales charge
at the time of redemption.
[2] Assumes deduction of a 3% contingent deferred
sales charge
at the time of redemption.
EXAMPLE (1 OF 2)
CLASS C SHARES
You would pay the following expenses on a $1,000
investment
in the Fund, assuming (1) 5% annual return and (2)
redemption at
the end of each time period:
1 YEAR[1] 3 YEARS
$_____[**] $_____[**]
EXAMPLE (2 OF 2)
CLASS C SHARES
You would pay the following expenses on a $1,000
investment in
the Fund, assuming (1) 5% annual return and (2) no
redemption:
1 YEAR[1] 3 YEARS
$_____[**] $_____[**]
[**] These figures assume that the current expense
limitation is
in place for each of the time periods indicated.
IMI, as
investment adviser, has reserved the right to
terminate or
revise this expense limitation at any time, which
may affect
the results in years one and three in the
preceding
Examples.
[1] Assumes deduction of a 1% contingent deferred
sales charge
at the time of redemption.
The purpose of the foregoing tables is to provide an
investor
with an understanding of the various costs and expenses
that an
investor in the Fund will bear, directly or indirectly.
The
Examples assume reinvestment of all dividends and
distributions
and that the percentage amounts under "Total Fund
Operating
Expenses After Expense Reimbursement" remain the same
each year.
As noted above in the Expense Data Table, the
percentage amounts
under "Total Fund Operating Expenses After Expense
Reimbursement"
reflect expense reimbursements. The assumed annual
return of 5%
is required by applicable law to be applied by all
investment
companies and is used for illustrative purposes only.
This
assumption is not a projection of future performance.
The actual
expenses for the Fund may be higher or lower than the
estimates
given.
The percentages expressing annual fund operating
expenses are
based on estimated expenses of the Fund during the
current fiscal
year, except as otherwise noted in the Expense Data
Table. For a
more detailed discussion of the Fund's fees and
expenses, see the
following sections of the Prospectus: "Organization and
Management of the Fund," "Initial Sales Charge
Alternative--Class
A Shares," "Contingent Deferred Sales Charge
Alternative--Class B
and Class C Shares," and "How to Buy Shares," and the
following
section of the SAI: "Investment Advisory and Other
Services."
INVESTMENT OBJECTIVES AND POLICIES
The Fund is a non-diversified company which has a
principal
investment objective of current income primarily by
investing in
high-grade non-U.S. dollar-denominated bonds
(international
bonds). Protection, and possible enhancement, of
principal value
through active management of currency, bond market and
maturity
exposure and through security selection is a secondary
objective.
The Fund's investment objectives are fundamental and
may not be
changed without the approval of a majority of the
outstanding
voting shares of the Fund. The Trustees may make
non-material
changes in the Fund's objectives without shareholder
approval.
Except for the Fund's investment objectives and those
investment
restrictions specifically identified as fundamental,
all
investment policies and practices described in this
Prospectus
and in the SAI are non-fundamental and, therefore, may
be changed
by the Trustees without shareholder approval. There
can be no
assurance that the Fund's objectives will be met.
INVESTING IN INTERNATIONAL BOND MARKETS
The U.S. dollar-denominated bond market now represents
less than
one half of the world's developed bond markets. As a
result,
opportunities for investment in international bond
markets have
become more significant. The liquidity of
international bond
markets has improved as the number of investors
participating in
these markets has increased. Additionally, many
international
bond markets have become more attractive for foreign
investors
due to the reduction of barriers of entry to foreign
investors by
deregulation and by reduction of withholding taxes.
Concurrent with the opening of foreign markets,
restrictions on
international capital flows have been reduced or
eliminated,
thereby enabling investment funds to seek the highest
expected
returns. As a result, the market conditions of one
nation
influence the market conditions of other countries
through the
flow of international capital. The Fund is a
convenient vehicle
for investing in international bond markets, some of
which may,
during certain time periods, outperform the U.S.
dollar-
denominated bond markets.
History has shown that returns from international bond
markets
often differ from those generated by U.S. bond markets.
The
variations in returns are, in part, the result of
fluctuating
foreign currency exchange rates and changes in foreign
interest
rates as compared with U.S. interest rates. Although
the Fund is
non-diversified under the Investment Company Act of
1940, as
amended (the "1940 Act"), investing in the Fund can
provide an
investor's existing portfolio of U.S.
dollar-denominated bonds
(U.S. bonds) with international diversification.
At times, higher investment returns may be provided by
international bonds than from U.S. bonds. For example,
international bonds may provide higher current income
and/or
greater capital appreciation than U.S. bonds due to
fluctuation
in foreign currencies relative to the U.S. dollar. Of
course, at
any time, the opposite may also be true.
Individual and small institutional investors often find
it
difficult to participate in international bond markets.
This is
due in part to the lack of current information
available about
foreign entities as well as difficulties in purchasing
and
selling foreign securities, holding foreign securities
in
safekeeping, and converting foreign currencies into
U.S. dollars.
The Fund is a convenient and relatively low cost way
for
individuals and small institutions to invest in these
markets.
The Fund can provide its shareholders with potential
capital
appreciation and protection, as well as income, as is
associated
with a professionally managed portfolio of high-grade
international bonds. IMI has significant experience
investing in
international markets as well as in global trading,
custody and
currency transactions.
In addition, the Fund offers investors the opportunity
to enjoy
the benefits of all of the Ivy Mackenzie Funds. IMI,
together
with its affiliate, Mackenzie Investment Management
Inc.
("MIMI"), manages a diverse family of funds and
provides a wide
range of services to help investors meet their
investment needs.
RISK FACTORS AND INVESTMENT TECHNIQUES
The Fund is intended for long-term investors who can
accept the
risks associated with investing in international bonds.
Total
return from investment in the Fund will consist of
income after
expenses, bond price gains (or losses) in the local
currency and
currency gains or losses. For federal income tax
purposes,
currency gains and losses generally are regarded as
ordinary
income and loss and, therefore, may increase or reduce
the amount
of the Fund's distributions.
The value of the Fund's portfolio will vary in response
to a
number of economic factors, the most important being
fluctuations
in foreign currency exchange rates, in market interest
rates and
in an issuer's creditworthiness. Since the Fund's
investments
are denominated primarily in foreign currencies,
changes in
foreign currency values can significantly affect the
Fund's share
price. Investors should be aware that exchange rate
movements
can be significant and endure for long periods of time.
In
addition, because the market value of a debt security
generally
varies inversely with changes in prevailing interest
rates, the
longer the maturity of a debt security, the more
volatile it will
be in terms of changes in value. There also exists the
risk that
the issuer of a debt security may not be able to meet
its
obligation on interest or principal payments at the
time called
for by the security.
IMI attempts to control exchange rate and interest rate
risks
through active portfolio management, including such
techniques as
management of currency, bond market and maturity
exposure and
selection of securities based on available yields and
IMI's
foreign interest rate and currency exchange rate
projections.
Longer maturity bonds tend to fluctuate more in price
than
shorter-term instruments in which the Fund
invests--providing
potential for both gain and loss.
Investors should not rely on an investment in the Fund
for their
short-term financial needs or use the Fund as a vehicle
for
playing short-term swings in the international bond and
foreign
exchange markets. The Fund should not be regarded as a
total
investment program. Also, investors should be aware
that
investing in international bonds may involve a higher
degree of
risk than investing in U.S. bonds.
Investing in foreign securities involves special risks
and
considerations not typically associated with investing
in U.S.
securities. These include differences in accounting,
auditing
and financial reporting standards, generally higher
commission
rates on foreign portfolio transactions, often less
publicly
available information about issuers, the possibility of
expropriation or confiscatory taxation, adverse changes
in
investment or exchange control regulations, political
instability
which could affect U.S. investment in foreign
countries, and
potential restrictions on the flow of international
capital.
Additionally, dividends or interest payable on foreign
securities
may be subject to foreign taxes withheld prior to
distribution
and other foreign taxes might apply. Transactions in
foreign
securities may involve greater time from the trade date
until
settlement than is involved for domestic securities
transactions
and may involve the risk of possible losses to the Fund
due to
subsequent declines in the value of the portfolio
securities.
Foreign securities often trade with less frequency and
volume
than domestic securities and therefore may exhibit
greater price
volatility. Because foreign securities often are
purchased with
and pay in currencies of foreign countries, the value
of these
assets as measured in U.S. dollars may be affected
favorably or
unfavorably by changes in currency rates and exchange
control
regulations. The Fund may incur currency exchange
costs when it
changes investments from one country to another.
Further, the
Fund may encounter difficulties or be unable to pursue
legal
remedies and obtain judgment in foreign courts.
The Fund seeks to achieve its objective by investing
primarily in
a managed portfolio of high grade bonds denominated in
foreign
currencies, including European currencies and the
European
Currency Unit (ECU). At least 65% of the Fund's total
assets
will normally be invested in bonds denominated in
foreign
currencies. In selecting bonds for the Fund's
portfolio, IMI
will consider various factors, including yields, credit
quality
and the fundamental outlook for currency and interest
rate trends
in different parts of the world. IMI may also take
into account
the ability to hedge currency and local bond price
risk.
To be considered a high grade bond in which the Fund
primarily
invests, a bond must be rated at least A or better by
Standard
and Poor's Corporation ("S&P") or by Moody's Investors
Services,
Inc. ("Moody's") or, if the bond is unrated, it must be
considered by IMI to be of comparable quality in local
currency
terms.
The Fund may invest less than 35% of its net assets in
debt
securities rated Baa or below by Moody's and/or BBB or
below by
S&P or, if unrated, considered by IMI to be of
comparable
quality. The Fund will not invest in debt securities
that, at
the time of investment, are rated less than C by either
Moody's
or S&P.
The Fund's investments may include: debt securities
issued or
guaranteed by a foreign national government, its
agencies,
instrumentalities or political subdivisions; debt
securities
issued or guaranteed by supranational organizations
(e.g.,
European Investment Bank, Inter-American Development
Bank or the
World Bank); corporate debt securities; bank or bank
holding
company debt securities; and other debt securities,
including
those convertible into common stock. The Fund may also
invest in
zero coupon securities which do not provide for the
periodic
payment of interest and are sold at significant
discount from
face value.
The Fund may also purchase securities which are not
publicly
offered and may be subject to regulations applicable to
restricted securities.
The Fund intends to diversify among several countries
and market
sectors, and to have represented, in substantial
proportions,
business activities in not less than three different
countries
other than the United States. Under normal
circumstances, the
Fund will invest no more than 35% of the value of its
total
assets in U.S. debt securities. The Fund may engage in
options,
futures, forward foreign currency contact and other
derivatives
transactions, as described below, for hedging purposes
or to seek
to enhance potential gain. The Fund may invest without
limit in
U.S. debt securities, including short-term money market
securities, for temporary defensive or emergency
purposes. It is
not possible to predict the extent to which the Fund
might employ
such optional strategies.
ADDITIONAL INFORMATION ABOUT POLICIES AND INVESTMENTS
The Fund may not make loans except through the lending
or
purchase of portfolio securities or through repurchase
agreements, and may not borrow money except as a
temporary
measure for extraordinary or emergency purposes.
In addition, as a matter of non-fundamental policy, the
Fund may
not invest more than 10% of its net assets in
securities which
are not readily marketable, repurchase agreements
maturing in
more than seven days, and restricted securities; in no
event may
the Fund invest more than 5% of its assets in
restricted
securities. These instruments may be difficult to sell
promptly
at an acceptable price, and the sale of certain of
these
instruments may be subject to legal restrictions.
Difficulty in
selling these instruments may result in a loss or may
be costly
to the Fund. A description of these and other policies
and
restrictions is contained under "Investment
Restrictions" in the
Fund's SAI.
To protect against adverse movements of interest rates
and for
purposes of liquidity, the Fund may also purchase
short-term
obligations denominated in U.S. and foreign currencies
such as,
but not limited to, bank deposits, bankers'
acceptances,
certificates of deposit, commercial paper, short-term
government,
government agency, supranational agency and corporate
obligations, and repurchase agreements.
The Fund can use various techniques to increase or
decrease its
exposure to changing security prices, interest rates,
currency
exchange rates, commodity prices, or other factors that
affect
security values. These techniques may involve
derivative
transactions such as buying and selling options and
futures
contracts, entering into currency exchange contracts,
and
purchasing indexed securities.
IMI can use these practices to adjust the risk and
return
characteristics of the Fund's portfolio of investments.
If IMI
judges market conditions incorrectly or employs a
strategy that
does not correlate well with the Fund's investments,
these
techniques could result in a loss, regardless of
whether the
intent was to reduce risk or increase return. These
techniques
may increase the volatility of the Fund and may involve
a small
investment of cash relative to the magnitude of the
risk assumed.
In addition, these techniques could result in a loss if
the
counterparty to the transaction does not perform as
promised.
The Fund may enter into repurchase agreements with
selected banks
and broker/dealers. Under a repurchase agreement, the
Fund
acquires securities, subject to the seller's agreement
to
repurchase at a specified time and price.
The Fund may purchase securities on a when-issued or
forward
delivery basis, for payment and delivery at a later
date. The
price and yield generally are fixed on the date of
commitment to
purchase. From the time of purchase until settlement,
no
interest accrues to the Fund. At the time of
settlement, the
market value of the security may differ from the
purchase price.
The higher yields and high income sought by the Fund
may be
obtainable from high yield, higher risk securities in
the lower
rating categories of the established rating services.
These
securities are rated Baa or lower by Moody's or BBB or
lower by
S&P. The Fund may invest in securities rated as low as
C by
Moody's or S&P, which may indicate that the obligations
are
speculative to a high degree and often in default.
Securities
rated lower than Baa or BBB (and comparable unrated
securities)
are commonly referred to as "high yield" or "junk"
bonds and are
considered to be predominantly speculative with respect
to the
issuer's continuing ability to meet principal and
interest
payments. Should the rating of a portfolio security be
downgraded, IMI will determine whether it is in the
Fund's best
interest to retain or dispose of the security.
However, should
any individual bond held by the Fund be downgraded
below a rating
of C, IMI currently intends to dispose of such bond
based on then
existing market conditions. See Appendix A to the SAI
for a more
complete description of the ratings assigned by Moody's
and S&P
and their respective characteristics.
RISKS
The different types of securities and investment
techniques used
by IMI all have attendant risks of varying degrees.
The Fund's
investments, and consequently its net asset value, will
be
subject to the market fluctuations and risks inherent
in all
securities. The following are descriptions of certain
risks
related to the investments and techniques that IMI may
use from
time to time.
LOW-RATED DEBT SECURITIES. The Fund may invest
less than
35% of its net assets in debt securities rated below
BBB or Baa,
but no lower than C, by S&P or Moody's. Debt
obligations rated
in the lower ratings categories, or which are unrated,
involve
greater volatility of price and risk of loss of
principal and
income than the price and liquidity of higher rated
securities.
In addition, lower ratings reflect a greater
possibility of an
adverse change in financial condition affecting the
ability of
the issuer to make payments of interest and principal.
The
market price and liquidity of lower rated fixed income
securities
generally respond to short-term corporate and market
developments
to a greater extent than the price and liquidity of
higher rated
securities, because these developments are perceived to
have a
more direct relationship with the ability of an issuer
of lower
rated securities to meet its ongoing debt obligations.
Reduced volume and liquidity in the high yield,
high risk
bond market or the reduced availability of market
quotations may
make it more difficult to dispose of the bonds and to
value
accurately the Fund's assets. The reduced availability
of
reliable, objective data may increase the Fund's
reliance on
IMI's judgment in valuing high yield, high risk bonds.
In
addition, the Fund's investments in high yield, high
risk
securities may be susceptible to adverse publicity and
investor
perceptions, whether or not justified by fundamental
factors.
NON-DIVERSIFIED INVESTMENT COMPANIES. As a "non-
diversified" investment company, the Fund may invest a
greater
portion of its assets in the securities of fewer
issuers, thereby
exposing the Fund to greater market and credit risk
than a more
broadly diversified investment company.
REPURCHASE AGREEMENTS. If the seller of
securities under a
repurchase agreement becomes insolvent, the Fund's
right to
dispose of the securities may be restricted. In the
event of the
commencement of bankruptcy or insolvency proceedings of
the
seller before repurchase of the securities under a
repurchase
agreement, the Fund may experience delays in selling
the
securities and might incur losses if the value of the
securities
should decline, as well as costs in disposing of the
securities.
ZERO COUPON SECURITIES. Zero coupon securities
are subject
to greater market value fluctuations from changing
interest rates
than debt obligations of comparable maturities which
make current
cash interest payments. If the Fund holds zero coupon
securities
in its portfolio, it generally will recognize income
currently
for federal income tax purposes in the amount of the
unpaid,
accrued interest and generally will be required to
distribute
dividends representing such income to shareholders
currently,
even though funds representing this income will not
have been
received by the Fund. Cash to pay dividends
representing unpaid,
accrued interest may be obtained from sales proceeds of
portfolio
securities and from loan proceeds.
OPTIONS, FUTURES CONTRACTS AND FORWARD CONTRACTS.
Successful use of option contracts, forward foreign
currency
contracts, futures contracts and options on futures
contracts is
subject to special risk considerations. The risk of
loss from
the use of futures is potentially unlimited. A liquid
secondary
market for any futures or related options contract may
not be
available when a futures or options position is sought
to be
closed and the Fund would remain obligated to meet
margin
requirements until the position is closed. In
addition, there
may be an imperfect correlation between price movements
in the
securities or currency on which the futures or options
contract
is based and in the Fund's portfolio securities being
hedged.
Successful use of futures or related options contracts
is further
dependent on IMI's ability to predict correctly price
movements
in the securities or currency being hedged, and no
assurance can
be given that its judgment will be correct. 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; may not involve a
clearing
mechanism and related guarantees; and are subject to
the risk of
governmental action affecting trading in, or the prices
of,
foreign securities. Successful use of options on
securities or
currencies or forward foreign currency contracts is
subject to
similar risk considerations. For further information
regarding
the Fund's options and futures transactions and their
risks, see
the SAI.
LENDING. Lending securities to broker-dealers is
a means of
earning income. This practice could result in a loss
or a delay
in recovering, or even a loss of rights in, the Fund's
securities.
ORGANIZATION OF THE FUND
The Fund is a separate, non-diversified portfolio of
the
Trust, an open-end management investment company
organized as a
Massachusetts business trust on December 21, 1983. The
business
and affairs of the Fund are managed under the direction
of the
Trustees. Information about the Trustees, as well as
the Trust's
executive officers, may be found in the SAI. The Trust
has an
unlimited number of authorized shares of beneficial
interest, and
currently has thirteen series of shares. The Trustees
of the
Trust also have the authority, without shareholder
approval, to
classify and reclassify the shares of the Fund into one
or more
classes. Pursuant to this authority, the Trustees have
authorized the issuance of three classes of shares of
the Fund,
designated as Class A, Class B and Class C. Shares of
the Fund
entitle their holders to one vote per share (with
proportionate
voting for fractional shares). The shares of each
class
represent an interest in the same portfolio of
investments of the
Fund. Each class of shares has a different
distribution policy
and bears different distribution fees. Shares of each
class have
equal rights as to voting, redemption, dividends and
liquidation
but have exclusive voting rights with respect to their
Rule 12b-1
distribution plans.
INVESTMENT MANAGER. The Trust employs IMI to
provide
business management and investment advisory services;
MIMI, of
which IMI is a wholly owned subsidiary, to provide
administrative
services; and Mackenzie Ivy Funds Distribution, Inc.
("MIFDI," or
the "Distributor") to distribute the Fund's shares.
The Fund is
managed by a team, with each team member having
specific
responsibilities.
INVESTMENT MANAGEMENT EXPENSES. For management of
investment and business affairs, the Fund pays IMI a
monthly fee
calculated on the basis on the Fund's average daily net
assets
during the preceding month at an annual rate of 0.75%.
The fees
paid by the Fund are higher than the average fees paid
by most
funds.
Under the Fund's management agreement, IMI pays
all expenses
incurred by it in rendering management services to the
Fund. The
Fund bears its cost of operations. See the SAI. If,
however,
the Fund's total expenses in any fiscal year exceed the
permissible limit applicable to the Fund in any state
in which
the shares are then qualified for sale, IMI will bear
the excess
expenses.
IMI currently limits the Fund's total operating
expenses
(excluding Rule 12b-1 fees, interest, taxes, brokerage
commissions, litigation and indemnification expenses)
to an
annual rate of 1.50% of the Fund's average daily net
assets. As
long as the Fund's expense limitation continues, it may
lower the
Fund's expenses and increase its yield. The Fund's
expense
limitation may be terminated or revised at any time, at
which
time the Fund's expenses may increase and its yield may
be
reduced, depending on the total assets of the Fund.
Thereafter,
IMI will comply with any applicable state regulations
that may
require IMI to make reimbursements to the Fund in the
event that
the Fund's aggregate operating expenses, including
advisory fees,
administrative services fees and transfer agency and
shareholder
services fees, but generally excluding interest, taxes,
brokerage
commissions and extraordinary expenses, are in excess
of specific
applicable limitations. The strictest rule currently
applicable
to the Fund is 2.5% of the first $30,000,000 of net
assets, 2.0%
of the next $70,000,000 of net assets and 1.5% of the
remainder.
The assets received by each class of the Fund for
the issue
or sale of its shares and all income, earnings,
profits, losses
and proceeds therefrom, subject only to the rights of
the
creditors, are allocated to and constitute the
underlying assets
of each class of the Fund which are segregated and are
charged
with the expenses with respect to that class of the
Fund and
with a share of the general expenses of the Trust.
General
expenses of the Trust (such as the costs of maintaining
the
Trust's existence, legal fees, proxy and shareholders'
meeting
costs, etc.) that are not readily identifiable as
belonging to a
particular fund or to a particular class of a fund will
be
allocated among and charged to the assets of each fund
on a fair
and equitable basis, which may be based on the relative
net
assets of each fund or the nature of the services
performed and
relative applicability to each fund. Expenses that
relate
exclusively to the Fund, such as certain registration
fees,
brokerage commissions and other portfolio expenses,
will be borne
directly by the Fund.
ADMINISTRATOR. The Trust has entered into an
Administrative
Services Agreement with MIMI pursuant to which MIMI
provides
various administrative services for the Fund including
maintenance of registration or qualification of Fund
shares under
state "Blue Sky" laws, assisting in the preparation of
Federal,
state and local income tax returns and preparing
financial and
other information for prospectuses, statements of
additional
information, and periodic reports to shareholders. In
addition,
MIMI will assist the Trust's legal counsel with SEC
registration
statements, proxies and other required filings. Under
the
agreement, the Fund's net assets are subject to a
monthly fee at
the annual rate of 0.10%.
FUND ACCOUNTING. The Trust has entered into a Fund
Accounting Services Agreement with MIMI pursuant to
which MIMI
provides certain accounting and pricing services for
the Fund.
For fund accounting services, the Fund pays MIMI
out-of-pocket
expenses as incurred and a monthly fee based upon the
Fund's net
assets at the end of the preceding month 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
the net
assets are over $40 million to $75 million; and $6,500
when net
assets are over $75 million.
TRANSFER AGENT. Mackenzie Ivy Investor Services
Corp.
("MIISC"), a wholly owned subsidiary of MIMI, is the
transfer
agent and dividend paying agent for the Fund and
provides certain
shareholder and shareholder-related services as
required by the
Fund. Certain broker-dealers that maintain shareholder
accounts
with the Fund through an omnibus account provide
transfer agent
and other shareholder-related services that would
otherwise be
provided by MIISC if the individual accounts that
comprise the
omnibus account were opened by their beneficial owners
directly.
As compensation for these services, MIISC pays the
broker-dealer
a similar open account fee for each account within the
omnibus
account or a fixed rate (e.g., .10%) based on the
average daily
net asset value of the omnibus account (or a
combination
thereof).
PORTFOLIO TRANSACTIONS
Subject to the overall supervision of the Trust's
President and
the Board of Trustees, IMI places all orders for the
purchase and
sale of portfolio securities for the Fund. All
portfolio
transactions are executed at the best price and
execution
obtainable. Purchases and sales of debt securities are
usually
principal transactions and, therefore, brokerage
commissions are
generally not required to be paid by the Fund for such
purchases
and sales, although the price paid usually includes
undisclosed
compensation to the dealer. The prices paid to
underwriters of
newly-issued securities usually include a concession
paid by the
issuer to the underwriter, and purchases of
after-market
securities from dealers normally reflect the spread
between the
bid and asked prices. Subject to the requirement of
best price
and execution, IMI may select broker-dealers that
provide it with
research services and may consider the sales of shares
of the
Fund as a factor in the selection of broker-dealers.
During the
Fund's current fiscal year, the portfolio turnover rate
is
estimated not to exceed 75%.
ALTERNATIVE PURCHASE ARRANGEMENTS
You can purchase shares of the Fund at a price equal
to their
net asset value per share, plus a sales charge. At
your
election, this charge may be imposed either at the time
of the
purchase (see "Initial Sales Charge Alternative -Class
A shares")
or on a contingent deferred basis (see "Contingent
Deferred Sales
Charge - Class B and Class C Shares"). If you do not
specify on
your account application which class of shares you are
purchasing, it will be assumed that you are investing
in Class A
shares. The Fund reserves the right to reject for any
reason any
purchase order of exchange (see "Exchange Privilege"
below).
CLASS A SHARES. If you elect to purchase Class A
shares,
you will incur an initial sales charge unless the
amount you
purchase is $500,000 or more. If you purchase $500,000
or more
of Class A shares, you will not be subject to an
initial sales
charge, but you will incur a contingent deferred sales
charge
("CDSC") if you redeem your shares within 24 months of
purchase.
See "Contingent Deferred Sales Charge - Class A
Shares." Class A
shares are subject to ongoing service fees at an annual
rate of
up to 0.25% of the Fund's average daily net assets
attributable
to the Class A shares. Certain purchases of Class A
shares
qualify for reduced initial sales charges. See "Share
Price -
Qualifying for a Reduced Sales Charge."
CLASS B AND CLASS C SHARES. Class B and Class
C shares
are not subject to an initial sales charge, but are
subject to a
CDSC if redeemed within six years of purchase, in the
case of
Class B shares, or within one year of purchase, in the
case of
Class C shares. Both classes of shares are subject to
ongoing
service and distribution fees at a combined annual rate
of up to
1.00% of a Fund's average daily net assets attributable
to its
Class B or Class C shares. The ongoing distribution fee
will
cause these shares to have a higher expense ratio than
that of
Class A shares. Also, to the extent that a Fund pays
any
dividends, these higher expenses will result in lower
dividends
than those paid on Class A shares.
FACTORS TO CONSIDER IN CHOOSING AN ALTERNATIVE
The alternative purchase arrangement allows you to
choose the
most beneficial way to buy shares given the amount of
your
purchase, the length of time you expect to hold your
shares and
other circumstances. You should consider whether,
during the
anticipated life of your Fund investment, the
accumulated fees on
Class B and Class C shares would be less than the
initial sales
charge and accumulated fees on Class A shares purchased
at the
same time, and to what extent this differential would
be offset
by the Class A shares' lower expenses. To help you
make this
determination, the table under the caption "Expense
Information"
on the inside cover page of this Prospectus gives
examples of the
charges applicable to each class of shares. Class A
shares will
normally be more beneficial if you qualify for a
reduced sales
charge. See "Share Price -- Qualifying for a Reduced
Sales
Charge."
Class A shares are subject to lower distribution and
service
fees, and accordingly, pay correspondingly higher
dividends per
share, to the extent that any dividends are paid.
However,
because initial sales charges are deducted at the time
of
purchase, you would not have all of your funds invested
initially
and, therefore, would own fewer shares. If you do not
qualify
for reduced initial sales charges and expect to
maintain your
investment for an extended period of time, you might
consider
purchasing Class A shares because the accumulated
distribution
and service changes on Class B and Class C shares may
exceed the
initial sales charge and accumulated distribution and
service
charges on Class A shares during the life of your
investment.
Alternatively, you might determine that it would be
more
advantageous to purchase Class B or Class C shares in
order to
have all of your funds invested initially, although
remaining
subject to a CDSC and a higher distribution fee over a
period of
eight years.
In the case of Class A shares, the distribution
expenses that
MIFDI incurs in connection with the sale of the shares
will be
paid from the proceeds of the initial sales charge and
the
ongoing distribution and service fees. In the case of
Class B
and Class C shares, the expenses will be paid from the
proceeds
of ongoing distribution and service fees, as well as
the CDSC
incurred upon redemption within six years of purchase.
The
purpose and function of the Class B and Class C shares'
CDSC and
ongoing distribution fees are the same as those of the
Class A
shares' initial sales charge and ongoing distribution
and service
fees. MIFDI is the principal underwriter of the Fund's
shares.
Sales personnel distributing the Fund's shares may
receive
different compensation for selling each class of
shares.
DIVIDENDS AND TAXES
Dividends and capital gain distributions received
from the
Fund are reinvested in additional shares of your class
unless you
elect the option to receive them in cash. If you elect
the cash
option and the U.S. Postal Service cannot deliver your
checks,
your election will be converted to the reinvestment
option.
Because of the higher expenses associated with Class B
and Class
C shares, any dividend on these shares will be lower
than on the
Class A shares. See "Share Price."
In order to provide steady cash flow to the Fund's
shareholders, the Board of Trustees intends normally to
make
monthly distributions from the Fund's net investment
income to
the Fund's Class A, Class B and Class C shares based on
their
relative net asset value. The Fund intends to make a
final
distribution for each fiscal year of any undistributed
net
investment income and net realized short-term capital
gains, as
well as undistributed net long-term capital gains,
realized
during the year. An additional distribution may be
made of net
investment income, net realized short-term capital
gains and net
realized long-term capital gains to comply with the
calendar year
distribution requirement under the excise tax
provisions of
Section 4982 of the Internal Revenue Code of 1986, as
amended
(the "Code").
If, for any year, the total distributions from the Fund
exceed
net investment income and net realized capital gains
for the
Fund, the excess, distributed from the assets of the
Fund, will
generally be treated as a return of capital. The
amount treated
as a return of capital will reduce a shareholder's
adjusted basis
in his or her shares (thereby increasing his or her
potential
gain or reducing his or her potential loss on the sale
of his or
her shares) and, to the extent that the amount exceeds
this
basis, will be treated as a taxable gain. However, if
the Fund
has current or accumulated earnings and profits, so as
to
characterize all or a portion of such excess as a
dividend for
federal income tax purposes, the distributions, to that
extent,
would normally be taxable as ordinary income (or, if a
capital
gain dividend, as long-term capital gain).
If the Fund distributes amounts in excess of its net
investment
income and net realized capital gains, such
distributions will
decrease the Fund's total assets and, therefore, have
the likely
effect of increasing the Fund's expense ratio. In
addition, in
order to make such distributions, the Fund may have to
sell a
portion of its investment portfolio at a time when
independent
investment judgment might not dictate such action.
Such sales
could also adversely affect the Fund's status as a
regulated
investment company. See "Taxation" in the SAI.
TAXATION. The following discussion is intended
for general
information only. An investor should consult with his
or her own
tax adviser as to the tax consequences of an investment
in the
Fund, including the status of distributions from the
Fund under
applicable state or local law.
The Fund intends to qualify annually and elect to be
treated as a
regulated investment company under the Code. To
qualify, the
Fund must meet certain income, distribution and
diversification
requirements. In any year in which the Fund qualifies
as a
regulated investment company and timely distributes all
of its
taxable income, the Fund generally will not pay any
U.S. federal
income or excise tax.
Dividends paid out of the Fund's investment company
taxable
income (including dividends, interest and net
short-term capital
gains) will be taxable to a shareholder as ordinary
income.
Because no portion of the Fund's income is expected to
consist of
dividends paid by U.S. corporations, no portion of the
dividends
paid by the Fund is expected to be eligible for the
corporate
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 as capital gain
dividends are
taxable as long-term capital gains, regardless of how
long the
shareholder has held the Fund's shares. Dividends are
taxable to
shareholders in the same manner whether received in
cash or
reinvested in additional Fund shares.
A distribution will be treated as paid on December 31
of the
current calendar year if it is declared by the 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. Such
distributions will be taxable to shareholders in the
calendar
year in which the distributions are declared, rather
than the
calendar year in which the distributions are received.
Each year the Fund will notify shareholders of the tax
status of
dividends and distributions.
Investments in securities that are issued at a discount
will
result in income to the Fund each year equal to a
portion of the
excess of the face value of the securities over their
issue
price, even though the Fund receives no cash interest
payments
from the securities.
Income and gains received by the Fund from sources
within foreign
countries may be subject to foreign withholding and
other taxes.
Unless the Fund is eligible to and elects to "pass
through" to
its shareholders the amount of foreign income and
similar taxes
paid by the Fund, these taxes will reduce the Fund's
investment
company taxable income, and distributions of investment
company
taxable income received from the Fund will be treated
as U.S.
source income.
Any gain or loss realized by a shareholder upon the
sale or other
disposition of shares of the Fund, or upon receipt of a
distribution in complete liquidation of the Fund,
generally will
be a capital gain or loss which will be long-term or
short-term,
generally depending upon the shareholder's holding
period for the
shares.
The Fund may be required to withhold U.S. federal
income tax at
the rate of 31% of all taxable distributions payable to
shareholders who fail to provide the Fund with their
correct
taxpayer identification number or to make required
certifications, or who have been notified by the IRS
that they
are subject to backup withholding. Backup withholding
is not an
additional tax. Any amounts withheld may be credited
against the
shareholder's U.S. federal income tax liability.
Further information relating to tax consequences is
contained in
the SAI.
Fund distributions also may be subject to state, local
and
foreign taxes. Distributions of the Fund that are
derived from
interest on obligations of the U.S. Government and
certain of its
agencies and instrumentalities may be exempt from state
and local
taxes in certain states. Shareholders should consult
their own
tax advisers regarding the particular tax consequences
of an
investment in the Fund.
PERFORMANCE DATA
Performance information for the classes of shares of
the Fund may
be compared, in reports and promotional literature, to:
(i) 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
persons who
rank mutual funds on overall performance or other
criteria; (ii)
the Consumer Price Index (measure for inflation) to
assess the
real rate of return from an investment in the Fund; and
(iii)
unmanaged indices so that investors may compare the
Fund's
results with those of a group of securities widely
regarded by
investors as representative of the securities markets
in general.
Unmanaged indices may assume the reinvestment of
dividends, but
generally do not reflect deductions for administrative
and
management costs and expenses. Performance rankings
are based on
historical information and are not intended to indicate
future
performance.
In addition, advertisements, sales literature and
communications to shareholders may contain various
measures of
the Fund's performance including current yield, various
expressions of total return and current distribution
rate. Such
materials may occasionally cite statistics to reflect
the Fund's
volatility or risk. Performance information is
computed
separately for the Fund's Class A, Class B and Class C
Shares in
accordance with the formulas described below. Because
Class B
and Class C shares bear the expense of the deferred
sales charge
alternative, it is expected that the level of
performance of the
Fund's Class B and Class C shares will be lower than
that of the
Fund's Class A shares.
Average annual total return figures as prescribed by
the SEC
represent the average annual percentage change in value
of $1000
invested at the maximum public offering price (offering
price
includes applicable sales charge) for one-, five- and
ten-year
periods, or any portion thereof, to the extent
applicable,
through the end of the most recent calendar quarter,
assuming
reinvestment of all distributions. The Fund may also
furnish
total return quotations for other periods, or based on
investments at various sales charge levels or at net
asset value.
For such purposes total return equals the total of all
income and
capital gains paid to shareholders, assuming
reinvestment of all
distributions, plus (or minus) the change in the value
of the
original investment expressed as a percentage of the
purchase
price.
Current yield reflects the income per share earned by
the Fund's
portfolio investments; it is calculated by dividing the
Fund's
net investment income per share during a recent 30-day
period by
the maximum public offering price on the last day of
that period
and then annualizing the result.
Yield, which is calculated according to a formula
prescribed by
the SEC (see the SAI), is not indicative of the
dividends or
distributions that were or will be paid to the Fund's
shareholders. Dividends or distributions paid to
shareholders
are reflected in the current distribution rate, which
may be
quoted to shareholders. The current distribution rate
is
computed by dividing the total amount of dividends per
share paid
by a Fund during the 12 months by a current maximum
offering
price (offering price includes sales charge). Under
certain
circumstances, such as when there has been a change in
the amount
of dividend payout, or a fundamental change in
investment
policies, it might be appropriate to annualize the
dividends paid
during the period when such policies would be in
effect, rather
than using the dividends during the past 12 months.
The
distribution rate will differ from the current yield
computation
because it may include distributions to shareholders
from sources
other than dividends and interest, short term capital
gain and
net equalization credits and will be calculated over a
different
period of time.
Performance figures are based upon past performance and
will
reflect all recurring charges against Fund income. In
the case
of Class A shares, performance figures may assume the
payment of
the maximum sales charge on the purchase of shares.
Such charges
would reduce a performance figure. In the case of
Class B and
Class shares, performance figures may assume the
deduction of any
applicable CDSC imposed on redemption of shares held
for the
period. The investment results of the Fund, like all
others,
will fluctuate over time; thus, performance figures
should not be
considered to represent what an investment may earn in
the future
or what the Fund's yield, distribution rate or total
return may
be in any future period.
HOW TO BUY SHARES
The minimum initial investment is $1000. All
purchases must
be made in U.S. dollars. Complete the Account
Application
attached to this Prospectus. Indicate whether you are
purchasing
Class A, Class B or Class C shares. If you do not
specify which
class of shares you are purchasing, MIISC will assume
you are
investing in Class A shares.
OPENING AN ACCOUNT
BY CHECK
1. Make your check payable to "Ivy International Bond
Fund."
2. Deliver the completed application and check to
your
registered representative or Selling Broker, or
mail it
directly to MIISC.
3. Our address is:
Mackenzie Ivy Investor Services Corp.
PO Box 3022
Boca Raton, FL 33431-0922
4. Our courier address is:
Mackenzie Ivy Investor Services Corp.
PO Box 3022
Boca Raton, FL 33431-0922
BY WIRE
1. Deliver a completed fund application to your
registered
representative or selling broker, or mail it
directly to
MIISC. Before wiring any funds, please contact
MIISC at 1-
800-777-6472 to verify your account number.
2. Instruct your bank to wire funds to:
Barnett Bank of Palm Beach County
ABA # 067008582
For deposit to The Ivy Mackenzie Funds
a/c #1455031505
Name of your account
Your Ivy or Mackenzie account number
The Ivy or Mackenzie Fund you are buying
Your bank may charge a fee for wiring funds.
THROUGH YOUR SECURITIES DEALER
You may also place an order to purchase shares through
your
Registered Securities Dealer.
BUYING ADDITIONAL SHARES
BY CHECK
1. Complete the investment stub attached to your
statement or
include a note with your investment listing the
name of the
Fund, the class of shares to purchase, your
account number
and the name(s) in which the account is
registered.
2. Make your check payable to the Ivy or Mackenzie
Fund to
which the investment will be made.
3. Mail the account information and check to:
Mackenzie Ivy Investor Services Corp.
PO Box 3022
Boca Raton, FL 33432
Our courier address is:
Mackenzie Ivy Investor Services Corp.
700 South Federal Highway, Suite 300
Boca Raton, FL 33432
or deliver it to your registered representative or
selling
broker.
BY WIRE
Instruct your bank to wire funds to:
Barnett Bank of Palm Beach County
ABA # 067008582
For deposit to
The Ivy Mackenzie Funds
a/c # 1455031505
Name of your account
Your Ivy or Mackenzie account number
The Ivy or Mackenzie Fund you are buying
Your bank may charge a fee for wiring funds.
THROUGH A REGISTERED SECURITIES DEALER
You may also place an order to purchase shares
through your Registered Securities Dealer.
BY AUTOMATIC INVESTMENT ("AIM")
1. Complete the "Automatic Investment Method" and
"Wire/EFT
Information" sections on the Account Application
designating
a bank account from which funds may be drawn.
Please note
that in order to invest using this method, your
bank must be
a member of the Automated Clearing House system
(ACH).
Please remember to attach a voided check to your
account
application.
2. At pre-specified intervals, your bank account will
be
debited and the proceeds will be credited to your
Ivy or
Mackenzie Fund account.
HOW YOUR PURCHASE PRICE IS DETERMINED
Your purchase price for Class A shares of the Fund
is the net
asset value per share plus a sales charge, which may be
reduced
or eliminated in certain circumstances. The purchase
price per
share is known as the public offering price. Your
purchase price
for Class B and Class C shares of the Fund is the net
asset value
per share.
Your purchase of shares will be made at the price next
determined
after the purchase order is received. The price is
effective for
orders received by MIISC or by your registered
securities dealer
prior to the time of the determination of the net asset
value.
Any orders received after the time of the determination
of the
net asset value will be entered at the next calculated
price.
Orders placed with a securities dealer prior to the
time of
determination of the net asset value and transmitted
through the
facilities of the National Securities Clearing
Corporation by
7:00 PM EST on the same day are confirmed at that day's
price.
Any loss resulting from the dealer's failure to submit
an order
by the deadline will be borne by that dealer.
You will receive an account statement of your account
after any
purchase, exchange or full liquidations. Statements
related to
reinvestment of dividends, capital gains, systematic
investment
plans ("SIP" - See the SAI for further explanation)
and/or
systematic withdrawal plans will be sent quarterly.
HOW THE FUND VALUES ITS SHARES
The net asset value ("NAV") per share is the value of
one share.
The NAV per share is determined in the following
manner: the
total of all liabilities, including accrued expenses
and taxes
and any necessary reserves, is deducted from the
aggregate gross
value of all assets, and the difference is divided by
the number
of shares outstanding at the time, adjusted to the
nearest cent.
The NAV per share is determined once every business day
(each day
the New York Stock Exchange is open). Trading of
foreign
securities may not occur on every business day, and may
occur on
days when the New York Stock Exchange is closed.
The Fund offers three classes of shares in this
Prospectus:
Class A shares, which are subject to an initial sales
charge; and
Class B and Class C shares, which are subject to a
CDSC. If you
do not specify a particular class of shares, it will be
assumed
that you are purchasing Class A shares and an initial
sales
charge will be assessed.
INITIAL SALES CHARGE ALTERNATIVE--CLASS A SHARES
Shares are purchased at a public offering price equal
to their
NAV per share plus a sales charge, as set forth below.
TABLE OF SALES CHARGES FOR CLASS A SHARES
SALES CHARGE
AS A PERCENTAGE
OF PUBLIC
AMOUNT INVESTED OFFERING PRICE
Less than $100,000 4.75%
$100,000 but less than $250,000 3.75
$250,000 but less than $500,000 2.50%
$500,000 and over* 0.00%
SALES CHARGE
AS A PERCENTAGE
OF NET
AMOUNT INVESTED AMOUNT INVESTED
Less than $100,000 4.99%
$100,000 but less than $250,000 3.90%
$250,000 but less than $500,000 2.56%
$500,000 and over* 0.00%
PORTION OF
PUBLIC OFFERING
PRICE RETAINED
AMOUNT INVESTED BY DEALER
Less than $100,000 4.00%
$100,000 but less than $250,000 3.00%
$250,000 but less than $500,000 2.00%
$500,000 and over* 0.00%
[*] A CDSC may apply to the redemption of Class A
shares that
are purchased. See "Contingent Deferred Sales
Charge--Class
A Shares."
Sales charges ARE NOT APPLIED to any dividends which
are
reinvested in additional shares of the Fund.
MIFDI may, at the time of any purchase of Class A Fund
shares,
pay out of MIFDI's own resources commissions to dealers
which
provided distribution assistance in connection with the
purchase.
For purchases over $500,000, the commission would be
computed at
1.00% of the first $3,000,000 invested, 0.50% of the
next
$2,000,000 invested, and 0.25% of the amount invested
in excess
of $5,000,000. Dealers who receive 90% or more of the
sales
charge may be deemed to be underwriters as that term is
defined
in the Securities Act of 1933.
An investor may be charged a transaction fee for Class
A shares
purchased or redeemed at net asset value through a
broker or
agent other than MIFDI.
MIFDI compensates participating brokers who sell
Class A
shares through the initial sales charge. MIFDI retains
that
portion of the initial sales charge that is not
reallowed to the
dealers, which it may use to distribute the Fund's
Class A
shares. Pursuant to separate distribution plans for the
Fund's
Class A, Class B and Class C shares, MIFDI bears
various
promotional and sales related expenses, including the
cost of
printing and mailing prospectuses to persons other than
shareholders. Pursuant to the Fund's distribution plans
applicable to its Class A, Class B and Class C shares,
MIFDI
currently pays a continuing service fee to qualified
dealers at
an annual rate of 0.25% of qualified investments.
MIFDI may from time to time pay a bonus or other
incentive to
dealers (other than MIFDI) which employ a registered
representative who sells a minimum dollar amount of the
shares of
the Fund and/or other funds distributed by MIFDI during
a
specified period of time. This bonus or other
incentive may take
the form of payment for travel expenses, including
lodging,
incurred in connection with trips taken by qualifying
registered
representatives and members of their families to places
within or
without the United States or other bonuses such as gift
certificates or the cash equivalent of such bonus or
incentive.
CONTINGENT DEFERRED SALES CHARGE--CLASS A SHARES
Purchases of $500,000 or more of Class A shares will be
made at
net asset value with no initial sales charge, but if
the shares
are redeemed within 24 months after the end of the
calendar month
in which the purchase was made (the CDSC period), a
CDSC of 1.00%
will be imposed.
Purchases made under the NAV Transfers Program in Class
A shares
of the Fund are subject to a CDSC of 0.40% for certain
redemptions within one year after the date of purchase.
The charge will be assessed on an amount equal to the
lesser of
the current market value or the original purchase cost
of the
Class A shares redeemed. Accordingly, no CDSC will be
imposed on
increases in account value above the initial purchase
price,
including any dividends which have been reinvested in
additional
Class A shares.
In determining whether a CDSC applies to a redemption,
the
calculation will be determined in a manner that results
in the
lowest possible rate being charged. Therefore, it will
be
assumed that the redemption is first made from any
shares in your
account not subject to the CDSC. The CDSC is waived in
certain
circumstances. See the discussion below under the
caption
"Waiver of Contingent Deferred Sales Charges."
WAIVER OF CONTINGENT DEFERRED SALES CHARGE. The
CDSC is
waived for (i) redemptions in connection with
distributions not
exceeding 12% annually of the initial account balance
(i.e., the
value of the shareholder's Class A Fund account at the
time of
the initial distribution) (a) following retirement
under a tax
qualified retirement plan or (b) in the case of an
individual
retirement account ("IRA"), a custodial account
pursuant to
section 403(b)(7) of the Code, or a Keogh Plan; (ii)
redemption
resulting from tax-free return of an excess
contribution to an
IRA; or (iii) any partial or complete redemption
following the
death or disability (as defined in Section 72(m)(7) of
the Code)
of a shareholder from an account in which the deceased
or
disabled is named, provided that the redemption is
requested
within one year of death or disability. The
distributor may
require documentation prior to waiver of the CDSC.
Class A shareholders may exchange their Class A shares
subject to
a CDSC ("outstanding Class A shares") for Class A
shares of
another Ivy or Mackenzie 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 be due upon the
redemption of the
outstanding Class A shares. The original CDSC rate
that would
have been charged if the outstanding Class A shares
were redeemed
will carry over to the new Class shares received in the
exchange,
and will be charged accordingly at the time of
redemption.
QUALIFYING FOR A REDUCED SALES CHARGE
RIGHTS OF ACCUMULATION (ROA). Rights of
Accumulation
("ROA") is calculated by determining the current market
value of
all Class A shares in all Ivy or Mackenzie Fund
accounts (except
Ivy Money Market Fund) owned by you, your spouse, and
your
children under 21 years of age. ROA is also applicable
to
accounts under a trustee or other single fiduciary
(including
retirement accounts qualified under Section 401 of the
Code).
The current market value of all of your accounts as
described
above is added together and then added to your current
purchase
amount. If the combined total is equal or greater than
a
breakpoint amount for the Fund, then you qualify for
the reduced
sales charge.
LETTER OF INTENT (LOI). A Letter of Intent
("LOI") is a
non-binding agreement that states your intention to
invest in
additional Class A shares, within a thirteen month
period after
the initial purchase, an amount equal to a breakpoint
amount for
the Fund. The LOI may be backdated up to 90 days. To
sign a
LOI, please complete Section 4B of the new account
application.
Should the LOI not be fulfilled within the
thirteen month
period, your account will be debited for the difference
between
the full sales charge that applies for the amount
actually
invested and the reduced sales charge actually paid on
purchases
placed under the terms of the LOI.
PURCHASES OF CLASS A SHARES AT NET ASSET VALUE.
An investor
who was a shareholder of any Ivy Fund on December 31,
1991 or a
shareholder of American Investors Income Fund, Inc. or
American
Investors Growth Fund, Inc. on October 31, 1988 and who
became a
shareholder of Mackenzie Fixed Income Trust or Ivy
Growth Fund as
a result of the respective reorganizations between the
funds will
be exempt from sales charges on the purchase of Class A
shares of
any Ivy or Mackenzie Fund. This privilege is also
available to
immediate family members of a shareholder (i.e., the
shareholder's children, the shareholder's spouse and
the children
of the shareholder's spouse). This no-load privilege
terminates
for the investor if the investor redeems all shares
owned.
Shareholders and their relatives as described above
should call
1-800-235-3322 for information about additional
purchases or to
inquire about their account.
Officers and Trustees of the Trust (and their
relatives) and IMI,
MIMI, and Mackenzie Financial Corporation (of which
MIMI is a
subsidiary) and their officers, directors, employees,
and
retired employees, and legal counsel and independent
accountants
(and their relatives) may buy Class A shares of the
Fund without
an initial sales charge or CDSC.
Directors, officers, partners, registered
representatives,
employees and retired employees (and their relatives)
of dealers
having a sales agreement with MIFDI or trustees or
custodians of
any qualified retirement plan established for the
benefit of a
person enumerated above may buy Class A shares of the
Fund
without an initial sales charge or CDSC. In addition,
certain
investment advisors and financial planners who charge a
management, consulting or other fee for their services
and who
place trades for their own accounts and the accounts of
their
clients may purchase Class A shares of the Fund without
an
initial sales charge or a CDSC, provided such purchases
are
placed through a broker or agent who maintains an
omnibus account
with the Fund. Also, clients of these advisors and
planners may
make purchases under the same conditions if the
purchases are
through the master account of such advisor or planner
on the
books of such broker or agent. THIS PROVISION APPLIES
TO ASSETS
OF RETIREMENT AND DEFERRED COMPENSATION PLANS AND
TRUSTS USED TO
FUND THOSE PLANS INCLUDING, BUT NOT LIMITED TO, THOSE
DEFINED IN
SECTION 401(a), 403(b) OR 457 OF THE CODE AND "RABBI
TRUSTS"
WHOSE ASSETS ARE USED TO PURCHASE SHARES OF THE FUND
THROUGH THE
AFOREMENTIONED CHANNELS.
Class A shares of the Fund may be purchased at net
asset value by
retirement plans qualified under section 401(a) or
403(b) of the
Code and subject to the Employee Retirement Income
Security Act
of 1974, as amended, subject to the following: (i)
either (a) the
sponsoring organization must have at least 25 employees
or (b)
the aggregate purchases by the retirement plan of Class
A shares
of the Fund must be in an amount of at least $250,000
within a
reasonable period of time, as determined by MIFDI in
its sole
discretion; and (ii) a CDSC of 0.75% will be imposed on
such
purchases in the event of certain redemption
transactions within
24 months of such purchases.
If investments by retirement plans at NAV are made
through a
dealer who has executed a dealer agreement with respect
to the
Fund, MIFDI may, at the time of purchase, pay such
dealer, out of
MIFDI's own resources, a commission to compensate such
dealer for
its distribution assistance in connection with such
purchase.
Commissions would be computed at 0.75% of the first
$3,000,000
invested, 0.50% of the next $2,000,000 invested, and
0.25% of the
amount invested in excess of $5,000,000. Please
contact MIFDI
for additional information.
Class A shares can also be purchased without an initial
sales
charge, but subject to a CDSC of 0.40% during the first
12 months
by any state, county, city, or any instrumentality,
department,
authority or agency of these entities, which is
prohibited by
applicable investment laws from paying a sales charge
or
commission when purchasing shares of any registered
investment
management company (an "eligible governmental
authority"). MIFDI
may, at the time of any such purchase, pay out of
MIFDI's own
resources commissions to dealers which provided
distribution
assistance in connection with the purchase.
Commissions would be
computed at 0.40% of the first $3,000,000 invested,
0.20% of the
next $2,000,000 invested, and 0.10% of the amount
invested in
excess of $5,000,000.
Class A shares can also be purchased without an initial
sales
charge, but subject to a CDSC of 0.40% in the first 12
months by
trust companies, bank trust departments, credit unions,
savings
and loans and other similar organizations in their
fiduciary
capacity or for their own accounts subject to any
minimum
requirements set by MIFDI. Currently, these criteria
require
that the amount invested or to be invested in the
subsequent 13-
month period totals at least $250,000. MIFDI may, at
the time of
any such purchase, pay out of MIFDI's own resources
commissions
to dealers which provided distribution assistance in
connection
with the purchase. Commissions would be computed at
0.40% of the
first $3,000,000 invested, 0.20% of the next $2,000,000
invested,
and 0.10% of the amount invested in excess of
$5,000,000.
Class A shares of the Fund may also be purchased
without a sales
charge in connection with certain liquidation, merger
or
acquisition transactions involving other investment
companies or
personal holding companies.
CONTINGENT DEFERRED SALES CHARGE ALTERNATIVE--CLASS
B AND
CLASS C SHARES
Class B and Class C shares are offered at NAV per share
without a
front end sales charge. However, Class C shares
redeemed within
one year of purchase will be subject to a CDSC of 1%,
and Class B
shares redeemed within six years of purchase will be
subject to a
CDSC at the rates set forth below. This charge 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.
Accordingly, you will not be assessed a CDSC on
increases in
account value above the initial purchase price,
including shares
derived from dividend reinvestment. In determining
whether a CDSC
applies to a redemption, the calculation will be
determined in a
manner that results in the lowest possible rate being
charged. It
will be assumed that your redemption comes first from
shares you
have held beyond the requisite maximum holding period
or those
you acquire through reinvestment of dividends or
distributions,
and next from the shares you have held the longest
during the
requisite holding period.
Proceeds from the CDSC are paid to MIFDI. MIFDI uses
them, in
whole or in part, to defray its expenses related to
providing
each Fund with distribution services in connection with
the sale
of Class B and Class C shares, such as compensating
selected
dealers and agents for selling these shares. The
combination of
the CDSC and the distribution and service fees makes it
possible
for a Fund to sell Class B or Class C shares without
deducting a
sales charge at the time of the purchase.
In the case of Class B shares, the amount of the
CDSC, if any,
will vary depending on the number of years from the
time you
purchase your Class B shares until the time you redeem
them.
Solely for purposes of determining this holding period,
any
payments you make during the quarter will be aggregated
and
deemed to have been made on the last day of the
quarter.
Class B Shares:
CONTINGENT
DEFERRED SALES
CHARGE AS A
PERCENTAGE OF
DOLLAR AMOUNT
YEAR SINCE PURCHASE
SUBJECT TO
CHARGE
First . . . . . . . . . . . . . . . . . . . . .
5%
Second . . . . . . . . . . . . . . . . . . . .
4%
Third . . . . . . . . . . . . . . . . . . . . .
3%
Fourth . . . . . . . . . . . . . . . . . . . .
3%
Fifth . . . . . . . . . . . . . . . . . . . . .
2%
Sixth . . . . . . . . . . . . . . . . . . . . .
1%
Seventh and thereafter . . . . . . . . . . . .
0%
MIFDI currently intends to pay to dealers a sales
commission
of 4% of the sale price of Class B shares that they
have sold,
and will receive the entire amount of the CDSC paid by
shareholders on the redemption of Class B shares to
finance the
4% commission and related marketing expenses.
With respect to Class C shares, MIFDI currently
intends to
pay to dealers a sales commission of 1% of the sale
price of
Class C shares that they have sold, a portion of which
is to
compensate the dealers for providing Class C
shareholder account
services during the first year of investment. MIFDI
will receive
the entire amount of the CDSC paid by shareholders on
the
redemption of Class C shares to finance the 1%
commission and
related marketing expenses.
Pursuant to separate distribution plans for the
Funds' Class
B and Class C shares, MIFDI bears various promotional
and sales
related expenses, including the cost of printing and
mailing
prospectuses to persons other than shareholders. Under
the Funds'
Class B Plan, MIFDI retains 0.75% of the continuing
1.00%
service/distribution fee assessed to Class B
shareholders, and
pays a continuing service fee to qualified dealers at
an annual
rate of 0.25% of qualified investments. Under the
Class C Plan,
MIFDI pays continuing service/distribution fees to
qualified
dealers at an annual rate of 1.00% of qualified
investments after
the first year of investment (0.25% of which represents
a service
fee).
CONVERSION OF CLASS B SHARES. Your Class B shares
and an
appropriate portion of both reinvested dividends and
capital
gains on those shares will be converted into Class A
shares
automatically no later than the month following eight
years after
the shares were purchased, resulting in lower annual
distribution
fees. If you exchanged Class B shares from another Ivy
or
Mackenzie fund into Class B shares of the Fund, the
calculation
will be based on the time the shares in the original
fund were
purchased.
WAIVER OF CONTINGENT DEFERRED SALES CHARGE. The
CDSC is
waived for (i) redemptions in connection with
distributions not
exceeding 12% annually of the initial account balance
(i.e., the
value of the shareholder's Class A Fund account at the
time of
the initial distribution) (a) following retirement
under a tax
qualified retirement plan or (b) in the case of an IRA,
custodial
account pursuant to section 403(b)(7) of the Code, or
Keogh Plan;
(ii) redemption resulting from tax-free return of an
excess
contribution to an IRA; or (iii) any partial or
complete
redemption following the death or disability (as
defined in
Section 72(m)(7) of the Code) of a shareholder from an
account in
which the deceased or disabled is named, provided that
the
redemption is requested within one year of death or
disability.
The distributor may require documentation prior to
waiver of the
CDSC.
ARRANGEMENTS WITH BROKER/DEALERS AND OTHERS.
MIFDI may, at
its own expense, pay concessions in addition to those
described
above to dealers which satisfy certain criteria
established from
time to time by MIFDI. These conditions relate to
increasing
sales of shares of the Fund over specified periods and
to certain
other factors. These payments may, depending on the
dealer's
satisfaction of the required conditions, be periodic
and may be
up to (i) 0.25% of the value of Fund shares sold by
such dealer
during a particular period, and (ii) 0.10% of the value
of Fund
shares held by the dealer's customers for more than one
year
calculated on an annual basis.
HOW TO REDEEM SHARES
You may redeem your Fund shares through your
registered
securities representative, by mail or by telephone. A
CDSC may
apply to certain Class A share redemptions, and to
Class B and
Class C share redemptions prior to conversion. All
redemptions
are made at the net asset value next determined after a
redemption request has been received in good order.
Requests for
redemptions must be received by 4:00 PM EST to be
processed at
the net asset value for that day. Any redemption
requests in
good order that is received after 4:00 PM will be
processed at
the price determined on the following business day. If
shares to
be redeemed were purchased by check, payment of the
redemption
may be delayed until the check has cleared or for up to
15 days
after the date of purchase, whichever is less. If a
shareholder
owns shares of more than one class of the Fund, the
Fund will
redeem first the shares having the highest 12b-1 fees;
provided,
that any shares subject to a CDSC will be redeemed last
unless
the shareholder specifically elects otherwise.
When shares are redeemed, the Fund generally sends you
payment on
the next business day. Under unusual circumstances,
the Fund may
suspend redemptions or postpone payment to the extent
permitted
by Federal securities laws. The proceeds of the
redemption may
be more or less than the purchase price of your shares,
depending
upon, among other factors, the market value of the
Fund's
securities at the time of the redemption. If the
redemption is
for over $50,000, or the proceeds are to be sent to an
address
other than the address of record, or an address change
has
occurred in the last 30 days, it must be requested in
writing
with a signature guarantee.
If you are not certain of the requirements for a
redemption,
please contact MIISC at 1-800-777-6472.
THROUGH The Dealer is responsible for promptly
transmitting
YOUR redemption orders. Redemptions requested
by dealers
REGISTERED will be made at the net asset value (less
any
SECURITIES applicable CDSC) determined at the close
of regular
DEALER trading (4:00 PM EST) on the day that a
redemption
request is received in good order by
MIISC.
BY MAIL Requests for redemption in writing are
considered to
be in "proper or good order" if they
contain the
following:
- Any outstanding certificate(s) for
shares being
redeemed.
- A letter of instruction, including
the fund
name, the account number, the account
name(s),
the address and the dollar amount or
number of
shares to be redeemed.
- Signatures of all registered owners
whose names
appear on the account.
- Any required signature guarantees.
- Other supporting legal documentation,
if
required (in the case of estates,
trusts,
guardianships, corporations,
retirement plans
or other representative capacities).
The dollar amount or number of shares
indicated for
redemption must not exceed the available
shares or
net asset value of your account at the
next-
determined prices. If your request
exceeds these
limits, then the trade will be rejected in
its
entirety.
Mail your request to:
MACKENZIE IVY INVESTOR SERVICES CORP.
PO BOX 3022
BOCA RATON, FL 33431-0922
Our courier address is:
MACKENZIE IVY INVESTOR SERVICES CORP.
700 SOUTH FEDERAL HIGHWAY, SUITE 300
BOCA RATON, FL 33432
BY TELEPHONE Individual and joint accounts may redeem
up to
$50,000 per day over the telephone by
contacting
MIISC at 1-800-777-6472. In times of
unusual
economic or market changes, the
telephone
redemption privilege may be difficult to
implement. If you are unable to execute
your
transaction (for example, during such
times), you
may want to consider placing the order
in writing
and sending it by mail or overnight
courier.
Checks will be made payable to the
current account
registration and sent to the address of
record.
If there has been a change of address in
the last
30 days, please use the instructions for
redemption requests by mail described
above. A
signature guarantee would be required.
Requests for telephone redemptions will
be
accepted from the registered owner of
the account,
the designated registered representative
or
his/her assistant.
Shares held in certificate form cannot
be redeemed
by telephone.
If Section 6E of the new account application is not
completed,
telephone redemption privileges will be provided
automatically.
Although telephone redemptions may be a convenient
feature, you
should realize that you may be giving up a measure of
security
that you may otherwise have if you terminated the
privilege and
redeemed your shares in writing. If you do not wish to
make
telephone redemptions or let your registered
representative or
his/her assistant do so on your behalf, you must notify
MIISC in
writing.
The Fund 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, the Fund
may be
liable for any losses due to unauthorized or fraudulent
telephone
instructions.
For shareholders who established this feature at the
time they
opened their new account, telephone instructions will
be accepted
for redemption of amounts up to $50,000 and proceeds
will be
wired on the next business day to a predesignated bank
account.
In order to add this feature to an existing account or
to change
existing bank account information, please submit a
letter of
instructions including your bank information to MIISC
at the
address provided above. The letter must be signed by
all
registered owners, and their signatures must be
guaranteed.
Your account will be charged a fee of $10.00 each time
that
redemption proceeds are wired to your bank.
Neither MIMI nor the Fund can be responsible for the
efficiency
of the Federal Funds wire system or the shareholder's
bank.
MINIMUM ACCOUNT BALANCE REQUIREMENTS
Due to the high cost of maintaining small accounts and
subject to
state law requirements, the Fund may redeem the
accounts of
shareholders who have maintained an investment,
including sales
charges paid, of less than $1,000 for more than 12
months. No
redemption will be made unless the shareholder has been
given at
least 60 day's notice of the Fund's intention to redeem
the
shares. No redemption will be made if a shareholder's
account
falls below the minimum due to a reduction in the value
of the
Fund's portfolio securities. This provision does not
apply to
IRAs, other retirement accounts and UGMA/UTMA accounts.
SIGNATURE GUARANTEES
For your protection, and to prevent fraudulent
redemptions, we
require a signature guarantee in order to accommodate
the
following requests:
- Redemption requests over $50,000.
- Requests for redemption proceeds to be sent
to someone
other than the registered shareholder.
- Requests for redemption proceeds to be sent
to an
address other than the address of record.
- Registration transfer requests.
- Requests for redemption proceeds to be wired
to your
bank account (if this option was not selected
on your
original application, or if you are changing
the bank
wire information).
A signature guarantee may be obtained only from an
eligible
guarantor institution as defined in Rule 17Ad-15 of the
Securities Exchange Act of 1934, as amended. An
eligible
guarantor institution includes banks, brokers, dealers,
municipal
securities dealers, government securities dealers,
government
securities brokers, credit unions, national securities
exchanges,
registered securities associations, clearing agencies
and savings
associations. The signature guarantee must not be
qualified in
any way. Notarizations from notary publics are not the
same as
signature guarantees, and are not accepted.
Circumstances other than those described above may
require a
signature guarantee. Please contact MIISC at
1-800-777-6472 for
more information.
CHOOSING A DISTRIBUTION OPTION
You have the option of selecting the dividend and
capital gain
distribution option that best suits your needs:
1. AUTOMATIC REINVESTMENT OPTION - Both dividends and
capital
gains are automatically reinvested at net asset
value in
additional shares of the same class of the Fund
unless you
specify one of the other options.
2. INVESTMENT IN ANOTHER IVY OR MACKENZIE FUND - Both
dividends
and capital gains are automatically invested at
net asset
value in the same class of shares of another Ivy
or
Mackenzie Fund.
3. DIVIDENDS IN CASH/CAPITAL GAINS REINVESTED -
Dividends will
be paid in cash. Capital gains will be reinvested
at net
asset value in additional shares of the same class
of the
fund or another Ivy or Mackenzie Fund of the same
class.
4. DIVIDENDS AND CAPITAL GAINS IN CASH - Both
dividends and
capital gains will be paid in cash.
If you wish to have your cash distributions deposited
directly to
your bank account via electronic funds transfer, or if
you wish
to change your distribution option, please contact
MIISC at 1-
800-777-6472.
If you wish to have your cash distributions go to an
address
other than the address of record, a signature guarantee
is
required.
TAX IDENTIFICATION NUMBER
In general, to avoid being subject to a 31% Federal
backup
withholding tax on dividends, capital gains
distributions and
redemption proceeds, you must furnish the Fund with
your
certified tax identification number (TIN) and certify
that you
are not subject to backup withholding due to prior
underreporting
of interest and dividends to the Internal Revenue
Service. If
you fail to provide a certified TIN or such other
tax-related
certifications as the Fund may require, within 30 days
of opening
your new account, the Fund reserves the right to
involuntarily
redeem your account and send the proceeds to your
address of
record.
You can avoid the above withholding and/or redemption
by
correctly furnishing your TIN, and making certain
certifications,
in Section 2 of the new account application at the time
you open
your new account, unless the IRS requires that backup
withholding
be applied to your account.
Certain payees, such as corporations, generally are
exempt from
backup withholding. Please complete IRS Form W-9 with
the new
account application to claim this exemption. If the
registration
is for a UGMA/UTMA account, please provide the social
security
number of the minor. Non-U.S. investors who do not
have a TIN
must provide, with their new account application, a
completed IRS
Form W-8.
CERTIFICATES
In order to facilitate transfers, exchanges and
redemptions, most
shareholders elect not to receive certificates. Should
you wish
to have a certificate issued, please contact MIISC at
1-800-777-
6472 and request that one be sent to you. (Retirement
plan
accounts are not eligible for this service.) Please
note that if
you were to lose your certificate, you would incur an
expense to
replace it.
Certificates requested by telephone for shares valued
up to
$50,000 will be issued to the current registration and
mailed to
the address of record. Should you wish to have your
certificates
mailed to a different address, or registered
differently from the
current registration, you must provide a letter of
instruction
signed by all registered owners with signatures
guaranteed. The
letter of instruction would be sent to Mackenzie Ivy
Investor
Services Corp., PO Box 3022, Boca Raton, FL
33431-0922.
EXCHANGE PRIVILEGE
Shareholders of the Fund have an exchange privilege
with other
Mackenzie and Ivy Funds. Class A shareholders may
exchange
their outstanding Class A shares for Class A shares of
another
Ivy or Mackenzie Fund on the basis of the net asset
value per
Class A share, plus an amount equal to the difference
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.
Class B and Class C shareholders may exchange their
outstanding Class B (or Class C) shares for Class B (or
Class C)
shares of another Ivy or Mackenzie Fund on the basis of
the
relative NAV per Class B (or Class C) share, without
the payment
of any CDSC that would otherwise be due upon the
redemption of
Class B (or Class C) shares. Class B shareholders who
exercise
the exchange privilege would continue to be subject to
the
original Fund's CDSC schedule (or period) following an
exchange
if such schedule is higher (or longer) than the CDSC
for the new
Class B shares.
Shares resulting from the reinvestment of dividends and
other
distributions will not be charged an initial sales
charge or a
CDSC when exchanged to another Ivy or Mackenzie Fund.
Exchanges are considered to be taxable events, and may
result in
a capital gain or a capital loss for tax purposes.
Prior to
executing an exchange, you should obtain and read the
prospectus
and consider the investment objective of the fund to be
purchased. Shares must be unissued in order to execute
an
exchange. Exchanges are available only in states where
they can
be legally made. This privilege is not intended to
provide
shareholders a means by which to speculate on
short-term
movements in the market. Exchanges are accepted only
if the
registrations of the two accounts are identical.
Amounts to be
exchanged must meet minimum investment requirements for
the Ivy
or Mackenzie Fund into which the exchange is made.
With respect to 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.
An investor who was a shareholder of American Investors
Income
Fund, Inc. or American Investors Growth Fund, Inc.
prior to
October 31, 1988, or a shareholder of the Ivy Funds
prior to
December 31, 1991, who became a shareholder of the Fund
as a
result of a reorganization or merger between the Funds
may
exchange between funds without paying a sales charge.
An
investor who was a shareholder of American Investors
Income Fund,
Inc. or American Investors Growth Fund, Inc. on or
after October
31, 1988, who became a shareholder of the Fund as a
result of the
reorganization between the Funds will receive credit
toward any
applicable sales charge imposed by any Ivy or Mackenzie
Fund into
which an exchange is made.
In calculating the sales charge assessed on an
exchange,
shareholders will be allowed to use the Rights of
Accumulation
privilege.
EXCHANGES BY TELEPHONE
When you fill out the application for your
purchase of Fund
shares, if Section 6E of the new account application is
not
completed, telephone exchange privileges will be
provided
automatically. Although telephone exchanges may be a
convenient
feature, you should realize that you may be giving up a
measure
of security that you may otherwise have if you
terminated the
privilege and exchanged your shares in writing. If you
do not
wish to make telephone exchanges or let your registered
representative or his/her assistant do so on your
behalf, you
must notify MIISC in writing.
In order to execute an exchange, please contact
MIISC at 1-
800-777-6472. Have the account number of your current
fund and
the exact name in which it is registered available to
give to the
telephone representative.
The Fund 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, the Fund
may be
liable for any losses due to unauthorized or fraudulent
telephone
instructions.
EXCHANGES IN WRITING
In a letter, request an exchange and provide the
following
information:
- The name and class of the fund whose shares
you
currently own.
- Your account number.
- The name(s) in which the account is
registered.
- The name of the fund in which you wish your
exchange to
be invested.
- The number of shares, all shares or the
dollar amount
you wish to exchange.
The request must be signed as by all registered owners.
Mail the request and information to:
Mackenzie Ivy Investor Services Corp.
P.O. Box 3022
Boca Raton, FL 33431-0922
REINVESTMENT PRIVILEGE
Investors who have redeemed Class A shares of the Fund
have a
one-time privilege of reinvesting 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
after the
date of redemption. In order to reinvest without a
sales charge,
shareholders or their brokers must inform MIISC that
they are
exercising the reinvestment privilege at the time of
reinvestment. The tax status of a gain realized on a
redemption
generally will not be affected by the exercise of the
reinvestment privilege, but a loss realized on a
redemption
generally may be disallowed by the Internal Revenue
Service if
the reinvestment privilege is exercised within 30 days
after the
redemption. In addition, upon a reinvestment, the
shareholder
may not be permitted to take into account sales charges
incurred
on the original purchase of shares in computing their
taxable
gain or loss.
SYSTEMATIC WITHDRAWAL PLAN ("SWP")
You may elect the Systematic Withdrawal Plan at any
time by
completing the Account Application, which is attached
to this
Prospectus. You can also obtain this application by
contacting
your registered representative or MIISC at
1-800-777-6472. To be
eligible, you must have at least $5,000 in your
account.
Payments (minimum distribution amount - $50) from your
account
can be made monthly, quarterly, semi-annually, annually
or on a
selected monthly basis, to yourself or any other
designated
payee. You may elect to have your systematic
withdrawal paid
directly to your bank account via electronic funds
transfer
("EFT"). For more information, please contact MIISC at
1-800-
777-6472.
If payments you receive through the Systematic
Withdrawal Plan
exceed the dividends and capital appreciation of your
account,
you will be reducing the value of your account.
Additional
investments made by shareholders participating in the
Systematic
Withdrawal Plan must equal at least $1,000 while the
plan is in
effect. However, it may not be advantageous to
purchase
additional Class A, Class B or Class C shares when you
have a
Systematic Withdrawal Plan, because you may be subject
to an
initial sales charge on your purchase of Class A shares
or to a
CDSC imposed on your redemptions of Class B or Class C
shares.
In addition, redemptions are taxable events.
Amounts paid to you through the Systematic Withdrawal
Plan are
derived from the redemption of shares in your account.
Any
applicable CDSC will be assessed upon the redemptions.
A CDSC
will not be assessed on withdrawals not exceeding 12%
annually of
the initial account balance when the Systematic
Withdrawal Plan
was started.
Should you wish at any time to add a Systematic
Withdrawal Plan
to an existing account or change payee instructions,
you will
need to submit a written request, signed by all
registered
owners, with signatures guaranteed.
Retirement accounts are eligible for Systematic
Withdrawal Plans.
Please contact MIISC at 1-800-777-6472 to obtain the
necessary
paperwork to establish a plan.
If the U.S. Postal Service cannot deliver your checks,
or if
deposits to a bank account are returned for any reason,
your
redemptions will be discontinued.
AUTOMATIC INVESTMENT METHOD ("AIM")
You may authorize an investment to be automatically
drawn each
month from your bank for investment in Fund shares
under the
"Automatic Investment Method" and "Fed Wire/EFT"
sections of the
Account Application. There is no charge to you for
this program.
You may terminate or suspend your Automatic Investment
Method by
telephone at any time by contacting MIISC at
1-800-777-6472.
If you have investments being withdrawn from a bank
account and
we are notified that the account has been closed, your
Automatic
Investment Method will be discontinued.
CONSOLIDATED ACCOUNT STATEMENTS
Shareholders with two or more Ivy or Mackenzie fund
accounts will
receive a single quarterly account statement, unless
otherwise
specified. This feature consolidates the activity for
each
account onto one statement. Requests for quarterly
consolidated
statements for all other accounts must be submitted in
writing
and must be signed by all registered owners.
RETIREMENT PLANS
The Ivy Mackenzie Funds offers several IRS-approved tax
sheltered
retirement plans that may fit your needs:
- IRA (Individual Retirement Account)
- 401(k) Plan
Money Purchase Pension Plan
Profit Sharing Plan
- SEP-IRA (Simplified Employee Pension Plan)
- 403(b)(7) Plan
Minimum initial and subsequent investments for
retirement plans
are $25.00.
Please call MIISC at 1-800-777-6472 for complete
information kits
describing the plans, their benefits, restrictions,
provisions
and fees.
SHAREHOLDER INQUIRIES
Inquiries regarding the Fund should be directed to
MIISC at 1-
800-777-6472.
IVY BOND FUND
IVY EMERGING GROWTH FUND
IVY GROWTH FUND
IVY GROWTH WITH INCOME FUND
series of
IVY FUND
Via Mizner Financial Plaza, Suite 300
700 South Federal Highway
Boca Raton, Florida 33432
STATEMENT OF ADDITIONAL INFORMATION
April 30, 1996
_________________________________________________________________
Ivy Fund (the "Trust") is a diversified, open-end
management
investment company that currently consists of thirteen
fully
managed portfolios. This Statement of Additional
Information
("SAI") describes four of the portfolios, Ivy Bond
Fund, Ivy
Emerging Growth Fund, Ivy Growth Fund and Ivy Growth
with Income
Fund (the "Funds," each a "Fund"). The other nine
portfolios of
the Trust are described in separate Statements of
Additional
Information.
This SAI is not a prospectus and should be read in
conjunction with the prospectus for the Funds dated
April 30,
1996 (the "Prospectus"), which may be obtained upon
request and
without charge from the Trust at the Distributor's
address and
telephone number listed 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
Mackenzie Ivy Funds Distribution, Inc.
("MIFDI")
Via Mizner Financial Plaza, Suite 300
700 South Federal Highway
Boca Raton, Florida 33432
Telephone: (800) 456-5111
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . .
. . . 1
U.S. GOVERNMENT SECURITIES . . . . . . . . . . . .
. . . 1
CONVERTIBLE SECURITIES . . . . . . . . . . . . . .
. . . 2
BORROWING . . . . . . . . . . . . . . . . . . . .
. . . 2
COMMERCIAL PAPER . . . . . . . . . . . . . . . . .
. . . 2
BANKING INDUSTRY AND SAVINGS AND LOAN OBLIGATIONS
. . . 2
WARRANTS . . . . . . . . . . . . . . . . . . . . .
. . . 3
AMERICAN DEPOSITORY RECEIPTS ("ADRs") . . . . . .
. . . 3
FOREIGN SECURITIES . . . . . . . . . . . . . . . .
. . . 3
INVESTING IN EMERGING MARKETS . . . . . . . . . .
. . . 3
FORWARD FOREIGN CURRENCY CONTRACTS . . . . . . . .
. . . 5
REPURCHASE AGREEMENTS . . . . . . . . . . . . . .
. . . 5
FIRM COMMITMENT AGREEMENTS AND WHEN-ISSUED
SECURITIES . 6
LOANS OF PORTFOLIO SECURITIES . . . . . . . . . .
. . . 6
ZERO COUPON BONDS . . . . . . . . . . . . . . . .
. . . 6
RESTRICTED AND ILLIQUID SECURITIES . . . . . . . .
. . . 7
OPTIONS TRANSACTIONS . . . . . . . . . . . . . . .
. . . 7
GENERAL . . . . . . . . . . . . . . . . . . .
. . . 7
WRITING OPTIONS ON INDIVIDUAL SECURITIES . .
. . . 8
PURCHASING OPTIONS ON INDIVIDUAL SECURITIES .
. . . 8
PURCHASING AND WRITING OPTIONS ON SECURITIES
INDICES . . . . . . . . . . . . . . . .
. . . 9
RISKS OF OPTIONS TRANSACTIONS . . . . . . . .
. . . 9
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
. . . 10
GENERAL . . . . . . . . . . . . . . . . . . .
. . . 10
INTEREST RATE FUTURES CONTRACTS . . . . . . .
. . . 11
OPTIONS ON INTEREST RATE FUTURES CONTRACTS .
. . . 11
FOREIGN CURRENCY FUTURES CONTRACTS AND
RELATED
OPTIONS . . . . . . . . . . . . . . . .
. . . 12
RISKS ASSOCIATED WITH FUTURES AND RELATED
OPTIONS . 12
SECURITIES INDEX FUTURES CONTRACTS . . . . . . . .
. . . 13
RISKS OF SECURITIES INDEX FUTURES . . . . . .
. . . 14
COMBINED TRANSACTIONS . . . . . . . . . . . . . .
. . . 15
HIGH YIELD BONDS . . . . . . . . . . . . . . . . .
. . . 15
FOREIGN CURRENCIES . . . . . . . . . . . . . . . .
. . . 15
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . .
. . . 16
ADDITIONAL RESTRICTIONS . . . . . . . . . . . . . . . .
. . . 18
ADDITIONAL RIGHTS AND PRIVILEGES . . . . . . . . . . .
. . . 20
AUTOMATIC INVESTMENT METHOD . . . . . . . . . . .
. . . 20
EXCHANGE OF SHARES . . . . . . . . . . . . . . . .
. . . 20
INITIAL SALES CHARGE SHARES . . . . . . . . .
. . . 20
CONTINGENT DEFERRED SALES CHARGE SHARES.
CLASS A . 21
CLASS B SHARES . . . . . . . . . . . . . . .
. . . 21
CLASS C SHARES . . . . . . . . . . . . . . .
. . . 22
CLASS I SHARES . . . . . . . . . . . . . . .
. . . 23
LETTER OF INTENT . . . . . . . . . . . . . . . . .
. . . 23
RETIREMENT PLANS . . . . . . . . . . . . . . . . .
. . . 24
INDIVIDUAL RETIREMENT ACCOUNTS . . . . . . .
. . . 24
QUALIFIED PLANS . . . . . . . . . . . . . . .
. . . 25
DEFERRED COMPENSATION FOR PUBLIC SCHOOLS AND
CHARITABLE ORGANIZATIONS ("403(B)(7)
ACCOUNT") . . . . . . . . . . . . . . .
. . . 26
SIMPLIFIED EMPLOYEE PENSION ("SEP") IRAS . .
. . . 26
REINVESTMENT PRIVILEGE . . . . . . . . . . . . . .
. . . 26
RIGHTS OF ACCUMULATION . . . . . . . . . . . . . .
. . . 26
SYSTEMATIC WITHDRAWAL PLAN . . . . . . . . . . . .
. . . 27
BROKERAGE ALLOCATION . . . . . . . . . . . . . . . . .
. . . 28
TRUSTEES AND OFFICERS . . . . . . . . . . . . . . . . .
. . . 30
PERSONAL INVESTMENTS BY EMPLOYEES OF IMI . . . . .
. . . 33
INVESTMENT ADVISORY AND OTHER SERVICES . . . . . . . .
. . . 36
BUSINESS MANAGEMENT AND INVESTMENT ADVISORY
SERVICES . . 36
DISTRIBUTION SERVICES . . . . . . . . . . . . . .
. . . 38
RULE 18F-3 PLAN . . . . . . . . . . . . . . .
. . . 39
RULE 12B-1 DISTRIBUTION PLANS . . . . . . . .
. . . 40
CUSTODIAN . . . . . . . . . . . . . . . . . . . .
. . . 42
FUND ACCOUNTING SERVICES . . . . . . . . . . . . .
. . . 43
TRANSFER AGENT AND DIVIDEND PAYING AGENT . . . . .
. . . 43
ADMINISTRATOR . . . . . . . . . . . . . . . . . .
. . . 43
AUDITORS . . . . . . . . . . . . . . . . . . . . .
. . . 43
CAPITALIZATION AND VOTING RIGHTS . . . . . . . . . . .
. . . 44
NET ASSET VALUE . . . . . . . . . . . . . . . . . . . .
. . . 45
PORTFOLIO TURNOVER . . . . . . . . . . . . . . . . . .
. . . 46
REDEMPTIONS . . . . . . . . . . . . . . . . . . . . . .
. . . 46
CONVERSION OF CLASS B SHARES . . . . . . . . . . . . .
. . . 47
TAXATION . . . . . . . . . . . . . . . . . . . . . . .
. . . 48
OPTIONS, FUTURES AND FOREIGN CURRENCY FORWARD
CONTRACTS . . . . . . . . . . . . . . . . . .
. . . 48
CURRENCY FLUCTUATIONS -- "SECTION 988" GAINS OR
LOSSES
. . . . . . . . . . . . . . . . . . . . . .
. . . 49
INVESTMENT IN PASSIVE FOREIGN INVESTMENT COMPANIES
. . . 49
DEBT SECURITIES ACQUIRED AT A DISCOUNT . . . . . .
. . . 50
DISTRIBUTIONS . . . . . . . . . . . . . . . . . .
. . . 50
DISPOSITION OF SHARES . . . . . . . . . . . . . .
. . . 51
FOREIGN WITHHOLDING TAXES . . . . . . . . . . . .
. . . 51
BACKUP WITHHOLDING . . . . . . . . . . . . . . . .
. . . 52
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . .
. . . 52
YIELD . . . . . . . . . . . . . . . . . . . .
. . . 52
AVERAGE ANNUAL TOTAL RETURN . . . . . . . . .
. . . 53
OTHER QUOTATIONS, COMPARISONS AND GENERAL
INFORMATION . . . . . . . . . . . . . .
. . . 62
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . .
. . . 63
APPENDIX A
DESCRIPTION OF STANDARD & POOR'S CORPORATION
("S&P") AND
MOODY'S INVESTORS SERVICE, INC. ("MOODY'S") CORPORATE
BOND AND
COMMERCIAL PAPER RATINGS . . . . .
. . . 64
INVESTMENT OBJECTIVES AND POLICIES
Each Fund has its own investment objectives and
policies,
which are described more fully in the Prospectus under
"Investment Objectives and Policies" and "Risk Factors
and
Investment Techniques." The different types of
securities and
investment techniques used by the Funds involve varying
degrees
of risk.
IVY BOND FUND: Ivy Bond Fund seeks a high level
of current
income by investing primarily in (i) investment grade
corporate
bonds (i.e., those rated Aaa, Aa, A or Baa by Moody's
Investors
Services, Inc. ("Moody's") or AAA, AA, A or BBB by
Standard &
Poor's Corporation ("S&P"), or, if unrated, are
considered by IMI
to be of comparable quality) and (ii) U.S. Government
securities
(including mortgage-backed securities issued by U.S.
Government
agencies or instrumentalities) that mature in more than
13
months. As a fundamental policy, the Fund normally
invests at
least 65% of its total assets in these fixed income
securities.
For temporary defensive purposes, the Fund may invest
without
limit in U.S. Government securities maturing in 13
months or
less, certificates of deposit, bankers' acceptances,
commercial
paper and repurchase agreements. The Fund may also
invest up to
35% of its total assets in such securities in order to
meet
redemptions or to maximize income to the Fund when it
is
anticipating longer-term investments.
The Fund may invest less than 35% of its net
assets in debt
securities rated Ba or below by Moody's or BB or below
by S&P,
or, if unrated, are considered by IMI to be of
comparable quality
(commonly referred to as "high yield" or "junk" bonds).
The Fund
will not invest in debt securities rated less than C by
either
Moody's or S&P.
The Fund may invest up to 5% of its assets in
dividend
paying common and preferred stocks (including
adjustable rate
preferred stocks and securities convertible into common
stocks),
municipal bonds, investment-grade zero coupon bonds,
and
securities sold on a "when-issued" or firm commitment
basis. The
Fund may also lend its portfolio securities to increase
current
income (so long as the aggregate value of all
outstanding
securities loaned does not exceed 30% of the value of
the Fund's
total assets), and, as a temporary measure for
extraordinary or
emergency purposes, may borrow from banks (up to 10% of
the value
of its total assets).
The Fund may invest up to 20% of its net assets in
debt
securities of foreign issuers, including non-U.S.
dollar-
denominated debt securities, American Depository
Receipts
("ADRs"), Eurodollar securities and debt securities
issued,
assumed or guaranteed by foreign governments or
political
subdivisions or instrumentalities thereof. The Fund may
also
enter into forward foreign currency contracts, but not
for
speculative purposes. The Fund may not invest more than
10% of
the value of its net assets in illiquid securities,
such as
securities subject to legal or contractual restrictions
on resale
("restricted securities"), repurchase agreements
maturing in more
than seven days and other securities that are not
readily
marketable, and in any case may not invest more than 5%
of its
net assets in restricted securities.
