As filed with the Securities and Exchange Commission on
May 3,
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. 86 [ 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
C. William Ferris
Mackenzie Investment Management Inc.
Via Mizner Financial Plaza
700 South Federal Highway - Suite 300
Boca Raton, Florida 33432
(Name and Address of Agent for Service)
Copies to:
Joseph R. Fleming, Esq.
Dechert Price & Rhoads
Ten Post Office Square, South - Suite 1230
Boston, MA 02109
[ X ] It is proposed that this Post-Effective
Amendment
become effective seventy-five (75) days after
filing
pursuant to subparagraph (a)(2) 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. 86 IS BEING FILED
SOLELY IN
ORDER TO ADD A NEW SERIES TO THE REGISTRANT, DESIGNATED
AS IVY
GLOBAL SCIENCE & TECHNOLOGY FUND. AS SUCH, THE
PROSPECTUS AND
STATEMENT OF ADDITIONAL INFORMATION THAT ARE INCLUDED
IN THIS
POST-EFFECTIVE AMENDMENT NO. 86 ARE TO BE USED
CONCURRENTLY WITH
AND SEPARATELY FROM EACH PROSPECTUS AND STATEMENT OF
ADDITIONAL
INFORMATION FOR THE OTHER 13 SERIES OFFERED BY THE
REGISTRANT,
WHICH ARE INCORPORATED BY REFERENCE TO THIS FILING.
IVY FUND
CROSS REFERENCE SHEET
Post-Effective Amendment No. 86 contains the
Prospectus and
Statement of Additional Information to be used with Ivy
Global
Science & Technology Fund, one of the fourteen series
of Ivy Fund
(the "Registrant"). The other thirteen series of the
Registrant
are described in five separate prospectuses and
statements of
additional information, which are not included herewith
but are
incorporated by reference herein.
Items Required by Form N-1A
PART A:
1 COVER PAGE: Cover Page
2 SYNOPSIS: Not Applicable
3 CONDENSED FINANCIAL INFORMATION: Schedule of Fees
4 GENERAL DESCRIPTION OF REGISTRANT: Investment
Objectives
and Policies; Risk Factors and Investment
Techniques
5 MANAGEMENT OF THE FUND: Organization and
Management of the
Fund; 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 the
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: 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 July
____, 1996
IVY GLOBAL SCIENCE & TECHNOLOGY FUND
Ivy Fund (the "Trust") is a registered investment
company
currently consisting of fourteen separate portfolios.
One of
these portfolios, Ivy Global Science & Technology Fund,
is
described in this Prospectus.
This Prospectus sets forth concisely the
information about
the Fund that a prospective investor should know before
investing. Please read it carefully and retain it for
future
reference. Additional information about the Fund is
contained in
the Statement of Additional Information for the Fund
dated July
____,1996 (the "SAI"), which has been filed with the
Securities
and Exchange Commission ("SEC") 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 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
Expense Information . . . . . . . . . . . . . . . . . .
. . . . .
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 . . . .
. . . . .
Qualifying for a Reduced Sales Charge . . . . . . . . .
. . . . .
Contingent Deferred Sales Charge Alternative-
Class B and Class C Shares . . . . . . . . . . . .
. . . . .
How to Redeem Share . . . . . . . . . . . . . . . . . .
. . . . .
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. Ivy Mackenzie
Services
Paul H. Broyhill 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
_______________________
J. Brendan Swan
_______________________
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 Ivy Mackenzie
Distributors,
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
EXPENSE INFORMATION
The tables and examples below are designed to
assist you in
understanding the various costs and expenses that you
will bear
directly or indirectly as an investor in the Fund. The
information is based on estimate amounts for the
current fiscal
year.
SHAREHOLDER TRANSACTION EXPENSES
MAXIMUM
MAXIMUM
CONTINGENT
SALES LOAD
DEFERRED
IMPOSED ON
SALES CHARGE
PURCHASES
(AS A % OF
(AS A % OF
ORIGINAL
OFFERING
PURCHASE
PRICE)
PRICE)
Class A . . . . . . . . . . . . . 5.75%(1)
None(2)
Class B . . . . . . . . . . . . . None
5.00%(3)
Class C . . . . . . . . . . . . . None
1.00%(4)
Class I . . . . . . . . . . . . . None
None
The Fund does not charge a redemption fee, an exchange
fee, or a
sales load on reinvested dividends.
(1) Class A shares 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 ("CDSC") 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 CDSC 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 CDSC on Class C shares applies to redemptions
during the
first year after purchase.
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
TOTAL FUND
OTHER
OPERATING
EXPENSES
EXPENSES
12B-1 (AFTER
(AFTER
SERVICE/ EXPENSE
EXPENSE
MANAGE- DISTRIBU- REIMBURSE-
REIMBURSE-
MENT FEES TION FEES MENTS)(2)
MENTS)(1)
Class A . . . 1.00% 0.25% 0.95%
2.20%
Class B . . . 1.00% 1.00%(3) 0.95%
2.95%
Class C(1) . 1.00% 1.00%(3) 0.95%
2.95%
Class I . . . 1.00% 0.00% 0.86%(4)
1.86%
__________
(1) Ivy Management, Inc. ("IMI") currently limits
Total Fund
Operating Expenses (excluding Rule 12b-1 fees) to
an annual
rate of 1.95% of the Fund's average net assets.
Without
reimbursements, "Other Expenses" and "Total Fund
Operating
Expenses" may increase, but are subject to a
maximum of
1.50% and 2.50% (excluding Rule 12b-1 fees),
respectively,
the highest expense ratio currently allowed under
state
securities laws.
(2) The "Other Expenses" of the Fund are based on
estimated
amounts for the current fiscal year.
(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 Rules of
Fair
Practice of the National Association of Securities
Dealers,
Inc. ("NASD").
(4) The "Other Expenses" of Class I of the Fund are
lower than
corresponding expenses for the Fund's other
classes because
Class I shares bear lower fees than Class A, Class
B and
Class C shares.
EXAMPLES
The following table lists the expenses that an
investor
would pay on a $1,000 investment, assuming (1) 5%
annual return
and (2) unless 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"*** remain the
same each
year. THE EXAMPLES SHOULD NOT BE CONSIDERED A
REPRESENTATION OF
PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE HIGHER
OR LOWER
THAN THOSE SHOWN.
1 YEAR
3 YEARS
Class A Shares* . . . . . . . . . . . . . . $79
$122
Class B Shares . . . . . . . . . . . . . . $80(1)
$121(2)
Class B Shares (no redemption) . . . . . . $30
$91
Class C Shares . . . . . . . . . . . . . . $40(3)
$91
Class C Shares (no redemption) . . . . . . $30
$91
Class I Shares** . . . . . . . . . . . . . $19
$58
__________
* Assumes deduction of the maximum 5.75% initial
sales charge
at the time of purchase and no deduction of a CDSC
at the
time of redemption.
** Class I Shares are not subject to an initial sales
charge at
the time of purchase, nor are they subject to the
deduction
of a CDSC at the time of redemption.
*** Based on Total Fund Operating Expenses net of
expense
reimbursements. See the "Annual Fund Operating
Expenses
Table," above.
(1) Assumes deduction of a 5% CDSC at the time of
redemption.
(2) Assumes deduction of a 3% CDSC at the time of
redemption.
(3) Assumes deduction of a 1% CDSC at the time of
redemption.
The information presented in the tables does not
reflect the
charge of $10 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 Fund's
fees and
expenses, see the following sections of this
Prospectus:
"Organization and Management of the Fund," "Initial
Sales Charge
Alternative -- Class A Shares" and "Contingent Deferred
Sales
Charge Alternative -- Class B and Class C Shares," and
"Investment Advisory and Other Services" in the SAI.
INVESTMENT OBJECTIVES AND POLICIES
The Fund's principal investment objective is
long-term
capital growth. Any income realized will be
incidental. The
Fund's investment objective is fundamental and may not
be changed
without the approval of a majority of the Fund's
outstanding
voting shares (as defined under the Investment Company
Act of
1940). Except for the 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 the Fund's objective will be met. The
different
types of securities and investment techniques used by
the Fund
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
the 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.
Under normal conditions, the Fund will invest at
least 65%
of total assets in the common stock of companies of any
size,
domiciled in at least three different nations
(including the
United States), that are expected to benefit from the
development, advancement and use of science and
technology.
Industries likely to be represented in the Fund's
portfolio
include computers and peripheral products, software,
electronic
components and systems, telecommunications, media and
information
services, pharmaceuticals, hospital supply and medical
devices,
biotechnology, environmental services, chemicals and
synthetic
materials, and defense and aerospace. The Fund may
also invest
in companies that are expected to benefit indirectly
from the
commercialization of technological and scientific
advances. In
recent years, rapid advances in these industries have
stimulated
unprecedented growth. While this is no guarantee of
future
performance, IMI believes that these industries offer
substantial
opportunities for long-term capital appreciation.
Although the Fund generally invests in common
stock, it may
also invest in preferred stock, securities convertible
into
common stock, sponsored or unsponsored American
Depository
Receipts ("ADRs") and investment-grade debt securities
(i.e.,
those rated Baa or higher by Moody's Investor Services
Inc.
("Moody's") or BBB or higher by Standard & Poor's
Corporation
("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
also
invest less up to 5% of its net assets in debt
securities that
are 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. (A description of the ratings assigned
by
Moody's and S&P is contained in Appendix A to the SAI).
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
total assets in other investment companies and
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 on
stock indices
and on individual securities, provided the premium paid
for such
options does not exceed 10% of the value 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 may
sell 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 the value of
its total
assets.
RISK FACTORS AND INVESTMENT TECHNIQUES
BANK OBLIGATIONS: The bank obligations in which
the Fund
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
the
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. The
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 Fund 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
involves both interest rate and credit risk. Generally,
the value
of debt instruments rises and falls inversely with
fluctuations
in 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. Securities rated Ba or
lower by
Moody's or BB or lower by S&P, 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
should be willing to accept the special risks
associated with
these securities.
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.
FOREIGN SECURITIES: The foreign securities in
which the
Fund invests may include non-U.S. dollar-denominated
securities,
Eurodollar securities, sponsored or unsponsored
American
Depository Receipts ("ADRs") and debt securities
issued, assumed
or guaranteed by foreign governments (or political
subdivisions
or instrumentalities thereof). In recent years, many
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. In order for
these
emerging economies to continue to expand and develop
industry,
infrastructure and currency reserves, continued influx
of capital
is essential. 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.
However,
investors should consider carefully the special risks
that arise
in connection with investing in securities issued by
companies
and governments of foreign nations (especially in
countries with
emerging or developing economies), which are in
addition to those
risks that are associated with the Fund's investments,
generally.
In many foreign countries (especially in emerging
market
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
Fund 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 market
countries
(e.g., in Latin America and parts of Europe).
Generally, price
fluctuations in the Fund's 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 taxation, foreign
exchange
controls (which may include suspension of the ability
to transfer
currency from a given country), difficulties in
pricing, 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
Fund's foreign
investments.
The risks of investing in foreign securities are
likely to
be intensified in the case of investments in issuers
domiciled or
doing substantial business in emerging market
countries. 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 the 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.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS: The 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 the Fund
converts
assets from one currency to another. The Fund may also
be
affected unfavorably by fluctuations in 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.
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 the 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.
INDUSTRY CONCENTRATION: Because the Fund normally
focuses
its investments in science and technology-related
industries, the
value of the Fund's shares may be more susceptible to
factors
affecting those industries and to greater market
fluctuation than
a fund whose portfolio holdings are more diverse. For
example,
rapid advances in these industries tend to render
existing
products obsolete. In addition, many companies in
which the Fund
is likely to invest are subject to government
regulations and
approval of their products and services, which may
affect their
overall profitability and cause their stock prices to
be more
volatile. In selecting the Fund's portfolio of
investments, IMI
will consider each company's ability to create new
products,
secure any necessary regulatory approvals, and generate
sufficient customer demand. A company's failure to
perform well
in any one of these areas, however, could cause its
stock to
decline sharply.
LENDING OF PORTFOLIO SECURITIES: Loans of
securities by the
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 Fund 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 Fund's
securities.
These techniques may involve derivative transactions
such as
purchasing put and call options, selling put and call
options,
and engaging in transactions in currency rate futures,
stock
index futures and related options.
The Fund may invest in options on stock indices
and on
individual 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.
The 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.
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 the Fund if IMI
judges
market conditions incorrectly or employs a strategy
that does not
correlate well with the Fund's investments. The 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 the 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.
The 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. The 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 the 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, the Fund will bear its ratable
share of
the investment company's expenses (including management
fees, in
the case of a management investment company).
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.
Small
companies also tend to have limited product lines,
markets or
financial resources. Transaction costs in smaller
company stocks
also may be higher than those of larger companies.
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, and are
considered
speculative investments. For example, if a warrant
were not
exercised by the date of its expiration, the Fund would
lose its
entire investment. The Fund's investments in warrants
will not
exceed 5% of the value of its net assets.