The Fund may purchase put and call options,
provided the
premium paid for such options does not exceed 10% of
the Fund's
net assets. The Fund may also sell covered put options
with
respect to up to 50% of the value of its net assets,
and my
write covered call options so long as not more than 20%
of the
Fund's net assets is subject to being purchased upon
the exercise
of the calls. For hedging purposes only, the Fund may
engage in
transactions in interest rate futures contracts,
currency futures
contracts and options on interest rate futures and
currency
futures contracts.
IVY EMERGING GROWTH FUND, IVY GROWTH FUND AND IVY
GROWTH
WITH INCOME FUND: Each Fund's principal investment
objective is
long-term capital growth primarily through investment
in equity
securities, with current income being a secondary
consideration.
Ivy Growth with Income Fund has tended to emphasize
dividend-
paying stocks more than the other two Funds. Under
normal
conditions, each Fund invests at least 65% of its total
assets in
common stocks and securities convertible into common
stocks. Ivy
Growth Fund and Ivy Growth with Income Fund invest
primarily in
common stocks of domestic corporations with low
price-earnings
ratios and rising earnings, focusing on established,
financially
secure firms with capitalizations over $100 million and
more than
three years of operating history. Ivy Emerging Growth
Fund
invests primarily in common stocks (or securities with
similar
characteristics) of small and medium-sized companies,
both
foreign and domestic, that are in the early stages of
their life
cycle and that IMI believes have the potential to
become major
enterprises. All of the Funds may invest up to 25% of
their
assets in foreign securities, primarily those traded in
European,
Pacific Basin and Latin American markets. Individual
foreign
securities are selected based on value indicators, such
as a low
price-earnings ratio, and are reviewed for fundamental
financial
strength.
When circumstances warrant, each Fund may invest
without
limit in investment-grade debt securities (e.g., U.S.
Government
securities or other debt securities rated at least Baa
by Moody's
or BBB by S&P, or, if unrated, are considered by IMI to
be of
comparable quality), preferred stocks, or cash or cash
equivalents such as bank obligations (including
certificates of
deposit and bankers' acceptances), commercial paper,
short-term
notes and repurchase agreements.
Ivy Growth with Income Fund may invest less than
35% of its
net assets in debt securities rated rated Ba or below
by Moody's
or BB or below by S&P, or if unrated, are considered by
IMI to be
of comparable quality (commonly referred to as "high
yield" or
"junk" bonds). Ivy Growth Fund may invest up to 5% of
its net
assets in these low-rated debt securities. Neither Fund
will
invest in debt securities rated less than C by either
Moody's or
S&P.
Each Fund may borrow up to 10% of the value of its
total
assets, but only for up to 60 days and where it would
be
advantageous to do so from an investment standpoint.
All of the
Funds may invest up to 5% of their assets in warrants.
Ivy
Growth with Income Fund may not invest more than 10% of
the value
of its net assets in illiquid securities, such as
securities
subject to legal or contractual restrictions on resale
("restricted securities"), repurchase agreements
maturing in more
than seven days and other securities that are not
readily
marketable. None of the Funds may invest more than 5%
of their
net assets in restricted securities. Ivy Growth with
Income Fund
may also invest in equity real estate investment
trusts, and all
of the Funds may enter into forward foreign currency
contracts.
Each of the Funds may purchase put options on
securities and
stock indices, and may write covered call options with
respect to
25% of the value of securities held in its portfolio.
For
hedging purposes only, each Fund may enter into stock
index
futures contracts as a means of regulating its exposure
to equity
markets. A Fund's aggregate investment in stock index
futures
contracts will not exceed 15% of its total assets.
U.S. GOVERNMENT SECURITIES
U.S. Government securities are obligations of, or
guaranteed
by, the U.S. Government, its agencies or
instrumentalities.
Securities guaranteed by the U.S. Government include:
(1) direct
obligations of the U.S. Treasury (such as Treasury
bills, notes,
and bonds) and (2) Federal agency obligations
guaranteed as to
principal and interest by the U.S. Treasury (such as
GNMA
certificates, which are mortgage-backed securities).
In these
securities, the payment of principal and interest is
unconditionally guaranteed by the U.S. Government, and
thus they
are of the highest possible credit quality. Such
securities are
subject to variations in market value due to
fluctuations in
interest rates, but, if held to maturity, will be paid
in
full.
Mortgage-backed securities are securities
representing part
ownership of a pool of mortgage loans. For example,
GNMA
certificates are such securities in which the timely
payment of
principal and interest is guaranteed by the full faith
and credit
of the U.S. Government. Although the mortgage loans in
the pool
will have maturities of up to 30 years, the actual
average life
of the GNMA certificates typically will be
substantially less
because the mortgages will be subject to normal
principal
amortization and may be prepaid prior to maturity.
Prepayment
rates vary widely and may be affected by changes in
market
interest rates. In periods of falling interest rates,
the rate
of prepayment tends to increase, thereby shortening the
actual
average life of the GNMA certificates. Conversely,
when interest
rates are rising, the rate of prepayments tends to
decrease,
thereby lengthening the actual average life of the GNMA
certificates. Accordingly, it is not possible to
predict
accurately the average life of a particular pool.
Reinvestment
of prepayment may occur at higher or lower rates than
the
original yield on the certificates. Due to the
prepayment
feature and the need to reinvest prepayments of
principal at
current rates, GNMA certificates can be less effective
than
typical bonds of similar maturities at "locking in"
yields during
periods of declining interest rates. GNMA certificates
may
appreciate or decline in market value during periods of
declining
or rising interest rates, respectively.
Securities issued by U.S. Government
instrumentalities and
certain federal agencies are neither directly
obligations of nor
guaranteed by the U.S. Treasury. However, they involve
Federal
sponsorship in one way or another; some are backed by
specific
types of collateral; some are supported by the issuer's
right to
borrow from the Treasury; some are supported by the
discretionary
authority of the Treasury to purchase certain
obligations of the
issuer; others are supported only by the credit of the
issuing
government agency or instrumentality. These agencies
and
instrumentalities include, but are not limited to,
Federal Land
Banks, Farmers Home Administration, Central Bank for
Cooperatives, Federal Intermediate Credit Banks,
Federal Home
Loan Banks, Federal National Mortgage Association, and
Student
Loan Marketing Association.
MUNICIPAL SECURITIES
Municipal securities are debt obligations that
generally
have a maturity at the time of issue in excess of one
year and
are issued to obtain funds for various public purposes.
The two
principal classifications of municipal bonds are
"general
obligation" and "revenue" bonds. General obligation
bonds are
secured by the issuer's pledge of its full faith,
credit and
taxing power for the payment of principal and interest.
Revenue
bonds are payable only from the revenues derived from a
particular facility or class of facilities, or, in some
cases,
from the proceeds of a special excise of specific
revenue source.
Industrial development bonds or private activity bonds
are issued
by or on behalf of public authorities to obtain funds
for
privately-operated facilities and are in most cases
revenue bonds
that generally do not carry the pledge of the full
faith and
credit of the issuer of such bonds, but depend for
payment on the
ability of the industrial user to meet its obligations
(or on any
property pledged as security).
The market prices of municipal securities, like
those of
taxable debt securities, go up and down when interest
rates
change. Thus, the net asset value per share can be
expected to
fluctuate and shareholders may receive more or less
than their
purchase price for shares they redeem.
ZERO COUPON BONDS
Zero coupons bonds are debt obligations issued
without any
requirement for the periodic payment of interest. Zero
coupon
bonds 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 a Fund holds zero coupon bonds in its
portfolio,
however, 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
such income to shareholders currently, even though
funds
representing such income would not have been received
by the
Fund. Cash to pay dividends representing unpaid,
accrued
interest may be obtained from sales proceeds of
portfolio
securities and Fund shares and from loan proceeds. The
potential
sale of portfolio securities to pay cash distributions
from
income earned on zero coupon bonds may result in a
Fund's being
forced to sell portfolio securities at a time when the
Fund might
otherwise choose not to sell these securities and when
the Fund
might incur a capital loss on such sales. Because
interest on
zero coupon obligations is not distributed to a Fund on
a current
basis, but is in effect compounded, the value of the
securities
of this type is subject to greater fluctuations in
response to
changing interest rates than the value of debt
obligations that
distribute income regularly.
REPURCHASE AGREEMENTS
Repurchase agreements are contracts under which a
Fund buys
a money market instrument and obtains a simultaneous
commitment
from the seller to repurchase the instrument at a
specified time
and at an agreed-upon yield. A Fund may not enter into
a repur-
chase agreement with more than seven days to maturity
if, as a
result, more than 10% of that Fund's net assets would
be invested
in illiquid securities, including such repurchase
agreements.
Under guidelines approved by the Trust's Board of
Trustees (the
"Board"), a Fund is permitted to enter into repurchase
agreements
only if the repurchase agreements are at least fully
collateralized with U.S. Government securities or other
securities that that Fund's investment adviser has
approved for
use as collateral for repurchase agreements and the
collateral
must be marked-to-market daily. A Fund will enter into
repurchase agreements only with banks and
broker-dealers deemed
to be creditworthy by that Fund's investment adviser
under
guidelines approved by the Board. In the unlikely
event of
failure of the executing bank or broker-dealer, a 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 costs in disposing
of the
security.
WARRANTS
A Fund's investments in warrants, valued at the
lower of
cost or market, will not exceed 5% of the value of its
net
assets. Included within that amount, but not to exceed
2% of a
Fund's net assets, may be warrants that are not listed
on either
the New York or the American Stock Exchanges. Warrants
acquired
by a Fund in units or attached to securities will be
deemed to be
without value for purposes of this restriction.
The holder of a warrant has the right to purchase
a given
number of shares of a particular issuer at a specified
price
until expiration of the warrant. Such investments can
provide a
greater potential for profit or loss than an equivalent
investment in the underlying security. Prices of
warrants do not
necessarily move in tandem with the prices of the
underlying
securities, and are speculative investments. Warrants
pay no
dividends and confer no rights other than a purchase
option. If
a warrant is not exercised by the date of its
expiration, the
particular Fund will lose its entire investment in such
warrant.
ADJUSTABLE RATE PREFERRED STOCKS
Adjustable rate preferred stocks have a variable
dividend,
generally determined on a quarterly basis according to
a formula
based upon a specified premium or discount to the yield
on a
particular U.S. Treasury security rather than a
dividend which is
set for the life of the issue. Although the dividend
rates on
these stocks are adjusted quarterly and their market
value should
therefore be less sensitive to interest rate
fluctuations than
are other fixed income securities and preferred stocks,
the
market values of adjustable rate preferred stocks have
fluctuated
and can be expected to continue to do so in the
future.
CONVERTIBLE SECURITIES
Convertible debt securities and convertible
preferred
stocks, until converted, have general characteristics
similar to
both debt and equity securities. Although to a lesser
extent
than with debt securities generally, the market value
of
convertible securities tends to decline as interest
rates
increase and, conversely, tends to increase as interest
rates
decline. In addition, because of the conversion or
exchange
feature, the market value of convertible securities
typically
changes as the market value of the underlying common
stocks
changes, and, therefore, also tends to follow movements
in the
general market for equity securities. As the market
price of the
underlying common stock declines, convertible
securities tend to
trade increasingly on a yield basis, and so may not
experience
market value declines to the same extent as the
underlying common
stock. When the market price of the underlying common
stock
increases, the prices of the convertible securities
tends to rise
as a reflection of the value of the underlying common
stock,
although typically not as much as the underlying common
stock.
While no securities investments are without risk,
investments in
convertible securities generally entail less risk than
investments in common stock of the same issuer. As
debt
securities, convertible securities are investments
which provide
for a stream of income (or in the case of zero coupon
securities,
accretion of income) with generally higher yields than
common
stocks. Like all debt securities, however, there can
be no
assurance of income or principal payments because the
issuers of
the convertible securities may default on their
obligations.
Convertible securities generally offer lower yields
than non-
convertible securities of similar quality because of
their
conversion or exchange features.
SMALL COMPANY RISK
Investors should recognize that investing in
smaller company
stocks involves certain special considerations and
risks,
including those set forth below and in the Funds'
Prospectus
under "Risk Factors and Investment Techniques," which
are not
customarily associated with investing in larger, more
established
companies. For example, smaller companies may be more
susceptible to losses and risks of bankruptcy. Also,
the
securities of smaller companies may be thinly traded
(and
therefore have to be sold at a discount from current
market
prices sold in small lots over an extended period of
time).
Transaction costs in smaller company stocks may be
higher than
those of larger companies.
COMMERCIAL PAPER
Commercial paper represents short-term unsecured
promissory
notes issued in bearer form by bank holding companies,
corporations and finance companies. A Fund may invest
in
commercial paper that, at the date of investment, is
rated A-1 by
Standard & Poor's Corporation ("S&P") or Prime-1 by
Moody's
Investors Service, Inc. ("Moody's") or, if not rated by
Moody's
or S&P, issued by companies having an outstanding debt
issue
rated AAA or AA by S&P or Aaa or Aa by Moody's.
BANKING INDUSTRY AND SAVINGS AND LOAN OBLIGATIONS
Certificates of deposit are negotiable
certificates issued
against funds deposited in a commercial bank for a
definite
period of time and earning a specified return.
Bankers'
acceptances are negotiable drafts or bills of exchange,
normally
drawn by an importer or exporter to pay for specific
merchandise,
which are "accepted" by a bank, meaning, in effect,
that the bank
unconditionally agrees to pay the face value of the
instrument on
maturity. In addition to investing in certificates of
deposit
and bankers' acceptances, a Fund may invest in time
deposits in
banks or savings and loan associations. Time deposits
are
generally similar to certificates of deposit, but are
uncertificated. A Fund's investments in certificates of
deposit,
time deposits, and bankers' acceptances are limited to
obligations of (i) banks having total assets in excess
of $1
billion, (ii) U.S. banks which do not meet the $1
billion asset
requirement, if the principal amount of such obligation
(currently $100,000) is fully insured by the Federal
Deposit
Insurance Corporation (the "FDIC"), (iii) savings and
loan
associations which have total assets in excess of $1
billion and
which are members of the FDIC, and (iv) foreign banks
if the
obligation is, in IMI's opinion, of an investment
quality
comparable to other debt securities which may be
purchased by a
Fund.
AMERICAN DEPOSITORY RECEIPTS
A Fund may purchase sponsored or unsponsored ADRs.
ADRs are
dollar-denominated receipts issued generally by U.S.
banks that
represent the deposit with the bank of a foreign
company's
security. ADRs are publicly traded on exchanges or
over-the-
counter ("OTC") in the United States. Ownership of
unsponsored
ADRs may not entitle a Fund to financial or other
reports from
the issuer to which it would be entitled as the owner
of
sponsored ADRs.
FOREIGN SECURITIES
A Fund may invest in debt securities of foreign
issuers,
including non-U.S. dollar-denominated debt securities,
Eurodollar
securities and debt securities issued, assumed or
guaranteed by
foreign governments or political subdivisions or the
instrumentalities thereof. Investors should consider
carefully
the substantial risks involved in investing in
securities issued
by companies and governments of foreign nations, which
are in
addition to the usual risks inherent in the domestic
investments.
Although a Fund intends to invest only in nations that
IMI
considers to have relatively stable and friendly
governments,
there is the possibility of expropriation,
nationalization or
confiscatory taxation, taxation of income earned in a
foreign
country and other foreign taxes, foreign exchange
controls (which
may include suspension of the ability to transfer
currency from a
given country), default in foreign government
securities,
political or social instability or diplomatic
developments which
could affect investments in securities of issuers in
those
nations. In addition, in many countries there is less
publicly
available information about issuers than is available
in reports
about companies in the United States. For example,
ownership of
unsponsored ADRs may not entitle the owner to financial
or other
reports from the issuer to which it might otherwise be
entitled
as the owner of a sponsored ADR. Moreover, foreign
companies are
not generally subject to uniform accounting, auditing
and
financial reporting standards, and auditing practices
and
requirements may not be comparable to those applicable
to U.S.
companies. In many foreign countries, there is less
government
supervision and regulation of business and industry
practices,
stock exchanges, brokers and listed companies than in
the United
States. Foreign securities transactions may be subject
to higher
brokerage costs than domestic securities transactions.
The
foreign securities markets of many of the countries in
which a
Fund may invest may also be smaller, less liquid and
subject to
greater price volatility than those in the United
States.
Further, a Fund may encounter difficulties or be unable
to pursue
legal remedies and obtain judgment in foreign
courts.
INVESTING IN EMERGING MARKETS
Investors should recognize that investing in
foreign
securities involves certain special considerations,
including
those set forth below, that are not typically
associated with
investing in United States securities and that may
affect a
Fund's performance favorably or unfavorably. (See also
"Foreign
Securities" under the caption "Risk Factors and
Investment
Techniques" in the Prospectus.)
Foreign stock markets have different clearance and
settlement procedures and in certain markets there have
been
times when settlements have been unable to keep pace
with the
volume of securities transactions, making it difficult
to conduct
such transactions. Delays in settlement could result
in
temporary periods when assets of a Fund are uninvested
and no
return is earned thereon. The inability of a Fund to
make
intended security purchases due to settlement problems
could
cause that Fund to miss attractive investment
opportunities.
Further, the inability to dispose of portfolio
securities due to
settlement problems could result either in losses to a
Fund
because of subsequent declines in the value of the
portfolio
security or, if a Fund has entered into a contract to
sell the
security, in possible liability to the purchaser.
Fixed
commissions on some foreign securities exchanges are
generally
higher than negotiated commissions on U.S. exchanges,
although
IMI will endeavor to achieve the most favorable net
results on a
Fund's portfolio transactions. In addition, a Fund may
encounter
difficulties or be unable to pursue legal remedies and
obtain
judgment in foreign courts. It may be more difficult
for a
Fund's agents to keep currently informed about
corporate actions
such as stock dividends or other matters that may
affect the
prices of portfolio securities. Communications between
the
United States and foreign countries may be less
reliable than
within the United States, thus increasing the risk of
delayed
settlements of portfolio transactions or loss of
certificates for
portfolio securities. Moreover, individual foreign
economies may
differ favorably or unfavorably from the United States
economy in
such respects as growth of gross national product, rate
of
inflation, capital reinvestment, resource
self-sufficiency and
balance of payments position. IMI seeks to mitigate
the risks to
a Fund associated with the foregoing considerations
through
investment variation and continuous professional
management.
Investments in companies domiciled in developing
countries
may be subject to potentially higher risks than
investments in
developed countries. These risks include (i) less
social,
political and economic stability; (ii) the small
current size of
the markets for such securities and the currently low
or
nonexistent volume of trading, which result in a lack
of
liquidity and in greater price volatility; (iii)
certain national
policies that may restrict a Fund's investment
opportunities,
including restrictions on investment in issuers or
industries
deemed sensitive to national interests; (iv) foreign
taxation;
(v) the absence of developed structures governing
private or
foreign investment or allowing for judicial redress for
injury to
private property; (vi) the absence, until relatively
recently in
certain Eastern European countries, of a capital market
structure
or market-oriented economy; (vii) the possibility that
recent
favorable economic developments in Eastern Europe may
be slowed
or reversed by unanticipated political or social events
in such
countries; and (viii) the possibility that currency
devaluations
could adversely affect the value of a Fund's
investments.
Despite the dissolution of the Soviet Union, the
Communist
Party may continue to exercise a significant role in
certain
Eastern European countries. To the extent of the
Communist
Party's influence, investments in such countries will
involve
risks of nationalization, expropriation and
confiscatory
taxation. The communist governments of a number of
Eastern
European countries expropriated large amounts of
private property
in the past, in many cases without adequate
compensation, and
there can be no assurance that such expropriation will
not occur
in the future. In the event of such expropriation, a
Fund could
lose a substantial portion of any investments it has
made in the
affected countries. Further, few (if any) accounting
standards
exist in Eastern European countries. Finally, even
though
certain Eastern European currencies may be convertible
into U.S.
dollars, the conversion rates may be artificial in
relation to
the actual market values and may be adverse to a Fund's
Shareholders.
Certain Eastern European countries that do not
have market
economies are characterized by an absence of developed
legal
structures governing private and foreign investments
and private
property. In addition, certain countries require
governmental
approval prior to investments by foreign persons, or
limit the
amount of investment by foreign persons in a particular
company,
or limit the investment of foreign persons to only a
specific
class of securities of a company that may have less
advantageous
terms than securities of the company available for
purchase by
nationals.
Authoritarian governments in certain Eastern
European
countries may require that a governmental or
quasi-governmental
authority act as custodian of a Fund's assets invested
in such
country. To the extent such governmental or
quasi-governmental
authorities do not satisfy the requirements of the
Investment
Company Act of 1940, as amended (the "1940 Act"), to
act as
foreign custodians of a Fund's cash and securities,
that Fund's
investment in such countries may be limited or may be
required to
be effected through intermediaries. The risk of loss
through
governmental confiscation may be increased in such
countries.
FORWARD FOREIGN CURRENCY CONTRACTS
A Fund may enter into forward foreign currency
contracts (a
"forward contract"). A forward contract is an
obligation to
purchase or sell a specific currency for an agreed
price at a
future date (usually less than a year), which is
individually
negotiated and privately traded by currency traders and
their
customers. A forward contract generally has no deposit
requirement, and no commissions are charged at any
stage for
trades. Although foreign exchange dealers do not
charge a fee
for commissions, they do realize a profit based on the
difference
between the price at which they are buying and selling
various
currencies. Although these contracts are intended to
minimize
the risk of loss due to a decline in the value of the
hedged
currencies, at the same time, they tend to limit any
potential
gain which might result should the value of such
currencies
increase.
While a Fund may enter into forward contracts to
reduce
currency exchange risks, changes in currency exchange
rates may
result in poorer overall performance for a Fund than if
it had
not engaged in such transactions. Moreover, there may
be an
imperfect correlation between a Fund's portfolio
holdings of
securities denominated in a particular currency and
forward
contracts entered into by that Fund. Such imperfect
correlation
may prevent the particular Fund from achieving the
intended hedge
or expose the Fund to the risk of currency exchange
loss.
A Fund will not enter into forward contracts or
maintain a
net exposure to such contracts where the consummation
of the
contracts would obligate that Fund to deliver an amount
of
currency in excess of the value of that Fund's
portfolio securi-
ties or other assets denominated in that currency.
Further, a
Fund generally will not enter into a forward contract
with a term
of greater than one year.
A Fund will hold cash, U.S. Government securities,
or other
high grade debt securities in a segregated account with
its
Custodian in an amount equal (on a daily
marked-to-market basis)
to the amount of the commitments under these contracts.
At the
maturity of a forward contract, a Fund may either
accept or make
delivery of the currency specified in the contract, or,
prior to
maturity, enter into a closing purchase transaction
involving the
purchase or sale of an offsetting contract. Closing
purchase
transactions with respect to forward contracts are
usually
effected with the currency trader who is a party to the
original
forward contract.
FOREIGN CURRENCIES
Investment in foreign securities usually will
involve
currencies of foreign countries. Moreover, a Fund may
temporarily hold funds in bank deposits in foreign
currencies
during the completion of investment programs and may
purchase
forward contracts. Because of these factors, the value
of the
assets of a Fund as measured in U.S. dollars may be
affected
favorably or unfavorably by changes in foreign currency
exchange
rates and exchange control regulations, and the Fund
may incur
costs in connection with conversions between various
currencies.
Although a Fund's custodian values the Fund's assets
daily in
terms of U.S. dollars, a Fund does not intend to
convert its
holdings of foreign currencies into U.S. dollars on a
daily
basis. A Fund may do so from time to time, and
investors should
be aware of the costs of currency conversion. Although
foreign
exchange dealers do not charge a fee for conversion,
they do
realize a profit based on the difference (the "spread")
between
the prices at which they are buying and selling various
currencies. Thus, a dealer may offer to sell a foreign
currency
to a Fund at one rate, while offering a lesser rate of
exchange
should the Fund desire to resell that currency to the
dealer. A
Fund will conduct its foreign currency exchange
transactions
either on a spot (i.e., cash) basis at the spot rate
prevailing
in the foreign currency exchange market, or through
entering into
forward contracts to purchase or sell foreign
currencies.
Because a Fund normally will be invested in both
U.S. and
foreign securities markets, changes in the Fund's share
price may
have a low correlation with movements in the U.S.
markets. A
Fund's share price will reflect the movements of both
the
different stock and bond markets in which it is
invested and of
the currencies in which the investments are
denominated; the
strength or weakness of the U.S. dollar against foreign
currencies may account for part of a Fund's investment
performance. U.S. and foreign securities markets do
not always
move in step with each other, and the total returns
from
different markets may vary significantly.
BORROWING
All borrowings will be repaid before any
additional
investments are made. Borrowing may exaggerate the
effect on a
Fund's net asset value of any increase or decrease in
the value
of the Fund's portfolio securities. Money borrowed
will be
subject to interest costs (which may include commitment
fees
and/or the cost of maintaining minimum average
balances).
Although the principal of a Fund's borrowings will be
fixed, the
Fund's assets may change in value during the time a
borrowing is
outstanding, thus increasing exposure to capital
risk.
FIRM COMMITMENT AGREEMENTS AND WHEN-ISSUED SECURITIES
A Fund may purchase securities on a firm
commitment or when-
issued basis. New issues of certain debt securities
are often
offered on a when-issued basis; that is, the payment
obligation
and the interest rate are fixed at the time the buyer
enters into
the commitment, but delivery and payment for the
securities
normally take place after the date of the commitment to
purchase.
Firm commitment agreements call for the purchase of
securities at
an agreed-upon price on a specified future date. The
transactions are entered into in order to secure what
is
considered to be an advantageous price and yield to a
Fund and
not for purposes of leveraging the Fund's assets. A
Fund will
maintain in a segregated account with its custodian
cash, U.S.
Government securities, or other high grade debt
securities equal
(on a daily marked-to-market basis) to the amount of
its
commitment to purchase the securities on a when-issued
or firm
commitment basis.
LOANS OF PORTFOLIO SECURITIES
A Fund may lend its investment securities to
brokers,
dealers and financial institutions for the purpose of
realizing
additional income. Loans of securities by a Fund will
be
collateralized by cash, letters of credit, or
securities issued
or guaranteed by the U.S Government or its agencies or
instrumentalities. The collateral will equal (on a
daily marked-
to-market basis) at least 100% of the current market
value of the
loaned securities. The risks in lending portfolio
securities, as
with other extensions of credit, involve a possible
loss of
rights in the collateral should the borrower fail
financially.
In determining whether to lend securities, IMI will
consider all
relevant facts and circumstances, including the
creditworthiness
of the borrower.
RESTRICTED AND ILLIQUID SECURITIES
Issuers of restricted securities may not be
subject to the
disclosure and other investor protection requirements
that would
be applicable if their securities were publicly traded.
Restricted securities may be sold only in privately
negotiated
transactions or in a public offering with respect to
which a
registration statement is in effect under the
Securities Act of
1933. Where a registration statement is required, a
Fund may be
required to bear all or part of the registration
expenses. There
may be a lapse of time between a Fund's decision to
sell a
restricted or illiquid security and the point at which
the Fund
is permitted or able to sell such security. If, during
such a
period, adverse market conditions were to develop, a
Fund might
obtain a price less favorable than the price that
prevailed when
it decided to sell. Since it is not possible to
predict with
assurance that the market for securities eligible for
resale
under Rule 144A will continue to be liquid, a Fund may
carefully
monitor each of its investments in these securities,
focussing on
such important factors, among others, as valuation,
liquidity and
availability of information. This investment practice
could have
the effect of increasing the level of illiquidity in a
Fund to
the extent that qualified institutional buyers become,
for a
time, uninterested in purchasing these restricted
securities.
REAL ESTATE INVESTMENT TRUSTS (REITS)
A Fund may invest in equity real estate investment
trusts
("REITs"). Equity REITs are dependent upon management
skill, may
not be diversified and are subject to the risks of
financing
projects. Such trusts are also subject to heavy cash
flow
dependency, defaults by borrowers, self-liquidation and
the
possibility of failing to qualify for tax-free
pass-through of
income under the Internal Revenue Code of 1986, as
amended (the
"Code") and to maintain exemption from the 1940 Act.
Changes in
interest rates may also affect the value of the debt
securities
in a Fund's portfolio. By investing in REITs
indirectly through
a fund, a shareholder will bear not only his or her
proportionate
share of the expenses of the Fund, but also,
indirectly, similar
expenses of the REITs.
OPTIONS TRANSACTIONS
GENERAL. A Fund may engage in transactions in
options on
securities and stock indices in accordance with the
Fund's stated
investment objective and policies. A Fund may also
purchase put
options on securities and may purchase and sell (write)
put and
call options on stock indices. Options on securities
and stock
indices purchased or written by a Fund will be limited
to options
traded on national securities exchanges, boards of
trade or
similar entities, or in the OTC markets.
A call option is a short-term contract (having a
duration of
less than one year) pursuant to which the purchaser, in
return
for the premium paid, has the right to buy the security
underlying the option at the specified exercise price
at any time
during the term of the option. The writer of the call
option,
who receives the premium, has the obligation, upon
exercise of
the option, to deliver the underlying security against
payment of
the exercise price. A put option is a similar contract
pursuant
to which the purchaser, in return for the premium paid,
has the
right to sell the security underlying the option at the
specified
exercise price at any time during the term of the
option. The
writer of the put option, who receives the premium, has
the
obligation, upon exercise of the option, to buy the
underlying
security at the exercise price. The premium paid by
the
purchaser of an option will reflect, among other
things, the
relationship of the exercise price to the market price
and
volatility of the underlying security, the time
remaining to
expiration of the option, supply and demand, and
interest
rates.
If the writer of an option wishes to terminate the
obligation, the writer may effect a "closing purchase
transaction." This is accomplished by buying an option
of the
same series as the option previously written. The
effect of the
purchase is that the writer's position will be
cancelled by the
Options Clearing Corporation. However, a writer may
not effect a
closing purchase transaction after it has been notified
of the
exercise of an option. Likewise, an investor who is
the holder
of an option may liquidate his or her position by
effecting a
"closing sale transaction." This is accomplished by
selling an
option of the same series as the option previously
purchased.
There is no guarantee that either a closing purchase or
a closing
sale transaction can be effected at any particular time
or at any
acceptable price. If any call or put option is not
exercised or
sold, it will become worthless on its expiration
date.
A Fund will realize a gain (or a loss) on a
closing purchase
transaction with respect to a call or a put previously
written by
the Fund if the premium, plus commission costs, paid by
the Fund
to purchase the call or the put is less (or greater)
than the
premium, less commission costs, received by the Fund on
the sale
of the call or the put. A gain also will be realized
if a call
or a put that a Fund has written lapses unexercised,
because the
Fund would retain the premium. Any such gains (or
losses) are
considered short-term capital gains (or losses) for
Federal
income tax purposes. Net short-term capital gains,
when
distributed by a Fund, are taxable as ordinary income.
See
"Taxation."
A Fund will realize a gain (or a loss) on a
closing sale
transaction with respect to a call or a put previously
purchased
by the Fund if the premium, less commission costs,
received by
the Fund on the sale of the call or the put is greater
(or less)
than the premium, plus commission costs, paid by the
Fund to
purchase the call or the put. If a put or a call
expires
unexercised, it will become worthless on the expiration
date, and
a Fund will realize a loss in the amount of the premium
paid,
plus commission costs. Any such gain or loss will be
long-term
or short-term gain or loss, depending upon a Fund's
holding
period for the option.
Exchange-traded options generally have
standardized terms
and are issued by a regulated clearing organization
(such as the
Options Clearing Corporation), which, in effect,
guarantees the
completion of every exchange-traded option transaction.
In
contrast, the terms of OTC options are negotiated by a
Fund and
its counterparty (usually a securities dealer or a
financial
institution) with no clearing organization guarantee.
When a
Fund purchases an OTC option, it relies on the party
from whom it
has purchased the option (the "counterparty") to make
delivery of
the instrument underlying the option. If the
counterparty fails
to do so, a Fund will lose any premium paid for the
option, as
well as any expected benefit of the transaction.
Accordingly,
IMI will assess the creditworthiness of each
counterparty to
determine the likelihood that the terms of the OTC
option will be
satisfied.
WRITING OPTIONS ON INDIVIDUAL SECURITIES. A Fund
may write
(sell) covered call options on the Fund's securities in
an
attempt to realize a greater current return than would
be
realized on the securities alone. A Fund may also
write covered
call options to hedge a possible stock or bond market
decline
(only to the extent of the premium paid to the Fund for
the
options). In view of the investment objectives of a
Fund, the
Fund generally would write call options only in
circumstances
where the investment adviser to the Fund does not
anticipate
significant appreciation of the underlying security in
the near
future or has otherwise determined to dispose of the
security.
A Fund may write covered call options as described
in the
Fund's Prospectus. A "covered" call option means
generally that
so long as the Fund is obligated as the writer of a
call option,
the Fund will (i) own the underlying securities subject
to the
option, or (ii) have the right to acquire the
underlying
securities through immediate conversion or exchange of
convertible preferred stocks or convertible debt
securities owned
by the Fund. Although a Fund receives premium income
from these
activities, any appreciation realized on an underlying
security
will be limited by the terms of the call option. A
Fund may
purchase call options on individual securities only to
effect a
"closing purchase transaction."
As the writer of a call option, a Fund receives a
premium
for undertaking the obligation to sell the underlying
security at
a fixed price during the option period, if the option
is
exercised. So long as a Fund remains obligated as a
writer of a
call option, it forgoes the opportunity to profit from
increases
in the market price of the underlying security above
the exercise
price of the option, except insofar as the premium
represents
such a profit (and retains the risk of loss should the
value of
the underlying security decline).
PURCHASING OPTIONS ON INDIVIDUAL SECURITIES. A
Fund may
purchase a put option on an underlying security owned
by the Fund
as a defensive technique in order to protect against an
anticipated decline in the value of the security. A
Fund, as the
holder of the put option, may sell the underlying
security at the
exercise price regardless of any decline in its market
price. In
order for a put option to be profitable, the market
price of the
underlying security must decline sufficiently below the
exercise
price to cover the premium and transaction costs that a
Fund must
pay. These costs will reduce any profit a Fund might
have
realized had it sold the underlying security instead of
buying
the put option. The premium paid for the put option
would reduce
any capital gain otherwise available for distribution
when the
security is eventually sold. The purchase of put
options will
not be used by a Fund for leverage purposes.
A Fund may also purchase a put option on an
underlying
security that it owns and at the same time write a call
option on
the same security with the same exercise price and
expiration
date. Depending on whether the underlying security
appreciates
or depreciates in value, a Fund would sell the
underlying
security for the exercise price either upon exercise of
the call
option written by it or by exercising the put option
held by it.
A Fund would enter into such transactions in order to
profit from
the difference between the premium received by the Fund
for the
writing of the call option and the premium paid by the
Fund for
the purchase of the put option, thereby increasing the
Fund's
current return.
A Fund will purchase put options only to the
extent
permitted by the policies of state securities
authorities in
states where shares of the Fund are qualified for offer
and sale.
Such authorities may impose further limitations on the
ability of
a Fund to purchase options. A Fund may write (sell)
put options
on individual securities only to effect a "closing sale
transaction."
PURCHASING AND WRITING OPTIONS ON SECURITIES
INDICES. A
Fund may purchase and sell (write) put and call options
on
securities indices. An index assigns relative values
to the
securities included in the index and the index
fluctuates with
changes in the market values of the securities so
included.
Options on indices are similar to options on individual
securities, except that, rather than giving the
purchaser the
right to take delivery of an individual security at a
specified
price, they give the purchaser the right to receive
cash. The
amount of cash is equal to the difference between the
closing
price of the index and the exercise price of the
option,
expressed in dollars, times a specified multiple (the
"multiplier"). The writer of the option is obligated,
in return
for the premium received, to make delivery of this
amount.
The multiplier for an index option performs a
function
similar to the unit of trading for a stock option. It
determines
the total dollar value per contract of each point in
the
difference between the exercise price of an option and
the
current level of the underlying index. A multiplier of
100 means
that a one-point difference will yield $100. Options
on
different indices have different multipliers.
When a Fund writes a call or put option on a stock
index,
the option is "covered", in the case of a call, or
"secured", in
the case of a put, if the Fund maintains in a
segregated account
with the Custodian cash, U.S. Government securities or
other
high-grade debt securities equal to the contract value.
A call
option is also covered if a Fund holds a call on the
same index
as the call written where the exercise price of the
call held is
(i) equal to or less than the exercise price of the
call written
or (ii) greater than the exercise price of the call
written,
provided that the Fund maintains in a segregated
account with the
Custodian the difference in cash, U.S. Government
securities or
other high-grade debt securities. A put option is also
"secured"
if a Fund holds a put on the same index as the put
written where
the exercise price of the put held is (i) equal to or
greater
than the exercise price of the put written or (ii) less
than the
exercise price of the put written, provided that the
Fund
maintains in a segregated account with the Custodian
the
difference in cash, U.S. Government securities or other
high-
grade debt securities.
RISKS OF OPTIONS TRANSACTIONS. The purchase and
writing of
options involves certain risks. During the option
period, the
covered call writer has, in return for the premium on
the option,
given up the opportunity to profit from a price
increase in the
underlying securities above the exercise price, but, as
long as
its obligation as a writer continues, has retained the
risk of
loss should the price of the underlying security
decline. The
writer of an option has no control over the time when
it may be
required to fulfill its obligation as a writer of the
option.
Once an option writer has received an exercise notice,
it cannot
effect a closing purchase transaction in order to
terminate its
obligation under the option and must deliver the
underlying
securities (or cash in the case of an index option) at
the
exercise price. If a put or call option purchased by a
Fund is
not sold when it has remaining value, and if the market
price of
the underlying security (or index), in the case of a
put, remains
equal to or greater than the exercise price or, in the
case of a
call, remains less than or equal to the exercise price,
a Fund
will lose its entire investment in the option. Also,
where a put
or call option on a particular security (or index) is
purchased
to hedge against price movements in a related security
(or
securities), the price of the put or call option may
move more or
less than the price of the related security (or
securities). In
this regard, there are differences between the
securities and
options markets that could result in an imperfect
correlation
between these markets, causing a given transaction not
to achieve
its objective.
There can be no assurance that a liquid market
will exist
when a Fund seeks to close out an option position.
Furthermore,
if trading restrictions or suspensions are imposed on
the options
markets, a Fund may be unable to close out a position.
Finally,
trading could be interrupted, for example, because of
supply and
demand imbalances arising from a lack of either buyers
or
sellers, or the options exchange could suspend trading
after the
price has risen or fallen more than the maximum amount
specified
by the exchange. Closing transactions can be made for
OTC
options only by negotiating directly with the
counterparty or by
a transaction in the secondary market, if any such
market exists.
There is no assurance that a Fund will be able to close
out an
OTC option position at a favorable price prior to its
expiration.
In the event of insolvency of the counterparty, a Fund
might be
unable to close out an OTC option position at any time
prior to
its expiration. Although a Fund may be able to offset
to some
extent any adverse effects of being unable to liquidate
an option
position, the Fund may experience losses in some cases
as a
result of such inability.
A Fund's options activities also may have an
impact upon the
level of its portfolio turnover and brokerage
commissions. See
"Portfolio Turnover."
A Fund's success in using options techniques
depends, among
other things, on IMI's ability to predict accurately
the
direction and volatility of price movements in the
options
markets as well as the securities markets and on IMI's
ability to
select the proper type, time and duration of
options.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
GENERAL. A Fund may enter into futures contracts
and
options on futures contracts. When a purchase or sale
of a
futures contract is made by a Fund, that Fund is
required to
deposit with its custodian (or broker, if legally
permitted) a
specified amount of cash or U.S. Government securities
("initial
margin"). The margin required for a futures contract
is set by
the exchange on which the contract is traded and may be
modified
during the term of the contract. The initial margin is
in the
nature of a performance bond or good faith deposit on
the futures
contract which is returned to the particular Fund upon
termination of the contract, assuming all contractual
obligations
have been satisfied. A futures contract held by a Fund
is valued
daily at the official settlement price of the exchange
on which
it is traded. Each day a Fund pays or receives cash,
called
"variation margin," equal to the daily change in value
of the
futures contract. This process is known as "marking
to market."
Variation margin does not represent a borrowing or loan
by a Fund
but is instead a settlement between that Fund and the
broker of
the amount one would owe the other if the futures
contract
expired. In computing daily net asset value, a Fund
will mark-
to-market its open futures position.
A Fund is also required to deposit and maintain
margin with
respect to put and call options on futures contracts
written by
it. Such margin deposits will vary depending on the
nature of
the underlying futures contract (and the related
initial margin
requirements), the current market value of the option,
and other
futures positions held by a Fund.
Although some futures contracts call for making or
taking
delivery of the underlying securities, generally these
obligations are closed out prior to delivery of
offsetting
purchases or sales of matching futures contracts (same
exchange,
underlying security or index, and delivery month). If
an
offsetting purchase price is less than the original
sale price, a
Fund generally realizes a capital gain, or if it is
more, the
Fund generally realizes a capital loss. Conversely, if
an
offsetting sale price is more than the original
purchase price, a
Fund generally realizes a capital gain, or if it is
less, the
Fund generally realizes a capital loss. The
transaction costs
must also be included in these calculations.
When purchasing a futures contract, a Fund will
maintain
with its Custodian (and mark-to-market on a daily
basis) cash,
U.S. Government securities, or other high grade debt
securities
that, when added to the amounts deposited with a
futures
commission merchant ("FCM") as margin, are equal to the
market
value of the futures contract. Alternatively, a Fund
may "cover"
its position by purchasing a put option on the same
futures
contract with a strike price as high as or higher than
the price
of the contract held by the Fund.
When selling a futures contact, a Fund will
maintain with
its custodian (and mark-to-market on a daily basis)
liquid assets
that, when added to the amounts deposited with an FCM
as margin,
are equal to the market value of the instruments
underlying the
contract. Alternatively, a Fund may "cover" its
position by
owning the instruments underlying the contract (or, in
the case
of an index futures contract, a portfolio with a
volatility
substantially similar to that of the index on which the
futures
contract is based), or by holding a call option
permitting the
Fund to purchase the same futures contract at a price
no higher
than the price of the contract written by that Fund (or
at a
higher price if the difference is maintained in liquid
assets
with the Fund's custodian).
When selling a call option on a futures contract,
a Fund
will maintain with its custodian (and mark-to-market on
a daily
basis) cash, U.S. Government securities, or other high
grade debt
securities that, when added to the amounts deposited
with an FCM
as margin, equal the total market value of the futures
contract
underlying the call option. Alternatively, a Fund may
cover its
position by entering into a long position in the same
futures
contract at a price no higher than the strike price of
the call
option, by owning the instruments underlying the
futures
contract, or by holding a separate call option
permitting the
Fund to purchase the same futures contract at a price
not higher
than the strike price of the call option sold by that
Fund.
When selling a put option on a futures contract, a
Fund will
maintain with its custodian (and mark-to-market on a
daily basis)
cash, U.S. Government securities, or other highly
liquid debt
securities that equal the purchase price of the futures
contract
less any margin on deposit. Alternatively, a Fund may
cover the
position either by entering into a short position in
the same
futures contract, or by owning a separate put option
permitting
it to sell the same futures contract so long as the
strike price
of the purchased put option is the same or higher than
the strike
price of the put option sold by the Fund.
The requirements for qualification as a regulated
investment
company also may limit the extent to which a Fund may
enter into
futures and futures options.
INTEREST RATE FUTURES CONTRACTS. A Fund may
engage in
interest rate futures contracts transactions for
hedging purposes
only. An interest rate futures contract is an
agreement between
parties to buy or sell a specified debt security at a
set price
on a future date. The financial instruments that
underlie
interest rate futures contracts include long-term U.S.
Treasury
bonds, U.S. Treasury notes, GNMA certificates, and
three-month
U.S. Treasury bills. In the case of futures contracts
traded on
U.S. exchanges, the exchange itself or an affiliated
clearing
corporation assumes the opposite side of each
transaction (i.e.,
as buyer or seller). A futures contract may be
satisfied or
closed out by delivery or purchase, as the case may be
in the
cash financial instrument or by payment of the change
in the cash
value of the index. Frequently, using futures to
effect a
particular strategy instead of using the underlying or
related
security will result in lower transaction costs being
incurred.
A Fund may sell interest rate futures contracts in
order to
hedge its portfolio securities whose value may be
sensitive to
changes in interest rates. In addition, a Fund could
purchase
and sell these futures contracts in order to hedge its
holdings
in certain common stocks (such as utilities, banks and
savings
and loans) whose value may be sensitive to changes in
interest
rates. A Fund could sell interest rate futures
contracts in
anticipation of or during a market decline to attempt
to offset
the decrease in market value of its securities that
might
otherwise result. When a Fund is not fully invested in
securities, it could purchase interest rate futures in
order to
gain rapid market exposure that may in part or entirely
offset
increases in the cost of securities that it intends to
purchase.
As such purchases are made, an equivalent amount of
interest rate
futures contracts will be terminated by offsetting
sales. In a
substantial majority of these transactions, a Fund
would purchase
such securities upon termination of the futures
position whether
the futures position results from the purchase of an
interest
rate futures contract or the purchase of a call option
on an
interest rate futures contract, but under unusual
market
conditions, a futures position may be terminated
without the
corresponding purchase of securities.
OPTIONS ON INTEREST RATE FUTURES CONTRACTS. For
hedging
purposes, a Fund may also purchase and write put and
call options
on interest rate futures contracts which are traded on
a U.S.
exchange or board of trade and sell or purchase such
options to
terminate an existing position. Options on interest
rate futures
give the purchaser the right (but not the obligation),
in return
for the premium paid, to assume a position in an
interest rate
futures contract at a specified exercise price at a
time during
the period of the option.
Transactions in options on interest rate futures
would
enable a Fund to hedge against the possibility that
fluctuations
in interest rates and other factors may result in a
general
decline in prices of debt securities owned by the Fund.
Assuming
that any decline in the securities being hedged is
accomplished
by a rise in interest rates, the purchase of put
options and sale
of call options on the futures contracts may generate
gains which
can partially offset any decline in the value of the
particular
Fund's portfolio securities which have been hedged.
However, if
after a Fund purchases or sells an option on a futures
contract,
the value of the securities being hedged moves in the
opposite
direction from that contemplated, the Fund may
experience losses
in the form of premiums on such options which would
partially
offset gains the Fund would have.
FOREIGN CURRENCY FUTURES CONTRACTS AND RELATED
OPTIONS. A
Fund may engage in foreign currency futures contracts
and related
options transactions for hedging purposes. A foreign
currency
futures contract provides for the future sale by one
party and
purchase by another party of a specified quantity of a
foreign
currency at a specified price and time.
An option on a foreign currency futures contract
gives the
holder the right, in return for the premium paid, to
assume a
long position (call) or short position (put) in a
futures
contract at a specified exercise price at any time
during the
period of the option. Upon the exercise of a call
option, the
holder acquires a long position in the futures contract
and the
writer is assigned the opposite short position. In the
case of a
put option, the opposite is true.
A Fund may purchase call and put options on
foreign
currencies as a hedge against changes in the value of
the U.S.
dollar (or another currency) in relation to a foreign
currency in
which portfolio securities of the Fund may be
denominated. A
call option on a foreign currency gives the buyer the
right to
buy, and a put option the right to sell, a certain
amount of
foreign currency at a specified price during a fixed
period of
time. A Fund may invest in options on foreign currency
which are
either listed on a domestic securities exchange or
traded on a
recognized foreign exchange.
In those situations where foreign currency options
may not
be readily purchased (or where such options may be
deemed
illiquid) in the currency in which the hedge is
desired, the
hedge may be obtained by purchasing an option on a
"surrogate"
currency, i.e., a currency where there is tangible
evidence of a
direct correlation in the trading value of the two
currencies. A
surrogate currency's exchange rate movements parallel
that of the
primary currency. Surrogate currencies are used to
hedge an
illiquid currency risk, when no liquid hedge
instruments exist in
world currency markets for the primary currency.
A Fund will only enter into futures contracts and
futures
options which are standardized and traded on a U.S. or
foreign
exchange, board of trade, or similar entity or quoted
on an
automated quotation system. A Fund will not enter into
a futures
contract or purchase an option thereon if, immediately
thereafter, the aggregate initial margin deposits for
futures
contracts held by the Fund plus premiums paid by it for
open
futures option positions, less the amount by which any
such
positions are "in-the-money," would exceed 5% of the
liquidation
value of that Fund's portfolio (or the Fund's net asset
value),
after taking into account unrealized profits and
unrealized
losses on any such contracts the Fund has entered into.
A call
option is "in-the-money" if the value of the futures
contract
that is the subject of the option exceeds the exercise
price. A
put option is "in the money" if the exercise price
exceeds the
value of the futures contract that is the subject of
the option.
For additional information about margin deposits
required with
respect to futures contracts and options thereon, see
"Futures
Contracts and Options on Futures Contracts."
RISKS ASSOCIATED WITH FUTURES AND RELATED OPTIONS.
There
are several risks associated with the use of futures
contracts
and futures options as hedging techniques. A purchase
or sale of
a futures contract may result in losses in excess of
the amount
invested in the futures contract. There can be no
guarantee that
there will be a correlation between price movements in
the
hedging vehicle and in a Fund's portfolio securities
being
hedged. In addition, there are significant differences
between
the securities and futures markets that could result in
an
imperfect correlation between the markets, causing a
given hedge
not to achieve its objectives. The degree of
imperfection of
correlation depends on circumstances such as variations
in
speculative market demand for futures and futures
options on
securities, including technical influences in futures
trading and
futures options, and differences between the financial
instruments being hedged and the instruments underlying
the
standard contracts available for trading in such
respects as
interest rate levels, maturities, and creditworthiness
of
issuers. A decision as to whether, when and how to
hedge
involves the exercise of skill and judgment, and even a
well-
conceived hedge may be unsuccessful to some degree
because of
market behavior or unexpected interest rate trends.
Futures exchanges may limit the amount of
fluctuation
permitted in certain futures contract prices during a
single
trading day. The daily limit establishes the maximum
amount that
the price of a futures contract may vary either up or
down from
the previous day's settlement price at the end of the
current
trading session. Once the daily limit has been reached
in a
futures contract subject to the limit, no more trades
may be made
on that day at a price beyond that limit. The daily
limit
governs only price movements during a particular
trading day and
therefore does not limit potential losses because the
limit may
work to prevent the liquidation of unfavorable
positions. For
example, futures prices have occasionally moved to the
daily
limit for several consecutive trading days with little
or no
trading, thereby preventing prompt liquidation of
positions and
subjecting some holders of futures contracts to
substantial
losses.
There can be no assurance that a liquid market
will exist at
a time when a Fund seeks to close out a futures or a
futures
option position, and the Fund would remain obligated to
meet
margin requirements until the position is closed. In
addition,
there can be no assurance that an active secondary
market will
continue to exist.
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; may not
involve a clearing mechanism and related guarantees;
and are
subject to the risk of governmental actions affecting
trading in,
or the prices of, foreign securities. The value of
such position
also could 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 a 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.
SECURITIES INDEX FUTURES CONTRACTS
A Fund may enter into securities index futures
contracts as
an efficient means of regulating the Fund's exposure to
the
equity markets. An index futures contract is a
contract to buy
or sell units of an index at a specified future date at
a price
agreed upon when the contract is made. Entering into a
contract
to buy units of an index is commonly referred to as
purchasing a
contract or holding a long position in the index.
Entering into
a contract to sell units of an index is commonly
referred to as
selling a contract or holding a short position. The
value of a
unit is the current value of the stock index. For
example, the
S&P 500 Index is composed of 500 selected common
stocks, most of
which are listed on the New York Stock Exchange (the
"Exchange").
The S&P 500 Index assigns relative weightings to the
500 common
stocks included in the Index, and the Index fluctuates
with
changes in the market values of the shares of those
common
stocks. In the case of the S&P 500 Index, contracts
are to buy
or sell 500 units. Thus, if the value of the S&P 500
Index were
$150, one contract would be worth $75,000 (500 units x
$150).
The index futures contract specifies that no delivery
of the
actual securities making up the index will take place.
Instead,
settlement in cash must occur upon the termination of
the
contract, with the settlement being the difference
between the
contract price and the actual level of the stock index
at the
expiration of the contract. For example, if a Fund
enters into a
futures contract to buy 500 units of the S&P 500 Index
at a
specified future date at a contract price of $150 and
the S&P 500
Index is at $154 on that future date, a Fund will gain
$2,000
(500 units x gain of $4). If a Fund enters into a
futures
contract to sell 500 units of the stock index at a
specified
future date at a contract price of $150 and the S&P 500
Index is
at $154 on that future date, the Fund will lose $2,000
(500 units
x loss of $4).
RISKS OF SECURITIES INDEX FUTURES. A Fund's
success in
using hedging techniques depends, among other things,
on IMI's
ability to predict correctly the direction and
volatility of
price movements in the futures and options markets as
well as in
the securities markets and to select the proper type,
time and
duration of hedges. The skills necessary for
successful use of
hedges are different from those used in the selection
of
individual stocks.
A Fund's ability to hedge effectively all or a
portion of
its securities through transactions in index futures
(and
therefore the extent of its gain or loss on such
transactions)
depends on the degree to which price movements in the
underlying
index correlate with price movements in the Fund's
securities.
Inasmuch as such securities will not duplicate the
components of
an index, the correlation probably will not be perfect.
Consequently, a Fund will bear the risk that the prices
of the
securities being hedged will not move in the same
amount as the
hedging instrument. This risk will increase as the
composition
of a Fund's portfolio diverges from the composition of
the
hedging instrument.
Although a Fund intends to establish positions in
these
instruments only when there appears to be an active
market, there
is no assurance that a liquid market will exist at a
time when
the Fund seeks to close a particular option or futures
position.
Trading could be interrupted, for example, because of
supply and
demand imbalances arising from a lack of either buyers
or
sellers. In addition, the futures exchanges may
suspend trading
after the price has risen or fallen more than the
maximum amount
specified by the exchange. In some cases, a Fund may
experience
losses as a result of its inability to close out a
position, and
it may have to liquidate other investments to meet its
cash
needs.
Although some index futures contracts call for
making or
taking delivery of the underlying securities, generally
these
obligations are closed out prior to delivery by
offsetting
purchases or sales of matching futures contracts (same
exchange,
underlying security or index, and delivery month). If
an
offsetting purchase price is less than the original
sale price, a
Fund generally realizes a capital gain, or if it is
more, the
Fund generally realizes a capital loss. Conversely, if
an
offsetting sale price is more than the original
purchase price, a
Fund generally realizes a capital gain, or if it is
less, the
Fund generally realizes a capital loss. The
transaction costs
must also be included in these calculations.
A Fund will only enter into index futures
contracts or
futures options that are standardized and traded on a
U.S. or
foreign exchange or board of trade, or similar entity,
or quoted
on an automated quotation system. A Fund will use
futures
contracts and related options only for "bona fide
hedging"
purposes, as such term is defined in applicable
regulations of
the CFTC.
When purchasing an index futures contract, a Fund
will
maintain with its custodian (and mark-to-market on a
daily basis)
cash, U.S. Government securities, or other highly
liquid debt
securities that, when added to the amounts deposited
with a
futures commission merchant ("FCM") as margin, are
equal to the
market value of the futures contract. Alternatively, a
Fund may
"cover" its position by purchasing a put option on the
same
futures contract with a strike price as high as or
higher than
the price of the contract held by a Fund.
When selling an index futures contract, a Fund
will maintain
with its custodian (and mark-to-market on a daily
basis) liquid
assets that, when added to the amounts deposited with
an FCM as
margin, are equal to the market value of the
instruments
underlying the contract. Alternatively, a Fund may
"cover" its
position by owning the instruments underlying the
contract (or,
in the case of an index futures contract, a portfolio
with a
volatility substantially similar to that of the index
on which
the futures contract is based), or by holding a call
option
permitting a Fund to purchase the same futures contract
at a
price no higher than the price of the contract written
by the
Fund (or at a higher price if the difference is
maintained in
liquid assets with the Fund's custodian).
COMBINED TRANSACTIONS. A Fund may enter into
multiple
transactions, including multiple options transactions,
multiple
futures transactions, multiple currency transactions
(including
forward currency contracts) and multiple interest rate
transactions and any combination of futures, options,
currency
and interest rate transactions ("component"
transactions),
instead of a single transaction, as part of a single or
combined
strategy when, in the opinion of IMI, it is in the best
interests
of a Fund to do so. A combined transaction will
usually contain
elements of risk that are present in each of its
component
transactions. Although combined transactions are
normally
entered into based on IMI's judgment that the combined
strategies
will reduce risk or otherwise more effectively achieve
the
desired portfolio management goal, it is possible that
the
combination will instead increase such risks or hinder
achievement of the management objective.
HIGH YIELD BONDS
Ivy Bond Fund, Ivy Growth Fund and Ivy Growth with
Income
Fund may invest in corporate debt securities rated Baa
or lower
by Moody's, BB or lower by S&P. None of the Funds will
invest in
securities that, at the time of investment, are rated
lower than
C by either Moody's or S&P. Securities rated Baa or
BBB (and
comparable unrated securities) are considered by major
credit-
rating organizations to have speculative elements as
well as
investment-grade characteristics. Securities rated
lower than
Baa or BBB (and comparable unrated securities) are
commonly
referred to as "high yield" or "junk" bonds and are
considered to
be predominantly speculative with respect to the
issuer's
continuing ability to meet principal and interest
payments. The
lower the ratings of corporate debt securities, the
more their
risks render them like equity securities. (See
Appendix A for a
more complete description of the ratings assigned by
Moody's and
S&P and their respective characteristics.)
While IMI may refer to ratings issued by
established credit
rating agencies, it is not IMI's policy to rely
exclusively on
such ratings, but rather to supplement such ratings
with its own
independent and ongoing review of credit quality. A
Fund's
achievement of its investment objective may, to the
extent of its
investment in high yield bonds, be more dependent upon
IMI's
credit analysis than would be the case if the Funds
were
investing in higher quality bonds. Should the rating
of a
portfolio security be downgraded, IMI will determine
whether it
is in the relevant Fund's best interest to retain or
dispose of
the security. However, should any individual bond held
by a Fund
be downgraded below a rating of C, IMI currently
intends to
dispose of such bond based on then existing market
conditions.
The secondary market on which high yield bonds are
traded
may be less liquid than the market for higher grade
bonds. Less
liquidity in the secondary trading market could
adversely affect
the price at which a Fund could sell a high yield bond,
and could
adversely affect and cause large fluctuations in the
daily net
asset value of each the Fund's shares. Adverse
publicity and
investor perceptions, whether or not based on
fundamental
analysis, may decrease the value and liquidity of high
yield
bonds, especially in a thinly traded market. When
secondary
markets for high yield securities are less liquid than
the
markets for higher grade securities, it may be more
difficult to
value the securities because such valuation may require
more
research, and elements of judgment may play a greater
role in the
valuation because there is less reliable, objective
data
available.
Furthermore, prices for high yield bonds may be
affected by
legislative and regulatory developments. For example,
federal
rules require savings and loan institutions to reduce
gradually
their holdings of this type of security. Also,
Congress has from
time to time considered legislation that would restrict
or
eliminate the corporate tax deduction for interest
payments on
these securities and regulate corporate restructurings.
Such
legislation may significantly depress the prices of
outstanding
securities of this type.
INVESTMENT RESTRICTIONS
A Fund's investment objective, as set forth in the
Prospectus under "Investment Objectives and Policies,"
and the
investment restrictions set forth below are fundamental
policies
of the Fund and may not be changed with respect to that
Fund
without the approval of a majority (as defined in the
1940 Act)
of the outstanding voting shares of that Fund. Under
these
restrictions, each of Ivy Emerging Growth Fund, Ivy
Growth Fund
and Ivy Growth with Income Fund may not:
(i) purchase or sell real estate or
commodities and
commodity contracts;
(ii) purchase securities on margin;
(iii) sell securities short;
(iv) participate in an underwriting or
selling group in
connection with the public distribution
of
securities except for its own capital
stock;
(v) purchase from or sell to any of its
officers or
trustees, or firms of which any of them
are
members or which they control, any
securities
(other than capital stock of the Fund),
but such
persons or firms may act as brokers for
the Fund
for customary commissions to the extent
permitted
by the Investment Company Act of 1940;
(vi) make an investment in securities of
companies in
any one industry (except obligations of
domestic
banks or the U.S. Government, its
agencies,
authorities, or instrumentalities) if
such
investment would cause investments in
such
industry to exceed 25% of the market
value of the
Fund's total assets at the time of such
investment;
(vii) issue senior securities, except as
appropriate to
evidence indebtedness which it is
permitted to
incur, and except to the extent that
shares of the
separate classes or series of the Trust
may be
deemed to be senior securities; provided
that
collateral arrangements with respect to
currency-
related contracts, futures contracts,
options or
other permitted investments, including
deposits of
initial and variation margin, are not
considered
to be the issuance of senior securities
for
purposes of this restriction;
(viii) lend any funds or other assets, except
that this
restriction shall not prohibit (a) the
entry into
repurchase agreement or (b) the purchase
of
publicly distributed bonds, debentures
and other
securities of a similar type, or
privately placed
municipal or corporate bonds, debentures
and other
securities of a type customarily
purchased by
institutional investors or publicly
traded in the
securities markets;
(ix) borrow money, except for temporary
purposes where
investment transactions might
advantageously
require it. Any such loan may not be
for a period
in excess of 60 days, and the aggregate
amount of
all outstanding loans may not at any
time exceed
10% of the value of the total assets of
the Fund
at the time any such loan is made.
Under the 1940 Act, a Fund is permitted, subject
to each
Fund's investment restrictions, to borrow money only
from banks.
The Trust has no current intention of borrowing amounts
in excess
of 5% of each the Fund's assets. Each of Ivy Emerging
Growth
Fund, Ivy Growth Fund and Ivy Growth with Income Fund
will
continue to interpret fundamental investment
restriction (i)
above to prohibit investment in real estate limited
partnership
interests; this restriction shall not, however,
prohibit
investment in readily marketable securities of
companies that
invest in real estate or interests therein, including
REITs.
Further, as a matter of fundamental policy, each of Ivy
Growth
Fund and Ivy Growth with Income Fund may not:
(i) invest more than 5% of the value of its
total
assets in the securities of any one
issuer (except
obligations of domestic banks or the
U.S.
Government, its agencies, authorities
and
instrumentalities);
(ii) purchase the securities of any other
open-end
investment company, except as part of a
plan of
merger or consolidation; or
(iii) hold more than 10% of the voting
securities of any
one issuer (except obligations of
domestic banks
or the U.S. Government, its agencies,
authorities
and instrumentalities).
Further, as a matter of fundamental policy, each of Ivy
Bond Fund
and Ivy Emerging Growth Fund may not:
(i) purchase securities of any one issuer
(except U.S.
Government securities) if as a result
more than 5%
of the Fund's total assets would be
invested in
such issuer or the Fund would own or
hold more
than 10% of the outstanding voting
securities of
that issuer; provided, however, that up
to 25% of
the value of the Fund's total assets may
be
invested without regard to these
limitations.
Further, as a matter of fundamental policy, Ivy Bond
Fund may
not:
(i) Make investments in securities for the
purpose of
exercising control over or management of
the
issuer;
(ii) Borrow amounts in excess of 10% of its
total
assets, taken at the lower of cost or
market
value, and then only from banks as a
temporary
measure for extraordinary or emergency
purposes.
(iii) Purchase the securities of issuers
conducting
their principal business activities in
the same
industry if immediately after such
purchase the
value of the Fund's investments in such
industry
would exceed 25% of the value of the
total assets
of the Fund;
(iv) Act as an underwriter of securities;
(v) Issue senior securities, except insofar
as the
Fund may be deemed to have issued a
senior
security in connection with any
repurchase
agreement or any permitted borrowing.
(vi) Invest in real estate, real estate
mortgage loans,
commodities, commodity futures contracts
or
interests in oil, gas and/or mineral
exploration
or development programs, although a Fund
may
purchase and sell (a) securities which
are secured
by real estate, (b) securities of
issuers which
invest or deal in real estate, and (c)
futures
contracts as described in a Fund's
Prospectus;
(vii) Participate on a joint or a joint and
several
basis in any trading account in
securities. The
"bunching" of orders of the Fund--or of
the Fund
and of other accounts under the
investment
management of the persons rendering
investment
advice to the Fund--for the sale or
purchase of
portfolio securities shall not be
considered
participation in a joint securities
trading
account;
(viii) Purchase securities on margin, except
such short-
term credits as are necessary for the
clearance of
transactions. The deposit or payment by
a Fund of
initial or variation margin in
connection with
futures contracts or related options
transactions
is not considered the purchase of a
security on
margin;
(ix) Make loans, except that this restriction
shall not
prohibit (a) the purchase and holding of
a portion
of an issue of publicly distributed debt
securities, (b) the lending of portfolio
securities (provided that the loan is
secured
continuously by collateral consisting of
U.S.
Government securities or cash or cash
equivalents
maintained on daily marked-to-market
basis in an
amount at least equal to the current
market value
of the securities loaned), or (c) entry
into
repurchase agreements with banks or
broker-
dealers;
(x) Mortgage, pledge, hypothecate or in any
manner
transfer, as security for indebtedness,
any
securities owned or held by the Fund
(except as
may be necessary in connection with
permitted
borrowings and then not in excess of 20%
of the
Fund's total assets); provided, however,
this does
not prohibit escrow, collateral or
margin
arrangements in connection with its use
of
options, short sales, futures contracts
and
options on future contracts; or
(xi) Make short sales of securities or
maintain a short
position.
ADDITIONAL RESTRICTIONS
Unless otherwise indicated, each Fund has adopted
the
following additional restrictions, which are not
fundamental and
which may be changed without shareholder approval, to
the extent
permitted by applicable law, regulation or regulatory
policy.
Under these restrictions, each Fund may not:
(i) purchase any security if, as a result,
the Fund
would then have more than 5% of its
total assets
(taken at current value) invested in
securities of
companies (including predecessors) less
than three
years old.
Further, as a matter of non-fundamental policy, each of
Ivy
Emerging Growth Fund, Ivy Growth Fund and Ivy Growth
with Income
Fund may not:
(i) invest in oil, gas or other mineral
leases or
exploration or development programs;
(ii) engage in the purchase and sale of puts,
calls,
straddles or spreads (except to the
extent
described in the Prospectus and in this
SAI);
(iii) invest in companies for the purpose of
exercising
control of management; or
(iv) invest more than 5% of its total assets
in
warrants, valued at the lower of cost or
market,
or more than 2% of its total assets in
warrants,
so valued, which are not listed on
either the New
York or American Stock Exchanges.
Further, as a matter of non-fundamental policy, each of
Ivy Bond
Fund, Ivy Emerging Growth Fund and Ivy Growth with
Income Fund
may not:
(i) purchase or retain securities of any
company if
officers and Trustees of the Trust and
officers
and directors of Ivy Management, Inc.
(the
Manager, with respect to Ivy Bond Fund),
MIMI or
Mackenzie Financial Corporation who
individually
own more than 1/2 of 1% of the
securities of that
company together own beneficially more
than 5% of
such securities.
Further, as a matter of non-fundamental policy, each of
Ivy
Growth Fund and Ivy Growth with Income Fund may not:
(i) purchase any security which it is
restricted from
selling to the public without
registration under
the Securities Act of 1933; or
(ii) invest more than 5% of the value of its
total
assets in the securities of issuers
which are not
readily marketable.
Further, as a matter of non-fundamental policy, each of
Ivy Bond
Fund and Ivy Emerging Growth Fund may not:
(i) invest more than 10% of its net assets
taken at
market value at the time of investment
in
"illiquid securities." Illiquid
securities may
include securities subject to legal or
contractual
restrictions on resale (including
private
placements), repurchase agreements
maturing in
more than seven days, certain options
traded over
the counter that the Fund has purchased,
securities being used to cover certain
options
that a fund has written, securities for
which
market quotations are not readily
available, or
other securities which legally or in
IMI's
opinion, subject to the Board's
supervision, may
be deemed illiquid, but shall not
include any
instrument that, due to the existence of
a trading
market, to the Fund's compliance with
certain
conditions intended to provide
liquidity, or to
other factors, is liquid.
Further, as a matter of non-fundamental policy, Ivy
Emerging
Growth Fund may not:
(i) purchase securities of other investment
companies,
except in connection with a merger,
consolidation
or sale of assets, and except that it
may purchase
shares of other investment companies
subject to
such restrictions as may be imposed by
the 1940
Act and rules thereunder or by any state
in which
its shares are registered.
Further, as a matter of non-fundamental policy, Ivy
Bond Fund may
not:
(i) purchase or sell real estate limited
partnership
interests; or
(ii) purchase or sell interests in oil, gas
or mineral
leases (other than securities of
companies that
invest in or sponsor such programs).
In addition to the above restrictions, so long as
it remains
a policy of the California Department of Corporations,
each of
Ivy Emerging Growth Fund, Ivy Growth Fund and Ivy
Growth with
Income Fund may purchase and sell OTC options on stock
indices if
(a) exchange-traded options are not available, (b) an
active OTC
market exists that establishes pricing and liquidity,
and (c) the
broker-dealers with whom each Fund enters into such
transactions
have a minimum net worth of $20 million. Moreover, so
long as it
remains a restriction of the Ohio Division of
Securities, Ivy
Bond Fund will treat securities eligible for resale
under Rule
144A of the Securities Act of 1933 as subject to the
Fund's
restriction on investing in restricted securities,
unless the
Board determines that such securities are liquid.
Further, with
respect to the nonfundamental investment restrictions
for Ivy
Bond Fund relating to investing in the securities of
unseasoned
issuers, purchasing the securities of other investment
companies
and investing in illiquid securities, the Fund will
notify
shareholders 30 days before changing its investment
policies with
respect to any of the investment practices described
therein.
In addition, as a matter of nonfundamental policy,
each Fund
may not purchase securities of any open-end investment
company,
or securities of closed-end companies, except by
purchase in the
open market where no commission or profit to a sponsor
or dealer
results from such purchases, or except when such
purchase is part
of a merger, consolidation, reorganization or sale of
assets, and
except that the Fund may purchase shares of other
investment
companies subject to such restrictions as may be
imposed by the
1940 Act and rules thereunder or by any state in which
shares of
the Fund are registered.
Whenever an investment objective, policy or
restriction set
forth in the Prospectus or this SAI states a maximum
percentage
of assets that may be invested in any security or other
asset or
describes a policy regarding quality standards, such
percentage
limitation or standard shall, unless otherwise
indicated, apply
to a Fund only at the time a transaction is entered
into.
Accordingly, if a percentage limitation is adhered to
at the time
of investment, a later increase or decrease in the
percentage
which results from circumstances not involving any
affirmative
action by a Fund, such as a change in market conditions
or a
change in the Fund's asset level or other circumstances
beyond
that Fund's control, will not be considered a
violation.
ADDITIONAL RIGHTS AND PRIVILEGES
The Trust offers to investors, and (except as
noted below)
bears the cost of providing, the following rights and
privileges.
The Trust reserves the right to amend or terminate any
one or
more of such rights and privileges. Notice of
amendments to or
terminations of rights and privileges will be provided
to
shareholders in accordance with applicable law.
Certain of the rights and privileges described
below
reference other funds distributed by MIFDI, which funds
are not
described in this SAI. These funds are: Ivy Canada
Fund, Ivy
China Region Fund, Ivy Global Fund, Ivy International
Fund, Ivy
Latin America Strategy Fund, Ivy New Century Fund, Ivy
International Bond Fund, Ivy Short-Term Bond Fund and
Ivy Money
Market Fund, the other nine series of the Trust; and
Mackenzie
California Municipal Fund, Mackenzie Florida Limited
Term
Municipal Fund, Mackenzie Limited Term Municipal Fund,
Mackenzie
National Municipal Fund and Mackenzie New York
Municipal Fund,
the five series of Mackenzie Series Trust
(collectively, with the
Funds, the "Ivy Mackenzie Funds"). Investors should
obtain a
current prospectus before exercising any right or
privilege that
may relate to these funds.
AUTOMATIC INVESTMENT METHOD
The Automatic Investment Method is available for
all classes
of shares, except Class I. The minimum initial and
subsequent
investment pursuant to this plan is $50 per month,
except in the
case of a tax qualified retirement plan for which the
minimum
initial and subsequent investment is $25 per month.
The
Automatic Investment Method may be discontinued at any
time upon
receipt by The Mackenzie Ivy Investor Services Corp.
("MIISC") of
telephone instructions or written notice to MIISC from
the
investor. See "Automatic Investment Method" in the
Account
Application.
EXCHANGE OF SHARES
As described in the Prospectus, shareholders of
each Fund
have an exchange privilege with certain other Ivy and
Mackenzie
Funds. Before effecting an exchange, shareholders of
each Fund
should obtain and read the currently effective
prospectus for the
Ivy or Mackenzie Fund into which the exchange is to be
made.
INITIAL SALES CHARGE SHARES. Class A shareholders
may
exchange their Class A shares ("outstanding Class A
shares") for
Class A shares of another Ivy or Mackenzie Fund (or for
shares of
another Ivy or Mackenzie 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.
(The additional sales charge will be waived for
outstanding
Class A shares that have been invested for a period of
12 months
or longer.) Class A shareholders may also exchange
their Class A
shares for Class A shares of Ivy Money Market Fund (no
initial
sales charge will be assessed at the time of such an
exchange).
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 Ivy or Mackenzie Fund (or for shares of
another Ivy or
Mackenzie 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
any 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
that Fund's CDSC schedule (or period) following an
exchange if
such schedule is higher (or such period is longer) than
the CDSC
schedule (or period), if any, applicable to the new
Class A
shares.
Class A shares of a Fund acquired through an
exchange of
Class A shares of another Ivy or Mackenzie Fund subject
to a CDSC
will be subject to that Fund's CDSC schedule (or
period) if such
schedule is higher (or such period is longer) than the
CDSC
schedule (or period) applicable to the Ivy or Mackenzie
Fund from
which the exchange was made.
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 SHARES: Class B shareholders may exchange
their
Class B shares ("outstanding Class B shares") for Class
B shares
of another Ivy or Mackenzie 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 a Fund exercising the exchange
privilege will
continue to be subject to that Fund's CDSC schedule (or
period)
following an exchange if such schedule is higher (or
such period
is longer) than the CDSC schedule (or period)
applicable to the
new Class B shares.
Class B shares of a Fund acquired through an
exchange of
Class B shares of another Ivy or Mackenzie Fund will be
subject
to that Fund's CDSC schedule (or period) if such
schedule is
higher (or such period is longer) than the CDSC
schedule (or
period) applicable to the Ivy or Mackenzie Fund from
which the
exchange was made.
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 CDSC table ("Table 1") applies to
Class B
shares of Ivy Global Fund, Ivy Growth Fund, Ivy Growth
with
Income Fund, Ivy Emerging Growth Fund, Ivy
International Fund,
Ivy China Region Fund, Ivy Latin America Strategy Fund,
Ivy New
Century Fund, Ivy International Bond Fund, Ivy Bond
Fund, Ivy
Canada Fund, Mackenzie California Municipal Fund,
Mackenzie
National Municipal Fund, Mackenzie New York Municipal
Fund
("Table 1 Funds"):
CONTINGENT DEFERRED
SALES
CHARGE AS A
PERCENTAGE OF
DOLLAR AMOUNT
SUBJECT TO
YEAR SINCE PURCHASE CHARGE
First 5%
Second 4%
Third 3%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh and thereafter 0%
The following CDSC table ("Table 2") applies to
Class B
shares of Ivy Short-Term Bond Fund, Mackenzie Florida
Limited
Term Municipal Fund and Mackenzie Limited Term
Municipal Fund
("Table 2 Funds"):
CONTINGENT DEFERRED
SALES
CHARGE AS A
PERCENTAGE OF
DOLLAR AMOUNT
SUBJECT TO
YEAR SINCE PURCHASE CHARGE
First 3%
Second 2.5%
Third 2%
Fourth 1.5%
Fifth 1%
Sixth and thereafter 0%
The CDSC schedule for Table 1 Funds is higher (and
the
period is longer) than the CDSC schedule (and period)
for Table 2
Funds.
If a shareholder exchanges Class B shares of a
Table 1 Fund
for Class B shares of a Table 2 Fund, Table 1 will
continue to
apply to the Class B shares following the exchange.
For example,
an investor may decide to exchange Class B shares of a
Table 1
Fund ("outstanding Class B shares") for Class B shares
of a Table
2 Fund ("new Class B shares") after having held the
outstanding
Class B shares for two years. The 4% CDSC that
generally would
apply to a redemption of outstanding Class B shares
held for two
years would not be deducted at the time of the
exchange. If,
three years later, the investor redeems the new Class B
shares, a
2% CDSC will be assessed upon the redemption because by
"tacking"
the two year holding period of the outstanding Class B
shares
onto the three year holding period of the new Class B
shares, the
investor will be deemed to have held the new Class B
shares for
five years.
If a shareholder exchanges Class B shares of a
Table 2 Fund
for Class B shares of a Table 1 Fund, Table 1 will
apply to the
Class B shares following the exchange. For example, an
investor
may decide to exchange Class B shares of a Table 2 Fund
("outstanding Class B shares") for Class B shares of a
Table 1
Fund ("new Class B shares") after having held the
outstanding
Class B shares for two years. The 2.5% CDSC that
generally would
apply to a redemption of outstanding Class B shares
held for two
years would not be deducted at the time of the
exchange. If,
three years later, the investor redeems the new Class B
shares, a
2% CDSC will be assessed upon the redemption because by
"tacking"
the two year holding period of the outstanding Class B
shares
onto the three year holding period of the new Class B
shares, the
investor will be deemed to have held the new Class B
shares for
five years.
CLASS C SHARES. Class C shareholders may exchange
their
Class C shares ("outstanding Class C shares") for Class
C shares
of another Ivy or Mackenzie 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 SHARES. Class I shareholders may exchange
their
Class I shares for Class I shares of another Ivy or
Mackenzie
Fund on the basis of the relative net asset value per
Class I
share.
The minimum amount which may be exchanged into a
fund of the
Ivy Mackenzie Funds in which shares are not already
held is
$1,000 ($5,000,000 in the case of Class I of a Fund).
No
exchange out of a Fund (other than by a complete
exchange of all
the shares of the Fund) may be made if it would reduce
the
shareholder's interest in that Fund to less than $1,000
($5,000,000 in the case of Class I of a Fund).
Exchanges are
available only in states where the exchange can be
legally made.
Each exchange will be made on the basis of the
relative net
asset values per share of each fund of the Ivy
Mackenzie Funds
next computed following receipt of telephone
instructions by
MIISC or a properly executed request by MIISC.
Exchanges,
whether written or telephonic, must be received by
MIISC 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. This
exchange privilege may be modified or terminated at any
time,
upon at least 60 days' notice when such noticed is
required by
SEC rules. See "Redemptions."
An exchange of shares in any fund of the Ivy
Mackenzie Funds
for shares in another fund will result in a taxable
gain or loss.
Generally, any such taxable gain or loss 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 each Fund 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
($100,000 for Ivy Bond Fund) 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 a Fund or within 90 days
of the
initial purchase, in which case the Letter of Intent
will be back
dated. A shareholder may include the value (at the
applicable
offering price) of all Class A shares of Ivy Global
Fund, Ivy
Growth Fund, Ivy Growth with Income Fund, Ivy Emerging
Growth
Fund, Ivy International Bond Fund, Ivy Short-Term Bond
Fund, Ivy
Bond Fund, Mackenzie National Municipal Fund, Mackenzie
Florida
Limited Term Municipal Fund, Mackenzie Limited Term
Municipal
Fund, Mackenzie California Municipal Fund and Mackenzie
New York
Municipal Fund (and shares that have been exchanged
into Ivy
Money Market Fund from any of the other funds in the
Ivy
Mackenzie Funds) held of record by him or her as of the
date of
his or her Letter of Intent as an accumulation credit
toward the
completion of such Letter. During the term of the
Letter of
Intent, the Transfer Agent 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 MIFDI 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 thereof before
signing.
RETIREMENT PLANS
Shares may be purchased in connection with several
types of
tax-deferred retirement plans. Shares of more than one
fund
distributed by MIFDI may be purchased in a single
application
establishing a single plan account, and shares held in
such an
account may be exchanged among the funds in the Ivy
Mackenzie
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 account
For shareholders whose retirement accounts are
diversified across
several funds of the Ivy Mackenzie Funds, the annual
maintenance
fee will be limited to not more than $20.
The following discussion describes 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 the
Trust 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 IMI, who may
impose a
charge for establishing the account. Individuals
should consult
their tax advisers before investing IRA assets in a
Fund that
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. However, if one spouse has (or elects to be
treated as
having) no earned income for IRA purposes for a year,
the other
spouse may contribute to an IRA on his or her behalf.
In such a
case, the working spouse may contribute up to the
lesser of
$2,250 or 100% or his or her compensation or earned
income for
the year to IRAs for both spouses, provided that no
more than
$2,000 is contributed to the IRA of one spouse.
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 (or 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, a
full deduction is only available if he or she has
adjusted gross
income that is less than a specified level ($40,000 for
married
couples filing a joint return, $25,000 for single
individuals,
and $0 for a married individual filing a separate
return). The
deduction is phased out ratably for active participants
with
adjusted gross income between certain levels ($40,000
and $50,000
for married individuals filing a joint return, $25,000
and
$35,000 for single individuals, and $0 and $10,000 for
married
individuals filing separate returns). Individuals who
are active
participants with income above the specified phase-out
level may
not deduct their IRA contributions. 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. 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
benefi-
ciary, if any, or rolled over into another IRA.
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
distribu-
tions will result in the imposition of a 50%
non-deductible
penalty tax. Extremely large distributions in any one
year from
an IRA (or from an IRA and other retirement plans) may
also
result in a penalty tax.
QUALIFIED PLANS: For those self-employed
individuals who
wish to purchase shares of one or more of the funds in
the Ivy
Mackenzie Funds through a qualified retirement plan, a
Custodial
Agreement and a Retirement Plan are available from
MIISC. 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 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 Trust in
conjunction with such an arrangement. The sales charge
for
purchases of less than $10,000 of Class A shares is set
forth
under "Retirement Plans" in the Prospectus. Sales
charges for
purchases of $10,000 or more of Class A shares are the
same as
those set forth under "Initial Sales Charge Alternative
--
Class A Shares" in the Prospectus. The special
application for a
403(b)(7) Account is available from Mackenzie
Investment
Management Inc. ("MIMI").
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.
REINVESTMENT PRIVILEGE
Investors 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
MIISC 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."
RIGHTS OF ACCUMULATION
A scale of reduced sales charges applies to any
investment
of $50,000 ($100,000 for Ivy Bond Fund) or more in
Class A shares
of a Fund. 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). It is also applicable to current
purchases of
all of the funds in the Ivy Mackenzie Funds (except Ivy
Money
Market Fund) by any of the persons enumerated above,
where the
aggregate quantity of Class A shares of Ivy Global
Fund, Ivy
Growth Fund, Ivy Growth with Income Fund, Ivy Emerging
Growth
Fund, Ivy China Region Fund, Ivy Latin America Strategy
Fund, Ivy
New Century Fund, Ivy International Bond Fund, Ivy
International
Fund, Ivy Bond Fund, Ivy Short-Term Bond Fund, Ivy
Canada Fund,
Mackenzie National Municipal Fund, Mackenzie California
Municipal
Fund, Mackenzie Florida Limited Term Municipal Fund,
Mackenzie
Limited Term Municipal Fund and Mackenzie New York
Municipal Fund
(and shares that have been exchanged into Ivy Money
Market Fund
from any of the other funds in the Ivy Mackenzie Funds)
and of
any other investment company distributed by MIFDI,
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 $50,000 or
more for
Ivy Global Fund, Ivy Growth Fund, Ivy Growth with
Income Fund,
Ivy Emerging Growth Fund, Ivy International Fund, Ivy
China
Region Fund, Ivy Latin America Strategy Fund, Ivy New
Century
Fund and Ivy Canada Fund; $100,000 or more for
International Bond
Fund, Ivy Bond Fund, Mackenzie National Municipal Fund,
Mackenzie
California Municipal Fund and Mackenzie New York
Municipal Fund;
or $25,000 or more for Mackenzie Florida Limited Term
Municipal
Fund and Mackenzie Limited Term Municipal Fund; or
$1,000,000 or
more for Ivy Short-Term Bond Fund.
At the time an investment takes place, MIISC 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 may establish a Systematic
Withdrawal Plan
(the "Withdrawal Plan") (except shareholders with
accounts in
Class I of Ivy Bond Fund) by telephone instructions to
MIISC or
by delivery to MIISC of a written election to so
redeem,
accompanied by a surrender to MIISC of all share
certificates
then outstanding in the name of such shareholder,
properly
endorsed by him. A Withdrawal Plan may not be
established if the
investor is currently participating in the Automatic
Investment
Method. The Withdrawal Plan may involve the use of
principal
and, to the extent that it does, depending on the
amount
withdrawn, the investor's principal may be
depleted.
A redemption under the Withdrawal Plan is a
taxable event.
Investors contemplating participation in the Withdrawal
Plan
should consult their tax advisers.
Additional investments in a Fund made by investors
participating in the Withdrawal Plan must equal at
least $1,000
each while the Withdrawal Plan is in effect. Making
additional
purchases while the Withdrawal Plan is in effect may be
disadvantageous to the investor because of applicable
initial
sales charges or CDSCs.
An investor may terminate his participation in the
Withdrawal Plan at any time by delivering written
notice to
MIISC. If all shares held by the investor are
liquidated at any
time, the Withdrawal Plan will terminate automatically.
The
Trust or MIMI may terminate the Withdrawal Plan at any
time after
reasonable notice to shareholders.
GROUP SYSTEMATIC INVESTMENT PROGRAM
Shares of each Fund (except Ivy Bond Fund) may be
purchased
in connection with investment programs established by
employee or
other groups using systematic payroll deductions or
other
systematic payment arrangements. The Trust does not
itself
organize, offer or administer any such programs.
However, it
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 a Fund 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 Trust reserves the right
to refuse
any purchase or suspend the offering of shares in
connection with
group systematic investment programs at any time and to
restrict
the offering of shareholder privileges, such as Check
writing,
Simplified Redemptions and other optional privileges,
as
described in the Prospectus, 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 Trust and IMI each currently charge a
maintenance
fee of $3.00 (or portion thereof) for each twelve-month
period
(or portion thereof) the account is maintained. The
Trust 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
Trust
reserves the right to change these fees from time to
time without
advance notice.
BROKERAGE ALLOCATION
Subject to the overall supervision of the
President and the
Board, IMI places orders for the purchase and sale of
each Fund's
portfolio securities. All portfolio transactions are
effected at
the best price and execution obtainable. Purchases and
sales of
debt securities are usually principal transactions and
therefore,
brokerage commissions are usually not required to be
paid by the
particular Fund for such purchases and sales, although
the price
paid generally includes undisclosed compensation to the
dealer.
The prices paid to underwriters of newly-issued
securities
usually include a concession paid by the issuer to the
underwriter, and purchases of after-market securities
from
dealers normally reflect the spread between the bid and
asked
prices. In connection with OTC transactions, IMI
attempts to
deal directly with the principal market makers, except
in those
circumstances where IMI believes that a better price
and
execution are available elsewhere.