"WHEN-ISSUED" SECURITIES AND FIRM COMMITMENTS:
Purchasing
securities on a "when-issued" or firm commitment 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 the 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 FUND
The Fund is 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 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 14 separate portfolios. The Fund has four
classes
of shares, designated as Class A, Class B, Class C and
Class I.
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 Fund
investments. Each class of shares, except for Class I,
has a
different Rule 12b-1 distribution plan 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.
The Trust employs IMI to provide business
management and
investment advisory services to the Fund. Mackenzie
Investment
Management Inc. ("MIMI") provides administrative and
accounting
services, Ivy Mackenzie Distributors, Inc. ("IMDI")
distributes
the Fund's shares, and Ivy Mackenzie Services Corp.
("IMSC")
provides transfer agency and shareholder-related
services for the
Fund. IMI, IMDI and IMSC are wholly-owned subsidiaries
of MIMI.
As of ______________, IMI and MIMI had approximately
$____
billion 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
For IMI's business management and investment
advisory
services, the Fund pays IMI a fee, which is accrued
daily and
paid monthly, based on the Fund's average daily net
assets, at an
annual rate of 1.00%. The fees paid by the Fund are
higher than
those charged by many funds that invest primarily in
U.S.
securities, but not necessarily higher than the fees
charged to
funds with investment objectives similar to those of
the Fund.
Currently, 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
total return. This voluntary expense limitation may be
terminated
at any time, at which point the Fund's expenses may
increase and
its total return may be reduced.
IMI pays all expenses that it incurs in rendering
management
services to the Fund. The 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 the Fund if its aggregate operating
expenses
exceed certain limitations).
PORTFOLIO MANAGEMENT: The following individuals
have
responsibility for managing the Fund's assets:
- James W. Broadfoot, an Executive Vice President
and Chief
Investment Officer of IMI, is the portfolio
manager for the
Fund. Prior to joining the organization in 1990,
Mr.
Broadfoot was the principal in an investment
counsel firm
specializing in small capitalization companies.
Mr.
Broadfoot has 24 years of professional investment
experience, and is a Chartered Financial Analyst.
He has an
MBA from The Wharton School of the University of
Pennsylvania.
- Michael G. Landry is the President and a
Director of IMI
and MIMI and the President and a Trustee of the
Trust. Mr.
Landry joined the organization in 1987. Previously
he was a
Senior Vice President and portfolio manager with
the
Templeton organization. Mr. Landry has over 20
years of
professional investment experience, and has a
degree in
economics from Carleton University.
- Barbara Trebbi is a Senior Vice President of IMI
and
managing director of the Ivy emerging markets
research team.
Ms. Trebbi joined the organization in 1988 and has
eight
years of professional investment experience. She
is a
Chartered Financial Analyst and holds a Graduate
Diploma
from the London School of Economics. In addition
to Ms.
Trebbi, the Ivy emerging markets research team is
comprised
of Frank DuMond, who has a Bachelor of Science
degree from
the Massachusetts Institute of Technology; Justin
Lu,
located in Shanghai, who is a graduate of Shanghai
International University; and Moira McLachlan, who
earned
her degree in international business from the
University of
South Carolina.
FUND ADMINISTRATION AND ACCOUNTING
MIMI provides various administrative services for
the Fund,
such as assisting with the preparation of Federal and
state
income tax returns, 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
average net assets attributable to the Fund's Class A,
Class B
and Class C shares are subject to a fee, accrued daily
and paid
monthly, at an annual rate of 0.10%. The average net
assets
attributable to the Fund's Class I shares are subject
to a fee at
an annual rate of 0.01%.
MIMI also provides certain accounting and pricing
services
for the Fund (see "Fund Accounting Services" in the SAI
for more
information).
TRANSFER AGENT
IMSC is the transfer and dividend-paying agent for
the Fund,
and also provides certain shareholder-related services.
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
IMSC if the individual accounts that comprise the
omnibus account
were opened by their beneficial owners directly (see
"Investment
Advisory and Other Services" in the SAI).
ALTERNATIVE PURCHASE ARRANGEMENTS
CLASS A SHARES: Class A shares are subject to an
initial
sales charge, unless the amount you purchase is
$500,000 or more
(see "Contingent Deferred Sales Charge -- Class A
Shares").
Certain purchases 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 the
Fund's average 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 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 the
Fund's average 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 the 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 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 fees
than Class
A, Class B and Class C shares.
FACTORS TO CONSIDER IN CHOOSING AN ALTERNATIVE:
The multi-
class structure of the Fund 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
Distributions you receive from the Fund are
reinvested in
additional shares of the same class unless you elect
to receive
them in cash. 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 and Class I shares.
The 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 Internal Revenue Code of 1986, as
amended
(the "Code").
TAXATION: The following discussion is intended
for general
information only. You should consult with your 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.
The Fund intends to qualify annually 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 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. If a
portion of the 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, 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.
If, for any year, the 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/her shares
(thereby
increasing potential gain or reducing potential loss on
the sale
of 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 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.
Investments in securities that are issued at a
discount will
result each year in income to the 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 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
Internal Revenue
Service ("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.
Fund distributions may be subject to state, local
and
foreign taxes. Distributions of the 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 the 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 Fund's 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
the 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 the 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 the
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 the Fund's shareholders
are
reflected in the "current distribution rate," which is
computed
by dividing the total amount of dividends per share
paid by the
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
OPENING AN ACCOUNT: Complete and sign the Account
Application on the last page of this Prospectus. Make
your check
payable to Ivy Fund. No third party checks will be
accepted.
Deliver these items to your registered representative
or selling
broker, or send them to one of the addresses below:
Regular Mail:
IVY MACKENZIE SERVICES CORP.
P.O. BOX 3022
BOCA RATON, FL 33431-0922
Courier:
IVY MACKENZIE SERVICES CORP.
700 SOUTH FEDERAL HIGHWAY, SUITE 300
BOCA RATON, FL 33432
The Fund reserves the right to reject, for any
reason, any
purchase order.
MINIMUM INVESTMENT POLICIES: The minimum initial
investment
is $1,000; the minimum additional investment is $100.
Initial or
additional amounts for retirement accounts may be less
(see
"Retirement Plans").
Accounts in Class I 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 may
be spread
over the thirteen-month period following the opening of
the
account.
BUYING ADDITIONAL SHARES: You may add to your
account at
any time through any of the following options:
BY MAIL: Complete the investment slip attached to
your
statement, or write instructions including the account
registration, Fund number and account number of the
shares you
wish to purchase. Send your check (payable to the Fund
in which
you are investing), along with your investment slip or
written
instructions, to one of the addresses above.
THROUGH YOUR BROKER: Deliver the investment slip
attached
to your statement, or written instructions, along with
your
payment to your registered representative or selling
broker.
BY WIRE: Purchases may also be made by wiring
money from
your bank account to your Ivy account. Your bank may
charge a fee
for wiring funds. Before wiring any funds, please call
IMSC at 1-
800-777-6472. Wiring instructions are as follows:
FIRST UNION NATIONAL BANK OF FLORIDA
JACKSONVILLE, FL
ABA#063000021
ACCOUNT #2090002063833
FOR FURTHER CREDIT TO:
YOUR IVY ACCOUNT REGISTRATION
YOUR FUND NUMBER AND ACCOUNT NUMBER
BY AUTOMATIC INVESTMENT METHOD: Complete Sections
6A and 7B
on the Account Application (see "Automatic Investment
Method" on
page 25 for more information).
HOW YOUR PURCHASE PRICE IS DETERMINED
Your purchase price for Class A shares of the Fund
is the
net asset value ("NAV") 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, Class C and Class I shares
is the
NAV 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 IMSC or by your registered
securities dealer
prior to the time of the determination of the NAV. Any
orders
received after the time of the determination of the NAV
will be
entered at the next calculated price.
Orders placed with a securities dealer before the
NAV is
determined that are transmitted through the facilities
of the
National Securities Clearing Corporation 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 THE FUND VALUES ITS SHARES
The NAV per share is the value of one share. The
NAV is
determined for each Class of shares as of the close of
the New
York Stock Exchange on each day the Exchange is open by
dividing
the value of the Fund's net assets attributable to a
class by the
number of shares of that class that are outstanding,
adjusted to
the nearest cent. These procedures are described more
completely
in the SAI.
The Trust's Board of Trustees has established
procedures to
value the Fund's securities in order to determine the
NAV. The
value of a foreign security is determined 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 New York Stock
Exchange, if
that is earlier. 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. 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 the Fund are valued at amortized cost.
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
PERCEN- PERCEN-
OFFERING
TAGE TAGE
PRICE
OF PUBLIC OF NET
RETAINED
OFFERING AMOUNT
BY
AMOUNT INVESTED PRICE INVESTED
DEALER
Less than $50,000 . . . . . . . 5.75% 6.10%
5.00%
$50,000 but less than $100,000
5.25% 5.54% 4.50%
$100,000 but less than $250,000
4.50% 4.71% 3.75%
$250,000 but less than $500,000
3.00% 3.09% 2.50%
$500,000 or over* . . . . . . . 0.00% 0.00%
0.00%
* 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 or
capital
gains that are reinvested in additional shares of the
Fund. An
investor may be charged a transaction fee for Class A
and Class I
shares purchased or redeemed at NAV through a broker or
agent
other than IMDI.
With respect to purchases of $500,000 or more
through
dealers or agents, IMDI 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 as set forth below:
NAV COMMISSION TABLE
PURCHASE AMOUNT
COMMISSION
First $3,000.00 . . . . . . . . . . . . . . . . .
1.00%
Next $2,000.00 . . . . . . . . . . . . . . . . .
.50%
Over $5,000.00 . . . . . . . . . . . . . . . . .
.25%
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.
IMDI compensates participating brokers who sell
Class A
shares through the initial sales charge. IMDI 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, IMDI 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 Class A
distribution plans,
IMDI currently pays a continuing service fee to
qualified dealers
at an annual rate of 0.25% of qualified investments.
IMDI may from time to time pay a bonus or other
incentive to
dealers (other than IMDI) which employ a registered
representative who sells a minimum dollar amount of the
shares of
the Fund and/or other funds distributed by IMDI 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 U.S. 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 the 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 or capital gains 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) (i.a) following retirement
under a tax
qualified retirement plan, or (i.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. IMDI 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 new 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 the Fund, then you qualify for the reduced
sales
charge. To reduce or eliminate the sales charge, you
must
complete Section 4B of the 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
the Fund. The LOI may be backdated up to 90 days. To
sign an LOI,
please complete Section 4B of the 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 the 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 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 IMDI (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 or 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 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
the Fund through the aforementioned channels.
Class A shares of the 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. A CDSC of 1.00% will be imposed on
such
purchases in the event of certain plan-level 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 the
Fund, IMDI may, at the time of purchase, pay the dealer
out of
IMDI's own resources a commission to compensate the
dealer for
its distribution assistance in connection with the
retirement
plan's investment. Please refer to the NAV Commission
Table on
page 20 of this Prospectus. Please contact IMDI 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 IMDI (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, IMDI may pay commissions to dealers that provide
distribution assistance on the same basis as in the
preceding
paragraph.
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.
The 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 IMDI has a selling relationship.
This
privilege will apply only to Class A Shares of the 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 IMDI.
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 IMDI 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. 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 dividends or capital gains reinvested. 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 capital gains, and next
from the
shares you have held the longest during the requisite
holding
period.
Proceeds from the CDSC are paid to IMDI. The
proceeds are
used, in whole or in part, to defray its expenses
related to
providing the 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 the 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. In the
case of Class C shares, solely for purposes of
determining this
holding period, any purchases you make during a month
will be
deemed to have been made on the last day of the month.
CONTINGENT
DEFERRED
SALES CHARGE
AS A
PERCENTAGE OF
DOLLAR AMOUNT
CLASS B SHARES
SUBJECT TO
YEAR SINCE PURCHASE
CHARGE
First . . . . . . . . . . . . . . . . . . . . . 5%
Second . . . . . . . . . . . . . . . . . . . . 4%
Third . . . . . . . . . . . . . . . . . . . . . 3%
Fourth . . . . . . . . . . . . . . . . . . . . 3%
Fifth . . . . . . . . . . . . . . . . . . . . . 2%
Sixth . . . . . . . . . . . . . . . . . . . . . 1%
Seventh and thereafter . . . . . . . . . . . . 0%
IMDI 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, IMDI 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. IMDI 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
Fund's Class
B and Class C shares, IMDI bears various promotional
and sales
related expenses, including the cost of printing and
mailing
prospectuses to persons other than shareholders. Under
the Fund's
Class B Plan, IMDI 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,
IMDI 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 the 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) (i.a) following
retirement
under a tax qualified retirement plan, or (i.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. IMDI may
require
documentation prior to waiver of the CDSC.