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. Commissions to be charged and the rendering
of
investment services, including statistical, research,
and
counseling services by brokerage firms, are factors to
be
considered in the placing of brokerage business. The
types of
research services provided by brokers may include
general
economic and industry data, and information on
securities of
specific companies. Research services furnished by
brokers
through whom the Trust effects securities transactions
may be
used by IMI in servicing all of its accounts. In
addition, not
all of these services may be used by IMI in connection
with the
services it provides to a particular Fund or the Trust.
IMI may
consider sales of shares of a Fund as a factor in the
selection
of broker-dealers and may select broker-dealers who
provide it
with research services. IMI will not, however, execute
brokerage
transactions other than at the best price and
execution.
During the fiscal year ended June 30, 1993 and
1994, during
the six-month period ended December 31, 1994 and during
the
fiscal year ended December 31, 1995, Ivy Bond Fund paid
brokerage
commissions of $39,498, $175,688, $42,425 and $20,912,
respectively.
During the period from March 3, 1993 (commencement
of
operations) to December 31, 1993, and during the
fiscal years
ended December 31, 1994 and 1995, Ivy Emerging Growth
Fund paid
brokerage commissions of $94,628, $83,831 and $302,892,
respectively.
During the fiscal years ended December 31, 1993,
1994 and
1995, Ivy Growth Fund paid brokerage commissions of
$1,071,036,
$265,471 and $666,385, respectively.
During the fiscal years ended December 31, 1993,
1994 and
1995, Ivy Growth with Income Fund paid brokerage
commissions of
$97,896, $34,028 and $192,913, respectively.
Each Fund may, under some circumstances, accept
securities
in lieu of cash as payment for Fund shares. Each of
these Funds
will consider accepting securities only to increase its
holdings
in a portfolio security or to take a new portfolio
position in a
security that IMI deems to be a desirable investment
for each the
Fund. While no minimum has been established, it is
expected that
each the Fund will not accept securities having an
aggregate
value of less than $1 million. The Trust may reject in
whole or
in part any or all offers to pay for the Fund shares
with
securities and may discontinue accepting securities as
payment
for the Fund shares at any time without notice. The
Trust will
value accepted securities in the manner and at the same
time
provided for valuing portfolio securities of each the
Fund, and
the Fund shares will be sold for net asset value
determined at
the same time the accepted securities are valued. The
Trust will
accept only securities which are delivered in proper
form and
will not accept securities subject to legal
restrictions on
transfer. The acceptance of securities by the Trust
must comply
with the applicable laws of certain states.
TRUSTEES AND OFFICERS
The Trustees and Executive Officers of the Trust,
their
business addresses and principal occupations during the
past five
years are:
POSITION
WITH THE BUSINESS
AFFILIATIONS
NAME, ADDRESS, AGE TRUST AND PRINCIPAL
OCCUPATIONS
John S. Anderegg, Jr. Trustee Chairman,
Dynamics
60 Concord Street Research Corp.
instruments
Wilmington, MA 01887 and controls);
Director,
Age: 71 Burr-Brown Corp.
(operational
amplifiers);
Director,
Metritage
Incorporated
(level
measuring
instruments);
Trustee of
Mackenzie Series
Trust
(1992-present).
Paul H. Broyhill Trustee Chairman, BMC
Fund, Inc.
800 Hickory Blvd. (1983-present);
Chairman,
Golfview Park Broyhill Family
Foundation,
Lenoir, NC 28645 Inc.
(1983-Present);
Age: 71 Chairman and
President,
Broyhill
Investments, Inc.
(1983-present);
Chairman,
Broyhill Timber
Resources
(1983-present);
Management
of a personal
portfolio of
fixed-income and
equity
investments
(1983-present);
Trustee of
Mackenzie Series
Trust
(1988-present);
Director of The
Mackenzie
Funds Inc.
(1988-1995).
Stanley Channick Trustee President, The
Whitestone
11 Bala Avenue Corporation
(insurance
Bala Cynwyd, PA 19004 agency);
President, Scott
Age: 71 Management
Company
(administrative
services
for insurance
companies);
President, The
Channick
Group
(consultants to
insurance
companies and
national trade
associations);
Trustee of
Ivy Fund
(1984-1993);
Director of The
Mackenzie
Funds Inc.
(1994-1995).
Frank W. DeFriece, Jr. Trustee Director, Manager
and Vice
322 Seventh Street President,
Massengill-
Bristol, TN 37620-2218 DeFriece
Foundation
Age: 74 (charitable
organization)
(1950-present);
Trustee and
Second Vice
Chairman, East
Tennessee Public
Communications
Corp. (WSJK-
TV)
(1984-present); Trustee
of Mackenzie
Series Trust
(1985-present);
Director of
The Mackenzie
Funds Inc.
(1987-1995).
Roy J. Glauber Trustee Mallinckrodt
Professor of
Physics, Harvard
Age: 70 University (since
1974);
Trustee of Ivy
Fund (1961-
1991); Trustee of
Mackenzie
Series Trust
(1994-
present).
Michael G. Landry Trustee President,
Chairman and
700 South Federal Hwy. and Director of
Mackenzie
Suite 300 President
Investment
Boca Raton, FL 33432 Management Inc.
Age: 49 (1987-present);
President
[*Deemed to be an and Director of
"interested person" Ivy Management,
Inc. (1992-
of the Trust, as present);
Chairman and
defined under the Director of
Mackenzie Ivy
1940 Act.] Investor Services
Corp.
(1993-present);
Director
and President of
Mackenzie
Ivy Funds
Distribution,
Inc. (1993-1994);
Chairman
and Director of
Mackenzie
Ivy Funds
Distribution,
Inc.
(1994-present);
Director and
President of
The Mackenzie
Funds Inc.
(1987-1995);
Trustee and
President of
Mackenzie
Series Trust
(1987-
present).
Michael R. Peers Trustee Chairman of the
Board,
c/o Brattle, Inc. and Ivy Management,
Inc.
176 Federal Street, Chairman (1984-1991);
Chairman
5th Floor of the of the Board, Ivy
Fund
Boston, MA 02110 Board (1974-present);
Private
Age: 66 Investor.
[*Deemed to be an
"interested person"
of the Trust, as
defined under the
1940 Act.]
Joseph G. Rosenthal Trustee Chartered
Accountant
110 Jardin Drive (1958-present);
Trustee
Unit #12 of Mackenzie
Series
Concord, Ontario Canada Trust
(1985-present);
L4K 2T7 Director of The
Mackenzie
Age: 61 Funds Inc.
(1987-1995).
Richard N. Silverman Trustee Formerly
President,
18 Bonnybrook Road Hy-Sil
Manufacturing
Waban, MA 02168 Company, a
division of
Age: 71 Van Leer, U.S.A.,
Inc.
(gift packaging
materials
and metalized
film
products);
Formerly
Director, Waters
Manufacturing Co.
(manufacturer of
electronic
parts); Director,
Panorama
Television
Network.
J. Brendan Swan Trustee President,
Airspray
4701 North Federal Hwy. International,
Inc.;
Suite 465 Joint Managing
Director,
Pompano Beach, FL 33064 Airspray
International
Age: 65 B.V. (an
environmentally
sensitive
packaging
company);
Director, The
Mackenzie Funds
Inc. (1992-
1995); Trustee of
Mackenzie
Series Trust
(1992-
present).
Keith J. Carlson Vice Senior Vice
President
700 South Federal Hwy. President and Director of
Mackenzie
Suite 300 Investment
Management,
Boca Raton, FL 33432 Inc.
(1994-present);
Age: 39 Senior Vice
President,
Secretary and
Treasurer of
Mackenzie
Investment
Management Inc.
(1985-
1994); Senior
Vice
President and
Director of
Ivy Management,
Inc. (1994-
present); Senior
Vice
President,
Treasurer and
Director of Ivy
Management,
Inc. (1992-1994);
Vice
President of The
Mackenzie
Funds Inc.
(1987-1995);
President and
Director of
Mackenzie Ivy
Investor
Services Corp.
(1993-
present); Vice
President of
Mackenzie Series
Trust
(1994-present);
Treasurer
of Mackenzie
Series Trust
(1985-1994);
President and
Director of
Mackenzie Ivy
Funds
Distribution, Inc.
(1994-present);
Executive
Vice President
and Director
of Mackenzie Ivy
Funds
Distribution,
Inc. (1993-
1994).
C. William Ferris Secretary/ Senior Vice
President,
700 South Federal Hwy. Treasurer
Secretary/Treasurer
Suite 300 and Director of
Boca Raton, FL 33432 Mackenzie
Investment
Age: 51 Management Inc.
(1994-
present); Senior
Vice
President,
Finance and
Administration/Compliance
Officer of
Mackenzie
Investment
Management Inc.
(1989-1994);
Senior Vice
President,
Secretary/
Treasurer and
Clerk of Ivy
Management, Inc.
(1994-
present); Senior
Vice
President,
Finance and
Administration/Compliance
Officer of Ivy
Management,
Inc. (1992-1994);
Senior
Vice President,
Secretary/
Treasurer and
Clerk of Ivy
Management, Inc.
(1989-
1994); Senior
Vice
President,
Secretary/
Treasurer of
Mackenzie Ivy
Funds
Distribution, Inc.
(1994-present);
Secretary/
Treasurer and
Director of
Mackenzie Ivy
Funds
Distribution,
Inc. (1993-
1994);
Secretary/Treasurer
and Director of
Mackenzie
Ivy Investor
Services Corp.
(1993-present);
Secretary/
Treasurer of The
Mackenzie
Funds Inc.
(1993-1995);
Secretary/Treasurer of
Mackenzie Series
Trust
(1994-present).
PERSONAL INVESTMENTS BY EMPLOYEES OF IMI
Employees of IMI are permitted to make personal
securities
transactions, subject to requirements and restrictions
set forth
in IMI's Code of Ethics. The Code of Ethics contains
provisions
and requirements 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, 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.
Additional restrictions apply to portfolio managers,
traders,
research analysts and others involved in the investment
advisory
process. Exceptions to these and other provisions of
the Code of
Ethics may be granted in particular circumstances after
review by
appropriate personnel.
COMPENSATION TABLE
IVY FUND
(FISCAL YEAR ENDED DECEMBER 31, 1995)
TOTAL
PENSION OR
COMPENSA-
RETIREMENT
TION FROM
BENEFITS ESTIMATED
TRUST AND
AGGREGATE ACCRUED AS ANNUAL
FUND COM-
COMPENSA- PART OF BENEFITS
PLEX PAID
NAME, TION FUND UPON
TO
POSITION FROM TRUST EXPENSES RETIREMENT
TRUSTEES
John S. 7,112 N/A N/A
8,000
Anderegg, Jr.
(Trustee)
Paul H. 7,112 N/A N/A
8,000
Broyhill
(Trustee)
Stanley -0- N/A N/A
8,000
Channick[*]
(Trustee)
Frank W. 7,112 N/A N/A
8,000
DeFriece, Jr.
(Trustee)
Roy J. -0- N/A N/A
8,000
Glauber[*]
(Trustee)
Michael G. -0- N/A N/A
-0-
Landry
(Trustee and
President)
Michael R. -0- N/A N/A
-0-
Peers
(Trustee and
Chairman of
the Board)
Joseph G. 7,112 N/A N/A
8,000
Rosenthal
(Trustee)
Richard N. 8,000 N/A N/A
8,000
Silverman
(Trustee)
J. Brendan 7,112 N/A N/A
8,000
Swan
(Trustee)
Keith J. -0- N/A N/A
-0-
Carlson
(Vice President)
C. William -0- N/A N/A
-0-
Ferris
(Secretary/Treasurer)
[*] Appointed as a Trustee of the Trust at a meeting
of the
Board of Trustees held on February 6, 1996.
As of February 26, 1996, the Officers and Trustees
of the
Trust as a group owned beneficially or of record none
of the
outstanding Class A, Class B, Class C or Class I shares
of any of
the Funds.
INVESTMENT ADVISORY AND OTHER SERVICES
BUSINESS MANAGEMENT AND INVESTMENT ADVISORY SERVICES
IMI currently provides business management and
investment
advisory services to each Fund pursuant to a Business
Management
and Investment Advisory Agreement (the "Agreement").
The
Agreement was approved by the respective sole
shareholder of Ivy
Bond Fund on December 31, 1994 and of Ivy Emerging
Growth Fund on
April 30, 1993 and by the respective shareholders of
Ivy Growth
Fund and Ivy Growth with Income Fund on December 30,
1991. Prior
to the approval by the respective shareholders or sole
shareholder of each Fund, the Agreement was approved on
September
29, 1994 with respect to Ivy Bond Fund, on February 19,
1993 with
respect to Ivy Emerging Growth Fund and October 28,
1991 with
respect to Ivy Growth Fund and Ivy Growth with Income
Fund by the
Board, including a majority of the Trustees who are
neither
"interested persons" (as defined in the 1940 Act) of
the Trust
nor have any direct or indirect financial interest in
the
operation of the distribution plan (see "Distribution
Services")
or in any related agreement (the "Independent
Trustees").
Until December 31, 1994, MIMI served as the
investment
adviser to Ivy Bond Fund, which Fund was a series of
Mackenzie
Series Trust until it was reorganized as a series of
the Trust on
December 31, 1994. On December 31, 1994, MIMI's
interest in the
Agreement with respect to Ivy Bond Fund was assigned by
MIMI to
IMI, which is a wholly owned subsidiary of MIMI. The
provisions
of the Agreement remain unchanged by IMI's succession
to MIMI
thereunder. 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 and
advises Ivy
Canada Fund. IMI currently acts as manager and
investment
adviser to the following investment companies
registered under
the 1940 Act (other than the Funds): Ivy China Region
Fund, Ivy
Global Fund, Ivy International Fund, Ivy Latin America
Strategy
Fund, Ivy New Century Fund, Ivy International Bond
Fund, Ivy
Short-Term Bond Fund and Ivy Money Market Fund.
The Agreement obligates IMI to make investments
for the
accounts of each Fund 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
Code
relating to regulated investment companies, subject to
policy
decisions adopted by the Board. IMI also determines
the
securities to be purchased or sold by these Funds and
places
orders with brokers or dealers who deal in such
securities.
Under the Agreement, IMI also provides certain
business
management services. IMI is obligated to (1)
coordinate with
each Fund's Custodian and monitor the services it
provides to
that Fund; (2) coordinate with and monitor any other
third
parties furnishing services to each Fund; (3) provide
each Fund
with necessary office space, telephones and other
communications
facilities as are adequate for the particular Fund's
needs;
(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 particular
Fund or by
IMI acting in some other capacity pursuant to a
separate
agreement or arrangements with the Fund; (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 IMI'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 the
Trust 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.
Ivy Bond Fund pays IMI a monthly fee for providing
business
management and investment advisory services at an
annual rate of
0.75% of the first $500 million of the Fund's average
daily net
assets, reduced to 0.60% of the next $500 million and
0.40% of
average daily net assets over $1 billion. Each of the
other Funds
pays IMI a monthly fee for providing business
management and
investment advisory serves at an annual rate of 0.85%
of each the
Fund's average daily net assets.
For the fiscal years ended June 30, 1993 and 1994,
for the
six-month period ended December 31, 1994 and for the
fiscal year
ended December 31, 1995, Ivy Bond Fund paid IMI of
$887,211,
$984,110, $445,111 and $848,778, respectively (of which
IMI
reimbursed $______, $______, $10,764 and $2,615,
respectively,
pursuant to required expense limitations).
For the period from March 3, 1993 (commencement of
operations) to December 31, 1993 and during the fiscal
years
ended December 31, 1994 and 1995, Ivy Emerging Growth
Fund paid
IMI $37,707, $168,819 and $318,186, respectively (of
which IMI
reimbursed $18,141, $3,923 and $0, respectively,
pursuant to
voluntary expense limitations).
For the fiscal years ended December 31, 1993, 1994
and 1995,
Ivy Growth Fund paid IMI $2,203,771, $2,133,471 and
$2,278,390,
respectively (of which IMI reimbursed $323,541,
$285,510 and
$11,680, respectively, pursuant to voluntary expense
limitations).
For the fiscal years ended December 31, 1993, 1994
and 1995,
Ivy Growth with Income Fund paid IMI $185,897, $277,991
and
$515,787, respectively.
Under the Agreement, the Trust pays the following
expenses:
(1) the fees and expenses of the Trust's Independent
Trustees;
(2) the salaries and expenses of any of the Trust's
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 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
preparation and
distribution to existing shareholders of periodic
reports, proxy
materials and prospectuses; and (13) fees and expenses
of
membership in industry organizations.
The Agreement provides that if a Fund's total
expenses 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
extraor-
dinary expenses including, without limitation,
litigation and
indemnification expenses) exceed the permissible limits
appli-
cable to that Fund in any state in which its shares are
then
qualified for sale, IMI will bear the excess expenses.
At the
present time, the most restrictive state expense
limitation
provision limits each Fund's annual expenses to 2.5% of
the first
$30 million of its average daily net assets, 2.0% of
the next $70
million and 1.5% of its average daily net assets over
$100
million.
IMI currently limits each of Ivy Emerging Market
Fund's
total operating expenses (excluding Rule 12b-1 fees,
interest,
taxes, brokerage commissions, litigation and
indemnification
expenses, and other extraordinary expenses) to an
annual rate of
1.95% of each the Fund's average daily net assets. As
long as a
Fund's expense limitation continues, it may lower that
Fund's
expenses and increase its yield. Each the Fund's
expense
limitation may be terminated or revised at any time, at
which
time a Fund's expenses may increase and its yield may
be reduced,
depending on the total assets of the particular
Fund.
On August 25-26, 1995, the Board, including a
majority of
the Independent Trustees, last approved the continuance
of the
Agreement with respect to each of Ivy Bond Fund, Ivy
Emerging
Growth Fund, Ivy Growth Fund and Ivy Growth with Income
Fund.
Each Agreement will continue in effect with respect to
each Fund
from year to year, or for more than the initial period,
as the
case may be, only so long as the 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 the particular Fund or (b) by the vote of
a majority
of the entire Board. If the question of continuance of
the
Agreements (or adoption of any new agreement) is
presented to
shareholders, continuance (or adoption) shall be
effected only if
approved by the affirmative vote of a majority of the
outstanding
voting securities of the particular Fund. See
"Capitalization
and Voting Rights."
Each Agreement may be terminated with respect to a
particular 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 Agreement shall terminate automatically
in the
event of its assignment.
DISTRIBUTION SERVICES
MIFDI, a wholly owned subsidiary of MIMI, serves
as the
exclusive distributor of the Funds' shares pursuant to
an Amended
and Restated Distribution Agreement with the Trust
dated October
23, 1991, as amended from time to time (the
"Distribution
Agreement"). MIFDI 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 MIFDI. MIFDI distributes shares of the Funds on a
continuous basis, but reserves the right to suspend or
discontinue distribution on that basis. MIFDI is not
obligated
to sell any specific amount of Fund shares.
Pursuant to the Distribution Agreement, MIFDI 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 Funds' then-current prospectus, and the
net asset
value on which such price is based. Out of that
commission,
MIFDI may reallow to dealers such concession as MIFDI
may
determine from time to time. In addition, MIFDI 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.
MIFDI may reallow all or a portion of the CDSC to
dealers as
MIFDI may determine from time to time.
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.
During the fiscal year ended June 30, 1993 and the
three
months ended September 30, 1993, MIMI (which at that
time was Ivy
Bond Fund's distributor) received from sales of Class
A1 [Shares
of Ivy Bond Fund outstanding as of March 31, 1994 were
designated
Class A shares of the Fund.] shares of Ivy Bond Fund
$900,303 and
$236,973, respectively, in sales commissions, of which
$201,431
and $46,312, respectively, was retained after dealers'
reallowances. During the nine months ended June 30,
1994, the
six-month period ended December 31, 1994 and the fiscal
year
ended December 31, 1995, MIFDI received commissions of
$343,167,
$123,560 and $_________, respectively, from sales of
Class A
shares of the Fund, of which $65,470, $23,740 and
$_________,
respectively, was retained after dealers'
reallowances.
During the period from March 3, 1993 (commencement
of
operations) to September 30, 1993, MIMI received from
sales of
Class A shares of Ivy Emerging Growth Fund $198,884 in
sales
commissions, of which $30,643 was retained after
dealers' re-
allowances. During the period from October 1, 1993 to
December 31, 1993 and during the fiscal years ended
December 31,
1994 and 1995, MIFDI received from sales of Class A
shares of Ivy
Emerging Growth Fund $267,621, $193,050 and $_______,
respectively, in sales commissions, of which $41,714,
$31,480 and
$______, respectively, was retained after dealers' re-
allowances. During the periods from March 3, 1993
(commencement
of operations) to September 30, 1993 and from October
1, 1993 to
December 31, 1993, MIMI and MIFDI, respectively,
received no
CDSCs upon certain redemptions of Class A shares of Ivy
Emerging
Growth Fund. During the period from October 23, 1993
and during
the fiscal year ended December 31, 1994, (the date on
which
Class B shares of Ivy Emerging Growth Fund were first
offered for
sale to the public) to December 31, 1993 and during the
fiscal
years ended December 31, 1994 and 1995, MIFDI received
$239,
$12,352 and $______, respectively, in CDSCs paid upon
certain
redemptions of Class B shares of Ivy Emerging Growth
Fund.
During the period from January 1, 1993 to
September 30,
1993, MIMI received from sales of Class A shares of Ivy
Growth
Fund $310,897 in sales commissions, of which $51,790
was retained
after dealers' re-allowances. During the period from
October 1,
1993 to December 31, 1993 and during the fiscal years
ended
December 31, 1994 and 1995, MIFDI received from sales
of Class A
shares of Ivy Growth Fund $26,792, $70,092 and $______,
respectively, in sales commissions, of which $4,463,
$10,667 and
$_____, respectively, was retained after dealers'
re-allowances.
During the period from January 1, 1993 to September 30,
1993,
MIMI received no CDSCs. During the period from October
1, 1993
to December 31, 1993 and during the fiscal years ended
December
31, 1994 and 1995, MIFDI received $0, $4,669 and
$_______,
respectively, in CDSCs paid upon certain redemptions of
Class B
shares of Ivy Growth Fund, of which $0, $_____ and
$______,
respectively, was retained after dealers'
re-allowances.
During the period from January 1, 1993 to
September 30,
1993, MIMI received from sales of Class A shares of Ivy
Growth
with Income Fund $145,295 in sales commissions, of
which $23,818
was retained after dealers' re-allowances. During the
period
from October 1, 1993 to December 31, 1993 and during
the fiscal
years ended December 31, 1994 and 1995, MIFDI received
from sales
of Class A shares of the Fund $60,844, $236,691 and
$_________,
respectively, in sales commissions, of which $9,974,
$37,077 and
$_______, respectively, was retained after dealers' re-
allowances. During the period from January 1, 1993 to
September 30, 1993, MIMI received no CDSCs. During the
period
from October 1, 1993 to December 31, 1993 and during
the fiscal
year ended December 31, 1994, MIFDI received no CDSCs.
During
the fiscal year ended December 31, 1995, MIFDI received
$________
in CDSCs paid upon certain redemptions of Class B
shares of Ivy
Growth with Income Fund, of which $_____ was retained
after
dealers' re-allowances.
Since the inception date for Class C shares of
each Fund is
April 30, 1996, no payments were made in connection
with the sale
of Class C shares with respect to any Fund during the
relevant
time periods.
Each Distribution Agreement will continue in
effect 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 each Fund. Each Distribution Agreement may be
terminated with
respect to a particular Fund at any time, without
payment of any
penalty, by MIFDI on 60 days' written notice to the
Fund or by
the Fund by vote of either a majority of the
outstanding voting
securities of the Fund or a majority of the Independent
Trustees
on 60 days' written notice to MIFDI. Each 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 whose shares are registered on Form
N-1A to
issue multiple classes of shares in accordance with a
written
plan approved by the investment company's board of
directors/trustees and filed with the SEC. At a
meeting held on
December 1-2, 1995, the Board adopted a multi-class
plan (the
"Rule 18f-3 plan") on behalf of each Fund. The key
features of
the Rule 18f-3 plan are as follows: (i) shares of each
class of
a 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 a Fund may be exchanged for shares
of the
same class of another Ivy or Mackenzie fund; and (iii)
a 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 distribution plans pertaining to the
Funds'
Class A, Class B and Class C shares (each, a "Plan").
In
adopting each Plan, a majority of the Independent
Trustees have
concluded in conformity with the requirements of the
1940 Act
that there is a reasonable likelihood that each Plan
will benefit
each respective 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 a Fund's shares in the absence of a Plan or under an
alternative distribution arrangement.
Under each Plan, each Fund pays MIFDI 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, as the case may be. The services for
which
service fees may be paid include, among other services,
advising
clients or customers regarding the purchase, sale or
retention of
shares of the Fund, answering routine inquiries
concerning the
Fund 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
that
Class of that Fund. The expenses not reimbursed in any
one given
month may be reimbursed in a subsequent month.
Under the Funds' Class B and Class C Plans, each
Fund also
pays MIFDI 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. MIFDI
may reallow
to dealers all or a portion of the service and
distribution fees
as MIFDI may determine from time to time. The
distribution fee
compensates MIFDI for expenses incurred in connection
with
activities primarily intended to result in the sale of
the Funds'
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. Under the Funds' Class B and
Class C
Plans, MIFDI 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)
MIFDI 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 Trust
shall be committed to the discretion of the Trustees
who are not
"interested persons" of the Trust.
MIFDI may make payments for distribution
assistance and for
administrative and accounting services from resources
that may
include the management fees paid by a Fund. MIFDI also
may make
payments (such as the service fee payments described
above) to
unaffiliated broker-dealers for services rendered in
the
distribution of each Fund's 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
MIFDI.
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.
During the fiscal year ended June 30, 1994, the
six-month
period ended December 31, 1994 and the fiscal year
ended December
31, 1995 Ivy Bond Fund paid MIFDI $327,497, $146,362
and
$273,837, respectively, pursuant to the Class A plan,
and $693,
$7,469 and $36,359, respectively, pursuant to the Class
B
plan.
For the period from March 3, 1993 (commencement of
operations) to September 30, 1993, Ivy Emerging Growth
Fund paid
MIMI $3,137 pursuant to the Class A Plan. For the
period from
October 1, 1993 to December 31, 1993 and during the
fiscal years
ended December 31, 1994 and 1995, the Fund paid MIFDI
$7,644,
$41,576 and $70,182, respectively, pursuant to the
Class A Plan.
For the period from October 23, 1993 (the date on which
Class B
shares of Ivy Emerging Growth Fund were first offered
for sale to
the public) to December 31, 1993 and during the fiscal
years
ended December 31, 1994 and 1995, Ivy Emerging Growth
Fund paid
MIFDI $1,235,$32,179 and $93,593, respectively,
pursuant to the
Class B Plan.
For the period from January 1, 1993 to September
30, 1993,
Ivy Growth Fund paid MIMI $36,753 pursuant to the Class
A Plan.
For the period from October 1, 1993 to December 31,
1993, and for
the fiscal years ended December 31, 1994 and 1995, Ivy
Growth
Fund paid MIFDI $21,315, $89,478 and $115,730,
respectively,
pursuant to the Class A Plan. For the period from
October 23,
1993 (the date on which Class B shares of Ivy Growth
Fund were
first offered for sale to the public) to December 31,
1993, and
during the fiscal year ended December 31, 1994 and
1995, Ivy
Growth Fund paid MIFDI $109, $6,983 and $20,164,
respectively,
pursuant to the Class B Plan.
For the period from January 1, 1993 to September
30, 1993,
Ivy Growth with Income Fund paid MIMI $8,540 pursuant
to the
Class A Plan. For the period from October 1, 1993 to
December 31, 1993 and for the fiscal years ended
December 31,
1994 and 1995, Ivy Growth with Income Fund paid MIFDI
$2,459,
$34,975 , and $105,143, respectively, pursuant to the
Class A
Plan. For the period from October 23, 1993 (the date
on which
Class B shares of Ivy Growth with Income Fund were
first offered
for sale to the public) to December 31, 1993 and for
the fiscal
years ended December 31, 1994 and 1995, Ivy Growth with
Income
Fund paid MIFDI $312, $38,866 and $76,355,
respectively, pursuant
to the Class B Plan.
Since the inception date for Class C shares is
April 30,
1996, no payments were made under the Funds' Class C
Plan during
the relevant time periods.
During the fiscal year ended December 31, 1995,
MIFDI
expended the following amounts in marketing Class A
shares of Ivy
Bond Fund: advertising, $_____; printing and mailing
of
prospectuses to persons other than current
shareholders, $_____;
compensation to dealers, $_____; compensation to sales
personnel,$_____; seminars and meetings, $_____; travel
and
entertainment, $_____; general and administrative,
$_____;
telephone, $_____; and occupancy and equipment rental,
$_____.
During the fiscal year ended December 31, 1995,
MIFDI
expended the following amounts in marketing Class B
shares of Ivy
Bond Fund: advertising, $_____; printing and mailing
of
prospectuses to persons other than current
shareholders, $_____;
compensation to dealers, $_____; compensation to sales
personnel,$_____; seminars and meetings, $_____; travel
and
entertainment, $_____; general and administrative,
$_____;
telephone, $_____; and occupancy and equipment rental,
$_____.
During the fiscal year ended December 31, 1995,
MIFDI
expended the following amounts in marketing Class A
shares of Ivy
Emerging Growth Fund: advertising, $_____; printing
and mailing
of prospectuses to persons other than current
shareholders,
$_____; compensation to dealers, $_____; compensation
to sales
personnel,$_____; seminars and meetings, $_____; travel
and
entertainment, $_____; general and administrative,
$_____;
telephone, $_____; and occupancy and equipment rental,
$_____.
During the fiscal year ended December 31, 1995,
MIFDI
expended the following amounts in marketing Class B
shares of Ivy
Emerging Growth Fund: advertising, $_____; printing
and mailing
of prospectuses to persons other than current
shareholders,
$_____; compensation to dealers, $_____; compensation
to sales
personnel,$_____; seminars and meetings, $_____; travel
and
entertainment, $_____; general and administrative,
$_____;
telephone, $_____; and occupancy and equipment rental,
$_____.
During the fiscal year ended December 31, 1995,
MIFDI
expended the following amounts in marketing Class A
shares of Ivy
Growth Fund: advertising, $_____; printing and mailing
of
prospectuses to persons other than current
shareholders, $_____;
compensation to dealers, $_____; compensation to sales
personnel,$_____; seminars and meetings, $_____; travel
and
entertainment, $_____; general and administrative,
$_____;
telephone, $_____; and occupancy and equipment rental,
$_____.
During the fiscal year ended December 31, 1995,
MIFDI
expended the following amounts in marketing Class B
shares of Ivy
Growth Fund: advertising, $_____; printing and mailing
of
prospectuses to persons other than current
shareholders, $_____;
compensation to dealers, $_____; compensation to sales
personnel,$_____; seminars and meetings, $_____; travel
and
entertainment, $_____; general and administrative,
$_____;
telephone, $_____; and occupancy and equipment rental,
$_____.
During the fiscal year ended December 31, 1995,
MIFDI
expended the following amounts in marketing Class A
shares of Ivy
Growth with Income Fund: advertising, $_____; printing
and
mailing of prospectuses to persons other than current
shareholders, $_____; compensation to dealers, $_____;
compensation to sales personnel,$_____; seminars and
meetings,
$_____; travel and entertainment, $_____; general and
administrative, $_____; telephone, $_____; and
occupancy and
equipment rental, $_____.
During the fiscal year ended December 31, 1995,
MIFDI
expended the following amounts in marketing Class B
shares of Ivy
Growth with Income Fund: advertising, $_____; printing
and
mailing of prospectuses to persons other than current
shareholders, $_____; compensation to dealers, $_____;
compensation to sales personnel,$_____; seminars and
meetings,
$_____; travel and entertainment, $_____; general and
administrative, $_____; telephone, $_____; and
occupancy and
equipment rental, $_____.
Since the inception date for Class C shares of
each Fund is
April 30, 1996, no payments were made in marketing
Class C shares
of any Fund during the relevant time period.
Each Plan may be amended at any time with respect
to the
class of shares of the particular 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 with
respect to the class of shares of the particular Fund
to which
the Plan relates at any time, 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 the Distribution
Plans are
terminated (or not renewed) with respect to one or more
funds (or
Class of shares thereof) of the Trust, they may
continue in
effect with respect to any fund (or Class of shares
thereof) as
to which they have not been terminated (or have been
renewed).
CUSTODIAN
Brown Brothers Harriman & Co. ("Brown Brothers"),
a private
bank and member of the principal securities exchanges,
located at
40 Water Street, Boston, Massachusetts 02109 (the
"Custodian"),
has been retained to act as the Trust's Custodian for
assets of
each Fund held in the United States. Rules adopted
under the
1940 Act permit the Trust to maintain its foreign
securities and
cash in the custody of certain eligible foreign banks
and
securities depositories. Pursuant to those rules,
Brown Brothers
has entered into subcustodial agreements for the
holding of each
Fund's foreign securities. With respect to each Fund,
Brown
Brothers may receive, as partial payment for its
services, a
portion of the Trust's brokerage business, subject to
its ability
to provide best price and execution.
FUND ACCOUNTING SERVICES
Pursuant to a Fund Accounting Services Agreement,
MIMI
provides certain accounting and pricing services for
each Fund.
As compensation for those services, Ivy Bond Fund pays
MIMI a
monthly fee plus out-of-pocket expenses as incurred.
The monthly
fee is based upon the net assets of the particular Fund
at the
preceding month end at the following rates: $1,000
when the net
assets are less than $20 million; $1,500 when the net
assets are
$20 to $75 million; $4,000 when the net assets are $75
to $100
million; and $6,000 when the net assets are over $100
million.
For the fiscal years ended June 30, 1993 and 1994,
the six
months ended December 31, 1994 and the fiscal year
ended December
31, 1995, Ivy Bond Fund paid $84,116, $85,737, $45,015
and
$102,160, respectively, to MIMI under such agreement.
During the
period from March 3, 1993 to December 31, 1993 and
during the
fiscal years ended December 31, 1994 and 1995 Ivy
Emerging Growth
Fund paid MIMI $12,798, $31,948 and $45,324,
respectively, under
such agreement. During the period from January 25,
1993 through
December 31, 1993 and during the fiscal years ended
December 31,
1994 and 1995, Ivy Growth Fund paid MIMI $101,323,
$103,232 and
$103,945, respectively under such agreement. During
the period
from April 1, 1993 through December 31, 1993 and the
fiscal years
ended December 31, 1994 and 1995, Ivy Growth with
Income Fund
paid MIMI $24,500, $33,702 and $60,915, respectively,
pursuant to
such agreement.
TRANSFER AGENT AND DIVIDEND PAYING AGENT
Pursuant to a Transfer Agency and Shareholder
Service
Agreement, MIISC, a wholly owned subsidiary of MIMI, is
the
transfer agent for each Fund. Each Fund (except for
Ivy Bond
Fund) pays a monthly fee at an annual rate of $20.00
per open
account. Ivy Bond Fund pays $20.75 per open account
for Class A,
Class B and Class C and $10.25 per open account for
Class I. In
addition, each Fund pays a monthly fee at an annual
rate of $4.36
per account that is closed plus certain out-of-pocket
expenses.
Such fees and expenses for the fiscal year ended
December 31,
1995 for Ivy Bond Fund, Ivy Emerging Growth Fund, Ivy
Growth Fund
and Ivy Growth with Income Fund totalled $198,311,
$130,012,
$1,104,622 and $280,966, respectively.
ADMINISTRATOR
Pursuant to an Administrative Services Agreement,
MIMI
provides certain administrative services to each Fund.
As
compensation for these services, each Fund except for
Ivy Bond
Fund with respect to its Class I shares only pays MIMI
a monthly
fee at the annual rate of .10% of that Fund's average
daily net
assets. Ivy Bond Fund pays MIMI a monthly fee at the
annual rate
of .01% of its average daily net assets for Class I.
Such fees
for the fiscal year ended December 31, 1995 for Ivy
Bond Fund,
Ivy Emerging Growth Fund, Ivy Growth Fund and Ivy
Growth with
Income Fund totalled $113,170, $37,434, $268,046 and
$60,681,
respectively.
AUDITORS
Coopers & Lybrand L.L.P., independent certified
public
accountants, 200 East Las Olas Boulevard, Suite 1700,
Ft.
Lauderdale, Florida 33301, has been selected as
auditors for the
Trust. The audit services performed by Coopers &
Lybrand L.L.P.,
include audits of the annual financial statements of
each of the
funds of the Trust. Other services provided
principally relate
to filings with the SEC and the preparation of the
Trust's tax
returns.
CAPITALIZATION AND VOTING RIGHTS
Ivy Bond Fund results from a reorganization of
Mackenzie
Fixed Income Trust, a series of Mackenzie Series Trust,
which
reorganization was approved by shareholders of the Fund
on
December 15, 1994. The capitalization of the Trust
consists of
an unlimited number of shares of beneficial interest
(no par
value per share). When issued, shares of each class of
each Fund
are fully paid, non-assessable, redeemable and fully
transferable. No class of shares of any Fund has
preemptive
rights or subscription rights.
The Amended and Restated Declaration of Trust
permits the
Trustees to create separate series or portfolios and to
divide
any series or portfolio into one or more classes. The
Trustees
have authorized thirteen series, each of which
represents a fund.
The Trustees have further authorized the issuance of
Classes A, B
and C for Ivy Global Fund, Ivy Growth Fund, Ivy
Emerging Growth
Fund, Ivy Growth with Income Fund, Ivy Money Market
Fund, Ivy
China Region Fund, Ivy Latin America Strategy Fund, Ivy
New
Century Fund, Ivy International Fund, Ivy Canada Fund,
Ivy Bond
Fund and Ivy International Bond Fund, as well as Class
A, B and I
for Ivy Short-Term Bond Fund, Class I for Ivy
International Fund
and Ivy Bond Fund, and Class D for Ivy Growth with
Income Fund.
[FN][The Class D shares of Ivy Growth with Income Fund
were
initially issued as "Ivy Growth with Income Fund --
Class C" to
shareholders of Mackenzie Growth & Income Fund, a
former series
of the Company, in connection with the reorganization
between
that fund and Ivy Growth with Income Fund, and are not
offered
for sale to the public. On February 29, 1996, the
Trustees of
the Trust resolved by written consent to establish a
new class of
shares designated as "Class C" for all Ivy Fund
portfolios (other
than Ivy Short-Term Bond Fund), and to redesignate the
shares of
beneficial interest of "Ivy Growth with Income
Fund--Class C" as
shares of beneficial interest of "Ivy Growth with
Income Fund--
Class D," which establishment and redesignation,
respectively,
are to become effective on April 30, 1996. The voting,
dividend,
liquidation and other rights, preferences, powers,
restrictions,
limitations, qualifications, terms and conditions of
the Class D
shares of Ivy Growth with Income Fund, as set forth in
Ivy Fund's
Declaration of Trust, as amended from time to time,
will not be
changed by this redesignation.]
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).
On matters affecting only one Fund, only the
shareholders of that
Fund are entitled to vote. All classes of shares of a
Fund will
vote together, except with respect to the distribution
plan
applicable to that 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 of the Trust, but affecting the
funds
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 of the
Trust. If the Trustees determine that a matter does
not affect
the interests of a Fund, then the shareholders of that
Fund will
not be entitled to vote on that matter. Matters that
affect the
Trust in general, such as ratification of the selection
of
independent public accountants, will be voted upon
collectively
by the shareholders of all funds of the Trust.
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 that 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 that Fund (or of
the
Trust).
With respect to the submission to shareholder vote
of a
matter requiring separate voting by a Fund, the matter
shall have
been effectively acted upon with respect to that Fund
if a
majority of the outstanding voting securities of that
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 of the Trust; or
(2) the
matter has not been approved by a majority of the
outstanding
voting securities of the Trust.
The Amended and Restated 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 as if Section 26(c) of
the Act were
applicable.
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.
To the knowledge of the Trust, as of January 31,
1996, no
shareholder owned beneficially or of record 5% or more
of any
Fund's outstanding Class A, Class B, Class C or Class I
shares,
except that of the outstanding Class A shares of Ivy
Emerging
Growth Fund, Amalgamated Bank of New York (custodian)
FBO TWU-NYC
Private Bus Lines Pension Fund, P.O. Box 370 Cooper
Station, New
York, New York 10003, owned of record 90,679.566 shares
(5.48%);
and except that of the outstanding Class B shares of
Ivy Growth
Fund, IBT (custodian) FBO G. Pattyson, P.O. Box 11,
Terrace Bay,
Ontario, Canada POT 2W0, owned of record 14,617.961
shares
(9.94%); and of the outstanding Class C shares of Ivy
Growth with
Income Fund (which shares will be redesignated as Class
D shares
of Ivy Growth with Income Fund, effective April 30,
1996),
Resources Trust Co. (custodian) FBO J. McDonald, 109
South
Street, Needham, Massachusetts 02192, owned of record
8,037.952
shares (7.10%), and J. and L. Venner (trustees) FBO
Clampo
Products Profit Sharing Plan, 1743 Wall Road,
Wadsworth, Ohio
44281, owned of record 7,215.092 shares (6.37%).
Under Massachusetts law, the Trust's shareholders
could,
under certain circumstances, be held personally liable
for the
obligations of the Trust. However, the Amended and
Restated
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 Amended and Restated Declaration
of Trust
provides for indemnification out of Fund property for
all loss
and expense of any shareholder of a Fund held
personally liable
for the obligations of that 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 series of the Trust is liable
for the
obligations of any other series of the Trust.
NET ASSET VALUE
The share price, or value, for the separate
Classes of
shares of a Fund is called the net asset value per
share. The
net asset value per share of a Fund is computed by
dividing the
value of the assets of that Fund, less its liabilities,
by the
number of shares of that Fund outstanding. For
purposes of
determining the aggregate net assets of a Fund, cash
and
receivables will be valued at their realizable amounts.
A
security listed or traded on a recognized stock
exchange or
NASDAQ is valued at its last sale price on the
principal exchange
on which the security is traded. The value of a
foreign security
is determined in its national currency as of the normal
close of
trading on the foreign exchange on which it is traded
or as of
the close of regular trading on the Exchange, if that
is earlier,
and that value is then converted into its U.S. dollar
equivalent
at the foreign exchange rate in effect at noon, Eastern
time, on
the day the value of the foreign security is
determined. If no
sale is reported at that time, the average between the
current
bid and asked price is used. All other securities for
which OTC
market quotations are readily available are valued at
the average
between the current bid and asked price. Interest will
be
recorded as accrued. Securities and other assets for
which
market prices are not readily available are valued at
fair value
as determined by IMI and approved in good faith by the
Board.
Money market instruments of a Fund are valued at market
value,
except that instruments maturing within 60 days of the
valuation
date are valued at amortized cost.
A 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 that 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.
Portfolio securities are valued and net asset
value per
share is determined as of the close of regular trading
on the
Exchange (normally 4:00 p.m., eastern time), every
Monday through
Friday (exclusive of national business holidays). The
Trust's
offices will be closed, and net asset value will not be
calculated, on the following national business
holidays: New
Year's Day, Presidents Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Veterans 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
such day
being a partial holiday or otherwise, the right is
reserved to
advance the time on that day by which purchase and
redemption
requests must be received.
When a Fund writes an option, an amount equal to
the premium
received by that Fund is included in that Fund's
Statement of
Assets and Liabilities as an asset and as an equivalent
liability. The amount of the liability will be
subsequently
marked-to-market daily to reflect the current market
value of the
option written. The current market value of a written
option is
the last sale on the principal exchange on which such
option is
traded or, in the absence of a sale, the last offering
price.
The premium paid by a Fund for the purchase of a
call or a
put option will be deducted from its assets and an
equal amount
will be included in the asset section of that Fund's
Statement of
Assets and Liabilities as an investment and
subsequently adjusted
to the current market value of the option. For
example, if the
current market value of the option exceeds the premium
paid, the
excess would be unrealized appreciation and,
conversely, if the
premium exceeds the current market value, such excess
would be
unrealized depreciation. The current market value of a
purchased
option will be the last sale price on the principal
exchange on
which the option is traded or, in the absence of a
sale, the last
bid price. If a Fund exercises a call option which it
has
purchased, the cost of the security which that Fund
purchased
upon exercise will be increased by the premium
originally paid.
The sale of shares of a Fund will be suspended
during any
period when the determination of its 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 best
interest of
the particular Fund to do so.
PORTFOLIO TURNOVER
Each Fund purchases securities that are believed
by IMI to
have above average potential for capital appreciation.
Common
stocks are disposed of in situations where it is
believed that
potential for such appreciation has lessened or that
other common
stocks have a greater potential. Therefore, a Fund may
purchase
and sell securities without regard to the length of
time the
security is to be, or has been, held. A change in
securities
held by a Fund is known as "portfolio turnover" and may
involve
the payment by the Fund of dealer markup or
underwriting
commission and other transaction costs on the sale of
securities,
as well as on the reinvestment of the proceeds in other
securities. A Fund's portfolio turnover rate is
calculated by
dividing the lesser of purchases or sales of portfolio
securities
for the most recently completed fiscal year by the
monthly
average of the value of the portfolio securities owned
by that
Fund during that year. For purposes of determining a
Fund's
portfolio turnover rate, all securities whose
maturities at the
time of acquisition were one year or less are excluded.
The
annual portfolio turnover rates for the Funds are
provided in the
Prospectus under "The Funds' Financial Highlights."
REDEMPTIONS
Shares of each Fund are redeemed at their net
asset value
next determined after a proper redemption request has
been
received by MIISC, 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 Trust
reserves 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 a Fund is not reasonably
practicable or it is
not reasonably practicable for the 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 a
Fund.
Under unusual circumstances, when the Board deems
it in the
best interest of a Fund's shareholders, the Fund may
make payment
for shares repurchased or redeemed in whole or in part
in
securities of that Fund taken at current values. If
any such
redemption in kind is to be made, each Fund intends to
make an
election pursuant to Rule 18f-1 under the 1940 Act.
This will
require the particular Fund to redeem with cash at a
shareholder's election in any case where the redemption
involves
less than $250,000 (or 1% of that Fund's net asset
value at the
beginning of each 90-day period during which such
redemptions are
in effect, if that amount is less than $250,000).
Should payment
be made in securities, the redeeming shareholder may
incur
brokerage costs in converting such securities to cash.
Subject to state law restrictions, the Trust may
redeem
those accounts of shareholders who have maintained an
investment,
including sales charges paid, of less than $1,000 in a
Fund for a
period of more than 12 months. All accounts below that
minimum
will be redeemed simultaneously when MIMI deems it
advisable.
The $1,000 balance will be determined by actual dollar
amounts
invested by the shareholder, unaffected by market
fluctuations.
The Trust will notify any such shareholder by certified
mail of
its intention to redeem such account, and the
shareholder shall
have 60 days from the date of such letter to invest
such
additional sums as shall raise the value of such
account above
that minimum. Should the shareholder fail to forward
such sum
within 60 days of the date of the Trust's letter of
notification,
the Trust will redeem the shares held in such account
and
transmit the redemption in value thereof to the
shareholder.
However, those shareholders who are investing pursuant
to the
Automatic Investment Method will not be redeemed
automatically
unless they have ceased making payments pursuant to the
plan for
a period of at least six consecutive months, and these
shareholders will be given six-months' notice by the
Trust before
such redemption. Shareholders in a qualified
retirement, pension
or profit sharing plan who wish to avoid tax
consequences must
"rollover" any sum so redeemed into another qualified
plan within
60 days. The Trustees of the Trust may change the
minimum
account size.
If a shareholder has given authorization for
telephonic
redemption privilege, shares can be redeemed and
proceeds sent by
Federal wire to a single previously designated bank
account.
Delivery of the proceeds of a wire redemption request
of $250,000
or more may be delayed by a Fund for up to seven days
if deemed
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.
Each Fund employs 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 the
respective
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 the
particular
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.
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 advisor about the tax consequences to
them of
investing in the Funds.
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; (b) derive in
each
taxable year less than 30% of its gross income from the
sale or
other disposition of certain assets held less than
three months,
namely: (i) stock or securities; (ii) options,
futures, or
forward contracts (other than those on foreign
currencies); or
(iii) foreign currencies (or options, futures, or
forward
contracts on foreign currencies) that are not directly
related to
the particular Fund's principal business of investing
in stock or
securities (or options and futures with respect to
stock or
securities) (the "30% Limitation"); and (c) diversify
its
holdings so that, at the end of each fiscal quarter,
(i) at least
50% of the market value of the particular 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 the
particular
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 the particular Fund in October, November
or
December of the year with a record date in such a month
and paid
by that 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.
OPTIONS, FUTURES AND FOREIGN CURRENCY FORWARD CONTRACTS
Some of the options, futures and foreign currency
forward
contracts in which a Fund may invest may be "section
1256
contracts." Gains (or losses) on these contracts
generally are
considered to be 60% long-term and 40% short-term
capital gains
or losses; however foreign currency gains or losses
arising from
certain section 1256 contracts are ordinary in
character. Also,
section 1256 contracts held by a Fund at the end of
each taxable
year (and on certain other dates prescribed in the
Code) are
"marked-to-market" with the result that unrealized
gains or
losses are treated as though they were realized.
The transactions in options, futures and forward
contracts
undertaken by a Fund may result in "straddles" for
Federal income
tax purposes. The straddle rules may affect the
character of
gains or losses realized by a Fund. In addition,
losses realized
by a Fund on positions that are part of a straddle may
be
deferred under the straddle rules, rather than being
taken into
account in calculating the taxable income for the
taxable year in
which such losses are realized. Because only a few
regulations
implementing the straddle rules have been promulgated,
the
consequences of such transactions to a Fund are not
entirely
clear. The straddle rules may increase the amount of
short-term
capital gain realized by a Fund, which is taxed as
ordinary
income when distributed to shareholders.
A Fund may make one or more of the elections
available under
the Code which are applicable to straddles. If a Fund
makes any
of the elections, the amount, character and timing of
the
recognition of gains or losses from the affected
straddle
positions will be determined under rules that vary
according to
the election(s) made. The rules applicable under
certain of the
elections may operate to accelerate the recognition of
gains or
losses from the affected straddle positions.
Because application of the straddle rules may
affect the
character of gains or losses, defer losses and/or
accelerate the
recognition of gains or losses from the affected
straddle
positions, the amount which must be distributed to
shareholders
as ordinary income or long-term capital gain, may be
increased or
decreased substantially as compared to a fund that did
not engage
in such transactions.
The 30% Limitation and the diversification
requirements
applicable to a Fund's assets may limit the extent to
which a
Fund will be able to engage in transactions in options,
futures
and forward contracts.
CURRENCY FLUCTUATIONS -- "SECTION 988" GAINS OR LOSSES
Gains or losses attributable to fluctuations in
exchange
rates which occur between the time a Fund accrues
receivables or
liabilities denominated in a foreign currency and the
time the
Fund actually collects such receivables or pays such
liabilities
generally are treated as ordinary income or ordinary
loss.
Similarly, on disposition of some investments,
including debt
securities denominated in a foreign currency and
certain options,
futures and forward contracts, gains or losses
attributable to
fluctuations in the value of the foreign currency
between the
date of acquisition of the security or contract and the
date of
disposition also are treated as ordinary gain or loss.
These
gains and losses, referred to under the Code as
"section 988"
gains or losses, increase or decrease the amount of a
Fund's
investment company taxable income available to be
distributed to
its shareholders as ordinary income. If section 988
losses
exceed other investment company taxable income during a
taxable
year, a Fund would not be able to make any ordinary
dividend
distributions, or distributions made before the losses
were
realized would be recharacterized as a return of
capital to
shareholders, rather than as an ordinary dividend,
reducing each
shareholder's basis in his or her Fund shares.
INVESTMENT IN PASSIVE FOREIGN INVESTMENT COMPANIES
A Fund may invest in shares of foreign
corporations which
may be classified under the Code as passive foreign
investment
companies ("PFICs"). In general, a foreign corporation
is
classified as a PFIC if at least one-half of its assets
constitute investment-type assets, or 75% or more of
its gross
income is investment-type income. If a Fund receives a
so-called
"excess distribution" with respect to PFIC stock, a
Fund itself
may be subject to a tax on a portion of the excess
distribution,
whether or not the corresponding income is distributed
by a Fund
to shareholders. In general, under the PFIC rules, an
excess
distribution is treated as having been realized ratably
over the
period during which a Fund held the PFIC shares. A
Fund itself
will be subject to tax on the portion, if any, of an
excess
distribution that is so allocated to prior Fund taxable
years and
an interest factor will be added to the tax, as if the
tax had
been payable in such prior taxable years. Certain
distributions
from a PFIC as well as gain from the sale of PFIC
shares are
treated as excess distributions. Excess distributions
are
characterized as ordinary income even though, absent
application
of the PFIC rules, certain excess distributions might
have been
classified as capital gain.
A Fund may be eligible to elect alternative tax
treatment
with respect to PFIC shares. Under an election that
currently is
available in some circumstances, a Fund generally would
be
required to include in its gross income its share of
the earnings
of a PFIC on a current basis, regardless of whether
distributions
are received from the PFIC in a given year. If this
election
were made, the special rules, discussed above, relating
to the
taxation of excess distributions, would not apply. In
addition,
other elections may become available that would affect
the tax
treatment of PFIC shares held by a Fund.
DEBT SECURITIES ACQUIRED AT A DISCOUNT
Some of the debt securities (with a fixed maturity
date of
more than one year from the date of issuance) that may
be
acquired by a Fund may be treated as debt securities
that are
issued originally at a discount. Generally, the amount
of the
original issue discount ("OID") is treated as interest
income and
is included in income over the term of the debt
security, even
though payment of that amount is not received until a
later time,
usually when the debt security matures.
Some of the debt securities (with a fixed maturity
date of
more than one year from the date of issuance) that may
be
acquired by a Fund in the secondary market may be
treated as
having market discount. Generally, gain recognized on
the
disposition of, and any partial payment of principal
on, a debt
security having market discount is treated as ordinary
income to
the extent the gain, or principal payment, does not
exceed the
"accrued market discount" on such debt security. In
addition,
the deduction of any interest expenses attributable to
debt
securities having market discount may be deferred.
Market
discount generally accrues in equal daily installments.
A Fund
may make one or more of the elections applicable to
debt
securities having market discount, which could affect
the
character and timing of recognition of income.
Some debt securities (with a fixed maturity date
of one year
or less from the date of issuance) that may be acquired
by a Fund
may be treated as having acquisition discount, or OID
in the case
of certain types of debt securities. Generally, a Fund
will be
required to include the acquisition discount, or OID,
in income
over the term of the debt security, even though payment
of that
amount is not received until a later time, usually when
the debt
security matures. A Fund may make one or more of the
elections
applicable to debt securities having acquisition
discount, or
OID, which could affect the character and timing of
recognition
of income.
A Fund generally will be required to distribute
dividends to
shareholders representing discount on debt securities
that is
currently includible in income, even though cash
representing
such income may not have been received by a Fund. Cash
to pay
such dividends may be obtained from sales proceeds of
securities
held by a Fund.
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 a Fund to a
corporate
shareholder, to the extent such dividends are
attributable to
dividends received from U.S. corporations by the 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 a Fund as capital gain dividends, are
taxable as
long-term capital gains, whether paid in cash or in
shares,
regardless of how long the shareholder has held a
Fund's shares
and 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 a 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.
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. Investors 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 which 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 generally 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 a 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.
FOREIGN WITHHOLDING TAXES
Income received by a 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 a Fund's total
assets at
the close of its taxable year consists of securities of
foreign
corporations, the Fund will be eligible and may elect
to "pass-
through" to that Fund's shareholders the amount of
foreign income
and similar taxes paid by that Fund. Pursuant to this
election,
a shareholder will be required to include in gross
income (in
addition to taxable dividends actually received) his or
her pro
rata share of the foreign income and similar taxes paid
by a
Fund, and will be entitled either to deduct his or her
pro rata
share of foreign income and similar taxes in computing
his or her
taxable income or to use it as a foreign tax credit
against his
or her U.S. Federal income taxes, subject to
limitations. No
deduction for foreign taxes may be claimed by a
shareholder who
does not itemize deductions. Foreign taxes generally
may not be
deducted by a shareholder that is an individual in
computing the
alternative minimum tax. Each shareholder will be
notified
within 60 days after the close of a Fund's taxable year
whether
the foreign taxes paid by the Fund will "pass-through"
for that
year and, if so, such notification will designate (1)
the
shareholder's portion of the foreign taxes paid to each
such
country and (2) the portion of the dividend which
represents
income derived from sources within each such country.
Generally, a credit for foreign taxes is subject
to the
limitation that it may not exceed the shareholder's
U.S. tax
attributable to his or her total foreign source taxable
income.
For this purpose, if a Fund makes the election
described in the
preceding paragraph, the source of that Fund's income
flows
through to its shareholders. With respect to a Fund,
gains from
the sale of securities generally will be treated as
derived from
U.S. sources and section 988 gains will be treated as
ordinary
income derived from U.S. sources. The limitation on
the foreign
tax credit is applied separately to foreign source
passive
income, including foreign source passive income
received from a
Fund. In addition, the foreign tax credit may offset
only 90% of
the revised alternative minimum tax imposed on
corporations and
individuals.
The foregoing is only a general description of the
foreign
tax credit under current law. Because application of
the credit
depends on the particular circumstances of each
shareholder,
shareholders are advised to consult their own tax
advisers.
BACKUP WITHHOLDING
Each Fund will be required to report to the
Internal Revenue
Service ("IRS") all distributions as well as gross
proceeds from
the redemption of the particular 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 a
Fund with
and to certify the shareholder's correct taxpayer
identification
number or social security number, (2) the IRS notifies
the
shareholder or the particular 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 a Fund or shareholders.
Shareholders
are advised to consult their own tax advisers with
respect to the
particular tax consequences to them of an investment in
a Fund.
PERFORMANCE INFORMATION
Performance information for the classes of shares
of the
Funds 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.
In addition, the Trust may, from time to time,
include the
yield (with respect to Ivy Bond Fund only), the average
annual
total return and the cumulative total return of shares
of a Fund
in advertisements, promotional literature or reports to
shareholders or prospective investors.
YIELD. Quotations of yield for a specific Class
of shares
of a Fund will be based on all investment income
attributable to
that Class earned during a particular 30-day (or one
month)
period (including dividends and interest), less
expenses
attributable to that Class accrued during the period
("net
investment income"), and will be computed by dividing
the net
investment income per share of that Class earned during
the
period by the maximum offering price per share (in the
case of
Class A shares) or the net asset value per share (in
the case of
Class B and Class C shares) on the last day of the
period,
according to the following formula:
YIELD = 2[({(a-b)/cd} + 1){superscript
6}-1]
Where: a = dividends and interest earned
during the
period attributable to a
specific Class
of shares,
b = expenses accrued for the
period
attributable to that Class
(net of
reimbursements),
c = the average daily number of
shares of
that Class outstanding during
the period
that were entitled to receive
dividends,
and
d = the maximum offering price per
share (in
the case of Class A shares) or
the net
asset value per share (in the
case of
Class B shares, Class C shares
and Class
I shares) on the last day of
the
period.
The yield for Class A and Class B shares of Ivy
Bond Fund
for the 30-day period ended December 31, 1995 were
7.68% and
7.04%, respectively. As of December 31, 1995, there
were no
outstanding Class I shares of Ivy Bond Fund.
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 a 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 a 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% (4.75% for Ivy Bond Fund) sales charge is
deducted
from the initial $1,000 payment and, for Class B
shares, the
applicable CDSC imposed upon redemption of Class B
shares held
for the period is deducted. Standardized Return
quotations for
the Funds 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%.
A Fund 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.
The following tables summarize the calculation of
Standardized and Non-Standardized Return for the Class
A, Class
B, Class C and Class I (for Ivy Bond Fund) shares of
the Funds
for the periods indicated. In determining the average
annual
total return for a specific Class of shares of a Fund,
recurring
fees, if any, that are charged to all shareholder
accounts are
taken into consideration. For any account fees that
vary with
the size of the account of a Fund, the account fee used
for
purposes of the following computations is assumed to be
the fee
that would be charged to the mean account size of the
particular
Fund. Shares of Ivy Bond Fund outstanding as of March
31, 1994
were designated Class A shares of the Fund. Shares of
each of
Ivy Emerging Growth Fund, Ivy Growth Fund and Ivy
Growth with
Income Fund outstanding as of October 22, 1993 have
been
redesignated as "Class A" shares of each respective
Fund.
IVY BOND FUND
STANDARDIZED RETURN[*]
CLASS A[1] CLASS B[2] CLASS C[7]
CLASS I[5]
One year ended
December 31,
1995: 11.83% 11.54% N/A
N/A
Five years ended
December 31,
1995: 8.91% N/A N/A
N/A
Ten years ended
December 31,
1995: 8.93% N/A N/A
N/A
Inception[#] to
December 31,
1995:[6] 8.79% 5.60% N/A
N/A
NON-STANDARDIZED RETURN[**]
CLASS A[3] CLASS B[4] CLASS C[7]
CLASS I[5]
One year ended
December 31,
1995: 17.41% 16.54% N/A
N/A
Five years ended
December 31,
1995: 9.98% N/A N/A
N/A
Ten years ended
December 31,
1995: 9.47% N/A N/A
N/A
Inception[#] to
December 31,
1995:[6] 9.30% 7.77%% N/A
N/A
_________________________
[*] The Standardized Return figures for Class A shares
reflect
the deduction of the maximum initial sales charge
of 4.75%.
The Standardized Return figures for Class B shares
reflect
the deduction of the applicable CDSC imposed on a
redemption
of Class B shares held for the period. Class I
shares are
not subject to an initial or a CDSC; therefore,
the Non-
Standardized Return figures would be identical to
the
Standardized Return figures.
[**] The Non-Standardized Return figures do not reflect
the
deduction of any initial sales charge or CDSC.
[#] Until December 31, 1994, MIMI served as investment
adviser
to Ivy Bond Fund, which until that date was a
series of
Mackenzie Series Trust. The inception date for
the Fund
(and the Class A shares of the Fund) was September
6, 1985;
the inception date for the Class B and Class I
shares of the
Fund was April 1, 1994; and the inception date for
the Class
C shares of the Fund is April 30, 1996.
[1] The Standardized Return figures for Class A shares
reflect
expense reimbursement. Without expense
reimbursement, the
Standardized Return for Class A shares for the one
year
ended December 31, 1995, the five years ended
December 31,
1995, the ten years ended December 31, 1995 and
the period
from inception through December 31, 1995 would
have been
11.83%, 8.88%, 2.21% and .79%, respectively.
[2] The Standardized Return figures for Class B shares
reflect
expense reimbursement. Without expense
reimbursement, the
Standardized Return for Class B shares for the one
year
ended December 31, 1995 and the period from
inception
through December 31, 1995 would have been 11.54%
and 5.60%,
respectively. (Since the inception date for Class
B shares
of the Fund was April 1, 1994, there were no Class
B shares
outstanding for the duration of the five year or
ten year
periods ending December 31, 1995.)
[3] The Non-Standardized Return figures for Class A
shares
reflect expense reimbursement. Without expense
reimbursement, the Non-Standardized Return for
Class A
shares for the one year ended December 31, 1995,
the five
years ended December 31, 1995, the ten years ended
December
31, 1995 and the period from inception through
December 31,
1995 would have been 17.41%, 9.95%, 2.73% and
1.28%,
respectively.
[4] The Non-Standardized Return figures for Class B
shares
reflect expense reimbursement. Without expense
reimbursement, the Non-Standardized Return for
Class B
shares for the one year ended December 31, 1995
and the
period from inception through December 31, 1995
would have
been 16.54% and 7.77%, respectively. (Since the
inception
date for Class B shares of the Fund was April 1,
1994, there
were no Class B shares outstanding for the
duration of the
five year or ten year periods ending December 31,
1995.)
[5] No Class I shares were outstanding during the time
periods
indicated.
[6] The total return for a period less than a full
year is
calculated on an aggregate basis and is not
annualized.
[7] Since the inception date for Class C shares of the
Fund is
April 30, 1996, there were no Class C shares
outstanding
during any of the relevant time periods.
IVY EMERGING GROWTH FUND:
STANDARDIZED RETURN[*]
CLASS A[1] CLASS B[2] CLASS
C[6]
One year ended
December 31,
1995: 33.90% 36.03% N/A
Inception[#] to
December 31,
1995:[5] 29.89% 17.18% N/A
NON-STANDARDIZED RETURN[**]
CLASS A[3] CLASS B[4] CLASS
C[6]
One year ended
December 31,
1995: 42.07% 41.03% N/A
Inception[#] to
December 31,
1995:[5] 32.78% 18.29% N/A
_________________________
[*] The Standardized Return figures for Class A shares
reflect
the deduction of the maximum initial sales charge
of 5.75%.
The Standardized Return figures for Class B shares
reflect
the deduction of the applicable CDSC imposed on a
redemption
of Class B shares held for the period.
[**] The Non-Standardized Return figures do not reflect
the
deduction of any initial sales charge or CDSC.
[#] The inception date for Ivy Emerging Growth Fund
was March 3,
1993. Class A shares of the Fund were first
offered for
sale to the public on April 30, 1993, and Class B
shares of
the Fund were first offered for sale to the public
on
October 23, 1993. The inception date for the
Class C shares
of the Fund was April 30, 1996
[1] The Standardized Return figures for Class A shares
reflect
expense reimbursement. Without expense
reimbursement, the
Standardized Return for Class A shares for the one
year
ended December 31, 1995 and the period from
inception
through December 31, 1995 would have been 33.90%
and 29.83%,
respectively.
[2] The Standardized Return figures for Class B shares
reflect
expense reimbursement. Without expense
reimbursement, the
Standardized Return for Class B shares for the one
year
ended December 31, 1995 and the period from
inception
through December 31, 1995 would have been 36.03%
and 17.09%,
respectively.
[3] The Non-Standardized Return figures for Class A
shares
reflect expense reimbursement. Without expense
reimbursement, the Non-Standardized Return for
Class A
shares for the one year ended December 31, 1995
and the
period from inception through December 31, 1995
would have
been 42.07% and 32.74%, respectively.
[4] The Non-Standardized Return figures for Class B
shares
reflect expense reimbursement. Without expense
reimbursement, the Non-Standardized Return for
Class B
shares for the one year ended December 31, 1995
and the
period from inception through December 31, 1995
would have
been 41.03% and 18.22%, respectively.
[5] The total return for a period less than a full
year is
calculated on an aggregate basis and is not
annualized.
[6] Since the inception date for Class C shares of the
Fund is
April 30, 1996, there were no Class C shares
outstanding
during any of the relevant time periods.
IVY GROWTH FUND:
STANDARDIZED RETURN[*]
CLASS A[1] CLASS B[2] CLASS
C[6]
One year ended
December 31,
1995: 21.01% 21.13% N/A
Five years ended
December 31,
1995: 12.46% N/A N/A
Ten years ended
December 31,
1995: 11.09% N/A N/A
Inception[#] to
December 31,
1995:[5] 10.57% 9.12% N/A
NON-STANDARDIZED RETURN[**]
CLASS A[3] CLASS B[4] CLASS
C[6]
One year ended
December 31,
1995: 27.33% 26.13% N/A
Five years ended
December 31,
1995: 13.80% N/A N/A
Ten years ended
December 31,
1995: 11.75% N/A N/A
Inception[#] to
December 31,
1995:[5] 10.76% 10.34% N/A
_________________________
[*] The Standardized Return figures for Class A shares
reflect
the deduction of the maximum initial sales charge
of 5.75%.
The Standardized Return figures for Class B shares
reflect
the deduction of the applicable CDSC imposed on a
redemption
of Class B shares held for the period.
[**] The Non-Standardized Return figures do not reflect
the
deduction of any initial sales charge or CDSC.
[#] The inception date for Ivy Growth Fund (and for
Class A
shares of the Fund) was March 1, 1984. The
inception date
for Class B shares of the Fund was October 23,
1993. The
inception date for Class C shares of the Fund is
April 30,
1996
[1] The Standardized Return figures for Class A shares
reflect
expense reimbursement. Without expense
reimbursement, the
Standardized Return for Class A shares for the one
year
ended December 31, 1995, the five years ended
December 31,
1995, the ten years ended December 31, 1995 and
the period
from inception through December 31, 1995 would
have been
20.01%, 12.40%, 11.06% and 10.56%, respectively.
[2] The Standardized Return figures for Class B shares
reflect
expense reimbursement. Without expense
reimbursement, the
Standardized Return for Class B shares for the one
year
ended December 31, 1995 and the period from
inception
through December 31, 1995 would have been 21.13%
and 9.01%,
respectively. (Since the inception date for Class
B shares
of the Fund was October 23, 1993, there were no
Class B
shares outstanding for the duration of the five
year or ten
year periods ending December 31, 1995.)
[3] The Non-Standardized Return figures for Class A
shares
reflect expense reimbursement. Without expense
reimbursement, the Non-Standardized Return for
Class A
shares for the one year ended December 31, 1995,
the five
years ended December 31, 1995, the ten years ended
December
31, 1995 and the period from inception through
December 31,
1995 would have been 27.33%, 13.74%, 11.72% and
10.76%,
respectively.
[4] The Non-Standardized Return figures for Class B
shares
reflect expense reimbursement. Without expense
reimbursement, the Non-Standardized Return for
Class B
shares for the one year ended December 31, 1995
and the
period from inception through December 31, 1995
would have
been 26.13% and 10.24%, respectively. (Since the
inception
date for Class B shares of the Fund was October
23, 1993,
there were no Class B shares outstanding for the
duration of
the five year or ten year periods ending December
31, 1995.)
[5] The total return for a period less than a full
year is
calculated on an aggregate basis and is not
annualized.
[6] Since the inception date for Class C shares of the
Fund is
April 30, 1996, there were no Class C shares
outstanding
during any of the relevant time periods.
IVY GROWTH WITH INCOME FUND:
STANDARDIZED RETURN[*]
CLASS A[1] CLASS B[2] CLASS
C[6]
One year ended
December 31,
1995: 17.75% 18.94% N/A
Five years ended
December 31,
1995: 13.18% N/A N/A
Ten years ended
December 31,
1995: 12.35% N/A N/A
Inception[#] to
December 31,
1995:[5] 14.53% 7.89% N/A
NON-STANDARDIZED RETURN[**]
CLASS A[3] CLASS B[4] CLASS
C[6]
One year ended
December 31,
1995: 24.93% 23.94% N/A
Five years ended
December 31,
1995: 14.53% N/A N/A
Ten years ended
December 31,
1995: 13.01% N/A N/A
Inception[#] to
December 31,
1995:[5] 15.12% 9.13% N/A
_________________________
[*] The Standardized Return figures for Class A shares
reflect
the deduction of the maximum initial sales charge
of 5.75%.
The Standardized Return figures for Class B shares
reflect
the deduction of the applicable CDSC imposed on a
redemption
of Class B shares held for the period.
[**] The Non-Standardized Return figures do not reflect
the
deduction of any initial sales charge or CDSC.
[#] The inception date for Ivy Growth with Income Fund
(and the
Class A shares of the Fund) was April 1, 1984; the
inception
date for Class B shares of the Fund was October
23, 1993;
and the inception date for the Class C shares of
the Fund is
April 30, 1996.
[1] The Standardized Return figures for Class A shares
reflect
expense reimbursement. Without expense
reimbursement, the
Standardized Return for Class A shares for the one
year
ended December 31, 1995, the five years ended
December 31,
1995, the ten years ended December 31, 1995 and
the period
from inception through December 31, 1995 would
have been
17.75%, 13.16%, 12.33% and 14.52%, respectively.
[2] The Standardized Return figures for Class B shares
reflect
expense reimbursement. Without expense
reimbursement, the
Standardized Return for Class B shares for the one
year
ended December 31, 1995 and the period from
inception
through December 31, 1995 would have been 18.94%
and 7.89%,
respectively. (Since the inception date for Class
B shares
of the Fund was October 23, 1993, there were no
Class B
shares outstanding for the duration of the five
year or ten
year periods ending December 31, 1995.)
[3] The Non-Standardized Return figures for Class A
shares
reflect expense reimbursement. Without expense
reimbursement, the Non-Standardized Return for
Class A
shares for the one year ended December 31, 1995,
the five
years ended December 31, 1995, the ten years ended
December
31, 1995 and the period from inception through
December 31,
1995 would have been 24.93%, 14.51%, 13.00% and
15.10%,
respectively.
[4] The Non-Standardized Return figures for Class B
shares
reflect expense reimbursement. Without expense
reimbursement, the Non-Standardized Return for
Class B
shares for the one year ended December 31, 1995
and the
period from inception through December 31, 1995
would have
been 23.94% and 9.13%, respectively. (Since the
inception
date for Class B shares of the Fund was October
23, 1993,
there were no Class B shares outstanding for the
duration of
the five year or ten year periods ending December
31, 1995.)
[5] The total return for a period less than a full
year is
calculated on an aggregate basis and is not
annualized.
[6] Since the inception date for Class C shares of the
Fund is
April 30, 1996, there were no Class C shares
outstanding
during any of the relevant time periods. The
inception of
Class C shares of the Fund will coincide with the
redesignation as "Class D" those shares of Ivy
Growth with
Income Fund that were initially issued as "Ivy
Growth with
Income Fund -- Class C" to shareholders of
Mackenzie
Growth & Income Fund, a former series of the
Company, in
connection with the reorganization between that
fund and Ivy
Growth with Income Fund, which shares are not
offered for
sale to the public.
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 a 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.
IVY BOND FUND. The following table summarizes the
calculation
of Cumulative Total Return for the periods indicated
through
December 31, 1995, assuming the maximum 4.75% sales
charge has
been assessed.
SINCE
ONE YEAR FIVE YEARS TEN YEARS
INCEPTION[*]
Class A 11.83% 53.26% 135.32%
138.85%
Class B 11.54% N/A[**] N/A[**]
N/A[**]
Class C N/A[**] N/A[**] N/A[**]
N/A[**]
Class I N/A[**] N/A[**] N/A[**]
N/A[**]
The following table summarizes the calculation of
Cumulative
Total Return for the periods indicated through December
31, 1995,
assuming the maximum 5.75% sales charge has not been
assessed.
SINCE
ONE YEAR FIVE YEARS TEN YEARS
INCEPTION[*]
Class A 17.41% 60.90% 147.06%
150.76%
Class B 16.54% N/A[**] N/A[**]
14.00%
Class C N/A[**] N/A[**] N/A[**]
N/A[**]
Class I N/A[**] N/A[**] N/A[**]
N/A[**]
___________________________
[*] Until December 31, 1994, MIMI served as investment
adviser
to Ivy Bond Fund, which until that date was a
series of
Mackenzie Series Trust. The inception date for
the Fund
(and the Class A shares of Ivy Bond Fund) was
September 6,
1985; the inception date for the Class B and Class
I shares
of the Fund was April 1, 1994. The inception date
for Class
C shares of the Fund is April 30, 1996.
[**] No such shares were outstanding for the duration
of the time
period indicated.
IVY EMERGING GROWTH FUND. The following table
summarizes
the calculation of Cumulative Total Return for the
periods
indicated through December 31, 1995, assuming the
maximum 5.75%
sales charge has been assessed.
SINCE
ONE YEAR INCEPTION[*]
Class A 33.90% 101.01%
Class B 36.03% 41.50%
Class C N/A[**] N/A[**]
The following table summarizes the calculation of
Cumulative
Total Return for the periods indicated through December
31, 1995,
assuming the maximum 5.75% sales charge has not been
assessed.
SINCE
ONE YEAR INCEPTION[*]
Class A 42.07% 41.03%
Class B 113.27% 44.50%
Class C N/A[**] N/A[**]
___________________________
[*] The inception date for Ivy Emerging Growth Fund
was March 3,
1993. Class A shares of the Fund were first
offered for
sale to the public on April 30, 1993, and Class B
shares of
the Fund were first offered for sale to the public
on
October 23, 1993. The inception date for Class C
shares of
the Fund is April 30, 1996.
[**] No Class C shares were outstanding for the
duration of the
time period indicated.
IVY GROWTH FUND. The following table summarizes
the
calculation of Cumulative Total Return for the periods
indicated
through December 31, 1995, assuming the maximum 5.75%
sales
charge has been assessed.
SINCE
ONE YEAR FIVE YEARS TEN YEARS
INCEPTION[*]
Class A 20.01% 79.90% 186.36%
3,031.88%
Class B 21.13% N/A[**] N/A[**]
21.06%
Class C N/A[**] N/A[**] N/A[**]
N/A[**]
The following table summarizes the calculation of
Cumulative
Total Return for the periods indicated through December
31, 1995,
assuming the maximum 5.75% sales charge has not been
assessed.
SINCE
ONE YEAR FIVE YEARS TEN YEARS
INCEPTION[*]
Class A 27.33% 90.88% 203.83%
3,222.95%
Class B 26.13% N/A[**] N/A[**]
24.06%
Class C N/A[**] N/A[**] N/A[**]
N/A[**]
___________________________
[*] The inception date for Ivy Growth Fund (and for
Class A
shares of the Fund) was March 1, 1984. The
inception date
for the Class B shares of the Fund was October 23,
1993.
The inception date for Class C shares of the Fund
is April
30, 1996.
[**] No such shares were outstanding for the duration
of the time
period indicated.
IVY GROWTH WITH INCOME FUND. The following table
summarizes
the calculation of Cumulative Total Return for the
periods
indicated through December 31, 1995, assuming the
maximum 5.75%
sales charge has been assessed.
SINCE
ONE YEAR FIVE YEARS TEN YEARS
INCEPTION[*]
Class A 17.75% 85.73% 220.34%
387.72%
Class B 18.94% N/A[**] N/A[**]
18.11%
Class C N/A[**] N/A[**] N/A[**]
N/A[**]
The following table summarizes the calculation of
Cumulative
Total Return for the periods indicated through December
31, 1995,
assuming the maximum 5.75% sales charge has not been
assessed.
SINCE
ONE YEAR FIVE YEARS TEN YEARS
INCEPTION[*]
Class A 24.93% 97.06% 239.89%
417.48%
Class B 23.94% N/A[**] N/A[**]
21.11%
Class C N/A[**] N/A[**] N/A[**]
N/A[**]
___________________________
[*] The inception date for Ivy Growth with Income Fund
(and the
Class A shares of the Fund) was April 1, 1984; the
inception
date for the Class B shares of the Fund was
October 23,
1993. The inception date for Class C shares of
the Fund is
April 30, 1996.
[**] No such shares were outstanding for the duration
of the time
period indicated.
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 the Trust's existence and
may or may
not include the impact of sales charges, taxes or other
factors.
Performance quotations for a Fund will vary from
time to
time depending on market conditions, the composition of
the
Fund's portfolio and operating expenses of the Fund.
These
factors and possible differences in the methods used in
calculating performance quotations should be considered
when
comparing performance information regarding a Fund's
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 a Fund's
shares
and the risks associated with a Fund's 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
their 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
Director
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' Portfolios of Investments as of
December 31,
1995, Statements of Assets and Liabilities as of
December 31,
1995, Statements of Operations for the fiscal year
ended December
31, 1995, Statements of Changes in Net Assets for the
six-month
period ended December 31, 1994 and the fiscal years
ended June
30, 1994 and the fiscal year ended December 31, 1995,
Financial
Highlights, Notes to Financial Statements, and Reports
of
Independent Accountants are included in each Fund's
December 31,
1995 Annual Report to shareholders, which are
incorporated by
reference into this SAI. Copies of the Funds'
financial
statements may be obtained upon request and without
charge from
the Trust at the Distributor's address and telephone
number
provided on the cover of this SAI.
APPENDIX A
DESCRIPTION OF STANDARD & POOR'S CORPORATION
("S&P") AND
MOODY'S INVESTORS SERVICE, INC. ("MOODY'S") CORPORATE
BOND AND
COMMERCIAL PAPER RATINGS
[From "Moody's Bond Record," November 1994 Issue
(Moody's
Investor Service, New York, 1994), and "Standard &
Poor's
Municipal Ratings Handbook," October 1994 Issue (McGraw
Hill, New
York, 1994).]
MOODY'S:
(a) CORPORATE BONDS. Bonds rated Aaa by Moody's
are judged
by Moody's to be of the best quality, carrying the
smallest
degree of investment risk. Interest payments are
protected by a
large or exceptionally stable margin and principal is
secure.
Bonds rated Aa are judged by Moody's to be of high
quality by all
standards. Aa bonds are rated lower than Aaa bonds
because
margins of protection may not be as large as those of
Aaa bonds,
or fluctuations of protective elements may be of
greater
amplitude, or there may be other elements present which
make the
long-term risks appear somewhat larger than those
applicable to
Aaa securities. Bonds which are rated A by Moody's
possess many
favorable investment attributes and are considered as
upper
medium-grade obligations. Factors giving security to
principal
and interest are considered adequate, but elements may
be present
which suggest a susceptibility to impairment sometime
in the
future.
Bonds rated Baa by Moody's are considered
medium-grade
obligations, i.e., they are neither highly protected
nor poorly
secured. Interest payments and principal security
appear
adequate for the present, but certain protective
elements may be
lacking or may be characteristically unreliable over
any great
length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative
characteristics as
well. Bonds which are rated Ba are judged to have
speculative
elements; their future cannot be considered
well-assured. Often
the protection of interest and principal payments may
be very
moderate and thereby not well safeguarded during both
good and
bad times over the future. Uncertainty of position
characterizes
bonds in this class. Bonds which are rated B generally
lack
characteristics of the desirable investment. Assurance
of
interest and principal payments of or maintenance of
other terms
of the contract over any long period of time may be
small.
Bonds which are rated Caa are of poor standing.
Such
issues may be in default or there may be present
elements of
danger with respect to principal or interest. Bonds
which are
rated Ca represent obligations which are speculative in
a high
degree. Such issues are often in default or have other
marked
shortcomings. Bonds which are rated C are the lowest
rated class
of bonds and issues so rated can be regarded as having
extremely
poor prospects of ever attaining any real investment
standing.
(b) COMMERCIAL PAPER. The Prime rating is the
highest
commercial paper rating assigned by Moody's. Among the
factors
considered by Moody's in assigning ratings are the
following:
(1) evaluation of the management of the issuer; (2)
economic
evaluation of the issuer's industry or industries and
an
appraisal of speculative-type risks which may be
inherent in
certain areas; (3) evaluation of the issuer's products
in
relation to competition and customer acceptance; (4)
liquidity;
(5) amount and quality of long-term debt; (6) trend of
earnings
over a period of ten years; (7) financial strength of a
parent
company and the relationships which exist with the
issuer; and
(8) recognition by management of obligations which may
be present
or may arise as a result of public interest questions
and
preparations to meet such obligations. Issuers within
this Prime
category may be given ratings 1, 2 or 3, depending on
the
relative strengths of these factors. The designation
of Prime-1
indicates the highest quality repayment capacity of the
rated
issue.
S&P:
(a) CORPORATE BONDS. An S&P corporate debt
rating is a
current assessment of the creditworthiness of an
obligor with
respect to a specific obligation. The ratings are
based on
current information furnished by the issuer or obtained
by S&P
from other sources it considers reliable. The ratings
described
below may be modified by the addition of a plus or
minus sign to
show relative standing within the major rating
categories.
Debt rated AAA by S&P is considered by S&P to be
the highest
grade obligation. Capacity to pay interest and repay
principal
is extremely strong. Debt rated AA is judged by S&P to
have a
very strong capacity to pay interest and repay
principal and
differs from the highest rated issues only in small
degree. Debt
rated A by S&P has a strong capacity to pay interest
and repay
principal, although it is somewhat more susceptible to
the
adverse effects of changes in circumstances and
economic
conditions than debt in higher rated categories.
Debt rated BBB by S&P is regarded by S&P as having
an
adequate capacity to pay interest and repay principal.
Although
such bonds normally exhibit adequate protection
parameters,
adverse economic conditions or changing circumstances
are more
likely to lead to a weakened capacity to pay interest
and repay
principal than debt in higher rated categories.
Debt rated BB, B, CCC, CC and C is regarded as
having
predominately speculative characteristics with respect
to
capacity to pay interest and repay principal. BB
indicates the
least degree of speculation and C the highest. While
such debt
will likely have some quality and protective
characteristics,
these are outweighed by large uncertainties or
exposures to
adverse conditions. Debt rated BB has less near-term
vulnerability to default than other speculative issues.
However,
it faces major ongoing uncertainties or exposure to
adverse
business, financial or economic conditions which could
lead to
inadequate capacity to meet timely interest and
principal
payments. The BB rating category is also used for debt
subordinated to senior debt that is assigned an actual
or implied
BBB- rating. Debt rated B has a greater vulnerability
to default
but currently has the capacity to meet interest
payments and
principal repayments. Adverse business, financial, or
economic
conditions will likely impair capacity or willingness
to pay
interest and repay principal. The B rating category is
also used
for debt subordinated to senior debt that is assigned
an actual
or implied BB or BB- rating. Debt rated CCC has a
currently
identifiable vulnerability to default, and is dependent
upon
favorable business, financial, and economic conditions
to meet
timely payment of interest and repayment of principal.
In the
event of adverse business, financial or economic
conditions, it
is not likely to have the capacity to pay interest and
repay
principal. The CCC rating category is also used for
debt
subordinated to senior debt that is assigned an actual
or implied
B or B- rating. The rating CC typically is applied to
debt
subordinated to senior debt which is assigned an actual
or
implied CCC debt rating. The rating C typically is
applied to
debt subordinated to senior debt which is assigned an
actual or
implied CCC- debt rating. The C rating may be used to
cover a
situation where a bankruptcy petition has been filed,
but debt
service payments are continued.
(b) COMMERCIAL PAPER. An S&P commercial paper
rating is a
current assessment of the likelihood of timely payment
of debt
having an original maturity of no more than 365 days.
Commercial paper rated A by S&P has the following
characteristics: (i) liquidity ratios are adequate to
meet cash
requirements; (ii) long-term senior debt rating should
be A or
better, although in some cases BBB credits may be
allowed if
other factors outweigh the BBB; (iii) the issuer should
have
access to at least one additional channel of borrowing;
(iv)
basic earnings and cash flow should have an upward
trend with
allowances made for unusual circumstances; and (v)
typically the
issuer's industry should be well established and the
issuer
should have a strong position within its industry and
the
reliability and quality of management should be
unquestioned.
Issues rated A are further referred to by use of
numbers 1, 2 and
3 to denote relative strength within this highest
classification.
For example, the A-1 designation indicates that the
degree of
safety regarding timely payment of debt is strong.
Issues rated B are regarded as having only
speculative
capacity for timely payment. The C rating is assigned
to short-
term debt obligations with a doubtful capacity for
payment.
IVY CANADA FUND
IVY CHINA REGION FUND
IVY GLOBAL FUND
IVY INTERNATIONAL FUND
IVY LATIN AMERICA STRATEGY FUND
IVY NEW CENTURY FUND
series of
IVY FUND
Via Mizner Financial Plaza, Suite 300
700 South Federal Highway
Boca Raton, Florida 33432
STATEMENT OF ADDITIONAL INFORMATION
April 30, 1996
_________________________________________________________________
Ivy Fund (the "Trust") is a diversified, open-end
management
investment company that currently consists of thirteen
fully
managed portfolios. This Statement of Additional
Information
("SAI") describes six of the portfolios, Ivy Canada
Fund, Ivy
China Region Fund, Ivy Global Fund, Ivy International
Fund, Ivy
Latin America Strategy Fund and Ivy New Century Fund
(the
"Funds," each a "Fund"). The other seven portfolios of
the Trust
are described in separate Statements of Additional
Information.
This SAI is not a prospectus and should be read in
conjunction with the prospectus for the Funds dated
April 30,
1996 (the "Prospectus"), which may be obtained upon
request and
without charge from the Trust at the Distributor's
address and
telephone number listed 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
Mackenzie Ivy Funds Distribution, Inc.
("MIFDI")
Via Mizner Financial Plaza, Suite 300
700 South Federal Highway
Boca Raton, Florida 33432
Telephone: (800) 456-5111
INVESTMENT ADVISER
(for Ivy Canada Fund only)
Mackenzie Financial Corporation ("MFC")
150 Bloor Street West
Suite 400
Toronto, Ontario
CANADA M5S3B5
Telephone (416) 922-5322
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . .
. . .
U.S. GOVERNMENT SECURITIES . . . . . . . . . . . .
. . .
BORROWING . . . . . . . . . . . . . . . . . . . .
. . .
COMMERCIAL PAPER . . . . . . . . . . . . . . . . .
. . .
BANKING INDUSTRY AND SAVINGS AND LOAN OBLIGATIONS
. . .
WARRANTS . . . . . . . . . . . . . . . . . . . . .
. . .
AMERICAN DEPOSITORY RECEIPTS . . . . . . . . . . .
. . .
FOREIGN SECURITIES . . . . . . . . . . . . . . . .
. . .
INVESTING IN EMERGING MARKETS . . . . . . . . . .
. . .
CANADIAN SECURITIES . . . . . . . . . . . . . . .
. . .
FORWARD FOREIGN CURRENCY CONTRACTS . . . . . . . .
. . .
REPURCHASE AGREEMENTS . . . . . . . . . . . . . .
. . .
FIRM COMMITMENT AGREEMENTS AND WHEN-ISSUED
SECURITIES .
LOANS OF PORTFOLIO SECURITIES . . . . . . . . . .
. . .
ZERO COUPON BONDS . . . . . . . . . . . . . . . .
. . .
RESTRICTED AND ILLIQUID SECURITIES . . . . . . . .
. . .
OPTIONS TRANSACTIONS . . . . . . . . . . . . . . .
. . .
GENERAL . . . . . . . . . . . . . . . . . . .
. . .
WRITING OPTIONS ON INDIVIDUAL SECURITIES . .
. . .
PURCHASING OPTIONS ON INDIVIDUAL SECURITIES .
. . .
PURCHASING AND WRITING OPTIONS ON SECURITIES
INDICES . . . . . . . . . . . . . . . .
. . .
RISKS OF OPTIONS TRANSACTIONS . . . . . . . .
. . .
SECURITIES INDEX FUTURES CONTRACTS . . . . . . . .
. . . .
RISKS OF SECURITIES INDEX FUTURES . . . . . .
. . . .
COMBINED TRANSACTIONS . . . . . . . . . . . . . .
. . . .
HIGH YIELD BONDS . . . . . . . . . . . . . . . . .
. . . .
FOREIGN CURRENCIES . . . . . . . . . . . . . . . .
. . . .
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . .
. . . .
ADDITIONAL RESTRICTIONS . . . . . . . . . . . . . . . .
. . . .
ADDITIONAL RIGHTS AND PRIVILEGES . . . . . . . . . . .
. . . .
AUTOMATIC INVESTMENT METHOD . . . . . . . . . . .
. . . .
EXCHANGE OF SHARES . . . . . . . . . . . . . . . .
. . . .
INITIAL SALES CHARGE SHARES . . . . . . . . .
. . . .
CONTINGENT DEFERRED SALES CHARGE SHARES.
CLASS A . .
CLASS B . . . . . . . . . . . . . . . . . . .
. . . .
CLASS I SHARES . . . . . . . . . . . . . . .
. . . .
LETTER OF INTENT . . . . . . . . . . . . . . . . .
. . . .
RETIREMENT PLANS . . . . . . . . . . . . . . . . .
. . . .
INDIVIDUAL RETIREMENT ACCOUNTS . . . . . . .
. . . .
QUALIFIED PLANS . . . . . . . . . . . . . . .
. . . .
DEFERRED COMPENSATION FOR PUBLIC SCHOOLS AND
CHARITABLE ORGANIZATIONS . . . . . . . .
. . . .
SIMPLIFIED EMPLOYEE PENSION IRAS . . . . . .
. . . .
REINVESTMENT PRIVILEGE . . . . . . . . . . . . . .
. . . .
RIGHTS OF ACCUMULATION . . . . . . . . . . . . . .
. . . .
SYSTEMATIC WITHDRAWAL PLAN . . . . . . . . . . . .
. . . .
BROKERAGE ALLOCATION . . . . . . . . . . . . . . . . .
. . . .
TRUSTEES AND OFFICERS . . . . . . . . . . . . . . . . .
. . . .
PERSONAL INVESTMENTS BY EMPLOYEES OF IMI . . . . . . .
. . . .
INVESTMENT ADVISORY AND OTHER SERVICES . . . . . . . .
. . . .
BUSINESS MANAGEMENT AND INVESTMENT ADVISORY
SERVICES . . .
SUBADVISORY CONTRACT - IVY INTERNATIONAL
FUND . . .
DISTRIBUTION SERVICES . . . . . . . . . . . . . .
. . . .
RULE 18F-3 PLAN . . . . . . . . . . . . . . .
. . . .
RULE 12B-1 DISTRIBUTION PLANS . . . . . . . .
. . . .
CUSTODIAN . . . . . . . . . . . . . . . . . . . .
. . . .
FUND ACCOUNTING SERVICES . . . . . . . . . . . . .
. . . .
TRANSFER AGENT AND DIVIDEND PAYING AGENT . . . . .
. . . .
ADMINISTRATOR . . . . . . . . . . . . . . . . . .
. . . .
AUDITORS . . . . . . . . . . . . . . . . . . . . .
. . . .
CAPITALIZATION AND VOTING RIGHTS . . . . . . . . . . .
. . . .
NET ASSET VALUE . . . . . . . . . . . . . . . . . . . .
. . . .
PORTFOLIO TURNOVER . . . . . . . . . . . . . . . . . .
. . . .
REDEMPTIONS . . . . . . . . . . . . . . . . . . . . . .
. . . .
CONVERSION OF CLASS B SHARES . . . . . . . . . . . . .
. . . .
TAXATION . . . . . . . . . . . . . . . . . . . . . . .
. . . .
OPTIONS, FUTURES AND FOREIGN CURRENCY FORWARD
CONTRACTS . . . . . . . . . . . . . . . . . .
. . . .
CURRENCY FLUCTUATIONS -- "SECTION 988" GAINS OR
LOSSES
. . . . . . . . . . . . . . . . . . . . . .
. . . .
INVESTMENT IN PASSIVE FOREIGN INVESTMENT COMPANIES
. . . .
DEBT SECURITIES ACQUIRED AT A DISCOUNT . . . . . .
. . . .
DISTRIBUTIONS . . . . . . . . . . . . . . . . . .
. . . .
DISPOSITION OF SHARES . . . . . . . . . . . . . .
. . . .
FOREIGN WITHHOLDING TAXES . . . . . . . . . . . .
. . . .
BACKUP WITHHOLDING . . . . . . . . . . . . . . . .
. . . .
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . .
. . . .
YIELD . . . . . . . . . . . . . . . . . . . .
. . . .
AVERAGE ANNUAL TOTAL RETURN . . . . . . . . .
. . . .
OTHER QUOTATIONS, COMPARISONS AND GENERAL
INFORMATION . . . . . . . . . . . . . .
. . . .
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . .
. . . .
APPENDIX A: DESCRIPTION OF STANDARD & POOR'S
CORPORATION AND
MOODY'S INVESTORS SERVICE, INC. CORPORATE BOND AND
COMMERCIAL PAPER RATINGS . . . . . . . . . . . . .
. . . .
INVESTMENT OBJECTIVES AND POLICIES
Each Fund has its own investment objectives and
policies,
which are described more fully in the Prospectus under
"Investment Objectives and Policies" and "Risk Factors
and
Investment Techniques." The different types of
securities and
investment techniques used by the Funds involve varying
degrees
of risk.
IVY CANADA FUND: Ivy Canada Fund seeks long-term
capital
appreciation by investing primarily in equity
securities of
Canadian companies. Canada is one of the world's
leading
industrial countries and a major exporter of
agricultural
products. The country is rich in natural resources such
as zinc,
uranium, nickel, gold, silver, aluminum, iron and
copper, and
forest covers over 44% of land areas, making Canada a
leading
world producer of newsprint. Canada is also a major
producer of
hydroelectricity, oil and gas.
To meet its objective, the Fund normally invests
at least
65% of its total assets in Canadian equity securities
(i.e.,
common and preferred stock, securities convertible into
common
stock and common stock purchase warrants) listed on
Canadian
stock exchanges or traded over-the-counter in Canada.
Canadian
issuers are companies (i) organized under the laws of
Canada,
(ii) for which the principal securities trading market
is in
Canada, (iii) which derive at least 50% of their
revenues or
profits from goods produced or sold, investments made
or services
performed in Canada, or (iv) which have at least 50% of
their
assets situated in Canada. The balance of the Fund's
assets
ordinarily are invested in (i) bills and bonds of the
Canadian
Government and the governments of the provinces or
municipalities
of Canada, (ii) high quality notes and debentures of
Canadian
companies (i.e., those rated Aaa or Aa by Moody's
Investor
Services, Inc. ("Moody's) or AAA or AA by Standard and
Poor's
Corporation ("S&P"), or if not rated, judged to be of
comparable
quality by Mackenzie Financial Corporation ("MFC"), the
Fund's
Adviser), (iii) foreign securities (including sponsored
or
unsponsored American Depository Receipts ("ADRs")),
(iv) U.S.
Government securities, (v) equity securities and
investment-grade
debt securities (i.e., those rated Baa or higher by
Moody's or
BBB or higher by S&P, or if unrated, are considered by
MFC to be
of comparable quality) of U.S. companies, and (vi) zero
coupon
bonds that meet these credit quality standards.
The Fund may purchase securities on a
"when-issued" or firm
commitment basis, engage in currency exchange
transactions and
enter into forward foreign currency contracts. The
Fund may also
invest up to 10% of its assets in (i) other investment
companies
and (ii) restricted and other illiquid securities
(although the
Fund may not invest more than 5% of its assets in
restricted
securities).
For temporary defensive purposes, the Fund may
invest
without limit in U.S. or Canadian dollar-denominated
money market
securities issued by entities organized in the U.S. or
Canada,
such as (i) obligations issued or guaranteed by the
Canadian
Government or the governments of the provinces or
municipalities
of Canada (or their agencies or instrumentalities), (i)
finance
company and corporate commercial paper (and other
short-term
corporate obligations rated Prime-1 by Moody's or A or
better by
S&P, or if not rated, considered by MFC to be of
comparable
quality), (iii) obligations of banks (i.e.,
certificates of
deposit, time deposits and bankers' acceptances) of
banks
considered creditworthy by MFC under guidelines
approved by the
Trust's Board of Trustees, and (iv) repurchase
agreements with
broker-dealers and banks. For temporary or emergency
purposes,
the Fund may also borrow up to 10% of the value of its
total
assets from banks.
IVY CHINA REGION FUND: 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 seeks to meet its objective primarily by investing
in the
equity securities of companies that are expected to
benefit from
the economic development and growth of China, Hong Kong
and
Taiwan. A significant percentage of the Fund's assets
may also
be invested in the securities markets of South Korea,
Singapore,
Malaysia, Thailand, Indonesia and the Philippines
(collectively,
with China, Hong Kong and Taiwan, the "China Region").
The Fund normally invests at least 65% of its
total assets
in "Greater China growth companies," defined as
companies (a)
that are organized in or for which the principal
securities
trading markets are the China Region; (b) that have at
least 50%
of their assets in one or more China Region countries
or derive
at least 50% of their gross sales revenues or profits
from
providing goods or services to or from within one or
more China
Region countries; or (c) that have at least 35% of
their assets
in China, Hong Kong or Taiwan, derive at least 35% of
their gross
sales revenues or profits from providing goods or
services to or
from within these three countries, or have significant
manufacturing or other operations in these countries.
IMI's
determination as to whether a company qualifies as a
Greater
China growth company is based primarily on information
contained
in financial statements, reports, analyses and other
pertinent
information (some of which may be obtained directly
from the
company). The Fund may invest 25% or more of its total
assets in
the securities of issuers located in any one China
Region
country, and currently expects to invest more than 50%
of its
total assets in Hong Kong.
The balance of the Fund's assets ordinarily are
invested in
(i) certain investment-grade debt securities and (ii)
the equity
securities of "China Region associated companies,"
which are
companies that do not meet the definition of a Greater
China
growth company, but whose current or expected
performance, based
on certain identified factors (such as the growth
trends in the
location of a company's assets and the sources of its
revenues
and profits), is judged by IMI to be strongly
associated with the
China Region. The investment-grade debt securities in
which the
Fund may invest include (a) obligations of the U.S.
Government or
its agencies or instrumentalities, (b) obligations of
U.S. banks
and other banks organized and existing under the laws
of Hong
Kong, Taiwan or countries that are members of the
Organization
for Economic Cooperation and Development ("OECD"), and
(c)
obligations denominated in any currency issued by
international
development institutions and Hong Kong, Taiwan and OECD
member
governments and their agencies and instrumentalities,
as well as
repurchase agreements with respect to any of the
foregoing
instruments. The Fund may also invest in zero coupon
bonds, and
corporate bonds rated Baa or higher by Moody's or BBB
or higher
by S&P (or if unrated, are considered by IMI to be of
comparable
quality).
The Fund may invest less than 35% of its net
assets in debt
securities rated Ba or below by Moody's or BB or below
by S&P,
or, if unrated, are considered by IMI to be of
comparable quality
(commonly referred to as "high yield" or "junk" bonds).
The Fund
will not invest in debt securities rated less than C by
either
Moody's or S&P. (As of the fiscal year ended December
31, 1995,
the Fund held no low-rated debt securities in its
portfolio.)
The Fund may lend portfolio securities valued at
not more
that 30% of the Fund's total assets, invest in
warrants, purchase
securities on a "when-issued" or firm commitment basis,
engage in
currency exchange transactions and enter into forward
foreign
currency contracts. The Fund may also invest up to 10%
of its
assets in (i) other investment companies that invest in
equity
securities of Greater China growth companies or China
Region
associated companies, and (ii) restricted and other
illiquid
securities (although the Fund may not invest more than
5% of its
assets in restricted securities).
For temporary defensive purposes and during
periods when IMI
believes that circumstances warrant, the Fund may
reduce its
position in Greater China growth companies and Greater
China
associated companies and increase its investment in
cash and
liquid debt securities, such as U.S. Government
securities, bank
obligations, commercial paper, short-term notes and
repurchase
agreements. For temporary or emergency purposes, the
Fund may
also borrow up to 10% of the value of its total assets
from
banks.
The Fund may purchase put and call options on
securities and
stock indices, provided the premium paid for such
options does
not exceed 5% of the Fund's net assets. The Fund may
also sell
covered put options with respect to up to 10% of the
value of
its net assets, and my write covered call options so
long as not
more than 25% of the Fund's net assets is subject to
being
purchased upon the exercise of the calls. For hedging
purposes
only, the Fund may engage in transactions in stock
index futures
contracts, provided that the Fund's aggregate
investment in such
contracts does not exceed 15% of its total assets.
IVY GLOBAL FUND: The Fund seeks long-term capital
growth
through a flexible policy of investing in stocks and
debt
obligations of companies and governments of any nation.
Any
income realized will be incidental. Under normal
conditions, the
Fund invests at least 65% of its total assets in
issuers
domiciled in at least three different nations
(including the
United States). Although the Fund generally invests in
common
stock, it may also invest in preferred stocks,
sponsored or
unsponsored ADRs and investment-grade debt securities
(i.e.,
those rated Baa or higher by Moody's or BBB or higher
by S&P, or
if unrated, are considered by IMI to be of comparable
quality),
including corporate bonds, notes, debentures,
convertible bonds
and zero coupon bonds.
The Fund may lend portfolio securities valued at
not more
that 30% of the Fund's total assets, invest in
warrants, purchase
securities on a "when-issued" or firm commitment basis,
engage in
currency exchange transactions and enter into forward
foreign
currency contracts. The Fund may also invest up to 10%
of its
assets in (i) other investment companies and (ii)
restricted and
other illiquid securities (although the Fund may not
invest more
than 5% of its assets in restricted securities).
For temporary defensive purposes and during
periods when IMI
believes that circumstances warrant, the Fund may
invest without
limit in U.S. Government securities, obligations issued
by
domestic or foreign banks (including certificates of
deposit,
time deposits and bankers' acceptances), and domestic
or foreign
commercial paper (which, if issued by a corporation,
must be
rated Prime-1 by Moody's or A-1 by S&P, or if unrated
has been
issued by a company that at the time of investment has
an
outstanding debt issue rated AAA or AA by S&P or Aaa or
Aa by
Moody's). The Fund may also enter into repurchase
agreements,
and, for temporary or emergency purposes, may borrow up
to 10% of
the value of its total assets from banks.
The Fund may purchase put and call options stock
indices,
provided the premium paid for such options does not
exceed 10% of
the Fund's net assets. The Fund may also sell covered
put options
with respect to up to 50% of the value of its net
assets, and my
write covered call options so long as not more than 20%
of the
Fund's net assets is subject to being purchased upon
the exercise
of the calls. For hedging purposes only, the Fund may
engage in
transactions in (and options on) stock index and
foreign currency
futures contracts, provided that the Fund's aggregate
investment
in such contracts does not exceed 20% of its total
assets.
IVY INTERNATIONAL FUND: The Fund's principal
objective is
long-term capital growth primarily through investment
in equity
securities. Consideration of current income is
secondary to this
principal objective. It is anticipated that at least
65% of the
Fund's total assets will be invested in common stocks
(and
securities convertible into common stocks) principally
traded in
European, Pacific Basin and Latin America markets. For
temporary
defensive purposes, the Fund may also invest in equity
securities
principally traded in U.S. markets. The Fund's
subadviser,
Northern Cross Investments Limited (the "Subadviser"),
invests
the Fund's assets in a variety of economic sectors,
industry
segments and individual securities in order to reduce
the effects
of price volatility in any one area and to enable
shareholders to
participate in markets that do not necessarily move in
concert
with U.S. markets. The Subadviser seeks to identify
rapidly
expanding foreign economies, and then searches out
growing
industries and corporations, focusing on companies with
established records. Individual securities ares
selected based
on value indicators, such as a low price-earnings
ratio, and are
reviewed for fundamental financial strength. Companies
in which
investments are made will generally have at least $100
million in
capitalization and a solid history of operations.
When economic or market conditions warrant, the
Fund may
invest without limit in U.S. Government securities,
investment-
grade debt securities (i.e., those rated Baa or higher
by Moody's
or BBB or higher by S&P, or if unrated, are considered
by the
Subadviser to be of comparable quality), preferred
stocks,
warrants, or cash or cash equivalents such as bank
obligations
(including certificates of deposit and banders'
acceptances),
commercial paper, short-term notes and repurchase
agreements.
For temporary or emergency purposes, the Fund may
borrow up to
10% of the value of its total assets from banks.
The Fund may lend portfolio securities valued at
not more
that 30% of the Fund's total assets, engage in currency
exchange
transactions and enter into forward foreign currency
contracts.
The Fund may also invest up to 10% of its assets in (i)
other
investment companies and (ii) restricted and other
illiquid
securities (although the Fund may not invest more than
5% of its
assets in restricted securities).
The Fund may purchase put and call options on
securities and
stock indices, provided the premium paid for such
options does
not exceed 5% of the Fund's net assets. The Fund may
also sell
covered put options with respect to up to 10% of the
value of its
net assets, and my write covered call options so long
as not more
than 25% of the Fund's net assets is subject to being
purchased
upon the exercise of the calls. For hedging purposes
only, the
Fund may engage in transactions in (and options on)
stock index
and foreign currency futures contracts, provided that
the Fund's
aggregate investment in such contracts does not exceed
15% of its
total assets.
IVY LATIN AMERICA STRATEGY FUND: The Fund has a
principal
investment objective of long-term capital growth.
Consideration
of current income is secondary to this principal
objective.
Under normal conditions the Fund invests at least 65%
of its
total assets in securities issued in Latin America,
which for
purposes of this Prospectus is defined as Mexico,
Central
America, South America and the Spanish-speaking islands
of the
Caribbean. Securities of Latin American issuers
include (a)
securities of companies organized under the laws of a
Latin
American country or for which the principal securities
trading
market is in Latin America; (b) securities that are
issued or
guaranteed by the government of a Latin American
country, its
agencies or instrumentalities, political subdivisions
or the
country's central bank; (c) securities of a company,
wherever
organized, where at least 50% of the 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
Latin
America; or (d) any of the preceding types of
securities in the
form of depository shares. The Fund may participate in
markets
throughout Latin America, and it is expected that the
Fund will
be invested at all times in at least three countries.
Under
present conditions, the Fund expects to focus its
investments in
Argentina, Brazil, Chile, Mexico and Venezuela, which
IMI
believes are the most developed capital markets in
Latin America.
The Fund does not expect to concentrate its investments
in any
particular industry.
The Fund's equity investments consist of common
stock,
preferred stock (either convertible or
non-convertible),
sponsored or unsponsored depository receipts (including
ADRs,
American Depository Shares, and Global Depository
Shares) and
warrants (any of which may be purchased through
rights). The
Fund's equity securities may be listed on securities
exchanges,
traded over-the-counter, or have no organized market.
The Fund may invest in debt securities (including
zero
coupon bonds) when IMI anticipates that the potential
for capital
appreciation from debt securities is likely to equal or
exceed
that of equity securities (e.g., a favorable change in
relative
foreign exchange rates, interest rate levels or the
creditworthiness of issuers). These include debt
securities
issued by Latin American Governments ("Sovereign
Debt"). Most of
the debt securities in which the Fund may invest are
not rated,
and those that are rated are expected to be below
investment-
grade (i.e., rated Ba or below by Moody's or BB or
below by S&P,
or considered by IMI to be of comparable quality), and
are
commonly referred to as "high yield" or "junk" bonds.
(As of the
fiscal year ended December 31, 1995, the Fund held no
debt
securities in its portfolio.)
To meet redemptions, or while the Fund is
anticipating
investments in Latin American securities, the Fund may
hold cash
or cash equivalents such as bank obligations (including
certificates of deposit and banders' acceptances),
commercial
paper, short-term notes and repurchase agreements. For
temporary
defensive or emergency purposes, the Fund may (i)
invest without
limit in such instruments, and (ii) borrow up to
one-third of the
value of its total assets from banks (but may not
purchase
securities at any time during which the value of the
Fund's
outstanding loans exceeds 10% of the value of the
Fund's
assets).
The Fund may lend portfolio securities valued at
not more
that 30% of the Fund's total assets, invest in
warrants, purchase
securities on a "when-issued" or firm commitment basis,
engage in
currency exchange transactions and enter into forward
foreign
currency contracts. The Fund may also invest up to 10%
of its
assets in (i) other investment companies that invest in
Latin
American securities, and (ii) restricted and other
illiquid
securities (although the Fund may not invest more than
5% of its
assets in restricted securities). The Fund will treat
any Latin
American securities that are subject to restrictions on
repatriation for more than seven days, as well as any
securities
issued in connection with Latin American debt
conversion programs
that are restricted to remittance of invested capital
or profits,
as illiquid securities for purposes of this
limitation.
The Fund may purchase put and call options on
securities and
stock indices, provided the premium paid for such
options does
not exceed 5% of the Fund's net assets. The Fund may
also sell
covered put options with respect to up to 10% of the
value of
its net assets, and my write covered call options so
long as not
more than 25% of the Fund's net assets is subject to
being
purchased upon the exercise of the calls. For hedging
purposes
only, the Fund may engage in transactions in (and
options on)
stock index and foreign currency futures contracts,
provided that
the Fund's aggregate investment in such contracts does
not exceed
15% of its total assets.
IVY NEW CENTURY FUND: The Fund's principal
objective is
long-term growth. Consideration of current income is
secondary
to this principal objective. In pursuing its objective,
the Fund
invests primarily in the equity securities of companies
that IMI
believes will benefit from the economic development and
growth of
emerging markets. The Fund considers countries having
emerging
markets to be those that (i) are generally considered
to be
"developing" or "emerging" by the World Bank and the
International Finance Corporation, or (ii) are
classified by the
United Nations (or otherwise regarded by their
authorities) as
"emerging." Under normal market conditions, the Fund
invests at
least 65% of its total assets in equity securities
(including
common and preferred stocks, convertible debt
obligations,
warrants, options, rights and depository receipts that
are listed
on stock exchanges or traded over-the-counter) of
"Emerging
Market growth companies," which are defined as
companies (a) for
which the principal securities trading market is an
emerging
market (as defined above), (b) that (alone or on a
consolidated
basis) derives 50% or more of its total revenue either
from
goods, sales or services in emerging markets, or (c)
that are
organized under the laws of (and with a principal
office in) an
emerging market country.
In recent years, many emerging market countries
around the
world have undergone political changes that have
reduced
government's role in economic and personal affairs and
have
stimulated investment and growth. Historically, there
is a strong
direct correlation between economic growth and stock
market
returns. While this is no guarantee of future
performance, IMI
believes that investment opportunities (particularly in
the
energy, environmental services, natural resources,
basic
materials, power, telecommunications and transportation
industries) may result within the evolving economies of
emerging
market countries from which the Fund and its
shareholders will
benefit.
The Fund normally invests its assets in the
securities of
issuers located in at least three emerging market
countries, and
may invest 25% or more of its total assets in the
securities of
issuers located in any one country. IMI's
determination as to
whether a company qualifies as a Emerging Markets
growth company
is based primarily on information contained in
financial
statements, reports, analyses and other pertinent
information
(some of which may be obtained directly from the
company).
For purposes of capital appreciation, the Fund may
invest up
to 35% of its assets in (i) debt securities of
government or
corporate issuers in emerging market countries, (ii)
equity and
debt securities of issuers in developed countries
(including the
United States), and (iii) cash or cash equivalents such
as bank
obligations (including certificates of deposit and
banders'
acceptances), commercial paper, short-term notes and
repurchase
agreements. For temporary defensive purposes, the Fund
may invest
without limit in such instruments. The Fund may also
invest in
zero coupon bonds and purchase securities on a
"when-issued" or
firm commitment basis.
The Fund will not invest more than 20% of its
total assets
in debt securities rated Ba or lower by Moody's or BB
or lower by
S&P, or if unrated, are considered by IMI to be of
comparable
quality (commonly referred to as "high yield" or "junk"
bonds).
(As of the fiscal year ended December 31, 1995, the
Fund held no
low-rated debt securities in its portfolio.)
For temporary or emergency purposes, the Fund may
borrow up
to one-third of the value of its total assets from
banks, but may
not purchase securities at any time during which the
value of the
Fund's outstanding loans exceeds 10% of the value of
the Fund's
assets. The Fund may lend portfolio securities valued
at not
more that 30% of the Fund's total assets, engage in
currency
exchange transactions and enter into forward foreign
currency
contracts. The Fund may also invest (i) other
investment
companies that invest in Emerging Markets growth
companies, and
(ii) up to 15% of its assets in restricted and other
illiquid
securities (although the Fund may not invest more than
5% of its
assets in restricted securities).
The Fund may purchase put and call options on
securities and
stock indices, provided the premium paid for such
options does
not exceed 5% of the Fund's net assets. The Fund may
also sell
covered put options with respect to up to 10% of the
value of
its net assets, and my write covered call options so
long as not
more than 25% of the Fund's net assets is subject to
being
purchased upon the exercise of the calls. For hedging
purposes
only, the Fund may engage in transactions in (and
options on)
stock index and foreign currency futures contracts,
provided that
the Fund's aggregate investment in such contracts does
not exceed
15% of its total assets.
U.S. GOVERNMENT SECURITIES
A Fund may invest in U.S. Government securities.
U.S.
Government securities are obligations of, or guaranteed
by, the
U.S. Government, its agencies or instrumentalities.
Securities
guaranteed by the U.S. Government include: (1) direct
obligations of the U.S. Treasury (such as Treasury
bills, notes,
and bonds) and (2) Federal agency obligations
guaranteed as to
principal and interest by the U.S. Treasury (such as
GNMA
certificates, which are mortgage-backed securities).
In these
securities, the payment of principal and interest is
unconditionally guaranteed by the U.S. Government, and
thus they
are of the highest possible credit quality. Such
securities are
subject to variations in market value due to
fluctuations in
interest rates, but, if held to maturity, will be paid
in
full.
Mortgage-backed securities are securities
representing part
ownership of a pool of mortgage loans. For example,
GNMA
certificates are such securities in which the timely
payment of
principal and interest is guaranteed by the full faith
and credit
of the U.S. Government. Although the mortgage loans in
the pool
will have maturities of up to 30 years, the actual
average life
of the GNMA certificates typically will be
substantially less
because the mortgages will be subject to normal
principal
amortization and may be prepaid prior to maturity.
Prepayment
rates vary widely and may be affected by changes in
market
interest rates. In periods of falling interest rates,
the rate
of prepayment tends to increase, thereby shortening the
actual
average life of the GNMA certificates. Conversely,
when interest
rates are rising, the rate of prepayments tends to
decrease,
thereby lengthening the actual average life of the GNMA
certificates. Accordingly, it is not possible to
predict
accurately the average life of a particular pool.
Reinvestment
of prepayment may occur at higher or lower rates than
the
original yield on the certificates. Due to the
prepayment
feature and the need to reinvest prepayments of
principal at
current rates, GNMA certificates can be less effective
than
typical bonds of similar maturities at "locking in"
yields during
periods of declining interest rates. GNMA certificates
may
appreciate or decline in market value during periods of
declining
or rising interest rates, respectively.
Securities issued by U.S. Government
instrumentalities and
certain federal agencies are neither direct obligations
of nor
guaranteed by the U.S. Treasury. However, they involve
Federal
sponsorship in one way or another; some are backed by
specific
types of collateral; some are supported by the issuer's
right to
borrow from the Treasury; some are supported by the
discretionary
authority of the Treasury to purchase certain
obligations of the
issuer; others are supported only by the credit of the
issuing
government agency or instrumentality. These agencies
and
instrumentalities include, but are not limited to,
Federal Land
Banks, Farmers Home Administration, Central Bank for
Cooperatives, Federal Intermediate Credit Banks,
Federal Home
Loan Banks, Federal National Mortgage Association, and
Student
Loan Marketing Association.
ZERO COUPON BONDS
A Fund may purchase zero coupon bonds in
accordance with the
Fund's credit quality standards. Zero coupons bonds
are debt
obligations issued without any requirement for the
periodic
payment of interest. Zero coupon bonds 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 a Fund
holds zero
coupon bonds in its portfolio, however, 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 such income to
shareholders
currently, even though funds representing such income
would not
have been received by the Fund. Cash to pay dividends
representing unpaid, accrued interest may be obtained
from sales
proceeds of portfolio securities and Fund shares and
from loan
proceeds. The potential sale of portfolio securities
to pay cash
distributions from income earned on zero coupon bonds
may result
in a Fund's being forced to sell portfolio securities
at a time
when the Fund might otherwise choose not to sell these
securities
and when the Fund might incur a capital loss on such
sales.
Because interest on zero coupon obligations is not
distributed to
a Fund on a current basis, but is in effect compounded,
the value
of the securities of this type is subject to greater
fluctuations
in response to changing interest rates than the value
of debt
obligations that distribute income regularly.
REPURCHASE AGREEMENTS
A Fund may enter into repurchase agreements.
Repurchase
agreements are contracts under which a Fund buys a
money market
instrument and obtains a simultaneous commitment from
the seller
to repurchase the instrument at a specified time and at
an
agreed-upon yield. Under guidelines approved by the
Trust's
Board of Trustees (the "Board"), a Fund is permitted to
enter
into repurchase agreements only if the repurchase
agreements are
at least fully collateralized with U.S. Government
securities or
other securities that the Fund's investment adviser has
approved
for use as collateral for repurchase agreements and the
collateral must be marked-to-market daily. A Fund will
enter
into repurchase agreements only with banks and
broker-dealers
deemed to be creditworthy by the Fund's investment
adviser under
guidelines approved by the Board. In the unlikely
event of
failure of the executing bank or broker-dealer, a 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 costs in disposing
of the
security.
WARRANTS
A Fund may invest in warrants. The holder of a
warrant has
the right to purchase a given number of shares of a
particular
issuer at a specified price until expiration of the
warrant.
Such investments can provide a greater potential for
profit or
loss than an equivalent investment in the underlying
security.
Prices of warrants do not necessarily move in tandem
with the
prices of the underlying securities, and are
speculative
investments. Warrants pay no dividends and confer no
rights
other than a purchase option. If a warrant is not
exercised by
the date of its expiration, the particular Fund will
lose its
entire investment in such warrant.
COMMERCIAL PAPER
Commercial paper represents short-term unsecured
promissory
notes issued in bearer form by bank holding companies,
corporations and finance companies. A Fund may invest
in
commercial paper that, at the date of investment, is
rated A-1 by
Standard & Poor's Corporation ("S&P") or Prime-1 by
Moody's
Investors Service, Inc. ("Moody's") or, if not rated by
Moody's
or S&P, issued by companies having an outstanding debt
issue
rated AAA or AA by S&P or Aaa or Aa by Moody's.
BANKING INDUSTRY AND SAVINGS AND LOAN OBLIGATIONS
Certificates of deposit are negotiable
certificates issued
against funds deposited in a commercial bank for a
definite
period of time and earning a specified return.
Bankers'
acceptances are negotiable drafts or bills of exchange,
normally
drawn by an importer or exporter to pay for specific
merchandise,
which are "accepted" by a bank, meaning, in effect,
that the bank
unconditionally agrees to pay the face value of the
instrument on
maturity. In addition to investing in certificates of
deposit
and bankers' acceptances, a Fund may invest in time
deposits in
banks or savings and loan associations. Time deposits
are
generally similar to certificates of deposit, but are
uncertificated. A Fund's investments in certificates of
deposit,
time deposits, and bankers' acceptances are limited to
obligations of (i) banks having total assets in excess
of $1
billion, (ii) U.S. banks which do not meet the $1
billion asset
requirement, if the principal amount of such obligation
(currently $100,000) is fully insured by the Federal
Deposit
Insurance Corporation (the "FDIC"), (iii) savings and
loan
associations which have total assets in excess of $1
billion and
which are members of the FDIC, and (iv) foreign banks
if the
obligation is, in IMI's opinion, of an investment
quality
comparable to other debt securities which may be
purchased by the
particular Fund.
AMERICAN DEPOSITORY RECEIPTS ("ADRs")
A Fund may purchase sponsored or unsponsored ADRs.
ADRs are
dollar-denominated receipts issued generally by U.S.
banks that
represent the deposit with the bank of a foreign
company's
security. ADRs are publicly traded on exchanges or
over-the-
counter ("OTC") in the United States. Ownership of
unsponsored
ADRs may not entitle a Fund to financial or other
reports from
the issuer to which it would be entitled as the owner
of
sponsored ADRs.
HIGH YIELD BONDS
A Fund may invest in corporate debt securities
rated Baa or
lower by Moody's, BB or lower by S&P. A Fund will not,
however,
invest in securities that, at the time of investment,
are rated
lower than C by either Moody's or S&P. Securities
rated Baa or
BBB (and comparable unrated securities) are considered
by major
credit-rating organizations to have speculative
elements as well
as investment-grade characteristics. Securities rated
lower than
Baa or BBB (and comparable unrated securities) are
commonly
referred to as "high yield" or "junk" bonds and are
considered to
be predominantly speculative with respect to the
issuer's
continuing ability to meet principal and interest
payments. The
lower the ratings of corporate debt securities, the
more their
risks render them like equity securities. (See
Appendix A for a
more complete description of the ratings assigned by
Moody's and
S&P and their respective characteristics.)
While IMI may refer to ratings issued by
established credit
rating agencies, it is not IMI's policy to rely
exclusively on
such ratings, but rather to supplement such ratings
with its own
independent and ongoing review of credit quality. A
Fund's
achievement of its investment objective may, to the
extent of its
investment in high yield bonds, be more dependent upon
IMI's
credit analysis than would be the case if the Funds
were
investing in higher quality bonds. Should the rating
of a
portfolio security be downgraded, IMI will determine
whether it
is in the relevant Fund's best interest to retain or
dispose of
the security. However, should any individual bond held
by a Fund
be downgraded below a rating of C, IMI currently
intends to
dispose of such bond based on then existing market
conditions.
The secondary market on which high yield bonds are
traded
may be less liquid than the market for higher grade
bonds. Less
liquidity in the secondary trading market could
adversely affect
the price at which a Fund could sell a high yield bond,
and could
adversely affect and cause large fluctuations in the
daily net
asset value of each the Fund's shares. Adverse
publicity and
investor perceptions, whether or not based on
fundamental
analysis, may decrease the value and liquidity of high
yield
bonds, especially in a thinly traded market. When
secondary
markets for high yield securities are less liquid than
the
markets for higher grade securities, it may be more
difficult to
value the securities because such valuation may require
more
research, and elements of judgment may play a greater
role in the
valuation because there is less reliable, objective
data
available.
Furthermore, prices for high yield bonds may be
affected by
legislative and regulatory developments. For example,
federal
rules require savings and loan institutions to reduce
gradually
their holdings of this type of security. Also,
Congress has from
time to time considered legislation that would restrict
or
eliminate the corporate tax deduction for interest
payments on
these securities and regulate corporate restructurings.
Such
legislation may significantly depress the prices of
outstanding
securities of this type.
FOREIGN SECURITIES
A Fund may invest in debt securities of foreign
issuers,
including non-U.S. dollar-denominated debt securities,
Eurodollar
securities and debt securities issued, assumed or
guaranteed by
foreign governments or political subdivisions or the
instrumentalities thereof. Investors should consider
carefully
the substantial risks involved in investing in
securities issued
by companies and governments of foreign nations, which
are in
addition to the usual risks inherent in the domestic
investments.
Although a Fund intends to invest only in nations that
IMI
considers to have relatively stable and friendly
governments,
there is the possibility of expropriation,
nationalization or
confiscatory taxation, taxation of income earned in a
foreign
country and other foreign taxes, foreign exchange
controls (which
may include suspension of the ability to transfer
currency from a
given country), default in foreign government
securities,
political or social instability or diplomatic
developments which
could affect investments in securities of issuers in
those
nations. In addition, in many countries there is less
publicly
available information about issuers than is available
in reports
about companies in the United States. For example,
ownership of
unsponsored ADRs may not entitle the owner to financial
or other
reports from the issuer to which it might otherwise be
entitled
as the owner of a sponsored ADR. Moreover, foreign
companies are
not generally subject to uniform accounting, auditing
and
financial reporting standards, and auditing practices
and
requirements may not be comparable to those applicable
to U.S.
companies. In many foreign countries, there is less
government
supervision and regulation of business and industry
practices,
stock exchanges, brokers and listed companies than in
the United
States. Foreign securities transactions may be subject
to higher
brokerage costs than domestic securities transactions.
The
foreign securities markets of many of the countries in
which a
Fund may invest may also be smaller, less liquid and
subject to
greater price volatility than those in the United
States.
Further, a Fund may encounter difficulties or be unable
to pursue
legal remedies and obtain judgment in foreign
courts.
INVESTING IN EMERGING MARKETS
Investors should recognize that investing in
foreign
securities involves certain special considerations,
including
those set forth below, that are not typically
associated with
investing in United States securities and that may
affect a
Fund's performance favorably or unfavorably. (See also
"Foreign
Securities" under the caption "Risk Factors and
Investment
Techniques" in the Prospectus.)
Foreign stock markets have different clearance and
settlement procedures and in certain markets there have
been
times when settlements have been unable to keep pace
with the
volume of securities transactions, making it difficult
to conduct
such transactions. Delays in settlement could result
in
temporary periods when assets of a Fund are uninvested
and no
return is earned thereon. The inability of a Fund to
make
intended security purchases due to settlement problems
could
cause that Fund to miss attractive investment
opportunities.
Further, the inability to dispose of portfolio
securities due to
settlement problems could result either in losses to a
Fund
because of subsequent declines in the value of the
portfolio
security or, if a Fund has entered into a contract to
sell the
security, in possible liability to the purchaser.
Fixed
commissions on some foreign securities exchanges are
generally
higher than negotiated commissions on U.S. exchanges,
although
IMI will endeavor to achieve the most favorable net
results on a
Fund's portfolio transactions. In addition, a Fund may
encounter
difficulties or be unable to pursue legal remedies and
obtain
judgment in foreign courts. It may be more difficult
for a
Fund's agents to keep currently informed about
corporate actions
such as stock dividends or other matters that may
affect the
prices of portfolio securities. Communications between
the
United States and foreign countries may be less
reliable than
within the United States, thus increasing the risk of
delayed
settlements of portfolio transactions or loss of
certificates for
portfolio securities. Moreover, individual foreign
economies may
differ favorably or unfavorably from the United States
economy in
such respects as growth of gross national product, rate
of
inflation, capital reinvestment, resource
self-sufficiency and
balance of payments position. IMI seeks to mitigate
the risks to
a Fund associated with the foregoing considerations
through
investment variation and continuous professional
management.
Investments in companies domiciled in developing
countries
may be subject to potentially higher risks than
investments in
developed countries. These risks include (i) less
social,
political and economic stability; (ii) the small
current size of
the markets for such securities and the currently low
or
nonexistent volume of trading, which result in a lack
of
liquidity and in greater price volatility; (iii)
certain national
policies that may restrict a Fund's investment
opportunities,
including restrictions on investment in issuers or
industries
deemed sensitive to national interests; (iv) foreign
taxation;
(v) the absence of developed structures governing
private or
foreign investment or allowing for judicial redress for
injury to
private property; (vi) the absence, until relatively
recently in
certain Eastern European countries, of a capital market
structure
or market-oriented economy; (vii) the possibility that
recent
favorable economic developments in Eastern Europe may
be slowed
or reversed by unanticipated political or social events
in such
countries; and (viii) the possibility that currency
devaluations
could adversely affect the value of a Fund's
investments.
Despite the dissolution of the Soviet Union, the
Communist
Party may continue to exercise a significant role in
certain
Eastern European countries. To the extent of the
Communist
Party's influence, investments in such countries will
involve
risks of nationalization, expropriation and
confiscatory
taxation. The communist governments of a number of
Eastern
European countries expropriated large amounts of
private property
in the past, in many cases without adequate
compensation, and
there can be no assurance that such expropriation will
not occur
in the future. In the event of such expropriation, a
Fund could
lose a substantial portion of any investments it has
made in the
affected countries. Further, few (if any) accounting
standards
exist in Eastern European countries. Finally, even
though
certain Eastern European currencies may be convertible
into U.S.
dollars, the conversion rates may be artificial in
relation to
the actual market values and may be adverse to a Fund's
Shareholders.
Certain Eastern European countries that do not
have market
economies are characterized by an absence of developed
legal
structures governing private and foreign investments
and private
property. In addition, certain countries require
governmental
approval prior to investments by foreign persons, or
limit the
amount of investment by foreign persons in a particular
company,
or limit the investment of foreign persons to only a
specific
class of securities of a company that may have less
advantageous
terms than securities of the company available for
purchase by
nationals.
Authoritarian governments in certain Eastern
European
countries may require that a governmental or
quasi-governmental
authority act as custodian of a Fund's assets invested
in such
country. To the extent such governmental or
quasi-governmental
authorities do not satisfy the requirements of the
Investment
Company Act of 1940, as amended (the "1940 Act"), to
act as
foreign custodians of a Fund's cash and securities,
that Fund's
investment in such countries may be limited or may be
required to
be effected through intermediaries. The risk of loss
through
governmental confiscation may be increased in such
countries.
CANADIAN SECURITIES
Ivy Canada Fund may invest in Canadian securities.
The
Canadian securities market is among the largest in the
world.
Equity securities are traded primarily on the country's
five
independent regional stock exchanges: The Toronto
Stock Exchange
("TSE"), the Montreal Exchange ("ME"), the Vancouver
Stock
Exchange ("VSE"), the Alberta Stock Exchange and the
Winnipeg
Stock Exchange. The TSE, which is the largest regional
exchange,
had a total market capitalization of $756.3 billion as
of
November 3, 1994 and its 1,250 listed companies had a
November
trading volume of 1,120,300,000 shares. A small
percentage of
Canadian stocks are traded on the unlisted or OTC
market. In
contrast, almost all debt securities are traded on the
OTC.
Interlisting is common among the Canadian and U.S.
stock
exchanges and the OTC markets. In addition, the TSE,
the
American Stock Exchange and the Midwest Stock Exchange
are
electronically linked to permit the order routing of
interlisted
securities on those stock exchanges. The ME and the
Boston Stock
Exchange are similarly linked. Ivy Canada Fund invests
less than
1% of its assets in securities listed solely on the
VSE.
The economy of Canada is strongly influenced by
the
activities of companies and industries involved in the
production
and processing of natural resources. The companies may
include
those involved in the energy industry, industrial
materials
(chemicals, base metals, timber and paper) and
agricultural
materials (grain cereals). The securities of companies
in the
energy industry are subject to changes in value and
dividend
yield, which depend, to a large extent, on the price
and supply
of energy fuels. Rapid price and supply fluctuations
may be
caused by events relating to international politics,
energy
conservation and the success of exploration projects.
Economic
prospects are changing due to recent government
attempts to
reduce restrictions against foreign investment. These
considerations are especially important for a Fund,
like Ivy
Canada Fund, which invests primarily in Canadian
securities.
Many factors, including social, environmental and
economic
conditions, that are not within the control of Canada
affect and
could have an adverse impact on the financial condition
of
Canada. IMI is unable to predict what effect, if any,
such
factors would have on instruments held in a Fund's
portfolio.
Beginning in January of 1989 the U.S. - Canada
Free Trade
Agreement will be phased in over a period of 10 years.
This
agreement will remove tariffs on U.S. technology and
Canadian
agricultural products in addition to removing trade
barriers
affecting other important sectors of each country's
economy.
Additionally, the recent implementation of the North
American
Free Trade Agreement in January, 1994 is expected to
lead to
increased trade and reduced barriers between Canada and
the
United States.
Canada is one of the world's leading industrial
countries,
as well as a major exporter of agricultural products.
Canada is
rich in natural resources such as zinc, uranium,
nickel, gold,
silver, aluminum, iron and copper. Forest covers over
44% of
land area, making Canada a leading world producer of
newsprint.
Canada is also a major producer of
hydroelectricity, oil and
gas. The business activities of companies in the
energy field
may include the production, generation, transmission,
marketing,
control or measurement of energy or energy fuels.
Canadian securities exchanges are self-regulatory
agencies
that are recognized by the securities administrators of
the
province in which the exchange is located. The
largest, most
active Canadian exchange is the TSE, which is a
self-regulated
agency recognized by the Ontario Securities Commission.
Canadian
securities regulation differs in certain respects from
United
States securities regulation. For example, the amount
of
information available concerning companies that have
securities
traded on Canadian exchanges and do not have securities
traded on
an exchange in the United States is generally less than
that
available concerning companies which have securities
traded on
United States exchanges. See "Risk Factors and
Investment
Techniques" in the Prospectus for a discussion of the
risks
associated with investing in the securities of foreign
companies.
INVESTING IN LATIN AMERICA
Investing in securities of Latin American issuers
may entail
risks relating to the potential political and economic
instability of certain Lain American countries and the
risks of
expropriation, nationalization, confiscation or the
imposition of
restrictions on foreign investment and on repatriation
of capital
invested. In the event of expropriation,
nationalization or
other confiscation by any country, a Fund could lose
its entire
investment in any such country.
The securities markets of Latin American countries
are
substantially smaller, less developed, less liquid and
more
volatile than the major securities markets in the U.S.
Disclosure
and regulatory standards are in many respects less
stringent than
U.S. standards. Furthermore, there is a lower level of
monitoring and regulation of the markets and the
activities of
investors in such markets.
The limited size of many Latin American securities
markets
and limited trading volume in the securities of Latin
American
issuers compared to volume of trading in the securities
of U.S.
issuers could cause prices to be erratic for reasons
apart from
factors that affect the soundness and competitiveness
of the
securities issuers. For example, limited market size
may cause
prices to be unduly influenced by traders who control
large
positions. Adverse publicity and investors'
perceptions, whether
or not based on in-depth fundamental analysis, may
decrease the
value and liquidity of portfolio securities.
Latin America Strategy Fund invests in securities
denominated in currencies of Latin American countries.
Accordingly, changes in the value of these currencies
against the
U.S. dollar will result in corresponding changes in the
U.S.
dollar value of the Fund's assets denominated in those
currencies.
Some Latin American countries also may have
managed
currencies, which are not free floating against the
U.S. dollar.
In addition, there is risk that certain Lain American
countries
may restrict the free conversion of their currencies
into other
countries. Further, certain Latin American currencies
may not be
internationally traded. Certain of these currencies
have
experienced a steep devaluation relative to the U.S.
dollar. Any
devaluations in the currencies in which a Fund's
portfolio
securities are denominated may have a detrimental
impact on that
Fund's net asset value.
The economies of individual Latin American
countries may
differ favorably or unfavorably from the U.S. economy
in such
respects as the rate of growth of gross domestic
product, the
rate of inflation, capital reinvestment, resource self-
sufficiency and balance of payments position. Certain
Latin
American countries have experienced high levels of
inflation
which can have a debilitating effect on the economy.
Furthermore, certain Latin American countries may
impose
withholding taxes on dividends payable to a Fund at a
higher rate
than those imposed by other foreign countries. This
may reduce
the Fund's investment income available for distribution
to
shareholders.
Certain Latin American countries such as
Argentina, Brazil
and Mexico are among the world's largest debtors to
commercial
banks and foreign governments. At times, certain Latin
American
countries have declared moratoria on the payment of
principal
and/or interest on outstanding debt. Investment in
sovereign
debt can involve a high degree of risk. The
governmental entity
that controls the repayment of sovereign debt may not
be able or
willing to repay the principal and/or interest when due
in
accordance with the terms of such debt. A governmental
entity's
willingness or ability to repay principal and interest
due in a
timely manner may be affected by, among other factors,
its cash
flow situation, the extent of its foreign reserves, the
availability of sufficient foreign exchange on the date
a payment
is due, the relative size of the debt service burden to
the
economy as a whole, the governmental entity's policy
towards the
International Monetary Fund, and the political
constraints to
which a governmental entity may be subject.
Governmental
entities may also be dependent on expected
disbursements from
foreign governments, multilateral agencies and others
abroad to
reduce principal and interest arrearages on their debt.
The
commitment on the part of these governments, agencies
and others
to make such disbursements may be conditioned on a
governmental
entity's implementation of economic reforms and/or
economic
performance and the timely service of such debtor's
obligations.
Failure to implement such reforms, achieve such levels
of
economic performance or repay principal or interest
when due may
result in the cancellation of such third parties'
commitments to
lend funds to the governmental entity, which may
further impair
such debtor's ability or willingness to service its
debts in a
timely manner. Consequently, governmental entities may
default
on their sovereign debt.
Holders of sovereign debt, including a Fund, may
be
requested to participate in the rescheduling of such
debt and to
extend further loans to governmental entities. There
is no
bankruptcy proceeding by which defaulted sovereign debt
may be
collected in whole or in part.
Governments of many Latin American countries have
exercised
and continue to exercise substantial influence over
many aspects
of the private sector through the ownership or control
of many
companies, including some of the largest in those
countries. As
a result, government actions in the future could have a
significant effect on economic conditions which may
adversely
affect prices of certain portfolio securities.
Expropriation,
confiscatory taxation, nationalization, political,
economic or
social instability or other similar developments, such
as
military coups, have occurred in the past and could
also
adversely affect a Fund's investments in this
region.
Changes in political leadership, the
implementation of
market oriented economic policies, such as
privatization, trade
reform and fiscal and monetary reform are among the
recent steps
taken to renew economic growth. External debt is being
restructured and flight capital (domestic capital that
has left
home country) has begun to return. Inflation control
efforts
have also been implemented. Latin American equity
markets can be
extremely volatile and in the past have shown little
correlation
with the U.S. market. Currencies are typically weak,
but most
are now relatively free floating, and it is not unusual
for the
currencies to undergo wide fluctuations in value over
short
periods of time due to changes in the market.
FORWARD FOREIGN CURRENCY CONTRACTS
A Fund may enter into forward foreign currency
contracts (a
"forward contract"). A forward contract is an
obligation to
purchase or sell a specific currency for an agreed
price at a
future date (usually less than a year), which is
individually
negotiated and privately traded by currency traders and
their
customers. A forward contract generally has no deposit
requirement, and no commissions are charged at any
stage for
trades. Although foreign exchange dealers do not
charge a fee
for commissions, they do realize a profit based on the
difference
between the price at which they are buying and selling
various
currencies. Although these contracts are intended to
minimize
the risk of loss due to a decline in the value of the
hedged
currencies, at the same time, they tend to limit any
potential
gain which might result should the value of such
currencies
increase.
While a Fund may enter into forward contracts to
reduce
currency exchange risks, changes in currency exchange
rates may
result in poorer overall performance for a Fund than if
it had
not engaged in such transactions. Moreover, there may
be an
imperfect correlation between a Fund's portfolio
holdings of
securities denominated in a particular currency and
forward
contracts entered into by that Fund. Such imperfect
correlation
may prevent a Fund from achieving the intended hedge or
expose
the Fund to the risk of currency exchange loss.
A Fund will not enter into forward contracts or
maintain a
net exposure to such contracts where the consummation
of the
contracts would obligate the Fund to deliver an amount
of
currency in excess of the value of the Fund's portfolio
securi-
ties or other assets denominated in that currency.
Further, a
Fund generally will not enter into a forward contract
with a term
of greater than one year.
A Fund will hold cash, U.S. Government securities,
or other
high grade debt securities in a segregated account with
its
Custodian in an amount equal (on a daily
marked-to-market basis)
to the amount of the commitments under these contracts.
At the
maturity of a forward contract, a Fund may either
accept or make
delivery of the currency specified in the contract, or,
prior to
maturity, enter into a closing purchase transaction
involving the
purchase or sale of an offsetting contract. Closing
purchase
transactions with respect to forward contracts are
usually
effected with the currency trader who is a party to the
original
forward contract.
FOREIGN CURRENCIES
Investment in foreign securities usually will
involve
currencies of foreign countries. Moreover, a Fund may
temporarily hold funds in bank deposits in foreign
currencies
during the completion of investment programs and may
purchase
forward contracts. Because of these factors, the value
of the
assets of a Fund as measured in U.S. dollars may be
affected
favorably or unfavorably by changes in foreign currency
exchange
rates and exchange control regulations, and the Fund
may incur
costs in connection with conversions between various
currencies.
Although a Fund's custodian values the Fund's assets
daily in
terms of U.S. dollars, a Fund does not intend to
convert its
holdings of foreign currencies into U.S. dollars on a
daily
basis. A Fund may do so from time to time, and
investors should
be aware of the costs of currency conversion. Although
foreign
exchange dealers do not charge a fee for conversion,
they do
realize a profit based on the difference (the "spread")
between
the prices at which they are buying and selling various
currencies. Thus, a dealer may offer to sell a foreign
currency
to a Fund at one rate, while offering a lesser rate of
exchange
should the Fund desire to resell that currency to the
dealer. A
Fund will conduct its foreign currency exchange
transactions
either on a spot (i.e., cash) basis at the spot rate
prevailing
in the foreign currency exchange market, or through
entering into
forward contracts to purchase or sell foreign
currencies.
Because a Fund normally will be invested in both
U.S. and
foreign securities markets, changes in the Fund's share
price may
have a low correlation with movements in the U.S.
markets. A
Fund's share price will reflect the movements of both
the
different stock and bond markets in which it is
invested and of
the currencies in which the investments are
denominated; the
strength or weakness of the U.S. dollar against foreign
currencies may account for part of a Fund's investment
performance. U.S. and foreign securities markets do
not always
move in step with each other, and the total returns
from
different markets may vary significantly.
OPTIONS TRANSACTIONS
GENERAL. A Fund may engage in transactions in
options on
securities and stock indices in accordance with the
Fund's stated
investment objective and policies. A Fund may also
purchase put
options on securities and may purchase and sell (write)
put and
call options on stock indices. Options on securities
and stock
indices purchased or written by a Fund will be limited
to options
traded on national securities exchanges, boards of
trade or
similar entities, or in the OTC markets.
A call option is a short-term contract (having a
duration of
less than one year) pursuant to which the purchaser, in
return
for the premium paid, has the right to buy the security
underlying the option at the specified exercise price
at any time
during the term of the option. The writer of the call
option,
who receives the premium, has the obligation, upon
exercise of
the option, to deliver the underlying security against
payment of
the exercise price. A put option is a similar contract
pursuant
to which the purchaser, in return for the premium paid,
has the
right to sell the security underlying the option at the
specified
exercise price at any time during the term of the
option. The
writer of the put option, who receives the premium, has
the
obligation, upon exercise of the option, to buy the
underlying
security at the exercise price. The premium paid by
the
purchaser of an option will reflect, among other
things, the
relationship of the exercise price to the market price
and
volatility of the underlying security, the time
remaining to
expiration of the option, supply and demand, and
interest
rates.
If the writer of an option wishes to terminate the
obligation, the writer may effect a "closing purchase
transaction." This is accomplished by buying an option
of the
same series as the option previously written. The
effect of the
purchase is that the writer's position will be
cancelled by the
Options Clearing Corporation. However, a writer may
not effect a
closing purchase transaction after it has been notified
of the
exercise of an option. Likewise, an investor who is
the holder
of an option may liquidate his or her position by
effecting a
"closing sale transaction." This is accomplished by
selling an
option of the same series as the option previously
purchased.
There is no guarantee that either a closing purchase or
a closing
sale transaction can be effected at any particular time
or at any
acceptable price. If any call or put option is not
exercised or
sold, it will become worthless on its expiration
date.
A Fund will realize a gain (or a loss) on a
closing purchase
transaction with respect to a call or a put previously
written by
the Fund if the premium, plus commission costs, paid by
the Fund
to purchase the call or the put is less (or greater)
than the
premium, less commission costs, received by the Fund on
the sale
of the call or the put. A gain also will be realized
if a call
or a put that a Fund has written lapses unexercised,
because the
Fund would retain the premium. Any such gains (or
losses) are
considered short-term capital gains (or losses) for
Federal
income tax purposes. Net short-term capital gains,
when
distributed by a Fund, are taxable as ordinary income.
See
"Taxation."
A Fund will realize a gain (or a loss) on a
closing sale
transaction with respect to a call or a put previously
purchased
by the Fund if the premium, less commission costs,
received by
the Fund on the sale of the call or the put is greater
(or less)
than the premium, plus commission costs, paid by the
Fund to
purchase the call or the put. If a put or a call
expires
unexercised, it will become worthless on the expiration
date, and
a Fund will realize a loss in the amount of the premium
paid,
plus commission costs. Any such gain or loss will be
long-term
or short-term gain or loss, depending upon a Fund's
holding
period for the option.
Exchange-traded options generally have
standardized terms
and are issued by a regulated clearing organization
(such as the
Options Clearing Corporation), which, in effect,
guarantees the
completion of every exchange-traded option transaction.
In
contrast, the terms of OTC options are negotiated by a
Fund and
its counterparty (usually a securities dealer or a
financial
institution) with no clearing organization guarantee.
When a
Fund purchases an OTC option, it relies on the party
from whom it
has purchased the option (the "counterparty") to make
delivery of
the instrument underlying the option. If the
counterparty fails
to do so, a Fund will lose any premium paid for the
option, as
well as any expected benefit of the transaction.
Accordingly,
IMI will assess the creditworthiness of each
counterparty to
determine the likelihood that the terms of the OTC
option will be
satisfied.
WRITING OPTIONS ON INDIVIDUAL SECURITIES. A Fund
may write
(sell) covered call options on the Fund's securities in
an
attempt to realize a greater current return than would
be
realized on the securities alone. A Fund may also
write covered
call options to hedge a possible stock or bond market
decline
(only to the extent of the premium paid to the Fund for
the
options). In view of the investment objectives of a
Fund, the
Fund generally would write call options only in
circumstances
where the investment adviser to the Fund does not
anticipate
significant appreciation of the underlying security in
the near
future or has otherwise determined to dispose of the
security.
A Fund may write covered call options as described
in the
Fund's Prospectus. A "covered" call option means
generally that
so long as the Fund is obligated as the writer of a
call option,
the Fund will (i) own the underlying securities subject
to the
option, or (ii) have the right to acquire the
underlying
securities through immediate conversion or exchange of
convertible preferred stocks or convertible debt
securities owned
by the Fund. Although a Fund receives premium income
from these
activities, any appreciation realized on an underlying
security
will be limited by the terms of the call option. A
Fund may
purchase call options on individual securities only to
effect a
"closing purchase transaction."
As the writer of a call option, a Fund receives a
premium
for undertaking the obligation to sell the underlying
security at
a fixed price during the option period, if the option
is
exercised. So long as a Fund remains obligated as a
writer of a
call option, it forgoes the opportunity to profit from
increases
in the market price of the underlying security above
the exercise
price of the option, except insofar as the premium
represents
such a profit (and retains the risk of loss should the
value of
the underlying security decline).
PURCHASING OPTIONS ON INDIVIDUAL SECURITIES. A
Fund may
purchase a put option on an underlying security owned
by the Fund
as a defensive technique in order to protect against an
anticipated decline in the value of the security. A
Fund, as the
holder of the put option, may sell the underlying
security at the
exercise price regardless of any decline in its market
price. In
order for a put option to be profitable, the market
price of the
underlying security must decline sufficiently below the
exercise
price to cover the premium and transaction costs that a
Fund must
pay. These costs will reduce any profit a Fund might
have
realized had it sold the underlying security instead of
buying
the put option. The premium paid for the put option
would reduce
any capital gain otherwise available for distribution
when the
security is eventually sold. The purchase of put
options will
not be used by a Fund for leverage purposes.
A Fund may also purchase a put option on an
underlying
security that it owns and at the same time write a call
option on
the same security with the same exercise price and
expiration
date. Depending on whether the underlying security
appreciates
or depreciates in value, a Fund would sell the
underlying
security for the exercise price either upon exercise of
the call
option written by it or by exercising the put option
held by it.
A Fund would enter into such transactions in order to
profit from
the difference between the premium received by the Fund
for the
writing of the call option and the premium paid by the
Fund for
the purchase of the put option, thereby increasing the
Fund's
current return.
A Fund will purchase put options only to the
extent
permitted by the policies of state securities
authorities in
states where shares of the Fund are qualified for offer
and sale.
Such authorities may impose further limitations on the
ability of
a Fund to purchase options. A Fund may write (sell)
put options
on individual securities only to effect a "closing sale
transaction."
PURCHASING AND WRITING OPTIONS ON SECURITIES
INDICES. A
Fund may purchase and sell (write) put and call options
on
securities indices. An index assigns relative values
to the
securities included in the index and the index
fluctuates with
changes in the market values of the securities so
included.
Options on indices are similar to options on individual
securities, except that, rather than giving the
purchaser the
right to take delivery of an individual security at a
specified
price, they give the purchaser the right to receive
cash. The
amount of cash is equal to the difference between the
closing
price of the index and the exercise price of the
option,
expressed in dollars, times a specified multiple (the
"multiplier"). The writer of the option is obligated,
in return
for the premium received, to make delivery of this
amount.
The multiplier for an index option performs a
function
similar to the unit of trading for a stock option. It
determines
the total dollar value per contract of each point in
the
difference between the exercise price of an option and
the
current level of the underlying index. A multiplier of
100 means
that a one-point difference will yield $100. Options
on
different indices have different multipliers.
When a Fund writes a call or put option on a stock
index,
the option is "covered", in the case of a call, or
"secured", in
the case of a put, if the Fund maintains in a
segregated account
with the Custodian cash, U.S. Government securities or
other
high-grade debt securities equal to the contract value.
A call
option is also covered if a Fund holds a call on the
same index
as the call written where the exercise price of the
call held is
(i) equal to or less than the exercise price of the
call written
or (ii) greater than the exercise price of the call
written,
provided that the Fund maintains in a segregated
account with the
Custodian the difference in cash, U.S. Government
securities or
other high-grade debt securities. A put option is also
"secured"
if a Fund holds a put on the same index as the put
written where
the exercise price of the put held is (i) equal to or
greater
than the exercise price of the put written or (ii) less
than the
exercise price of the put written, provided that the
Fund
maintains in a segregated account with the Custodian
the
difference in cash, U.S. Government securities or other
high-
grade debt securities.
RISKS OF OPTIONS TRANSACTIONS. The purchase and
writing of
options involves certain risks. During the option
period, the
covered call writer has, in return for the premium on
the option,
given up the opportunity to profit from a price
increase in the
underlying securities above the exercise price, but, as
long as
its obligation as a writer continues, has retained the
risk of
loss should the price of the underlying security
decline. The
writer of an option has no control over the time when
it may be
required to fulfill its obligation as a writer of the
option.
Once an option writer has received an exercise notice,
it cannot
effect a closing purchase transaction in order to
terminate its
obligation under the option and must deliver the
underlying
securities (or cash in the case of an index option) at
the
exercise price. If a put or call option purchased by a
Fund is
not sold when it has remaining value, and if the market
price of
the underlying security (or index), in the case of a
put, remains
equal to or greater than the exercise price or, in the
case of a
call, remains less than or equal to the exercise price,
a Fund
will lose its entire investment in the option. Also,
where a put
or call option on a particular security (or index) is
purchased
to hedge against price movements in a related security
(or
securities), the price of the put or call option may
move more or
less than the price of the related security (or
securities). In
this regard, there are differences between the
securities and
options markets that could result in an imperfect
correlation
between these markets, causing a given transaction not
to achieve
its objective.
There can be no assurance that a liquid market
will exist
when a Fund seeks to close out an option position.
Furthermore,
if trading restrictions or suspensions are imposed on
the options
markets, a Fund may be unable to close out a position.
Finally,
trading could be interrupted, for example, because of
supply and
demand imbalances arising from a lack of either buyers
or
sellers, or the options exchange could suspend trading
after the
price has risen or fallen more than the maximum amount
specified
by the exchange. Closing transactions can be made for
OTC
options only by negotiating directly with the
counterparty or by
a transaction in the secondary market, if any such
market exists.
There is no assurance that a Fund will be able to close
out an
OTC option position at a favorable price prior to its
expiration.
In the event of insolvency of the counterparty, a Fund
might be
unable to close out an OTC option position at any time
prior to
its expiration. Although a Fund may be able to offset
to some
extent any adverse effects of being unable to liquidate
an option
position, the Fund may experience losses in some cases
as a
result of such inability.
A Fund's options activities also may have an
impact upon the
level of its portfolio turnover and brokerage
commissions. See
"Portfolio Turnover."
A Fund's success in using options techniques
depends, among
other things, on IMI's ability to predict accurately
the
direction and volatility of price movements in the
options
markets as well as the securities markets and on IMI's
ability to
select the proper type, time and duration of
options.
SECURITIES INDEX FUTURES CONTRACTS
A Fund may enter into securities index futures
contracts as
an efficient means of regulating the Fund's exposure to
the
equity markets. A Fund will not engage in transactions
in
futures contracts for speculation but only as a hedge
against
changes resulting from market conditions in the values
of
securities held in the Fund's portfolio or which it
intends to
purchase.
An index futures contract is a contract to buy or
sell units
of an index at a specified future date at a price
agreed upon
when the contract is made. Entering into a contract to
buy units
of an index is commonly referred to as purchasing a
contract or
holding a long position in the index. Entering into a
contract
to sell units of an index is commonly referred to as
selling a
contract or holding a short position. The value of a
unit is the
current value of the stock index. For example, the S&P
500 Index
is composed of 500 selected common stocks, most of
which are
listed on the New York Stock Exchange (the "Exchange").
The S&P
500 Index assigns relative weightings to the 500 common
stocks
included in the Index, and the Index fluctuates with
changes in
the market values of the shares of those common stocks.
In the
case of the S&P 500 Index, contracts are to buy or sell
500
units. Thus, if the value of the S&P 500 Index were
$150, one
contract would be worth $75,000 (500 units x $150).
The index
futures contract specifies that no delivery of the
actual
securities making up the index will take place.
Instead,
settlement in cash must occur upon the termination of
the
contract, with the settlement being the difference
between the
contract price and the actual level of the stock index
at the
expiration of the contract. For example, if a Fund
enters into a
futures contract to buy 500 units of the S&P 500 Index
at a
specified future date at a contract price of $150 and
the S&P 500
Index is at $154 on that future date, a Fund will gain
$2,000
(500 units x gain of $4). If a Fund enters into a
futures
contract to sell 500 units of the stock index at a
specified
future date at a contract price of $150 and the S&P 500
Index is
at $154 on that future date, the Fund will lose $2,000
(500 units
x loss of $4).
RISKS OF SECURITIES INDEX FUTURES. A Fund's
success in
using hedging techniques depends, among other things,
on IMI's
ability to predict correctly the direction and
volatility of
price movements in the futures and options markets as
well as in
the securities markets and to select the proper type,
time and
duration of hedges. The skills necessary for
successful use of
hedges are different from those used in the selection
of
individual stocks.
A Fund's ability to hedge effectively all or a
portion of
its securities through transactions in index futures
(and
therefore the extent of its gain or loss on such
transactions)
depends on the degree to which price movements in the
underlying
index correlate with price movements in the Fund's
securities.
Inasmuch as such securities will not duplicate the
components of
an index, the correlation probably will not be perfect.
Consequently, a Fund will bear the risk that the prices
of the
securities being hedged will not move in the same
amount as the
hedging instrument. This risk will increase as the
composition
of a Fund's portfolio diverges from the composition of
the
hedging instrument.
Although a Fund intends to establish positions in
these
instruments only when there appears to be an active
market, there
is no assurance that a liquid market will exist at a
time when
the Fund seeks to close a particular option or futures
position.
Trading could be interrupted, for example, because of
supply and
demand imbalances arising from a lack of either buyers
or
sellers. In addition, the futures exchanges may
suspend trading
after the price has risen or fallen more than the
maximum amount
specified by the exchange. In some cases, a Fund may
experience
losses as a result of its inability to close out a
position, and
it may have to liquidate other investments to meet its
cash
needs.
Although some index futures contracts call for
making or
taking delivery of the underlying securities, generally
these
obligations are closed out prior to delivery by
offsetting
purchases or sales of matching futures contracts (same
exchange,
underlying security or index, and delivery month). If
an
offsetting purchase price is less than the original
sale price, a
Fund generally realizes a capital gain, or if it is
more, the
Fund generally realizes a capital loss. Conversely, if
an
offsetting sale price is more than the original
purchase price, a
Fund generally realizes a capital gain, or if it is
less, the
Fund generally realizes a capital loss. The
transaction costs
must also be included in these calculations.
A Fund will only enter into index futures
contracts or
futures options that are standardized and traded on a
U.S. or
foreign exchange or board of trade, or similar entity,
or quoted
on an automated quotation system. A Fund will use
futures
contracts and related options only for "bona fide
hedging"
purposes, as such term is defined in applicable
regulations of
the CFTC.
When purchasing an index futures contract, a Fund
will
maintain with its custodian (and mark-to-market on a
daily basis)
cash, U.S. Government securities, or other highly
liquid debt
securities that, when added to the amounts deposited
with a
futures commission merchant ("FCM") as margin, are
equal to the
market value of the futures contract. Alternatively, a
Fund may
"cover" its position by purchasing a put option on the
same
futures contract with a strike price as high as or
higher than
the price of the contract held by a Fund.
When selling an index futures contract, a Fund
will maintain
with its custodian (and mark-to-market on a daily
basis) liquid
assets that, when added to the amounts deposited with
an FCM as
margin, are equal to the market value of the
instruments
underlying the contract. Alternatively, a Fund may
"cover" its
position by owning the instruments underlying the
contract (or,
in the case of an index futures contract, a portfolio
with a
volatility substantially similar to that of the index
on which
the futures contract is based), or by holding a call
option
permitting a Fund to purchase the same futures contract
at a
price no higher than the price of the contract written
by the
Fund (or at a higher price if the difference is
maintained in
liquid assets with the Fund's custodian).
COMBINED TRANSACTIONS. A Fund may enter into
multiple
transactions, including multiple options transactions,
multiple
futures transactions, multiple currency transactions
(including
forward currency contracts) and multiple interest rate
transactions and any combination of futures, options,
currency
and interest rate transactions ("component"
transactions),
instead of a single transaction, as part of a single or
combined
strategy when, in the opinion of IMI, it is in the best
interests
of a Fund to do so. A combined transaction will
usually contain
elements of risk that are present in each of its
component
transactions. Although combined transactions are
normally
entered into based on IMI's judgment that the combined
strategies
will reduce risk or otherwise more effectively achieve
the
desired portfolio management goal, it is possible that
the
combination will instead increase such risks or hinder
achievement of the management objective.
FIRM COMMITMENT AGREEMENTS AND WHEN-ISSUED SECURITIES
A Fund may purchase securities on a firm
commitment or when-
issued basis. New issues of certain debt securities
are often
offered on a when-issued basis; that is, the payment
obligation
and the interest rate are fixed at the time the buyer
enters into
the commitment, but delivery and payment for the
securities
normally take place after the date of the commitment to
purchase.
Firm commitment agreements call for the purchase of
securities at
an agreed-upon price on a specified future date. The
transactions are entered into in order to secure what
is
considered to be an advantageous price and yield to a
Fund and
not for purposes of leveraging the Fund's assets. A
Fund will
maintain in a segregated account with its custodian
cash, U.S.
Government securities, or other high grade debt
securities equal
(on a daily marked-to-market basis) to the amount of
its
commitment to purchase the securities on a when-issued
or firm
commitment basis.
RESTRICTED AND ILLIQUID SECURITIES
Issuers of restricted securities may not be
subject to the
disclosure and other investor protection requirements
that would
be applicable if their securities were publicly traded.
Restricted securities may be sold only in privately
negotiated
transactions or in a public offering with respect to
which a
registration statement is in effect under the
Securities Act of
1933. Where a registration statement is required, a
Fund may be
required to bear all or part of the registration
expenses. There
may be a lapse of time between a Fund's decision to
sell a
restricted or illiquid security and the point at which
the Fund
is permitted or able to sell such security. If, during
such a
period, adverse market conditions were to develop, a
Fund might
obtain a price less favorable than the price that
prevailed when
it decided to sell. Since it is not possible to
predict with
assurance that the market for securities eligible for
resale
under Rule 144A will continue to be liquid, a Fund may
carefully
monitor each of its investments in these securities,
focussing on
such important factors, among others, as valuation,
liquidity and
availability of information. This investment practice
could have
the effect of increasing the level of illiquidity in a
Fund to
the extent that qualified institutional buyers become,
for a
time, uninterested in purchasing these restricted
securities.
BORROWING
All borrowings will be repaid before any
additional
investments are made. Borrowing may exaggerate the
effect on a
Fund's net asset value of any increase or decrease in
the value
of the Fund's portfolio securities. Money borrowed
will be
subject to interest costs (which may include commitment
fees
and/or the cost of maintaining minimum average
balances).
Although the principal of a Fund's borrowings will be
fixed, the
Fund's assets may change in value during the time a
borrowing is
outstanding, thus increasing exposure to capital
risk.
LOANS OF PORTFOLIO SECURITIES
A Fund may lend its investment securities to
brokers,
dealers and financial institutions for the purpose of
realizing
additional income. Loans of securities by a Fund will
be
collateralized by cash, letters of credit, or
securities issued
or guaranteed by the U.S Government or its agencies or
instrumentalities. The collateral will equal (on a
daily marked-
to-market basis) at least 100% of the current market
value of the
loaned securities. The risks in lending portfolio
securities, as
with other extensions of credit, involve a possible
loss of
rights in the collateral should the borrower fail
financially.
In determining whether to lend securities, IMI will
consider all
relevant facts and circumstances, including the
creditworthiness
of the borrower.
INVESTMENT RESTRICTIONS
A Fund's investment objective, as set forth in the
Prospectus under "Investment Objectives and Policies,"
and the
investment restrictions set forth below are fundamental
policies
of the Fund and may not be changed with respect to that
Fund
without the approval of a majority (as defined in the
1940 Act)
of the outstanding voting shares of that Fund. Under
these
restrictions, each of Ivy China Region Fund, Ivy
International
Fund, Ivy Latin America Strategy Fund and Ivy New
Century Fund
may not:
(i) purchase or sell real estate or commodities
and
commodity contracts;
(ii) purchase securities on margin;
(iii) sell securities short;
(iv) participate in an underwriting or selling
group in
connection with the public distribution of
securities
except for its own capital stock;
(v) purchase from or sell to any of its officers
or
trustees, or firms of which any of them are
members or
which they control, any securities (other
than capital
stock of the Fund), but such persons or firms
may act
as brokers for the Fund for customary
commissions to
the extent permitted by the Investment
Company Act of
1940;
(vi) make an investment in securities of companies
in any
one industry (except obligations of domestic
banks or
the U.S. Government, its agencies,
authorities, or
instrumentalities) if such investment would
cause
investments in such industry to exceed 25% of
the
market value of the Fund's total assets at
the time of
such investment; or
(vii) issue senior securities, except as
appropriate to
evidence indebtedness which it is
permitted to
incur, and except to the extent that
shares of the
separate classes or series of the Trust
may be
deemed to be senior securities; provided
that
collateral arrangements with respect to
currency-
related contracts, futures contracts,
options or
other permitted investments, including
deposits of
initial and variation margin, are not
considered
to be the issuance of senior securities
for
purposes of this restriction.
Under the 1940 Act, a Fund is permitted, subject
to each
Fund's investment restrictions, to borrow money only
from banks.
The Trust has no current intention of borrowing amounts
in excess
of 5% of each the Fund's assets. Each of Ivy China
Region Fund,
Ivy International Fund, Ivy Latin America Strategy Fund
and Ivy
New Century Fund will continue to interpret fundamental
investment restriction (i) above to prohibit investment
in real
estate limited partnership interests; this restriction
shall not,
however, prohibit investment in readily marketable
securities of
companies that invest in real estate or interests
therein,
including real estate investment trusts.
Further, as a matter of fundamental policy, each of Ivy
China
Region Fund, Ivy Latin America Strategy Fund and Ivy
New Century
Fund may not:
(i) lend any funds or other assets, except that
this
restriction shall not prohibit (a) the entry
into
repurchase agreements, (b) the purchase of
publicly
distributed bonds, debentures and other
securities of a
similar type, or privately placed municipal
or
corporate bonds, debentures and other
securities of a
type customarily purchased by institutional
investors
or publicly traded in the securities markets,
or (c)
the lending of portfolio securities (provided
that the
loan is secured continuously by collateral
consisting
of U.S. Government securities or cash or cash
equivalents maintained on a daily
marked-to-market
basis in an amount at least equal to the
market value
of the securities loaned).
Further, as a matter of fundamental policy, each of Ivy
Canada
Fund, Ivy China Region Fund, Ivy Global Fund and Ivy
New Century
Fund may not:
(i) purchase securities of any one issuer (except
U.S.
Government securities) if as a result more
than 5% of
the Fund's total assets would be invested in
such
issuer or the Fund would own or hold more
than 10% of
the outstanding voting securities of that
issuer;
provided, however, that up to 25% of the
value of the
Fund's total assets may be invested without
regard to
these limitations.
Further, as a matter of fundamental policy, each of Ivy
Latin
America Strategy Fund and Ivy New Century Fund may not:
(i) borrow money, except for temporary or
emergency
purposes; provided that the Fund maintains
asset
coverage of 300% for all borrowings.
Further, as a matter of fundamental policy, each of Ivy
China
Region Fund and Ivy International Fund may not:
(i) borrow money, except for temporary purposes
where
investment transactions might advantageously
require
it. Any such loan may not be for a period in
excess of
60 days, and the aggregate amount of all
outstanding
loans may not at any time exceed 10% of the
value of
the total assets of the Fund at the time any
such loan
is made.
Further, as a matter of fundamental policy, Ivy Canada
Fund and
Ivy Global Fund may not:
(i) Make investments in securities for the
purpose of
exercising control over or management of the
issuer;
(ii) Participate on a joint or a joint and several
basis in
any trading account in securities. The
"bunching" of
orders of the Fund and of other accounts
under the
investment management of the Manager (in the
case of
Ivy Global Fund) or the investment adviser,
Mackenzie
Financial Corporation (the "Investment
Adviser") (in
the case of Ivy Canada Fund) for the sale or
purchase
of portfolio securities shall not be
considered
participation in a joint securities trading
account;
(iii) Purchase securities on margin, except
such short-
term credits as are necessary for the
clearance of
transactions, but Ivy Global Fund may
make margin
deposits in connection with transactions
in
options, futures and options on futures;
(iv) Make loans, except this restriction shall not
prohibit
(a) the purchase and holding of a portion of
an issue
of publicly distributed debt securities, (b)
the entry
into repurchase agreements with banks or
broker-
dealers, or, with respect to Ivy Global Fund
only, (c)
the lending of the Fund's portfolio
securities in
accordance with applicable guidelines
established by
the Securities and Exchange Commission (the
"SEC") and
any guidelines established by the Trust's
Trustees;
(v) Borrow amounts in excess of 10% of its total
assets,
taken at the lower of cost or market value,
and then
only from banks as a temporary measure for
extraordinary or emergency purposes. All
borrowings
will be repaid before any additional
investments are
made;
(vi) Purchase the securities of issuers conducting
their
principal business activities in the same
industry if
immediately after such purchase the value of
the Fund's
investments in such industry would exceed 25%
of the
value of the total assets of the Fund;
(vii) Act as an underwriter of securities,
except to the
extent that, in connection with the sale
of
securities, it may be deemed to be an
underwriter
under applicable securities laws;
(viii) Purchase any security if, as a result,
the Fund
would then have more than 5% of its
total assets
(taken at current value) invested in
securities
restricted as to disposition under the
Federal
securities laws; or
(ix) Issue senior securities, except insofar as
the Fund may
be deemed to have issued a senior security in
connection with any repurchase agreement or
any
permitted borrowing.
Further, as a matter of fundamental policy, Ivy Global
Fund may
not:
(i) Invest in real estate, real estate mortgage
loans,
commodities or interests in oil, gas and/or
mineral
exploration or development programs, although
(a) the
Fund may purchase and sell marketable
securities of
issuers which are secured by real estate, (b)
the Fund
may purchase and sell securities of issuers
which
invest or deal in real estate, (c) the Fund
may enter
into forward foreign currency contracts as
described in
the Fund's prospectus, and (d) the Fund may
write or
buy puts, calls, straddles or spreads and may
invest in
commodity futures contracts and options on
futures
contracts; or
(ii) purchase securities of another investment
company,
except in connection with a merger,
consolidation,
reorganization or acquisition of assets, and
except
that the Fund may invest in securities of
other
investment companies subject to the
restrictions in
Section 12(d)(1) of the Investment Company
Act of 1940
(the "1940 Act").
Further, as a matter of fundamental policy, Ivy
International
Fund may not:
(i) lend any funds or other assets, except that
this
restriction shall not prohibit (a) the entry
into
repurchase agreements or (b) the purchase of
publicly
distributed bonds, debentures and other
securities of a
similar type, or privately placed municipal
or
corporate bonds, debentures and other
securities of a
type customarily purchased by institutional
investors
or publicly traded in the securities markets;
(ii) invest more than 5% of the value of its total
assets in
the securities of any one issuer (except
obligations of
domestic banks or the U.S. Government, its
agencies,
authorities and instrumentalities); or
(iii) purchase the securities of any other open-end
investment company, except as part of a plan
of merger
or consolidation.
Further, as a matter of fundamental policy, Ivy Canada
Fund may
not:
(i) Write or buy puts, calls, straddles or
spreads; invest
in real estate, real estate mortgage loans,
commodities, commodity futures contracts or
interests
in oil, gas and/or mineral exploration or
development
programs, although (a) the Fund may purchase
and sell
marketable securities of issuers which are
secured by
real estate, (b) the Fund may purchase and
sell
securities of issuers which invest or deal in
real
estate, and (c) the Fund may enter into
forward foreign
currency contracts as described in the Fund's
prospectus.
ADDITIONAL RESTRICTIONS
Unless otherwise indicated, each Fund has adopted
the
following additional restrictions, which are not
fundamental and
which may be changed without shareholder approval, to
the extent
permitted by applicable law, regulation or regulatory
policy.
Under these restrictions, each Fund may not:
(i) purchase any security if, as a result, the
Fund would
then have more than 5% of its total assets
(taken at
current value) invested in securities of
companies
(including predecessors) less than three
years old.
Further, as a matter of non-fundamental policy, each of
Ivy China
Region Fund, Ivy International Fund, Ivy Latin America
Strategy
Fund and Ivy New Century Fund may not:
(i) invest in oil, gas or other mineral leases or
exploration or development programs;
(ii) engage in the purchase and sale of puts,
calls,
straddles or spreads (except to the extent
described in
the Prospectus and in this SAI);
(iii) invest in companies for the purpose of
exercising
control of management; or
(iv) invest more than 5% of its total assets in
warrants,
valued at the lower of cost or market, or
more than 2%
of its total assets in warrants, so valued,
which are
not listed on either the New York or American
Stock
Exchanges.
Further, as a matter of non-fundamental policy, each of
Ivy China
Region Fund, Ivy Latin America Strategy Fund and Ivy
New Century
Fund may not:
(i) purchase or retain securities of any company
if
officers and Trustees of the Trust and
officers and
directors of Ivy Management, Inc., MIMI or
Mackenzie
Financial Corporation who individually own
more than
1/2 of 1% of the securities of that company
together
own beneficially more than 5% of such
securities;
(ii) purchase securities of other investment
companies,
except in connection with a merger,
consolidation or
sale of assets, and except that it may
purchase shares
of other investment companies subject to such
restrictions as may be imposed by the
Investment
Company Act of 1940 and rules thereunder or
by any
state in which its shares are registered; or
(iii) invest more than 15% of its net assets taken
at market
value at the time of investment in "illiquid
securities", provided, however, that the Fund
will not
invest more than 10% of its total assets in
securities
of issuers that are restricted from selling
to the
public without registration under the
Securities act of
1933. Illiquid securities may include
securities
subject to legal or contractual restrictions
on resale
(including private placements), repurchase
agreements
maturing in more than seven days, certain
options
traded over the counter that the Fund has
purchased,
securities being used to cover certain
options that a
fund has written, securities for which market
quotations are not readily available, or
other
securities which legally or in IMI's opinion,
subject
to the Board's supervision, may be deemed
illiquid, but
shall not include any instrument that, due to
the
existence of a trading market, to the Fund's
compliance
with certain conditions intended to provide
liquidity,
or to other factors, is liquid.
Further, as a matter of non-fundamental policy, each of
Ivy
Canada Fund and Ivy Global Fund may not:
(i) purchase or sell real estate limited
partnership
interests; or
(ii) purchase or sell interests in oil, gas or
mineral
leases (other than securities of companies
that invest
in or sponsor such programs).
Further, as a matter of non-fundamental policy, Ivy
Global Fund
may not:
(i) purchase or retain securities of any company
if
officers and Trustees of the Trust and
officers and
directors of the Manager (and the investment
adviser
with respect to Ivy Canada Fund) who
individually own
more than 1/2 of 1% of the securities of that
company,
together own beneficially more than 5% of
such
securities.