ARRANGEMENTS WITH BROKER-DEALERS AND OTHERS: IMDI
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 IMDI. 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 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 or by telephone. 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. If you own shares of more than one class
of the
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, 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. See "Signature Guarantees,"
below.
If you are not certain of the requirements for a
redemption,
please contact IMSC 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 IMSC.
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
account
registration, fund number, the account number
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, unincorporated associations,
retirement
plan trustees or others acting in
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 IMSC at one of the addresses
on page 18
of this Prospectus.
BY TELEPHONE: Individual and joint accounts may
redeem up
to $50,000 per day over the telephone by contacting
IMSC 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, 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 the registered representative's
assistant.
Shares held in certificate form cannot be redeemed
by
telephone.
If Section 6E of the 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 do so
on your behalf, you must notify IMSC 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.
RECEIVING YOUR PROCEEDS BY FEDERAL FUNDS WIRE:
For
shareholders who established this feature at the time
they opened
their account, telephone instructions will be accepted
for
redemption of amounts up to $50,000 ($1,000 minimum)
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 IMSC
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
redemption proceeds are wired to your bank. Your bank
may also
charge you a fee for receiving a Federal Funds wire.
Neither IMSC 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 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 IMSC at
1-800-777-6472 for
more information.
CHOOSING A DISTRIBUTION OPTION
You have the option of selecting the distribution
option
that best suits your needs:
AUTOMATIC REINVESTMENT OPTION -- Both dividends
and capital
gains are automatically reinvested at NAV in additional
shares of
the same class of the Fund unless you specify one of
the other
options.
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.
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 the Fund or
another Ivy or
Mackenzie Fund of the same class.
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
("EFT"), or if you wish to change your distribution
option,
please contact IMSC at 1-800-777-6472.
If you wish to have your cash distributions go to
an address
other than the address of record, you must provide IMSC
with a
letter of instruction signed by all registered owners
with
signatures guaranteed.
TAX IDENTIFICATION NUMBER
In general, to avoid being subject to a 31% U.S.
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 IRS. 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 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 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 IMSC
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, contact IMSC 1-800-777-6472.
EXCHANGE PRIVILEGE
Shareholders of the Fund have an exchange
privilege with
other Ivy and Mackenzie funds. The Fund reserves the
right to
reject, for any reason, any exchange orders.
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 shares for Class B (or Class C) shares of
another Ivy
or Mackenzie Fund on the basis of the relative NAV per
share,
without the payment of any CDSC that would otherwise be
due upon
redemption. 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.
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. The Fund reserves the right to
limit the
frequency of exchanges. 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: If Section 6D of the
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 do so on your behalf, you
must notify
IMSC in writing.
In order to execute an exchange, please contact
IMSC 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 or the dollar amount you wish
to
exchange.
The request must be signed by all registered
owners.
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 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 IMSC 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 IMSC 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, semiannually, 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 EFT, at no charge. Share certificates
must be
unissued (i.e., held by the 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 IMSC 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 IMSC 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
by
completing Sections 6A and 7B of the Account
Application. Attach
a "voided" check or deposit slip to your account
application. At
pre-specified intervals, your bank account will be
debited and
the proceeds will be credited to your Ivy account. The
minimum
investment under this plan is $50 per month ($25 per
month for
retirement plans). 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 IMSC 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
having the same taxpayer I.D. number 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), Money Purchase Pension and Profit
Sharing Plans
- SEP-IRA (Simplified Employee Pension Plan)
- 403(b)(7) Plan
Minimum initial and subsequent investments for
retirement
plans are $25.
Investors Bank & Trust, which serves as custodian
or trustee
under the retirement plan prototypes available from the
Fund,
charges certain nominal fees for annual maintenance. A
portion of
these fees is remitted to IMSC, as compensation for its
services
to the retirement plan accounts maintained with the
Fund.
Distributions from retirement plans are subject to
certain
requirements under the Code. Certain documentation,
including IRS
Form W4-P, must be provided to IMSC prior to taking any
distribution. Please contact IMSC for details. The Ivy
and
Mackenzie family of funds and IMSC 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 or tax adviser.
Please call IMSC 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
IMSC at
1-800-777-6472.
IVY GLOBAL SCIENCE & TECHNOLOGY FUND
series of
IVY FUND
Via Mizner Financial Plaza, Suite 300
700 South Federal Highway
Boca Raton, Florida 33432
STATEMENT OF ADDITIONAL INFORMATION
July ____, 1996
_________________________________________________________________
Ivy Fund (the "Trust") is a diversified, open-end
management
investment company that currently consists of fourteen
fully
managed portfolios. This Statement of Additional
Information
("SAI") describes one of the portfolios, Ivy Global
Science &
Technology Fund (the "Fund"). The other thirteen
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 July
____,
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
Ivy Mackenzie Distributors, Inc.
Via Mizner Financial Plaza, Suite 300
700 South Federal Highway
Boca Raton, Florida 33432
Telephone: (800) 456-5111
TABLE OF CONTENTS
INVESTMENT OBJECTIVE AND POLICIES . . . . . . . . . . .
. . . 4
BANKING INDUSTRY AND SAVINGS AND LOAN OBLIGATIONS
. . . 4
U.S. GOVERNMENT SECURITIES . . . . . . . . . . . .
. . . 5
INVESTMENT-GRADE DEBT SECURITIES . . . . . . . . .
. . . 6
HIGH YIELD BONDS . . . . . . . . . . . . . . . . .
. . . 6
FOREIGN SECURITIES . . . . . . . . . . . . . . . .
. . . 7
INVESTING IN EMERGING MARKETS . . . . . . . .
. . . 8
FORWARD FOREIGN CURRENCY CONTRACTS . . . . . . . .
. . . 9
FOREIGN CURRENCIES . . . . . . . . . . . . . . . .
. . . 10
INDUSTRY CONCENTRATION . . . . . . . . . . . . . .
. . . 11
REPURCHASE AGREEMENTS . . . . . . . . . . . . . .
. . . 11
SMALL COMPANIES . . . . . . . . . . . . . . . . .
. . . 12
WARRANTS . . . . . . . . . . . . . . . . . . . . .
. . . 12
ZERO COUPON BONDS . . . . . . . . . . . . . . . .
. . . 12
OPTIONS TRANSACTIONS . . . . . . . . . . . . . . .
. . . 13
GENERAL . . . . . . . . . . . . . . . . . . .
. . . 13
WRITING OPTIONS ON INDIVIDUAL SECURITIES . .
. . . 14
PURCHASING OPTIONS ON INDIVIDUAL SECURITIES .
. . . 15
PURCHASING AND WRITING OPTIONS ON SECURITIES
INDICES . . . . . . . . . . . . . . . .
. . . 15
RISKS OF OPTIONS TRANSACTIONS . . . . . . . .
. . . 16
SECURITIES INDEX FUTURES CONTRACTS . . . . . . . .
. . . 17
RISKS OF SECURITIES INDEX FUTURES . . . . . .
. . . 18
COMBINED TRANSACTIONS . . . . . . . . . . . . . .
. . . 20
FIRM COMMITMENT AGREEMENTS AND WHEN-ISSUED
SECURITIES . 20
RESTRICTED AND ILLIQUID SECURITIES . . . . . . . .
. . . 20
LOANS OF PORTFOLIO SECURITIES . . . . . . . . . .
. . . 21
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . .
. . . 21
ADDITIONAL RESTRICTIONS . . . . . . . . . . . . . . . .
. . . 23
ADDITIONAL RIGHTS AND PRIVILEGES . . . . . . . . . . .
. . . 25
AUTOMATIC INVESTMENT METHOD . . . . . . . . . . .
. . . 25
EXCHANGE OF SHARES . . . . . . . . . . . . . . . .
. . . 26
INITIAL SALES CHARGE SHARES . . . . . . . . .
. . . 26
CONTINGENT DEFERRED SALES CHARGE SHARES . . .
. . . 26
LETTER OF INTENT . . . . . . . . . . . . . . . . .
. . . 29
RETIREMENT PLANS . . . . . . . . . . . . . . . . .
. . . 30
INDIVIDUAL RETIREMENT ACCOUNTS . . . . . . .
. . . 30
QUALIFIED PLANS . . . . . . . . . . . . . . .
. . . 32
DEFERRED COMPENSATION FOR PUBLIC SCHOOLS AND
CHARITABLE ORGANIZATIONS ("403(B)(7)
ACCOUNT") . . . . . . . . . . . . . . .
. . . 33
SIMPLIFIED EMPLOYEE PENSION ("SEP") IRAS . .
. . . 33
REINVESTMENT PRIVILEGE . . . . . . . . . . . . . .
. . . 33
RIGHTS OF ACCUMULATION . . . . . . . . . . . . . .
. . . 34
SYSTEMATIC WITHDRAWAL PLAN . . . . . . . . . . . .
. . . 35
GROUP SYSTEMATIC INVESTMENT PROGRAM . . . . . . .
. . . 35
BROKERAGE ALLOCATION . . . . . . . . . . . . . . . . .
. . . 36
TRUSTEES AND OFFICERS . . . . . . . . . . . . . . . . .
. . . 38
PERSONAL INVESTMENTS BY EMPLOYEES OF IMI . . . . .
. . . 42
COMPENSATION TABLE . . . . . . . . . . . . . . . . . .
. . . 42
INVESTMENT ADVISORY AND OTHER SERVICES . . . . . . . .
. . . 44
BUSINESS MANAGEMENT AND INVESTMENT ADVISORY
SERVICES . . 44
DISTRIBUTION SERVICES . . . . . . . . . . . . . .
. . . 46
RULE 18F-3 PLAN . . . . . . . . . . . . . . .
. . . 47
RULE 12B-1 DISTRIBUTION PLANS . . . . . . . .
. . . 47
CUSTODIAN . . . . . . . . . . . . . . . . . . . .
. . . 49
FUND ACCOUNTING SERVICES . . . . . . . . . . . . .
. . . 50
TRANSFER AGENT AND DIVIDEND PAYING AGENT . . . . .
. . . 50
ADMINISTRATOR . . . . . . . . . . . . . . . . . .
. . . 50
AUDITORS . . . . . . . . . . . . . . . . . . . . .
. . . 51
CAPITALIZATION AND VOTING RIGHTS . . . . . . . . . . .
. . . 51
NET ASSET VALUE . . . . . . . . . . . . . . . . . . . .
. . . 53
PORTFOLIO TURNOVER . . . . . . . . . . . . . . . . . .
. . . 54
REDEMPTIONS . . . . . . . . . . . . . . . . . . . . . .
. . . 55
CONVERSION OF CLASS B SHARES . . . . . . . . . . . . .
. . . 56
TAXATION . . . . . . . . . . . . . . . . . . . . . . .
. . . 57
OPTIONS, FUTURES AND FOREIGN CURRENCY FORWARD
CONTRACTS . . . . . . . . . . . . . . . . . .
. . . 58
CURRENCY FLUCTUATIONS -- "SECTION 988" GAINS OR
LOSSES
. . . . . . . . . . . . . . . . . . . . . .
. . . 59
INVESTMENT IN PASSIVE FOREIGN INVESTMENT COMPANIES
. . . 60
DEBT SECURITIES ACQUIRED AT A DISCOUNT . . . . . .
. . . 60
DISTRIBUTIONS . . . . . . . . . . . . . . . . . .
. . . 62
DISPOSITION OF SHARES . . . . . . . . . . . . . .
. . . 62
FOREIGN WITHHOLDING TAXES . . . . . . . . . . . .
. . . 63
BACKUP WITHHOLDING . . . . . . . . . . . . . . . .
. . . 64
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . .
. . . 64
AVERAGE ANNUAL TOTAL RETURN . . . . . . . . .
. . . 65
OTHER QUOTATIONS, COMPARISONS AND GENERAL
INFORMATION . . . . . . . . . . . . . .
. . . 66
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . .
. . . 67
APPENDIX A
DESCRIPTION OF STANDARD & POOR'S CORPORATION
("S&P")
AND MOODY'S SHAREHOLDERS SERVICE, INC. ("MOODY'S")
CORPORATE BOND AND COMMERCIAL PAPER RATINGS . . .
. . . 68
INVESTMENT OBJECTIVE AND POLICIES
The Fund has its own investment objective and
policies,
which are described in the Prospectus under the
captions
"Investment Objective and Policies" and "Risk Factors
and
Investment Techniques." Additional information
regarding the
characteristics and risks associated with the Fund s
investment
techniques is set forth below.
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, the 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. The 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
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 that
the Fund may purchase.
BORROWING
Borrowing may exaggerate the effect on the 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
the 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. All borrowings
will be
repaid before any additional investments are made.
COMMERCIAL PAPER
Commercial paper represents short-term unsecured
promissory
notes issued in bearer form by bank holding companies,
corporations and finance companies. The Fund may
invest in
commercial paper that is rated A-1 by Standard & Poor's
Corporation ("S&P") or Prime-1 by Moody's Shareholders
Service,
Inc. ("Moody's") or, if not rated by Moody's or S&P, is
issued by
companies having an outstanding debt issue rated AAA or
AA by S&P
or Aaa or Aa by Moody's.