Further, as a matter of non-fundamental policy, Ivy
Latin America
Strategy Fund may not:
(i) purchase or retain securities of an issuer
if, with
respect to 75% of the Fund's total assets,
such
purchase would result in more than 10% of the
outstanding voting securities of such issuer
being held
by the Fund.
Further, as a matter of non-fundamental policy, Ivy
International
Fund may not:
(i) purchase any security which it is restricted
from
selling to the public without registration
under the
Securities Act of 1933.
In addition to the above restrictions, so long as
it remains
a policy of the California Department of Corporations,
each of
Ivy China Region Fund, Ivy Global Fund, Ivy
International Fund,
Ivy Latin America Strategy Fund and Ivy New Century
Fund may
purchase and sell OTC options on stock indices if (a)
exchange-
traded options are not available, (b) an active OTC
market exists
that establishes pricing and liquidity, and (c) the
broker-
dealers with whom each Fund enters into such
transactions have a
minimum net worth of $20 million. Moreover, so long as
it
remains a restriction of the Ohio Division of
Securities, each
Fund will treat securities eligible for resale under
Rule 144A of
the Securities Act of 1933 as subject to the Funds'
restriction
on investing in restricted securities, unless the Board
determines that such securities are liquid. Further,
with
respect to the nonfundamental investment restrictions
for Ivy
Canada Fund, Ivy Global Fund, Ivy Latin America
Strategy Fund and
Ivy New Century Fund relating to investing in the
securities of
unseasoned issuers, purchasing the securities of other
investment
companies and investing in illiquid securities, each
the Fund
will notify shareholders 30 days before changing its
investment
policies with respect to any of the investment
practices
described therein. Finally, as a matter of
nonfundamental
policy, each of Ivy Canada Fund and Ivy Global Fund may
not make
short sales of securities or maintain a short position.
In addition, as a matter of nonfundamental policy,
each Fund
may not purchase securities of any open-end investment
company,
or securities of closed-end companies, except by
purchase in the
open market where no commission or profit to a sponsor
or dealer
results from such purchases, or except when such
purchase is part
of a merger, consolidation, reorganization or sale of
assets, and
except that the Fund may purchase shares of other
investment
companies subject to such restrictions as may be
imposed by the
1940 Act and rules thereunder or by any state in which
shares of
the Fund are registered.
Whenever an investment objective, policy or
restriction set
forth in the Prospectus or this SAI states a maximum
percentage
of assets that may be invested in any security or other
asset or
describes a policy regarding quality standards, such
percentage
limitation or standard shall, unless otherwise
indicated, apply
to the particular Fund only at the time a transaction
is entered
into. Accordingly, if a percentage limitation is
adhered to at
the time of investment, a later increase or decrease in
the
percentage which results from circumstances not
involving any
affirmative action by a Fund, such as a change in
market
conditions or a change in the Fund's asset level or
other
circumstances beyond the Fund's control, will not be
considered a
violation.
ADDITIONAL RIGHTS AND PRIVILEGES
The Trust offers to investors, and (except as
noted below)
bears the cost of providing, the following rights and
privileges.
The Trust reserves the right to amend or terminate any
one or
more of such rights and privileges. Notice of
amendments to or
terminations of rights and privileges will be provided
to
shareholders in accordance with applicable law.
Certain of the rights and privileges described
below
reference other funds distributed by MIFDI, which funds
are not
described in this SAI. These funds are: Ivy Growth
Fund, Ivy
Growth with Income Fund, Ivy Emerging Growth Fund, Ivy
International Bond Fund, Ivy Bond Fund, Ivy Short-Term
Bond Fund
and Ivy Money Market Fund, the other seven series of
the Trust;
and Mackenzie California Municipal Fund, Mackenzie
Florida
Limited Term Municipal Fund, Mackenzie Limited Term
Municipal
Fund, Mackenzie National Municipal Fund and Mackenzie
New York
Municipal Fund, the five series of Mackenzie Series
Trust
(collectively, with the Funds, the "Ivy Mackenzie
Funds").
Investors should obtain a current prospectus before
exercising
any right or privilege that may relate to these
funds.
AUTOMATIC INVESTMENT METHOD
The Automatic Investment Method is available for
all classes
of shares, other than Class I. The minimum initial and
subsequent investment pursuant to this plan is $50 per
month,
except in the case of a tax qualified retirement plan
for which
the minimum initial and subsequent investment is $25
per month.
The Automatic Investment Method may be discontinued at
any time
upon receipt by The Mackenzie Ivy Investor Services
Corp.
("MIISC") of telephone instructions or written notice
to MIISC
from the investor. See "Automatic Investment Method"
in the
Account Application.
EXCHANGE OF SHARES
As described in the Prospectus, shareholders of
each Fund
have an exchange privilege with certain other Ivy and
Mackenzie
Funds. Before effecting an exchange, shareholders of
each Fund
should obtain and read the currently effective
prospectus for the
Ivy or Mackenzie Fund into which the exchange is to be
made.
INITIAL SALES CHARGE SHARES. Class A shareholders
may
exchange their Class A shares ("Class A shares") for
Class A
shares of another Ivy or Mackenzie Fund (or for shares
of another
Ivy or Mackenzie 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.
(The
additional sales charge will be waived for outstanding
Class A
shares that have been invested for a period of 12
months or
longer.) Class A shareholders may also exchange their
Class A
shares for Class A shares of Ivy Money Market Fund (no
initial
sales charge will be assessed at the time of such an
exchange).
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 Ivy or Mackenzie Fund (or for shares of
another Ivy or
Mackenzie 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
any 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
that Fund's CDSC schedule (or period) following an
exchange if
such schedule is higher (or such period is longer) than
the CDSC
schedule (or period), if any, applicable to the new
Class A
shares.
Class A shares of a Fund acquired through an
exchange of
Class A shares of another Ivy or Mackenzie Fund subject
to a CDSC
will be subject to that Fund's CDSC schedule (or
period) if such
schedule is higher (or such period is longer) than the
CDSC
schedule (or period) applicable to the Ivy or Mackenzie
Fund from
which the exchange was made.
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 Ivy or Mackenzie 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 a Fund exercising the exchange
privilege will
continue to be subject to that Fund's CDSC schedule (or
period)
following an exchange if such schedule is higher (or
such period
is longer) than the CDSC schedule (or period)
applicable to the
new Class B shares.
Class B shares of a Fund acquired through an
exchange of
Class B shares of another Ivy or Mackenzie Fund will be
subject
to that Fund's CDSC schedule (or period) if such
schedule is
higher (or such period is longer) than the CDSC
schedule (or
period) applicable to the Ivy or Mackenzie Fund from
which the
exchange was made.
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 CDSC table ("Table 1") applies to
Class B
shares of Ivy Global Fund, Ivy Growth Fund, Ivy Growth
with
Income Fund, Ivy Emerging Growth Fund, Ivy
International Fund,
Ivy China Region Fund, Ivy Latin America Strategy Fund,
Ivy New
Century Fund, Ivy International Bond Fund, Ivy Bond
Fund, Ivy
Canada Fund, Mackenzie California Municipal Fund,
Mackenzie
National Municipal Fund, Mackenzie New York Municipal
Fund
("Table 1 Funds"):
CONTINGENT DEFERRED
SALES
CHARGE AS A
PERCENTAGE OF
DOLLAR AMOUNT
SUBJECT TO
YEAR SINCE PURCHASE CHARGE
First 5%
Second 4%
Third 3%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh and thereafter 0%
The following CDSC table ("Table 2") applies to
Class B
shares of Ivy Short-Term Bond Fund, Mackenzie Florida
Limited
Term Municipal Fund and Mackenzie Limited Term
Municipal Fund
("Table 2 Funds"):
CONTINGENT DEFERRED
SALES
CHARGE AS A
PERCENTAGE OF
DOLLAR AMOUNT
SUBJECT TO
YEAR SINCE PURCHASE CHARGE
First 3%
Second 2.5%
Third 2%
Fourth 1.5%
Fifth 1%
Sixth and thereafter 0%
The CDSC schedule for Table 1 Funds is higher (and
the
period is longer) than the CDSC schedule (and period)
for Table 2
Funds.
If a shareholder exchanges Class B shares of a
Table 1 Fund
for Class B shares of a Table 2 Fund, Table 1 will
continue to
apply to the Class B shares following the exchange.
For example,
an investor may decide to exchange Class B shares of a
Table 1
Fund ("outstanding Class B shares") for Class B shares
of a Table
2 Fund ("new Class B shares") after having held the
outstanding
Class B shares for two years. The 4% CDSC that
generally would
apply to a redemption of outstanding Class B shares
held for two
years would not be deducted at the time of the
exchange. If,
three years later, the investor redeems the new Class B
shares, a
2% CDSC will be assessed upon the redemption because by
"tacking"
the two year holding period of the outstanding Class B
shares
onto the three year holding period of the new Class B
shares, the
investor will be deemed to have held the new Class B
shares for
five years.
If a shareholder exchanges Class B shares of a
Table 2 Fund
for Class B shares of a Table 1 Fund, Table 1 will
apply to the
Class B shares following the exchange. For example, an
investor
may decide to exchange Class B shares of a Table 2 Fund
("outstanding Class B shares") for Class B shares of a
Table 1
Fund ("new Class B shares") after having held the
outstanding
Class B shares for two years. The 2.5% CDSC that
generally would
apply to a redemption of outstanding Class B shares
held for two
years would not be deducted at the time of the
exchange. If,
three years later, the investor redeems the new Class B
shares, a
2% CDSC will be assessed upon the redemption because by
"tacking"
the two year holding period of the outstanding Class B
shares
onto the three year holding period of the new Class B
shares, the
investor will be deemed to have held the new Class B
shares for
five years.
CLASS C SHARES. Class C shareholders may exchange
their
Class C shares ("outstanding Class C shares") for Class
C shares
of another Ivy or Mackenzie 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 SHARES. Class I shareholders may exchange
their
Class I shares for Class I shares of another Ivy or
Mackenzie
Fund on the basis of the relative net asset value per
Class I
share.
The minimum amount which may be exchanged into a
fund of the
Ivy Mackenzie Funds in which shares are not already
held is
$1,000 ($5,000,000 in the case of Class I of Ivy Global
Fund).
No exchange out of a Fund (other than by a complete
exchange of
all the shares of the Fund) may be made if it would
reduce the
shareholder's interest in that Fund to less than $1,000
($5,000,000 in the case of Class I of Ivy Global Fund).
Exchanges are available only in states where the
exchange can be
legally made.
Each exchange will be made on the basis of the
relative net
asset values per share of each fund of the Ivy
Mackenzie Funds
next computed following receipt of telephone
instructions by
MIISC or a properly executed request by MIISC.
Exchanges,
whether written or telephonic, must be received by
MIISC 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. This
exchange privilege may be modified or terminated at any
time,
upon at least 60 days' notice when such noticed is
required by
SEC rules. See "Redemptions."
An exchange of shares in any fund of the Ivy
Mackenzie Funds
for shares in another fund will result in a taxable
gain or loss.
Generally, any such taxable gain or loss 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 each Fund 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 a
Fund or
within 90 days of the initial purchase, in which case
the Letter
of Intent will be back dated. A shareholder may
include the
value (at the applicable offering price) of all Class A
shares of
Ivy Global Fund, Ivy Growth Fund, Ivy Growth with
Income Fund,
Ivy Emerging Growth Fund, Ivy International Bond Fund,
Ivy Short-
Term Bond Fund, Ivy Bond Fund, Mackenzie National
Municipal Fund,
Mackenzie Florida Limited Term Municipal Fund,
Mackenzie Limited
Term Municipal Fund, Mackenzie California Municipal
Fund and
Mackenzie New York Municipal Fund (and shares that have
been
exchanged into Ivy Money Market Fund from any of the
other funds
in the Ivy Mackenzie Funds) held of record by him or
her as of
the date of his or her Letter of Intent as an
accumulation credit
toward the completion of such Letter. During the term
of the
Letter of Intent, the Transfer Agent 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 MIFDI
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
thereof before
signing.
RETIREMENT PLANS
Shares may be purchased in connection with several
types of
tax-deferred retirement plans. Shares of more than one
fund
distributed by MIFDI may be purchased in a single
application
establishing a single plan account, and shares held in
such an
account may be exchanged among the funds in the Ivy
Mackenzie
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 account
For shareholders whose retirement accounts are
diversified across
several funds of the Ivy Mackenzie Funds, the annual
maintenance
fee will be limited to not more than $20.
The following discussion describes 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 the
Trust 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 IMI, who may
impose a
charge for establishing the account. Individuals
should consult
their tax advisers before investing IRA assets in a
Fund that
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. However, if one spouse has (or elects to be
treated as
having) no earned income for IRA purposes for a year,
the other
spouse may contribute to an IRA on his or her behalf.
In such a
case, the working spouse may contribute up to the
lesser of
$2,250 or 100% or his or her compensation or earned
income for
the year to IRAs for both spouses, provided that no
more than
$2,000 is contributed to the IRA of one spouse.
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 (or 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, a
full deduction is only available if he or she has
adjusted gross
income that is less than a specified level ($40,000 for
married
couples filing a joint return, $25,000 for single
individuals,
and $0 for a married individual filing a separate
return). The
deduction is phased out ratably for active participants
with
adjusted gross income between certain levels ($40,000
and $50,000
for married individuals filing a joint return, $25,000
and
$35,000 for single individuals, and $0 and $10,000 for
married
individuals filing separate returns). Individuals who
are active
participants with income above the specified phase-out
level may
not deduct their IRA contributions. 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. 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
benefi-
ciary, if any, or rolled over into another IRA.
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
distribu-
tions will result in the imposition of a 50%
non-deductible
penalty tax. Extremely large distributions in any one
year from
an IRA (or from an IRA and other retirement plans) may
also
result in a penalty tax.
QUALIFIED PLANS: For those self-employed
individuals who
wish to purchase shares of one or more of the funds in
the Ivy
Mackenzie Funds through a qualified retirement plan, a
Custodial
Agreement and a Retirement Plan are available from
MIISC. 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 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
Internal Revenue Code of 1986, as amended (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 Trust in
conjunction
with such an arrangement. The sales charge for
purchases of less
than $10,000 of Class A shares is set forth under
"Retirement
Plans" in the Prospectus. Sales charges for purchases
of $10,000
or more of Class A shares are the same as those set
forth under
"Initial Sales Charge Alternative -- Class A Shares" in
the
Prospectus. The special application for a 403(b)(7)
Account is
available from Mackenzie Investment Management Inc.
("MIMI").
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.
REINVESTMENT PRIVILEGE
Investors 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
MIISC 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."
RIGHTS OF ACCUMULATION
A scale of reduced sales charges applies to any
investment
of $50,000 or more in Class A shares of a Fund. 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). It is
also
applicable to current purchases of all of the funds in
the Ivy
Mackenzie Funds (except Ivy Money Market Fund) by any
of the
persons enumerated above, where the aggregate quantity
of Class A
shares of Ivy Global Fund, Ivy Growth Fund, Ivy Growth
with
Income Fund, Ivy Emerging Growth Fund, Ivy China Region
Fund, Ivy
Latin America Strategy Fund, Ivy New Century Fund, Ivy
International Bond Fund, Ivy International Fund, Ivy
Bond Fund,
Ivy Short-Term Bond Fund, Ivy Canada Fund, Mackenzie
National
Municipal Fund, Mackenzie California Municipal Fund,
Mackenzie
Florida Limited Term Municipal Fund, Mackenzie Limited
Term
Municipal Fund and Mackenzie New York Municipal Fund
(and shares
that have been exchanged into Ivy Money Market Fund
from any of
the other funds in the Ivy Mackenzie Funds) and of any
other
investment company distributed by MIFDI, 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 $50,000 or more for Ivy Global
Fund, Ivy
Growth Fund, Ivy Growth with Income Fund, Ivy Emerging
Growth
Fund, Ivy International Fund, Ivy China Region Fund,
Ivy Latin
America Strategy Fund, Ivy New Century Fund and Ivy
Canada Fund;
$100,000 or more for International Bond Fund, Ivy Bond
Fund,
Mackenzie National Municipal Fund, Mackenzie California
Municipal
Fund and Mackenzie New York Municipal Fund; or $25,000
or more
for Mackenzie Florida Limited Term Municipal Fund and
Mackenzie
Limited Term Municipal Fund; or $1,000,000 or more for
Ivy Short-
Term Bond Fund.
At the time an investment takes place, MIISC 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 (except shareholders with accounts
in Class I
of Ivy Global Fund) may establish a Systematic
Withdrawal Plan
(the "Withdrawal Plan") by telephone instructions to
MIISC or by
delivery to MIISC of a written election to so redeem,
accompanied
by a surrender to MIISC of all share certificates then
outstanding in the name of such shareholder, properly
endorsed by
him or her. To be eligible (with respect to Ivy Global
Fund and
Ivy Canada Fund only), a shareholder must have at least
$5,000 in
the shareholder's account. A Withdrawal Plan may not
be
established if the investor is currently participating
in the
Automatic Investment Method. A Withdrawal Plan may
involve the
use of principal and, to the extent that it does,
depending on
the amount withdrawn, the investor's principal may be
depleted.
A redemption under a Withdrawal Plan is a taxable
event.
Investors contemplating participation 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 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
MIISC. If all shares held by the investor are
liquidated at any
time, participation in the Withdrawal Plan will
terminate
automatically. The Trust or MIISC may terminate the
Withdrawal
Plan option at any time after reasonable notice to
shareholders.
GROUP SYSTEMATIC INVESTMENT PROGRAM
Shares of each of Ivy China Region Fund, Ivy
International
Fund, Ivy Latin America Strategy Fund and Ivy New
Century Fund
may be purchased in connection with investment programs
established by employee or other groups using
systematic payroll
deductions or other systematic payment arrangements.
The Trust
does not itself organize, offer or administer any such
programs.
However, it 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 a Fund 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
Trust
reserves the right to refuse any purchase or suspend
the offering
of shares in connection with group systematic
investment programs
at any time and to restrict the offering of shareholder
privileges, such as Check writing, Simplified
Redemptions and
other optional privileges, as described in the
Prospectus, 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 Trust and IMI each currently charge a
maintenance
fee of $3.00 (or portion thereof) for each twelve-month
period
(or portion thereof) the account is maintained. The
Trust 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
Trust
reserves the right to change these fees from time to
time without
advance notice.
BROKERAGE ALLOCATION
Subject to the overall supervision of the
President and the
Board, IMI (or MFC with respect to Ivy Canada Fund)
places orders
for the purchase and sale of each Fund's portfolio
securities.
With respect to Ivy International Fund, Northern Cross
Investments Limited ("Northern Cross," or the
"Subadviser") also
places orders for the purchase and sale of the Fund's
portfolio
securities. All portfolio transactions are effected at
the best
price and execution obtainable. Purchases and sales of
debt
securities are usually principal transactions and
therefore,
brokerage commissions are usually not required to be
paid by the
particular Fund for such purchases and sales, although
the price
paid generally includes undisclosed compensation to the
dealer.
The prices paid to underwriters of newly-issued
securities
usually include a concession paid by the issuer to the
underwriter, and purchases of after-market securities
from
dealers normally reflect the spread between the bid and
asked
prices. In connection with OTC transactions, IMI (or
MFC for Ivy
Canada Fund and the Subadviser for Ivy International
Fund)
attempts to deal directly with the principal market
makers,
except in those circumstances where IMI (or MFC for Ivy
Canada
Fund and the Subadviser for Ivy International Fund)
believes that
a better price and execution are available
elsewhere.
IMI (or MFC for Ivy Canada Fund and the Subadviser
for Ivy
International Fund) 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. Commissions to be charged and
the
rendering of investment services, including
statistical,
research, and counseling services by brokerage firms,
are factors
to be considered in the placing of brokerage business.
The types
of research services provided by brokers may include
general
economic and industry data, and information on
securities of
specific companies. Research services furnished by
brokers
through whom the Trust effects securities transactions
may be
used by IMI (or MFC for Ivy Canada Fund and the
Subadviser for
Ivy International Fund) in servicing all of its
accounts. In
addition, not all of these services may be used by IMI
(or MFC
for Ivy Canada Fund and the Subadviser for Ivy
International
Fund) in connection with the services it provides to a
particular
Fund or the Trust. IMI (or MFC for Ivy Canada Fund and
the
Subadviser for Ivy International Fund) may consider
sales of
shares of a Fund as a factor in the selection of
broker-dealers
and may select broker-dealers who provide it with
research
services. IMI (or MFC for Ivy Canada Fund and the
Subadviser for
Ivy International Fund) will not, however, execute
brokerage
transactions other than at the best price and
execution.
With respect to Ivy International Fund, when a
security
proposed to be purchased or sold for the Fund is also
to be
purchased or sold at the same time for other accounts
managed by
the Subadviser, purchases or sales are effected on a
pro rata,
rotating or other equitable basis so as to avoid any
one account
being preferred over any other account.
During the fiscal years ended June 30, 1993 and
1994, during
the six-month period ended December 31, 1994 and during
the
fiscal year ended December 31, 1995, Ivy Canada Fund
paid
brokerage commissions of $24,925, $202,849, $98,390 and
$79,464,
respectively.
During the period from October 23, 1993
(commencement of
operations) to December 31, 1993, Ivy China Region Fund
paid
brokerage commissions of $43,919. During the fiscal
years ended
December 31, 1994 and December 31, 1995, Ivy China
Region Fund
paid brokerage commissions of $26,579 and $70,459,
respectively.
During the fiscal years ended June 30, 1993 and
1994, during
the six-month period ended December 31, 1994, and
during the
fiscal year ended December 31, 1995, Ivy Global Fund
paid
brokerage commissions of $31,789, $58,828, $43,367 and
$96,124,
respectively.
During the fiscal years ended December 31, 1993,
1994 and
1995, Ivy International Fund paid brokerage commissions
of
$98,756, $139,426 and $715,524, respectively.
During the period from November 1, 1994
(commencement of
operations) to December 31, 1994, Ivy Latin America
Strategy Fund
and Ivy New Century Fund each paid brokerage
commissions of
$5,491 and $2,611, respectively. During the fiscal
year ended
December 31, 1995, Ivy Latin America Strategy Fund and
Ivy New
Century Fund each paid brokerage commissions of $17,184
and
$15,236, respectively.
Each Fund, with the exception of Ivy Canada Fund
and Ivy
Global Fund, may, under some circumstances, accept
securities in
lieu of cash as payment for Fund shares. Each of these
Funds
will consider accepting securities only to increase its
holdings
in a portfolio security or to take a new portfolio
position in a
security that IMI (and the Subadviser for Ivy
International Fund)
deems to be a desirable investment for each the Fund.
While no
minimum has been established, it is expected that each
the Fund
will not accept securities having an aggregate value of
less than
$1 million. The Trust may reject in whole or in part
any or all
offers to pay for the Fund shares with securities and
may
discontinue accepting securities as payment for the
Fund shares
at any time without notice. The Trust will value
accepted
securities in the manner and at the same time provided
for
valuing portfolio securities of each the Fund, and the
Fund
shares will be sold for net asset value determined at
the same
time the accepted securities are valued. The Trust
will accept
only securities which are delivered in proper form and
will not
accept securities subject to legal restrictions on
transfer. The
acceptance of securities by the Trust must comply with
the
applicable laws of certain states.
TRUSTEES AND OFFICERS
The Trustees and Executive Officers of the Trust,
their
business addresses and principal occupations during the
past five
years are:
POSITION
WITH THE BUSINESS
AFFILIATIONS
NAME, ADDRESS, AGE TRUST AND PRINCIPAL
OCCUPATIONS
John S. Anderegg, Jr. Trustee Chairman,
Dynamics
60 Concord Street Research Corp.
instruments
Wilmington, MA 01887 and controls);
Director,
Age: 71 Burr-Brown Corp.
(operational
amplifiers);
Director,
Metritage
Incorporated
(level
measuring
instruments);
Trustee of
Mackenzie Series
Trust
(1992-present).
Paul H. Broyhill Trustee Chairman, BMC
Fund, Inc.
800 Hickory Blvd. (1983-present);
Chairman,
Golfview Park Broyhill Family
Foundation,
Lenoir, NC 28645 Inc.
(1983-Present);
Age: 71 Chairman and
President,
Broyhill
Investments, Inc.
(1983-present);
Chairman,
Broyhill Timber
Resources
(1983-present);
Management
of a personal
portfolio of
fixed-income and
equity
investments
(1983-present);
Trustee of
Mackenzie Series
Trust
(1988-present);
Director of The
Mackenzie
Funds Inc.
(1988-1995).
Stanley Channick Trustee President, The
Whitestone
11 Bala Avenue Corporation
(insurance
Bala Cynwyd, PA 19004 agency);
President, Scott
Age: 71 Management
Company
(administrative
services
for insurance
companies);
President, The
Channick
Group
(consultants to
insurance
companies and
national trade
associations);
Trustee of
Ivy Fund
(1984-1993);
Director of The
Mackenzie
Funds Inc.
(1994-1995).
Frank W. DeFriece, Jr. Trustee Director, Manager
and Vice
322 Seventh Street President,
Massengill-
Bristol, TN 37620-2218 DeFriece
Foundation
Age: 74 (charitable
organization)
(1950-present);
Trustee and
Second Vice
Chairman, East
Tennessee Public
Communications
Corp. (WSJK-
TV)
(1984-present); Trustee
of Mackenzie
Series Trust
(1985-present);
Director of
The Mackenzie
Funds Inc.
(1987-1995).
Roy J. Glauber Trustee Mallinckrodt
Professor of
Physics, Harvard
Age: 70 University (since
1974);
Trustee of Ivy
Fund (1961-
1991); Trustee of
Mackenzie
Series Trust
(1994-
present).
Michael G. Landry Trustee President,
Chairman and
700 South Federal Hwy. and Director of
Mackenzie
Suite 300 President
Investment
Boca Raton, FL 33432 Management Inc.
Age: 49 (1987-present);
President
[*Deemed to be an and Director of
"interested person" Ivy Management,
Inc. (1992-
of the Trust, as present);
Chairman and
defined under the Director of
Mackenzie Ivy
1940 Act.] Investor Services
Corp.
(1993-present);
Director
and President of
Mackenzie
Ivy Funds
Distribution,
Inc. (1993-1994);
Chairman
and Director of
Mackenzie
Ivy Funds
Distribution,
Inc.
(1994-present);
Director and
President of
The Mackenzie
Funds Inc.
(1987-1995);
Trustee and
President of
Mackenzie
Series Trust
(1987-
present).
Michael R. Peers Trustee Chairman of the
Board,
c/o Brattle, Inc. and Ivy Management,
Inc.
176 Federal Street, Chairman (1984-1991);
Chairman
5th Floor of the of the Board, Ivy
Fund
Boston, MA 02110 Board (1974-present);
Private
Age: 66 Investor.
[*Deemed to be an
"interested person"
of the Trust, as
defined under the
1940 Act.]
Joseph G. Rosenthal Trustee Chartered
Accountant
110 Jardin Drive (1958-present);
Trustee
Unit #12 of Mackenzie
Series
Concord, Ontario Canada Trust
(1985-present);
L4K 2T7 Director of The
Mackenzie
Age: 61 Funds Inc.
(1987-1995).
Richard N. Silverman Trustee Formerly
President,
18 Bonnybrook Road Hy-Sil
Manufacturing
Waban, MA 02168 Company, a
division of
Age: 71 Van Leer, U.S.A.,
Inc.
(gift packaging
materials
and metalized
film
products);
Formerly
Director, Waters
Manufacturing Co.
(manufacturer of
electronic
parts); Director,
Panorama
Television
Network.
J. Brendan Swan Trustee President,
Airspray
4701 North Federal Hwy. International,
Inc.;
Suite 465 Joint Managing
Director,
Pompano Beach, FL 33064 Airspray
International
Age: 65 B.V. (an
environmentally
sensitive
packaging
company);
Director, The
Mackenzie Funds
Inc. (1992-
1995); Trustee of
Mackenzie
Series Trust
(1992-
present).
Keith J. Carlson Vice Senior Vice
President
700 South Federal Hwy. President and Director of
Mackenzie
Suite 300 Investment
Management,
Boca Raton, FL 33432 Inc.
(1994-present);
Age: 39 Senior Vice
President,
Secretary and
Treasurer of
Mackenzie
Investment
Management Inc.
(1985-
1994); Senior
Vice
President and
Director of
Ivy Management,
Inc. (1994-
present); Senior
Vice
President,
Treasurer and
Director of Ivy
Management,
Inc. (1992-1994);
Vice
President of The
Mackenzie
Funds Inc.
(1987-1995);
President and
Director of
Mackenzie Ivy
Investor
Services Corp.
(1993-
present); Vice
President of
Mackenzie Series
Trust
(1994-present);
Treasurer
of Mackenzie
Series Trust
(1985-1994);
President and
Director of
Mackenzie Ivy
Funds
Distribution, Inc.
(1994-present);
Executive
Vice President
and Director
of Mackenzie Ivy
Funds
Distribution,
Inc. (1993-
1994).
C. William Ferris Secretary/ Senior Vice
President,
700 South Federal Hwy. Treasurer
Secretary/Treasurer
Suite 300 and Director of
Boca Raton, FL 33432 Mackenzie
Investment
Age: 51 Management Inc.
(1994-
present); Senior
Vice
President,
Finance and
Administration/Compliance
Officer of
Mackenzie
Investment
Management Inc.
(1989-1994);
Senior Vice
President,
Secretary/
Treasurer and
Clerk of Ivy
Management, Inc.
(1994-
present); Senior
Vice
President,
Finance and
Administration/Compliance
Officer of Ivy
Management,
Inc. (1992-1994);
Senior
Vice President,
Secretary/
Treasurer and
Clerk of Ivy
Management, Inc.
(1989-
1994); Senior
Vice
President,
Secretary/
Treasurer of
Mackenzie Ivy
Funds
Distribution, Inc.
(1994-present);
Secretary/
Treasurer and
Director of
Mackenzie Ivy
Funds
Distribution,
Inc. (1993-
1994);
Secretary/Treasurer
and Director of
Mackenzie
Ivy Investor
Services Corp.
(1993-present);
Secretary/
Treasurer of The
Mackenzie
Funds Inc.
(1993-1995);
Secretary/Treasurer of
Mackenzie Series
Trust
(1994-present).
PERSONAL INVESTMENTS BY EMPLOYEES OF IMI
Employees of IMI are permitted to make personal
securities
transactions, subject to requirements and restrictions
set forth
in IMI's Code of Ethics. The Code of Ethics contains
provisions
and requirements 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, 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.
Additional restrictions apply to portfolio managers,
traders,
research analysts and others involved in the investment
advisory
process. Exceptions to these and other provisions of
the Code of
Ethics may be granted in particular circumstances after
review by
appropriate personnel.
COMPENSATION TABLE
IVY FUND
(FISCAL YEAR ENDED DECEMBER 31, 1995)
TOTAL
PENSION OR
COMPENSA-
RETIREMENT
TION FROM
BENEFITS ESTIMATED
TRUST AND
AGGREGATE ACCRUED AS ANNUAL
FUND COM-
COMPENSA- PART OF BENEFITS
PLEX PAID
NAME, TION FUND UPON
TO
POSITION FROM TRUST EXPENSES RETIREMENT
TRUSTEES
John S. 7,112 N/A N/A
8,000
Anderegg, Jr.
(Trustee)
Paul H. 7,112 N/A N/A
8,000
Broyhill
(Trustee)
Stanley -0- N/A N/A
8,000
Channick[*]
(Trustee)
Frank W. 7,112 N/A N/A
8,000
DeFriece, Jr.
(Trustee)
Roy J. -0- N/A N/A
8,000
Glauber[*]
(Trustee)
Michael G. -0- N/A N/A
-0-
Landry
(Trustee and
President)
Michael R. -0- N/A N/A
-0-
Peers
(Trustee and
Chairman of
the Board)
Joseph G. 7,112 N/A N/A
8,000
Rosenthal
(Trustee)
Richard N. 8,000 N/A N/A
8,000
Silverman
(Trustee)
J. Brendan 7,112 N/A N/A
8,000
Swan
(Trustee)
Keith J. -0- N/A N/A
-0-
Carlson
(Vice President)
C. William -0- N/A N/A
-0-
Ferris
(Secretary/Treasurer)
[*] Appointed as a Trustee of the Trust at a meeting
of the
Board of Trustees held on February 6, 1996.
As of February 26, 1996, the Officers and Trustees
of the
Trust as a group owned beneficially or of record none
of the
outstanding Class A, Class B, Class C or Class I shares
of any of
the Funds.
INVESTMENT ADVISORY AND OTHER SERVICES
BUSINESS MANAGEMENT AND INVESTMENT ADVISORY SERVICES
IMI currently provides business management and
investment
advisory services to each Fund pursuant to a Business
Management
and Investment Advisory Agreement (the "Agreement")
(except for
Ivy Canada Fund, for which IMI provides only business
management
services pursuant to a Business Management Agreement).
The
Agreement was approved by the sole shareholder of Ivy
China
Region Fund on October 23, 1993, by the shareholders of
Ivy
International Fund on December 30, 1991 and by the
respective
sole shareholder of Ivy Latin America Strategy Fund and
Ivy New
Century Fund on October 28, 1994. Prior to the
approval by the
respective shareholders or sole shareholder of each
Fund (except
for Ivy Canada Fund and Ivy Global Fund), the Agreement
was
approved on August 23, 1993 with respect to Ivy China
Region
Fund, October 28, 1991 with respect to Ivy
International Fund and
September 17, 1994 with respect to Ivy Latin America
Strategy
Fund and Ivy New Century Fund by the Board, including a
majority
of the Trustees who are neither "interested persons"
(as defined
in the 1940 Act) of the Trust nor have any direct or
indirect
financial interest in the operation of the distribution
plan (see
"Distribution Services") or in any related agreement
(the
"Independent Trustees").
Until January 31, 1995 MIMI served as the
investment adviser
to Ivy Global Fund and as investment manager to Ivy
Canada Fund,
which Funds were each a series of The Mackenzie Funds
Inc. (the
"Company") until January 31, 1995. On January 31,
1995, MIMI's
interest in the Agreement (with respect to Ivy Global
Fund) and
in the Management Agreement (with respect to Ivy Canada
Fund) was
assigned by MIMI to IMI, which is a wholly owned
subsidiary of
MIMI. The provisions of the Agreement and the
Management
Agreement remain unchanged by IMI's succession to MIMI
thereunder. The Agreement (with respect to Ivy Global
Fund) and
the Management Agreement (with respect to Ivy Canada
Fund) was
initially approved with respect to the Funds on
September 29,
1994 by the Board including a majority of the
Independent
Trustees. The Agreement was approved by the sole
shareholder of
each the Fund on January 27, 1995. MIMI is a subsidiary
of 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 the following investment companies
registered under
the 1940 Act (other than the Funds and other than as
investment
manager to Ivy Canada Fund): Ivy Growth Fund, Ivy
Emerging
Growth Fund, Ivy Growth with Income Fund, Ivy Bond
Fund, Ivy
International Bond Fund, Ivy Short-Term Bond Fund and
Ivy Money
Market Fund. The Trust has contracted with MFC to act
as
investment adviser to Ivy Canada Fund pursuant to an
Investment
Advisory Agreement (the "Advisory Agreement"). The
Advisory
Agreement between Ivy Canada Fund and MFC was approved
on
September 29, 1994 by the Board, including a majority
of the
Independent Trustees, and was approved on January 27,
1995 by the
sole shareholder of Ivy Canada Fund.
The Agreement obligates IMI to make investments
for the
accounts of each Fund (except Ivy Canada Fund) 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 Code relating to regulated investment
companies, subject to policy decisions adopted by the
Board. IMI
also determines the securities to be purchased or sold
by these
Funds and places orders with brokers or dealers who
deal in such
securities. The Advisory Agreement obligates MFC to
make
investments for the account of Ivy Canada Fund in
accordance with
its best judgment and within the investment objectives
and
restrictions set forth in the Prospectus with respect
to Ivy
Canada Fund, the 1940 Act and the provisions of the
Code,
relating to regulated investment companies, subject to
policy
decisions adopted by the Board. MFC also determines
the
securities to be purchased or sold by Ivy Canada Fund
and places
orders with brokers or dealers who deal in such
securities.
Under the Agreement (the Management Agreement with
respect
to Ivy Canada Fund), IMI also provides certain business
management services. IMI is obligated to (1)
coordinate with
each Fund's Custodian and monitor the services it
provides to
that Fund; (2) coordinate with and monitor any other
third
parties furnishing services to each Fund; (3) provide
each Fund
with necessary office space, telephones and other
communications
facilities as are adequate for the particular Fund's
needs;
(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 particular
Fund or by
IMI acting in some other capacity pursuant to a
separate
agreement or arrangements with the Fund; (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 IMI'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 the
Trust 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. Pursuant to
the
Management Agreement, IMI is also responsible for
reviewing the
activities of MFC to insure that Ivy Canada Fund is
operated in
compliance with that Fund's investment objectives and
policies
and with the 1940 Act.
Ivy Global Fund pays IMI a monthly fee for
providing
business management and investment advisory services at
an annual
rate of 1.00% of the first $500 million of its average
daily net
assets, reduced to 0.75% on average daily net assets
over $500
million. Each of the other Funds (except Ivy Canada
Fund) pays
IMI a monthly fee for providing business management and
investment advisory serves at an annual rate of 1.00%
of each the
Fund's average daily net assets. Ivy Canada Fund pays
IMI a
monthly fee for providing business management services
at an
annual rate of 0.50% of its average daily net
assets.
For advisory services, Ivy Canada Fund pays MFC a
monthly
fee at an annual rate of 0.35% of the average daily net
assets of
the Fund. For the fiscal years ended June 30, 1993 and
1994, for
the six-month period ended December 31, 1994 and for
the fiscal
year ended December 31, 1995, Ivy Canada Fund paid MFC
fees of
$47,671, $120,495, $54,763 and $67,229,
respectively.
For the period from October 23, 1993 (commencement
of
operations) to December 31, 1993 and during the fiscal
years
ended December 31, 1994 and 1995, Ivy China Region Fund
paid IMI
$10,340, $193,875 and $200,605, respectively (of which
IMI
reimbursed $0, $1,036 and $0, respectively, pursuant to
required
expense limitations and of which IMI reimbursed $2,907,
$106,631
and $106,085, respectively, pursuant to voluntary
expense
limitations).
During the fiscal years ended June 30, 1993 and
1994 and
during the six-month period ended December 31, 1994,
MIMI, as
investment manager to Ivy Canada Fund and as investment
adviser
to Ivy Global Fund, when each was a series of the
Company,
received fees of $68,102, $172,136 and $78,234,
respectively,
from Ivy Canada Fund and $104,015, $155,540 and
$107,966,
respectively, (of which MIMI reimbursed $581, $0 and
$0,
respectively, pursuant to required expense limitations
and of
which MIMI reimbursed $83,214, $34,779 and $15,264,
respectively,
pursuant to voluntary expense limitations) from Ivy
Global Fund.
During the fiscal year ended December 31, 1995, IMI
received fees
of $96,041 from Ivy Canada Fund (of which IMI
reimbursed $63,466
pursuant to required expense limitations) and $239,963
from Ivy
Global Fund (of which IMI reimbursed $62,242 pursuant
to
voluntary expense limitations).
For the fiscal years ended December 31, 1993, 1994
and 1995,
Ivy International Fund paid IMI fees of $1,302,526,
$2,217,950
and $3,948,456, respectively.
During the period from November 1, 1994
(commencement of
operations) to December 31, 1994 and during the fiscal
year ended
December 31, 1995, Ivy Latin America Strategy Fund paid
IMI fees
of $1,006 and $95,380, respectively (of which IMI
reimbursed IMI
reimbursed $13,333 and $93,340,, respectively, pursuant
to
required expense limitations and of which IMI
reimbursed $523 and
$2,040, respectively, pursuant to voluntary expense
limitations)
and Ivy New Century Fund paid IMI fees of $912 and
$91,226,
respectively (of which IMI reimbursed $16,415 and
$87,348,
respectively, pursuant to required expense limitations
and of
which IMI reimbursed $512 and $3,878, respectively,
pursuant to
voluntary expense limitations).
Under the Agreement (or the Management Agreement
and the
Advisory Agreement with respect to Ivy Canada Fund),
the Trust
pays the following expenses: (1) the fees and expenses
of the
Trust's Independent Trustees; (2) the salaries and
expenses of
any of the Trust's 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
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
preparation and distribution to existing shareholders
of periodic
reports, proxy materials and prospectuses; and (13)
fees and
expenses of membership in industry organizations.
The Agreement provides that if a Fund's total
expenses 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
extraor-
dinary expenses including, without limitation,
litigation and
indemnification expenses) exceed the permissible limits
appli-
cable to that Fund in any state in which its shares are
then
qualified for sale, IMI will bear the excess expenses.
At the
present time, the most restrictive state expense
limitation
provision limits each Fund's annual expenses to 2.5% of
the first
$30 million of its average daily net assets, 2.0% of
the next $70
million and 1.5% of its average daily net assets over
$100
million.
IMI currently limits each of Ivy China Region, Ivy
Latin
America Strategy and Ivy New Century Fund's total
operating
expenses (excluding Rule 12b-1 fees, interest, taxes,
brokerage
commissions, litigation and indemnification expenses,
and other
extraordinary expenses) to an annual rate of 1.95% of
the
particular Fund's average daily net assets. As long as
a Fund's
expense limitation continues, it may lower that Fund's
expenses
and increase its yield. Each the Fund's expense
limitation may
be terminated or revised at any time, at which time
that Fund's
expenses may increase and its yield may be reduced,
depending on
the total assets of the Fund. In addition, IMI may
voluntarily
reimburse Ivy Global Fund's expenses.
On August 25-26, 1995, the Board, including a
majority of
the Independent Trustees, last approved the continuance
of the
Agreement with respect to Ivy China Region Fund, Ivy
Global Fund
and Ivy International Fund. On August 25-26, 1995, the
Trustees
of the Trust, including a majority of the Independent
Trustees,
voted to approve the Management Agreement for Ivy
Canada Fund.
The initial term of the Agreement between IMI and each
of Ivy
Latin America Strategy Fund and Ivy New Century Fund,
which
commenced on October 30, 1994, will run for a period of
two years
from the date of commencement. Each Agreement (or
Management
Agreement with respect to Ivy Canada Fund) will
continue in
effect with respect to each Fund from year to year, or
for more
than the initial period, as the case may be, only so
long as the
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
securi-
ties (as defined in the 1940 Act) of the particular
Fund or (b)
by the vote of a majority of the entire Board. If the
question
of continuance of the Agreements (or adoption of any
new agree-
ment) is presented to shareholders, continuance (or
adoption)
shall be effected only if approved by the affirmative
vote of a
majority of the outstanding voting securities of the
particular
Fund. See "Capitalization and Voting Rights."
Each Agreement (or Management Agreement with
respect to Ivy
Canada Fund) may be terminated with respect to a
particular 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 Agreement shall terminate automatically in the
event of its
assignment.
SUBADVISORY CONTRACT - IVY INTERNATIONAL FUND.
The Trust
and IMI, on behalf of Ivy International Fund, have
entered into a
subadvisory contract with an independent investment
adviser (the
"Subadvisory Contract") under which the subadviser
develops,
recommends and implements an investment program and
strategy for
the Fund's portfolio and is responsible for making all
portfolio
security and brokerage decisions, subject to the
supervision of
IMI and, ultimately, the Board. Fees payable under the
Subadvisory Contract accrue daily and are paid
quarterly by IMI.
Effective April 1, 1993, Northern Cross serves as
subadviser for
Ivy International Fund's portfolio pursuant to the
Subadvisory
Contract. As compensation for its services, Northern
Cross is
paid a fee by IMI at the annual rate of 0.60% of Ivy
International Fund's average net assets. As
compensation for
advisory services rendered for the period from April 1,
1993 to
December 31, 1993 and for the fiscal years ended
December 31,
1994 and 1995, IMI paid Northern Cross $617,520,
$1,330,770 and
$_______, respectively. Northern Cross, wholly-owned
and
operated by Hakan Castegren, is the successor to the
investment
advisory functions of Boston Overseas Investors, Inc.
("BOI"),
which also was wholly-owned and operated by Hakan
Castegren.
Boston Investor Services, Inc., the successor to the
administrative and research functions of BOI, provides
administrative and research services to Northern
Cross.
BOI served as subadviser for Ivy International
Fund's
portfolio from July 1, 1990 until March 31, 1993.
Under its
subadvisory contract, IMI paid BOI a fee at an annual
rate of
0.60% of the Fund's average net assets. As
compensation for
advisory services rendered for the three-month period
ended
March 31, 1993, IMI paid BOI $163,879.
Any amendment to the current Subadvisory Contract
requires
approval by votes of (a) a majority of the outstanding
voting
securities of Ivy International Fund affected thereby
and (b) a
majority of the Trustees who are not interested persons
of the
Trust or of any other party to such Contract. The
Subadvisory
Contract terminates automatically in the event of its
assignment
(as defined in the 1940 Act) or upon termination of the
Agreement. Also, the Subadvisory Contract may be
terminated by
not more than 60 days' nor less than 30 days' written
notice by
either the Trust or IMI or upon not less than 120 days'
notice by
the Subadviser. The Subadvisory Contract provides that
IMI or
the Subadviser shall not be liable to the Trust, to any
shareholder of the Trust, or to any other person,
except for loss
resulting from willful misfeasance, bad faith, gross
negligence
or reckless disregard of duty.
The Subadvisory Contract will continue in effect
(subject to
provisions for earlier termination as described above)
only if
such continuance is approved at least annually (a) by a
majority
of the Trustees who are not interested persons of the
Trust or of
any other party to the Contract and (b) by either (i) a
majority
of all of the Trustees of the Trust or (ii) a vote of a
majority
of the outstanding voting securities of any Fund
affected
thereby. On September 17, 1994, the Board, including a
majority
of the Independent Trustees, last approved the
continuance of the
Subadvisory Contract.
DISTRIBUTION SERVICES
MIFDI, a wholly owned subsidiary of MIMI, serves
as the
exclusive distributor of the Funds' shares pursuant to
an Amended
and Restated Distribution Agreement with the Trust
dated October
23, 1991, as amended from time to time (the
"Distribution
Agreement"). MIFDI 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 MIFDI. MIFDI distributes shares of the Funds on a
continuous basis, but reserves the right to suspend or
discontinue distribution on that basis. MIFDI is not
obligated
to sell any specific amount of Fund shares.
Pursuant to the Distribution Agreement, MIFDI 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 Funds' then-current prospectus, and the
net asset
value on which such price is based. Out of that
commission,
MIFDI may reallow to dealers such concession as MIFDI
may
determine from time to time. In addition, MIFDI 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.
MIFDI may reallow all or a portion of the CDSC to
dealers as
MIFDI may determine from time to time.
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.
During the fiscal year ended June 30, 1993 and the
three
months ended September 30, 1993, MIMI, which at that
time was Ivy
Canada Fund's distributor, received from sales of Class
A[1:
Shares of Ivy Canada Fund outstanding as of March 31,
1994 were
designated Class A shares of the Fund.] shares of Ivy
Canada Fund
$395,698 and $332,241, respectively, in sales
commissions, of
which $59,871 and $52,414, respectively, was retained
after
dealers' reallowances. During the nine months ended
June 30,
1994, the six-month period ended December 31, 1994 and
the fiscal
year ended December 31, 1995, MIFDI received
commissions of
$386,239, $44,748 and $_________, respectively, from
sales of
Class A shares of the Fund, of which $62,036, $7,074
and
$_________, respectively, was retained after dealers'
reallowances. During the period April 1, 1994
(commencement of
sales of Class B shares) to June 30, 1994 and the
six-month
period ended December 31, 1994 and the fiscal year
ended December
31, 1995, MIFDI received $574 and $_______,
respectively, in
CDSCs on redemptions of Class B shares of Ivy Canada
Fund.
During the period from October 23, 1993
(commencement of
operations) to December 31, 1993 and during the fiscal
years
ended December 31, 1994 and December 31, 1995, MIFDI
received
from sales of Class A shares of Ivy China Region Fund
$215,030,
$328,530 and $_______, respectively, in sales
commissions, of
which $33,451, $52,347 and $________, respectively, was
retained
after dealers' re-allowances. During the period from
October 23,
1993 (commencement of operations) to December 31, 1993,
MIFDI
received no CDSCs on Class B shares of Ivy China Region
Fund.
During the fiscal years ended December 31, 1994 and
December 31,
1995, MIFDI received $17,290 and $_____, respectively,
in CDSCs
on redemptions of Class B shares of the Fund.
During the fiscal years ended June 30, 1993 and
the three
month period ended September 30, 1993, MIMI, which at
that time
was Ivy Global Fund's distributor, received from sales
of Class A
1[Shares of Ivy Global Fund outstanding as of March 31,
1994 were
designated Class A shares of the Fund.] shares of Ivy
Global Fund
$192,128 and $57,279, respectively, in sales
commissions, of
which $35,500 and $8,869, respectively, was retained
after
dealers' reallowances. During the nine months ended
June 30,
1994, the six-month period ended December 31, 1994 and
the fiscal
year ended December 31, 1995, MIFDI received
commissions of
$166,539, $96,349 and $________, respectively, from
sales of
Class A shares of the Fund, of which $25,240, $16,508
and
$______, respectively, was retained after dealers'
reallowances.
During the period April 1, 1994 (commencement of sales
of Class B
shares) to December 31, 1994 and during the fiscal year
ended
December 31, 1995, MIFDI received $0 and $_______,
respectively,
in CDSCs on redemptions of Class B shares of Ivy Global
Fund.
During the period from January 1, 1993 to
September 30,
1993, MIMI, which at that time was Ivy International
Fund's
distributor, received from sales of Class A shares of
the Fund
$262,908 in sales commissions, of which $41,306 was
retained
after dealers' re-allowances. During the period from
October 1,
1993 to December 31, 1993, MIFDI received from sales of
Class A
shares of Ivy International Fund $215,623 in sales
commissions,
of which $33,877 was retained after dealers'
re-allowances.
During the fiscal years ended December 31, 1994 and
December 31,
1995, MIFDI received from sales of Class A shares of
Ivy
International Fund $788,610 and $_______, respectively,
in sales
commissions, of which $124,786 and $________,
respectively, was
retained after dealers' re-allowances. During the
period from
January 1, 1993 to September 30, 1993, and from October
1, 1993
to December 31, 1993, MIMI and MIFDI, respectively,
received no
CDSCs upon certain redemptions of Class A shares of Ivy
International Fund. During the period from October 23,
1993 (the
date on which Class B shares of Ivy International Fund
were first
offered for sale to the public) to December 31, 1993,
MIFDI
received $439 in CDSCs paid upon certain redemptions of
Class B
shares of Ivy International Fund. During the fiscal
years ended
December 31, 1994 and December 31, 1995, MIFDI received
$23,381
and $________, respectively, in CDSCs paid upon certain
redemptions of Class B shares of Ivy International
Fund.
During the period from November 1, 1994
(commencement of
operations) to December 31, 1994 and during the fiscal
year ended
December 31, 1995, MIFDI received from sales of Class A
shares of
Ivy Latin America Strategy Fund $7,492 and $_______,
respectively, in sales commissions, of which $1,071 and
$________, respectively, was retained after dealers re-
allowances. During the period from November 1, 1994
(commencement of operations) to December 31, 1994,
MIFDI received
no CDSCs on redemptions of Class B shares of Ivy Latin
America
Strategy Fund. During the fiscal year ended December
31, 1995,
MIFDI received $________ in CDSCs on redemptions of
Class B
shares of the Fund.
During the period from November 1, 1994
(commencement of
operations) to December 31, 1994 and during the fiscal
year ended
December 31, 1995, MIFDI received from sales of Class A
Shares of
Ivy New Century Fund $5,766 and $______, respectively,
in sales
commissions, of which $865 and $_______, respectively,
was
retained after dealer re-allowances. During the period
from
November 1, 1994 (commencement of operations) to
December 31,
1994, MIFDI received no CDSCs on redemptions of Class B
Shares of
Ivy New Century Fund. During the fiscal year ended
December 31,
1995, MIFDI received $_________ in CDSCs on redemptions
of Class
B shares of the Fund.
Since the inception date for Class C shares of
each Fund is
April 30, 1996, no payments were made in connection
with the sale
of Class C shares with respect to any Fund during the
relevant
time periods.
Each Distribution Agreement will continue in
effect 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 each Fund. Each Distribution Agreement may be
terminated with
respect to a particular Fund at any time, without
payment of any
penalty, by MIFDI on 60 days' written notice to the
particular
Fund or by a Fund by vote of either a majority of the
outstanding
voting securities of the Fund or a majority of the
Independent
Trustees on 60 days' written notice to MIFDI. Each
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/trustees and filed with
the SEC. At
a meeting held on December 1-2, 1995, the Board adopted
a multi-
class plan (the "Rule 18f-3 plan") on behalf of each
Fund. The
key features of the Rule 18f-3 plan are as follows:
(i) shares
of each class of a 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 a Fund may be exchanged for shares
of the
same class of another Ivy or Mackenzie fund; and (iii)
a 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 distribution plans pertaining to the
Funds'
Class A, Class B and Class C shares (each, a "Plan").
In
adopting each Plan, a majority of the Independent
Trustees have
concluded in conformity with the requirements of the
1940 Act
that there is a reasonable likelihood that each Plan
will benefit
each respective 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 a Fund's shares in the absence of a Plan or under an
alternative distribution arrangement.
Under each Plan, each Fund pays MIFDI 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
shares,
Class B shares or Class C shares, as the case may be.
The
services for which service fees may be paid include,
among other
services, advising clients or customers regarding the
purchase,
sale or retention of shares of the Fund, answering
routine
inquiries concerning the Fund and assisting
shareholders in
changing options or enrolling in specific plans.
Pursuant to
each Plans, 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 that class of the Fund. The expenses not
reimbursed in
any one given month may be reimbursed in a subsequent
month. The
Class A Plan (other than the Class A Plan for Ivy
Canada Fund)
does not provide for the payment of interest or
carrying charges
as distribution expenses.
Under the Funds' Class B Plan and Class C Plans,
each Fund
also pays MIFDI 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.
Ivy Canada
Fund also pays MIFDI a distribution fee, accrued daily
and paid
monthly, at the annual rate of 0.15% of the average
daily assets
attributable to its Class A shares. MIFDI may reallow
to dealers
all or a portion of the service and distribution fees
as MIFDI
may determine from time to time. The distribution fee
compensates MIFDI for expenses incurred in connection
with
activities primarily intended to result in the sale of
the Funds'
Class B or Class C shares (and Class A shares, in the
case of Ivy
Canada Fund), 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
(and Ivy
Canada Fund's Class A Plan), MIFDI 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)
MIFDI 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 Trust
shall be committed to the discretion of the Trustees
who are not
"interested persons" of the Trust.
MIFDI may make payments for distribution
assistance and for
administrative and accounting services from resources
that may
include the management fees paid (to MIMI, in the case
of Ivy
Canada Fund) by a Fund. MIFDI also may make payments
(such as
the service fee payments described above) to
unaffiliated broker-
dealers for services rendered in the distribution of
each Fund's
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 MIFDI.
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.
During the period from October 1, 1993 to June 30,
1994,
during the six-month period ended December 31, 1994 and
during
the fiscal year ended December 31, 1995, Ivy Canada
Fund paid
MIFDI $92,079, $61,133 and $73,233, respectively,
pursuant to its
Class A plan. During the period from April 1, 1994
(the date on
which Class B shares of Ivy Canada Fund were first
offered to the
public) to June 30, 1994, during the six-month period
ended
December 31, 1994 and during the fiscal year ended
December 31,
1995, Ivy Canada Fund paid MIFDI $312, $2,953 and
$8,964,
respectively, pursuant to its the Class B plan.
For the period from October 23, 1993 (commencement
of
operations) to December 31, 1993 and during the fiscal
years
ended December 31, 1994 and December 31, 1995, Ivy
China Region
Fund paid MIFDI $1,844, $31,640 and $32,647,
respectively,
pursuant to its Class A Plan. For the period from
October 23,
1993 (commencement of operations) to December 31, 1993
and during
the fiscal years ended December 31, 1994 and December
31, 1995,
Ivy China Region Fund paid MIFDI $2,962, $67,315 and
$70,020,
respectively, pursuant to its Class B Plan.
During the period from October 1, 1993 to June 30,
1994,
during the six-month period ended December 31, 1994 and
during
the fiscal year ended December 31, 1995, Ivy Global
Fund paid
MIFDI $30,665, $24,936 and $50,833, respectively,
pursuant to its
Class A plan. During the period from April 1, 1994
(the date on
which Class B shares of Ivy Global Fund were first
offered to the
public) to June 30, 1994, during the six-month period
ended
December 31, 1994 and during the fiscal year ended
December 31,
1995, the Fund paid MIFDI $434, $8,224 and $36,632,
respectively,
pursuant to its Class B plan.
For the period from January 1, 1993 to September
30, 1993,
Ivy International Fund paid MIMI $22,673 pursuant to
its Class A
Plan. For the period from October 1, 1993 to December
31, 1993,
the Fund paid MIFDI $9,196 pursuant to its Class A
Plan. For the
fiscal years ended December 31, 1994 and December 31,
1995, Ivy
International Fund paid MIFDI $168,356 and $281,215,
respectively, pursuant to its Class A Plan. For the
period from
October 23, 1993 (the date on which Class B shares of
Ivy
International Fund were first offered for sale to the
public) to
December 31, 1993, the Fund paid MIFDI $2,339 pursuant
to its
Class B Plan. For the fiscal years ended December 31,
1994 and
December 31, 1995, the Fund paid MIFDI $175,505 and
$474,670,
respectively, pursuant to its Class B Plan.
Since the inception date for Class C shares of
each Fund is
April 30, 1996, no payments were made pursuant to the
Funds'
Class C Plan during the relevant time periods.
During the period from November 1, 1994
(commencement of
operations) to December 31, 1994 and during the fiscal
year ended
December 31, 1995, Ivy Latin America Strategy Fund paid
MIFDI
$208 and $2,637, respectively, pursuant to its Class A
plan.
During the period from November 1, 1994 (commencement
of
operations) to December 31, 1994 and during the fiscal
year ended
December 31, 1995, the Fund paid MIFDI $157 and $3,855,
respectively, pursuant to its Class B plan.
During the period from November 1, 1994
(commencement of
operations) to December 31, 1994 and during the fiscal
year ended
December 31, 1995, Ivy New Century Fund paid MIFDI $196
and
$3,888, respectively, pursuant to its Class A plan.
During the
period from November 1, 1994 (commencement of
operations) to
December 31, 1994 and during the fiscal year ended
December 31,
1995, the Fund paid MIFDI $124 and $4,160,
respectively, pursuant
to its Class B plan.
During the fiscal year ended December 31, 1995,
MIFDI
expended the following amounts in marketing Class A
shares of Ivy
Canada Fund: advertising, $_____; printing and mailing
of
prospectuses to persons other than current
shareholders, $_____;
compensation to dealers, $_____; compensation to sales
personnel,$_____; seminars and meetings, $_____; travel
and
entertainment, $_____; general and administrative,
$_____;
telephone, $_____; and occupancy and equipment rental,
$_____.
During the fiscal year ended December 31, 1995,
MIFDI
expended the following amounts in marketing Class B
shares of Ivy
Canada Fund: advertising, $_____; printing and mailing
of
prospectuses to persons other than current
shareholders, $_____;
compensation to dealers, $_____; compensation to sales
personnel,$_____; seminars and meetings, $_____; travel
and
entertainment, $_____; general and administrative,
$_____;
telephone, $_____; and occupancy and equipment rental,
$_____.
During the fiscal year ended December 31, 1995,
MIFDI
expended the following amounts in marketing Class A
shares of Ivy
China Region Fund: advertising, $_____; printing and
mailing of
prospectuses to persons other than current
shareholders, $_____;
compensation to dealers, $_____; compensation to sales
personnel,$_____; seminars and meetings, $_____; travel
and
entertainment, $_____; general and administrative,
$_____;
telephone, $_____; and occupancy and equipment rental,
$_____.
During the fiscal year ended December 31, 1995,
MIFDI
expended the following amounts in marketing Class B
shares of Ivy
China Region Fund: advertising, $_____; printing and
mailing of
prospectuses to persons other than current
shareholders, $_____;
compensation to dealers, $_____; compensation to sales
personnel,$_____; seminars and meetings, $_____; travel
and
entertainment, $_____; general and administrative,
$_____;
telephone, $_____; and occupancy and equipment rental,
$_____.
During the fiscal year ended December 31, 1995,
MIFDI
expended the following amounts in marketing Class A
shares of Ivy
Global Fund: advertising, $_____; printing and mailing
of
prospectuses to persons other than current
shareholders, $_____;
compensation to dealers, $_____; compensation to sales
personnel,$_____; seminars and meetings, $_____; travel
and
entertainment, $_____; general and administrative,
$_____;
telephone, $_____; and occupancy and equipment rental,
$_____.
During the fiscal year ended December 31, 1995,
MIFDI
expended the following amounts in marketing Class B
shares of Ivy
Global Fund: advertising, $_____; printing and mailing
of
prospectuses to persons other than current
shareholders, $_____;
compensation to dealers, $_____; compensation to sales
personnel,$_____; seminars and meetings, $_____; travel
and
entertainment, $_____; general and administrative,
$_____;
telephone, $_____; and occupancy and equipment rental,
$_____.
During the fiscal year ended December 31, 1995,
MIFDI
expended the following amounts in marketing Class A
shares of Ivy
International Fund: advertising, $_____; printing and
mailing of
prospectuses to persons other than current
shareholders, $_____;
compensation to dealers, $_____; compensation to sales
personnel,$_____; seminars and meetings, $_____; travel
and
entertainment, $_____; general and administrative,
$_____;
telephone, $_____; and occupancy and equipment rental,
$_____.
During the fiscal year ended December 31, 1995,
MIFDI
expended the following amounts in marketing Class B
shares of Ivy
International Fund: advertising, $_____; printing and
mailing of
prospectuses to persons other than current
shareholders, $_____;
compensation to dealers, $_____; compensation to sales
personnel,$_____; seminars and meetings, $_____; travel
and
entertainment, $_____; general and administrative,
$_____;
telephone, $_____; and occupancy and equipment rental,
$_____.
During the fiscal year ended December 31, 1995,
MIFDI
expended the following amounts in marketing Class A
shares of Ivy
Latin America Strategy Fund: advertising, $_____;
printing and
mailing of prospectuses to persons other than current
shareholders, $_____; compensation to dealers, $_____;
compensation to sales personnel,$_____; seminars and
meetings,
$_____; travel and entertainment, $_____; general and
administrative, $_____; telephone, $_____; and
occupancy and
equipment rental, $_____.
During the fiscal year ended December 31, 1995,
MIFDI
expended the following amounts in marketing Class B
shares of Ivy
Latin America Strategy Fund: advertising, $_____;
printing and
mailing of prospectuses to persons other than current
shareholders, $_____; compensation to dealers, $_____;
compensation to sales personnel,$_____; seminars and
meetings,
$_____; travel and entertainment, $_____; general and
administrative, $_____; telephone, $_____; and
occupancy and
equipment rental, $_____.
During the fiscal year ended December 31, 1995,
MIFDI
expended the following amounts in marketing Class A
shares of Ivy
New Century Fund: advertising, $_____; printing and
mailing of
prospectuses to persons other than current
shareholders, $_____;
compensation to dealers, $_____; compensation to sales
personnel,$_____; seminars and meetings, $_____; travel
and
entertainment, $_____; general and administrative,
$_____;
telephone, $_____; and occupancy and equipment rental,
$_____.
During the fiscal year ended December 31, 1995,
MIFDI
expended the following amounts in marketing Class B
shares of Ivy
New Century Fund: advertising, $_____; printing and
mailing of
prospectuses to persons other than current
shareholders, $_____;
compensation to dealers, $_____; compensation to sales
personnel,$_____; seminars and meetings, $_____; travel
and
entertainment, $_____; general and administrative,
$_____;
telephone, $_____; and occupancy and equipment rental,
$_____.
Since the inception date for Class C shares of
each Fund is
April 30, 1996, no payments were made in marketing
Class C shares
of any Fund during the relevant time period.
Each Plan may be amended at any time with respect
to the
class of shares of the 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 with
respect to the
class of shares of the particular Fund to which the
Plan relates
at any time, 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 the Distribution
Plans are
terminated (or not renewed) with respect to one or more
funds (or
Class of shares thereof) of the Trust, they may
continue in
effect with respect to any fund (or Class of shares
thereof) as
to which they have not been terminated (or have been
renewed).
CUSTODIAN
Brown Brothers Harriman & Co. ("Brown Brothers"),
a private
bank and member of the principal securities exchanges,
located at
40 Water Street, Boston, Massachusetts 02109 (the
"Custodian"),
has been retained to act as the Trust's Custodian for
assets of
each Fund held in the United States. Under the
Custodian
Agreement, Brown Brothers also provides certain
financial
services for Ivy International Fund, including
bookkeeping,
computation of daily net asset value, maintenance of
income,
expense and brokerage records, and provision of all
information
required by the Trust in order to satisfy its reporting
and
filing requirements. Rules adopted under the 1940 Act
permit the
Trust to maintain its foreign securities (Canadian
securities,
with respect to Ivy Canada Fund) and cash in the
custody of
certain eligible foreign banks and securities
depositories (and
certain eligible Canadian banks and securities
depositories, with
respect to Ivy Canada Fund). Pursuant to those rules,
Brown
Brothers has entered into subcustodial agreements for
the holding
of each Fund's foreign securities (and for the holding
of Ivy
Canada Fund's non-Canadian foreign securities).
Similarly,
pursuant to those rules, Ivy Canada Fund's portfolio
securities
and cash, when invested in Canadian securities, will be
held by
its Sub-custodian, The Bank of Nova Scotia. With
respect to each
Fund, except for Ivy Canada Fund, Brown Brothers may
receive, as
partial payment for its services, a portion of the
Trust's
brokerage business, subject to its ability to provide
best price
and execution.
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 a 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.
For the fiscal years ended June 30, 1993 and 1994,
for the
six-month period ended December 31, 1994 and for the
fiscal year
ended December 31, 1995, Ivy Canada Fund paid MIMI
$32,742,
$32,492, $16,442 and $32,399, respectively, under the
agreement..
During the period from October 23, 1993 (commencement
of
operations) to December 31, 1993 and during the fiscal
years
ended December 31, 1994 and 1995, Ivy China Region Fund
paid MIMI
$2,513, $32,137 and $32,653, respectively, under the
agreement.
For the fiscal years ended June 30, 1993 and 1994, for
the six-
month period ended December 31, 1994 and for the fiscal
year
ended December 31, 1995, Ivy Global Fund paid MIMI
$25,612 and
$31,448, $15,957 and $32,982, respectively, under the
agreement.
The payments to MIMI from Ivy International Fund
amounted to
$48,788 for the nine months ended December 31, 1994.
Prior to
April 1, 1994, the Fund utilized an unrelated entity
for fund
accounting and pricing services. Such fees and
expenses for the
fiscal year ended December 31, 1994 totalled $88,790.
For the
fiscal year ended December 31, 1995, Ivy International
Fund paid
MIMI $91,612 under the agreement. During the period
from
November 1, 1994 (commencement of operations) to
December 31,
1994 and during the fiscal year ended December 31,
1995, Ivy
Latin America Strategy Fund paid MIMI $2,505 and
$15,094,
respectively, under the agreement. During the period
from
November 1, 1994 (commencement of operations) to
December 31,
1994 and during the fiscal year ended December 31,
1995, Ivy New
Century Fund paid MIMI $2,505 and $15,112,
respectively, under
the agreement.
TRANSFER AGENT AND DIVIDEND PAYING AGENT
Pursuant to a Transfer Agency and Shareholder
Service
Agreement, MIISC, a wholly owned subsidiary of MIMI, is
the
transfer agent for each Fund. Each Fund (except for
Ivy
International Fund with respect to its Class I shares
only) pays
a monthly fee at an annual rate of $20.00 per open
account. Ivy
International Fund pays $10.25 per open account for
Class I. In
addition, each Fund pays a monthly fee at an annual
rate of $4.36
per account that is closed plus certain out-of-pocket
expenses.
Such fees and expenses for the fiscal year ended
December 31,
1995 for Ivy Canada Fund, Ivy China Region Fund, Ivy
Global Fund,
Ivy International Fund, Ivy Latin America Strategy Fund
and Ivy
New Century Fund totalled $181,036, $113,884, $88,419,
$590,068,
$7,376 and $7,918, respectively.
ADMINISTRATOR
Pursuant to an Administrative Services Agreement,
MIMI
provides certain administrative services to each Fund.
As
compensation for these services, each Fund (except for
Ivy
International Fund with respect to its Class I shares
only) pays
MIMI a monthly fee at the annual rate of .10% of that
Fund's
average daily net assets. Ivy International Fund pays
MIMI a
monthly fee at the annual rate of .01% of its average
daily net
assets for Class I. Such fees for the fiscal year
ended December
31, 1995 for Ivy Canada Fund, Ivy China Region Fund,
Ivy Global
Fund, Ivy International Fund, Ivy Latin America
Strategy Fund and
Ivy New Century Fund totalled $19,208, $20,061,
$23,996,
$387,795, $1,434 and $1,971, respectively.
AUDITORS
Coopers & Lybrand L.L.P., independent certified
public
accountants, 200 East Las Olas Boulevard, Suite 1700,
Ft.
Lauderdale, Florida 33301, has been selected as
auditors for the
Trust. The audit services performed by Coopers &
Lybrand L.L.P.,
include audits of the annual financial statements of
each of the
funds of the Trust. Other services provided
principally relate
to filings with the SEC and the preparation of the
Trust's tax
returns.
CAPITALIZATION AND VOTING RIGHTS
Ivy Canada Fund results from a reorganization of
Mackenzie
Canada Fund, a series of the Company, which
reorganization was
approved by shareholders on January 27, 1995. Ivy
Global Fund
results from a reorganization of Mackenzie Global Fund,
which
reorganization was approved by shareholders on January
27, 1995.
The capitalization of the Trust consists of an
unlimited number
of shares of beneficial interest (no par value per
share). When
issued, shares of each class of each Fund are fully
paid, non-
assessable, redeemable and fully transferable. No
class of
shares of a Fund has preemptive rights or subscription
rights.
The Amended and Restated Declaration of Trust
permits the
Trustees to create separate series or portfolios and to
divide
any series or portfolio into one or more classes. The
Trustees
have authorized thirteen series, each of which
represents a fund.
The Trustees have further authorized the issuance of
Classes A, B
and C for Ivy Global Fund, Ivy Growth Fund, Ivy
Emerging Growth
Fund, Ivy Growth with Income Fund, Ivy Money Market
Fund, Ivy
China Region Fund, Ivy Latin America Strategy Fund, Ivy
New
Century Fund, Ivy International Fund, Ivy Canada Fund,
Ivy Bond
Fund and Ivy International Bond Fund, as well as Class
A, B and I
for Ivy Short-Term Bond Fund, Class I for Ivy
International Fund
and Ivy Bond Fund, and Class D for Ivy Growth with
Income Fund.
[FN][The Class D shares of Ivy Growth with Income Fund
were
initially issued as "Ivy Growth with Income Fund --
Class C" to
shareholders of Mackenzie Growth & Income Fund, a
former series
of the Company, in connection with the reorganization
between
that fund and Ivy Growth with Income Fund and not
offered for
sale to the public. On February 29, 1996, the Trustees
of the
Trust resolved by written consent to establish a new
class of
shares designated as "Class C" for all Ivy Fund
portfolios (other
than Ivy Short-Term Bond Fund) and to redesignate the
shares of
beneficial interest of "Ivy Growth with Income
Fund--Class C" as
shares of beneficial interest of "Ivy Growth with
Income Fund--
Class D," which establishment and redesignation,
respectively,
are to become effective on April 30, 1996. The voting,
dividend,
liquidation and other rights, preferences, powers,
restrictions,
limitations, qualifications, terms and conditions of
the Class D
shares of Ivy Growth with Income Fund, as set forth in
Ivy Fund's
Declaration of Trust, as amended from time to time,
will not be
changed by this redesignation.]
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).
On matters affecting only one Fund, only the
shareholders of that
Fund are entitled to vote. All classes of shares of a
Fund will
vote together, except with respect to the distribution
plan
applicable to that 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 of the Trust, but affecting the
funds
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 of the
Trust. If the Trustees determine that a matter does
not affect
the interests of a Fund, then the shareholders of that
Fund will
not be entitled to vote on that matter. Matters that
affect the
Trust in general, such as ratification of the selection
of
independent public accountants, will be voted upon
collectively
by the shareholders of all funds of the Trust.
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 that 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 that Fund (or of
the
Trust).
With respect to the submission to shareholder vote
of a
matter requiring separate voting by a Fund, the matter
shall have
been effectively acted upon with respect to that Fund
if a
majority of the outstanding voting securities of that
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 of the Trust; or
(2) the
matter has not been approved by a majority of the
outstanding
voting securities of the Trust.
The Amended and Restated 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 as if Section 26(c) of
the Act were
applicable.
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.
To the knowledge of the Trust, as of January 31,
1996, no
shareholder owned beneficially or of record 5% or more
of any
Fund's outstanding Class A, Class B, Class C or Class I
shares,
except that of the outstanding Class A shares of Ivy
Canada Fund,
Jupiter & Co., P.O. Box 1537 Top 57, Boston,
Massachusetts 02205,
owned of record 486,290.085 shares (22.99%); and except
that of
the outstanding Class A shares of Ivy International
Fund, Charles
Schwab & Co., Inc., 101 Montgomery Street, San
Francisco,
California 94104 owned of record 6,663,138.196 shares
(39.29%);
and that of the outstanding Class A shares of Ivy Latin
America
Strategy Fund, Merrill Lynch Pierce Fenner & Smith,
4800 Deer
Lake Drive East, 3rd Floor, Jacksonville, Florida
32246, owned of
record 32,821.000 shares (10.83%); and except that of
the
outstanding Class A shares of Ivy New Century Fund, C.
and M.
Brount, 3312 Lake Knoll Drive, Northbrook, Illinois
60062 owned
of record 25,014.119 shares (6.09%) and J. and L.
Paradinovich,
8490 Old Loomis Road, Franklin, Wisconsin 53132, owned
of record
22,183.053 shares (5.40%); and except that of the
outstanding
Class B shares of Ivy Canada Fund, Merrill Lynch Pierce
Fenner &
Smith, 4800 Deer Lake Drive East, 3rd Floor,
Jacksonville,
Florida 32246, owned of record 14,980.000 shares
(13.96%), and
NFSC FEBO (custodian) FBO R. Brown, 2345 Roxburgh
Drive, Roswell,
Georgia 30076, owned of record 7,891.946 shares
(7.35%); and that
of the outstanding Class B shares of Ivy International
Fund,
Merrill Lynch Pierce Fenner & Smith, 4800 Deer Lake
Drive East,
3rd Floor, Jacksonville, Florida 32246, owned of record
335,652.00 shares (11.94%); and except that of the
outstanding
Class B shares of Ivy Latin America Strategy Fund, IBT
(custodian) FBO G. Pattyson, P.O. Box 11, Terrace Bay,
Ontario,
Canada POT 2W0, owned of record 10,000.00 shares
(9.44%), and
Donaldson Lufkin Jenrette Securities Corporation Inc.,
P.O. Box
2052, Jersey City, New Jersey 07303, owned of record
7,062.147
shares (6.66%); and except that of the outstanding
Class B shares
of Ivy New Century Fund, Merrill Lynch Pierce Fenner &
Smith,
4800 Deer Lake Drive East, 3rd Floor, Jacksonville,
Florida
32246, owned of record 29,351.000 shares (20.06%), and
S. and S.
Parks, 407 Peachtree Club Drive, Peachtree City,
Georgia 30269,
owned of record 23,045.588 shares (15.75%); and except
that of
the outstanding Class I shares of Ivy International
Fund, Vernat
Company, P.O. Box 800, Brattleboro, Vermont 05302,
owned of
record 192,575.376 shares (35.60%), BankAmerica State
Trust
Company (custodian) FBO Klukwan Inc., P.O. Box 32077,
Juneau,
Alaska 99803 owned of record 181,080.463 shares
(33.48%), and
National City Bank Indiana (trustee) FBO Mechanics
Laundry &
Supply, Inc. Employees Pension Plan, P.O. Box 94777,
Cleveland,
Ohio 44101, owned of record 28,987.004 shares
(5.36%).
Under Massachusetts law, the Trust's shareholders
could,
under certain circumstances, be held personally liable
for the
obligations of the Trust. However, the Amended and
Restated
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 Amended and Restated Declaration
of Trust
provides for indemnification out of Fund property for
all loss
and expense of any shareholder of a Fund held
personally liable
for the obligations of that 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 series of the Trust is liable
for the
obligations of any other series of the Trust.
NET ASSET VALUE
The share price, or value, for the separate
Classes of
shares of a Fund is called the net asset value per
share. The
net asset value per share of a Fund is computed by
dividing the
value of the assets of that Fund, less its liabilities,
by the
number of shares of the particular Fund outstanding.
For
purposes of determining the aggregate net assets of a
Fund, cash
and receivables will be valued at their realizable
amounts. A
security listed or traded on a recognized stock
exchange or
NASDAQ is valued at its last sale price on the
principal exchange
on which the security is traded. The value of a
foreign security
is determined in its national currency as of the normal
close of
trading on the foreign exchange on which it is traded
or as of
the close of regular trading on the Exchange, if that
is earlier,
and that value is then converted into its U.S. dollar
equivalent
at the foreign exchange rate in effect at noon, Eastern
time, on
the day the value of the foreign security is
determined. If no
sale is reported at that time, the average between the
current
bid and asked price is used. All other securities for
which OTC
market quotations are readily available are valued at
the average
between the current bid and asked price. Interest will
be
recorded as accrued. Securities and other assets for
which
market prices are not readily available are valued at
fair value
as determined by IMI and approved in good faith by the
Board.
Money market instruments of a Fund are valued at market
value,
except that instruments maturing within 60 days of the
valuation
date are valued at amortized cost.
A 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 that 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.
Portfolio securities are valued and net asset
value per
share is determined as of the close of regular trading
on the
Exchange (normally 4:00 p.m., eastern time), every
Monday through
Friday (exclusive of national business holidays). The
Trust's
offices will be closed, and net asset value will not be
calculated, on the following national business
holidays: New
Year's Day, Presidents Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Veterans 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
such day
being a partial holiday or otherwise, the right is
reserved to
advance the time on that day by which purchase and
redemption
requests must be received.
When a Fund writes an option, an amount equal to
the premium
received by that Fund is included in that Fund's
Statement of
Assets and Liabilities as an asset and as an equivalent
liability. The amount of the liability will be
subsequently
marked-to-market daily to reflect the current market
value of the
option written. The current market value of a written
option is
the last sale on the principal exchange on which such
option is
traded or, in the absence of a sale, the last offering
price.
The premium paid by a Fund for the purchase of a
call or a
put option will be deducted from its assets and an
equal amount
will be included in the asset section of that Fund's
Statement of
Assets and Liabilities as an investment and
subsequently adjusted
to the current market value of the option. For
example, if the
current market value of the option exceeds the premium
paid, the
excess would be unrealized appreciation and,
conversely, if the
premium exceeds the current market value, such excess
would be
unrealized depreciation. The current market value of a
purchased
option will be the last sale price on the principal
exchange on
which the option is traded or, in the absence of a
sale, the last
bid price. If a Fund exercises a call option which it
has
purchased, the cost of the security which that Fund
purchased
upon exercise will be increased by the premium
originally paid.
The sale of shares of a Fund will be suspended
during any
period when the determination of its 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 best
interest of
the particular Fund to do so.
PORTFOLIO TURNOVER
Each Fund purchases securities that are believed
by IMI to
have above average potential for capital appreciation.
Common
stocks are disposed of in situations where it is
believed that
potential for such appreciation has lessened or that
other common
stocks have a greater potential. Therefore, a Fund may
purchase
and sell securities without regard to the length of
time the
security is to be, or has been, held. A change in
securities
held by a Fund is known as "portfolio turnover" and may
involve
the payment by that Fund of dealer markup or
underwriting
commission and other transaction costs on the sale of
securities,
as well as on the reinvestment of the proceeds in other
securities. A Fund's portfolio turnover rate is
calculated by
dividing the lesser of purchases or sales of portfolio
securities
for the most recently completed fiscal year by the
monthly
average of the value of the portfolio securities owned
by the
Fund during that year. For purposes of determining a
Fund's
portfolio turnover rate, all securities whose
maturities at the
time of acquisition were one year or less are excluded.
The
annual portfolio turnover rates for the Funds are
provided in the
Prospectus under "The Funds' Financial Highlights."
REDEMPTIONS
Shares of each Fund are redeemed at their net
asset value
next determined after a proper redemption request has
been
received by MIISC, 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 Trust
reserves 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 a Fund is not reasonably
practicable or it is
not reasonably practicable for the 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 a
Fund.
Under unusual circumstances, when the Board deems
it in the
best interest of a Fund's shareholders, the Fund may
make payment
for shares repurchased or redeemed in whole or in part
in
securities of that Fund taken at current values. If
any such
redemption in kind is to be made, each Fund intends to
make an
election pursuant to Rule 18f-1 under the 1940 Act.
This will
require the particular Fund to redeem with cash at a
shareholder's election in any case where the redemption
involves
less than $250,000 (or 1% of that Fund's net asset
value at the
beginning of each 90-day period during which such
redemptions are
in effect, if that amount is less than $250,000).
Should payment
be made in securities, the redeeming shareholder may
incur
brokerage costs in converting such securities to cash.
Subject to state law restrictions, the Trust may
redeem
those accounts of shareholders who have maintained an
investment,
including sales charges paid, of less than $1,000 in a
Fund for a
period of more than 12 months. All accounts below that
minimum
will be redeemed simultaneously when MIMI deems it
advisable.
The $1,000 balance will be determined by actual dollar
amounts
invested by the shareholder, unaffected by market
fluctuations.
The Trust will notify any such shareholder by certified
mail of
its intention to redeem such account, and the
shareholder shall
have 60 days from the date of such letter to invest
such
additional sums as shall raise the value of such
account above
that minimum. Should the shareholder fail to forward
such sum
within 60 days of the date of the Trust's letter of
notification,
the Trust will redeem the shares held in such account
and
transmit the redemption in value thereof to the
shareholder.
However, those shareholders who are investing pursuant
to the
Automatic Investment Method will not be redeemed
automatically
unless they have ceased making payments pursuant to the
plan for
a period of at least six consecutive months, and these
shareholders will be given six-months' notice by the
Trust before
such redemption. Shareholders in a qualified
retirement, pension
or profit sharing plan who wish to avoid tax
consequences must
"rollover" any sum so redeemed into another qualified
plan within
60 days. The Trustees of the Trust may change the
minimum
account size.
If a shareholder has given authorization for
telephonic
redemption privilege, shares can be redeemed and
proceeds sent by
Federal wire to a single previously designated bank
account.
Delivery of the proceeds of a wire redemption request
of $250,000
or more may be delayed by a Fund for up to seven days
if deemed
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.
Each Fund employs 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 the
respective
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 the
particular
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.
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 advisor about the tax consequences to
them of
investing in the Funds.
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; (b) derive in
each
taxable year less than 30% of its gross income from the
sale or
other disposition of certain assets held less than
three months,
namely: (i) stock or securities; (ii) options,
futures, or
forward contracts (other than those on foreign
currencies); or
(iii) foreign currencies (or options, futures, or
forward
contracts on foreign currencies) that are not directly
related to
the particular Fund's principal business of investing
in stock or
securities (or options and futures with respect to
stock or
securities) (the "30% Limitation"); and (c) diversify
its
holdings so that, at the end of each fiscal quarter,
(i) at least
50% of the market value of the particular 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 the
particular
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 the particular Fund in October, November
or
December of the year with a record date in such a month
and paid
by that 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.
OPTIONS, FUTURES AND FOREIGN CURRENCY FORWARD CONTRACTS
Some of the options, futures and foreign currency
forward
contracts in which a Fund may invest may be "section
1256
contracts." Gains (or losses) on these contracts
generally are
considered to be 60% long-term and 40% short-term
capital gains
or losses; however foreign currency gains or losses
arising from
certain section 1256 contracts are ordinary in
character. Also,
section 1256 contracts held by a Fund at the end of
each taxable
year (and on certain other dates prescribed in the
Code) are
"marked-to-market" with the result that unrealized
gains or
losses are treated as though they were realized.
The transactions in options, futures and forward
contracts
undertaken by a Fund may result in "straddles" for
Federal income
tax purposes. The straddle rules may affect the
character of
gains or losses realized by a Fund. In addition,
losses realized
by a Fund on positions that are part of a straddle may
be
deferred under the straddle rules, rather than being
taken into
account in calculating the taxable income for the
taxable year in
which such losses are realized. Because only a few
regulations
implementing the straddle rules have been promulgated,
the
consequences of such transactions to a Fund are not
entirely
clear. The straddle rules may increase the amount of
short-term
capital gain realized by a Fund, which is taxed as
ordinary
income when distributed to shareholders.
A Fund may make one or more of the elections
available under
the Code which are applicable to straddles. If a Fund
makes any
of the elections, the amount, character and timing of
the
recognition of gains or losses from the affected
straddle
positions will be determined under rules that vary
according to
the election(s) made. The rules applicable under
certain of the
elections may operate to accelerate the recognition of
gains or
losses from the affected straddle positions.
Because application of the straddle rules may
affect the
character of gains or losses, defer losses and/or
accelerate the
recognition of gains or losses from the affected
straddle
positions, the amount which must be distributed to
shareholders
as ordinary income or long-term capital gain, may be
increased or
decreased substantially as compared to a fund that did
not engage
in such transactions.
The 30% Limitation and the diversification
requirements
applicable to a Fund's assets may limit the extent to
which a
Fund will be able to engage in transactions in options,
futures
and forward contracts.
CURRENCY FLUCTUATIONS -- "SECTION 988" GAINS OR LOSSES
Gains or losses attributable to fluctuations in
exchange
rates which occur between the time a Fund accrues
receivables or
liabilities denominated in a foreign currency and the
time the
Fund actually collects such receivables or pays such
liabilities
generally are treated as ordinary income or ordinary
loss.
Similarly, on disposition of some investments,
including debt
securities denominated in a foreign currency and
certain options,
futures and forward contracts, gains or losses
attributable to
fluctuations in the value of the foreign currency
between the
date of acquisition of the security or contract and the
date of
disposition also are treated as ordinary gain or loss.
These
gains and losses, referred to under the Code as
"section 988"
gains or losses, increase or decrease the amount of a
Fund's
investment company taxable income available to be
distributed to
its shareholders as ordinary income. If section 988
losses
exceed other investment company taxable income during a
taxable
year, a Fund would not be able to make any ordinary
dividend
distributions, or distributions made before the losses
were
realized would be recharacterized as a return of
capital to
shareholders, rather than as an ordinary dividend,
reducing each
shareholder's basis in his or her Fund shares.