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.
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
principal 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).
HIGH YIELD BONDS
The Fund may invest in corporate debt securities
rated Ba or
lower by Moody's, or BB or lower by 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 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 that 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
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
value and liquidity of high yield bonds, especially in
a thinly
traded market. When secondary markets for high yield
securities
become comparatively less liquid, it may be more
difficult to
value the securities in light of the additional
research that may
be required, and elements of judgment may play a
greater role in
the valuation where objective and reliable data is less
widely
available. Prices for high yield bonds may also be
affected by
legislative and regulatory developments. (For example,
federal
rules currently require savings and loan institutions
to reduce
gradually their holdings of high yield bonds.)
FOREIGN SECURITIES
The Fund may invest in debt securities of foreign
issuers,
including non-U.S. dollar-denominated debt securities,
Eurodollar
securities, sponsored and unsponsored American
Depository
Receipts ("ADRs"), and debt securities issued, assumed
or
guaranteed by foreign governments or political
subdivisions or
instrumentalities thereof. Shareholders 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
Fund's domestic investments.
Although the 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 that
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
for U.S.
companies. 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 also be subject to higher
brokerage
costs than domestic securities transactions. The
foreign
securities markets of many of the countries in which
the Fund may
invest may also be smaller, less liquid and subject to
greater
price volatility than those in the United States. In
addition,
the Fund may encounter difficulties or be unable to
pursue legal
remedies and obtain judgment in foreign courts.
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 are
earning no return. The inability of the Fund to make
intended
security purchases due to settlement problems could
cause the
Fund to miss attractive investment opportunities.
Further, the
inability to dispose of portfolio securities due to
settlement
problems could result either in losses to the Fund
because of
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 the Fund's
portfolio
transactions. In addition, 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 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
the Fund
associated with the foregoing considerations through
investment
variation and continuous professional management.
INVESTING IN EMERGING MARKETS. 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 the
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 the 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 are
exposed to
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, the
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 the
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 the 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"), with
respect to
the custody of the Fund's cash and securities, the
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 also be increased in such
countries.
FORWARD FOREIGN CURRENCY CONTRACTS
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), and typically 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 the Fund may enter into forward contracts to
reduce
currency exchange risks, changes in currency exchange
rates may
result in poorer overall performance for the Fund than
if it had
not engaged in such transactions. Moreover, there may
be an
imperfect correlation between the Fund's portfolio
holdings of
securities denominated in a particular currency and
forward
contracts entered into by the Fund. An imperfect
correlation of
this type may prevent the Fund from achieving the
intended hedge
or expose the Fund to the risk of currency exchange
loss.
The Fund will not enter into or maintain a net
exposure to a
forward contract where the consummation of the contract
would
obligate the Fund to deliver an amount of currency that
exceeds
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.
To the extent required by applicable law, the Fund
will hold
liquid assets, such as cash, U.S. Government
securities, or other
appropriate high grade debt obligations, 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
position. 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. In addition, the Fund
may
temporarily hold funds in bank deposits in foreign
currencies
during the development of its various investment
programs. To
the extent this is so, 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. The Fund may also incur currency
conversion
costs. Although foreign exchange dealers do not charge
a fee for
conversion, they do realize a profit based on the
difference (or
"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 (see "Forward Foreign Currency Contracts,"
above).
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.
INDUSTRY CONCENTRATION
Because the Fund normally focuses its investments
in
particular industries, the value of the Fund's shares
may be more
susceptible to factors affecting those industries. For
example,
rapid scientific or technological advances in a
particular
industry are likely to render existing products in that
industry
obsolete. In addition, many companies are subject to
government
regulations that may limit rates of return and slow the
general
pace of development, causing increased competition
among such
companies and their stock prices to be more volatile.
REPURCHASE AGREEMENTS
Repurchase agreements are contracts under which
the 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"), the 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. The 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, the Fund could experience some delay in
obtaining
direct ownership of the underlying collateral and might
incur a
loss if the value of the security should decline, as
well as
costs in disposing of the security.
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.
WARRANTS
The holder of a warrant has the right, until the
warrant
expires, to purchase a given number of shares of a
particular
issuer at a specified price. Such investments can
provide a
greater potential for profit or loss than an equivalent
investment in the underlying security. However, prices
of
warrants do not necessarily move in tandem with the
prices of the
underlying securities, and are therefore considered
speculative
investments. Warrants pay no dividends and confer no
rights
other than a purchase option. Thus, if a warrant held
by the
Fund were not exercised by the date of its expiration,
the Fund
would lose the entire purchase price of the warrant.
ZERO COUPON BONDS
The Fund may purchase zero coupon bonds in
accordance with
the Fund's credit quality standards. Zero coupon bonds
are debt
obligations issued at a significant discount from face
value,
without any requirement for the periodic payment of
interest.
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 the 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.
However, this
may result in the Fund's having to sell portfolio
securities at a
time when it might otherwise choose not to do so, and
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 such
securities is subject to greater fluctuations in
response to
changing interest rates than the value of debt
obligations that
distribute income regularly.
OPTIONS TRANSACTIONS
GENERAL. The Fund may engage in transactions in
options on
securities and stock indices in accordance with its
stated
investment objective and policies. The 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 the 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 canceled
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.
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 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 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."
The 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
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 gain or loss, depending upon the 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
the Fund and
its counterparty (usually a securities dealer or a
financial
institution) with no clearing organization guarantee.
When the
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, the 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. The
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. The 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
the 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.
The Fund may write covered call options as
described in the
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 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. The Fund may purchase
call
options on individual securities only to effect a
"closing
purchase transaction."
As the writer of a call option, the 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 the 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. The
Fund may
purchase a put option on an underlying security that it
owns as a
defensive technique in order to protect against an
anticipated
decline in the value of the security. The 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
the Fund
must pay. These costs will reduce any profit the 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 the Fund for leverage purposes.
The 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, the 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.
The 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.
The 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
the Fund to purchase options. The Fund may write
(sell) put
options on individual securities only to effect a
"closing sale
transaction."
PURCHASING AND WRITING OPTIONS ON SECURITIES
INDICES. The
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 the 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 its custodian liquid assets, such as cash, U.S.
Government
securities, or other appropriate high grade debt
obligations
equal to the contract value. A call option is also
covered if
the 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 its custodian
the
difference in liquid assets, such as cash, U.S.
Government
securities, or other appropriate high grade debt
obligations. A
put option is also "secured" if the 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 its
custodian the difference in liquid assets, such as
cash, U.S.
Government securities, or other appropriate high grade
debt
obligations.
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
the 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,
the 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 the Fund seeks to close out an option position.
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. 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 the
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, the Fund might be unable to close out an
OTC option
position at any time prior to its expiration. 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's options activities also may have an
impact upon
the level of its portfolio turnover and brokerage
commissions.
See "Portfolio Turnover."
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 and
securities markets, and to select the proper type, time
and
duration of options.
SECURITIES INDEX FUTURES CONTRACTS
The Fund may enter into securities index futures
contracts
as an efficient means of regulating the Fund's exposure
to the
equity markets. The 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 the 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, the Fund will
gain $2,000
(500 units x gain of $4). If the 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. The 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.
The 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.
Insofar as such securities do not duplicate the
components of an
index, the correlation probably will not be perfect.
Consequently, the 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 the Fund's portfolio diverges from the composition
of the
hedging instrument.
Although the 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, the 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,
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.
The 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. The 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, the
Fund will
maintain with its custodian in a segregated account
(and mark-to-
market on a daily basis) liquid assets, such as cash,
U.S.
Government securities, or other appropriate high grade
debt
obligations 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 held by the Fund.
When selling an index futures contract, the Fund
will
maintain with its custodian in a segregated account
(and mark-to-
market on a daily basis) liquid assets, such as cash,
U.S.
Government securities, or other appropriate high grade
debt
obligations 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).
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 the
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
New issues of certain debt securities are often
offered on a
"when-issued basis," meaning that 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 Fund
uses such
investment techniques in order to secure what is
considered to be
an advantageous price and yield to the Fund and not for
purposes
of leveraging the Fund's assets. In either instance,
the Fund
will maintain in a segregated account with its
custodian liquid
assets, such as cash, U.S. Government securities, or
other
appropriate high grade debt obligations equal (on a
daily marked-
to-market basis) to the amount of its commitment to
purchase the
underlying securities.
RESTRICTED AND ILLIQUID SECURITIES
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. Issuers of restricted securities may not be
subject to
the disclosure and other investor protection
requirements that
would apply if their securities were publicly traded.
There may
also 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 do so. If, during such a
period, adverse
market conditions were to develop, the Fund might
obtain a less
favorable price 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 monitor each
of its
investments in these securities, focusing on factors
such as
valuation, liquidity and availability of information.
This
investment practice could have the effect of increasing
the level
of illiquidity in the Fund to the extent that qualified
institutional buyers become, for a time, uninterested
in
purchasing these restricted securities.
LOANS OF PORTFOLIO SECURITIES
The Fund may lend its investment securities to
brokers,
dealers and financial institutions for the purpose of
realizing
additional income. Loans of securities by the 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
The 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 without the approval
of a
majority (as defined in the 1940 Act) of the Fund s
outstanding
voting shares. Under these restrictions, the Fund may
not:
(i) borrow money, except as a temporary measure
for
extraordinary or emergency purposes, and
provided that
the Fund maintains asset coverage of 300% for
all
borrowings;
(ii) purchase securities on margin;
(iii) sell securities short, except for short sales
"against
the box";
(iv) 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;
(v) participate in an underwriting or selling
group in
connection with the public distribution of
securities,
except for its own capital stock, and except
to the
extent that, in connection with the
disposition of
portfolio securities, it may be deemed to be
an
underwriter under the Federal securities
laws;
(vi) 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 1940 Act;
(vii) purchase or sell real estate or commodities
and
commodity contracts; provided, however, that
the Fund
may purchase securities secured by real
estate or
interests therein, or securities issued by
companies
that invest in real estate or interests
therein, and
except that, subject to the policies and
restrictions
set forth in the Prospectus and elsewhere in
this SAI,
(i) the Fund may enter into futures
contracts, and
options thereon, and (ii) the Fund may enter
into
forward foreign currency contracts and
currency futures
contracts, and options thereon;
(viii) 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;
(ix) 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; or
(x) 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.
Under the 1940 Act, the Fund is permitted, subject
to the
above investment restrictions, to borrow money only
from banks.
The Trust has no current intention of borrowing amounts
in excess
of 5% of the Fund's assets. The Fund will continue to
interpret
fundamental investment restriction (vii) 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.
ADDITIONAL RESTRICTIONS
Unless otherwise indicated, 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) 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;
(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;
(v) invest more than 5% of the value of its total
assets in
the securities of unseasoned issuers,
including their
predecessors, which have been in operation
for less
than three years;
(vi) 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;
(vii) 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
(viii) 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.
In addition to the above restrictions, so long as
it remains
a policy of the California Department of Corporations,
the Fund
may not purchase or sell OTC options on stock indices
unless (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 the 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, the
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. Finally,
with
respect to the investment restrictions set forth in
paragraphs
(v), (vii) and (viii) above, the Fund will notify
shareholders 30
days before changing its investment policies with
respect to any
of the investment practices described therein.
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 and (except as noted below) bears
the cost
of providing to investors the following rights and
privileges.
The Trust reserves the right to amend or terminate any
one or
more of these rights and privileges. Notice of
amendments to or
terminations of rights and privileges will be provided
to
shareholders in accordance with applicable law.
Certain of the rights and privileges described
below refer
to funds other than the Fund whose shares are
distributed by Ivy
Mackenzie Distributors, Inc. ("IMDI") (formerly known
as
Mackenzie Ivy Funds Distribution, Inc.). These funds
are: Ivy
Bond Fund, Ivy Growth Fund, Ivy Growth with Income
Fund, Ivy
Emerging Growth Fund, 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
thirteen 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 Fund,
the "Ivy
Mackenzie Funds"). Shareholders should obtain a
current
prospectus for these funds before exercising any right
or
privilege that may relate to them.
AUTOMATIC INVESTMENT METHOD
The Automatic Investment Method is available for
Class A,
Class B and Class C shares. 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). A
shareholder may terminate the Automatic Investment
Method at any
time upon delivery to Ivy Mackenzie Services Corp.
("IMSC")
(formerly known as Mackenzie Ivy Shareholder Services
Corp.) of
telephone instructions or written notice from the
shareholder.
See "Automatic Investment Method" in the Account
Application.
EXCHANGE OF SHARES
As described in the Prospectus, shareholders of
the Fund
have an exchange privilege with certain other Ivy
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 ("new
Class A
Shares") on the basis of the relative net asset value
per Class A
share, plus (in the case of funds other than Ivy Money
Market
Fund) 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
("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
period following an exchange if such schedule is higher
(or such
period is longer) than the CDSC period, if any,
applicable to the
new Class A shares.
For purposes of computing the CDSC that may be
payable upon
the redemption of the new Class A shares, the holding
period of
the outstanding Class A shares is "tacked" onto the
holding
period of the new Class A shares.
CLASS B: Class B shareholders may exchange their
Class B
shares ("outstanding Class B shares") for Class B
shares of
another 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 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 and 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. 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. 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.
ALL CLASSES. The minimum amount which may be
exchanged into
an Ivy Mackenzie Fund in which shares are not already
held is
$1,000. No exchange out of the Fund (other than by a
complete
exchange of all Fund shares) 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
legally be made.
Each exchange will be made on the basis of the
relative net
asset values per share of the Fund of the Ivy Mackenzie
Funds
next computed following receipt by IMSC of telephone
instructions
or a properly executed request. Exchanges, whether
written or
telephonic, must be received by IMSC by the close of
regular
trading on the Exchange (normally 4:00 p.m., eastern
time) to
receive the price computed on the day of receipt.
Exchange
requests received after that time will receive the
price next
determined following receipt of the request. The
exchange
privilege may be modified or terminated at any time,
upon at
least 60 days' notice to the extent required by
applicable law.
See "Redemptions."
An exchange of shares between any of the Ivy
Mackenzie Funds
will result in a taxable gain or loss. Generally, this
will be a
capital gain or loss (long-term or short-term,
depending on the
holding period of the shares) in the amount of the
difference
between the net asset value of the shares surrendered
and the
shareholder's tax basis for those shares. However, in
certain
circumstances, shareholders will be ineligible to take
sales
charges into account in computing taxable gain or loss
on an
exchange. See "Taxation."
With limited exceptions, gain realized by a
tax-deferred
retirement plan will not be taxable to the plan and
will not be
taxed to the participant until distribution. Each
investor
should consult his or her tax adviser regarding the tax
consequences of an exchange transaction.
LETTER OF INTENT
Reduced sales charges apply to initial investments
in
Class A shares of the 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 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,
as an accumulation credit, the value (at the applicable
offering
price) of all Class A shares of Ivy Bond Fund, Ivy
Emerging
Growth Fund, Ivy Global Fund, Ivy Growth Fund, Ivy
Growth with
Income Fund, Ivy International Bond Fund, Ivy
Short-Term Bond
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 (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. 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 IMDI
an amount
equal to the difference between the dollar amount of
sales charge
that he or she has paid and that which he or she would
have paid
on his or her aggregate purchases if the total of such
purchases
had been made at a single time. Such payment will be
made by an
automatic liquidation of Class A shares in the escrow
account. A
Letter of Intent does not obligate the investor to buy
or the
Trust to sell the indicated amount of Class A shares,
and the
investor should read carefully all the provisions
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 IMDI 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 IMSC, which may
impose a
charge for establishing the account. Individuals
should consult
their tax advisers before investing IRA assets in the
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
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 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
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
IMSC. The
Retirement Plan may be adopted as a profit sharing plan
or a
money purchase pension plan. A profit sharing plan
permits an
annual contribution to be made in an amount determined
each year
by the self-employed individual within certain limits
prescribed
by law. A money purchase pension plan requires annual
contributions at the level specified in the Custodial
Agreement.
There is no set-up fee for qualified plans and the
annual
maintenance fee is $20.00 per account.
In general, if a self-employed individual has any
common law
employees, employees who have met certain minimum age
and service
requirements must be covered by the Retirement Plan. A
self-
employed individual generally must contribute the same
percentage
of income for common law employees as for himself or
herself.
A self-employed individual may contribute up to
the lesser
of $30,000 or 25% of compensation or earned income to a
money
purchase pension plan or to a combination profit
sharing and
money purchase pension plan arrangement each year on
behalf of
each participant. To be deductible, total
contributions to a
profit sharing plan generally may not exceed 15% of the
total
compensation or earned income of all participants in
the plan,
and total contributions to a combination money
purchase-profit
sharing arrangement generally may not exceed 25% of the
total
compensation or earned income of all participants. The
amount of
compensation or earned income of any one participant
that may be
included in computing the deduction is limited
(generally to
$150,000 for benefits accruing in plan years beginning
after
1993, with annual inflation adjustments). A
self-employed
individual's contributions to a retirement plan on his
or her own
behalf must be deducted in computing his or her earned
income.
Corporate employers may also adopt the Custodial
Agreement
and Retirement Plan for the benefit of their eligible
employees.
Similar contribution and deduction rules apply to
corporate
employers.
Distributions from the Retirement Plan generally
are made
after a participant's separation from service. A 10%
penalty tax
generally applies to distributions to an individual
before he or
she reaches age 59-1/2, unless the individual (1) has
reached age
55 and separated from service; (2) dies; (3) becomes
disabled;
(4) uses the withdrawal to pay tax-deductible medical
expenses;
(5) takes the withdrawal as part of a series of
substantially
equal payments over his or her life expectancy or the
joint life
expectancy of himself or herself and a designated
beneficiary; or
(6) rolls over the distribution.
The Fund's 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 IMSC.
Distributions from the 403(b)(7) Account may be
made only
following death, disability, separation from service,
attainment
of age 59-1/2, or incurring a financial hardship. A
10% penalty
tax generally applies to distributions to an individual
before he
or she reaches age 59-1/2, unless the individual (1)
has reached
age 55 and separated from service; (2) dies or becomes
disabled;
(3) uses the withdrawal to pay tax-deductible medical
expenses;
(4) takes the withdrawal as part of a series of
substantially
equal payments over his or her life expectancy or the
joint life
expectancy of himself or herself and a designated
beneficiary; or
(5) rolls over the distribution. There is no set-up
fee for
403(b)(7) Accounts and the annual maintenance fee is
$20.00 per
account.
SIMPLIFIED EMPLOYEE PENSION ("SEP") IRAS: An
employer may
deduct contributions to a SEP up to the lesser of
$30,000 or 15%
of compensation. SEP accounts generally are subject to
all rules
applicable to IRA accounts, except the deduction
limits, and are
subject to certain employee participation requirements.
REINVESTMENT PRIVILEGE
Shareholders 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 IMSC
of the reinvestment order accompanied by the funds to
be
reinvested. No compensation will be paid to any sales
personnel
or dealer in connection with the transaction.
Any redemption is a taxable event. A loss
realized on a
redemption generally may be disallowed for tax purposes
if the
reinvestment privilege is exercised within 30 days
after the
redemption. In certain circumstances, shareholders
will be
ineligible to take sales charges into account in
computing
taxable gain or loss on a redemption if the
reinvestment
privilege is exercised. See "Taxation."
RIGHTS OF ACCUMULATION
A scale of reduced sales charges applies to any
investment
of $50,000 or more in Class A shares of the 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 IMDI, previously
purchased or
acquired and currently owned, determined at the higher
of current
offering price or amount invested, plus the Class A
shares being
purchased, amounts to $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, IMSC must
be notified
by the investor or his or her dealer that the
investment
qualifies for the reduced sales charge on the basis of
previous
investments. The reduced sales charge is subject to
confirmation
of the investor's holdings through a check of the
Fund's records.
SYSTEMATIC WITHDRAWAL PLAN
A shareholder may establish a Systematic
Withdrawal Plan (a
"Withdrawal Plan"), by telephone instructions or by
delivery to
IMSC of a written election to have his or her shares
withdrawn
periodically, accompanied by a surrender to IMSC of all
share
certificates then outstanding in the shareholder s
name, properly
endorsed by the shareholder. To be eligible to elect a
Withdrawal Plan, a shareholder must have at least
$5,000 in his
or her account. A Withdrawal Plan may not be
established if the
investor is utilizing the Automatic Investment Method.
A
Withdrawal Plan may involve the depletion of a
shareholder s
principal, depending on the amount withdrawn.
A redemption under a Withdrawal Plan is a taxable
event.
Shareholders contemplating participating in a
Withdrawal Plan
should consult their tax advisers.
Additional investments made by investors
participating in a
Withdrawal Plan must equal at least $1,000 each while
the
Withdrawal Plan is in effect. Making additional
purchases while
a Withdrawal Plan is in effect may be disadvantageous
to the
investor because of applicable initial sales charges or
CDSCs.
An investor may terminate his or her participation
in the
Withdrawal Plan at any time by delivering written
notice to IMSC.
If all shares held by the investor are liquidated at
any time,
participation in the Withdrawal Plan will terminate
automatically. The Trust or IMSC may terminate the
Withdrawal
Plan option at any time after reasonable notice to
shareholders.
GROUP SYSTEMATIC INVESTMENT PROGRAM
Shares of the 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 the 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
a purchase at any time or suspend the offering of
shares in
connection with group systematic investment programs,
and to
restrict the offering of shareholder privileges, such
as check
writing, simplified redemptions and other optional
privileges, 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) that the account is maintained.
The Trust
may collect this 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 the fee. The
Trust
reserves the right to change such 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
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 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 in servicing all of its accounts. In addition,
not all
of these services may be used by in connection with the
services
it provides 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.
The Fund may, under some circumstances, accept
securities in
lieu of cash as payment for Fund shares. The Fund will
accept
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
only accept securities 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: 72 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: 72 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
The Landmark Centre President,
Massengill-
113 Landmark Lane, DeFriece
Foundation
Suite B (charitable
organization)
Bristol, TN 37625 (1950-present);
Trustee and
Age: 75 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
Lyman Laboratory Physics, Harvard
of Physics University (since
1974);
Harvard University Trustee of Ivy
Fund (1961
Cambridge, MA 02138 -1991); Trustee
of
Age: 70 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
Boca Raton, FL 33432 Inc.
(1987-present);
Age: 49 President and
Director
[*Deemed to be an of Ivy
Management, Inc.
"interested person" (1992-present);
Chairman
of the Trust, as and Director of
defined under the Mackenzie Ivy
Investor
1940 Act.] 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,
737 Periwinkle Way and Ivy Management,
Inc.
Sanibel, FL 33957 Chairman (1984-1991);
Chairman
Age: 66 of the of the Board, Ivy
Fund
[*Deemed to be an Board (1974-present);
Private
"interested person" Investor.
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.
(1993-1996);
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.
(1993-1996);
President and
Director of
Mackenzie Ivy
Investor Services
Corp.
(1996-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 the requirements and
restrictions set
forth in IMI's Code of Ethics. The Code of Ethics is
designed to
identify and address certain conflicts of interest
between
personal investment activities and the interests of
investment
advisory clients such as the 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 10, 1996.
As of ______________________, 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 the Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
BUSINESS MANAGEMENT AND INVESTMENT ADVISORY SERVICES
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").
The Agreement was approved by the sole shareholder of
the Fund on
____________________, 1996. Before the sole
shareholder of the
Fund approved the Agreement, it was approved on behalf
of the
Fund by the 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 is a wholly owned subsidiary of MIMI,
which
currently acts as manager and investment adviser to the
following
registered investment companies: 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 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 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
accounts of the Fund in accordance with its best
judgment,
consistent with the Fund's investment objective and
restrictions
set forth in the Prospectus, the 1940 Act and the
provisions of
the Code relating to regulated investment companies,
and any
policy decisions adopted by the Board. 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 Fund
with
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 that 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
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.
For providing business management and investment
advisory
services, the Fund pays IMI a monthly fee at an annual
rate of
1.00% of the Fund's average daily net assets.
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 (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 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 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 1.95% 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, which could cause
the Fund's
expenses to increase and its yield to be reduced,
depending on
the total assets of the Fund when the termination
occurs.
The initial term of the Agreement between IMI the
Fund,
which is scheduled to commence operations on
__________________,
1996, will run for a period of two years from the date
of
commencement. The Agreement will continue in effect
with respect
to the Fund from year to year only so long as such
continuance is
specifically approved at least annually (i) by the vote
of a
majority of the Independent Trustees and (ii) either
(a) by the
vote of a majority of the outstanding voting securities
(as
defined in the 1940 Act) of 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 the vote
of a
majority of the 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
IMDI, a wholly owned subsidiary of MIMI, serves as
the
exclusive distributor of the Fund's 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"). The Distribution Agreement was last
approved by the
Board of Trustees on August 25, 1995. IMDI 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 IMDI. IMDI distributes shares
of the Fund
on a continuous basis, but reserves the right to
suspend or
discontinue distribution on that basis. IMDI is not
obligated to
sell any specific amount of Fund shares.
Pursuant to the Distribution Agreement, IMDI is
entitled to
deduct a commission on all classes of Fund shares sold
equal to
the difference, if any, between the public offering
price, as set
forth in the Fund s then-current prospectus, and the
net asset
value on which such price is based. Out of that
commission, IMDI
may reallow to dealers such concession as IMDI may
determine from
time to time. In addition, IMDI is entitled to deduct
a CDSC on
the redemption of Class A shares sold without an
initial sales
charge and Class B and Class C shares, in accordance
with, and in
the manner set forth in, the Prospectus.