INVESTMENT IN PASSIVE FOREIGN INVESTMENT COMPANIES
A Fund may invest in shares of foreign
corporations which
may be classified under the Code as passive foreign
investment
companies ("PFICs"). In general, a foreign corporation
is
classified as a PFIC if at least one-half of its assets
constitute investment-type assets, or 75% or more of
its gross
income is investment-type income. If a Fund receives a
so-called
"excess distribution" with respect to PFIC stock, a
Fund itself
may be subject to a tax on a portion of the excess
distribution,
whether or not the corresponding income is distributed
by a Fund
to shareholders. In general, under the PFIC rules, an
excess
distribution is treated as having been realized ratably
over the
period during which a Fund held the PFIC shares. A
Fund itself
will be subject to tax on the portion, if any, of an
excess
distribution that is so allocated to prior Fund taxable
years and
an interest factor will be added to the tax, as if the
tax had
been payable in such prior taxable years. Certain
distributions
from a PFIC as well as gain from the sale of PFIC
shares are
treated as excess distributions. Excess distributions
are
characterized as ordinary income even though, absent
application
of the PFIC rules, certain excess distributions might
have been
classified as capital gain.
A Fund may be eligible to elect alternative tax
treatment
with respect to PFIC shares. Under an election that
currently is
available in some circumstances, a Fund generally would
be
required to include in its gross income its share of
the earnings
of a PFIC on a current basis, regardless of whether
distributions
are received from the PFIC in a given year. If this
election
were made, the special rules, discussed above, relating
to the
taxation of excess distributions, would not apply. In
addition,
other elections may become available that would affect
the tax
treatment of PFIC shares held by a Fund.
DEBT SECURITIES ACQUIRED AT A DISCOUNT
Some of the debt securities (with a fixed maturity
date of
more than one year from the date of issuance) that may
be
acquired by a Fund may be treated as debt securities
that are
issued originally at a discount. Generally, the amount
of the
original issue discount ("OID") is treated as interest
income and
is included in income over the term of the debt
security, even
though payment of that amount is not received until a
later time,
usually when the debt security matures.
Some of the debt securities (with a fixed maturity
date of
more than one year from the date of issuance) that may
be
acquired by a Fund in the secondary market may be
treated as
having market discount. Generally, gain recognized on
the
disposition of, and any partial payment of principal
on, a debt
security having market discount is treated as ordinary
income to
the extent the gain, or principal payment, does not
exceed the
"accrued market discount" on such debt security. In
addition,
the deduction of any interest expenses attributable to
debt
securities having market discount may be deferred.
Market
discount generally accrues in equal daily installments.
A Fund
may make one or more of the elections applicable to
debt
securities having market discount, which could affect
the
character and timing of recognition of income.
Some debt securities (with a fixed maturity date
of one year
or less from the date of issuance) that may be acquired
by a Fund
may be treated as having acquisition discount, or OID
in the case
of certain types of debt securities. Generally, a Fund
will be
required to include the acquisition discount, or OID,
in income
over the term of the debt security, even though payment
of that
amount is not received until a later time, usually when
the debt
security matures. A Fund may make one or more of the
elections
applicable to debt securities having acquisition
discount, or
OID, which could affect the character and timing of
recognition
of income.
A Fund generally will be required to distribute
dividends to
shareholders representing discount on debt securities
that is
currently includible in income, even though cash
representing
such income may not have been received by a Fund. Cash
to pay
such dividends may be obtained from sales proceeds of
securities
held by a Fund.
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 a Fund to a
corporate
shareholder, to the extent such dividends are
attributable to
dividends received from U.S. corporations by the 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 a Fund as capital gain dividends, are
taxable as
long-term capital gains, whether paid in cash or in
shares,
regardless of how long the shareholder has held a
Fund's shares
and 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 a 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.
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. Investors 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 which 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 generally 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 a 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.
FOREIGN WITHHOLDING TAXES
Income received by a 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 a Fund's total
assets at
the close of its taxable year consists of securities of
foreign
corporations, the Fund will be eligible and may elect
to "pass-
through" to that Fund's shareholders the amount of
foreign income
and similar taxes paid by that Fund. Pursuant to this
election,
a shareholder will be required to include in gross
income (in
addition to taxable dividends actually received) his or
her pro
rata share of the foreign income and similar taxes paid
by a
Fund, and will be entitled either to deduct his or her
pro rata
share of foreign income and similar taxes in computing
his or her
taxable income or to use it as a foreign tax credit
against his
or her U.S. Federal income taxes, subject to
limitations. No
deduction for foreign taxes may be claimed by a
shareholder who
does not itemize deductions. Foreign taxes generally
may not be
deducted by a shareholder that is an individual in
computing the
alternative minimum tax. Each shareholder will be
notified
within 60 days after the close of a Fund's taxable year
whether
the foreign taxes paid by the Fund will "pass-through"
for that
year and, if so, such notification will designate (1)
the
shareholder's portion of the foreign taxes paid to each
such
country and (2) the portion of the dividend which
represents
income derived from sources within each such country.
Generally, a credit for foreign taxes is subject
to the
limitation that it may not exceed the shareholder's
U.S. tax
attributable to his or her total foreign source taxable
income.
For this purpose, if a Fund makes the election
described in the
preceding paragraph, the source of that Fund's income
flows
through to its shareholders. With respect to a Fund,
gains from
the sale of securities generally will be treated as
derived from
U.S. sources and section 988 gains will be treated as
ordinary
income derived from U.S. sources. The limitation on
the foreign
tax credit is applied separately to foreign source
passive
income, including foreign source passive income
received from a
Fund. In addition, the foreign tax credit may offset
only 90% of
the revised alternative minimum tax imposed on
corporations and
individuals.
The foregoing is only a general description of the
foreign
tax credit under current law. Because application of
the credit
depends on the particular circumstances of each
shareholder,
shareholders are advised to consult their own tax
advisers.
BACKUP WITHHOLDING
Each Fund will be required to report to the
Internal Revenue
Service ("IRS") all distributions as well as gross
proceeds from
the redemption of the particular 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 a
Fund with
and to certify the shareholder's correct taxpayer
identification
number or social security number, (2) the IRS notifies
the
shareholder or the particular 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 a Fund or shareholders.
Shareholders
are advised to consult their own tax advisers with
respect to the
particular tax consequences to them of an investment in
a Fund.
PERFORMANCE INFORMATION
Comparisons of a Fund's performance may be made
with respect
to various unmanaged indices (including the TSE 300,
S&P 100, S&P
500, Dow Jones Industrial Average and Major Market
Index) which
assume reinvestment of dividends, but do not reflect
deductions
for administrative and management costs. A Fund also
may be
compared to Lipper's Analytical Reports, reports
produced by a
widely used independent research firm that ranks mutual
funds by
overall performance, investment objectives and assets,
or to
Wiesenberger Reports. Lipper Analytical Services does
not
include sales charges in computing performance.
Further
information on comparisons is contained in the
Prospectus.
Performance rankings will be based on historical
information and
are not intended to indicate future performance.
In addition, the Trust may, from time to time,
include the
average annual total return and the cumulative total
return of
shares of a Fund in advertisements, promotional
literature or
reports to shareholders or prospective investors.
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 a 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 a 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 shares and Class C shares, the
applicable CDSC imposed upon redemption of Class B
shares or
Class C shares held for the period is deducted.
Standardized
Return quotations for the Funds 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%.
A Fund 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.
The following tables summarize the calculation of
Standardized and Non-Standardized Return for the Class
A, Class
B, Class C and Class I (for Ivy International Fund)
shares of the
Funds for the periods indicated. In determining the
average
annual total return for a specific Class of shares of a
Fund,
recurring fees, if any, that are charged to all
shareholder
accounts are taken into consideration. For any account
fees that
vary with the size of the account of a Fund, the
account fee used
for purposes of the following computations is assumed
to be the
fee that would be charged to the mean account size of
the
particular Fund. Shares of each of Ivy Canada Fund and
Ivy
Global Fund outstanding as of March 31, 1994 were
designated
Class A shares of each respective Fund. Shares of Ivy
International Fund outstanding as of October 22, 1993
have been
redesignated as "Class A" shares of the Fund.
IVY CANADA FUND:
STANDARDIZED RETURN[*]
CLASS A[1] CLASS B[2] CLASS C[6]
One year ended
December 31,
1995: .26% .74% N/A
Five years ended
December 31,
1995: 3.29% N/A N/A
Inception[#] to
December 31,
1995:[5] 1.18% (6.49)% N/A
NON-STANDARDIZED RETURN[**]
CLASS A[3] CLASS B[4] CLASS C[6]
One year ended
December 31,
1995: 6.37% 5.74% N/A
Five years ended
December 31,
1995: 4.52% N/A N/A
Inception[#] to
December 31,
1995:[5] 1.91% (4.28)% N/A
_________________________
[*] The Standardized Return figures for Class A shares
reflect
the deduction of the maximum initial sales charge
of 5.75%.
The Standardized Return figures for Class B shares
reflect
the deduction of the applicable CDSC imposed on a
redemption
of Class B shares held for the period.
[**] The Non-Standardized Return figures do not reflect
the
deduction of any initial sales charge or CDSC.
[#] The inception date for Ivy Canada Fund (and the
Class A
shares of the Fund) was November 17, 1987; the
inception
date for Class B shares of the Fund was April 1,
1994. The
inception date for Class C shares of the Fund is
April 30,
1996. Until December 31, 1994, Mackenzie
Investment
Management, Inc. served as investment adviser to
the Fund,
which until that date was a series of the Company.
[1] The Standardized Return figures for Class A shares
reflect
expense reimbursement. Without expense
reimbursement, the
Standardized Return for Class A shares for the one
year
ended December 31, 1995, the five years ended
December 31,
1995 and the period from inception through
December 31, 1995
would have been (.08)%, 3.22% and .71%,
respectively.
[2] The Standardized Return figures for Class B shares
reflect
expense reimbursement. Without expense
reimbursement, the
Standardized Return for Class B shares for the one
year
ended December 31, 1995 and the period from
inception
through December 31, 1995 would have been .40% and
(6.67)%,
respectively. (Since the inception date for Class
B shares
of the Fund was April 1, 1994, there were no Class
B shares
outstanding for the duration of the five year
period ending
December 31, 1995.)
[3] The Non-Standardized Return figures for Class A
shares
reflect expense reimbursement. Without expense
reimbursement, the Non-Standardized Return for
Class A
shares for the one year ended December 31, 1995,
the five
years ended December 31, 1995 and the period from
inception
through December 31, 1995 would have been 6.01%,
4.45% and
1.44%, respectively.
[4] The Non-Standardized Return figures for Class B
shares
reflect expense reimbursement. Without expense
reimbursement, the Non-Standardized Return for
Class B
shares for the one year ended December 31, 1995
and the
period from inception through December 31, 1995
would have
been 5.39% and (4.47)%, respectively. (Since the
inception
date for Class B shares of the Fund was April 1,
1994, there
were no Class B shares outstanding for the
duration of the
five year period ending December 31, 1995.)
[5] The total return for a period less than a full
year is
calculated on an aggregate basis and is not
annualized.
[6] Since the inception date for Class C shares of the
Fund is
April 30, 1996, there were no Class C shares
outstanding
during any of the relevant time periods.
IVY CHINA REGION FUND:
STANDARDIZED RETURN[*]
CLASS A[1] CLASS B[2] CLASS C[6]
One year ended
December 31,
1995: (4.26)% (4.17)% N/A
Inception[#] to
December 31,
1995:[5] (8.10)% (7.58)% N/A
NON-STANDARDIZED RETURN[**]
CLASS A[3] CLASS B[4] CLASS C[6]
One year ended
December 31,
1995: (1.59)% .83% N/A
Inception[#] to
December 31,
1995:[5] (5.56)% (6.27)% N/A
_________________________
[*] The Standardized Return figures for Class A shares
reflect
the deduction of the maximum initial sales charge
of 5.75%.
The Standardized Return figures for Class B shares
reflect
the deduction of the applicable CDSC imposed on a
redemption
of Class B shares held for the period.
[**] The Non-Standardized Return figures do not reflect
the
deduction of any initial sales charge or CDSC.
[#] The inception date for Ivy China Region Fund
(Class A and
Class B shares) was October 23, 1993. The
inception date
for Class C shares of the Fund is April 30, 1996.
[1] The Standardized Return figures for Class A shares
reflect
expense reimbursement. Without expense
reimbursement, the
Standardized Return for Class A shares for the one
year
ended December 31, 1995 and the period from
inception
through December 31, 1995 would have been (4.70)%
and
(8.57)%, respectively.
[2] The Standardized Return figures for Class B shares
reflect
expense reimbursement. Without expense
reimbursement, the
Standardized Return for Class B shares for the one
year
ended December 31, 1995 and the period from
inception
through December 31, 1995 would have been (4.62)%
and
(8.01)%, respectively.
[3] The Non-Standardized Return figures for Class A
shares
reflect expense reimbursement. Without expense
reimbursement, the Non-Standardized Return for
Class A
shares for the one year ended December 31, 1995
and the
period from inception through December 31, 1995
would have
been 1.11% and (6.06)%, respectively.
[4] The Non-Standardized Return figures for Class B
shares
reflect expense reimbursement. Without expense
reimbursement, the Non-Standardized Return for
Class B
shares for the one year ended December 31, 1995
and the
period from inception through December 31, 1995
would have
been .36% and (6.72)%, respectively.
[5] The total return for a period less than a full
year is
calculated on an aggregate basis and is not
annualized.
[6] Since the inception date for Class C shares of the
Fund is
April 30, 1996, there were no Class C shares
outstanding
during any of the relevant time periods.
IVY GLOBAL FUND:
STANDARDIZED RETURN[*]
CLASS A[1] CLASS B[2] CLASS C[6]
One year ended
December 31,
1995: 5.64% 6.25% N/A
Inception[#] to
December 31,
1995:[5] 8.05% 3.00% N/A
NON-STANDARDIZED RETURN[**]
CLASS A[3] CLASS B[4] CLASS C[6]
One year ended
December 31,
1995: 12.08% 11.25% N/A
Inception[#] to
December 31,
1995:[5] 9.42% 5.22% N/A
_________________________
[*] The Standardized Return figures for Class A shares
reflect
the deduction of the maximum initial sales charge
of 5.75%.
The Standardized Return figures for Class B shares
reflect
the deduction of the applicable CDSC imposed on a
redemption
of Class B shares held for the period.
[**] The Non-Standardized Return figures do not reflect
the
deduction of any initial sales charge or CDSC.
[#] The inception date for Ivy Global Fund (and Class
A shares
of the Fund) was April 18, 1991; the inception
date for
Class B shares of the Fund was April 1, 1994; and
the
inception date for the Class C shares of the Fund
is April
30, 1996. Until December 31, 1994, Mackenzie
Investment
Management Inc. served as investment adviser to
the Fund,
which until that date was a series of the Company.
[1] The Standardized Return figures for Class A shares
reflect
expense reimbursement. Without expense
reimbursement, the
Standardized Return for Class A shares for the one
year
ended December 31, 1995 and the period from
inception
through December 31, 1995 would have been 5.37%
and 7.02%,
respectively.
[2] The Standardized Return figures for Class B shares
reflect
expense reimbursement. Without expense
reimbursement, the
Standardized Return for Class B shares for the one
year
ended December 31, 1995 and the period from
inception
through December 31, 1995 would have been 5.98%
and 2.84%,
respectively.
[3] The Non-Standardized Return figures for Class A
shares
reflect expense reimbursement. Without expense
reimbursement, the Non-Standardized Return for
Class A
shares for the one year ended December 31, 1995
and the
period from inception through December 31, 1995
would have
been 11.80% and 3.38%, respectively.
[4] The Non-Standardized Return figures for Class B
shares
reflect expense reimbursement. Without expense
reimbursement, the Non-Standardized Return for
Class B
shares for the one year ended December 31, 1995
and the
period from inception through December 31, 1995
would have
been 10.97% and 5.05%, respectively.
[5] The total return for a period less than a full
year is
calculated on an aggregate basis and is not
annualized.
[6] Since the inception date for Class C shares of the
Fund is
April 30, 1996, there were no Class C shares
outstanding
during any of the relevant time periods.
IVY INTERNATIONAL FUND
STANDARDIZED
RETURN[*]
CLASS A[1] CLASS B[2] CLASS C[7]
CLASS I[5]
One year ended
December 31,
1995: 6.17% 6.62% N/A
12.85%
Five years ended
December 31,
1995: 13.88% N/A N/A
N/A
Inception[#] to
December 31,
1995:[6] 14.42% 8.57% N/A
10.41%
NON-STANDARDIZED RETURN[**]
CLASS A[3] CLASS B[4] CLASS C[7]
CLASS I[5]
One year ended
December 31,
1995: 12.65% 11.62% N/A
12.85%
Five years ended
December 31,
1995: 15.24% N/A N/A
N/A
Inception[#] to
December 31,
1995:[6] 15.13% 10.21% N/A
10.41%
_________________________
[*] The Standardized Return figures for Class A shares
reflect
the deduction of the maximum initial sales charge
of 5.75%.
The Standardized Return figures for Class B shares
reflect
the deduction of the applicable CDSC imposed on a
redemption
of Class B shares held for the period. Class I
shares are
not subject to an initial or a CDSC; therefore,
the Non-
Standardized Return figures would be identical to
the
Standardized Return figures.
[**] The Non-Standardized Return figures do not reflect
the
deduction of any initial sales charge or CDSC.
[#] The inception date for Ivy International Fund (and
the Class
A shares of the Fund) was April 21, 1986; the
inception date
for the Class B and Class I shares of the Fund was
October 23, 1993; and the inception date for the
Class C
shares of the Fund is April 30, 1996.
[1] The Standardized Return figures for Class A shares
reflect
expense reimbursement. Without expense
reimbursement, the
Standardized Return for Class A shares for the one
year
ended December 31, 1995, the five years ended
December 31,
1995 and the period from inception through
December 31, 1995
would have been 6.17%, 13.86% and 14.41%,
respectively.
[2] The Standardized Return figures for Class B shares
reflect
expense reimbursement. Without expense
reimbursement, the
Standardized Return for Class B shares for the one
year
ended December 31, 1995 and the period from
inception
through December 31, 1995 would have been 6.62%
and 8.57%,
respectively. (Since the inception date for Class
B shares
of the Fund was October 23, 1993, there were no
Class B
shares outstanding for the duration of the five
year period
ending December 31, 1995.)
[3] The Non-Standardized Return figures for Class A
shares
reflect expense reimbursement. Without expense
reimbursement, the Non-Standardized Return for
Class A
shares for the one year ended December 31, 1995,
the five
years ended December 31, 1995 and the period from
inception
through December 31, 1995 would have been 12.65%,
15.21% and
15.11%, respectively.
[4] The Non-Standardized Return figures for Class B
shares
reflect expense reimbursement. Without expense
reimbursement, the Non-Standardized Return for
Class B
shares for the one year ended December 31, 1995
and the
period from inception through December 31, 1995
would have
been 11.62% and 10.21%, respectively. (Since the
inception
date for Class B shares of the Fund was October
23, 1993,
there were no Class B shares outstanding for the
duration of
the five year period ending December 31, 1995.)
[5] Class I shares are not subject to an initial sales
charge or
a CDSC, therefore the Non-Standardized and
Standardized
Return figures are identical. (Since the
inception date for
Class I shares of the Fund was October 23, 1993,
there were
no Class I shares outstanding for the duration of
the five
year period ending December 31, 1995.)
[6] The total return for a period less than a full
year is
calculated on an aggregate basis and is not
annualized.
[7] Since the inception date for Class C shares of the
Fund is
April 30, 1996, there were no Class C shares
outstanding
during any of the relevant time periods.
IVY LATIN AMERICA STRATEGY FUND
STANDARDIZED RETURN[*]
CLASS A[1] CLASS B[2] CLASS C[6]
One year ended
December 31,
1995: (22.04)% (22.90)% N/A
Inception[#] to
December 31,
1995:[5] (30.65)% (30.06)% N/A
NON-STANDARDIZED RETURN[**]
CLASS A[3] CLASS B[4] CLASS C[6]
One year ended
December 31,
1995: (17.28)% (17.90)% N/A
Inception[#] to
December 31,
1995:[5] (26.93)% (27.47)% N/A
_________________________
[*] The Standardized Return figures for Class A shares
reflect
the deduction of the maximum initial sales charge
of 5.75%.
The Standardized Return figures for Class B shares
reflect
the deduction of the applicable CDSC imposed on a
redemption
of Class B shares held for the period.
[**] The Non-Standardized Return figures do not reflect
the
deduction of any initial sales charge or CDSC.
[#] The inception date for Ivy Latin America Strategy
Fund
(Class A and Class B shares) was November 1, 1994.
The
inception date for Class C shares of the Fund is
April 30,
1996.
[1] The Standardized Return figures for Class A shares
reflect
expense reimbursement. Without expense
reimbursement, the
Standardized Return for Class A shares for the one
year
ended December 31, 1995 and the period from
inception
through December 31, 1995 would have been (28.49)%
and
(36.91)%, respectively.
[2] The Standardized Return figures for Class B shares
reflect
expense reimbursement. Without expense
reimbursement, the
Standardized Return for Class B shares for the one
year
ended December 31, 1995 and the period from
inception
through December 31, 1995 would have been (29.29)%
and
(36.10)%, respectively.
[3] The Non-Standardized Return figures for Class A
shares
reflect expense reimbursement. Without expense
reimbursement, the Non-Standardized Return for
Class A
shares for the one year ended December 31, 1995
and the
period from inception through December 31, 1995
would have
been (24.09)% and (33.57)%, respectively.
[4] The Non-Standardized Return figures for Class B
shares
reflect expense reimbursement. Without expense
reimbursement, the Non-Standardized Return for
Class B
shares for the one year ended December 31, 1995
and the
period from inception through December 31, 1995
would have
been (24.67)% and (33.79)%, respectively.
[5] The total return for a period less than a full
year is
calculated on an aggregate basis and is not
annualized.
[6] Since the inception date for Class C shares of the
Fund is
April 30, 1996, there were no Class C shares
outstanding
during any of the relevant time periods.
IVY NEW CENTURY FUND
STANDARDIZED RETURN[*]
CLASS A[1] CLASS B[2] CLASS C[6]
One year ended
December 31,
1995: .29% .62% N/A
Inception[#] to
December 31,
1995:[5] (11.54)% (3.01)% N/A
NON-STANDARDIZED RETURN[**]
CLASS A[3] CLASS B[4] CLASS C[6]
One year ended
December 31,
1995: 6.40% 5.62% N/A
Inception[#] to
December 31,
1995:[5] (6.88)% (7.56)% N/A
_________________________
[*] The Standardized Return figures for Class A shares
reflect
the deduction of the maximum initial sales charge
of 5.75%.
The Standardized Return figures for Class B shares
reflect
the deduction of the applicable CDSC imposed on a
redemption
of Class B shares held for the period.
[**] The Non-Standardized Return figures do not reflect
the
deduction of any initial sales charge or CDSC.
[#] The inception date for Ivy New Century Fund (Class
A and
Class B shares) was November 1, 1994. The
inception date
for Class C shares of the Fund is April 30, 1996.
[1] The Standardized Return figures for Class A shares
reflect
expense reimbursement. Without expense
reimbursement, the
Standardized Return for Class A shares for the one
year
ended December 31, 1995 and the period from
inception
through December 31, 1995 would have been (3.34)%
and
(15.73)%, respectively.
[2] The Standardized Return figures for Class B shares
reflect
expense reimbursement. Without expense
reimbursement, the
Standardized Return for Class B shares for the one
year
ended December 31, 1995 and the period from
inception
through December 31, 1995 would have been (3.01)%
and
(15.28)%, respectively.
[3] The Non-Standardized Return figures for Class A
shares
reflect expense reimbursement. Without expense
reimbursement, the Non-Standardized Return for
Class A
shares for the one year ended December 31, 1995
and the
period from inception through December 31, 1995
would have
been 2.58% and (11.28)%, respectively.
[4] The Non-Standardized Return figures for Class B
shares
reflect expense reimbursement. Without expense
reimbursement, the Non-Standardized Return for
Class B
shares for the one year ended December 31, 1995
and the
period from inception through December 31, 1995
would have
been 1.82% and (11.93)%, respectively.
[5] The total return for a period less than a full
year is
calculated on an aggregate basis and is not
annualized.
[6] Since the inception date for Class C shares of the
Fund is
April 30, 1996, there were no Class C shares
outstanding
during any of the relevant time periods.
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 a 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.
IVY CANADA FUND. The following table summarizes
the
calculation of Cumulative Total Return for the periods
indicated
through December 31, 1995, assuming the maximum 5.75%
sales
charge has been assessed.
SINCE
ONE YEAR FIVE YEARS
INCEPTION[*]
Class A .26% 17.56% 10.03%
Class B .74% N/A[**] (11.08)%
Class C N/A[**] N/A[**] N/A[**]
The following table summarizes the calculation of
Cumulative
Total Return for the periods indicated through December
31, 1995,
assuming the maximum 5.75% sales charge has not been
assessed.
SINCE
ONE YEAR FIVE YEARS
INCEPTION[*]
Class A 6.37% 24.73% 16.74%
Class B 5.74% N/A[**] (7.37)%
Class C N/A[**] N/A[**] N/A[**]
___________________________
[*] The inception date for Ivy Canada Fund (and the
Class A
shares of the Fund) was November 17, 1987; the
inception
date for the Class B shares of Ivy Canada Fund was
April 1,
1994. Until December 31, 1994, Mackenzie
Investment
Management, Inc. served as investment adviser to
Ivy Canada
Fund, which until that date was a series of the
Company.
[**] No such shares were outstanding for the duration
of the time
period indicated.
IVY CHINA REGION FUND. The following table
summarizes the
calculation of Cumulative Total Return for the periods
indicated
through December 31, 1995, assuming the maximum 5.75%
sales
charge has been assessed.
SINCE
ONE YEAR INCEPTION[*]
Class A (4.27)% (16.83)%
Class B (4.17)% (15.79)%
Class C N/A[**] N/A[**]
The following table summarizes the calculation of
Cumulative
Total Return for the periods indicated through December
31, 1995,
assuming the maximum 5.75% sales charge has not been
assessed.
SINCE
ONE YEAR INCEPTION[*]
Class A 1.59% (11.75)%
Class B .83% (13.19)%
Class C N/A[**] N/A[**]
___________________________
[*] The inception date for Ivy China Region Fund was
October 23,
1993.
[**] No such shares were outstanding for the duration
of the time
period indicated.
IVY GLOBAL FUND. The following table summarizes
the
calculation of Cumulative Total Return for the periods
indicated
through December 31, 1995, assuming the maximum 5.75%
sales
charge has been assessed.
SINCE
ONE YEAR INCEPTION[*]
Class A 5.64% 44.00%
Class B 6.25% 5.31%
Class C N/A[**] N/A[**]
The following table summarizes the calculation of
Cumulative
Total Return for the periods indicated through December
31, 1995,
assuming the maximum 5.75% sales charge has not been
assessed.
SINCE
ONE YEAR INCEPTION[*]
Class A 12.08% 52.79%
Class B 11.25% 9.31%
Class C N/A[**] N/A[**]
___________________________
[*] The inception date for the Fund (and Class A
shares of the
Fund) was April 18, 1991; the inception date for
Class B
shares of the Fund was April 1, 1994. Until
December 31,
1994, Mackenzie Investment Management Inc. served
as
investment adviser to the Fund, which until that
date was a
series of the Company.
[**] No such shares were outstanding for the duration
of the time
period indicated.
IVY INTERNATIONAL FUND. The following table
summarizes the
calculation of Cumulative Total Return for the periods
indicated
through December 31, 1995, assuming the maximum 5.75%
sales
charge has been assessed.
SINCE
ONE YEAR FIVE YEARS
INCEPTION[*]
Class A 6.17% 91.54% 268.32%
Class B 6.62% N/A[**] 20.72%
Class C N/A[**] N/A[**] N/A[**]
Class I 12.85% N/A[**] 24.25%
The following table summarizes the calculation of
Cumulative
Total Return for the periods indicated through December
31, 1995,
assuming the maximum 5.75% sales charge has not been
assessed.
SINCE
ONE YEAR FIVE YEARS
INCEPTION[*]
Class A 12.65% 103.22% 290.79%
Class B 11.62% N/A[**] 23.72%
Class C N/A[**] N/A[**] N/A[**]
Class I 12.85% N/A[**] 24.25%
___________________________
[*] The inception date for Ivy International Fund (and
the Class
A shares of the Fund) was April 21, 1986; the
inception date
for the Class B and Class I shares of Ivy
International Fund
was October 23, 1993.
[**] No such shares were outstanding for the duration
of the time
period indicated.
IVY LATIN AMERICA STRATEGY FUND. The following
table
summarizes the calculation of Cumulative Total Return
for the
periods indicated through December 31, 1995, assuming
the maximum
5.75% sales charge has been assessed.
SINCE
ONE YEAR INCEPTION[*]
Class A (22.04)% (34.59)%
Class B (22.90)% (33.95)%
Class C N/A[**] N/A[**]
The following table summarizes the calculation of
Cumulative
Total Return for the periods indicated through December
31, 1995,
assuming the maximum 5.75% sales charge has not been
assessed.
SINCE
ONE YEAR INCEPTION[*]
Class A (17.28)% (30.60)%
Class B (17.90)% (31.20)%
Class C N/A[**] N/A[**]
___________________________
[*] The inception date for Ivy Latin America Strategy
Fund was
November 1, 1994.
[**] No such shares were outstanding for the duration
of the time
period indicated.
IVY NEW CENTURY FUND. The following table
summarizes the
calculation of Cumulative Total Return for the periods
indicated
through December 31, 1995, assuming the maximum 5.75%
sales
charge has been assessed.
SINCE
ONE YEAR INCEPTION[*]
Class A .29% (13.25)%
Class B .62% (12.40)%
Class C N/A[**] N/A[**]
The following table summarizes the calculation of
Cumulative
Total Return for the periods indicated through December
31, 1995,
assuming the maximum 5.75% sales charge has not been
assessed.
SINCE
ONE YEAR INCEPTION[*]
Class A 6.40% (7.96)%
Class B 5.62% (8.75)%
Class C N/A[**] N/A[**]
___________________________
[*] The inception date for Ivy New Century Fund was
November 1,
1994.
[**] No such shares were outstanding for the duration
of the time
period indicated.
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 the Trust's existence and
may or may
not include the impact of sales charges, taxes or other
factors.
Performance quotations for a Fund will vary from
time to
time depending on market conditions, the composition of
the
Fund's portfolio and operating expenses of that Fund.
These
factors and possible differences in the methods used in
calculating performance quotations should be considered
when
comparing performance information regarding a Fund's
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 a Fund's
shares
and the risks associated with a Fund's 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
their 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
Director
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' Portfolios of Investments as of
December 31,
1995, Statements of Assets and Liabilities as of
December 31,
1995, Statements of Operations for the fiscal year
ended December
31, 1995, Statements of Changes in Net Assets for the
six-month
period ended December 31, 1994 and the fiscal years
ended June
30, 1994 and the fiscal year ended December 31, 1995,
Financial
Highlights, Notes to Financial Statements, and Reports
of
Independent Accountants are included in each Fund's
December 31,
1995 Annual Report to shareholders, which are
incorporated by
reference into this SAI. Copies of the Funds'
financial
statements may be obtained upon request and without
charge from
the Trust at the Distributor's address and telephone
number
provided on the cover of this SAI.
APPENDIX A
DESCRIPTION OF STANDARD & POOR'S CORPORATION
("S&P") AND
MOODY'S INVESTORS SERVICE, INC. ("MOODY'S") CORPORATE
BOND AND
COMMERCIAL PAPER RATINGS
[From "Moody's Bond Record," November 1994 Issue
(Moody's
Investor Service, New York, 1994), and "Standard &
Poor's
Municipal Ratings Handbook," October 1994 Issue (McGraw
Hill, New
York, 1994).]
MOODY'S:
(a) CORPORATE BONDS. Bonds rated Aaa by Moody's
are judged
by Moody's to be of the best quality, carrying the
smallest
degree of investment risk. Interest payments are
protected by a
large or exceptionally stable margin and principal is
secure.
Bonds rated Aa are judged by Moody's to be of high
quality by all
standards. Aa bonds are rated lower than Aaa bonds
because
margins of protection may not be as large as those of
Aaa bonds,
or fluctuations of protective elements may be of
greater
amplitude, or there may be other elements present which
make the
long-term risks appear somewhat larger than those
applicable to
Aaa securities. Bonds which are rated A by Moody's
possess many
favorable investment attributes and are considered as
upper
medium-grade obligations. Factors giving security to
principal
and interest are considered adequate, but elements may
be present
which suggest a susceptibility to impairment sometime
in the
future.
Bonds rated Baa by Moody's are considered
medium-grade
obligations, i.e., they are neither highly protected
nor poorly
secured. Interest payments and principal security
appear
adequate for the present, but certain protective
elements may be
lacking or may be characteristically unreliable over
any great
length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative
characteristics as
well. Bonds which are rated Ba are judged to have
speculative
elements; their future cannot be considered
well-assured. Often
the protection of interest and principal payments may
be very
moderate and thereby not well safeguarded during both
good and
bad times over the future. Uncertainty of position
characterizes
bonds in this class. Bonds which are rated B generally
lack
characteristics of the desirable investment. Assurance
of
interest and principal payments of or maintenance of
other terms
of the contract over any long period of time may be
small.
Bonds which are rated Caa are of poor standing.
Such
issues may be in default or there may be present
elements of
danger with respect to principal or interest. Bonds
which are
rated Ca represent obligations which are speculative in
a high
degree. Such issues are often in default or have other
marked
shortcomings. Bonds which are rated C are the lowest
rated class
of bonds and issues so rated can be regarded as having
extremely
poor prospects of ever attaining any real investment
standing.
(b) COMMERCIAL PAPER. The Prime rating is the
highest
commercial paper rating assigned by Moody's. Among the
factors
considered by Moody's in assigning ratings are the
following:
(1) evaluation of the management of the issuer; (2)
economic
evaluation of the issuer's industry or industries and
an
appraisal of speculative-type risks which may be
inherent in
certain areas; (3) evaluation of the issuer's products
in
relation to competition and customer acceptance; (4)
liquidity;
(5) amount and quality of long-term debt; (6) trend of
earnings
over a period of ten years; (7) financial strength of a
parent
company and the relationships which exist with the
issuer; and
(8) recognition by management of obligations which may
be present
or may arise as a result of public interest questions
and
preparations to meet such obligations. Issuers within
this Prime
category may be given ratings 1, 2 or 3, depending on
the
relative strengths of these factors. The designation
of Prime-1
indicates the highest quality repayment capacity of the
rated
issue.
S&P:
(a) CORPORATE BONDS. An S&P corporate debt
rating is a
current assessment of the creditworthiness of an
obligor with
respect to a specific obligation. The ratings are
based on
current information furnished by the issuer or obtained
by S&P
from other sources it considers reliable. The ratings
described
below may be modified by the addition of a plus or
minus sign to
show relative standing within the major rating
categories.
Debt rated AAA by S&P is considered by S&P to be
the highest
grade obligation. Capacity to pay interest and repay
principal
is extremely strong. Debt rated AA is judged by S&P to
have a
very strong capacity to pay interest and repay
principal and
differs from the highest rated issues only in small
degree. Debt
rated A by S&P has a strong capacity to pay interest
and repay
principal, although it is somewhat more susceptible to
the
adverse effects of changes in circumstances and
economic
conditions than debt in higher rated categories.
Debt rated BBB by S&P is regarded by S&P as having
an
adequate capacity to pay interest and repay principal.
Although
such bonds normally exhibit adequate protection
parameters,
adverse economic conditions or changing circumstances
are more
likely to lead to a weakened capacity to pay interest
and repay
principal than debt in higher rated categories.
Debt rated BB, B, CCC, CC and C is regarded as
having
predominately speculative characteristics with respect
to
capacity to pay interest and repay principal. BB
indicates the
least degree of speculation and C the highest. While
such debt
will likely have some quality and protective
characteristics,
these are outweighed by large uncertainties or
exposures to
adverse conditions. Debt rated BB has less near-term
vulnerability to default than other speculative issues.
However,
it faces major ongoing uncertainties or exposure to
adverse
business, financial or economic conditions which could
lead to
inadequate capacity to meet timely interest and
principal
payments. The BB rating category is also used for debt
subordinated to senior debt that is assigned an actual
or implied
BBB- rating. Debt rated B has a greater vulnerability
to default
but currently has the capacity to meet interest
payments and
principal repayments. Adverse business, financial, or
economic
conditions will likely impair capacity or willingness
to pay
interest and repay principal. The B rating category is
also used
for debt subordinated to senior debt that is assigned
an actual
or implied BB or BB- rating. Debt rated CCC has a
currently
identifiable vulnerability to default, and is dependent
upon
favorable business, financial, and economic conditions
to meet
timely payment of interest and repayment of principal.
In the
event of adverse business, financial or economic
conditions, it
is not likely to have the capacity to pay interest and
repay
principal. The CCC rating category is also used for
debt
subordinated to senior debt that is assigned an actual
or implied
B or B- rating. The rating CC typically is applied to
debt
subordinated to senior debt which is assigned an actual
or
implied CCC debt rating. The rating C typically is
applied to
debt subordinated to senior debt which is assigned an
actual or
implied CCC- debt rating. The C rating may be used to
cover a
situation where a bankruptcy petition has been filed,
but debt
service payments are continued.
(b) COMMERCIAL PAPER. An S&P commercial paper
rating is a
current assessment of the likelihood of timely payment
of debt
having an original maturity of no more than 365 days.
Commercial paper rated A by S&P has the following
characteristics: (i) liquidity ratios are adequate to
meet cash
requirements; (ii) long-term senior debt rating should
be A or
better, although in some cases BBB credits may be
allowed if
other factors outweigh the BBB; (iii) the issuer should
have
access to at least one additional channel of borrowing;
(iv)
basic earnings and cash flow should have an upward
trend with
allowances made for unusual circumstances; and (v)
typically the
issuer's industry should be well established and the
issuer
should have a strong position within its industry and
the
reliability and quality of management should be
unquestioned.
Issues rated A are further referred to by use of
numbers 1, 2 and
3 to denote relative strength within this highest
classification.
For example, the A-1 designation indicates that the
degree of
safety regarding timely payment of debt is strong.
Issues rated B are regarded as having only
speculative
capacity for timely payment. The C rating is assigned
to short-
term debt obligations with a doubtful capacity for
payment.
IVY INTERNATIONAL BOND FUND
a series of
IVY FUND
Via Mizner Financial Plaza, Suite 300
700 South Federal Highway
Boca Raton, Florida 33432
Statement of Additional Information
April 30, 1996
_________________________________________________________________
Ivy Fund (the "Trust") is a diversified, open-end
management
investment company that currently consists of thirteen
fully
managed portfolios. This Statement of Additional
Information
("SAI") describes one of the portfolios, Ivy
International Bond
Fund (the "Fund"). The other twelve portfolios of the
Trust are
described in separate Statements of Additional
Information.
This SAI is not a prospectus and should be read in
conjunction with the prospectus for the Fund dated
April 30, 1996
(the "Prospectus"), which may be obtained upon request
and
without charge from the Trust at the Distributor's
address and
telephone number listed 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
Mackenzie Ivy Funds Distribution, Inc.
("MIFDI")
Via Mizner Financial Plaza, Suite 300
700 South Federal Highway
Boca Raton, Florida 33432
Telephone (800) 456-5111
TABLE OF CONTENTS
PAGE
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . .
. . . 1
AMERICAN DEPOSITORY RECEIPTS (ADRS) . . . . . . .
. . . 1
FOREIGN SECURITIES . . . . . . . . . . . . . . . .
. . . 1
FOREIGN CURRENCIES . . . . . . . . . . . . . . . .
. . . 1
FORWARD FOREIGN CURRENCY CONTRACTS . . . . . . . .
. . . 2
HIGH YIELD BONDS . . . . . . . . . . . . . . . . .
. . . 2
WHEN-ISSUED PURCHASES AND FIRM COMMITMENT
AGREEMENTS . . 3
ZERO COUPON BONDS . . . . . . . . . . . . . . . .
. . . 4
RESTRICTED AND ILLIQUID SECURITIES . . . . . . . .
. . . 4
OPTIONS TRANSACTIONS . . . . . . . . . . . . . . .
. . . 4
GENERAL . . . . . . . . . . . . . . . . . . .
. . . 4
WRITING CALL OPTIONS ON INDIVIDUAL SECURITIES
. . . 5
RISKS OF OPTIONS TRANSACTIONS . . . . . . . .
. . . 5
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
. . . 6
GENERAL . . . . . . . . . . . . . . . . . . .
. . . 6
INTEREST RATE FUTURES CONTRACTS . . . . . . .
. . . 7
OPTIONS ON INTEREST RATE FUTURES CONTRACTS .
. . . 8
FOREIGN CURRENCY FUTURES CONTRACTS AND
RELATED
OPTIONS . . . . . . . . . . . . . . . .
. . . 8
RISKS ASSOCIATED WITH FUTURES AND RELATED
OPTIONS . 9
COMBINED TRANSACTIONS . . . . . . . . . . . .
. . . 9
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . .
. . . 10
ADDITIONAL RESTRICTIONS . . . . . . . . . . . . . . . .
. . . 11
ADDITIONAL RIGHTS AND PRIVILEGES . . . . . . . . . . .
. . . 12
AUTOMATIC INVESTMENT METHOD . . . . . . . . . . .
. . . 12
EXCHANGE OF SHARES . . . . . . . . . . . . . . . .
. . . 12
INITIAL SALES CHARGE SHARES . . . . . . . . .
. . . 12
CONTINGENT DEFERRED SALES CHARGE SHARES.
CLASS A . 13
CLASS B . . . . . . . . . . . . . . . . . . .
. . . 13
LETTER OF INTENT . . . . . . . . . . . . . . . . .
. . . 15
RETIREMENT PLANS . . . . . . . . . . . . . . . . .
. . . 15
INDIVIDUAL RETIREMENT ACCOUNTS . . . . . . .
. . . 16
QUALIFIED PLANS . . . . . . . . . . . . . . .
. . . 17
DEFERRED COMPENSATION FOR PUBLIC SCHOOLS AND
CHARITABLE ORGANIZATIONS ("403(B)(7)
ACCOUNT") . . . . . . . . . . . . . . .
. . . 17
SIMPLIFIED EMPLOYEE PENSION ("SEP") IRAS . .
. . . 18
REINVESTMENT PRIVILEGE . . . . . . . . . . . . . .
. . . 18
RIGHTS OF ACCUMULATION . . . . . . . . . . . . . .
. . . 18
SYSTEMATIC WITHDRAWAL PLAN . . . . . . . . . . . .
. . . 19
BROKERAGE ALLOCATION . . . . . . . . . . . . . . . . .
. . . 19
TRUSTEES AND OFFICERS . . . . . . . . . . . . . . . . .
. . . 21
PERSONNEL INVESTMENTS BY EMPLOYEES OF IMI . . . .
. . . 23
COMPENSATION TABLE . . . . . . . . . . . . . . . . . .
. . . 24
INVESTMENT ADVISORY AND OTHER SERVICES . . . . . . . .
. . . 25
BUSINESS MANAGEMENT AND INVESTMENT ADVISORY
SERVICES . . 25
DISTRIBUTION SERVICES . . . . . . . . . . . . . .
. . . 26
CUSTODIAN . . . . . . . . . . . . . . . . . . . .
. . . 28
FUND ACCOUNTING SERVICES . . . . . . . . . . . . .
. . . 28
TRANSFER AGENT AND DIVIDEND PAYING AGENT . . . . .
. . . 29
ADMINISTRATOR . . . . . . . . . . . . . . . . . .
. . . 29
AUDITORS . . . . . . . . . . . . . . . . . . . . .
. . . 29
CAPITALIZATION AND VOTING RIGHTS . . . . . . . . . . .
. . . 29
NET ASSET VALUE . . . . . . . . . . . . . . . . . . . .
. . . 30
PORTFOLIO TURNOVER . . . . . . . . . . . . . . . . . .
. . . 31
REDEMPTIONS . . . . . . . . . . . . . . . . . . . . . .
. . . 32
CONVERSION OF CLASS B SHARES . . . . . . . . . . . . .
. . . 33
TAXATION . . . . . . . . . . . . . . . . . . . . . . .
. . . 33
GENERAL . . . . . . . . . . . . . . . . . . . . .
. . . 33
DISTRIBUTORS . . . . . . . . . . . . . . . . . . .
. . . 34
DISPOSITION OF SHARES . . . . . . . . . . . . . .
. . . 34
HEDGING TRANSACTIONS . . . . . . . . . . . . . . .
. . . 35
CURRENCY FLUCTUATIONS --SECTION 988" GAINS OR
LOSSES . . 36
DISCOUNT . . . . . . . . . . . . . . . . . . . . .
. . . 36
FOREIGN WITHHOLDING TAXES . . . . . . . . . . . .
. . . 36
INVESTMENT IN PASSIVE FOREIGN INVESTMENT COMPANIES
. . . 37
BACKUP WITHHOLDING . . . . . . . . . . . . . . . .
. . . 37
OTHER TAXATION . . . . . . . . . . . . . . . . . .
. . . 38
CALCULATION OF AVERAGE ANNUAL TOTAL RETURN . . . . . .
. . . 38
AVERAGE ANNUAL TOTAL RETURN QUOTATIONS . . . . . .
. . . 38
OTHER QUOTATIONS, COMPARISONS AND GENERAL
INFORMATION . 39
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . .
. . . 39
APPENDIX A
DESCRIPTION OF STANDARD & POOR'S CORPORATION
("S&P")
AND MOODY'S INVESTORS SERVICE, INC. ("MOODY'S")
CORPORATE BOND AND COMMERCIAL PAPER RATINGS . . .
. . . 40
INVESTMENT OBJECTIVES AND POLICIES
Ivy Fund (the "Trust") is organized as an open-end
management investment company with thirteen series of
shares.
One series of the Trust, Ivy International Bond Fund
(the
"Fund"), is described in this SAI.
The Fund's investment objectives and general
investment
policies are described in the Fund's Prospectus.
Additional
information concerning the characteristics of the
Fund's
investments is set forth below.
AMERICAN DEPOSITORY RECEIPTS (ADRS)
The Fund may purchase sponsored or unsponsored
American
Depository Receipts ("ADRs"). ADRs are
dollar-denominated
receipts issued generally by U.S. banks that represent
the
deposit with the bank of a foreign company's security.
ADRs are
publicly traded on exchanges or over-the-counter
("OTC") in the
United States. Ownership of unsponsored ADRs may not
entitle the
Fund to financial or other reports from the issuer to
which it
might otherwise be entitled as the owner of sponsored
ADRs.
FOREIGN SECURITIES
Investors should recognize that investing in
foreign
securities involves certain special considerations,
including
those set forth below and in the Fund's Prospectus
under
"Investing In International Bond Markets" and "Special
Risk
Considerations," which are not typically associated
with
investing in United States securities and which may
affect the
Fund's performance favorably or unfavorably.
Foreign stock markets have different clearance and
settlement procedures and in certain markets there have
been
times when settlements have been unable to keep pace
with the
volume of securities transactions making it difficult
to conduct
such transactions. Delays in settlement could result
in
temporary periods when assets of the Fund are
uninvested and no
return is earned thereon. The inability of the Fund to
make
intended security purchases due to settlement problems
could
cause the Fund to miss attractive investment
opportunities. The
inability to dispose of portfolio securities due to
settlement
problems could result either in losses to the Fund due
to
subsequent declines in the value of the portfolio
security or, if
the Fund has entered into a contract to sell the
security, in
possible liability to the purchaser. Fixed commissions
on some
foreign securities exchanges are generally higher than
negotiated
commissions on U.S. exchanges, although IMI will
endeavor to
achieve the most favorable net results on each Fund's
portfolio
transactions. Further, the Fund may encounter
difficulties or be
unable to pursue legal remedies and obtain judgment in
foreign
courts. It may be more difficult for the Fund's agents
to keep
currently informed about corporate actions such as
stock
dividends or other matters which may affect the prices
of
portfolio securities. Communications between the
United States
and foreign countries may be less reliable than within
the United
States, thus increasing the risk of delayed settlements
of
portfolio transactions or loss of certificates for
portfolio
securities. Moreover, individual foreign economies may
differ
favorably or unfavorably from the United States economy
in such
respects as growth of gross national product, rate of
inflation,
capital reinvestment, resource self-sufficiency and
balance of
payments position. IMI seeks to mitigate the risks to
the Fund
associated with the foregoing considerations through
investment
variation and continuous professional management.
FOREIGN CURRENCIES
Investment in foreign securities usually will
involve
currencies of foreign countries. Moreover, the Fund
may
temporarily hold funds in bank deposits in foreign
currencies
during the completion of investment programs and may
purchase
forward foreign currency contracts. Because of these
factors,
the value of the assets of the Fund as measured in U.S.
dollars
may be affected favorably or unfavorably by changes in
foreign
currency exchange rates and exchange control
regulations, and the
Fund may incur costs in connection with conversions
between
various currencies. Although the Fund's custodian
values the
Fund's assets daily in terms of U.S. dollars, the Fund
does not
intend to convert its holdings of foreign currencies
into U.S.
dollars on a daily basis. The Fund will do so from
time to time,
and investors should be aware of the costs of currency
conversion. Although foreign exchange dealers do not
charge a
fee for conversion, they do realize a profit based on
the
difference (the "spread") between the prices at which
they are
buying and selling various currencies. Thus, a dealer
may offer
to sell a foreign currency to the Fund at one rate,
while
offering a lesser rate of exchange should the Fund
desire to
resell that currency to the dealer. The Fund will
conduct its
foreign currency exchange transactions either on a spot
(i.e.,
cash) basis at the spot rate prevailing in the foreign
currency
exchange market, or through entering into forward
contracts to
purchase or sell foreign currencies.
Because the Fund normally will be invested in both
U.S. and
foreign securities markets, changes in the Fund's share
price may
have a low correlation with movements in the U.S.
markets. The
Fund's share price will reflect the movements of both
the
different stock and bond markets in which it is
invested and of
the currencies in which the investments are
denominated; the
strength or weakness of the U.S. dollar against foreign
currencies may account for part of the Fund's
investment
performance. U.S. and foreign securities markets do
not always
move in step with each other, and the total returns
from
different markets may vary significantly.
FORWARD FOREIGN CURRENCY CONTRACTS
The Fund may enter into forward foreign currency
exchange
contracts in order to protect against uncertainty in
the level of
future foreign exchange rates in the purchase and sale
of
securities, but not for speculative purposes. A
forward foreign
currency exchange contract involves an obligation to
purchase or
sell a specific currency at a future date, which may be
any fixed
number of days from the date of the contract agreed
upon by the
parties, at a price set at the time of the contract.
These
contracts may be bought or sold to protect the Fund
against a
possible loss resulting from an adverse change in the
relation-
ship between foreign currencies and the U.S. dollar.
Although
such contracts are intended to minimize the risk of
loss due to a
decline in the value of the hedged currencies, at the
same time,
they tend to limit any potential gain that might result
should
the value of such currencies increase.
The Fund will not enter into forward contracts or
maintain a
net exposure to such contracts where the consummation
of the
contract would obligate the Fund to deliver an amount
of currency
in excess of the value of the Fund's portfolio
securities or
other assets denominated in that currency. Further,
the Fund
generally will not enter into a forward contract with a
term of
greater than one year.
The Fund will hold cash, U.S. Government
Securities or other
high-grade debt securities in a segregated account
with its
custodian in an amount equal (on a daily
marked-to-market basis)
to the amount of the commitments under these contracts.
At the
maturity of a forward contract, the Fund may either
accept or
make delivery of the currency specified in the
contract, or,
prior to maturity, enter into a closing purchase
transaction
involving the purchase or sale of an offsetting
contract.
Closing purchase transactions with respect to forward
contracts
are usually effected with the currency trader who is a
party to
the original forward contract.
HIGH YIELD BONDS
The Fund may invest in corporate debt securities
rated Baa
or lower by Moody's Investors Service, Inc. ("Moody's")
or BBB or
lower by Standard & Poor's Corporation ("S&P). The
Fund will
not, however, invest in securities that, at the time of
investment, are rated lower than C by either Moody's or
S&P.
Securities rated Baa or BBB (and comparable unrated
securities)
are considered by major credit-rating organizations to
have
speculative elements as well as investment-grade
characteristics.
Securities rated lower than Baa or BBB (and comparable
unrated
securities) are commonly referred to as "high yield" or
"junk"
bonds and are considered to be predominantly
speculative with
respect to the issuer's continuing ability to meet
principal and
interest payments. The lower the ratings of corporate
debt
securities, the more their risks render them like
equity
securities. See Appendix A for a more complete
description of
the ratings assigned by Moody's and S&P and their
respective
characteristics.
While IMI may refer to ratings issued by
established credit
rating agencies, it is not IMI's policy to rely
exclusively on
such ratings, but rather to supplement such ratings
with its own
independent and ongoing review of credit quality. The
Fund's
achievement of its investment objective may, to the
extent of its
investment in high yield bonds, be more dependent upon
IMI's
credit analysis than would be the case if the Fund were
investing
in higher quality bonds. Should the rating of a
portfolio
security be downgraded, IMI will determine whether it
is in the
Fund's best interest to retain or dispose of the
security.
However, should any individual bond held by the Fund be
downgraded below a rating of C, IMI currently intends
to dispose
of such bond based on then existing market conditions.
The secondary market on which high yield bonds are
traded
may be less liquid than the market for higher grade
bonds. Less
liquidity in the secondary trading market could
adversely affect
the price at which the Fund could sell a high yield
bond, and
could adversely affect and cause large fluctuations in
the daily
net asset value of the Fund's shares. Adverse
publicity and
investor perceptions, whether or not based on
fundamental
analysis, may decrease the values and liquidity of high
yield
bonds, especially in a thinly traded market. When
secondary
markets for high yield securities are less liquid than
the
markets for higher grade securities, it may be more
difficult to
value the securities because such valuation may require
more
research, and elements of judgment may play a greater
role in the
valuation because there is less reliable, objective
data
available.
Furthermore, prices for high yield bonds may be
affected by
legislative and regulatory developments. For example,
federal
rules require savings and loan institutions to reduce
gradually
their holdings of this type of security. Also,
Congress has from
time to time considered legislation that would restrict
or
eliminate the corporate tax deduction for interest
payments on
these securities and regulate corporate restructurings.
Such
legislation may significantly depress the prices of
outstanding
securities of this type.
WHEN-ISSUED PURCHASES AND FIRM COMMITMENT AGREEMENTS
When the Fund purchases new issues of securities
on a when-
issued basis, the Fund's custodian will establish a
segregated
account for the Fund consisting of cash, U.S.
Government
Securities or other high-grade debt securities equal to
the
amount of the commitment. If the value of securities
in the
account should decline, additional cash or securities
will be
placed in the account so that the market value of the
account
will equal the amount of such commitments by the Fund
on a daily
basis.
Securities purchased on a when-issued basis and
the
securities held in the Fund's portfolio are subject to
changes in
market value based upon various factors including
changes in the
level of market interest rates. Generally, the value
of such
securities will fluctuate inversely to changes in
interest rates,
i.e., they will appreciate in value when market
interest rates
decline and decrease in value when market interest
rates rise.
For this reason, placing securities rather than cash in
the
segregated account may have a leveraging effect on the
Fund's net
assets. That is, to the extent that the Fund remains
substantially fully invested in securities at the same
time that
it has committed to purchase securities on a
when-issued basis,
there will be greater fluctuations in its net assets
than if it
had set aside cash to satisfy its purchase commitment.
Upon the settlement date of the when-issued
securities, the
Fund ordinarily will meet its obligation to purchase
the
securities from available cash flow, use of the cash
(or
liquidation of securities) held in the segregated
account or sale
of other securities. Although it would not normally
expect to do
so, the Fund also may meet its obligation from the sale
of the
when-issued securities themselves (which may have a
current
market value greater or less than the Fund's payment
obligation).
The sale of securities to meet such obligations carries
with it a
greater potential for the realization of capital gains.
The Fund may also enter into firm commitment
agreements for
the purchase of securities at an agreed-upon price on a
specified
future date. During the time that the Fund is
obligated to
purchase such securities, it will maintain in a
segregated
account with its custodian cash, U.S. Government
Securities or
other high-grade debt securities of an aggregate value
sufficient
to make payment for the securities.
ZERO COUPON BONDS
The Fund may purchase zero coupon bonds in
accordance with
its credit quality standards. Zero coupon bonds are
debt
obligations issued without any requirement for the
periodic
payment of interest. Zero coupon bonds 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. The Fund, if
it holds
zero coupon bonds in its portfolio, however, 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 such income to
shareholders
currently, even though funds representing such income
would not
have been received by the Fund. Cash to pay dividends
representing unpaid, accrued interest may be obtained
from sales
proceeds of portfolio securities and Fund shares and
from loan
proceeds. The potential sale of portfolio securities
to pay cash
distributions from income earned on zero coupon bonds
may result
in the Fund being forced to sell portfolio securities
at a time
when the Fund might otherwise choose not to sell these
securities
and when the Fund might incur a capital loss on such
sales.
Because interest on zero coupon obligations is not
distributed to
the Fund on a current basis but is in effect
compounded, the
value of the securities of this type is subject to
greater
fluctuations in response to changing interest rates
than the
value of debt obligations which distribute income
regularly.
RESTRICTED AND ILLIQUID SECURITIES
It is the Fund's policy that restricted
securities,
including restricted securities offered and sold to
"qualified
institutional buyers" under Rule 144A under the
Securities Act of
1933, and any other illiquid securities (including
repurchase
agreements of more than seven days duration and other
securities
which are not readily marketable) may not constitute,
at the time
of purchase, more than 10% of the value of the Fund's
net assets.
Issuers of restricted securities may not be subject to
the
disclosure and other investor protection requirements
that would
be applicable if their securities were publicly traded.
Restricted securities may be sold only in privately
negotiated
transactions or in a public offering with respect to
which a
registration statement is in effect under the
Securities Act of
1933. Where a registration statement is required, the
Fund may
be required to bear all or part of the registration
expenses.
There may be a lapse of time between the Fund's
decision to sell
a restricted or illiquid security and the point at
which the Fund
is permitted or able to sell such security. If, during
such a
period, adverse market conditions were to develop, the
Fund might
obtain a price less favorable than the price that
prevailed when
it decided to sell. Since it is not possible to
predict with
assurance that the market for securities eligible for
resale
under Rule 144A will continue to be liquid, the Fund
will
carefully monitor each of its investments in these
securities,
focusing on such important factors, among others, as
valuation,
liquidity and availability of information. This
investment
practice could have the effect of increasing the level
of
illiquidity of the Fund to the extent that qualified
institutional buyers become for a time uninterested in
purchasing
these restricted securities.
OPTIONS TRANSACTIONS
GENERAL. The Fund may sell (write)
exchange-listed call
options and purchase put and call options in accordance
with its
investment objectives and policies. A call option is a
short-
term contract (having a duration of less than one year)
pursuant
to which the purchaser, in return for the premium paid,
has the
right to buy the security underlying the option at the
specified
exercise price at any time during the term of the
option. The
writer of the call option, who receives the premium,
has the
obligation, upon exercise of the option, to deliver the
underlying security against payment of the exercise
price. A put
option is a similar contract pursuant to which the
purchaser, in
return for the premium paid, has the right to sell the
security
underlying the option at the specified exercise price
at any time
during the term of the option. The writer of the put
option, who
receives the premium, has the obligation, upon exercise
of the
option, to buy the underlying security at the exercise
price.
The premium paid by the purchaser of an option will
reflect,
among other things, the relationship of the exercise
price to the
market price and volatility of the underlying security,
the time
remaining to expiration of the option, supply and
demand, and
interest rates.
If the writer of an option wishes to terminate the
obligation, he or she may effect a "closing purchase
transaction." This is accomplished by buying an option
of the
same series as the option previously written. The
effect of the
purchase is that the writer's position will be
cancelled by the
Options Clearing Corporation. However, a writer may
not effect a
closing purchase transaction after it has been notified
of the
exercise of an option. Likewise, an investor who is
the holder
of an option may liquidate his or her position by
effecting a
"closing sale transaction." This is accomplished by
selling an
option of the same series as the option previously
purchased.
There is no guarantee that either a closing purchase or
a closing
sale transaction can be effected. If any call or put
is not
exercised or sold, it will become worthless on its
expiration
date.
The Fund will realize a gain (or a loss) on a
closing
purchase transaction with respect to a call or a put
previously
written by the Fund if the premium, plus commission
costs, paid
by the Fund to purchase the call or put is less (or
greater) than
the premium, less commission costs, received by the
Fund on the
sale of the call or the put. A gain also will be
realized if a
call or put which the Fund has written lapses
unexercised,
because the Fund would retain the premium. Any such
gains (or
losses) are considered short-term capital gains (or
losses) for
Federal income tax purposes. Net short-term capital
gains, when
distributed by the Fund, are taxable as ordinary
income. See
"Taxation."
A gain (or a loss) will be realized by the Fund on
a closing
sale transaction with respect to a call or a put
previously
purchased by the Fund if the premium, less commission
costs,
received by the Fund on the sale of the call or the put
is
greater (or less) than the premium, plus commission
costs, paid
by the Fund to purchase the call or the put. If a put
or a call
expires unexercised, it will become worthless on the
expiration
date, and the Fund will realize a loss in the amount of
the
premium paid, plus commission costs. Any such gain or
loss will
be long-term or short-term capital gain or loss,
depending upon
the Fund's holding period for the option.
The Fund will not purchase put or call options if
the
aggregate premium paid for such options would exceed
10% of its
net assets at the time of purchase.
WRITING CALL OPTIONS ON INDIVIDUAL SECURITIES.
The Fund may
write (sell) covered call options as described in the
Prospectus.
Covered call options provide the Fund with additional
income on
its portfolio securities or partially protect against
declines in
the value of those securities. A "covered" call option
means
generally that so long as the Fund is obligated as the
writer of
a call option, the Fund will either own the underlying
securities
subject to the option, or hold a call at the same
exercise price,
for the same exercise period, and on the same
securities as the
call written. Although the Fund receives premium
income from
these activities, any appreciation realized on an
underlying
security will be limited by the terms of the call
option.
RISKS OF OPTIONS TRANSACTIONS. The purchase and
writing of
options involves certain risks. During the option
period, the
covered call writer has, in return for the premium on
the option,
given up the opportunity to profit from a price
increase in the
underlying securities above the exercise price, but, as
long as
its obligation as a writer continues, has retained the
risk of
loss should the price of the underlying security
decline. The
writer of an option has no control over the time when
it may be
required to fulfill its obligation as a writer of the
option.
Once an option writer has received an exercise notice,
it cannot
effect a closing purchase transaction in order to
terminate its
obligation under the option and must deliver the
underlying
securities at the exercise price. If a put or call
option
purchased by the Fund is not sold when it has remaining
value,
and if the market price of the underlying security, in
the case
of a put, remains equal to or greater than the exercise
price or,
in the case of a call, remains less than or equal to
the exercise
price, the Fund will lose its entire investment in the
option.
Also, where a put or call option on a particular
security is
purchased to hedge against price movements in a related
security,
the price of the put or call option may move more or
less than
the price of the related security. In this regard,
trading in
options on certain securities (such as U.S. Government
securities) is relatively new, so that it is impossible
to
predict to what extent liquid markets will develop or
continue.
Furthermore, if trading restrictions or suspensions are
imposed
on the options markets, the Fund may be unable to close
out a
position. Finally, trading could be interrupted, for
example,
because of supply and demand imbalances arising from a
lack of
either buyers or sellers, or the options exchange could
suspend
trading after the price has risen or fallen more than
the maximum
amount specified by the exchange. Although the Fund
may be able
to offset to some extent any adverse effects of being
unable to
liquidate an option position, the Fund may experience
losses in
some cases as a result of such inability.
The Fund may employ hedging strategies with
options on
currencies before the Fund purchases a foreign security
denominated in the hedged currency that the Fund
anticipates
acquiring, during the period the Fund holds the foreign
security,
or between the date the foreign security is purchased
or sold and
the date on which payment therefor is made or received.
Hedging
against a change in the value of a foreign currency in
the
foregoing manner does not eliminate fluctuations in the
prices of
portfolio securities or prevent losses if the prices of
such
securities decline. Furthermore, such hedging
transactions
reduce or preclude the opportunity for gain if the
value of the
hedged currency should change relative to the U.S.
dollar. With
respect to transactions in surrogate currencies, there
is a risk
of loss if there is not a correlation between the
currency in
which the hedge is desired and the surrogate currency.
A position on an option on foreign currencies may
be closed
out only on an exchange which provides a secondary
market for an
option of the same series. Although the Fund will
purchase only
exchange-traded options, there is no assurance that a
liquid
secondary market on an exchange will exist for any
particular
option, or at any particular time. In the event no
liquid
secondary market exists, it might not be possible to
effect
closing transactions in particular options. If the
Fund cannot
close out an exchange-traded option which it holds, it
would have
to exercise its option in order to realize any profit
and would
incur transactional costs on the sale of the underlying
assets.
The Fund's options activities also may have an
impact upon
the level of its portfolio turnover and brokerage
commissions.
The Fund's success in using options techniques
depends,
among other things, on IMI's ability to predict
accurately the
direction and volatility of price movements in the
options
markets as well as the securities markets and on IMI's
ability to
select the proper type, time and duration of options.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
GENERAL. The Fund may enter into futures
contracts and
options on futures contracts. When a purchase or sale
of a
futures contract is made by the Fund, the Fund is
required to
deposit with its custodian (or broker, if legally
permitted) a
specified amount of cash or U.S. Government securities
("initial
margin"). The margin required for a futures contract
is set by
the exchange on which the contract is traded and may be
modified
during the term of the contract. The initial margin is
in the
nature of a performance bond or good faith deposit on
the futures
contract which is returned to the Fund upon termination
of the
contract, assuming all contractual obligations have
been
satisfied. A futures contract held by the Fund is
valued daily
at the official settlement price of the exchange on
which it is
traded. Each day the Fund pays or receives cash,
called
"variation margin," equal to the daily change in value
of the
futures contract. This process is known as "marking
to market."
Variation margin does not represent a borrowing or loan
by the
Fund but is instead a settlement between the Fund and
the broker
of the amount one would owe the other if the futures
contract
expired. In computing daily net asset value, the Fund
will mark-
to-market its open futures position.
The Fund is also required to deposit and maintain
margin
with respect to put and call options on futures
contracts written
by it. Such margin deposits will vary depending on the
nature of
the underlying futures contract (and the related
initial margin
requirements), the current market value of the option,
and other
futures positions held by the Fund.
Although some futures contracts call for making or
taking
delivery of the underlying securities, generally these
obligations are closed out prior to delivery of
offsetting
purchases or sales of matching futures contracts (same
exchange,
underlying security or index, and delivery month). If
an
offsetting purchase price is less than the original
sale price,
the Fund generally realizes a capital gain, or if it is
more, the
Fund generally realizes a capital loss. Conversely, if
an
offsetting sale price is more than the original
purchase price,
the Fund generally realizes a capital gain, or if it is
less, the
Fund generally realizes a capital loss. The
transaction costs
must also be included in these calculations.
When purchasing a futures contract, the Fund will
maintain
with its custodian (and mark-to-market on a daily
basis) cash,
U.S. Government securities, or other highly liquid debt
securities that, when added to the amounts deposited
with a
futures commission merchant ("FCM") as margin, are
equal to the
market value of the futures contract. Alternatively,
the Fund
may "cover" its position by purchasing a put option on
the same
futures contract with a strike price as high as or
higher than
the price of the contract by held by the Fund.
When selling a futures contact, the Fund will
maintain with
its custodian (and mark-to-market on a daily basis)
liquid assets
that, when added to the amounts deposited with an FCM
as margin,
are equal to the market value of the instruments
underlying the
contract. Alternatively, the Fund may "cover" its
position by
owning the instruments underlying the contract (or, in
the case
of an index futures contract, a portfolio with a
volatility
substantially similar to that of the index on which the
futures
contract is based), or by holding a call option
permitting the
Fund to purchase the same futures contract at a price
no higher
than the price of the contract written by the Fund (or
at a
higher price if the difference is maintained in liquid
assets
with the Fund's custodian).
When selling a call option on a futures contract,
the Fund
will maintain with its custodian (and mark-to-market on
a daily
basis) cash, U.S. Government securities, or other
highly liquid
debt securities that, when added to the amounts
deposited with an
FCM as margin, equal the total market value of the
futures
contract underlying the call option. Alternatively,
the Fund may
cover its position by entering into a long position in
the same
futures contract at a price no higher than the strike
price of
the call option, by owning the instruments underlying
the futures
contract, or by holding a separate call option
permitting the
Fund to purchase the same futures contract at a price
not higher
than the strike price of the call option sold by the
Fund.
When selling a put option on a futures contract,
the Fund
will maintain with its custodian (and mark-to-market on
a daily
basis) cash, U.S. Government securities, or other
highly liquid
debt securities that equal the purchase price of the
futures
contract less any margin on deposit. Alternatively,
the Fund may
cover the position either by entering into a short
position in
the same futures contract, or by owning a separate put
option
permitting it to sell the same futures contract so long
as the
strike price of the purchased put option is the same or
higher
than the strike price of the put option sold by the
Fund.
The requirements for qualification as a regulated
investment
company also may limit the extent to which the Fund may
enter
into futures and options on futures.
INTEREST RATE FUTURES CONTRACTS. An interest rate
futures
contract is an agreement between parties to buy or sell
a
specified debt security at a set price on a future
date. The
financial instruments that underlie interest rate
futures
contracts include, for example, long-term U.S. Treasury
bonds,
U.S. Treasury notes, GNMA certificates, three-month
U.S. Treasury
bills, and Eurodollar instruments. In the case of
futures
contracts traded on U.S. exchanges, the exchange itself
or an
affiliated clearing corporation assumes the opposite
side of each
transaction (i.e., as buyer or seller). A futures
contract may
be satisfied or closed out by delivery or purchase, as
the case
may be in the cash financial instrument or by payment
of the
change in the cash value of the index. Frequently,
using futures
to effect a particular strategy instead of using the
underlying
or related security will result in lower transaction
costs being
incurred.
The Fund may sell interest rate futures contracts
in order
to hedge its portfolio securities whose value may be
sensitive to
changes in interest rates. In addition, the Fund could
purchase
and sell these futures contracts in order to hedge its
holdings
in certain common stocks (such as utilities, banks and
savings
and loans) whose value may be sensitive to changes in
interest
rates. The Fund could sell interest rate futures
contracts in
anticipation of or during a market decline to attempt
to offset
the decrease in market value of its securities that
might
otherwise result. When the Fund is not fully invested
in
securities, it could purchase interest rate futures in
order to
gain rapid market exposure that may in part or entirely
offset
increases in the cost of securities that it intends to
purchase.
As such purchases are made, an equivalent amount of
interest rate
futures contracts will be terminated by offsetting
sales. In a
substantial majority of these transactions, the Fund
would
purchase such securities upon termination of the
futures position
whether the futures position results from the purchase
of an
interest rate futures contract or the purchase of a
call option
on an interest rate futures contract, but under unusual
market
conditions, a futures position may be terminated
without the
corresponding purchase of securities.
OPTIONS ON INTEREST RATE FUTURES CONTRACTS. The
Fund may
also purchase and write put and call options on
interest rate
futures contracts which are traded on a U.S. exchange
or board of
trade and sell or purchase such options to terminate an
existing
position. Options on interest rate futures give the
purchaser
the right (but not the obligation), in return for the
premium
paid, to assume a position in an interest rate futures
contract
at a specified exercise price at a time during the
period of the
option.
Transactions in options on interest rate futures
may enable
the Fund to hedge against the possibility that
fluctuations in
interest rates and other factors may result in a
general decline
in prices of debt securities owned by the Fund.
Assuming that
any decline in the securities being hedged is
accomplished by a
rise in interest rates, the purchase of put options and
sale of
call options on the futures contracts may generate
gains which
can partially offset any decline in the value of the
Fund's
portfolio securities which have been hedged. However,
if after
the Fund purchases or sells an option on a futures
contract, the
value of the securities being hedged moves in the
opposite
direction from that contemplated, the Fund may
experience losses
in the form of premiums on such options which would
partially
offset gains the Fund would have.
FOREIGN CURRENCY FUTURES CONTRACTS AND RELATED
OPTIONS. A
foreign currency futures contract provides for the
future sale by
one party and purchase by another party of a specified
quantity
of a foreign currency at a specified price and time.
An option on a foreign currency futures contract
gives the
holder the right, in return for the premium paid, to
assume a
long position (call) or short position (put) in a
futures
contract at a specified exercise price at any time
during the
period of the option. Upon the exercise of a call
option, the
holder acquires a long position in the futures contract
and the
writer is assigned the opposite short position. In the
case of a
put option, the opposite is true.
The Fund may purchase call and put options on
foreign
currencies as a hedge against changes in the value of
the U.S.
dollar (or another currency) in relation to a foreign
currency in
which portfolio securities of the Fund may be
denominated. A
call option on a foreign currency gives the buyer the
right to
buy, and a put option the right to sell, a certain
amount of
foreign currency at a specified price during a fixed
period of
time. The Fund may invest in options on foreign
currency which
are either listed on a domestic securities exchange or
traded on
a recognized foreign exchange.
In those situations where foreign currency options
may not
be readily purchased (or where such options may be
deemed
illiquid) in the currency in which the hedge is
desired, the
hedge may be obtained by purchasing an option on a
"surrogate"
currency (i.e., a currency where there is tangible
evidence of a
direct correlation in the trading value of the two
currencies).
A surrogate currency's exchange rate movements parallel
that of
the primary currency. Surrogate currencies are used to
hedge an
illiquid currency risk, when no liquid hedge
instruments exist in
world currency markets for the primary currency.
The Fund will only enter into futures contracts
and options
on futures contracts which are standardized and traded
on a U.S.
or foreign exchange, board of trade, or similar entity
or quoted
on an automated quotation system. The Fund will not
enter into a
futures contract or purchase an option thereon if,
immediately
thereafter, the aggregate initial margin deposits for
futures
contracts held by the Fund plus premiums paid by it for
open
futures option positions, less the amount by which any
such
positions are "in-the-money," would exceed 5% of the
liquidation
value of the Fund's portfolio (or the Fund's net asset
value),
after taking into account unrealized profits and
unrealized
losses on any such contracts the Fund has entered into.
A call
option is "in-the-money" if the value of the futures
contract
that is the subject of the option exceeds the exercise
price. A
put option is "in the money" if the exercise price
exceeds the
value of the futures contract that is the subject of
the option.
For additional information about margin deposits
required with
respect to futures contracts and options thereon, see
"Futures
Contracts and Options on Futures Contracts."
RISKS ASSOCIATED WITH FUTURES AND RELATED OPTIONS.
The Fund
may engage in futures and related options transactions
for
hedging purposes or to seek to enhance potential gain.
There are
several risks associated with the use of futures
contracts and
options on futures contracts as hedging techniques. A
purchase
or sale of a futures contract may result in losses in
excess of
the amount invested in the futures contract. There can
be no
guarantee that there will be a correlation between
price
movements in the hedging vehicle and in the Fund's
portfolio
securities being hedged. In addition, there are
significant
differences between the securities and futures markets
that could
result in an imperfect correlation between the markets,
causing a
given hedge not to achieve its objectives. The degree
of
imperfection of correlation depends on circumstances
such as
variations in speculative market demand for futures and
related
options on securities, including technical influences
in futures
trading and options on futures, and differences between
the
financial instruments being hedged and the instruments
underlying
the standard contracts available for trading in such
respects as
interest rate levels, maturities, and creditworthiness
of
issuers. A decision as to whether, when and how to
hedge
involves the exercise of skill and judgment, and even a
well-
conceived hedge may be unsuccessful to some degree
because of
market behavior or unexpected interest rate trends.
Futures exchanges may limit the amount of
fluctuation
permitted in certain futures contract prices during a
single
trading day. The daily limit establishes the maximum
amount that
the price of a futures contract may vary either up or
down from
the previous day's settlement price at the end of the
current
trading session. Once the daily limit has been reached
in a
futures contract subject to the limit, no more trades
may be made
on that day at a price beyond that limit. The daily
limit
governs only price movements during a particular
trading day and
therefore does not limit potential losses because the
limit may
work to prevent the liquidation of unfavorable
positions. For
example, futures prices have occasionally moved to the
daily
limit for several consecutive trading days with little
or no
trading, thereby preventing prompt liquidation of
positions and
subjecting some holders of futures contracts to
substantial
losses.
There can be no assurance that a liquid market
will exist at
a time when the Fund seeks to close out a futures or a
related
option position, and the Fund would remain obligated to
meet
margin requirements until the position is closed. In
addition,
there can be no assurance that an active secondary
market will
continue to exist.
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; may not
involve a clearing mechanism and related guarantees;
and are
subject to the risk of governmental actions affecting
trading in,
or the prices of, foreign securities. The value of
such a
position also could 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 a 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.
COMBINED TRANSACTIONS. The Fund may enter into
multiple
transactions, including multiple options transactions,
multiple
futures transactions, multiple currency transactions
(including
forward currency contracts) and multiple interest rate
transactions and any combination of futures, options,
currency
and interest rate transactions ("component"
transactions),
instead of a single transaction, as part of a single or
combined
strategy when, in the opinion of IMI, it is in the best
interests
of a Fund to do so. A combined transaction will
usually contain
elements of risk that are present in each of its
component
transactions. Although combined transactions are
normally
entered into based on IMI's judgment that the combined
strategies
will reduce risk or otherwise more effectively achieve
the
desired portfolio management goal, it is possible that
the
combination will instead increase such risks or hinder
achievement of the management objective.
The requirements for qualification as a regulated
investment
company also may limit the extent to which the Fund may
enter
into futures, options or forward contracts. See
"Taxation."
INVESTMENT RESTRICTIONS
The Fund's investment objectives as set forth in
the
Prospectus under "Investment Objectives and Policies,"
together
with the investment restrictions set forth below, are
fundamental
policies of the Fund and may not be changed with
respect to the
Fund without the approval of a majority of the
outstanding voting
shares of the Fund. Under these restrictions, the Fund
may not:
(i) Invest in real estate, real estate mortgage
loans,
commodities, commodity futures contracts or
interests
in oil, gas and/or mineral exploration or
development
programs, although the Fund may purchase
and sell
(a) securities which are secured by real
estate,
(b) securities of issuers which invest or
deal in
real estate, and (c) futures contracts and
related
options;
(ii) Make investments in securities for the
purpose of
exercising control over or management of
the issuer;
(iii) Participate on a joint or a joint and
several basis
in any trading account in securities. The
"bunching"
of orders of the Fund--or of the Fund and
of other
accounts under the investment management of
the
persons rendering investment advice to the
Fund--for
the sale or purchase of portfolio
securities shall
not be considered participation in a joint
securities
trading account;
(iv) Purchase securities on margin, except such
short-term
credits as are necessary for the clearance
of
transactions; the deposit or payment by a
Fund of
initial or variation margin in connection
with
futures contracts or related options
transactions is
not considered the purchase of a security
on margin;
(v) Make loans, except that this restriction
shall not
prohibit (a) the purchase and holding of a
portion of
an issue of publicly distributed debt
securities,
(b) the lending of portfolio securities
(provided
that the loan is secured continuously by
collateral
consisting of U.S. Government securities or
cash or
cash equivalents maintained on daily
marked-to-market
basis in an amount at least equal to the
current
market value of the securities loaned), or
(c) entry
into repurchase agreements with banks or
broker-
dealers;
(vi) Borrow money, except as a temporary measure
for
extraordinary or emergency purposes or
except in
connection with reverse repurchase
agreements
provided that the Fund maintains net asset
coverage
of at least 300% for all borrowings;
(vii) Mortgage, pledge, hypothecate or in any
manner
transfer, as security for indebtedness, any
securities owned or held by the Fund
(except as may
be necessary in connection with permitted
borrowings
and then not in excess of 20% of the Fund's
total
assets); provided, however, this does not
prohibit
escrow, collateral or margin arrangements
in
connection with its use of options, short
sales,
futures contracts and options on future
contracts;
(viii) Purchase the securities of issuers
conducting their
principal business activities in the same
industry if
immediately after such purchase the value
of the
Fund's investments in such industry would
exceed 25%
of the value of the total assets of the
Fund;
(ix) Act as an underwriter of securities;
(x) Make short sales of securities or maintain
a short
position; or
(xii) Issue senior securities, except insofar as
the Fund
may be deemed to have issued a senior
security in
connection with any repurchase agreement or
any
permitted borrowing.
ADDITIONAL RESTRICTIONS
The Fund has adopted the following additional
restrictions,
which are not fundamental and which may be changed
without
shareholder approval, to the extent permitted by
applicable law,
regulation or regulatory policy.
Under these restrictions, the Fund may not:
(i) purchase or sell real estate limited
partnership
interests;
(ii) purchase or sell interests in oil, gas and
mineral
leases (other than securities of companies
that
invest in or sponsor such programs);
(iii) purchase or retain securities of any
company if, to
the knowledge of the Trust, officers and
Trustees of
the Trust and officers and directors of the
Manager,
Mackenzie Investment Management Inc.
("MIMI") or
Mackenzie Financial Corporation ("MFC") who
individually own more than 1/2 of 1% of the
securities of that company together own
beneficially
more than 5% of such securities;
(iv) purchase any security if as a result the
Fund would
then have more than 5% of its total assets
(taken at
current value) invested in securities of
companies
(including predecessors) less than three
years old;
(v) invest more than 10% of its net assets
taken at
market value at the time of the investment
in
"illiquid securities" and the Fund may not
invest
more than 5% of its total assets in
restricted
securities; Illiquid securities may include
securities subject to legal or contractual
restrictions on resale (including private
placements), repurchase agreements maturing
in more
than seven days, certain options traded
over the
counter that the Fund has purchased,
securities being
used to cover certain options that the Fund
has
written, securities for which market
quotations are
not readily available, or other securities
which
legally or in the Manager's opinion,
subject to the
Board's supervision, may be deemed
illiquid, but
shall not include any instrument that, due
to the
existence of a trading market, to the
Fund's
compliance with certain conditions intended
to
provide liquidity, or to other factors, is
liquid;
(vi) purchase securities of other investment
companies,
except in connection with a merger,
consolidation or
sale of assets, and except that the Fund
may purchase
shares of other investment companies
subject to such
restrictions as may be imposed by the
Investment
Company Act of 1940 (the "1940 Act") and
rules
thereunder or by any state in which shares
of the
Fund are registered;
Whenever an investment objective, policy or
restriction set
forth in the Prospectus or this SAI states a maximum
percentage
of assets that may be invested in any security or other
asset or
describes a policy regarding quality standards, such
percentage
limitation or standard shall, unless otherwise
indicated, apply
to the Fund only at the time a transaction is entered
into.
Accordingly, if a percentage limitation is adhered to
at the time
of investment, a later increase or decrease in the
percentage
which results from circumstances not involving any
affirmative
action by the Fund, such as a change in market
conditions or a
change in the Fund's asset level or other circumstances
beyond
the Fund's control, will not be considered a violation.
ADDITIONAL RIGHTS AND PRIVILEGES
The Trust offers to investors, and (except as
noted below)
bears the cost of providing, the following rights and
privileges.
The Trust reserves the right to amend or terminate any
one or
more of such rights and privileges. Notice of
amendments to or
terminations of rights and privileges will be provided
to
shareholders in accordance with applicable law.
Certain of the rights and privileges described
below
reference other funds distributed by MIFDI, which funds
are not
described in this Statement of Additional Information.
These
funds are: Ivy Growth Fund, Ivy Growth with Income
Fund, Ivy
Emerging Growth Fund, Ivy International Fund, Ivy China
Region
Fund, Ivy Latin America Strategy Fund, Ivy New Century
Fund, Ivy
Canada Fund, Ivy Global Fund, Ivy Bond Fund, Ivy
Short-Term Bond
Fund, and Ivy Money Market Fund, the other twelve
series of Ivy
Fund; Mackenzie California Municipal Fund, Mackenzie
Florida
Limited Term Municipal Fund, Mackenzie Limited Term
Municipal
Fund, Mackenzie National Municipal Fund and Mackenzie
New York
Municipal Fund, the five series of Mackenzie Series
Trust
(collectively, with the Fund, the "Ivy Mackenzie
Funds").
Investors should obtain a current prospectus before
exercising
any right or privilege that may relate to these funds.
AUTOMATIC INVESTMENT METHOD
The Automatic Investment Method is available for
Class A,
Class B and Class C shareholders of the Fund. The
minimum
initial and subsequent investment pursuant to this plan
is $50
per month, except in the case of a tax-qualified
retirement plan
for which the minimum initial and subsequent investment
is $25
per month. The Automatic Investment Method may be
discontinued
at any time upon receipt by the Mackenzie Ivy Investor
Services
Corp. ("MIISC") of telephone instructions or written
notice to
MIISC from the investor. See "Automatic Investment
Method" in
the Account Application in the Fund's Prospectus.
EXCHANGE OF SHARES
As described in the Fund's Prospectus,
shareholders of the
Fund have an exchange privilege with certain other Ivy
and
Mackenzie Funds. Before effecting an exchange,
shareholders of
the Fund should obtain and read the currently effective
prospectus for the Ivy or Mackenzie Fund into which the
exchange
is to be made.
INITIAL SALES CHARGE SHARES. Class A shareholders
may
exchange their Class A shares ("outstanding Class A
shares") for
Class A shares of another Ivy or Mackenzie Fund (or for
shares of
another Ivy or Mackenzie 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.
(The additional sales charge will be waived for
outstanding
Class A shares that have been invested for a period of
12 months
or longer.) Class A shareholders may also exchange
their Class A
shares for Class A shares of Ivy Money Market Fund (no
initial
sales charge will be assessed at the time of such an
exchange).
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 Ivy or Mackenzie Fund (or for shares
of another
Ivy or Mackenzie 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 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
the Fund's CDSC schedule (or period) following an
exchange if
such schedule is higher (or such period is longer) than
the CDSC
schedule (or period), if any, applicable to the new
Class A
shares.
Class A shares of the Fund acquired through an
exchange of
Class A shares of another Ivy or Mackenzie Fund subject
to a CDSC
will be subject to the Fund's CDSC schedule (or period)
if such
schedule is higher (or such period is longer) than the
CDSC
schedule (or period) applicable to the Ivy or Mackenzie
Fund from
which the exchange was made.
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 Ivy or Mackenzie 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 the Fund's CDSC schedule (or
period)
following an exchange if such schedule is higher (or
such period
is longer) than the CDSC schedule (or period)
applicable to the
new Class B shares.
Class B shares of the Fund acquired through an
exchange of
Class B shares of another Ivy or Mackenzie Fund will be
subject
to the Fund's CDSC schedule (or period) if such
schedule is
higher (or such period is longer) than the CDSC
schedule (or
period) applicable to the Ivy or Mackenzie Fund from
which the
exchange was made.