Under the Distribution Agreement, 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. Since the
inception
date for the Fund is July ____, 1996, no payments have
been made
in connection with the sale of Fund shares as of the
date of this
SAI.
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 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 IMDI 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 IMDI. The Distribution Agreement
shall
terminate automatically in the event of its assignment.
RULE 18F-3 PLAN. On February 23, 1995, the SEC
adopted Rule
18f-3 under the 1940 Act, which permits a registered
open-end
investment company to issue multiple classes of shares
in
accordance with a written plan approved by the
investment
company's board of directors/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 the
other
thirteen series of the Trust (other than Ivy Short-Term
Bond
Fund), and at a meeting held on June 7-8, 1996, the
Board adopted
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. At a meeting held
on June 7-
8, 1996, the Trustees adopted on behalf of the Fund, in
accordance with Rule 12b-1 under the 1940 Act ("Rule
12b-1"),
separate distribution plans pertaining to the Fund s
Class A,
Class B and Class C shares (each, a "Plan"). In
adopting each
Plan, a majority of the Independent Trustees concluded,
in
accordance with the requirements of Rule 12b-1, that
there is a
reasonable likelihood that each Plan will benefit the
Fund and
its shareholders. The Trustees of the Trust believe
that each
Plan should result in greater sales and/or fewer
redemptions of
the Fund's shares, although it is impossible to know
for certain
the level of sales and redemptions of the Fund's shares
in the
absence of a Plan or under an alternative distribution
arrangement.
Under each Plan, the Fund pays IMDI a service fee,
accrued
daily and paid monthly, at the annual rate of up to
0.25% of the
average daily net assets attributable to its Class A
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
things, advising clients or customers regarding the
purchase,
sale or retention of Fund shares, 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 the Fund's Class A, Class B or Class C
shares
must be in reimbursement for services rendered for or
on behalf
of the affected class. The expenses not reimbursed in
any given
month may be reimbursed in a subsequent month. The
Class A Plan
does not provide for the payment of interest or
carrying charges
as distribution expenses.
Under the Fund s Class B and Class C Plans, the
Fund also
pays IMDI a distribution fee, accrued daily and paid
monthly, at
the annual rate of 0.75% of the average daily net
assets
attributable to its Class B or Class C shares. IMDI may
reallow
to dealers all or a portion of the service and
distribution fees
as IMDI may determine from time to time. The
distribution fee
compensates IMDI for expenses incurred in connection
with
activities primarily intended to result in the sale of
the Fund s
Class B or Class C shares, including the printing of
prospectuses
and reports for persons other than existing
shareholders and the
preparation, printing and distribution of sales
literature and
advertising materials. Pursuant to the Fund s Class B
and Class
C Plans, IMDI may include interest, carrying or other
finance
charges in its calculation of distribution expenses, if
not
prohibited from doing so pursuant to an order of or a
regulation
adopted by the SEC.
Among other things, each Plan provides that (1)
IMDI will
submit to the Board at least quarterly, and the
Trustees will
review, written reports regarding all amounts expended
under the
Plan and the purposes for which such expenditures were
made;
(2) it will continue in effect only so long as such
continuance
is approved at least annually, and any material
amendment thereto
is approved, by the vote of a majority of the Board,
including
the Independent Trustees, cast in person at a meeting
called for
that purpose; (3) payments by the 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
affected
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.
IMDI may make payments for distribution assistance
and for
administrative and accounting services from resources
that may
include the management fees paid by the Fund. IMDI
also may make
payments (such as the service fee payments described
above) to
unaffiliated broker-dealers for services rendered in
the
distribution of the 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 IMDI.
A report of the amount expended pursuant to each
Plan, and
the purposes for which such expenditures were incurred,
must be
made to the Board for its review at least quarterly.
Since the
inception date for the Fund is July ___, 1996, no
payments were
made in marketing Fund shares as of the date of this
SAI.
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
the amendment. Each Plan may be terminated at any time
with
respect to the class of shares to which the Plan
relates, without
payment of any penalty, by vote of a majority of the
Independent
Trustees, or by vote of a majority of the outstanding
voting
securities of the affected class.
If the Distribution Agreement or the Distribution
Plans are
terminated (or not renewed) with respect any of the Ivy
Mackenzie
Funds (or class of shares thereof), each may continue
in effect
with respect to any other fund (or class of shares
thereof) as to
which they have not been terminated (or have been
renewed).
CUSTODIAN
Pursuant to a Custodian Agreement with the Trust,
Brown
Brothers Harriman & Co. (the "Custodian"), a private
bank and
member of the principal securities exchanges, located
at 40 Water
Street, Boston, Massachusetts 02109, maintains custody
of the
assets of the 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. In accordance with
these
rules, the Custodian has entered into subcustodial
agreements for
the holding of the Fund's foreign securities. In
connection with
the services it provides on behalf of the Fund, the
Custodian 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 the Fund Accounting Services Agreement
with the
Trust, MIMI provides certain accounting and pricing
services for
the Fund. As compensation for these 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 with the Trust, IMSC, a wholly owned
subsidiary of
MIMI, is the transfer agent for the Fund. For these
services,
the Fund pays a monthly fee at an annual rate of $20.00
for each
open Class A, Class B and Class C account, and $10.25
for each
open Class I 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. 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 IMSC if
the
individual accounts that comprise the omnibus account
were opened
by their beneficial owners directly. IMSC pays such
broker-
dealers a per account fee for each open account within
the
omnibus account, or a fixed rate fee (e.g., .10%),
based on the
average daily net asset value of the omnibus account
(or a
combination thereof).
ADMINISTRATOR
Pursuant to an Administrative Services Agreement
with the
Trust, 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 the Fund's average
daily net
assets.
Outside of providing administrative services to
the Trust,
as described above, MIMI may also act on behalf of IMDI
in paying
commissions to broker-dealers with respect to sales of
the Fund s
Class B and Class C shares.
AUDITORS
[_______________________], independent certified
public
accountants, [Address], has been selected as auditors
for the
Trust. The audit services performed by
[_________________________] 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 funds' 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 of shares and to
divide any
series into one or more classes. The Trustees have
authorized
fourteen series, each of which represents a "fund."
The Trustees
have further authorized the issuance of Classes A, B
and C for
the 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 and Ivy New Century Fund, as well as
Classes A,
B and I for Ivy Short-Term Bond Fund; Class I for the
Fund, Ivy
Bond Fund and Ivy International 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 the 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 the Fund entitle their holders
to one
vote per share (with proportionate voting for
fractional shares).
Shareholders of the Fund are entitled to vote alone on
matters
that only affect the Fund. All classes of shares of
the Fund
will vote together, except with respect to the separate
distribution plans for the Fund's Class A, Class B and
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 the
funds. 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.
As used in this SAI and the Prospectus, the phrase
"majority
vote of the outstanding shares" of a fund means the
vote of the
lesser of: (1) 67% of the shares of the fund (or of
the Trust)
present at a meeting if the holders of more than 50% of
the
outstanding shares are present in person or by proxy;
or (2) more
than 50% of the outstanding shares of the fund (or of
the Trust).
With respect to the submission to shareholder vote
of a
matter requiring separate voting by the funds, the
matter shall
have been effectively acted upon with respect to each
fund if a
majority of the outstanding voting securities of each
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.
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 the Fund held
personally liable
for the obligations of the Fund. The risk of a
shareholder of
the Trust incurring financial loss on account of
shareholder
liability is limited to circumstances in which the
Trust itself
would be unable to meet its obligations and, thus,
should be
considered remote. No 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 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 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.
Money market instruments of the Fund are valued at
amortized
cost, which approximates money market value.
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 the 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, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
On any day when either or both of the Fund s Custodian
or the
Exchange close early as a result of that day being a
partial
holiday or otherwise, the Trust reserves the right 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 the
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 that it
has
purchased, the cost of the security that the Fund
purchased upon
exercise will be increased by the premium originally
paid.
The sale of Fund shares 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 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. A change in
securities
held by the 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. The 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 the
Fund's
portfolio turnover rate, 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 IMSC, less any applicable CDSC.
Unless a shareholder requests that the proceeds of
any
redemption be wired to his or her bank account, payment
for
shares tendered for redemption is made by check within
seven days
after tender in proper form, except that the 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 the 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
the Fund.
Under unusual circumstances, when the Board 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 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 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
instructions,
the 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
the 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
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 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.
The Fund intends to be taxed as a regulated
investment
company under Subchapter M of the Code. Accordingly,
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 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 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 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 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, the 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. The 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,
the 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, the
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 Fund in October, November or
December of the
year with a record date in such a month and paid by the
Fund
during January of the following year. Such
distributions will be
taxable to shareholders in the calendar year the
distributions
are declared, rather than the calendar year in which
the
distributions are received.
OPTIONS, FUTURES AND FOREIGN CURRENCY FORWARD CONTRACTS
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.
Some of the options, futures and foreign currency
forward
contracts in which the 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 the 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 the Fund may result in "straddles" for
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 consequences of such transactions to
the Fund
are not entirely clear. The straddle rules 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
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 the Fund's assets may limit the extent to
which the
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 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 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 the
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, the 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
The 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 the Fund receives
a so-
called "excess distribution" with respect to PFIC
stock, the Fund
itself may be subject to a tax on a portion of the
excess
distribution, whether or not the corresponding income
is
distributed by the Fund to shareholders. In general,
under the
PFIC rules, an excess distribution is treated as having
been
realized ratably over the period during which the Fund
held the
PFIC shares. The 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.
The Fund may be eligible to elect alternative tax
treatment
with respect to PFIC shares. Under an election that
currently is
available in some circumstances, the 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 the 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 the 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.
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.
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 the 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.
The 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 the
Fund may be treated as having acquisition discount, or
OID in the
case of certain types of debt securities. Generally,
the 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. The 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.
The 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 the Fund.
Cash to pay
such dividends may be obtained from sales proceeds of
securities
held by the 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 the 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 the 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 the
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 the Fund on the
distribution 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 generally will be taxable even though
it
represents a return of invested capital. Shareholders
should be
careful to consider the tax implications of buying
shares just
prior to a distribution. The price of shares purchased
at this
time may reflect the amount of the forthcoming
distribution.
Those purchasing just prior to a distribution will
receive a
distribution 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 the Fund, (2) the shares are disposed of
before the
91st day after the date on which they were acquired,
and (3) the
shareholder subsequently acquires shares in the Fund or
another
regulated investment company and the otherwise
applicable sales
charge is reduced under a "reinvestment right" received
upon the
initial purchase of Fund shares. The term
"reinvestment right"
means any right to acquire shares of one or more
regulated
investment companies without the payment of a sales
load or with
the payment of a reduced sales charge. Sales charges
affected by
this rule are treated as if they were incurred with
respect to
the shares acquired under the reinvestment right. This
provision
may be applied to successive acquisitions of fund
shares.
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 may 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 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 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 or her total foreign source taxable
income.
For this purpose, if the Fund makes the election
described in the
preceding paragraph, the source of the 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.
BACKUP WITHHOLDING
The Fund will be required to report to the
Internal Revenue
Service ("IRS") all taxable distributions, including
gross
proceeds from redemption of the Fund's shares, except
in the case
of certain exempt shareholders. All such distributions
will be
subject to withholding of Federal income tax at a rate
of 31%
("backup withholding") in the case of non-exempt
shareholders if
(1) the shareholder fails to furnish the Fund with and
to certify
the shareholder's correct taxpayer identification
number or
social security number, (2) the IRS notifies the
shareholder or
the Fund that the shareholder has failed to report
properly
certain interest and dividend income to the IRS and to
respond to
notices to that effect, or (3) when required to do so,
the
shareholder fails to certify that he or she is not
subject to
backup withholding. If the withholding provisions are
applicable, any such distributions or proceeds, whether
reinvested in additional shares or taken in cash, will
be reduced
by the amounts required to be withheld.
Distributions may also be subject to additional
state, local
and foreign taxes depending on each shareholder's
particular
situation. Non-U.S. shareholders may be subject to
U.S. tax
rules that differ significantly from those summarized
above.
This discussion does not purport to deal with all of
the tax
consequences applicable to the 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 the Fund.
PERFORMANCE INFORMATION
Comparisons of the 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.
The 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 the 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 the Fund will be expressed
in terms
of the average annual compounded rate of return that
would cause
a hypothetical investment in that class of the Fund
made on the
first day of a designated period to equal the ending
redeemable
value ("ERV") of such hypothetical investment on the
last day of
the designated period, according to the following
formula:
P(1 + T){superscript n} = ERV
Where: P = a hypothetical initial payment of
$1,000 to
purchase shares of a specific Class
T = the average annual total return of
shares of
that Class
n = the number of years
ERV = the ending redeemable value of a
hypothetical
$1,000 payment made at the
beginning of the
period.