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 CDSC table ("Table 1") applies to
Class B
shares of the Fund, Ivy Growth Fund, Ivy Growth with
Income Fund,
Ivy Emerging Growth Fund, Ivy International Fund, Ivy
China
Region Fund, Ivy Latin America Strategy Fund, Ivy New
Century
Fund, Mackenzie California Municipal Fund, Mackenzie
National
Municipal Fund, Mackenzie New York Municipal Fund, Ivy
Canada
Fund, Ivy Bond Fund and Ivy Global Fund ("Table 1
Funds"):
CONTINGENT DEFERRED
SALES
CHARGE AS A
PERCENTAGE OF
YEAR SINCE PURCHASE DOLLAR AMOUNT
SUBJECT TO
CHARGE
First 5%
Second 4%
Third 3%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh and thereafter 0%
The following CDSC table ("Table 2") applies to
Class B
shares of Mackenzie Florida Limited Term Municipal
Fund, Ivy
Short-Term Bond Fund and Mackenzie Limited Term
Municipal Fund
("Table 2 Funds"):
CONTINGENT DEFERRED
SALES
CHARGE AS A
PERCENTAGE OF
YEAR SINCE PURCHASE DOLLAR AMOUNT
SUBJECT TO
CHARGE
First 3%
Second 2 1/2%
Third 2%
Fourth 1 1/2%
Fifth 1%
Sixth and thereafter 0%
The CDSC schedule for Table 1 Funds is higher (and
the
period is longer) than the CDSC schedule (and period)
for Table 2
Funds.
If a shareholder exchanges Class B shares of a
Table 1 Fund
for Class B shares of a Table 2 Fund, Table 1 will
continue to
apply to the Class B shares following the exchange.
For example,
an investor may decide to exchange Class B shares of a
Table 1
Fund ("outstanding Class B shares") for Class B shares
of a Table
2 Fund ("new Class B shares") after having held the
outstanding
Class B shares for two years. The 4% CDSC that
generally would
apply to a redemption of outstanding Class B shares
held for two
years would not be deducted at the time of the
exchange. If,
three years later, the investor redeems the new Class B
shares, a
2% CDSC will be assessed upon the redemption because by
"tacking"
the two year holding period of the outstanding Class B
shares
onto the three year holding period of the new Class B
shares, the
investor will be deemed to have held the new Class B
shares for
five years.
If a shareholder exchanges Class B shares of a
Table 2 Fund
for Class B shares of a Table 1 Fund, Table 1 will
apply to the
Class B shares following the exchange. For example, an
investor
may decide to exchange Class B shares of a Table 2 Fund
("outstanding Class B shares") for Class B shares of a
Table 1
Fund ("new Class B shares") after having held the
outstanding
Class B shares for two years. The 3% CDSC that
generally would
apply to a redemption of outstanding Class B shares
held for two
years would not be deducted at the time of the
exchange. If,
three years later, the investor redeems the new Class B
shares, a
2% CDSC will be assessed upon the redemption because by
"tacking"
the two year holding period of the outstanding Class B
shares
onto the three year holding period of the new Class B
shares, the
investor will be deemed to have held the new Class B
shares for
five years.
CLASS C SHARES. Class C shareholders may exchange
their
Class C shares ("outstanding Class C shares") for Class
C shares
of another Ivy or Mackenzie 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 the
redemption of the outstanding Class C shares. (Class C
shares
are subject to a CDSC of 1% if such shares are redeemed
within
one year of the date of purchase of such shares.)
The minimum amount which may be exchanged into a
fund of the
Ivy Mackenzie Funds in which shares are not already
held is
$1,000. No exchange out of the Fund (other than by a
complete
exchange of all shares of the Fund) may be made if it
would
reduce the shareholder's interest in the Fund to less
than
$1,000. Exchanges are available only in states where
the
exchange can be legally made.
Each exchange will be made on the basis of the
relative net
asset values per share of each fund of the Ivy
Mackenzie Funds
next computed following receipt of telephone
instructions by
MIISC or a properly executed request by MIISC.
Exchanges,
whether written or telephonic, must be received by
MIISC by the
close of regular trading on the New York Stock Exchange
(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. This exchange privilege may be
modified
or terminated at any time, upon at least 60 days'
notice when
such notice is required by Securities and Exchange
Commission
("SEC") rules. See "Redemptions."
An exchange of shares in any fund of the Ivy
Mackenzie Funds
for shares in another fund will result in a taxable
gain or loss.
Generally, any such taxable gain or loss 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 Fund 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 Fund's
Prospectus.
Any investor may submit a Letter of Intent stating that
he or she
will invest, over a period of 13 months, at least
$100,000 in
Class A shares of the 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 back dated. A shareholder may
include
the value (at the applicable offering price) of all
Class A
shares of the Fund, Ivy Growth Fund, Ivy Growth with
Income Fund,
Ivy Emerging Growth Fund, Ivy International Fund, Ivy
China
Region Fund, Ivy Latin America Strategy Fund, Ivy New
Century
Fund, Ivy Canada Fund, Ivy Bond Fund, Ivy Short-Term
Bond Fund,
Ivy Global Fund, Mackenzie National Municipal Fund,
Mackenzie
California Municipal Fund, Mackenzie Florida Limited
Term
Municipal Fund, Mackenzie Limited Term Municipal Fund
and
Mackenzie New York Municipal Fund (and shares that have
been
exchanged into Ivy Money Market Fund from any of the
other funds
in the Ivy Mackenzie Funds), held of record by him or
her as of
the date of his or her Letter of Intent as an
accumulation credit
toward the completion of such Letter. During the term
of the
Letter of Intent, the Fund's transfer agent 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
MIFDI an amount equal to the difference between the
dollar amount
of sales charge which 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 thereof before signing.
RETIREMENT PLANS
Shares may be purchased in connection with several
types of
tax-deferred retirement plans. Shares of more than one
fund
distributed by MIFDI may be purchased in a single
application
establishing a single plan account, and shares held in
such an
account may be exchanged among the funds in the Ivy
Mackenzie
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
account
For shareholders whose retirement accounts are
diversified across
several funds of the Ivy Mackenzie Funds, the annual
maintenance
fee will be limited to not more than $20.
The following discussion describes in general
terms 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 the
Trust 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 MIISC, which may
impose a
charge for establishing the account. Individuals may
wish to
consult their tax advisers before investing IRA assets
in a fund
which 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. However, if one spouse has (or elects to be
treated as
having) no earned income for IRA purposes for a year,
the other
spouse may contribute to an IRA on his or her behalf.
In such a
case, the working spouse may contribute up to the
lesser of
$2,250 or 100% or his or her compensation or earned
income for
the year to IRAs for both spouses, provided that no
more than
$2,000 is contributed to the IRA of one spouse.
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 (or 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 government
plan. If
he or she (or his or her spouse) is an active
participant, a full
deduction is only available if he or she has adjusted
gross
income that is less than a specified level ($40,000 for
married
couples filing a joint return, $25,000 for single
individuals,
and $0 for a married individual filing a separate
return). The
deduction is phased out ratably for active participants
with
adjusted gross income between certain levels ($40,000
and $50,000
for married individuals filing a joint return, $25,000
and
$35,000 for single individuals, and $0 and $10,000 for
married
individuals filing separate returns). Individuals with
income
above the specified phase-out level may not deduct
their IRA
contributions. Rollover contributions are not
includable 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. 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. 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.
Extremely large distributions in any one year from an
IRA (or
from an IRA and other retirement plans) may also result
in a
penalty tax.
QUALIFIED PLANS: For those self-employed
individuals who
wish to purchase shares of one or more of the funds in
the Ivy
Mackenzie Funds through a qualified retirement plan, a
Custodial
Agreement and a Retirement Plan are available from
MIISC. 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
taken into account under the plan 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 Fund's transfer agent will furnish custodial
services to
the employer and the employees, if any are included as
participants.
DEFERRED COMPENSATION FOR PUBLIC SCHOOLS AND
CHARITABLE
ORGANIZATIONS ("403(B)(7) ACCOUNT"): Section 403(b)(7)
of the
Internal Revenue Code of 1986, as amended (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 Trust in
conjunction
with such an arrangement. Sales charges for such
purchases are
the same as those set forth under "Initial Sales Charge
Alternative -- Class A Shares" in the Prospectus. The
special
application for a 403(b)(7) Account is available from
MIISC.
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 has
(1) reached
age 55 and separated from service; (2) died or become
disabled;
(3) used the withdrawal to pay tax-deductible medical
expenses;
(4) taken 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) rolled over the distribution. There is no set-up
fee for
403(b)(7) Accounts and the annual maintenance fee is
$20.00.
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.
REINVESTMENT PRIVILEGE
Investors who have redeemed Class A shares of the
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
MIISC 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."
RIGHTS OF ACCUMULATION
A scale of reduced sales charges applies to any
investment
of $100,000 or more in Class A shares of the Fund. See
"Initial
Sales Charge Alternative -- Class A Shares" in the
Prospectus for
the Fund. 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). It
is also
applicable to current purchases of all of the funds in
the Ivy
Mackenzie Funds (except Ivy Money Market Fund) by any
of the
persons enumerated above, where the aggregate quantity
of Class A
shares of the Fund, Ivy Growth Fund, Ivy Growth with
Income Fund,
Ivy Emerging Growth Fund, Ivy International Fund, Ivy
China
Region Fund, Ivy Latin America Strategy Fund, Ivy New
Century
Fund, Ivy Short-Term Bond Fund, Ivy Canada Fund, Ivy
Bond Fund,
Ivy Global Fund, Mackenzie National Municipal Fund,
Mackenzie
California Municipal Fund, Mackenzie New York Municipal
Fund,
Mackenzie Florida Limited Term Municipal Fund and
Mackenzie
Limited Term Municipal Fund (and shares that have been
exchanged
into Ivy Money Market Fund from any of the other funds
in the Ivy
Mackenzie Funds) and of any other investment company
distributed
by MIFDI, 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
$50,000 or more for the Fund, Ivy Growth Fund, Ivy
Growth with
Income Fund, Ivy Emerging Growth Fund, Ivy
International Fund,
Ivy China Region Fund, Ivy Latin America Strategy Fund,
Ivy New
Century Fund, Ivy Canada Fund and Ivy Global Fund;
$100,000 or
more for the Ivy Bond Fund, Mackenzie National
Municipal Fund,
Mackenzie California Municipal Fund and Mackenzie New
York
Municipal Fund; $25,000 or more for Mackenzie Florida
Limited
Term Municipal Fund and Mackenzie Limited Term
Municipal Fund; or
$1,000,000 or more for Ivy Short-Term Bond Fund.
At the time an investment takes place, MIISC must
be
notified by the investor or his or her dealer that the
investment
qualifies for the reduced charge on the basis of
previous
investments. The reduced charge is subject to
confirmation of
the investor's holdings through a check of the Fund's
records.
SYSTEMATIC WITHDRAWAL PLAN
A shareholder may establish a Systematic
Withdrawal Plan (a
"Withdrawal Plan") by telephone instructions to MIISC
or by
delivery to MIISC of a written election to so redeem,
accompanied
by a surrender to MIISC of all share certificates then
outstanding in the name of such shareholder, properly
endorsed by
him or her. To be eligible, a shareholder must have at
least
$5000 in the shareholder's account. A Withdrawal Plan
may not be
established if the investor is currently participating
in the
Automatic Investment Method. A Withdrawal Plan may
involve the
use of principal and, to the extent that it does,
depending on
the amount withdrawn, the investor's principal may be
depleted.
A redemption under a Withdrawal Plan is a taxable
event.
Investors contemplating participation 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 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 charge or
CDSCs.
An investor may terminate his or her participation
in a
Withdrawal Plan at any time by delivering written
notice to
MIISC. If all shares held by the investor are
liquidated at any
time, the Withdrawal Plan will terminate automatically.
The
Trust or MIISC may terminate the Withdrawal Plan option
at any
time after reasonable notice to shareholders.
BROKERAGE ALLOCATION
Subject to the overall supervision of the
President and the
Board of Trustees of the Trust, IMI places orders for
the
purchase and sale of the Fund's portfolio securities.
All
portfolio transactions are effected at the best price
and
execution obtainable. Purchases and sales of debt
securities are
usually principal transactions and, therefore,
brokerage
commissions are usually not required to be paid by the
Fund for
such purchases and sales, although the price paid
generally
includes undisclosed compensation to the dealer. The
prices paid
to underwriters of newly-issued securities usually
include a
concession paid by the issuer to the underwriter, and
purchases
of after-market securities from dealers normally
reflect the
spread between the bid and asked prices. In connection
with OTC
transactions, IMI attempts to deal directly with the
principal
market makers, except in those circumstances where it
believes
that better prices and execution are available
elsewhere.
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. Commissions to be charged and the rendering
of
investment services, including statistical, research,
and
counseling services by brokerage firms, are factors to
be
considered in placing of brokerage business. The
types of
research services provided by brokers may include
general
economic and industry data, and information on
securities of
specific companies. Research services furnished by
brokers
through whom the Trust effect securities transactions
may be used
by IMI in servicing all of its accounts. In addition,
not all of
these services may be used by IMI in connection with
the services
it provides to the Fund or the Trust. IMI may consider
sales of
shares of the Fund as a factor in the selection of
broker-dealers
and may select broker-dealers who provide it with
research
services. IMI will not, however, execute brokerage
transactions
other than at the best price and execution.
As of April 30, 1996, the Fund has not commenced
operations
and thus has not paid any brokerage commissions.
The Fund may, under some circumstances, accept
securities in
lieu of cash as payment for Fund shares. The Fund will
consider
accepting securities only to increase its holdings in a
portfolio
security or to take a new portfolio position in a
security that
IMI deems to be a desirable investment for the Fund.
While no
minimum has been established, it is expected that the
Fund will
not accept securities having an aggregate value of less
than $1
million. The Trust may reject in whole or in part any
or all
offers to pay for Fund shares with securities and may
discontinue
accepting securities as payment for Fund shares at any
time
without notice. The Trust will value accepted
securities in the
manner and at the same time provided for valuing
portfolio
securities of the Fund, and Fund shares will be sold
for net
asset value determined at the same time the accepted
securities
are valued. The Trust will accept only securities
which are
delivered in proper form and will not accept securities
subject
to legal restrictions on transfer. The acceptance of
securities
by the Trust must comply with applicable laws of
certain states.
TRUSTEES AND OFFICERS
The Trustees and Executive Officers of the Trust,
their
business addresses and principal occupations during the
past five
years are:
POSITION
WITH THE BUSINESS
AFFILIATIONS
NAME, ADDRESS, AGE TRUST AND PRINCIPAL
OCCUPATIONS
John S. Anderegg, Jr. Trustee Chairman,
Dynamics
60 Concord Street Research Corp.
instruments
Wilmington, MA 01887 and controls);
Director,
Age: 71 Burr-Brown Corp.
(operational
amplifiers);
Director,
Metritage
Incorporated
(level
measuring
instruments);
Trustee of
Mackenzie Series
Trust
(1992-present).
Paul H. Broyhill Trustee Chairman, BMC
Fund, Inc.
800 Hickory Blvd. (1983-present);
Chairman,
Golfview Park Broyhill Family
Foundation,
Lenoir, NC 28645 Inc. (1983-
Present);
Age: 71 Chairman and
President,
Broyhill
Investments, Inc.
(1983-present);
Chairman,
Broyhill Timber
Resources
(1983-present);
Management
of a personal
portfolio of
fixed-income and
equity
investments
(1983-present);
Trustee of
Mackenzie Series
Trust
(1988-present);
Director of The
Mackenzie
Funds Inc.
(1988-1995).
Stanley Channick Trustee President, The
Whitestone
11 Bala Avenue Corporation
(insurance
Bala Cynwyd, PA 19004 agency);
President, Scott
Age: 71 Management
Company
(administrative
services
for insurance
companies);
President, The
Channick
Group
(consultants to
insurance
companies and
national trade
associations);
Trustee of
Ivy Fund
(1984-1993);
Director of The
Mackenzie
Funds Inc.
(1994-1995).
Frank W. DeFriece, Jr. Trustee Director, Manager
and Vice
322 Seventh Street President,
Massengill-
Bristol, TN 37620-2218 DeFriece
Foundation
Age:74 (charitable
organization)
(1950-present);
Trustee and
Second Vice
Chairman, East
Tennessee Public
Communications
Corp. (WSJK-
TV)
(1984-present); Trustee
of Mackenzie
Series Trust
(1985-present);
Director of
The Mackenzie
Funds Inc.
(1987-1995).
Roy J. Glauber Trustee Mallinckrodt
Professor of
Physics, Harvard
Age: 70 University (since
1974);
Trustee of Ivy
Fund (1961-
1991); Trustee of
Mackenzie
Series Trust
(1994-
present).
Michael G. Landry Trustee President,
Chairman and
700 South Federal Hwy. and Director of
Mackenzie
Suite 300 President Investment
Management Inc.
Boca Raton, FL 33432 (1987-present);
Age: 49* President and
Director of
[Deemed to be an Ivy Management,
Inc. (1992-
"interested person" present);
Chairman and
of the Trust, as Director of
Mackenzie Ivy
defined under the Investor Services
Corp.
1940 Act.] (1993-present);
Director
and President of
Mackenzie
Ivy Funds
Distribution,
Inc. (1993-1994);
Chairman
and Director of
Mackenzie
Ivy Funds
Distribution,
Inc.
(1994-present);
Director and
President of
The Mackenzie
Funds Inc.
(1987-1995);
Trustee and
President of
Mackenzie
Series Trust
(1987-
present).
Michael R. Peers Trustee Chairman of the
Board,
c/o Brattle, Inc. and Ivy Management,
Inc.
176 Federal Street, Chairman (1984-1991);
Chairman
5th Floor of the of the Board, Ivy
Fund
Boston, MA 02110 Board (1974-present);
Private
Age: 66 Investor.
[Deemed to be an
"interested person"
of the Trust, as
defined under the
1940 Act.]
Joseph G. Rosenthal Trustee Chartered
Accountant
110 Jardin Drive (1958-present);
Trustee
Unit #12 of Mackenzie
Series
Concord, Ontario Canada Trust
(1985-present);
L4K 2T7 Director of The
Mackenzie
Age: 61 Funds Inc.
(1987-1995).
Richard N. Silverman Trustee Formerly
President,
18 Bonnybrook Road Hy-Sil
Manufacturing
Waban, MA 02168 Company, a
division of
Age: 71 Van Leer, U.S.A.,
Inc.
(gift packaging
materials
and metalized
film
products);
Formerly
Director, Waters
Manufacturing Co.
(manufacturer of
electronic
parts); Director,
Panorama
Television
Network.
J. Brendan Swan Trustee President,
Airspray
4701 North Federal Hwy. International,
Inc.;
Suite 465 Joint Managing
Director,
Pompano Beach, FL 33064 Airspray
International
Age: 65 B.V. (an
environmentally
sensitive
packaging
company);
Director, The
Mackenzie Funds
Inc. (1992-
1995); Trustee of
Mackenzie
Series Trust
(1992-
present).
Keith J. Carlson Vice Senior Vice
President
700 South Federal Hwy. President and Director of
Mackenzie
Suite 300 Investment
Management,
Boca Raton, FL 33432 Inc.
(1994-present);
Age: 39 Senior Vice
President,
Secretary and
Treasurer of
Mackenzie
Investment
Management Inc.
(1985-
1994); Senior
Vice
President and
Director of
Ivy Management,
Inc. (1994-
present); Senior
Vice
President,
Treasurer and
Director of Ivy
Management,
Inc. (1992-1994);
Vice
President of The
Mackenzie
Funds Inc.
(1987-1995);
President and
Director of
Mackenzie Ivy
Investor
Services Corp.
(1993-
present); Vice
President of
Mackenzie Series
Trust
(1994-present);
Treasurer
of Mackenzie
Series Trust
(1985-1994);
President and
Director of
Mackenzie Ivy
Funds
Distribution, Inc.
(1994-present);
Executive
Vice President
and Director
of Mackenzie Ivy
Funds
Distribution,
Inc. (1993-
1994).
C. William Ferris Secretary/ Senior Vice
President,
700 South Federal Hwy. Treasurer
Secretary/Treasurer
Suite 300 and Director of
Boca Raton, FL 33432 Mackenzie
Investment
Age: 51 Management Inc.
(1994-
present); Senior
Vice
President,
Finance and
Administration/Compliance
Officer of
Mackenzie
Investment
Management Inc.
(1989-1994);
Senior Vice
President,
Secretary/Treasurer and
Clerk of Ivy
Management,
Inc.
(1994-present); Senior
Vice President,
Finance and
Administration/Compliance
Officer of Ivy
Management,
Inc. (1992-1994);
Senior
Vice President,
Secretary/Treasurer and
Clerk of Ivy
Management,
Inc. (1989-1994);
Senior
Vice President,
Secretary/Treasurer of
Mackenzie Ivy
Funds
Distribution,
Inc. (1994-
present);
Secretary/Treasurer and
Director of
Mackenzie Ivy
Funds
Distribution, Inc.
(1993-1994);
Secretary/Treasurer and
Director of
Mackenzie Ivy
Investor Services
Corp.
(1993-present);
Secretary/Treasurer of The
Mackenzie Funds
Inc. (1993-
1995);
Secretary/Treasurer
of Mackenzie
Series Trust
(1994-present).
As of March 31, 1996, the Officers and Trustees of
the Trust
as a group owned less than 1% of the outstanding Class
A, Class
B, Class C and Class I shares of the Fund.
PERSONNEL INVESTMENTS BY EMPLOYEES OF IMI
Employees of IMI are permitted to make personal
securities
transactions, subject to requirements and restrictions
set forth
in IMI's Code of Ethics. The Code of Ethics contains
provisions
and requirements designed to identify and address
certain
conflicts of interest between personal investment
activities and
the interests of investment advisory clients such as
the Fund.
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, 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.
Additional restrictions apply to portfolio managers,
traders,
research analysts and others involved in the investment
advisory
process. Exceptions to these and other provisions of
the Code of
Ethics may be granted in particular circumstances after
review by
appropriate personnel.
COMPENSATION TABLE
IVY FUND
(FISCAL YEAR ENDED DECEMBER 31, 1995)
TOTAL
PENSION OR
COMPENSA-
RETIREMENT
TION FROM
BENEFITS ESTIMATED
TRUST AND
AGGREGATE ACCRUED AS ANNUAL
FUND COM-
COMPENSA- PART OF BENEFITS
PLEX PAID
NAME, TION FUND UPON
TO
POSITION FROM TRUST EXPENSES RETIREMENT
TRUSTEES
John S. 7,112 N/A N/A
8,000
Anderegg, Jr.
(Trustee)
Paul H. 7,112 N/A N/A
8,000
Broyhill
(Trustee)
Stanley -0- N/A N/A
8,000
Channick[*]
(Trustee)
Frank W. 7,112 N/A N/A
8,000
DeFriece, Jr.
(Trustee)
Roy J. -0- N/A N/A
8,000
Glauber[*]
(Trustee)
Michael G. -0- N/A N/A
-0-
Landry
(Trustee and
President)
Michael R. -0- N/A N/A
-0-
Peers
(Trustee and
Chairman of
the Board)
Joseph G. 7,112 N/A N/A
8,000
Rosenthal
(Trustee)
Richard N. 8,000 N/A N/A
8,000
Silverman
(Trustee)
J. Brendan 7,112 N/A N/A
8,000
Swan
(Trustee)
Keith J. -0- N/A N/A
-0-
Carlson
(Vice President)
C. William -0- N/A N/A
-0-
Ferris
(Secretary/Treasurer)
[*] Appointed as a Trustee of the Trust at a meeting
of the
Board of Trustees held on February 6, 1996.
INVESTMENT ADVISORY AND OTHER SERVICES
BUSINESS MANAGEMENT AND INVESTMENT ADVISORY SERVICES
Ivy Management, Inc. ("IMI") provides business
management
and investment advisory services to the Fund pursuant
to a
Business Management and Investment Advisory Agreement
with the
Trust (the "Agreement"), which was approved on
September 17,
1994, with respect to the Fund by the Board of
Trustees,
including a majority of the Trustees who are neither
"interested
persons" (as defined in the 1940 Act) of the Trust nor
have any
direct or indirect financial interest in the operation
of the
distribution plan (see "Distribution Services") or in
any related
agreement (the "Independent Trustees"). IMI also acts
as manager
and investment advisor to the following investment
companies
registered under the 1940 Act: Ivy Emerging Growth
Fund, Ivy
Growth Fund, Ivy Growth with Income Fund, Ivy Bond
Fund, Ivy
International Fund, Ivy Short-Term Bond Fund, Ivy
Canada Fund,
Ivy Global Fund, Ivy New Century Fund, Ivy Latin
America Strategy
Fund, Ivy China Region Fund and Ivy Money Market Fund.
IMI is a
wholly owned subsidiary of MIMI. MIMI currently acts
as manager
and investment adviser to the following investment
companies
registered under the 1940 Act: Mackenzie National
Municipal
Fund, Mackenzie New York Municipal Fund, Mackenzie
California
Municipal Fund, Mackenzie Limited Term Municipal Fund
and
Mackenzie Florida Limited Term Municipal Fund. MIMI is
a
subsidiary of 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 Toronto
Stock
Exchange. MFC is registered in Ontario as a mutual
fund dealer
and advises Ivy Canada Fund.
The Agreement obligates IMI to make investments
for the
account of the Fund in accordance with its best
judgment and
within the investment objectives and restrictions set
forth in
the Fund's current Prospectus, the 1940 Act and the
provisions of
the Code relating to regulated investment companies,
subject to
policy decisions adopted by the Trust's Board of
Trustees. IMI
also determines the securities to be purchased or sold
by the
Fund and places orders with brokers or dealers who deal
in such
securities.
Under the Agreement, IMI also provides certain
business
management services. IMI is obligated to (1)
coordinate with the
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 Fund; (3) provide the Funds
with the
necessary office space, telephones and other
communications
facilities as are adequate for the Fund's 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 Fund or by IMI acting in some
other
capacity pursuant to a separate agreement or
arrangement with the
Fund; (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 IMI'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 the Trust, 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.
For business management and investment advisory
services,
the Fund pays IMI a monthly fee at an annual rate of
0.75% of the
Fund's average daily net assets. As of April 30, 1996,
the Fund
has not commenced operations and thus has not paid IMI
any
management fees.
Under the Agreement, the Trust pays the following
expenses:
(1) the fees and expenses of the Trust's Independent
Trustees;
(2) the salaries and expenses of any of the Trust's
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 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
preparation and
distribution to existing shareholders of periodic
reports, proxy
materials and prospectuses; and (13) fees and expenses
of
membership in industry organizations.
The Agreement provides that if the Fund's total
expenses in
any fiscal year exceed the permissible limit applicable
to the
Fund in any state in which its shares are then
qualified for
sale, IMI will bear the excess expenses. At the
present time,
the most restrictive state expense limitation provision
limits
the Fund's annual expenses (excluding interest, taxes,
distribution expenses, brokerage commissions and
extraordinary
expenses, and other expenses subject to approval by
state
securities administrators) to 2.5% of the first $30
million of
its average daily net assets, 2.0% of the next $70
million and
1.5% of its average daily net assets over $100 million.
IMI currently limits the Fund's total operating
expenses
(excluding Rule 12b-1 fees, interest, taxes, brokerage
commissions, litigation and indemnification expenses,
and other
extraordinary expenses) to an annual rate of 1.50% of
the Fund's
average daily net assets. As long as the Fund's
expense
limitation continues, it may lower the Fund's expenses
and
increase its yield. The Fund's expense limitation may
be
terminated or revised at any time, at which time the
Fund's
expenses may increase and its yield may be reduced,
depending on
the total assets of the Fund.
The initial term of the Agreement between IMI and
the Fund
commenced on September 17, 1994 and will run for a
period of two
years from that date. The Agreement will continue in
effect with
respect to the Fund for more than the initial period
only so long
as the 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 the Fund or
(b) by the
vote of a majority of the entire Board of Trustees. If
the
question of continuance of the Agreement (or adoption
of any new
agreement) is presented to shareholders, continuance
(or
adoption) shall be effected only if approved by the
affirmative
vote of a majority of the outstanding voting securities
of the
Fund. See "Capitalization and Voting Rights."
The Agreement may be terminated with respect to
the Fund at
any time, without payment of any penalty, by a vote of
a majority
of the Board of Trustees, or by a vote of a majority of
the
outstanding voting securities of the Fund on 60 days'
written
notice to IMI, or by IMI on 60 days' written notice to
the Trust.
The Agreement shall terminate automatically in the
event of its
assignment.
DISTRIBUTION SERVICES
MIFDI serves as the exclusive distributor of the
Class A,
Class B and Class C shares of the Fund under an Amended
and
Restated Distribution Agreement with the Trust dated
October 23,
1993 (the "Distribution Agreement"). MIFDI distributes
shares of
the Fund through broker-dealers who are members of the
National
Association of Securities Dealers, Inc. and who have
executed
dealer agreements with MIFDI. MIFDI distributes shares
of the
Fund on a continuous basis, but reserves the right to
suspend or
discontinue distribution on such basis. MIFDI is not
obligated
to sell any specific amount of Fund shares. Pursuant
to the
Distribution Agreement, the 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.
Pursuant to the Distribution Agreement, MIFDI 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 such
commission,
MIFDI may allow to dealers such concession as MIFDI may
determine
from time to time. Furthermore, MIFDI 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 Fund's Prospectus.
MIFDI may
reallow all or a portion of the CDSC to dealers as
MIFDI may
determine from time to time. As of April 30, 1996, the
Fund has
not commenced operations and thus MIFDI has received no
sales
commissions from sales of Class A shares of the Fund,
and no
CDSCs on redemptions of Class B or Class C shares of
the
Fund.
The Distribution Agreement will continue in effect
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 of Trustees or a majority of the
outstanding voting
securities of the Fund. The Distribution Agreement may
be
terminated with respect to the Fund at any time,
without payment
of any penalty, by MIFDI on 60 days' written notice to
the Trust
or by the Fund by vote of either a majority of the
outstanding
voting securities of the Fund or a majority of the
Independent
Trustees on 60 days' written notice to MIFDI. 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 whose shares are registered on Form
N-1A to
issue multiple classes of shares in accordance with a
written
plan approved by the investment company's board of
directors/trustees and filed with the SEC. At a
meeting held on
December 1-2, 1995, the Board of Trustees of the Trust
adopted a
multi-class plan (the "Rule 18f-3 plan") on behalf of
the Fund.
The key features of the Rule 18f-3 plan are as follows:
(i)
shares of each class of the Fund represent an equal pro
rata
interest in the 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 the Fund may be
exchanged for
shares of the same class of another Ivy or Mackenzie
fund; and
(iii) the Fund's Class B shares will convert
automatically into
Class A shares of the 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 distribution plans pertaining to the
Funds'
Class A, Class B and Class C shares (each, a "Plan").
In
adopting each Plan, a majority of the Independent
Trustees have
concluded in conformity with the requirements of the
1940 Act
that there is a reasonable likelihood that each Plan
will benefit
each respective 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 a Fund's shares in the absence of a Plan or under an
alternative distribution arrangement.
Under each Plan, each Fund pays MIFDI 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, as the case may be. The services for
which
service fees may be paid include, among other services,
advising
clients or customers regarding the purchase, sale or
retention of
shares of the Fund, answering routine inquiries
concerning the
Fund 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
that
Class of that Fund. The expenses not reimbursed in any
one given
month may be reimbursed in a subsequent month.
Under the Funds' Class B and Class C Plans, each
Fund also
pays MIFDI 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. MIFDI
may reallow
to dealers all or a portion of the service and
distribution fees
as MIFDI may determine from time to time. The
distribution fee
compensates MIFDI for expenses incurred in connection
with
activities primarily intended to result in the sale of
the Funds'
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. Under the Funds' Class B and
Class C
Plans, MIFDI 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)
MIFDI will
submit to the Board of Trustees of the Trust at least
quarterly,
and the Trustees will review, reports regarding all
amounts
expended under the Plan and the purposes for which such
expenditures were made; (2) the 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 Trust's Board of Trustees, including
the
Independent Trustees, cast in person at a meeting
called for that
purpose; (3) payments by the Fund under the 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 the Plan is in effect, the selection and
nomination
of Trustees who are not "interested persons" (as
defined in the
1940 Act) of the Trust shall be committed to the
discretion of
the Trustees who are not "interested persons" of the
Trust.
MIFDI may make payments for distribution
assistance and for
administrative and accounting services from its own
resources,
which may include the management fees paid by the Fund.
MIFDI
also may make payments (such as the service fee
payments
described above) to unaffiliated broker-dealers for
services
rendered in the distribution of the Fund's 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 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 MIFDI.
A report of the amount expended pursuant to either
Plan, and
the purposes for which such expenditures were incurred,
must be
made to the Board of Trustees for its review at least
quarterly.
As of April 30, 1996, the Fund has not commenced
operations, and
thus MIFDI has not received nor expended any amounts
pursuant to
the Class A, Class B or Class C plans.
Each Plan may be amended at any time with respect
to the
Class of shares of the 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 with
respect to the
Class of shares of the Fund to which the Plan relates
at any
time, 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 the Distribution
Plans are
terminated (or not renewed) with respect to one or more
funds (or
Class of shares thereof) of the Trust, they may
continue in
effect with respect to any fund (or Class of shares
thereof) as
to which they have not been terminated (or have been
renewed).
CUSTODIAN
Brown Brothers Harriman & Co. ("Brown Brothers"),
a private
bank and member of the principal securities exchanges,
located at
40 Water Street, Boston, Massachusetts 02109, (the
"Custodian")
has been retained to act as custodian of the Trust's
investments.
Its primary responsibility is to maintain custody of
the cash and
securities in the Fund's portfolio. Rules adopted
under the 1940
Act permit the Trust to maintain its foreign securities
and cash
in the custody of certain eligible foreign banks and
securities
depositories. Pursuant to those rules, Brown Brothers
Harriman &
Co. has entered into subcustodial agreements for the
holding of
the Fund's foreign securities. Brown Brothers may
receive, as
partial payment for its services, a portion of the
Trust's
brokerage business, subject to its ability to provide
best price
and execution.
FUND ACCOUNTING SERVICES
Pursuant to a Fund Accounting Services Agreement,
MIMI
provides certain accounting and pricing services for
the Fund.
As compensation for those services, the Fund pays MIMI
a monthly
fee plus out-of-pocket expenses as incurred. The
monthly fee is
based upon the net assets of the 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.
TRANSFER AGENT AND DIVIDEND PAYING AGENT
Pursuant to a Transfer Agency and Shareholder
Service
Agreement, MIISC, a wholly owned subsidiary of MIMI, is
the
transfer agent. The Fund pays a monthly fee at an
annual rate of
$20.75 per open account. In addition, the Fund pays a
monthly
fee at an annual rate of $4.36 per account that is
closed plus
certain out-of-pocket expenses. As of April 30, 1996,
the Fund
has not commenced operations and has thus paid MIMI no
fees
pursuant to the agreement.
ADMINISTRATOR
Pursuant to an Administrative Services Agreement,
MIMI
provides certain administrative services to the Fund.
As
compensation for these services, the Fund pays MIMI a
monthly fee
at the annual rate of .10% of its average daily net
assets. As
of April 30, 1996, the Fund had not commenced
operations, and
thus has paid no fees pursuant to the agreement.
AUDITORS
Coopers & Lybrand L.L.P., independent certified
public
accountants, 200 East Las Olas Boulevard, Suite 1700,
Ft.
Lauderdale, Florida 33301, has been selected as
auditors for the
Trust. The audit services performed by Coopers &
Lybrand L.L.P.
include audits of the annual financial statements of
each of the
funds of the Trust. Other services provided primarily
relate to
filings with the SEC and the preparation and review of
the
Trust's tax returns.
CAPITALIZATION AND VOTING RIGHTS
The capitalization of the Trust consists of an
unlimited
number of shares of beneficial interest (no par value
per share).
When issued, shares of each class of the Fund are fully
paid,
non-assessable, redeemable and fully transferable. No
class of
shares of the Fund has preemptive rights or
subscription rights.
The Amended and Restated Declaration of Trust
permits the
Trustees to create separate series or portfolios and to
divide
any series or portfolio into one or more classes. The
Trustees
have authorized thirteen series, each of which
represents a fund.
The Trustees have further authorized the issuance of
Classes A, B
and C for Ivy Global Fund, Ivy Growth Fund, Ivy
Emerging Growth
Fund, Ivy Growth with Income Fund, Ivy Money Market
Fund, Ivy
China Region Fund, Ivy Latin America Strategy Fund, Ivy
New
Century Fund, Ivy International Fund, Ivy Canada Fund,
Ivy Bond
Fund and Ivy International Bond Fund, as well as Class
A, B and I
for Ivy Short-Term Bond Fund, Class I for Ivy
International Fund
and Ivy Bond Fund, and Class D for Ivy Growth with
Income Fund.
[FN][The Class D shares of Ivy Growth with Income Fund
were
initially issued as "Ivy Growth with Income Fund --
Class C" to
shareholders of Mackenzie Growth & Income Fund, a
former series
of the Company, in connection with the reorganization
between
that fund and Ivy Growth with Income Fund and not
offered for
sale to the public. On February 29, 1996, the Trustees
of the
Trust resolved by written consent to establish a new
class of
shares designated as "Class C" for all Ivy Fund funds,
other than
Ivy Short-Term Bond Fund, and to redesignate the shares
of
beneficial interest of "Ivy Growth with Income
Fund--Class C" as
shares of beneficial interest of "Ivy Growth with
Income Fund--
Class D," which establishment and redesignation,
respectively,
are to become effective on April 30, 1996. The voting,
dividend,
liquidation and other rights, preferences, powers,
restrictions,
limitations, qualifications, terms and conditions of
the Class D
shares of Ivy Growth with Income Fund, as set forth in
Ivy Fund's
Declaration of Trust, as amended from time to time,
will not be
changed by this redesignation.]
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 the Fund entitle their holders
to one
vote per share (with proportionate voting for
fractional shares).
On matters affecting only the Fund, only the
shareholders of the
Fund are entitled to vote. All Classes of shares of
the Fund
will vote together, except with respect to the
distribution plan
applicable to its 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 of the Trust, but affecting the funds
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 of the
Trust.
If the Trustees determine that a matter does not affect
the
interests of the Fund, then the shareholders of the
Fund will not
be entitled to vote on that matter. Matters which
affect the
Trust in general, such as ratification of the selection
of
independent public accountants, will be voted upon
collectively
by the shareholders of all funds of the Trust.
As used in this Statement of Additional
Information and the
Prospectus, the phrase "majority vote of the
outstanding shares"
of the 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 the Fund, the
matter shall
have been effectively acted upon with respect to the
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 of the Trust; or
(2) the
matter has not been approved by a majority of the
outstanding
voting securities of the Trust.
The Amended and Restated 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 as if Section 26(c) of
the Act were
applicable.
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 of Trustees, in
which case
the holders of the remaining shares would not be able
to elect
any Trustees.
As of April 30, 1996 no shares of the Fund have
been
issued.
Under Massachusetts law, the Trust's shareholders
could,
under certain circumstances, be held personally liable
for the
obligations of the Trust. However, the Amended and
Restated
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 Amended and Restated Declaration
of Trust
provides for indemnification out of Fund property for
all loss
and expense of any shareholder of a Fund held
personally liable
for the obligations of that 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.
NET ASSET VALUE
The share price, or value, for the separate
Classes of
shares of the Fund is called the net asset value per
share. The
net asset value per share of the Fund is computed by
dividing the
value of the assets of the Fund, less its liabilities,
by the
number of shares of the Fund outstanding. For the
purposes of
determining the aggregate net assets of the Fund, cash
and
receivables will be valued at their realizable amounts.
A
security listed or traded on a recognized stock
exchange or
NASDAQ is valued at its last sale price on the
principal exchange
on which the security is traded. The value of a
foreign security
is determined in its national currency as of the normal
close of
trading on the foreign exchange on which it is traded
or as of
the close of regular trading on the Exchange, if that
is earlier,
and that value is then converted into its U.S. dollar
equivalent
at the foreign exchange rate in effect at noon, Eastern
time, on
the day the value of the foreign security is
determined. If no
sale is reported at that time, the average between the
current
bid and asked price is used. All other securities for
which OTC
market quotations are readily available are valued at
the average
between the current bid and asked price. Interest will
be
recorded as accrued. Securities and other assets for
which
market prices are not readily available are valued at
fair value
as determined by IMI and approved in good faith by the
Board of
Trustees. Money market instruments of the Fund are
valued at
market value, except that instruments maturing within
60 days of
the valuation date are valued at amortized cost.
The 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.
Portfolio securities are valued and net asset
value per
share is determined as of the close of regular trading
on the
Exchange, (normally 4:00 p.m., eastern time), every
Monday
through Friday (exclusive of national business
holidays). The
Trust's offices will be closed, and net asset value
will not be
calculated, on the following national business
holidays: New
Year's Day, Presidents Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Veterans Day, Thanksgiving
Day and
Christmas Day. On those days when either or both of
the Fund's
Custodian or the New York Stock Exchange close early as
a result
of such day being a partial holiday or otherwise, the
right is
reserved to advance the time on that day by which
purchase and
redemption requests must be received.
When the Fund writes an option, an amount equal to
the
premium received by the Fund is included in the Fund's
Statement
of Assets and Liabilities as an asset and as an
equivalent
liability. The amount of the liability will be
subsequently
marked-to-market daily to reflect the current market
value of the
option written. The current market value of a written
option is
the last sale on the principal exchange on which such
option is
traded or, in the absence of a sale, the last offering
price.
The premium paid by the Fund for the purchase of a
call or a
put option will be deducted from its assets and an
equal amount
will be included in the asset section of the Fund's
Statement of
Assets and Liabilities as an investment and
subsequently adjusted
to the current market value of the option. For
example, if the
current market value of the option exceeds the premium
paid, the
excess would be unrealized appreciation and,
conversely, if the
premium exceeds the current market value, such excess
would be
unrealized depreciation. The current market value of a
purchased
option will be the last sale price on the principal
exchange on
which the option is traded or, in the absence of a
sale, the last
bid price. If the Fund exercises a call option which
it has
purchased, the cost of the security which the Fund
purchased upon
exercise will be increased by the premium originally
paid.
Valuations of below investment-grade debt
securities may be
supplied by a pricing agent; if valuations are not
available
through a pricing agent, such valuations may be
supplied through
a broker or otherwise as determined in good faith by
the Board of
Trustees.
The sale of shares of the Fund will be suspended
during any
period when the determination of its net asset value is
suspended
pursuant to rules or orders of the SEC, and may be
suspended by
the Board of Trustees whenever in its judgment it is in
the best
interest of the Fund to do so.
PORTFOLIO TURNOVER
The Fund purchases securities that are believed by
IMI to
have above average potential for capital appreciation.
Common
stocks are disposed of in situations where it is
believed that
potential for such appreciation has lessened or that
other common
stocks have a greater potential. Therefore, the Fund
may
purchase and sell securities without regard to the
length of time
the security is to be, or has been, held. The annual
Portfolio
turnover rates for the Fund are provided in the Fund's
Prospectus
under "Financial Highlights."
The Fund's Portfolio turnover rate is calculated
by dividing
the lesser of purchases or sales of portfolio
securities for the
fiscal year by the monthly average of the value of the
portfolio
securities owned by the Fund during the fiscal year.
For
purposes of determining such portfolio turnover, all
securities
whose maturities at the time of acquisition were one
year or less
are excluded.
REDEMPTIONS
Shares of the Fund are redeemed at their net asset
value
next determined after a proper redemption request has
been
received by MIISC, 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 Trust
reserves 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 New York Stock Exchange is closed
(other than
customary weekend and holiday closing) 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 Fund is not
reasonably
practicable or it is not reasonably practicable for the
Fund
fairly to 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 Fund.
Under unusual circumstances, when the Board of
Trustees
deems it in the best interest of the Fund's
shareholders, the
Fund may make payment for shares repurchased or
redeemed, in
whole or in part, in securities of the Fund taken at
current
values. If any such redemption in kind is to be made,
the Fund
intends to make an election pursuant to Rule 18f-1
under the 1940
Act. This will require the Fund to redeem with cash at
a
shareholder's election in any case where the redemption
involves
less than $250,000 (or 1% of the Fund's net asset value
at the
beginning of each 90-day period during which such
redemptions are
in effect, if that amount is less than $250,000).
Should payment
be made in securities, the redeeming shareholder may
incur
brokerage costs in converting such securities to cash.
Subject to state law restrictions, the Trust may
redeem
those accounts of shareholders who have maintained an
investment,
including sales charges paid, of less than $1,000 in
the Fund for
a period of more than 12 months. All accounts below
that minimum
will be redeemed simultaneously when MIMI deems it
advisable.
The $1,000 balance will be determined by actual dollar
amounts
invested by the shareholder, unaffected by market
fluctuations.
The Trust will notify any such shareholder by certified
mail of
its intention to redeem such account, and the
shareholder shall
have 60 days from the date of such letter to invest
such
additional sum 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.
Delivery of the proceeds of a wire redemption request
of $250,000
or more may be delayed by the Fund for up to seven days
if deemed
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 Fund employs 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
procedures, the
Fund may be liable for any losses due to unauthorized
or
fraudulent telephone instructions.
CONVERSION OF CLASS B SHARES
As described in the Fund's Prospectus, Class B
shares of the
Fund will automatically convert to Class A shares of
the 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 the
Fund
occurs. For the purpose of calculating the holding
period
required for conversion of Class B shares, the date of
initial
issuance shall mean: (i) 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.
TAXATION
The following is a general discussion of certain
tax rules
thought to be applicable with respect to the Fund. 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 advisor about the tax consequences to
them of
investing in the Fund.
GENERAL
The Fund intends to qualify annually and elect to
be treated
as a regulated investment company under Subchapter M of
the Code.
In order to qualify, the 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
securities loans,
gains from the sale or other disposition of stock,
securities, or
foreign currencies, or other income (including but not
limited to
gains from options, futures, and forward contracts)
derived with
respect to its business of investing in such stock,
securities or
currencies; (b) derive in each taxable year less than
30% of its
gross income from the sale or other disposition of
certain assets
(namely, (i) stock or securities, (ii) options,
futures, and
forward contracts (other than those on foreign
currencies), and
(iii) foreign currencies (including options, futures,
and forward
contracts on such currencies) not directly related to
the Fund's
principal business of investing in stocks or securities
(or
options and futures with respect to stocks and
securities)) held
less than three months (the "30% Limitation"); and (c)
diversify
its holdings so that, at the end of each fiscal
quarter, (i) at
least 50% of the market value of the 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 of any one issuer limited for purposes
of this
calculation to an amount not greater than 5% of the
Fund's 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 securities of any other issuer (other than
U.S.
Government securities and the securities of other
regulated
investment companies).
As a regulated investment company, the Fund
generally will
not be subject to U.S. Federal income tax on its
investment
company taxable income (which includes, among other
items,
dividends, interest and net short-term capital gains in
excess of
net long-term capital losses) and net capital gains
(net long-
term capital gains in excess of net short-term capital
losses)
that it distributes to shareholders, if at least 90% of
its
investment company taxable income for the taxable year
is
distributed. The Fund intends to distribute 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. To avoid that tax, the
Fund must
distribute during each calendar year an amount equal to
(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 the twelve-month
period 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. A distribution will be treated as
paid on
December 31 of the current calendar year if it is
declared by the
Fund in October, November or December of that year to
shareholders of record at some date in such a month and
paid by
the Fund during January of the following calendar year.
Such
distributions will be taken into account by
shareholders in the
calendar year the distributions are declared, rather
than the
calendar year in which the distributions are received.
DISTRIBUTORS
Distributions of investment company taxable income
are
taxable to a U.S. shareholder as ordinary income,
whether paid in
cash or shares. Because it is not anticipated that any
portion
of the Fund's gross income will consist of dividends
from
domestic corporations, no portion of the dividends paid
by the
Fund to its corporate shareholders is expected to
qualify for the
dividends received deduction. Distributions of net
capital
gains, if any, which are designated as capital gain
dividends are
taxable as long-term capital gains, whether paid in
cash or in
shares, regardless of how long the shareholder has held
the
Fund's shares, and are not eligible for the dividends
received
deduction. The tax treatment of distributions from the
Fund is
the same whether the dividends are received in cash or
in
additional shares. 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 the
Fund on
the reinvestment date. A distribution of an amount in
excess of
the 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.
If the net asset value of shares is reduced below
a
shareholder's cost as a result of a distribution by the
Fund,
such distribution will be taxable even though it
represents a
return of invested capital. Investors 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 which will nevertheless 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 will be long-term or
short-term,
generally, 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 as a long-term capital loss to the extent of
any
distributions of net capital gains 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
sales charges into account for purposes of determining
the amount
of gain or loss realized on the disposition of their
stock. This
prohibition generally applies where (1) the shareholder
incurs a
sales charge in acquiring the stock of the Fund, (2)
the stock is
disposed of before the 91st day after the date on which
it was
acquired, and (3) the shareholder subsequently acquires
the stock
of the same or another fund and the otherwise
applicable sales
charge is reduced under a "reinvestment right" received
upon the
initial purchase of regulated investment company
shares. The
term "reinvestment right" means any right to acquire
stock of one
or more funds without the payment of a sales charge 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 stock acquired under the reinvestment right. This
provision
may be applied to successive acquisitions of Fund
shares.
HEDGING TRANSACTIONS
The taxation of equity options and OTC options on
debt
securities is governed by Code section 1234. Pursuant
to Code
section 1234, the premium received by the Fund for
selling a put
or call option is not included in income at the time of
receipt.
If the option expires, the premium is short-term
capital gain to
the Fund. If the Fund enters into a closing
transaction, the
difference between the amount paid to close out its
position and
the premium received is short-term capital gain or
loss. If a
call option written by the Fund is exercised, thereby
requiring
the Fund to sell the underlying security, the premium
will
increase the amount realized upon the sale of such
security and
any resulting gain or loss will be a capital gain or
loss, and
will be long-term or short-term depending upon the
holding period
of the security. With respect to a put or call option
that is
purchased by the Fund, if the option is sold, any
resulting gain
or loss will be a capital gain or loss, and will be
long-term or
short-term, depending upon the holding period of the
option. If
the option expires, the resulting loss is a capital
loss and is
long-term or short-term, depending upon the holding
period of the
option. If the option is exercised, the cost of the
option, in
the case of a call option, is added to the basis of the
purchased
security and, in the case of a put option, reduces the
amount
realized on the underlying security in determining gain
or loss.
Certain options, futures and forward contracts in
which the
Fund may invest may be "section 1256 contracts." Gains
or losses
on section 1256 contracts are generally considered 60%
long-term
and 40% short-term capital gains or losses; however,
foreign
currency gains or losses arising from certain section
1256
contracts may be treated as ordinary income or loss.
Also,
section 1256 contracts held by the Fund at the end of
each
taxable year (and generally for purposes of the 4%
excise tax, on
October 31 of each year) are "marked-to-market" with
the result
that unrealized gains or losses are treated as though
they were
realized.
Generally, hedging transactions, if any,
undertaken by the
Fund may result in "straddles" for U.S. Federal income
tax
purposes. The straddle rules may affect the character
of gains
(or losses) realized by the Fund. In addition, losses
realized
by the Fund on positions that are part of a straddle
may be
deferred under the straddle rules, rather than being
taken into
account in calculating the taxable income for the
taxable year in
which such losses are realized. Because only a few
regulations
implementing the straddle rules have been promulgated,
the tax
consequences of hedging transactions to the Fund are
not entirely
clear. The hedging transactions may increase the
amount of
short-term capital gain realized by the Fund which is
taxed as
ordinary income when distributed to shareholders.
The Fund may make one or more of the elections
available
under the Code which are applicable to straddles. If
the Fund
makes any of the elections, the amount, character and
timing of
the recognition of gains or losses from the affected
straddle
positions will be determined under rules that vary
according to
the election(s) made. The rules applicable under
certain of the
elections may operate to accelerate the recognition of
gains or
losses from the affected straddle positions.
Because application of the straddle rules may
affect the
character of gains or losses, defer losses and/or
accelerate the
recognition of gains or losses from the affected
straddle
positions, the amount which must be distributed to
shareholders,
and which will be taxed to shareholders as ordinary
income or
long-term capital gain, may be increased or decreased
substantially as compared to a fund that did not engage
in such
hedging transactions.
The 30% Limitation and the diversification
requirements
applicable to the Fund's assets may limit the extent to
which the
Fund will be able to engage in transactions in options,
futures
or forward contracts.
CURRENCY FLUCTUATIONS --SECTION 988" GAINS OR LOSSES
Under the Code, gains or losses attributable to
fluctuations
in exchange rates which occur between the time the Fund
accrues
receivables or liabilities denominated in a foreign
currency and
the time the Fund actually collects such receivables or
pays such
liabilities generally are treated as ordinary income
and loss.
Similarly, on disposition of debt securities
denominated in a
foreign currency and on disposition of certain futures,
forward
contracts and options, gains or losses attributable to
fluctuations in the value of the foreign currency
between the
date of acquisition of the security or contract and the
date of
disposition also are treated as ordinary gain or loss.
These
gains or losses, referred to under the Code as "Section
988"
gains or losses, may increase or decrease the amount of
the
Fund's investment company taxable income to be
distributed to its
shareholders as ordinary income.
DISCOUNT
Certain of the bonds purchased by the Fund may be
treated as
bonds that were originally issued at a discount.
Original issue
discount represents interest for Federal income tax
purposes and
can generally be defined as the difference between the
price at
which a security was issued and its stated redemption
price at
maturity. Original issue discount is treated for
Federal income
tax purposes as income earned by the Fund even though
the Fund
doesn't actually receive any cash, and therefore is
subject to
the distribution requirements of the Code. The amount
of income
earned by the Fund generally is determined on the basis
of a
constant yield to maturity which takes into account the
semi-
annual compounding of accrued interest.
If the Fund invests in certain high yield original
issue
discount obligations issued by corporations, a portion
of the
original issue discount accruing on the obligation may
be
eligible for the deduction for dividends received by
corporations. In such event, dividends of investment
company
taxable income received from the Fund by its corporate
shareholders, to the extent attributable to such
portion of
accrued original issue discount, may be eligible for
this
deduction for dividends received by corporations if so
designated
by the Fund in a written notice to shareholders.
In addition, some of the bonds may be purchased by
the Fund
at a discount which exceeds the original issue discount
on such
bonds, if any. This additional discount represents
market
discount for Federal income tax purposes. The gain
realized on
the disposition of any bond having market discount will
be
treated as ordinary income to the extent it does not
exceed the
accrued market discount on such bond (unless the Fund
elects for
all its debt securities acquired after the first day of
the first
taxable year to which the election applies having a
fixed
maturity date of more than one year from the date of
issue to
include market discount in income in tax years to which
it is
attributable). Generally, market discount accrues on a
daily
basis for each day the bond is held by the Fund at a
constant
rate over the time remaining to the bond's maturity.
FOREIGN WITHHOLDING TAXES
Income received by the 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 the Fund's total
assets at
the close of its taxable year consists of securities of
foreign
corporations, the Fund will be eligible and intends to
elect to
"pass-through" to the Fund's shareholders the amount of
foreign
income and similar taxes paid by the Fund. Pursuant to
this
election, a shareholder will be required to include in
gross
income (in addition to taxable dividends actually
received) his
or her pro rata share of the foreign income and similar
taxes
paid by the Fund, and will be entitled either to deduct
his or
her pro rata share of foreign income and similar taxes
in
computing his taxable income or to use it as a foreign
tax credit
against his U.S. Federal income taxes, subject to
limitations.
No deduction for foreign taxes may be claimed by a
shareholder
who does not itemize deductions. Foreign taxes
generally may not
be deducted by a shareholder that is an individual in
computing
the alternative minimum tax. Each shareholder will be
notified
within 60 days after the close of the Fund's taxable
year whether
the foreign taxes paid by the Fund will "pass-through"
for that
year and, if so, such notification will designate (1)
the
shareholder's portion of the foreign taxes paid to each
such
country and (2) the portion of the dividend which
represents
income derived from sources within each such country.
Generally, a credit for foreign taxes is subject
to the
limitation that it may not exceed the shareholder's
U.S. tax
attributable to his total foreign source taxable
income. For
this purpose, if the Fund makes the election described
in the
preceding paragraph, the source of a Fund's income
flows through
to its shareholders. With respect to the Fund, gains
from the
sale of securities generally will be treated as derived
from U.S.
sources and section 988 gains will be treated as
ordinary income
derived from U.S. sources. The limitation on the
foreign tax
credit is applied separately to foreign source passive
income,
including foreign source passive income received from
the Fund.
In addition, the foreign tax credit may offset only 90%
of the
revised alternative minimum tax imposed on corporations
and
individuals.
The foregoing is only a general description of the
foreign
tax credit under current law. Because application of
the credit
depends on the particular circumstances of each
shareholder,
shareholders are advised to consult their own tax
advisers.
INVESTMENT IN PASSIVE FOREIGN INVESTMENT COMPANIES
If the Fund invests in stock of certain foreign
investment
companies either directly or through ADRs, the Fund may
be
subject to U.S. federal income taxation on a portion of
any
"excess distribution" with respect to, or gain from the
disposition of, such stock. The tax would be
determined by
allocating such distribution or gain ratably to each
day of the
Fund's holding period for the stock. The distribution
or gain so
allocated to any taxable year of the Fund, other than
the taxable
year of the excess distribution or disposition, would
be taxed to
the Fund at the highest ordinary income rate in effect
for such
year, and the tax would be further increased by an
interest
charge to reflect the value of the tax deferral deemed
to have
resulted from the ownership of the foreign company's
stock. Any
amount of distribution or gain allocated to the taxable
year of
the distribution or disposition would be included in
the Fund's
investment company taxable income and, accordingly,
would not be
taxable to the Fund to the extent distributed by the
Fund as a
dividend to its shareholders.
The Fund may be able to make an election, in lieu
of being
taxable in the manner described above, to include
annually in
income its pro rata share of the ordinary earnings and
net
capital gain of the foreign investment company,
regardless of
whether it actually received any distributions from the
foreign
company. These amounts would be included in the Fund's
investment company taxable income and net capital gain
which, to
the extent distributed by the Fund as ordinary or
capital gain
dividends, as the case may be, would not be taxable to
the Fund.
In order to make this election, the Fund would be
required to
obtain certain annual information from the foreign
investment
companies in which it invests, which in many cases may
be
difficult to obtain. Alternatively, the Fund may be
eligible for
another election that would involve marking to market
its PFIC
stock at the end of each taxable year, with any
resulting mark to
market gain being reported as ordinary income. No mark
to market
losses would be recognized. The effect of this
election would be
to treat excess distributions and gain on dispositions
as
ordinary income which is not subject to a fund-level
tax when
distributed to shareholders as a dividend.
BACKUP WITHHOLDING
The Fund will be required to report to the
Internal Revenue
Service (the "IRS") all distributions as well as gross
proceeds
from the redemption of the 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.
OTHER TAXATION
The foregoing discussion relates only to U.S.
Federal income
tax law as applicable to U.S. persons (i.e., U.S.
citizens and
residents and domestic corporations, partnerships,
trusts and
estates). Distributions by the Fund also may be
subject to state
and local taxes, and their treatment under state and
local income
tax laws may differ from the U.S. Federal income tax
treatment.
Shareholders should consult their tax advisers with
respect to
particular questions of U.S. Federal, state and local
taxation.
Shareholders who are not U.S. persons should consult
their tax
advisers regarding U.S. and foreign tax consequences of
ownership
of shares of the Fund, including the likelihood that
distributions to them would be subject to withholding
of U.S.
Federal income tax at a rate of 30% (or at a lower rate
under a
tax treaty).
CALCULATION OF AVERAGE ANNUAL TOTAL RETURN
The Fund's average annual total return quotations
as they
may appear in the Prospectus, this Statement of
Additional
Information, advertising or sales literature are
calculated by
standard methods prescribed by the SEC. The Fund's
standardized
average annual total return quotations may be
accompanied by non-
standardized total return quotations. Performance
information is
computed separately for the Fund's Class A and Class B
shares.
AVERAGE ANNUAL TOTAL RETURN QUOTATIONS
Standardized average annual total return
("Standardized
Return") quotations for a specific Class of shares of
the Fund
are computed by finding 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 specified
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 a
designated period (or fractional
portion
thereof).
For purposes of the above computation for the
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 4.75% sales charge is deducted from the
initial
$1,000 payment and, for Class B shares, the applicable
CDSC
imposed upon redemption of Class B shares held for the
period is
deducted. Standardized Return quotations for the Fund
do not
take into account any required payments for federal or
state
income taxes. Standardized Return figures for Class B
shares for
periods over eight years will reflect conversion of the
Class B
shares to Class A shares at the end of the eighth year.
Each
Standardized Return quotation is determined to the
nearest 1/100
of 1%.
The Fund 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 sales charges nor CDSCs are taken into account
in
calculating Non-Standardized Return; a sales charge, if
deducted,
would reduce the return.
In determining the average annual total return for
the
Class A and Class B shares of the Fund, recurring fees,
if any,
that are charged to all shareholder accounts are taken
into
consideration. For any account fees that vary with the
size of
the account of the Fund, the account fee used for
purposes of the
above computation is assumed to be the fee that would
be charged
to the mean account size of the Fund.
As of April 30, 1996 the Fund has not commenced
operations,
and therefore no historical return information exists
for the
Fund.
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
the Trust's existence and may or may not include the
impact of
sales charges, taxes or other factors.
The average annual total return for the Class A
and Class B
shares of the Fund will vary from time to time
depending on
market conditions, the composition of the Fund's
portfolio and
operating expenses of the Fund. These factors and
possible
differences in the methods used in calculating returns
should be
considered when comparing performance information
regarding the
Fund's Class A and Class B shares with information
published for
other investment companies and other investment
vehicles. Return
quotations should also be considered relative to
changes in the
value of the Fund's shares and the risks associated
with the
Fund's investment objectives and policies. At any time
in the
future, return quotations may be higher or lower than
past return
quotations and there can be no assurance that any
historical
return quotation will continue in the future. The Fund
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 DIRECTOR 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
As of April 30, 1996 the Fund has not commenced
operations,
and therefore has not issued historical financial
statements.
After the Fund commences operations, it will issue an
Annual
Report to shareholders for each fiscal year ended
December 31 and
a Semi-Annual Report to shareholders for each period
June 30.
APPENDIX A
DESCRIPTION OF STANDARD & POOR'S CORPORATION
("S&P") AND
MOODY'S INVESTORS SERVICE, INC. ("MOODY'S") CORPORATE
BOND AND
COMMERCIAL PAPER RATINGS
[From "Moody's Bond Record," November 1994 Issue
(Moody's
Investor Service, New York, 1994), and "Standard &
Poor's
Municipal Ratings Handbook," October 1994 Issue (McGraw
Hill, New
York, 1994).]
MOODY'S:
(a) CORPORATE BONDS. Bonds rated Aaa by Moody's
are judged
by Moody's to be of the best quality, carrying the
smallest
degree of investment risk. Interest payments are
protected by a
large or exceptionally stable margin and principal is
secure.
Bonds rated Aa are judged by Moody's to be of high
quality by all
standards. Aa bonds are rated lower than Aaa bonds
because
margins of protection may not be as large as those of
Aaa bonds,
or fluctuations of protective elements may be of
greater
amplitude, or there may be other elements present which
make the
long-term risks appear somewhat larger than those
applicable to
Aaa securities. Bonds which are rated A by Moody's
possess many
favorable investment attributes and are considered as
upper
medium-grade obligations. Factors giving security to
principal
and interest are considered adequate, but elements may
be present
which suggest a susceptibility to impairment sometime
in the
future.
Bonds rated Baa by Moody's are considered
medium-grade
obligations, i.e., they are neither highly protected
nor poorly
secured. Interest payments and principal security
appear
adequate for the present, but certain protective
elements may be
lacking or may be characteristically unreliable over
any great
length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative
characteristics as
well. Bonds which are rated Ba are judged to have
speculative
elements; their future cannot be considered
well-assured. Often
the protection of interest and principal payments may
be very
moderate and thereby not well safeguarded during both
good and
bad times over the future. Uncertainty of position
characterizes
bonds in this class. Bonds which are rated B generally
lack
characteristics of the desirable investment. Assurance
of
interest and principal payments of or maintenance of
other terms
of the contract over any long period of time may be
small.
Bonds which are rated Caa are of poor standing.
Such
issues may be in default or there may be present
elements of
danger with respect to principal or interest. Bonds
which are
rated Ca represent obligations which are speculative in
a high
degree. Such issues are often in default or have other
marked
shortcomings. Bonds which are rated C are the lowest
rated class
of bonds and issues so rated can be regarded as having
extremely
poor prospects of ever attaining any real investment
standing.
(b) COMMERCIAL PAPER. The Prime rating is the
highest
commercial paper rating assigned by Moody's. Among the
factors
considered by Moody's in assigning ratings are the
following:
(1) evaluation of the management of the issuer; (2)
economic
evaluation of the issuer's industry or industries and
an
appraisal of speculative-type risks which may be
inherent in
certain areas; (3) evaluation of the issuer's products
in
relation to competition and customer acceptance; (4)
liquidity;
(5) amount and quality of long-term debt; (6) trend of
earnings
over a period of ten years; (7) financial strength of a
parent
company and the relationships which exist with the
issuer; and
(8) recognition by management of obligations which may
be present
or may arise as a result of public interest questions
and
preparations to meet such obligations. Issuers within
this Prime
category may be given ratings 1, 2 or 3, depending on
the
relative strengths of these factors. The designation
of Prime-1
indicates the highest quality repayment capacity of the
rated
issue.
S&P:
(a) CORPORATE BONDS. An S&P corporate debt
rating is a
current assessment of the creditworthiness of an
obligor with
respect to a specific obligation. The ratings are
based on
current information furnished by the issuer or obtained
by S&P
from other sources it considers reliable. The ratings
described
below may be modified by the addition of a plus or
minus sign to
show relative standing within the major rating
categories.
Debt rated AAA by S&P is considered by S&P to be
the highest
grade obligation. Capacity to pay interest and repay
principal
is extremely strong. Debt rated AA is judged by S&P to
have a
very strong capacity to pay interest and repay
principal and
differs from the highest rated issues only in small
degree. Debt
rated A by S&P has a strong capacity to pay interest
and repay
principal, although it is somewhat more susceptible to
the
adverse effects of changes in circumstances and
economic
conditions than debt in higher rated categories.
Debt rated BBB by S&P is regarded by S&P as having
an
adequate capacity to pay interest and repay principal.
Although
such bonds normally exhibit adequate protection
parameters,
adverse economic conditions or changing circumstances
are more
likely to lead to a weakened capacity to pay interest
and repay
principal than debt in higher rated categories.
Debt rated BB, B, CCC, CC and C is regarded as
having
predominately speculative characteristics with respect
to
capacity to pay interest and repay principal. BB
indicates the
least degree of speculation and C the highest. While
such debt
will likely have some quality and protective
characteristics,
these are outweighed by large uncertainties or
exposures to
adverse conditions. Debt rated BB has less near-term
vulnerability to default than other speculative issues.
However,
it faces major ongoing uncertainties or exposure to
adverse
business, financial or economic conditions which could
lead to
inadequate capacity to meet timely interest and
principal
payments. The BB rating category is also used for debt
subordinated to senior debt that is assigned an actual
or implied
BBB- rating. Debt rated B has a greater vulnerability
to default
but currently has the capacity to meet interest
payments and
principal repayments. Adverse business, financial, or
economic
conditions will likely impair capacity or willingness
to pay
interest and repay principal. The B rating category is
also used
for debt subordinated to senior debt that is assigned
an actual
or implied BB or BB- rating. Debt rated CCC has a
currently
identifiable vulnerability to default, and is dependent
upon
favorable business, financial, and economic conditions
to meet
timely payment of interest and repayment of principal.
In the
event of adverse business, financial or economic
conditions, it
is not likely to have the capacity to pay interest and
repay
principal. The CCC rating category is also used for
debt
subordinated to senior debt that is assigned an actual
or implied
B or B- rating. The rating CC typically is applied to
debt
subordinated to senior debt which is assigned an actual
or
implied CCC debt rating. The rating C typically is
applied to
debt subordinated to senior debt which is assigned an
actual or
implied CCC- debt rating. The C rating may be used to
cover a
situation where a bankruptcy petition has been filed,
but debt
service payments are continued.
(b) COMMERCIAL PAPER. An S&P commercial paper
rating is a
current assessment of the likelihood of timely payment
of debt
having an original maturity of no more than 365 days.
Commercial paper rated A by S&P has the following
characteristics: (i) liquidity ratios are adequate to
meet cash
requirements; (ii) long-term senior debt rating should
be A or
better, although in some cases BBB credits may be
allowed if
other factors outweigh the BBB; (iii) the issuer should
have
access to at least one additional channel of borrowing;
(iv)
basic earnings and cash flow should have an upward
trend with
allowances made for unusual circumstances; and (v)
typically the
issuer's industry should be well established and the
issuer
should have a strong position within its industry and
the
reliability and quality of management should be
unquestioned.
Issues rated A are further referred to by use of
numbers 1, 2 and
3 to denote relative strength within this highest
classification.
For example, the A-1 designation indicates that the
degree of
safety regarding timely payment of debt is strong.
Issues rated B are regarded as having only
speculative
capacity for timely payment. The C rating is assigned
to short-
term debt obligations with a doubtful capacity for
payment.
1/3/95
PART C. OTHER INFORMATION
Item 24: Financial Statements and Exhibits
(a) Financial Statements:
Contained in Part A: Financial Highlights
Incorporated by reference in Part B:
December 31, 1995 Annual Report to
Shareholders of
Ivy Bond Fund:
- Portfolio of Investments at
December 31, 1995
- Statement of Assets and Liabilities
as of
December 31, 1995
- Statement of Operations for the
Year ended
December 31, 1995
- Statement of Changes in Net Assets
for the
Year ended December 31, 1995 and
for the six
months ended December 31, 1994
- Financial Highlights
- Notes to Financial Statements
- Report of Independent Accountants
December 31, 1995 Annual Report to
Shareholders of
Ivy Canada Fund:
- Portfolio of Investments at
December 31, 1995
- Statement of Assets and Liabilities
as of
December 31, 1995
- Statement of Operations for the
Year ended
December 31, 1995
- Statement of Changes in Net Assets
for the
Year ended December 31, 1995 and
for the six
months ended December 31, 1994
- Financial Highlights
- Notes to Financial Statements
- Report of Independent Accountants
December 31, 1995 Annual Report to
Shareholders of
Ivy China Region Fund:
- Portfolio of Investments at
December 31, 1995
- Statement of Assets and Liabilities
as of
December 31, 1995
- Statement of Operations for the
Year ended
December 31, 1995
- Statement of Changes in Net Assets
for the
Year ended December 31, 1995 and
1994
- Financial Highlights
- Notes to Financial Statements
- Report of Independent Accountants
December 31, 1995 Annual Report to
Shareholders of
Ivy Emerging Growth Fund:
- Portfolio of Investments at
December 31, 1995
- Statement of Assets and Liabilities
as of
December 31, 1995
- Statement of Operations for the
Year ended
December 31, 1995
- Statement of Changes in Net Assets
for the
Year ended December 31, 1995 and
1994
- Financial Highlights
- Notes to Financial Statements
- Report of Independent Accountants
December 31, 1995 Annual Report to
Shareholders of
Ivy Global Fund:
- Portfolio of Investments at
December 31, 1995
- Statement of Assets and Liabilities
as of
December 31, 1995
- Statement of Operations for the
Year ended
December 31, 1995
- Statement of Changes in Net Assets
for the
Year ended December 31, 1995 and
for the six
months ended December 31, 1994
- Financial Highlights
- Notes to Financial Statements
- Report of Independent Accountants
December 31, 1995 Annual Report to
Shareholders of
Ivy Growth Fund:
- Portfolio of Investments at
December 31, 1995
- Statement of Assets and Liabilities
as of
December 31, 1995
- Statement of Operations for the
Year ended
December 31, 1995
- Statement of Changes in Net Assets
for the
Year ended December 31, 1995 and
1994
- Financial Highlights
- Notes to Financial Statements
- Report of Independent Accountants
December 31, 1995 Annual Report to
Shareholders of
Ivy Growth with Income Fund:
- Portfolio of Investments at
December 31, 1995
- Statement of Assets and Liabilities
as of
December 31, 1995
- Statement of Operations for the
Year ended
December 31, 1995
- Statement of Changes in Net Assets
for the
Year ended December 31, 1995 and
1994
- Financial Highlights
- Notes to Financial Statements
- Report of Independent Accountants
December 31, 1995 Annual Report to
Shareholders of
Ivy International Fund:
- Portfolio of Investments at
December 31, 1995
- Statement of Assets and Liabilities
as of
December 31, 1995
- Statement of Operations for the
Year ended
December 31, 1995
- Statement of Changes in Net Assets
for the
Year ended December 31, 1995 and
1994
- Financial Highlights
- Notes to Financial Statements
- Report of Independent Accountants
December 31, 1995 Annual Report to
Shareholders of
Ivy Latin America Strategy Fund:
- Portfolio of Investments at
December 31, 1995
- Statement of Assets and Liabilities
as of
December 31, 1995
- Statement of Operations for the
Year ended
December 31, 1995
- Statement of Changes in Net Assets
for the
Year ended December 31, 1995 and
for the
Period November 1, 1994
(commencement) to
December 31, 1994
- Financial Highlights
- Notes to Financial Statements
- Report of Independent Accountants
December 31, 1995 Annual Report to
Shareholders of
Ivy New Century Fund:
- Portfolio of Investments at
December 31, 1995
- Statement of Assets and Liabilities
as of
December 31, 1995
- Statement of Operations for the
Year ended
December 31, 1995
- Statement of Changes in Net Assets
for the
Year ended December 31, 1995 and
for the
Period November 1, 1994
(commencement) to
December 31, 1994
- Financial Highlights
- Notes to Financial Statements
- Report of Independent Accountants
(b) Exhibits:
1. (a) Amended and Restated Declaration of
Trust
dated December 10, 1992 filed with
Post-
Effective Amendment No. 71 to
Registration
Statement No. 2-17613 and
incorporated by
reference herein.
(b) Amendment to Amended and Restated
Declaration
of Trust filed with Post-Effective
Amendment
No. 73 to Registration Statement
No. 2-17613
and incorporated by reference
herein.
(c) Amendment to Amended and Restated
Declaration
of Trust filed with Post-Effective
Amendment
No. 74 to Registration Statement
No. 2-17613
and incorporated by reference
herein.
(d) Establishment and Designation of
Additional
Series (Ivy Emerging Growth Fund)
filed with
Post-Effective Amendment No. 73 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(e) Redesignation of Shares (Ivy Growth
with
Income Fund--Class A) and
Establishment and
Designation of Additional Class
(Ivy Growth
with Income Fund--Class C) filed
with Post-
Effective Amendment No. 73 to
Registration
Statement No. 2-17613 and
incorporated by
reference herein.
(f) Redesignation of Shares (Ivy
Emerging Growth
Fund--Class A, Ivy Growth
Fund--Class A and
Ivy International Fund--Class A)
filed with
Post-Effective Amendment No. 74 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(g) Establishment and Designation of
Additional
Series (Ivy China Region Fund)
filed with
Post-Effective Amendment No. 74 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(h) Establishment and Designation of
Additional
Class (Ivy China Region Fund--Class
B, Ivy
Emerging Growth Fund--Class B, Ivy
Growth
Fund--Class B, Ivy Growth with
Income Fund--
Class B and Ivy International
Fund--Class B)
filed with Post-Effective Amendment
No. 74
for Registration Statement No.
2-17613 and
incorporated by reference herein.
(i) Establishment and Designation of
Additional
Class (Ivy International
Fund--Class I) filed
with Post-Effective Amendment No.
74 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(j) Establishment and Designation of
Series and
Classes (Ivy Latin American
Strategy Fund--
Class A and Class B, Ivy New
Century Fund--
Class A and Class B) filed with
Post-
Effective Amendment No. 75 to
Registration
Statement No. 2-17613 and
incorporated by
reference herein.
(k) Establishment and Designation of
Series and
Classes (Ivy International Bond
Fund--Class A
and Class B) filed with
Post-Effective
Amendment No. 76 to Registration
Statement
No. 2-17613 and incorporated by
reference
herein.
(l) Establishment and Designation of
Series and
Classes (Ivy Bond Fund, Ivy Canada
Fund, Ivy
Global Fund, Ivy Short-Term U.S.
Government
Securities Fund (now known as Ivy
Short-Term
Bond Fund) -- Class A and Class B)
filed with
Post-Effective Amendment No. 77 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(m) Redesignation of Ivy Short-Term
U.S.
Government Securities Fund as Ivy
Short-Term
Bond Fund filed with Post-Effective
Amendment
No. 81 to Registration Statement
No. 2-17613
and incorporated by reference
herein.
(n) Redesignation of Shares (Ivy Money
Market
Fund--Class A and Ivy Money Market
Fund--
Class B) filed with this
Post-Effective
Amendment No. 84 to Registration
Statement
No. 2-17613.
(o) Form of Establishment and
Designation of
Additional Class (Ivy Bond
Fund--Class C; Ivy
Canada Fund--Class C; Ivy China
Region Fund--
Class C; Ivy Emerging Growth
Fund--Class C;
Ivy Global Fund--Class C; Ivy
Growth Fund--
Class C; Ivy Growth with Income
Fund--Class
C; Ivy International Fund--Class C;
Ivy Latin
America Strategy Fund--Class C; Ivy
International Bond Fund--Class C;
Ivy Money
Market Fund--Class C; Ivy New
Century Fund--
Class C) filed with this
Post-Effective
Amendment No. 84 to Registration
Statement
No. 2-17613.
2. By-Laws, as amended and filed with
Post-Effective
Amendment No. 48 to Registration
Statement No. 2-
17613 and incorporated by reference
herein.
3. Not Applicable
4. (a) Specimen Securities for Ivy Growth
Fund, Ivy
Growth with Income Fund, Ivy
International
Fund and Ivy Money Market Fund
filed with
Post-Effective Amendment No. 49 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(b) Specimen Security for Ivy Emerging
Growth
Fund filed with Post-Effective
Amendment No.
70 to Registration Statement No.
2-17613 and
incorporated by reference herein.
(c) Specimen Security for Ivy China
Region Fund
filed with Post-Effective Amendment
No. 74 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(d) Specimen Security for Ivy Latin
American
Strategy Fund filed with
Post-Effective
Amendment No. 75 to Registration
Statement
No. 2-17613 and incorporated by
reference
herein.
(e) Specimen Security for Ivy New
Century Fund
filed with Post-Effective Amendment
No. 75 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(f) Specimen Security for Ivy
International Bond
Fund filed with Post-Effective
Amendment No.
76 to Registration Statement No.
2-17613 and
incorporated by reference herein.
(g) Specimen Securities for Ivy Bond
Fund, Ivy
Canada Fund, Ivy Global Fund, and
Ivy Short-
Term U.S. Government Securities
Fund filed
with Post-Effective Amendment No.
77 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
5. (a) Master Business Management and
Investment
Advisory Agreement between Ivy Fund
and Ivy
Management Inc. and Supplements for
Ivy
Growth Fund, Ivy Growth with Income
Fund, Ivy
International Fund and Ivy Money
Market Fund
filed with Post-Effective Amendment
No. 68 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(b) Subadvisory Contract by and among
Ivy Fund,
Ivy Management Inc. and Boston
Overseas
Investors, Inc. filed with
Post-Effective
Amendment No. 68 to Registration
Statement
No. 2-17613 and incorporated by the
reference
herein.
(c) Assignment Agreement relating to
Subadvisory
Contract filed with Post-Effective
Amendment
No. 74 to Registration Statement
No. 2-17613
and incorporated by reference
herein.
(d) Business Management and Investment
Advisory
Agreement Supplement for Ivy
Emerging Growth
Fund filed with Post-Effective
Amendment No.
74 to Registration Statement No.
2-17613 and
incorporated by reference herein.
(e) Business Management and Investment
Advisory
Agreement Supplement for Ivy China
Region
Fund filed with Post-Effective
Amendment No.
71 to Registration Statement No.
2-17613 and
incorporated by reference herein.
(f) Form of Business Management and
Investment
Advisory Supplement for Ivy Latin
America
Strategy Fund filed with
Post-Effective
Amendment No. 75 to Registration
Statement
No. 2-17613 and incorporated by
reference
herein.
(g) Form of Business Management and
Investment
Advisory Agreement Supplement for
Ivy New
Century Fund filed with
Post-Effective
Amendment No. 75 to Registration
Statement
No. 2-17613 and incorporated by
reference
herein.
(h) Form of Business Management and
Investment
Advisory Agreement Supplement for
Ivy
International Bond Fund filed with
Post-
Effective Amendment No. 76 to
Registration
Statement No. 2-17613 and
incorporated by
reference herein.
(i) Business Management and Investment
Advisory
Agreement Supplement for Ivy Bond
Fund, Ivy
Global Fund and Ivy Short-Term U.S.
Government Securities Fund filed
with Post-
Effective Amendment No. 81 to
Registration
Statement No. 2-17613 and
incorporated by
reference herein.
(j) Master Business Management
Agreement between
Ivy Fund and Ivy Management Inc.
filed with
Post-Effective Amendment No. 81 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(k) Form of Supplement to Master
Business
Agreement between Ivy Fund and Ivy
Management
Inc.--Ivy Canada Fund filed with
Post-
Effective Amendment No. 77 to
Registration
Statement No. 2-17613 and
incorporated by
reference herein.
(l) Form of Investment Advisory
Agreement between
Ivy Fund and Mackenzie Financial
Corporation
filed with Post-Effective Amendment
No. 77 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
6. (a) Dealer Agreement, as amended and
filed with
Post-Effective Amendment No. 70 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(b) Amended and Restated Distribution
Agreement
filed with Post-Effective Amendment
No. 73 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(c) Amendment to Amended and Restated
Distribution Agreement filed with
Post-
Effective Amendment No. 73 to
Registration
Statement No. 2-17613.
(d) Addendum to Amended and Restated
Distribution
Agreement (Ivy Money Market
Fund--Class A and
Ivy Money Market Fund--Class B)
filed with
this Post-Effective Amendment No.
84 to
Registration Statement No. 2-17613.
(e) Form of Addendum to Amended and
Restated
Distribution Agreement (Class C)
filed with
this Post-Effective Amendment No.
84 to
Registration Statement No. 2-17613.
7. Not Applicable
8. Custodian Agreement between Ivy Fund and
Brown
Brothers Harriman & Co. filed with
Post-Effective
Amendment No. 74 to Registration No.
2-17613 and
incorporated by reference herein.
9. (a) Master Administrative Services
Agreement
between Ivy Fund and Mackenzie
Investment
Management Inc. and Supplements for
Ivy
Growth Fund, Ivy Growth with Income
Fund, Ivy
International Fund and Ivy Money
Market Fund
filed with Post-Effective Amendment
No. 68 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(b) Addendum to Administrative Services
Agreement
Supplement for Ivy International
Fund filed
with Post-Effective Amendment No.
74 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(c) Administrative Services Agreement
Supplement
for Ivy Emerging Growth Fund filed
with Post-
Effective Amendment No. 73 to
Registration
Statement No. 2-17613 and
incorporated by
reference herein.
(d) Administrative Services Agreement
Supplement
for Ivy China Region Fund filed
with Post-
Effective Amendment No. 73 to
Registration
Statement No. 2-17613 and
incorporated by
reference herein.
(e) Administrative Services Agreement
Supplement
for Class I Shares of Ivy
International Fund
filed with Post-Effective Amendment
No. 74 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(f) Master Fund Accounting Services
Agreement
between Ivy Fund and Mackenzie
Investment
Management Inc. and Supplements for
Ivy
Growth Fund, Ivy Emerging Growth
Fund and Ivy
Money Market Fund filed with
Post-Effective
Amendment No. 73 to Registration
Statement
No. 2-17613 and incorporated by
reference
herein.
(g) Fund Accounting Services Agreement
Supplement
for Ivy Growth with Income Fund
filed with
Post-Effective Amendment No. 73 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(h) Fund Accounting Services Agreement
Supplement
for Ivy China Region Fund filed
with Post-
Effective Amendment No. 73 to
Registration
Statement No. 2-17613 and
incorporated by
reference herein.
(i) Transfer Agency and Shareholder
Services
Agreement between Ivy Fund and Ivy
Management
Inc. filed with Post-Effective
Amendment No.
71 to Registration Statement No.
2-17613 and
incorporated by reference herein.
(j) Addendum to Transfer Agency and
Shareholder
Services Agreement filed with
Post-Effective
Amendment No. 73 to Registration
Statement
No. 2-17613 and incorporated by
reference
herein.
(k) Assignment Agreement relating to
Transfer
Agency and Shareholder Services
Agreement
filed with Post-Effective Amendment
No. 74 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(l) Form of Administrative Services
Agreement
Supplement for Ivy Latin America
Strategy
Fund filed with Post-Effective
Amendment No.
75 to Registration Statement No.
2-17613 and
incorporated by reference herein.
(m) Form of Administrative Services
Agreement
Supplement for Ivy New Century Fund
filed
with Post-Effective Amendment No.
75 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(n) Form of Fund Accounting Services
Agreement
Supplement for Ivy Latin America
Strategy
Fund filed with Post-Effective
Amendment No.
75 to Registration Statement No.
2-17613 and
incorporated by reference herein.
(o) Form of Fund Accounting Services
Agreement
Supplement for Ivy New Century Fund
filed
with Post-Effective Amendment No.
75 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(p) Form of Administrative Services
Agreement
Supplement for Ivy International
Bond Fund
filed with Post-Effective Amendment
No. 76 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(q) Form of Fund Accounting Services
Agreement
Supplement for International Bond
Fund filed
with Post-Effective Amendment No.
76 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(r) Addendum to Transfer Agency and
Shareholder
Services Agreement filed with
Post-Effective
Amendment No. 76 to Registration
Statement
No. 2-17613 and incorporated by
reference
herein.
(s) Addendum to Transfer Agency and
Shareholder
Services Agreement filed with
Post-Effective
Amendment No. 77 to Registration
Statement
No. 2-17613 and incorporated by
reference
herein.
(t) Administrative Services Agreement
Supplement
for Ivy Bond Fund, Ivy Global Fund
and Ivy
Short-Term U.S. Government
Securities Fund
filed with Post-Effective Amendment
No. 81 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(u) Fund Accounting Services Agreement
Supplement
for Ivy Bond Fund, Ivy Global Fund
and Ivy
Short-Term U.S. Government
Securities Fund
filed with Post-Effective Amendment
No. 81 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(v) Form of Administrative Services
Agreement
Supplement for Ivy Bond Fund, Ivy
Canada
Fund, Ivy China Region Fund, Ivy
Emerging
Growth Fund, Ivy Global Fund, Ivy
Growth
Fund, Ivy Growth with Income Fund,
Ivy
International Fund, Ivy
International Bond
Fund, Ivy Latin America Strategy
Fund, Ivy
Money Market Fund and Ivy New
Century Fund
filed with this Post-Effective
Amendment No.
84 to Registration Statement No.
2-17613.
(w) Form of Addendum to Transfer Agency
and
Shareholder Services Agreement
filed with
this Post-Effective Amendment No.
84 to
Registration Statement No. 2-17613.
10. Opinion and Consent of Dechert Price &
Rhoads,
filed herewith.
11. Consent of Coopers & Lybrand L.L.P.,
filed
herewith.
12. Reports of Coopers & Lybrand L.L.P.,
filed
herewith, and the following Financial
Statements
filed electronically on February 29,
1996 and
incorporated by reference herein:
(a) Annual Report to Shareholders of
Ivy Bond
Fund for the year ended December
31, 1995
(b) Annual Report to Shareholders of
Ivy Canada
Fund for the year ended December
31, 1995
(c) Annual Report to Shareholders of
Ivy China
Region Fund for the year ended
December 31,
1995
(d) Annual Report to Shareholders of
Ivy Emerging
Growth Fund for the year ended
December 31,
1995
(e) Annual Report to Shareholders of
Ivy Global
Fund for the year ended December
31, 1995
(f) Annual Report to Shareholders of
Ivy Growth
Fund for the year ended December
31, 1995
(g) Annual Report to Shareholders of
Ivy Growth
with Income Fund for the year ended
December
31, 1995
(h) Annual Report to Shareholders of
Ivy
International Fund for the year
ended
December 31, 1995
(i) Annual Report to Shareholders of
Ivy Latin
America Strategy Fund for the year
ended
December 31, 1995
(j) Annual Report to Shareholders of
Ivy New
Century Fund for the year ended
December 31,
1995
13. Not applicable
14. Not applicable
15. (a) Amended and Restated Distribution
Plan for
Class A shares of Ivy China Region
Fund, Ivy
Growth Fund, Ivy Growth with Income
Fund, Ivy
International Fund and Ivy Emerging
Growth
Fund filed with Post-Effective
Amendment No.
73 to Registration Statement No.
2-17613 and
incorporated by reference herein.
(b) Distribution Plan for Class B
shares of Ivy
China Region Fund, Ivy Growth Fund,
Ivy
Growth with Income Fund, Ivy
International
Fund and Ivy Emerging Growth Fund
filed with
Post-Effective Amendment No. 73 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(c) Distribution Plan for Class C
shares of Ivy
Growth with Income Fund filed with
Post-
Effective Amendment No. 73 to
Registration
Statement No. 2-17613 and
incorporated by
reference herein.
(d) Form of Rule 12b-1 Related
Agreement filed
with Post-Effective Amendment No.
73 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(e) Supplement to Master Amended and
Restated
Distribution Plan for Ivy Fund
Class A Shares
filed with Post-Effective Amendment
No. 76 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(f) Supplement to Distribution Plan for
Ivy Fund
Class B Shares filed with
Post-Effective
Amendment No. 76 to Registration
Statement
No. 2-17613 and incorporated by
reference
herein.
(g) Supplement to Master Amended and
Restated
Distribution Plan for Ivy Fund
Class A Shares
filed with Post-Effective Amendment
No. 77 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(h) Supplement to Distribution Plan for
Ivy Fund
Class B Shares filed with
Post-Effective
Amendment No. 77 to Registration
Statement
No. 2-17613 and incorporated by
reference
herein.
(i) Form of Supplement to Distribution
Plan for
Ivy Growth with Income Fund Class C
Shares
(Redesignation as Class D Shares)
filed with
this Post-Effective Amendment No.
84 to
Registration Statement No. 2-17613.
16. Schedule of Computation of Standardized
Performance Quotations filed with
Post-Effective
Amendment No. 71 to Registration
Statement No. 2-
17613 and incorporated by reference
herein.
17. Financial Data Schedule filed with this
Post-
Effective Amendment No. 84 to
Registration
Statement No. 2-17613.
18. Plan adopted pursuant to Rule 18f-3
under the
Investment Company Act of 1940 filed
with Post-
Effective Amendment No. 83 to
Registration
Statement No. 2-17613 and incorporated
by
reference herein.
25. Persons Controlled by or Under Common Control with
Registrant
- Not applicable
26. Number of Holders of Securities (the inception
date for
Class C shares is April 30, 1996, and therefore
there were
no Class C shareholders of any of the Funds as of
the date
shown below).
Fund: Date Class Record
Holders
Ivy Bond Fund 1/31/96 Class A 5,319
Class B 195
Class I -0-
Ivy Canada Fund 1/31/96 Class A 2,941
Class B 102
Ivy China Region 1/31/96 Class A 2,302
Class B 1,213
Ivy Emerging 1/31/96 Class A 3,800
Growth Fund Class B 1,718
Ivy Global Fund 1/31/96 Class A 1,518
Class B 378
Ivy Growth Fund 1/31/96 Class A 32,531
Class B 210
Ivy Growth with 1/31/96 Class A 5,156
Income Fund Class B 766
Class C* 90
Ivy International 1/31/96 Class A 16,002
Fund Class B 6,726
Class I 171
Ivy International 1/31/96 Class A -0-
Bond Fund Class B -0-
Ivy Latin America 1/31/96 Class A 262
Strategy Fund Class B 133
Ivy Money Market 1/31/96 Class A 2,578
Fund Class B 118
Ivy New Century 1/31/96 Class A 372
Fund Class B 133
Ivy Short-Term 1/31/96 Class A 280
Bond Fund Class B 6
Class I -0-
* Effective April 30, 1996, Class C shares of Ivy
Growth with
Income Fund will be redesignated as "Ivy Growth
with Income-
- Class D".
27. Indemnification
The information required by this item is
incorporated by
reference to Item 27 of Part C of Post-Effective
Amendment
No. 48 to Registrant's Registration Statement on
Form N-1A
under the Securities Act of 1933 (File No.
2-17613).
Mackenzie Investment Management Inc. ("Mackenzie")
has
agreed to indemnify certain disinterested Trustees
of the
Fund for legal fees and court costs, not exceeding
$250,000
in the aggregate, except to the extent that
indemnification
is otherwise provided by the Fund or such fees or
costs are
covered by insurance. Mackenzie is not obligated
to
indemnify any such Trustee if he is finally
adjudicated by
the SEC or any court to have acted in bad faith or
with
gross negligence or willful misconduct with
respect to any
Board action in connection with Mackenzie's
purchase of all
of the outstanding capital stock of Ivy
Management, Inc.
Mackenzie has also agreed to indemnify the selling
shareholders, consisting of William M. Watson and
a company
controlled by Michael R. Peers (Trustees and
Officers of Ivy
Fund), against a variety of matters with respect
to the sale
of such stock to Mackenzie.
28. Business and Other Connections of Investment
Adviser
Information Regarding Adviser and Subadviser Under
Advisory
Arrangements. Reference is made to the Form ADV
of each of
Ivy Management, Inc., the adviser to the Trust,
Mackenzie
Financial Corporation, the adviser to Ivy Canada
Fund, and
Northern Cross Investments Limited (the successor
to Boston
Overseas Investors, Inc.), the subadviser to Ivy
International Fund.
The list required by this Item 28 of officers and
directors
of Ivy Management, Inc. and Northern Cross
Investments
Limited, 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 firm's respective Form ADV.
29. Principal Underwriters
(a) Mackenzie Ivy Funds Distribution, Inc.
("MIFDI"), 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. MIFDI also serves as the
distributor
for Mackenzie Series Trust. MIFDI is the
successor to
MIMI's distribution activities.
(b) The information required by this Item 29
regarding each
director, officer or partner of MIFDI is
incorporated
by reference to Schedule A of Form BD filed
by MIFDI
pursuant to the Securities Exchange Act of
1934.
(c) Not applicable
30. Location of Accounts and Records
The information required by this item is
incorporated by
reference to Item 7 of Part II of Post-Effective
Amendment
No. 46 to Registrant's Registration Statement on
Form N-1A
under the Securities Act of 1933 (File No.
2-17613).
31. Not applicable
32. Undertakings
(a) Not applicable
(b) Not applicable
(c) Registrant undertakes to furnish each person
to whom a
prospectus is delivered with a copy of
Registrant's
latest annual report to shareholders, upon
request and
without charge.
SIGNATURES
Pursuant to the requirements of the
Securities Act
of 1933
and the Investment Company Act of 1940, the
Registrant
has duly
caused this Post-Effective Amendment No. 84
to its
Registration
Statement to be signed on its behalf by the
undersigned,
thereunto duly authorized, in the City of
Boston, and
Commonwealth of Massachusetts, on the 1st day
of March,
1996.
IVY
FUND
By:
MICHAEL G.
LANDRY*
President
*By: JOSEPH R. FLEMING
Attorney-in-fact
Pursuant to the requirements of the
Securities Act
of 1933,
this Post-Effective Amendment No. 84 to the
Registration
Statement has been signed below by the
following
persons in the
capacities and on the dates indicated.
SIGNATURES TITLE
DATE
MICHAEL G. LANDRY* Trustee and
3/1/96
President
(Chief
Executive
Officer)
JOHN S. ANDEREGG, JR.* Trustee
3/1/96
PAUL H. BROYHILL* Trustee
3/1/96
STANLEY CHANNICK* Trustee
3/1/96
FRANK W. DEFRIECE, JR.* Trustee
3/1/96
ROY J. GLAUBER* Trustee
3/1/96
MICHAEL R. PEERS* Trustee and
Chairman
3/1/96
of the Board
JOSEPH G. ROSENTHAL* Trustee
3/1/96
RICHARD N. SILVERMAN* Trustee
3/1/96
J. BRENDAN SWAN* Trustee
3/1/96
C. WILLIAM FERRIS* Treasurer
(Chief
3/1/96
Financial
Officer)
*By: JOSEPH R. FLEMING
Attorney-in-fact
* Executed pursuant to powers of attorney
filed with
Post-
Effective Amendments Nos. 69, 73, 74 and
84 to
Registration
Statement No. 2-17613.
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the
undersigned
constitutes and appoints each of Joseph R. Fleming,
Sheldon A.
Jones and Allan S. Mostoff his true and lawful
attorney-in-fact
and agent, each with full power of substitution and
resubstitution for him in his name, place and stead, to
sign any
and all Registration Statements on Form N-1A applicable
to Ivy
Fund and any amendments or supplements thereto, and to
file the
same, with all exhibits thereto and other documents in
connection
therewith, with the Securities and Exchange Commission,
granting
unto said attorney-in-fact and agent full power and
authority to
do and perform each and every act and thing requisite
and
necessary to be done, as fully to all intents and
purposes as he
might or could do in person, hereby ratifying and
confirming all
that said attorney-in-fact and agent, or his substitute
or
substitutes, may lawfully do or cause to be done by
virtue
hereof.
IN WITNESS WHEREOF, the undersigned has subscribed to
these
presents this 23rd day of February, 1996.
Signature Title
STANLEY CHANNICK Trustee
Stanley Channick
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the
undersigned
constitutes and appoints each of Joseph R. Fleming,
Sheldon A.
Jones and Allan S. Mostoff his true and lawful
attorney-in-fact
and agent, each with full power of substitution and
resubstitution for him in his name, place and stead, to
sign any
and all Registration Statements on Form N-1A applicable
to Ivy
Fund and any amendments or supplements thereto, and to
file the
same, with all exhibits thereto and other documents in
connection
therewith, with the Securities and Exchange Commission,
granting
unto said attorney-in-fact and agent full power and
authority to
do and perform each and every act and thing requisite
and
necessary to be done, as fully to all intents and
purposes as he
might or could do in person, hereby ratifying and
confirming all
that said attorney-in-fact and agent, or his substitute
or
substitutes, may lawfully do or cause to be done by
virtue
hereof.
IN WITNESS WHEREOF, the undersigned has subscribed to
these
presents this 23rd day of February, 1996.
Signature Title
ROY J. GLAUBER Trustee
Roy J. Glauber
EXHIBIT INDEX
1(n) Redesignation of Shares (Ivy Money Market
Fund--Class A
and Ivy Money Market Fund--Class B)
1(o) Form of Establishment and Designation of
Additional
Class (Ivy Bond Fund--Class C; Ivy Canada
Fund--Class
C; Ivy China Region Fund--Class C; Ivy
Emerging Growth
Fund--Class C; Ivy Global Fund--Class C; Ivy
Growth
Fund--Class C; Ivy Growth with Income
Fund--Class C;
Ivy International Fund--Class C; Ivy Latin
America
Strategy Fund--Class C; Ivy International
Bond Fund--
Class C; Ivy Money Market Fund--Class C; Ivy
New
Century Fund--Class C)
6(d) Addendum to Amended and Restated Distribution
Agreement
(Ivy Money Market Fund--Class A and Ivy Money
Market
Fund--Class B)
6(e) Form of Addendum to Amended and Restated
Distribution
Agreement (Class C)
9(v) Form of Administrative Services Agreement
Supplement
for Ivy Bond Fund, Ivy Canada Fund, Ivy China
Region
Fund, Ivy Emerging Growth Fund, Ivy Global
Fund, Ivy
Growth Fund, Ivy Growth with Income Fund, Ivy
International Fund, Ivy International Bond
Fund, Ivy
Latin America Strategy Fund, Ivy Money Market
Fund and
Ivy New Century Fund
9(w) Form of Addendum to Transfer Agency and
Shareholder
Services Agreement
10 Opinion and Consent of Dechert Price & Rhoads
11 Consent of Coopers & Lybrand L.L.P.
12 Reports of Coopers & Lybrand L.L.P. relating
to the
Financial Statements and Financial Highlights
included
in the December 31, 1995 Annual Reports to
Shareholders
of Ivy Bond Fund, Ivy Canada Fund, Ivy China
Region
Fund, Ivy Emerging Growth Fund, Ivy Global
Fund, Ivy
Growth Fund, Ivy Growth with Income Fund, Ivy
International Fund, Ivy Latin America
Strategy Fund and
Ivy New Century Fund
15(i) Form of Supplement to Distribution Plan for
Ivy Growth
with Income Fund Class C Shares
(Redesignation as Class
D Shares)
17 Financial Data Schedule
EXHIBIT 1(N)
IVY FUND
Ivy Money Market Fund
Redesignation of Shares of Beneficial Interest,
No Par Value Per Share
I, Michael G. Landry, being a duly elected, qualified and
acting Trustee of Ivy Fund (the "Trust"), a business trust
organized under the laws of the Commonwealth of Massachusetts, DO
HEREBY CERTIFY that, at a Meeting of the Board of Trustees of the
Trust held on December 1 - 2, 1995, a majority of the Trustees of
the Trust (the "Trustees"), acting pursuant to Article III of the
Agreement and Declaration of Trust of the Trust dated December
21, 1983, as amended and restated December 10, 1992 (the
"Declaration of Trust"), duly adopted the following resolutions:
(1) that the shares of beneficial interest of Ivy Money
Market Fund (the "Fund") outstanding as of December 31,
1995 shall hereby be redesignated as shares of
beneficial interest of "Ivy Money Market Fund -- Class
A," with the exception of those shares of the Fund that
have been acquired (i) through an exchange of Class B
shares from Mackenzie Series Trust, The Mackenzie Funds
Inc. (prior to its dissolution) or another series of
Ivy Fund, (ii) pursuant to a systematic withdrawal plan
under which shares of the Fund are automatically
exchanged for Class B shares of Mackenzie Series Trust,
The Mackenzie Funds Inc. (prior to its dissolution) or
another series of Ivy Fund, or (iii) as a result of the
reinvestment of dividends paid with respect to shares
acquired in the foregoing subparts (i) and (ii), which
shares shall hereby be redesignated as shares of
beneficial interest of "Ivy Money Market Fund -- Class
B";
(2) that there shall be designated an unlimited number of
authorized and unissued shares of beneficial interest
of the Trust as "Ivy Money Market Fund -- Class A" (the
"Class A Shares") and "Ivy Money Market Fund -- Class
B" (the "Class B Shares"); and
(3) that the voting, dividend, liquidation and other
rights, preferences, powers, restrictions, limitations,
qualifications, terms and conditions of the Class A
Shares and Class B Shares, as set forth in the
Declaration of Trust, are not changed by this
Amendment, nor shall the Class A Shares and Class B
Shares have any special rights relative to each other
with respect to any other matters that relate to the
Fund.
The Trustees further determined that the foregoing shall
constitute an Amendment to the Declaration of Trust, effective as
of January 1, 1996.
IN WITNESS WHEREOF, I have signed this Amendment this 31st
day of December, 1995.
MICHAEL G. LANDRY
Michael G. Landry, as Trustee
The above signature is the true and correct signature of
Michael G. Landry, Trustee of the Trust.
C. WILLIAM FERRIS
C. William Ferris, Secretary/Treasurer
Mackenzie Investment Management, Inc.
EXHIBIT 1(O)
IVY FUND
Ivy Bond Fund
Ivy Canada Fund
Ivy China Region Fund
Ivy Emerging Growth Fund
Ivy Global Fund
Ivy Growth Fund
Ivy Growth with Income Fund
Ivy International Fund
Ivy International Bond Fund
Ivy Latin America Strategy Fund
Ivy Money Market Fund
Ivy New Century Fund
Establishment and Designation of Additional
Class of Shares of Beneficial Interest,
No Par Value Per Share
I, Michael G. Landry, being a duly elected, qualified and acting
Trustee of Ivy Fund (the "Trust"), a business trust organized
under the laws of the Commonwealth of Massachusetts, DO HEREBY
CERTIFY that, by a written consent dated as of February 29, 1996,
the Trustees of the Trust (the "Trustees"), pursuant to Article
III and Article IV of the Agreement and Declaration of Trust of
the Trust dated December 21, 1983, as amended and restated
December 10, 1992 (the "Declaration of Trust"), duly approved,
adopted and consented to the following resolutions as actions of
the Trustees of the Trust:
WHEREAS, (a) Ivy Bond Fund, Ivy Canada Fund, Ivy China
Region Fund, Ivy Emerging Growth Fund, Ivy Global Fund, Ivy
Growth Fund, Ivy Growth with Income Fund, Ivy International
Fund, Ivy International Bond Fund, Ivy Latin America
Strategy Fund, Ivy Money Market Fund and Ivy New Century
Fund (each, a "Fund," and collectively, the "Funds")
currently have an unlimited number of authorized and
unissued shares of beneficial interest designated as "Class
A Shares" and "Class B Shares," respectively, (b) Ivy Bond
Fund and Ivy International Fund currently have an unlimited
number of authorized and unissued shares of beneficial
interest designated as "Class I Shares," and (c) Ivy Growth
with Income Fund currently has a limited number of
authorized and issued shares of beneficial interest
designated as "Ivy Growth with Income Fund--Class C"; and
WHEREAS, the Trustees have decided to divide the shares
of beneficial interest of each Fund into an additional
class, no par value per share;
NOW, THEREFORE, IT IS HEREBY:
RESOLVED, that the shares of beneficial interest of "Ivy
Growth with Income Fund--Class C" are hereby redesignated as
shares of beneficial interest of "Ivy Growth with Income
Fund--Class D," of which there shall hereby be designated an
unlimited number of authorized and unissued shares of
beneficial interest. The voting, dividend, liquidation and
other rights, preferences, powers, restrictions,
limitations, qualifications, terms and conditions of the
Class D shares of Ivy Growth with Income Fund, as set forth
in the Declaration of Trust, are not changed by this
redesignation;
FURTHER RESOLVED, that the shares of beneficial interest of
each Fund are hereby divided into one additional class, no
par value per share, to be designated as "Class C," of which
there shall hereby be designated an unlimited number of
authorized and unissued shares of beneficial interest (the
"Class C Shares");
FURTHER RESOLVED, that each Class C Share of a Fund shall be
redeemable, shall represent a pro rata beneficial interest
in the assets attributable to Class C, and shall be entitled
to receive its pro rata share of net assets attributable to
Class C upon liquidation of the Fund, all as provided in or
not inconsistent with the Declaration of Trust. Each Class
C Share shall have the voting, dividend, liquidation and
other rights, preferences, powers, restrictions,
limitations, qualifications, terms and conditions as each
other share of the Trust, as set forth in the Declaration of
Trust;
FURTHER RESOLVED, that each Class C Share of a Fund shall be
entitled to one vote (or fraction thereof in the case of a
fractional share) on matters on which such shares shall be
entitled to vote. Shareholders of each Fund shall vote
together on any matter, except to the extent otherwise
required by the 1940 Act or when the Trustees have
determined that the matter affects only the interest of
shareholders of one or more classes, in which case only the
shareholders of that class (or classes) shall be entitled to
vote thereon. Any matter shall be deemed to have been
effectively acted upon with respect to each Fund if acted
upon in accordance with Rule 18f-2 under the 1940 Act (or
any successor rule) and the Declaration of Trust;
FURTHER RESOLVED, that liabilities, expenses, costs, charges
or reserves that should be properly allocated to a
particular class of shares of a Fund may, in accordance with
a plan previously adopted by the Trustees pursuant to Rule
18f-3 under the 1940 Act (the "Rule 18f-3 Plan"), or such
similar rule under or provision or interpretation of the
1940 Act, be charged to and borne solely by that class, and
the expenses so borne by a class may be appropriately
reflected and cause differences in the net asset value
attributable to, and the dividend, redemption and
liquidation rights of, the shares of the affected class, the
other classes of that Fund, and the other Funds;
FURTHER RESOLVED, that the Trustees (including any successor
Trustee) shall have the right at any time and from time to
time to reallocate assets, liabilities and expenses or to
change the designation of any class now or hereafter
created, or to otherwise change the special and relative
rights of any such class, provided that such change shall
not adversely affect the rights of shareholders of that
class; and
FURTHER RESOLVED, that the preceding resolutions shall
constitute an Amendment to the Declaration of Trust,
effective as of the date that the Registration Statement
pertaining to the Class C shares, as filed with the
Securities and Exchange Commission on or about February 29,
1995 pursuant to Rule 485(a) under the Securities Act of
1933 (the "1933 Act"), becomes effective.
IN WITNESS WHEREOF, I have signed this Amendment this _____
day of _________________, 1996.
______________________________________
Michael G. Landry, as Trustee
The above signature is the true and correct signature of
Michael G. Landry, Trustee of the Trust.
______________________________________
C. William Ferris, Secretary/Treasurer
Mackenzie Investment Management, Inc.
EXHIBIT 6(D)
IVY FUND
ADDENDUM TO AMENDED AND RESTATED
DISTRIBUTION AGREEMENT
Ivy Money Market Fund
WHEREAS, Ivy Fund is registered as an open-end investment
company under the Investment Company Act of 1940, as amended, and
consists of one or more separate investment portfolios ("Funds")
as may be designated from time to time; and
WHEREAS, Mackenzie Ivy Funds Distribution, Inc. (the
"Distributor") serves as Ivy Fund's distributor pursuant to an
Amended and Restated Distribution Agreement dated October 23,
1993 (the "Agreement"); and
WHEREAS, Ivy Fund and the Distributor desire that the
Agreement pertain to the Class A and Class B shares of Ivy Money
Market Fund, as redesignated in an amendment to the Agreement and
Declaration of Trust of Ivy Fund dated December 21, 1983, as
amended and restated December 10, 1992, which Amendment became
effective as of January 1, 1996;
NOW THEREFORE, Ivy Fund and the Distributor hereby agree as
follows:
The Agreement shall relate in all respects to the Class A
and Class B shares of Ivy Money Market Fund in addition to
the classes of shares of Funds (other than Ivy Money Market
Fund) specifically identified in Paragraph 1 of the
Agreement and any other Addenda thereto.
IN WITNESS WHEREOF, Ivy Fund and the Distributor have
adopted this Addendum as of the 1st day of January, 1996.
IVY FUND
By: MICHAEL G. LANDRY
Michael G. Landry, President
MACKENZIE IVY FUNDS DISTRIBUTION INC.
By: KEITH J. CARLSON
Keith J. Carlson, President
EXHIBIT 6(E)
IVY FUND
ADDENDUM TO AMENDED AND RESTATED
DISTRIBUTION AGREEMENT
Ivy Bond Fund
Ivy Canada Fund
Ivy China Region Fund
Ivy Emerging Growth Fund
Ivy Global Fund
Ivy Growth Fund
Ivy Growth with Income Fund
Ivy International Fund
Ivy International Bond Fund
Ivy Latin America Strategy Fund
Ivy Money Market Fund
Ivy New Century Fund
CLASS C SHARES
AGREEMENT made as of the 30th day of April, 1996, by and
between Ivy Fund (the "Trust") and Mackenzie Ivy Funds
Distribution, Inc. ("MIFDI").
WHEREAS, the Trust is registered as an open-end investment
company under the Investment Company Act of 1940, as amended, and
consists of one or more separate investment portfolios, as may be
designated from time to time; and
WHEREAS, MIFDI serves as the Trust's distributor pursuant to
an Amended and Restated Distribution Agreement dated October 23,
1993 (the "Agreement"); and
WHEREAS, the Trustees of the Trust, at a meeting held on
February 10, 1996, duly approved an amendment to the Agreement to
include (i) the Class C shares of Ivy Bond Fund, Ivy Canada Fund,
Ivy China Region Fund, Ivy Emerging Growth Fund, Ivy Global Fund,
Ivy Growth Fund, Ivy Growth with Income Fund, Ivy International
Fund, Ivy International Bond Fund, Ivy Latin America Strategy
Fund, Ivy Money Market Fund and Ivy New Century Fund (the
"Funds") and (ii) the Class D shares of Ivy Growth with Income
Fund; and
WHEREAS, (i) the Class C shares of the Funds were
established and designated and (ii) the Class D shares of Ivy
Growth with Income Fund were redesignated by the Board of
Trustees of the Trust by written consent dated as of February 29,
1996.
NOW THEREFORE, the Trust and MIFDI hereby agree as follows:
Effective as of the date that the
Registration Statement pertaining to the
Class C shares of the Funds, filed with the
Securities and Exchange Commission on or
about February 29, 1996 pursuant to Rule
485(a) under the Securities Act of 1933,
first becomes effective, (i) all references
in the Agreement to Class C shares of Ivy
Growth with Income Fund shall hereafter refer
to the Class D shares of Ivy Growth with
Income Fund, and (ii) the Agreement shall
relate in all respects to the Class C shares
of the Funds, in addition to the classes of
shares of the Funds and any other series of
the Trust specifically identified in
Paragraph 1 of the Agreement and any other
Addenda thereto.
IN WITNESS WHEREOF, the Trust and MIFDI have adopted this
Addendum as of the date first set forth above.
IVY FUND
By: _____________________________
Michael G. Landry, President
MACKENZIE IVY FUNDS DISTRIBUTION INC.
By: _____________________________
Keith J. Carlson, President
EXHIBIT 9(V)
IVY FUND
ADMINISTRATIVE SERVICES AGREEMENT SUPPLEMENT
Ivy Bond Fund
Ivy Canada Fund
Ivy China Region Fund
Ivy Emerging Growth Fund
Ivy Global Fund
Ivy Growth Fund
Ivy Growth with Income Fund
Ivy International Fund
Ivy International Bond Fund
Ivy Latin America Strategy Fund
Ivy Money Market Fund
Ivy New Century Fund
CLASS C SHARES
AGREEMENT made as of the 30th day of April, 1996, by and
between Ivy Fund (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 September 1,
1992, pursuant to which the Trust has appointed MIMI to provide
the administrative services specified in the Master Agreement;
and
WHEREAS, Ivy Bond Fund, Ivy Canada Fund, Ivy China Region
Fund, Ivy Emerging Growth Fund, Ivy Global Fund, Ivy Growth Fund,
Ivy Growth with Income Fund, Ivy International Fund, Ivy
International Bond Fund, Ivy Latin America Strategy Fund, Ivy
Money Market Fund and Ivy New Century Fund (each, a "Fund," and
collectively, 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 Class C of
each Fund, and MIMI hereby acknowledges that the Master Agreement
shall pertain to Class C of each Fund, the terms and conditions
of such Master Agreement being incorporated herein by reference.
2. As provided in the Master Agreement and subject to
further conditions as set forth therein, Class C of each Fund
shall pay to MIMI a monthly fee on the first business day of each
month based upon the average daily value (as determined on each
business day at the time set forth in each Fund's Prospectus for
determining net asset value per share) of the net assets of the
Fund attributable to Class C during the preceding month at the
annual rate of 0.10%.
3. This Supplement and the Master Agreement (together, the
"Agreement") shall become effective with respect to Class C of
each Fund as of the date that the Registration Statement
pertaining to the Class C shares, filed with the Securities and
Exchange Commission on or about February 29, 1996 pursuant to
Rule 485(a) under the Securities Act of 1933, first becomes
effective, and unless sooner terminated as hereinafter provided,
the Agreement shall remain in effect for a period of two years
from that date. Thereafter, the Agreement shall continue in
effect with respect to Class C of each Fund from year to year,
provided such continuance with respect to Class C of each 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 Independent Trustees. This Agreement may be terminated
with respect to Class C of a Fund at any time, without payment of
any penalty, by MIMI upon at least sixty (60) days' prior written
notice to the Fund, or by the Fund upon at least sixty (60) days'
written notice to MIMI; provided, that in 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.
IN WITNESS WHEREOF, the Trust and MIFDI have adopted this
Addendum as of the date first set forth above.
IVY FUND
By: ___________________________________
Michael G. Landry, President
MACKENZIE INVESTMENT MANAGEMENT INC.
By: ___________________________________
Michael G. Landry, President
EXHIBIT 9(W)
ADDENDUM TO TRANSFER AGENCY AND SHAREHOLDER SERVICES AGREEMENT
IVY FUND
The Transfer Agency and Shareholder Services Agreement, made
as of the 1st day of January, 1992, between Ivy Fund and
Mackenzie Ivy Investor Services Corp. ("MIISC"), is hereby
revised as set forth below in this Addendum.
Schedule A of the Agreement is revised in its entirety to
read as follows:
SCHEDULE A
IVY MANAGEMENT FEES
The transfer agency and shareholder service fees are based
on an annual per account fee. These fees are payable on a
monthly basis at the rate of 1/12 of the annual fee and are
charged with respect to all open accounts.
A. PER ACCOUNT FEES
FUND ANNUAL FEE
Ivy Bond Fund (Classes A, B and C) $ 20.75
Ivy Bond Fund (Class I) 10.25
Ivy Canada Fund 20.00
Ivy China Region Fund 20.00
Ivy Emerging Growth Fund 20.00
Ivy Global Fund 20.00
Ivy Growth Fund 20.00
Ivy Growth with Income Fund 20.00
Ivy International Fund (Classes A, B and C) 20.00
Ivy International Fund (Class I) 10.25
Ivy International Bond Fund 20.00
Ivy Latin America Strategy Fund 20.00
Ivy Money Market Fund 22.00
Ivy New Century Fund 20.00
Ivy Short-Term U.S. Government Securities Fund
(Classes A and B) 20.75
Ivy Short-Term U.S. Government Securities Fund
(Class I) 10.25
In addition, in accordance with an agreement between MIISC
and The Shareholder Services Group, each Fund will pay a fee of
$4.36 for each account that is closed, which fee may be increased
from time to time in accordance with the terms of that agreement.
B. SPECIAL SERVICES
Fees for activities of a non-recurring nature, such as
preparation of special reports, portfolio consolidations, or
reorganization, and extraordinary shipments will be subject to
negotiation.
This Addendum shall take effect as of the date that the
Registration Statement pertaining to the Class C shares of the
Funds, filed with the Securities and Exchange Commission on or
about February 29, 1996 pursuant to Rule 485(a) under the
Securities Act of 1933, first becomes effective.
IN WITNESS WHEREOF, the parties hereto have caused this
Addendum to be executed as of this 30th day of April, 1996.
IVY FUND
By: ___________________________________
Michael G. Landry, President
IVY MANAGEMENT, INC.
By: ___________________________________
Michael G. Landry, President
EXHIBIT 10
March 1, 1996
Ivy Fund
Via Mizner Financial Plaza
700 South Federal Highway
Suite 300
Boca Raton, Florida 33432
Re: LEGALITY OF SECURITIES BEING ISSUED
Dear Sirs:
As counsel for Ivy Fund (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. 811-1028), and the
registration statement relating to its shares of beneficial
interest (the "Shares") filed under the Securities Act of 1933,
as amended (File No. 2-17613)(the "Registration Statement"). 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 Registration Statement 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 Post-Effective Amendment No. 84 to the
Registration Statement.
Very truly yours,
DECHERT PRICE & RHOADS
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of Ivy Fund
We hereby consent to the incorporation by reference in
Post-Effective Amendment No. 84 to the Registration Statement on
Form N-1A (File No. 2-17613, hereafter the "Registration
Statement") of Ivy Fund of our reports dated February 16, 1996,
relating to the financial statements and financial highlights of
Ivy Bond Fund, Ivy Canada Fund, Ivy China Region Fund, Ivy
Emerging Growth Fund, Ivy Latin America Strategy Fund, Ivy Global
Fund, Ivy Growth Fund, Ivy Growth with Income Fund, Ivy
International Fund and Ivy New Century Fund (hereafter the
"Funds") appearing in the December 31, 1995 Annual Reports to
Shareholders of the Funds, which annual reports are incorporated
by reference in the Registration Statement.
We also consent to the reference to our Firm under the caption
"Financial Highlights" in the Prospectus and "Auditors" in the
Statement of Additional Information.
COOPERS & LYBRAND L.L.P.
Fort Lauderdale, Florida
March 1, 1996
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees of
Ivy Bond Fund (the Fund)
We have audited the accompanying statement of assets and
liabilities of the Fund, including the schedule of portfolio
investments, as of December 31, 1995, and the related statement
of operations for the year then ended, the statement of changes
in net assets for the six month period ended December 31, 1994
and for the year ended December 31, 1995, and the financial
highlights for each of the periods indicated. These financial
statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion
on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of December 31, 1995, by correspondence with
the custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of the Fund as of December 31, 1995, the
results of its operations for the year then ended, the changes in
its net assets for the six month period ended December 31, 1994
and for the year ended December 31, 1995, and the financial
highlights for each of the periods indicated, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Fort Lauderdale, Florida
February 16, 1996
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees of
Ivy Canada Fund (the Fund)
We have audited the accompanying statement of assets and
liabilities of the Fund, including the schedule of portfolio
investments, as of December 31, 1995, and the related statement
of operations for the year then ended, the statement of changes
in net assets for the six month period ended December 31, 1994
and for the year ended December 31, 1995, and the financial
highlights for each of the periods indicated. These financial
statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion
on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of December 31, 1995, by correspondence with
the custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of the Fund as of December 31, 1995, the
results of its operations for the year then ended, the changes in
its net assets for the six month period ended December 31, 1994
and for the year ended December 31, 1995, and the financial
highlights for each of the periods indicated, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Fort Lauderdale, Florida
February 16, 1996
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees of
Ivy China Region Fund (the Fund)
We have audited the accompanying statement of assets and
liabilities of the Fund, including the schedule of portfolio
investments, as of December 31, 1995, and the related statement
of operations for the year then ended, the statement of changes
in net assets for each of the two years in the period then ended,
and the financial highlights for each of the periods indicated.
These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is
to express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of December 31, 1995, by correspondence with
the custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of the Fund as of December 31, 1995, the
results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods
indicated, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Fort Lauderdale, Florida
February 16, 1996
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees of
Ivy Emerging Growth Fund (the Fund)
We have audited the accompanying statement of assets and
liabilities of the Fund, including the schedule of portfolio
investments, as of December 31, 1995, and the related statement
of operations for the year then ended, the statement of changes
in net assets for each of the two years in the period then ended,
and the financial highlights for each of the periods indicated.
These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is
to express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of December 31, 1995, by correspondence with
the custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of the Fund as of December 31, 1995, the
results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods
indicated, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Fort Lauderdale, Florida
February 16, 1996
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees of
Ivy Global Fund (the Fund)
We have audited the accompanying statement of assets and
liabilities of the Fund, including the schedule of portfolio
investments, as of December 31, 1995, and the related statement
of operations for the year then ended, the statement of changes
in net assets for the six month period ended December 31, 1994
and for the year ended December 31, 1995, and the financial
highlights for each of the periods indicated. These financial
statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion
on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of December 31, 1995, by correspondence with
the custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of the Fund as of December 31, 1995, the
results of its operations for the year then ended, the changes in
its net assets for the six month period ended December 31, 1994
and for the year ended December 31, 1995, and the financial
highlights for each of the periods indicated, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Fort Lauderdale, Florida
February 16, 1996
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees of
Ivy Growth Fund (the Fund)
We have audited the accompanying statement of assets and
liabilities of the Fund, including the schedule of portfolio
investments, as of December 31, 1995, and the related statement
of operations for the year then ended, the statement of changes
in net assets for each of the two years in the period then ended,
and the financial highlights for each of the periods indicated.
These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is
to express an opinion on these financial statements and financial
highlights based on our audits. The financial highlights for the
year ended December 31, 1991, were audited by other auditors,
whose report, dated January 31, 1992, expressed an unqualified
opinion on the selected per share data and ratios.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of December 31, 1995, by correspondence with
the custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, based on our audits and the report of other
auditors, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of the Fund as of December 31, 1995, the
results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods
indicated, in conformity with generally accepted accounting
principles.
COOOPERS & LYBRAND L.L.P.
Fort Lauderdale, Florida
February 16, 1996
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees of
Ivy Growth with Income Fund (the Fund)
We have audited the accompanying statement of assets and
liabilities of the Fund, including the schedule of portfolio
investments, as of December 31, 1995, and the related statement
of operations for the year then ended, the statement of changes
in net assets for each of the two years in the period then ended,
and the financial highlights for each of the periods indicated.
These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is
to express an opinion on these financial statements and financial
highlights based on our audits. The financial highlights for the
year ended December 31, 1991, were audited by other auditors,
whose report, dated January 31, 1992, expressed an unqualified
opinion on the selected per share data and ratios.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of December 31, 1995, by correspondence with
the custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, based on our audits and the report of other
auditors, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of the Fund as of December 31, 1995, the
results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods
indicated, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Fort Lauderdale, Florida
February 16, 1996
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees of
Ivy International Fund (the Fund)
We have audited the accompanying statement of assets and
liabilities of the Fund, including the schedule of portfolio
investments, as of December 31, 1995, and the related statement
of operations for the year then ended, the statement of changes
in net assets for each of the two years in the period then ended,
and the financial highlights for each of the periods indicated.
These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is
to express an opinion on these financial statements and financial
highlights based on our audits. The financial highlights for the
year ended December 31, 1991, were audited by other auditors,
whose report, dated January 31, 1992, expressed an unqualified
opinion on the selected per share data and ratios.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of December 31, 1995, by correspondence with
the custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, based on our audits and the report of other
auditors, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of the Fund as of December 31, 1995, the
results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods
indicated, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Fort Lauderdale, Florida
February 16, 1996
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees of
Ivy Latin America Strategy Fund (the Fund)
We have audited the accompanying statement of assets and
liabilities of the Fund, including the schedule of portfolio
investments, as of December 31, 1995, and the related statement
of operations for the year then ended, the statement of changes
in net assets and the financial highlights for the period
November 1, 1994 (commencement) to December 31, 1994 and for the
year ended December 31, 1995. These financial statements and
financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of December 31, 1995, by correspondence with
the custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of the Fund as of December 31, 1995, the
results of its operations for the year then ended, the changes in
its net assets and the financial highlights for the period
November 1, 1994 (commencement) to December 31, 1994 and for the
year ended December 31, 1995, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Fort Lauderdale, Florida
February 16, 1996
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees of
Ivy New Century Fund (the Fund)
We have audited the accompanying statement of assets and
liabilities of the Fund, including the schedule of portfolio
investments, as of December 31, 1995, and the related statement
of operations for the year then ended, the statement of changes
in net assets and the financial highlights for the period
November 1, 1994 (commencement) to December 31, 1994 and for the
year ended December 31, 1995. These financial statements and
financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of December 31, 1995, by correspondence with
the custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of the Fund as of December 31, 1995, the
results of its operations for the year then ended, the changes in
its net assets and the financial highlights for the period
November 1, 1994 (commencement) to December 31, 1994 and for the
year ended December 31, 1995, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Fort Lauderdale, Florida
February 16, 1996
EXHIBIT 15(I)
SUPPLEMENT TO DISTRIBUTION PLAN
IVY FUND
IVY GROWTH WITH INCOME FUND CLASS C SHARES
WHEREAS, Ivy Fund is registered as an open-end investment
company under the Investment Company Act of 1940 (the "Act"), as
amended, and consists of one or more separate investment
portfolios as may be established from time to time; and
WHEREAS, Ivy Fund and Mackenzie Ivy Funds Distribution, Inc.
("MIFDI"), a broker-dealer registered under the Securities
Exchange Act of 1934, have entered into an Amended and Restated
Distribution Agreement dated October 23, 1993 pursuant to which
MIFDI acts as Ivy Fund's distributor; and
WHEREAS, Ivy Fund has previously adopted a Distribution Plan
(the "Plan") in accordance with the Act that applies to the Class
C shares of Ivy Growth with Income Fund (the "Fund"); and
WHEREAS, the Trustees of Ivy Fund, by written consent dated
as of February 29, 1996, duly approved (i) the establishment and
designation of a new class of shares identified as Class C (the
"New Class C Shares") for the Fund, Ivy Bond Fund, Ivy Canada
Fund, Ivy China Region Fund, Ivy Emerging Growth Fund, Ivy Global
Fund, Ivy Growth Fund, Ivy International Fund, Ivy International
Bond Fund, Ivy Latin America Strategy Fund, Ivy Money Market Fund
and Ivy New Century Fund (the "Funds") and (ii) the redesignation
as "Class D shares" of the Fund those Class C shares of the Fund
issued and outstanding as of the date that the registration
statement for the New Class C Shares, filed with the Securities
and Exchange Commission on or about February 29, 1996 pursuant to
Rule 485(a) under the Securities Act of 1933 (the "Registration
Statement"), first becomes effective.
NOW, THEREFORE, Ivy Fund hereby adopts the following
modification to the Plan:
Effective as of the date that the Registration Statement
pertaining to the New Class C Shares first becomes
effective, all references in the Plan to Class C shares of
the Fund shall hereafter refer to Class D shares of the
Fund.
IN WITNESS WHEREOF, Ivy Fund has adopted this Supplement to
the Plan as of this ____ day of _________________, 1996.
IVY FUND
By: ___________________________
Michael G. Landry, President
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 011
<NAME> IVY GROWTH FUND-CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END>
DEC-31-1995
<PERIOD-START>
JAN-01-1995
<PERIOD-END>
DEC-31-1995
<INVESTMENTS-AT-COST>
243,420,953
<INVESTMENTS-AT-VALUE>
295,117,393
<RECEIVABLES>
520,711
<ASSETS-OTHER>
197,392
<OTHER-ITEMS-ASSETS>
0
<TOTAL-ASSETS>
295,835,496
<PAYABLE-FOR-SECURITIES>
967,109
<SENIOR-LONG-TERM-DEBT>
0
<OTHER-ITEMS-LIABILITIES>
2,244,971
<TOTAL-LIABILITIES>
3,212,080
<SENIOR-EQUITY>
0
<PAID-IN-CAPITAL-COMMON>
241,253,772
<SHARES-COMMON-STOCK>
17,310,761
<SHARES-COMMON-PRIOR>
16,642,406
<ACCUMULATED-NII-CURRENT>
25,339
<OVERDISTRIBUTION-NII>
0
<ACCUMULATED-NET-GAINS>
(114,013)
<OVERDISTRIBUTION-GAINS>
0
<ACCUM-APPREC-OR-DEPREC>
51,458,318
<NET-ASSETS>
292,623,416
<DIVIDEND-INCOME>
4,326,377
<INTEREST-INCOME>
778,306
<OTHER-INCOME>
0
<EXPENSES-NET>
4,268,696
<NET-INVESTMENT-INCOME>
835,987
<REALIZED-GAINS-CURRENT>
14,726,378
<APPREC-INCREASE-CURRENT>
49,121,241
<NET-CHANGE-FROM-OPS>
64,683,606
<EQUALIZATION>
0
<DISTRIBUTIONS-OF-INCOME>
393,729
<DISTRIBUTIONS-OF-GAINS>
14,615,580
<DISTRIBUTIONS-OTHER>
521,353
<NUMBER-OF-SHARES-SOLD>
2,850,578
<NUMBER-OF-SHARES-REDEEMED>
3,036,434
<SHARES-REINVESTED>
854,211
<NET-CHANGE-IN-ASSETS>
59,777,772
<ACCUMULATED-NII-PRIOR>
36,618
<ACCUMULATED-GAINS-PRIOR>
(96,421)
<OVERDISTRIB-NII-PRIOR>
0
<OVERDIST-NET-GAINS-PRIOR>
0
<GROSS-ADVISORY-FEES>
2,278,390
<INTEREST-EXPENSE>
0
<GROSS-EXPENSE>
4,280,376
<AVERAGE-NET-ASSETS>
266,028,982
<PER-SHARE-NAV-BEGIN>
13.91
<PER-SHARE-NII>
.05
<PER-SHARE-GAIN-APPREC>
3.73
<PER-SHARE-DIVIDEND>
.02
<PER-SHARE-DISTRIBUTIONS>
.89
<RETURNS-OF-CAPITAL>
.03
<PER-SHARE-NAV-END>
16.75
<EXPENSE-RATIO>
1.59
<AVG-DEBT-OUTSTANDING>
0
<AVG-DEBT-PER-SHARE>
0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 021
<NAME> IVY GROWTH WITH INCOME FUND - CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 57,976,477
<INVESTMENTS-AT-VALUE> 69,011,959
<RECEIVABLES> 385,721
<ASSETS-OTHER> 134,914
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 69,532,594
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 368,087
<TOTAL-LIABILITIES> 368,087
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 67,192,197
<SHARES-COMMON-STOCK> 5,377,714
<SHARES-COMMON-PRIOR> 2,866,608
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (9,063,172)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11,035,482
<NET-ASSETS> 69,164,507
<DIVIDEND-INCOME> 1,171,858
<INTEREST-INCOME> 663,208
<OTHER-INCOME> 0
<EXPENSES-NET> 1,264,817
<NET-INVESTMENT-INCOME> 570,249
<REALIZED-GAINS-CURRENT> 3,005,363
<APPREC-INCREASE-CURRENT> 10,486,040
<NET-CHANGE-FROM-OPS> 14,061,652
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 448,998
<DISTRIBUTIONS-OF-GAINS> 1,323,702
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,958,618
<NUMBER-OF-SHARES-REDEEMED> 1,580,020
<SHARES-REINVESTED> 132,508
<NET-CHANGE-IN-ASSETS> 34,293,865
<ACCUMULATED-NII-PRIOR> (37,333)
<ACCUMULATED-GAINS-PRIOR> 1,393
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 515,787
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,264,817
<AVERAGE-NET-ASSETS> 51,169,456
<PER-SHARE-NAV-BEGIN> 9.08
<PER-SHARE-NII> .11
<PER-SHARE-GAIN-APPREC> 2.13
<PER-SHARE-DIVIDEND> .08
<PER-SHARE-DISTRIBUTIONS> .26
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.98
<EXPENSE-RATIO> 1.96
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 012
<NAME> IVY GROWTH FUND-CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 243,420,953
<INVESTMENTS-AT-VALUE> 295,117,393
<RECEIVABLES> 520,711
<ASSETS-OTHER> 197,392
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 295,835,496
<PAYABLE-FOR-SECURITIES> 967,109
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,244,971
<TOTAL-LIABILITIES> 3,212,080
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 241,253,772
<SHARES-COMMON-STOCK> 159,356
<SHARES-COMMON-PRIOR> 100,626
<ACCUMULATED-NII-CURRENT> 25,339
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (114,013)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 51,458,318
<NET-ASSETS> 292,623,416
<DIVIDEND-INCOME> 4,326,377
<INTEREST-INCOME> 778,306
<OTHER-INCOME> 0
<EXPENSES-NET> 4,268,696
<NET-INVESTMENT-INCOME> 835,987
<REALIZED-GAINS-CURRENT> 14,726,378
<APPREC-INCREASE-CURRENT> 49,121,241
<NET-CHANGE-FROM-OPS> 64,683,606
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 110,798
<DISTRIBUTIONS-OTHER> 9,479
<NUMBER-OF-SHARES-SOLD> 276,024
<NUMBER-OF-SHARES-REDEEMED> 224,460
<SHARES-REINVESTED> 7,166
<NET-CHANGE-IN-ASSETS> 59,777,772
<ACCUMULATED-NII-PRIOR> 36,618
<ACCUMULATED-GAINS-PRIOR> (96,421)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,278,390
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,280,376
<AVERAGE-NET-ASSETS> 2,016,747
<PER-SHARE-NAV-BEGIN> 13.91
<PER-SHARE-NII> (0.08)
<PER-SHARE-GAIN-APPREC> 3.71
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .73
<RETURNS-OF-CAPITAL> .06
<PER-SHARE-NAV-END> 16.75
<EXPENSE-RATIO> 2.55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 022
<NAME> IVY GROWTH WITH INCOME FUND - CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 57,976,477
<INVESTMENTS-AT-VALUE> 69,011,959
<RECEIVABLES> 385,721
<ASSETS-OTHER> 134,914
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 69,532,594
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 368,087
<TOTAL-LIABILITIES> 368,087
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 67,192,197
<SHARES-COMMON-STOCK> 807,763
<SHARES-COMMON-PRIOR> 644,494
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (9,063,172)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11,035,482
<NET-ASSETS> 69,164,507
<DIVIDEND-INCOME> 1,171,858
<INTEREST-INCOME> 663,208
<OTHER-INCOME> 0
<EXPENSES-NET> 1,264,817
<NET-INVESTMENT-INCOME> 570,249
<REALIZED-GAINS-CURRENT> 3,005,363
<APPREC-INCREASE-CURRENT> 10,486,040
<NET-CHANGE-FROM-OPS> 14,061,652
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6,337
<DISTRIBUTIONS-OF-GAINS> 198,573
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 478,516
<NUMBER-OF-SHARES-REDEEMED> 332,940
<SHARES-REINVESTED> 17,693
<NET-CHANGE-IN-ASSETS> 34,293,865
<ACCUMULATED-NII-PRIOR> (37,333)
<ACCUMULATED-GAINS-PRIOR> 1,393
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 515,787
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,264,817
<AVERAGE-NET-ASSETS> 7,635,660
<PER-SHARE-NAV-BEGIN> 9.08
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> 2.13
<PER-SHARE-DIVIDEND> .01
<PER-SHARE-DISTRIBUTIONS> .25
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.98
<EXPENSE-RATIO> 2.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 023
<NAME> IVY GROWTH WITH INCOME FUND - CLASS C
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 57,976,477
<INVESTMENTS-AT-VALUE> 69,011,959
<RECEIVABLES> 385,721
<ASSETS-OTHER> 134,914
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 69,532,594
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 368,087
<TOTAL-LIABILITIES> 368,087
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 67,192,197
<SHARES-COMMON-STOCK> 113,146
<SHARES-COMMON-PRIOR> 330,975
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (9,063,172)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11,035,482
<NET-ASSETS> 69,164,507
<DIVIDEND-INCOME> 1,171,858
<INTEREST-INCOME> 663,208
<OTHER-INCOME> 0
<EXPENSES-NET> 1,264,817
<NET-INVESTMENT-INCOME> 570,249
<REALIZED-GAINS-CURRENT> 3,005,363
<APPREC-INCREASE-CURRENT> 10,486,040
<NET-CHANGE-FROM-OPS> 14,061,652
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,556
<DISTRIBUTIONS-OF-GAINS> 35,765
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 220,936
<SHARES-REINVESTED> 3,107
<NET-CHANGE-IN-ASSETS> 34,293,865
<ACCUMULATED-NII-PRIOR> (37,333)
<ACCUMULATED-GAINS-PRIOR> 1,393
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 515,787
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,264,817
<AVERAGE-NET-ASSETS> 1,875,101
<PER-SHARE-NAV-BEGIN> 9.08
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> 2.13
<PER-SHARE-DIVIDEND> .01
<PER-SHARE-DISTRIBUTIONS> .25
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.98
<EXPENSE-RATIO> 2.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 031
<NAME> IVY INTERNATIONAL FUND-CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 466,703,249
<INVESTMENTS-AT-VALUE> 560,167,683
<RECEIVABLES> 1,507,315
<ASSETS-OTHER> 2,864,533
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 564,539,531
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 879,911
<TOTAL-LIABILITIES> 879,911
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 470,231,185
<SHARES-COMMON-STOCK> 15,519,433
<SHARES-COMMON-PRIOR> 8,319,575
<ACCUMULATED-NII-CURRENT> 5,823
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (41,822)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 93,464,434
<NET-ASSETS> 563,659,620
<DIVIDEND-INCOME> 6,955,702
<INTEREST-INCOME> 2,910,827
<OTHER-INCOME> 0
<EXPENSES-NET> 6,436,879
<NET-INVESTMENT-INCOME> 3,429,650
<REALIZED-GAINS-CURRENT> 1,769,828
<APPREC-INCREASE-CURRENT> 44,011,142
<NET-CHANGE-FROM-OPS> 49,210,620
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,301,120
<DISTRIBUTIONS-OF-GAINS> 1,495,008
<DISTRIBUTIONS-OTHER> 423,723
<NUMBER-OF-SHARES-SOLD> 9,867,336
<NUMBER-OF-SHARES-REDEEMED> 2,826,332
<SHARES-REINVESTED> 158,854
<NET-CHANGE-IN-ASSETS> 299,009,558
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,948,456
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6,436,879
<AVERAGE-NET-ASSETS> 339,441,521
<PER-SHARE-NAV-BEGIN> 27.60
<PER-SHARE-NII> .25
<PER-SHARE-GAIN-APPREC> 3.22
<PER-SHARE-DIVIDEND> .25
<PER-SHARE-DISTRIBUTIONS> .12
<RETURNS-OF-CAPITAL> .03
<PER-SHARE-NAV-END> 30.67
<EXPENSE-RATIO> 1.52
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 032
<NAME> IVY INTERNATIONAL FUND-CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 466,703,249
<INVESTMENTS-AT-VALUE> 560,167,683
<RECEIVABLES> 1,507,315
<ASSETS-OTHER> 2,864,533
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 564,539,531
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 879,911
<TOTAL-LIABILITIES> 879,911
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 470,231,185
<SHARES-COMMON-STOCK> 2,433,772
<SHARES-COMMON-PRIOR> 1,092,309
<ACCUMULATED-NII-CURRENT> 5,823
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (41,822)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 93,464,434
<NET-ASSETS> 563,659,620
<DIVIDEND-INCOME> 6,955,702
<INTEREST-INCOME> 2,910,827
<OTHER-INCOME> 0
<EXPENSES-NET> 6,436,879
<NET-INVESTMENT-INCOME> 3,429,650
<REALIZED-GAINS-CURRENT> 1,769,828
<APPREC-INCREASE-CURRENT> 44,011,142
<NET-CHANGE-FROM-OPS> 49,210,620
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 26,475
<DISTRIBUTIONS-OF-GAINS> 233,428
<DISTRIBUTIONS-OTHER> 69,587
<NUMBER-OF-SHARES-SOLD> 1,620,201
<NUMBER-OF-SHARES-REDEEMED> 288,093
<SHARES-REINVESTED> 9,355
<NET-CHANGE-IN-ASSETS> 299,009,558
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,948,456
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6,436,879
<AVERAGE-NET-ASSETS> 47,484,147
<PER-SHARE-NAV-BEGIN> 27.60
<PER-SHARE-NII> .01
<PER-SHARE-GAIN-APPREC> 3.20
<PER-SHARE-DIVIDEND> .01
<PER-SHARE-DISTRIBUTIONS> .10
<RETURNS-OF-CAPITAL> .03
<PER-SHARE-NAV-END> 30.67
<EXPENSE-RATIO> 2.44
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 033
<NAME> IVY INTERNATIONAL FUND - CLASS I
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 466,703,249
<INVESTMENTS-AT-VALUE> 560,167,683
<RECEIVABLES> 1,507,315
<ASSETS-OTHER> 2,864,533
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 564,539,531
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 879,911
<TOTAL-LIABILITIES> 879,911
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 470,231,185
<SHARES-COMMON-STOCK> 424,505
<SHARES-COMMON-PRIOR> 178,332
<ACCUMULATED-NII-CURRENT> 5,823
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (41,822)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 93,464,434
<NET-ASSETS> 563,659,620
<DIVIDEND-INCOME> 6,955,702
<INTEREST-INCOME> 2,910,827
<OTHER-INCOME> 0
<EXPENSES-NET> 6,436,879
<NET-INVESTMENT-INCOME> 3,429,650
<REALIZED-GAINS-CURRENT> 1,769,828
<APPREC-INCREASE-CURRENT> 44,011,142
<NET-CHANGE-FROM-OPS> 49,210,620
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 102,055
<DISTRIBUTIONS-OF-GAINS> 41,392
<DISTRIBUTIONS-OTHER> 12,102
<NUMBER-OF-SHARES-SOLD> 254,153
<NUMBER-OF-SHARES-REDEEMED> 11,973
<SHARES-REINVESTED> 3,993
<NET-CHANGE-IN-ASSETS> 299,009,558
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,948,456
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6,436,879
<AVERAGE-NET-ASSETS> 8,910,446
<PER-SHARE-NAV-BEGIN> 27.60
<PER-SHARE-NII> .30
<PER-SHARE-GAIN-APPREC> 3.22
<PER-SHARE-DIVIDEND> .30
<PER-SHARE-DISTRIBUTIONS> .12
<RETURNS-OF-CAPITAL> .03
<PER-SHARE-NAV-END> 30.67
<EXPENSE-RATIO> 1.35
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 041
<NAME> IVY EMERGING GROWTH FUND-CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 42,509,333
<INVESTMENTS-AT-VALUE> 53,382,860
<RECEIVABLES> 324,843
<ASSETS-OTHER> 33,489
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 53,741,192
<PAYABLE-FOR-SECURITIES> 52,500
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 247,647
<TOTAL-LIABILITIES> 300,147
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 42,567,103
<SHARES-COMMON-STOCK> 1,635,831
<SHARES-COMMON-PRIOR> 1,169,256
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 415
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,873,527
<NET-ASSETS> 53,441,045
<DIVIDEND-INCOME> 15,008
<INTEREST-INCOME> 195,343
<OTHER-INCOME> 0
<EXPENSES-NET> 801,544
<NET-INVESTMENT-INCOME> (591,193)
<REALIZED-GAINS-CURRENT> 4,445,572
<APPREC-INCREASE-CURRENT> 8,767,787
<NET-CHANGE-FROM-OPS> 12,622,166
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 2,804,408
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,087,467
<NUMBER-OF-SHARES-REDEEMED> 730,995
<SHARES-REINVESTED> 110,103
<NET-CHANGE-IN-ASSETS> 26,933,004
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (38,954)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 318,186
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 801,544
<AVERAGE-NET-ASSETS> 28,072,995
<PER-SHARE-NAV-BEGIN> 18.38
<PER-SHARE-NII> (.24)
<PER-SHARE-GAIN-APPREC> 7.90
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 1.92
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 24.12
<EXPENSE-RATIO> 1.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 042
<NAME> IVY EMERGING GROWTH FUND - CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 42,509,333
<INVESTMENTS-AT-VALUE> 53,382,860
<RECEIVABLES> 324,843
<ASSETS-OTHER> 33,489
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 53,741,192
<PAYABLE-FOR-SECURITIES> 52,500
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 247,647
<TOTAL-LIABILITIES> 300,147
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 42,567,103
<SHARES-COMMON-STOCK> 579,718
<SHARES-COMMON-PRIOR> 272,799
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 415
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,873,527
<NET-ASSETS> 53,441,045
<DIVIDEND-INCOME> 15,008
<INTEREST-INCOME> 195,343
<OTHER-INCOME> 0
<EXPENSES-NET> 801,544
<NET-INVESTMENT-INCOME> (591,193)
<REALIZED-GAINS-CURRENT> 4,445,572
<APPREC-INCREASE-CURRENT> 8,767,787
<NET-CHANGE-FROM-OPS> 12,622,166
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 1,010,602
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 566,894
<NUMBER-OF-SHARES-REDEEMED> 297,917
<SHARES-REINVESTED> 37,942
<NET-CHANGE-IN-ASSETS> 26,933,004
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (38,954)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 318,186
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 801,544
<AVERAGE-NET-ASSETS> 9,359,259
<PER-SHARE-NAV-BEGIN> 18.38
<PER-SHARE-NII> (.35)
<PER-SHARE-GAIN-APPREC> 7.85
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 1.76
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 24.12
<EXPENSE-RATIO> 2.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 051
<NAME> IVY CHINA REGION FUND - CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END>
DEC-31-1995
<PERIOD-END>
DEC-31-1995
<INVESTMENTS-AT-COST>
23,084,415
<INVESTMENTS-AT-VALUE>
19,327,113
<RECEIVABLES>
91,898
<ASSETS-OTHER>
408,497
<OTHER-ITEMS-ASSETS>
0
<TOTAL-ASSETS>
19,827,508
<PAYABLE-FOR-SECURITIES>
0
<SENIOR-LONG-TERM-DEBT>
0
<OTHER-ITEMS-LIABILITIES>
67,340
<TOTAL-LIABILITIES>
67,340
<SENIOR-EQUITY>
0
<PAID-IN-CAPITAL-COMMON>
24,083,795
<SHARES-COMMON-STOCK>
1,497,659
<SHARES-COMMON-PRIOR>
1,531,469
<ACCUMULATED-NII-CURRENT>
1,382
<OVERDISTRIBUTION-NII>
0
<ACCUMULATED-NET-GAINS>
(567,707)
<OVERDISTRIBUTION-GAINS>
0
<ACCUM-APPREC-OR-DEPREC>
(3,757,302)
<NET-ASSETS>
19,760,168
<DIVIDEND-INCOME>
738,383
<INTEREST-INCOME>
25,323
<OTHER-INCOME>
0
<EXPENSES-NET>
493,819
<NET-INVESTMENT-INCOME>
269,887
<REALIZED-GAINS-CURRENT>
(304,802)
<APPREC-INCREASE-CURRENT>
370,010
<NET-CHANGE-FROM-OPS>
335,095
<EQUALIZATION>
0
<DISTRIBUTIONS-OF-INCOME>
209,871
<DISTRIBUTIONS-OF-GAINS>
0
<DISTRIBUTIONS-OTHER>
20,020
<NUMBER-OF-SHARES-SOLD>
1,416,644
<NUMBER-OF-SHARES-REDEEMED>
1,473,931
<SHARES-REINVESTED>
23,477
<NET-CHANGE-IN-ASSETS>
(755,932)
<ACCUMULATED-NII-PRIOR>
(39,826)
<ACCUMULATED-GAINS-PRIOR>
(264,140)
<OVERDISTRIB-NII-PRIOR>
0
<OVERDIST-NET-GAINS-PRIOR>
0
<GROSS-ADVISORY-FEES>
200,605
<INTEREST-EXPENSE>
0
<GROSS-EXPENSE>
599,904
<AVERAGE-NET-ASSETS>
13,058,797
<PER-SHARE-NAV-BEGIN>
8.61
<PER-SHARE-NII>
0.14
<PER-SHARE-GAIN-APPREC>
(0.01)
<PER-SHARE-DIVIDEND>
0.14
<PER-SHARE-DISTRIBUTIONS>
0
<RETURNS-OF-CAPITAL>
0.02
<PER-SHARE-NAV-END>
8.58
<EXPENSE-RATIO>
2.20
<AVG-DEBT-OUTSTANDING>
0
<AVG-DEBT-PER-SHARE>
0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 052
<NAME> IVY CHINA REGION FUND-CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 23,084,415
<INVESTMENTS-AT-VALUE> 19,327,113
<RECEIVABLES> 91,898
<ASSETS-OTHER> 408,497
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 19,827,508
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 67,340
<TOTAL-LIABILITIES> 67,340
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 24,083,795
<SHARES-COMMON-STOCK> 804,454
<SHARES-COMMON-PRIOR> 852,413
<ACCUMULATED-NII-CURRENT> 1,382
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (567,707)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (3,757,302)
<NET-ASSETS> 19,760,168
<DIVIDEND-INCOME> 738,383
<INTEREST-INCOME> 25,323
<OTHER-INCOME> 0
<EXPENSES-NET> 493,819
<NET-INVESTMENT-INCOME> 269,887
<REALIZED-GAINS-CURRENT> (304,802)
<APPREC-INCREASE-CURRENT> 370,010
<NET-CHANGE-FROM-OPS> 335,095
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 60,016
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 12,354
<NUMBER-OF-SHARES-SOLD> 575,358
<NUMBER-OF-SHARES-REDEEMED> 631,083
<SHARES-REINVESTED> 7,766
<NET-CHANGE-IN-ASSETS> (755,932)
<ACCUMULATED-NII-PRIOR> (39,826)
<ACCUMULATED-GAINS-PRIOR> (264,140)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 200,605
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 599,904
<AVERAGE-NET-ASSETS> 7,001,999
<PER-SHARE-NAV-BEGIN> 8.61
<PER-SHARE-NII> 0.08
<PER-SHARE-GAIN-APPREC> (0.02)
<PER-SHARE-DIVIDEND> 0.08
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0.01
<PER-SHARE-NAV-END> 8.58
<EXPENSE-RATIO> 2.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 061
<NAME> IVY LATIN AMERICA STRATEGY
FUND-CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END>
DEC-31-1995
<PERIOD-START>
JAN-01-1995
<PERIOD-END>
DEC-31-1995
<INVESTMENTS-AT-COST>
2,438,050
<INVESTMENTS-AT-VALUE>
2,267,292
<RECEIVABLES>
111,983
<ASSETS-OTHER>
334,754
<OTHER-ITEMS-ASSETS>
0
<TOTAL-ASSETS>
2,714,029
<PAYABLE-FOR-SECURITIES>
0
<SENIOR-LONG-TERM-DEBT>
0
<OTHER-ITEMS-LIABILITIES>
15,386
<TOTAL-LIABILITIES>
15,386
<SENIOR-EQUITY>
0
<PAID-IN-CAPITAL-COMMON>
2,910,979
<SHARES-COMMON-STOCK>
292,626
<SHARES-COMMON-PRIOR>
68,192
<ACCUMULATED-NII-CURRENT>
0
<OVERDISTRIBUTION-NII>
0
<ACCUMULATED-NET-GAINS>
(41,578)
<OVERDISTRIBUTION-GAINS>
0
<ACCUM-APPREC-OR-DEPREC>
(170,758)
<NET-ASSETS>
2,698,643
<DIVIDEND-INCOME>
34,819
<INTEREST-INCOME>
0
<OTHER-INCOME>
0
<EXPENSES-NET>
34,466
<NET-INVESTMENT-INCOME>
353
<REALIZED-GAINS-CURRENT>
(42,053)
<APPREC-INCREASE-CURRENT>
(56,614)
<NET-CHANGE-FROM-OPS>
(98,314)
<EQUALIZATION>
0
<DISTRIBUTIONS-OF-INCOME>
0
<DISTRIBUTIONS-OF-GAINS>
0
<DISTRIBUTIONS-OTHER>
7,792
<NUMBER-OF-SHARES-SOLD>
442,664
<NUMBER-OF-SHARES-REDEEMED>
219,064
<SHARES-REINVESTED>
834
<NET-CHANGE-IN-ASSETS>
2,005,208
<ACCUMULATED-NII-PRIOR>
0
<ACCUMULATED-GAINS-PRIOR>
(4,250)
<OVERDISTRIB-NII-PRIOR>
0
<OVERDIST-NET-GAINS-PRIOR>
0
<GROSS-ADVISORY-FEES>
14,343
<INTEREST-EXPENSE>
0
<GROSS-EXPENSE>
135,694
<AVERAGE-NET-ASSETS>
988,683
<PER-SHARE-NAV-BEGIN>
8.37
<PER-SHARE-NII>
0.01
<PER-SHARE-GAIN-APPREC>
(1.45)
<PER-SHARE-DIVIDEND>
0
<PER-SHARE-DISTRIBUTIONS>
0
<RETURNS-OF-CAPITAL>
0.05
<PER-SHARE-NAV-END>
6.88
<EXPENSE-RATIO>
2.20
<AVG-DEBT-OUTSTANDING>
0
<AVG-DEBT-PER-SHARE>
0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 062
<NAME> IVY LATIN AMERICA STRATEGY FUND-CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 2,438,050
<INVESTMENTS-AT-VALUE> 2,267,292
<RECEIVABLES> 111,983
<ASSETS-OTHER> 334,754
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,714,029
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 15,386
<TOTAL-LIABILITIES> 15,386
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,910,979
<SHARES-COMMON-STOCK> 99,356
<SHARES-COMMON-PRIOR> 14,649
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (41,578)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (170,758)
<NET-ASSETS> 2,698,643
<DIVIDEND-INCOME> 34,819
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 34,466
<NET-INVESTMENT-INCOME> 353
<REALIZED-GAINS-CURRENT> (42,053)
<APPREC-INCREASE-CURRENT> (56,614)
<NET-CHANGE-FROM-OPS> (98,314)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 86,962
<NUMBER-OF-SHARES-REDEEMED> 2,256
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,005,208
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (4,250)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 14,343
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 135,694
<AVERAGE-NET-ASSETS> 359,517
<PER-SHARE-NAV-BEGIN> 8.37
<PER-SHARE-NII> (0.02)
<PER-SHARE-GAIN-APPREC> (1.47)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 6.88
<EXPENSE-RATIO> 2.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 071
<NAME> IVY NEW CENTURY FUND-CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END>
DEC-31-1995
<PERIOD-END>
DEC-31-1995
<INVESTMENTS-AT-COST>
3,755,288
<INVESTMENTS-AT-VALUE>
3,780,476
<RECEIVABLES>
82,704
<ASSETS-OTHER>
535,142
<OTHER-ITEMS-ASSETS>
0
<TOTAL-ASSETS>
4,398,322
<PAYABLE-FOR-SECURITIES>
0
<SENIOR-LONG-TERM-DEBT>
0
<OTHER-ITEMS-LIABILITIES>
17,633
<TOTAL-LIABILITIES>
17,633
<SENIOR-EQUITY>
0
<PAID-IN-CAPITAL-COMMON>
4,354,168
<SHARES-COMMON-STOCK>
379,620
<SHARES-COMMON-PRIOR>
70,715
<ACCUMULATED-NII-CURRENT>
0
<OVERDISTRIBUTION-NII>
0
<ACCUMULATED-NET-GAINS>
1,333
<OVERDISTRIBUTION-GAINS>
0
<ACCUM-APPREC-OR-DEPREC>
25,188
<NET-ASSETS>
4,380,689
<DIVIDEND-INCOME>
48,041
<INTEREST-INCOME>
0
<OTHER-INCOME>
0
<EXPENSES-NET>
46,497
<NET-INVESTMENT-INCOME>
1,544
<REALIZED-GAINS-CURRENT>
36,055
<APPREC-INCREASE-CURRENT>
112,073
<NET-CHANGE-FROM-OPS>
149,672
<EQUALIZATION>
0
<DISTRIBUTIONS-OF-INCOME>
1,544
<DISTRIBUTIONS-OF-GAINS>
28,547
<DISTRIBUTIONS-OTHER>
9,760
<NUMBER-OF-SHARES-SOLD>
347,829
<NUMBER-OF-SHARES-REDEEMED>
43,244
<SHARES-REINVESTED>
4,320
<NET-CHANGE-IN-ASSETS>
3,648,420
<ACCUMULATED-NII-PRIOR>
(556)
<ACCUMULATED-GAINS-PRIOR>
0
<OVERDISTRIB-NII-PRIOR>
0
<OVERDIST-NET-GAINS-PRIOR>
0
<GROSS-ADVISORY-FEES>
19,712
<INTEREST-EXPENSE>
0
<GROSS-EXPENSE>
144,689
<AVERAGE-NET-ASSETS>
1,555,144
<PER-SHARE-NAV-BEGIN>
8.64
<PER-SHARE-NII>
.01
<PER-SHARE-GAIN-APPREC>
.54
<PER-SHARE-DIVIDEND>
.01
<PER-SHARE-DISTRIBUTIONS>
.10
<RETURNS-OF-CAPITAL>
.03
<PER-SHARE-NAV-END>
9.05
<EXPENSE-RATIO>
2.20
<AVG-DEBT-OUTSTANDING>
0
<AVG-DEBT-PER-SHARE>
0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 072
<NAME> IVY NEW CENTURY FUND - CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 3,755,288
<INVESTMENTS-AT-VALUE> 3,780,476
<RECEIVABLES> 82,704
<ASSETS-OTHER> 535,142
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,398,322
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 17,633
<TOTAL-LIABILITIES> 17,633
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,354,168
<SHARES-COMMON-STOCK> 104,469
<SHARES-COMMON-PRIOR> 14,043
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,333
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 25,188
<NET-ASSETS> 4,380,689
<DIVIDEND-INCOME> 48,041
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 46,497
<NET-INVESTMENT-INCOME> 1,544
<REALIZED-GAINS-CURRENT> 36,055
<APPREC-INCREASE-CURRENT> 112,073
<NET-CHANGE-FROM-OPS> 149,672
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 7,427
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 95,175
<NUMBER-OF-SHARES-REDEEMED> 5,547
<SHARES-REINVESTED> 798
<NET-CHANGE-IN-ASSETS> 3,648,420
<ACCUMULATED-NII-PRIOR> (556)
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 19,712
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 144,689
<AVERAGE-NET-ASSETS> 416,352
<PER-SHARE-NAV-BEGIN> 8.64
<PER-SHARE-NII> (.02)
<PER-SHARE-GAIN-APPREC> .51
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .08
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.05
<EXPENSE-RATIO> 2.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 081
<NAME> IVY CANADA FUND-CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END>
DEC-31-1995
<PERIOD-START>
JAN-01-1995
<PERIOD-END>
DEC-31-1995
<INVESTMENTS-AT-COST>
22,637,621
<INVESTMENTS-AT-VALUE>
20,372,523
<RECEIVABLES>
30,430
<ASSETS-OTHER>
199,585
<OTHER-ITEMS-ASSETS>
0
<TOTAL-ASSETS>
20,602,538
<PAYABLE-FOR-SECURITIES>
0
<SENIOR-LONG-TERM-DEBT>
0
<OTHER-ITEMS-LIABILITIES>
107,964
<TOTAL-LIABILITIES>
107,964
<SENIOR-EQUITY>
0
<PAID-IN-CAPITAL-COMMON>
22,485,604
<SHARES-COMMON-STOCK>
2,101,262
<SHARES-COMMON-PRIOR>
2,618,567
<ACCUMULATED-NII-CURRENT>
(185,467)
<OVERDISTRIBUTION-NII>
0
<ACCUMULATED-NET-GAINS>
459,535
<OVERDISTRIBUTION-GAINS>
0
<ACCUM-APPREC-OR-DEPREC>
(2,265,098)
<NET-ASSETS>
20,494,574
<DIVIDEND-INCOME>
111,480
<INTEREST-INCOME>
37,112
<OTHER-INCOME>
0
<EXPENSES-NET>
562,421
<NET-INVESTMENT-INCOME>
(413,829)
<REALIZED-GAINS-CURRENT>
1,423,512
<APPREC-INCREASE-CURRENT>
20,707
<NET-CHANGE-FROM-OPS>
1,030,390
<EQUALIZATION>
0
<DISTRIBUTIONS-OF-INCOME>
0
<DISTRIBUTIONS-OF-GAINS>
519,054
<DISTRIBUTIONS-OTHER>
0
<NUMBER-OF-SHARES-SOLD>
926,528
<NUMBER-OF-SHARES-REDEEMED>
1,490,048
<SHARES-REINVESTED>
46,215
<NET-CHANGE-IN-ASSETS>
(3,542,056)
<ACCUMULATED-NII-PRIOR>
0
<ACCUMULATED-GAINS-PRIOR>
(478,598)
<OVERDISTRIB-NII-PRIOR>
0
<OVERDIST-NET-GAINS-PRIOR>
0
<GROSS-ADVISORY-FEES>
96,041
<INTEREST-EXPENSE>
0
<GROSS-EXPENSE>
625,887
<AVERAGE-NET-ASSETS>
18,312,557
<PER-SHARE-NAV-BEGIN>
8.90
<PER-SHARE-NII>
(0.19)
<PER-SHARE-GAIN-APPREC>
0.75
<PER-SHARE-DIVIDEND>
0
<PER-SHARE-DISTRIBUTIONS>
0.25
<RETURNS-OF-CAPITAL>
0
<PER-SHARE-NAV-END>
9.21
<EXPENSE-RATIO>
2.90
<AVG-DEBT-OUTSTANDING>
0
<AVG-DEBT-PER-SHARE>
0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 082
<NAME> IVY CANADA FUND-CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 22,637,621
<INVESTMENTS-AT-VALUE> 20,372,523
<RECEIVABLES> 30,430
<ASSETS-OTHER> 199,585
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 20,602,538
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 107,964
<TOTAL-LIABILITIES> 107,964
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 22,485,604
<SHARES-COMMON-STOCK> 123,983
<SHARES-COMMON-PRIOR> 83,254
<ACCUMULATED-NII-CURRENT> 185,467
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 459,535
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (2,265,098)
<NET-ASSETS> 20,494,574
<DIVIDEND-INCOME> 111,480
<INTEREST-INCOME> 37,112
<OTHER-INCOME> 0
<EXPENSES-NET> 562,421
<NET-INVESTMENT-INCOME> (413,829)
<REALIZED-GAINS-CURRENT> 1,423,512
<APPREC-INCREASE-CURRENT> 20,707
<NET-CHANGE-FROM-OPS> 1,030,390
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 23,912
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 73,447
<NUMBER-OF-SHARES-REDEEMED> 35,009
<SHARES-REINVESTED> 2,291
<NET-CHANGE-IN-ASSETS> (3,542,056)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (478,598)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 96,041
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 625,887
<AVERAGE-NET-ASSETS> 1,125,265
<PER-SHARE-NAV-BEGIN> 8.90
<PER-SHARE-NII> (0.20)
<PER-SHARE-GAIN-APPREC> 0.71
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0.20
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.21
<EXPENSE-RATIO> 3.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 091
<NAME> IVY GLOBAL FUND-CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END>
DEC-31-1995
<PERIOD-END>
DEC-31-1995
<INVESTMENTS-AT-COST>
23,985,788
<INVESTMENTS-AT-VALUE>
26,132,152
<RECEIVABLES>
238,864
<ASSETS-OTHER>
47,366
<OTHER-ITEMS-ASSETS>
0
<TOTAL-ASSETS>
26,418,382
<PAYABLE-FOR-SECURITIES>
97,497
<SENIOR-LONG-TERM-DEBT>
0
<OTHER-ITEMS-LIABILITIES>
245,677
<TOTAL-LIABILITIES>
343,174
<SENIOR-EQUITY>
0
<PAID-IN-CAPITAL-COMMON>
23,921,114
<SHARES-COMMON-STOCK>
1,776,808
<SHARES-COMMON-PRIOR>
1,721,751
<ACCUMULATED-NII-CURRENT>
53,270
<OVERDISTRIBUTION-NII>
0
<ACCUMULATED-NET-GAINS>
13,394
<OVERDISTRIBUTION-GAINS>
0
<ACCUM-APPREC-OR-DEPREC>
2,087,430
<NET-ASSETS>
26,075,208
<DIVIDEND-INCOME>
659,633
<INTEREST-INCOME>
39,237
<OTHER-INCOME>
0
<EXPENSES-NET>
555,380
<NET-INVESTMENT-INCOME>
143,490
<REALIZED-GAINS-CURRENT>
998,646
<APPREC-INCREASE-CURRENT>
1,607,787
<NET-CHANGE-FROM-OPS>
2,749,923
<EQUALIZATION>
0
<DISTRIBUTIONS-OF-INCOME>
71,425
<DISTRIBUTIONS-OF-GAINS>
827,783
<DISTRIBUTIONS-OTHER>
120,215
<NUMBER-OF-SHARES-SOLD>
2,228,655
<NUMBER-OF-SHARES-REDEEMED>
2,247,642
<SHARES-REINVESTED>
74,044
<NET-CHANGE-IN-ASSETS>
3,792,079
<ACCUMULATED-NII-PRIOR>
(13,860)
<ACCUMULATED-GAINS-PRIOR>
0
<OVERDISTRIB-NII-PRIOR>
0
<OVERDIST-NET-GAINS-PRIOR>
0
<GROSS-ADVISORY-FEES>
239,963
<INTEREST-EXPENSE>
0
<GROSS-EXPENSE>
617,622
<AVERAGE-NET-ASSETS>
20,333,177
<PER-SHARE-NAV-BEGIN>
11.23
<PER-SHARE-NII>
.09
<PER-SHARE-GAIN-APPREC>
1.25
<PER-SHARE-DIVIDEND>
.04
<PER-SHARE-DISTRIBUTIONS>
.49
<RETURNS-OF-CAPITAL>
.07
<PER-SHARE-NAV-END>
11.97
<EXPENSE-RATIO>
2.20
<AVG-DEBT-OUTSTANDING>
0
<AVG-DEBT-PER-SHARE>
0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 092
<NAME> IVY GLOBAL FUND-CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END>
DEC-31-1995
<PERIOD-END>
DEC-31-1995
<INVESTMENTS-AT-COST>
23,985,788
<INVESTMENTS-AT-VALUE>
26,132,152
<RECEIVABLES>
238,864
<ASSETS-OTHER>
47,366
<OTHER-ITEMS-ASSETS>
0
<TOTAL-ASSETS>
26,418,382
<PAYABLE-FOR-SECURITIES>
97,497
<SENIOR-LONG-TERM-DEBT>
0
<OTHER-ITEMS-LIABILITIES>
245,677
<TOTAL-LIABILITIES>
343,174
<SENIOR-EQUITY>
0
<PAID-IN-CAPITAL-COMMON>
23,921,114
<SHARES-COMMON-STOCK>
402,023
<SHARES-COMMON-PRIOR>
263,339
<ACCUMULATED-NII-CURRENT>
53,270
<OVERDISTRIBUTION-NII>
0
<ACCUMULATED-NET-GAINS>
13,394
<OVERDISTRIBUTION-GAINS>
0
<ACCUM-APPREC-OR-DEPREC>
2,087,430
<NET-ASSETS>
26,075,208
<DIVIDEND-INCOME>
659,633
<INTEREST-INCOME>
39,237
<OTHER-INCOME>
0
<EXPENSES-NET>
555,380
<NET-INVESTMENT-INCOME>
143,490
<REALIZED-GAINS-CURRENT>
998,646
<APPREC-INCREASE-CURRENT>
1,607,787
<NET-CHANGE-FROM-OPS>
2,749,923
<EQUALIZATION>
0
<DISTRIBUTIONS-OF-INCOME>
0
<DISTRIBUTIONS-OF-GAINS>
170,863
<DISTRIBUTIONS-OTHER>
24,814
<NUMBER-OF-SHARES-SOLD>
424,399
<NUMBER-OF-SHARES-REDEEMED>
300,410
<SHARES-REINVESTED>
14,695
<NET-CHANGE-IN-ASSETS>
3,792,079
<ACCUMULATED-NII-PRIOR>
(13,860)
<ACCUMULATED-GAINS-PRIOR>
0
<OVERDISTRIB-NII-PRIOR>
0
<OVERDIST-NET-GAINS-PRIOR>
0
<GROSS-ADVISORY-FEES>
239,963
<INTEREST-EXPENSE>
0
<GROSS-EXPENSE>
617,622
<AVERAGE-NET-ASSETS>
3,663,084
<PER-SHARE-NAV-BEGIN>
11.23
<PER-SHARE-NII>
0
<PER-SHARE-GAIN-APPREC>
1.25
<PER-SHARE-DIVIDEND>
0
<PER-SHARE-DISTRIBUTIONS>
.45
<RETURNS-OF-CAPITAL>
.06
<PER-SHARE-NAV-END>
11.97
<EXPENSE-RATIO>
2.95
<AVG-DEBT-OUTSTANDING>
0
<AVG-DEBT-PER-SHARE>
0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 101
<NAME> IVY BOND FUND-CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 109,078,672
<INVESTMENTS-AT-VALUE> 111,645,840
<RECEIVABLES> 2,639,485
<ASSETS-OTHER> 77,024
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 114,362,349
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 338,937
<TOTAL-LIABILITIES> 338,937
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 118,697,394
<SHARES-COMMON-STOCK> 11,124,202
<SHARES-COMMON-PRIOR> 12,233,828
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (7,241,150)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,567,168
<NET-ASSETS> 114,023,412
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 9,772,593
<OTHER-INCOME> 0
<EXPENSES-NET> 1,771,515
<NET-INVESTMENT-INCOME> 8,001,078
<REALIZED-GAINS-CURRENT> (2,940,340)
<APPREC-INCREASE-CURRENT> 13,121,035
<NET-CHANGE-FROM-OPS> 18,181,773
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7,254,790
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 1,327,021
<NUMBER-OF-SHARES-SOLD> 1,092,290
<NUMBER-OF-SHARES-REDEEMED> 2,753,354
<SHARES-REINVESTED> 551,438
<NET-CHANGE-IN-ASSETS> 1,371,803
<ACCUMULATED-NII-PRIOR> 9,511
<ACCUMULATED-GAINS-PRIOR> (4,733,433)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 848,778
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,774,130
<AVERAGE-NET-ASSETS> 109,535,439
<PER-SHARE-NAV-BEGIN> 9.01
<PER-SHARE-NII> 0.67
<PER-SHARE-GAIN-APPREC> 0.84
<PER-SHARE-DIVIDEND> 0.63
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0.11
<PER-SHARE-NAV-END> 9.78
<EXPENSE-RATIO> 1.54
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 102
<NAME> IVY BOND FUND-CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 109,078,672
<INVESTMENTS-AT-VALUE> 111,645,840
<RECEIVABLES> 2,639,485
<ASSETS-OTHER> 77,024
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 114,362,349
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 338,937
<TOTAL-LIABILITIES> 338,937
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 118,697,394
<SHARES-COMMON-STOCK> 529,796
<SHARES-COMMON-PRIOR> 268,606
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (7,241,150)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,567,168
<NET-ASSETS> 114,023,412
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 9,772,593
<OTHER-INCOME> 0
<EXPENSES-NET> 1,771,515
<NET-INVESTMENT-INCOME> 8,001,078
<REALIZED-GAINS-CURRENT> (2,940,340)
<APPREC-INCREASE-CURRENT> 13,121,035
<NET-CHANGE-FROM-OPS> 18,181,773
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 213,541
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 47,497
<NUMBER-OF-SHARES-SOLD> 359,904
<NUMBER-OF-SHARES-REDEEMED> 119,296
<SHARES-REINVESTED> 20,582
<NET-CHANGE-IN-ASSETS> 1,371,803
<ACCUMULATED-NII-PRIOR> 9,511
<ACCUMULATED-GAINS-PRIOR> (4,733,433)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 848,778
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,774,130
<AVERAGE-NET-ASSETS> 3,635,891
<PER-SHARE-NAV-BEGIN> 9.01
<PER-SHARE-NII> 0.60
<PER-SHARE-GAIN-APPREC> 0.84
<PER-SHARE-DIVIDEND> 0.56
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0.11
<PER-SHARE-NAV-END> 9.78
<EXPENSE-RATIO> 2.29
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<RESTATED>
<SERIES>
<NUMBER> 103
<NAME> IVY BOND FUND - CLASS I
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 109,078,672
<INVESTMENTS-AT-VALUE> 111,645,840
<RECEIVABLES> 2,639,485
<ASSETS-OTHER> 77,024
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 114,362,349
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 338,937
<TOTAL-LIABILITIES> 338,937
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 118,697
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (7,241,150)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,567,168
<NET-ASSETS> 114,023,412
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 9,772,593
<OTHER-INCOME> 0
<EXPENSES-NET> 1,771,515
<NET-INVESTMENT-INCOME> 8,001,078
<REALIZED-GAINS-CURRENT> (2,940,340)
<APPREC-INCREASE-CURRENT> 13,121,035
<NET-CHANGE-FROM-OPS> 18,181,773
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,371,803
<ACCUMULATED-NII-PRIOR> 9,511
<ACCUMULATED-GAINS-PRIOR> (4,733,433)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 848,778
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,774,130
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 111
<NAME> IVY INTERNATIONAL BOND FUND - CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 112
<NAME> IVY INTERNATIONAL BOND FUND - CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 113
<NAME> IVY INTERNATIONAL BOND FUND - CLASS I
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