For purposes of the above computation for 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 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 Fund do not take into account
any
required payments for federal or state income taxes.
Standardized Return quotations for Class B shares for
periods of
over eight years will reflect conversion of the Class B
shares to
Class A shares at the end of the eighth year.
Standardized
Return quotations are determined to the nearest 1/100
of 1%.
The 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.
In determining the average annual total return for
a
specific Class of 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
following computations is assumed to be the fee that
would be
charged to the mean account size of 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.
Performance quotations for 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 performance quotations should be considered
when
comparing performance information regarding the 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 the
Fund's shares
and the risks associated with the 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 Fund 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 Shareholder, International Fund Monitor,
Shareholder'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 Shareholder, No Load Fund* X,
Oakland
Tribune, Pension World, Pensions and Investment Age,
Personal
Shareholder, Rugg and Steele, Time, U.S. News and World
Report,
USA Today, The Wall Street Journal, and Washington
Post.
FINANCIAL STATEMENTS
The Statement of Assets and Liabilities for the
Fund as of
____________________ and the Report of Independent
Accountants
are included herein.
APPENDIX A
DESCRIPTION OF STANDARD & POOR'S CORPORATION
("S&P") AND
MOODY'S SHAREHOLDERS SERVICE, INC. ("MOODY'S")
CORPORATE BOND AND
COMMERCIAL PAPER RATINGS
[From "Moody's Bond Record," November 1994 Issue
(Moody's
Shareholder 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.
PART C. OTHER INFORMATION
Item 24: Financial Statements and Exhibits
(a) Financial Statements:
- Included in Part A: Not applicable.
- Included in Part B: Statement of Assets
and
Liabilities as of _________________ and
Related
Notes (to be filed by amendment)
(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 Post-Effective
Amendment
No. 84 to Registration Statement
No. 2-17613
and incorporated by reference
herein.
(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 Post-Effective
Amendment
No. 84 to Registration Statement
No. 2-17613
and incorporated by reference
herein.
(p) Establishment and Designation of
Series and
Classes (Ivy Global Science &
Technology
Fund--Class A, Class B, Class C and
Class I)
filed with this Post-Effective
Amendment No.
86 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.
(m) Form of Supplement to Master
Business
Agreement between Ivy Fund and Ivy
Management, Inc. (Ivy Global
Science &
Technology Fund) filed with this
Post-
Effective Amendment No. 86 to
Registration
Statement No. 2-17613
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) Addendum to Amended and Restated
Distribution
Agreement filed with Post-Effective
Amendment
No. 73 to Registration Statement
No. 2-17613
and incorporated by reference
herein.
(d) Addendum to Amended and Restated
Distribution
Agreement (Ivy Money Market
Fund--Class A and
Class B) filed with Post-Effective
Amendment
No. 84 to Registration Statement
No. 2-17613
and incorporated by reference
herein.
(e) Form of Addendum to Amended and
Restated
Distribution Agreement (Class C)
filed with
Post-Effective Amendment No. 84 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(f) Form of Addendum to Amended and
Restated
Distribution Agreement (Ivy Global
Science &
Technology Fund--Class A, Class B,
Class C
and Class I) filed with this
Post-Effective
Amendment No. 86 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 Post-Effective Amendment
No. 84 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(w) Form of Addendum to Transfer Agency
and
Shareholder Services Agreement
filed with
Post-Effective Amendment No. 84 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(x) Form of Administrative Services
Agreement
Supplement for Ivy Global Science &
Technology Fund filed with this
Post-
Effective Amendment No. 86 to
Registration
Statement No. 2-17613.
(y) Form of Fund Accounting Services
Agreement
Supplement for Ivy Global Science &
Technology Fund filed with this
Post-
Effective Amendment No. 86 to
Registration
Statement No. 2-17613.
(z) Form of Addendum to Transfer Agency
and
Shareholder Services Agreement
filed with
this Post-Effective Amendment No.
86 to
Registration Statement No. 2-17613.
10. Opinion and Consent of Dechert Price &
Rhoads,
filed herewith.
11. Not applicable
12. Not applicable
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
Post-Effective Amendment No. 84 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(j) Form of Distribution Plan for 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 and Ivy New Century
Fund filed
with Post-Effective Amendment No.
85 to
Registration Statement No. 2-17613
and
incorporated by reference herein.
(k) Form of Supplement to Master
Amended and
Restated Distribution Plan for Ivy
Fund Class
A Shares (Ivy Global Science &
Technology
Fund), to be filed by amendment.
(l) Form of Supplement to Distribution
Plan for
Ivy Fund Class B Shares (Ivy Global
Science &
Technology Fund), to be filed by
amendment.
(m) Form or Supplement to Distribution
Plan for
Ivy Fund Class C Shares (Ivy Global
Science &
Technology Fund), to be filed by
amendment.
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. Not applicable.
18. (a) 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.
(b) Form of Amended and Restated Plan
adopted
pursuant to Rule 18f-3 under the
Investment
Company Act of 1940 filed with
Post-Effective
Amendment No. 85 to Registration
Statement
No. 2-17613 and incorporated by
reference
herein.
(c) Form of Amended and Restated Plan
adopted
pursuant to Rule 18f-3 under the
Investment
Company Act of 1940, to be filed by
amendment.
25. Persons Controlled by or Under Common Control with
Registrant: Not applicable
26. Number of Holders of Securities
Fund: Date Class Record
Holders
Ivy Bond Fund 4/30/96 Class A 5,095
Class B 203
Class C 1
Class I -0-
Ivy Canada Fund 4/30/96 Class A 2,662
Class B 107
Class C 1
Ivy China Region 4/30/96 Class A 2,255
Class B 1,208
Class C 1
Ivy Emerging 4/30/96 Class A 4,124
Growth Fund Class B 1,990
Class C 1
Ivy Global Fund 4/30/96 Class A 1,524
Class B 449
Class C 1
Ivy Growth Fund 4/30/96 Class A 31,530
Class B 237
Class C 1
Ivy Growth with 4/30/96 Class A 6,081
Income Fund Class B 852
Class C 1
Class D 48
Ivy International 4/30/96 Class A 17,307
Fund Class B 8,702
Class C 1
Class I 229
Ivy International 4/30/96 Class A -0-
Bond Fund Class B -0-
Class C -0-
Ivy Latin America 4/30/96 Class A 255
Strategy Fund Class B 97
Class C 1
Ivy Money Market 4/30/96 Class A 2,630
Fund Class B 108
Class C 1
Ivy New Century 4/30/96 Class A 570
Fund Class B 239
Class C 1
Ivy Short-Term 4/30/96 Class A 265
Bond Fund Class B 11
Class I -0-
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 Registration Statement No. 2-17613.
31. Not applicable
32. Undertakings
(a) Not applicable
(b) Registrant undertakes to file a
Post-Effective
Amendment, using reasonably current financial
statements of Ivy Global Science & Technology
Fund,
within four to six months from the effective
date of
this Post-Effective Amendment No. 86 to
Registrant's
Registration Statement under the Securities
Act of
1933.
(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. 86 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 3rd day of May,
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. 86 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
5/3/96
President (Chief
Executive Officer)
JOHN S. ANDEREGG, JR.* Trustee
5/3/96
PAUL H. BROYHILL* Trustee
5/3/96
STANLEY CHANNICK* Trustee
5/3/96
FRANK W. DEFRIECE, JR.* Trustee
5/3/96
ROY J. GLAUBER* Trustee
5/3/96
MICHAEL R. PEERS* Trustee and Chairman
5/3/96
of the Board
JOSEPH G. ROSENTHAL* Trustee
5/3/96
RICHARD N. SILVERMAN* Trustee
5/3/96
J. BRENDAN SWAN* Trustee
5/3/96
C. WILLIAM FERRIS* Treasurer (Chief
5/3/96
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.
EXHIBIT INDEX
1(p) Establishment and Designation of Series and
Classes
(Ivy Global Science & Technology Fund--Class
A, Class
B, Class C and Class I)
5(m) Form of Supplement to Master Business
Agreement between
Ivy Fund and Ivy Management, Inc. (Ivy Global
Science &
Technology Fund)
6(f) Form of Addendum to Amended and Restated
Distribution
Agreement (Ivy Global Science & Technology
Fund--Class
A, Class B, Class C and Class I)
9(x) Form of Administrative Services Agreement
Supplement
for Ivy Global Science & Technology Fund
9(y) Form of Fund Accounting Services Agreement
Supplement
for Ivy Global Science & Technology Fund
9(z) Form of Addendum to Transfer Agency and
Shareholder
Services Agreement
10 Opinion and Consent of Dechert Price & Rhoads
EXHIBIT 1(P)
IVY FUND
IVY GLOBAL SCIENCE & TECHNOLOGY FUND
Establishment and Designation of Additional
Series 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 formed
under the laws of the Commonwealth of Massachusetts, DO HEREBY
CERTIFY that, at a meeting held on February 9-10, 1996, the
Trustees of the Trust (the "Trustees"), 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 approved, adopted and consented to
the following resolutions as actions of the Trustees of the
Trust:
RESOLVED, that (i) the shares of beneficial interest of the
Trust having previously been divided into thirteen separate
series, designated as 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 and Ivy Short-Term Bond Fund, the shares of
beneficial interest of the Trust shall hereby be divided
into one additional separate series designated as "Ivy
Global Science & Technology Fund" (individually, the "Fund"
and collectively with the other thirteen series of the
Trust, the "Series"); and (ii) having established and
designated the Fund as an additional Series of the Trust,
there shall hereby be designated an unlimited number of
authorized and unissued shares of beneficial interest of the
Trust as (a) "Ivy Global Science & Technology Fund--Class
A," (b) "Ivy Global Science & Technology Fund--Class B," (c)
"Ivy Global Science & Technology Fund--Class C" and (d) "Ivy
Global Science & Technology Fund--Class I," with the Fund
and each of its classes of shares being subject to all
provisions of the Declaration of Trust relating to shares of
the Trust generally, and having the following special and
relative rights:
1. The Fund shall be authorized to hold cash and invest in
securities and instruments and use investment
techniques as described in the Trust's registration
statement under the Securities Act of 1933, as amended
from time to time. Each share of beneficial interest,
no par value per share, of the Fund ("share") shall be
redeemable as provided in the Declaration of Trust,
shall be entitled to one vote (or fraction thereof in
respect of a fractional share) on matters on which
shares of the Fund shall be entitled to vote and shall
represent a pro rata beneficial interest in the assets
allocated to the Fund. The proceeds of sales of shares
of the Fund, together with any income and gain thereon,
less any diminution or expenses thereof, shall
irrevocably belong to the Fund, unless otherwise
required by law. Each share of the Fund shall be
entitled to receive its pro rata share of net assets of
the Fund upon liquidation of the Fund. Upon redemption
of a shareholder's shares, or indemnification for
liabilities incurred by reason of a shareholder being
or having been a shareholder of the Fund, such
shareholder shall be paid solely out of the property of
the Fund.
2. Shareholders of the Fund shall vote separately as a
Series on any matter to the extent required by
applicable federal or state law. Shareholders of each
class of the Fund shall have (i) exclusive voting
rights with respect to matters on which the holders of
each such class shall be entitled to exclusive voting
rights under applicable federal or state law, and (ii)
no voting rights with respect to matters on which the
holders of another class of shares of the Fund or the
holders of another Series (or class thereof) shall be
entitled to exclusive voting rights under applicable
federal or state law.
3. The assets and liabilities of the Trust existing on the
date hereof shall be allocated among the Series other
than the Fund in accordance with Article III of the
Declaration of Trust, and hereafter the assets and
liabilities of the Trust shall be allocated among all
Series and classes thereof in accordance with Article
III of the Declaration of Trust, except as provided
below:
(a) Costs incurred by the Trust on behalf of the Fund
in connection with the organization, registration
and public offering of shares of the Fund shall be
allocated to the Fund and shall be amortized by
the Fund in accordance with applicable law and
generally accepted accounting principles.
(b) The Trustees may from time to time in particular
cases make specific allocations of assets or
liabilities among the Series.
4. The Trustees (including any successor Trustees) shall
have the right at any time and from time to time to
reallocate assets and expenses or to change the
designation of any Series (or class thereof) now or
hereafter created, or to otherwise change the special
and relative rights of any such Series (or class),
provided that such change shall not adversely affect
the rights of shareholders of that Series (or class).
5. The dividends and distributions with respect to each
class of shares shall be in such amount as may be
declared from time to time by the Trust's Board of
Trustees in accordance with the Declaration of Trust
and applicable law.
6. (a) Each Class B share of the Fund, other than a share
purchased through the automatic reinvestment of a
dividend or a distribution with respect to Class B
shares, shall be converted automatically, and
without any action or choice on the part of the
holder thereof, into and be reclassified as a
Class A share of the Fund on the date that is the
first business day following the last calendar day
of the month in which the eighth anniversary date
of the date of the issuance of such Class B share
falls (the "Conversion Date") on the basis of the
relative net asset values of the two classes,
without the imposition of any sales load, fee or
other charge;
(b) Each Class B share purchased through the automatic
reinvestment of a dividend or a distribution with
respect to Class B shares shall be segregated in a
separate sub-account. Each time any Class B
shares in a shareholder's Fund account (other than
those in the sub-account) convert to Class A
shares of the Fund, a pro rata portion of the
Class B shares then in the sub-account will also
convert to Class A shares. The portion will be
determined by the ratio that the shareholder's
Class B shares converting to Class A shares bears
to the shareholder's total Class B shares not
acquired through the reinvestment of dividends and
distributions;
(c) The conversion of Class B shares into Class A
shares may be suspended if (i) a ruling of the
Internal Revenue Service (the "IRS") to the effect
that the conversion of Class B shares does not
constitute a taxable event under Federal income
tax law is revoked or (ii) an opinion of counsel
on such tax matter is withdrawn or (iii) the Board
of Trustees determines that continuing such
conversions would have material, adverse tax
consequences for the Fund or its shareholders; and
(d) On the Conversion Date, the Class B shares
converted into Class A shares shall cease to
accrue dividends and shall no longer be deemed
outstanding and the rights of the holders thereof
(except the right to receive the number of Class A
shares into which the Class B shares have been
converted and any declared but unpaid dividends to
the Conversion Date) shall cease. Certificates
representing Class A shares of the Fund resulting
from the conversion of Class B shares need not be
issued until certificates representing the Class B
shares converted, if issued, have been received by
the Trust or its agent duly endorsed for transfer.
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 Fund is filed with the Securities and
Exchange Commission in accordance with Rule 485(a)(2) under
the Securities Act of 1933.
IN WITNESS WHEREOF, I have signed this Amendment this _____
day of May, 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 5(M)
IVY FUND
BUSINESS MANAGEMENT AND INVESTMENT ADVISORY
AGREEMENT SUPPLEMENT
Ivy Global Science & Technology Fund
AGREEMENT made as of the ____ day of ___________, 1996, by
and between Ivy Fund (the "Trust") and Ivy Management, Inc. (the
"Manager").
WHEREAS, the Trust is an open-end investment company,
organized as a Massachusetts business trust, and consists of such
separate investment portfolios as have been or may be established
and designated by the Trustees of the Trust from time to time;
WHEREAS, a separate class of shares of the Trust is offered
to investors with respect to each investment portfolio;
WHEREAS, the Trust has adopted a Master Business Management
and Investment Advisory Agreement dated December 31, 1991 (the
"Master Agreement"), pursuant to which the Trust has appointed
the Manager to provide the business management and investment
advisory services specified in that Master Agreement; and
WHEREAS, Ivy Global Science & Technology Fund (the "Fund")
is a separate investment portfolio of the Trust.
NOW, THEREFORE, the Trustees of the Trust hereby take the
following actions, subject to the conditions set forth:
1. As provided for in the Master Agreement, the Trust
hereby adopts the Master Agreement with respect to the Fund, and
the Manager hereby acknowledges that the Master Agreement shall
pertain to the Fund, the terms and conditions of such Master
Agreement being hereby incorporated herein by reference.
2. The term "Portfolio" as used in the Master Agreement
shall, for purposes of this Supplement, pertain to the Fund.
3. As provided in the Master Agreement and subject to
further conditions as set forth therein, the Fund shall pay the
Manager a monthly fee 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 the Fund's Prospectus for
determining net asset value per share) of the net assets of the
Fund during the preceding month at the annual rate of 1.00%.
4. This Supplement and the Master Agreement (together, the
"Agreement") shall become effective with respect to the Fund as
of the date specified above, and unless sooner terminated as
hereinafter provided, the Agreement shall remain in effect with
respect to the Fund for a period of more than two (2) years from
such date only so long as the continuance is specifically
approved at least annually (a) by the vote of a majority of the
outstanding voting securities of the Fund (as defined in the
Investment Company Act of 1940, as amended (the "1940 Act")) or
by the Trust's entire Board of Trustees and (b) by the vote, cast
in person at a meeting called for that purpose, of a majority of
the Trust's Independent Trustees. This Agreement may be
terminated with respect to the Fund at any time, without payment
of any penalty, by vote of a majority of the outstanding voting
securities of the Fund (as defined in the 1940 Act) or by vote of
a majority of the Trust's entire Board of Trustees on sixty (60)
days' written notice to the Manager or by the Manager on sixty
(60) days' written notice to the Trust. This Agreement shall
terminate automatically in the event of its assignment (as
defined in the 1940 Act).
IVY FUND, on behalf of Ivy Global
Science & Technology Fund
By: _____________________________
TITLE:
IVY MANAGEMENT, INC.
By: _____________________________
TITLE:
EXHIBIT 6(F)
IVY FUND
ADDENDUM TO AMENDED AND RESTATED
DISTRIBUTION AGREEMENT
Ivy Global Science & Technology Fund
Class A, Class B, Class C and Class I Shares
AGREEMENT made as of the ____ day of ______________, 1996,
by and between Ivy Fund (the "Trust") and Ivy Mackenzie
Distributors, Inc. ("IMDI")(formerly "Mackenzie Ivy Funds
Distribution, Inc.").
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, IMDI 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
June 7-8, 1996, duly approved an amendment to the Agreement to
include the Class A, Class B, Class C and Class I shares (the
"Shares") of Ivy Global Science & Technology Fund (the "Fund");
and
WHEREAS, the Shares were established and designated by the
Board of Trustees of the Trust at a meeting held on February 9-
10, 1996.
NOW THEREFORE, the Trust and IMDI hereby agree as follows:
Effective as of the date that the
Registration Statement pertaining to the
Fund, filed with the Securities and Exchange
Commission on or about May 3, 1996 pursuant
to Rule 485(a)(2) under the Securities Act of
1933, first becomes effective, the Agreement
shall relate in all respects to the Shares,
in addition to the classes of shares of the
Fund 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 IMDI have adopted this
Addendum as of the date first set forth above.
IVY FUND
By: _____________________________
Michael G. Landry, President
IVY MACKENZIE DISTRIBUTORS, INC.
By: _____________________________
Keith J. Carlson, President
EXHIBIT 9(X)
IVY FUND
ADMINISTRATIVE SERVICES AGREEMENT SUPPLEMENT
Ivy Global Science & Technology Fund
AGREEMENT made as of the ___ day of ____________, 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 series 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 dated September 1, 1992 (the "Master Services
Agreement"), pursuant to which the Trust has appointed MIMI to
provide the administrative services specified in the Master
Services Agreement; and
WHEREAS, Ivy Global Science & Technology Fund (the "Fund")
is a separate investment portfolio of the Trust.
NOW, THEREFORE, the Trustees of the Trust hereby take the
following actions, subject to the conditions set forth:
1. As provided for in the Master Services Agreement, the
Trust hereby adopts the Master Services Agreement with respect to
the Fund, and MIMI hereby acknowledges that the Master Services
Agreement shall pertain to the Fund, the terms and conditions of
such Master Services Agreement being incorporated herein by
reference.
2. The term "Fund" as used in the Master Services
Agreement shall, for purposes of this Supplement, pertain to the
Fund.
3. As provided in the Master Services Agreement and
subject to further conditions as set forth therein, the Fund
shall pay 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 the Fund's Prospectus for
determining net asset value per share) of the net assets of the
Fund during the preceding month at the annual rate of (i) 0.10%,
with respect to the Fund's Class A, Class B and Class C shares,
and (ii) 0.01%, with respect to the Fund's Class I shares.
4. This Supplement and the Master Services Agreement
(together, the "Agreement") shall become effective with respect
to the Fund as of the date specified above, 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 the Fund from
year to year, provided such continuance with respect to the 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 (as defined in the Investment
Company Act of 1940, as amended). This Agreement may be
terminated with respect to the 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 the Fund, such action shall have been authorized
by the Trust's Board of Trustees, including the vote or written
consent of a majority of the Trust's Independent Trustees.
IVY FUND, on behalf of
Ivy Global Science & Technology Fund
By: _____________________________
TITLE:
MACKENZIE INVESTMENT MANAGEMENT INC.
By: _____________________________
TITLE:
EXHIBIT 9(Y)
IVY FUND
FUND ACCOUNTING SERVICES AGREEMENT SUPPLEMENT
Ivy Global Science & Technology Fund
AGREEMENT made as of the _____ day of ___________, 1996, by
and between Ivy Fund (the "Trust") and Mackenzie Investment
Management Inc. (the "Agent").
WHEREAS, the Trust is an open-end investment company,
organized as a Massachusetts business trust, and consists of such
separate investment portfolios as have been or may be established
and designated by the Trustees of the Trust from time to time;
WHEREAS, a separate class of shares of the Trust is offered
to investors with respect to each investment portfolio;
WHEREAS, the Trust has adopted a Master Fund Accounting
Services Agreement dated January 25, 1993 (the "Master
Agreement"), pursuant to which the Trust has appointed the Agent
to provide the fund accounting services specified in the Master
Agreement; and
WHEREAS, Ivy Global Science & Technology Fund (the "Fund")
is a separate investment portfolio of the Trust.
NOW, THEREFORE, the Trustees of the Trust hereby take the
following actions, subject to the conditions set forth:
1. As provided for in the Master Agreement, the Trust
hereby adopts the Master Agreement with respect to the Fund, and
the Manager hereby acknowledges that the Master Agreement shall
pertain to the Fund, the terms and conditions of such Master
Agreement being hereby incorporated herein by reference.
2. The term "Portfolio" as used in the Master Agreement
shall, for purposes of this Supplement, pertain to the Fund.
3. As provided in the Master Agreement and subject to
further conditions as set forth therein, the Fund shall pay the
Agent a monthly fee based upon the rate(s) set forth in the Fee
Schedule attached hereto as Annex 1.
4. This Supplement and the Master Agreement (together, the
"Agreement") shall become effective with respect to the Fund as
of the date specified above, and unless sooner terminated as
hereinafter provided, the Agreement shall remain in effect with
respect to the Fund for a period of more than one (1) year from
such date only so long as the continuance is specifically
approved at least annually by the Trust's Board of Trustees,
including the vote or written consent of a majority of the
Trust's Independent Trustees (as defined in the Investment
Company Act of 1940, as amended). This Agreement may be
terminated with respect to the Fund, without payment of any
penalty, by the Fund upon at least ninety (90) days' prior
written notice to the Agent or by the Agent upon at least ninety
(90) days' prior written notice to the Fund; provided, that in
the case of termination by the Fund, such action shall have been
authorized by the Trust's Board of Trustees, including the vote
or written consent of a majority of the Trust's Independent
Trustees.
IVY FUND, on behalf of
Ivy Global Science & Technology Fund
By: ___________________________________
TITLE:
MACKENZIE INVESTMENT MANAGEMENT INC.
By: ___________________________________
TITLE:
ANNEX 1
FUND ACCOUNTING SERVICES AGREEMENT
FEE SCHEDULE
BASED UPON ASSETS UNDER MANAGEMENT (IN MILLIONS)
$0-$10 >$10-$40 >$40-$75 Over $75
Ivy Global Science $1,250 $2,500 $5,000 $6,500
& Technology Fund
EXHIBIT 9(Z)
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 Ivy
Mackenzie Services Corp. ("IMSC")(formerly "Mackenzie Ivy
Investor Services Corp."), 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 Global Science & Technology Fund
(Classes A, B and C) 20.00
Ivy Global Science & Technology Fund (Class I) 10.25
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 IMSC
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 Ivy Global Science &
Technology Fund, filed with the Securities and Exchange
Commission on or about May 3, 1996 pursuant to Rule 485(a)(2)
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 _____ day of ____________,
1996.
IVY FUND
By: ___________________________________
Michael G. Landry, President
IVY MANAGEMENT, INC.
By: ___________________________________
Michael G. Landry, President
EXHIBIT 10
DECHERT PRICE & RHOADS
TEN POST OFFICE SQUARE -- SOUTH
SUITE 1230
BOSTON, MA 02109-4603
May 3, 1996
Ivy Fund
Via Mizner Financial Plaza
700 South Federal Highway
Suite 300
Boca Raton, Florida 33432
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 Post-
Effective Amendment No. 86 to the Trust's registration statement
relating to the shares of beneficial interest of Ivy Global
Science & Technology Fund (the "Shares") being filed under the
Securities Act of 1933, as amended (File No. 2-17613)("Post-
Effective Amendment No. 86"). We have also examined such other
records of the Trust, agreements, documents and instruments as we
deemed appropriate.
Based upon the foregoing, it is our opinion that the Shares
have been duly authorized and, when issued and sold at the public
offering price contemplated by the Prospectus for Ivy Global
Science & Technology Fund 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. 86.
Very truly yours,
DECHERT PRICE & RHOADS
